BANKING
Regulator allows UK banks to restart dividends
The Bank of England’s Prudential Regulation Authority has said banks can resume dividend payments after the regulator decided lenders had capital positions that were resilient to “a wide range of economic outcomes, including economic scenarios that are materially more severe than current central expectations”. The move comes nearly nine months after banks were ordered to halt payments so the money could instead be used to plug possible losses and support emergency lending. However, the PRA warned that dividends distributed for full-year 2020 must be no greater than the higher of 20 basis points of risk weighted assets, or a quarter of profits made during 2019 and 2020, net of any distributions already made, and that cash bonuses for bankers would be closely scrutinised in light of continued uncertainty.
Banks failing to warn customers about scams
A review by the Lending Standards Board (LSB) has said banks are still failing to protect customers from fraud. The LSB said nine top banks had failed to put prominent warnings on digital apps when customers were making payments to suspected scammers. Barclays, Lloyds, HSBC, Metro Bank, Nationwide, NatWest, Santander, Co-operative Bank and Starling are all signatories to a voluntary code pledging to refund victims if customers were judged not to have been careless with personal information. The LSB did not name the worst offenders.
Lloyds becomes first UK bank to disclose black pay gap
Earnings gap data released by Lloyds Banking Group reveals that its black staff are being paid nearly 20% less than their colleagues. The lender said it had published the data as part of race action plan, and says gap is due to lack of black staff in top roles. Lloyds is the first major UK bank to disclose its black pay gap.
Morgan Stanley to move €100bn of assets to Frankfurt
Morgan Stanley is looking to move around €100bn (£92bn) in assets to Frankfurt in Germany in Q1 2021. The plans follow the bank’s decision to move staff to Europe to ensure that it can serve EU customers after Brexit. JP Morgan and Goldman Sachs have also increased their presence on the continent. Frankfurt and Paris are the main destinations for assets and staff leaving Europe.
PRIVATE EQUITY
Blackstone mulls sale of Lombard
Blackstone has reportedly begun exploring a sale of wealth manager Lombard International. The private equity group is working with advisers at Bank of America Merrill Lynch on a potential sale of Lombard following a series of unsolicited expressions of interest. Lombard had more than €47bn assets under administration at the end of June. The company’s likely price in any deal was unclear yesterday, although one analyst suggested that it was likely to be in excess of €700m.
Applegreen looks to go private
Blackstone is backing a £630m buyout of petrol forecourt retailer Applegreen by CEO Robert Etchingham and operations boss Joseph Barrett who already own more than 41% of the company.
INTERNATIONAL
ECB provides further €500bn of stimulus
The European Central Bank has announced further stimulus measures worth €500bn, taking its total pandemic emergency purchase programme to €1.85trn. Christine Lagarde, president of the ECB, said: “Incoming data and our staff projections suggest a more pronounced near-term impact of the pandemic on the economy and a more protracted weakness in inflation than previously envisaged.” The ECB has now extended ultra-cheap loans to commercial lenders at rates of minus 1% by one year to June 2022. Commenting on the eurozone’s predicament, the Telegraph’s Ambrose Evans-Pritchard says, “the ECB is doomed to keep sinking deeper into this debt trap even though everybody knows that QE has become a disguised monetary bail-out for insolvent states. In other respects it probably has no more economic potency at this juncture than a rain dance.” Meanwhile, the EU’s €1.8tn budget and post-pandemic recovery package can proceed after Hungary and Poland were assured they would not be targeted by a new mechanism tying payments to rule of law principles.
AUTOMOTIVE
McLaren mulling IPO
McLaren is mulling an IPO in a bid to raise cash in order to shore up its finances after taking a hit from COVID-19. The carmaker is looking to raise up to £500m over the next 12 months, and is considering going public via a deal with a special purpose acquisition company as one of the ways it could do so, according to reports.
Inchcape’s profits to top expectations after ‘resilient demand’
Inchcape has said it expects full-year pre-tax profits will be materially ahead of analysts’ £108m projection. The car dealership noted last month that it was likely to exceed market expectations, but did not give guidance.
Honda to restart production at Swindon plant on Monday
Honda has said that it would try to restart production at its Swindon plant on Monday after a shortage of parts forced it suspend activities. Output was halted yesterday after transport delays at the UK’s ports disrupted the carmaker’s supply chains.
AVIATION
Airlines fear Covid travel ban
UK travellers could be barred from entering the EU from 1 January as travel rules associated with being part of the EU expire and pandemic restrictions block entry. The president of the World Travel and Tourism Council, Gloria Guevara, said there were "compelling reasons" why the UK should be added to the EU's exemption list. Airlines are reportedly confident that individual EU states would exercise their right to allow British visitors "non-essential" travel.
FINANCIAL SERVICES
Permanent ban on mini-bond marketing
A permanent ban on the marketing of mini-bonds to retail investors has been confirmed by the Financial Conduct Authority. The move comes after a series of scandals involving unregulated bonds, including the collapse of London Capital & Finance (LCF) last year. The confirmation follows a temporary ban introduced in January after the regulator found the risks linked to the mass-marketing of mini-bonds was sufficiently “serious and immediate” to justify intervention without consultation. It later published a consultation paper over the summer setting out the scope of the ban. Mini-bonds are not regulated by the FCA, and concerns have been raised that ordinary investors do not understand the risks they carry and are unable to afford the potential financial losses involved.
Insurers in the firing line over cancelled events
Tensions are brewing between the Government and the insurance industry as the coronavirus crisis threatens the future of major 2021 events. Ministers, insurers and event company bosses are locked in talks over how to break a deadlock which could see events from the London Marathon to Glastonbury cancelled. Event organisers usually take out contingency insurance, to cover their losses if they cancel their plans. However, such is the level of uncertainty for next year, amid concerns of new lockdowns and bans on mass gatherings, insurers are refusing to provide cover.
Quilter reviewing international business
Quilter has said it is carrying out a strategic review of its international business which could result in the sale of Quilter International. The wealth manager overseas £109.5bn of investments for 900,000 clients.
LEISURE & HOSPITALITY
Tui posts €3bn loss
Tui has posted an annual loss of €3bn as the pandemic hit travel demand and finances of the world’s biggest holiday group. Tui said it will raise its cost-cutting targets to €400m annually from the previous level of €300m, trying to become more efficient to help pay off new debts taken on to survive the crisis. Last week, Tui secured a third bailout, agreeing a deal with the German government, private investors and banks for an extra €1.8bn, on top of state loans of 3bn it had already received. The company posted a loss of €3bn, from €894m of underlying core earnings last year, while revenue came in 58% lower at €7.9bn.
Marston's warns of ‘challenging and uncertain period’
Marston's has warned of a challenging and uncertain period ahead as it posted a loss of almost £400m. The Wolverhampton-based pub operator said sales were impacted by the 15-week closure of pubs from the end of March due to the COVID-19 pandemic. Its total pre-tax loss was £397.1m for the year ended October 3rd 2020, compared with a loss of £20.1m last year. Revenues also slipped at the firm, from £1.17bn in 2019 to £821m this year.
Nightclub owner files notice to appoint administrators
Deltic has filed a notice to appoint administrators. The nightclub owner remains in talks over an emergency sale after coming under intense financial pressure from the enforced closure of nightclubs.
MANUFACTURING
DS Smith to resume dividend payments
DS Smith will resume dividend payments despite a 54% drop in profits in the six months to 31 October. However, the cardboard manufacturer which supplies Amazon, Unilever and Nestlé, saw demand for packaging rise by 5% in November. The company will pay an interim dividend of 4p a share as confidence of recovery increases.
MEDIA & ENTERTAINMENT
Papercup secures funding
Funding worth £8m has been secures by a London-based AI start-up to help it develop speech technology which translates people’s voices into other languages. Papercup hopes to use the investment to help creators and media companies reach audiences around the world.
REAL ESTATE
Airbnb worth $100bn after market debut
Airbnb enjoyed a stunning Wall Street debut yesterday with its shares more than doubling in frenzied trading that left the travel website valued at more than $100bn (£75bn).
RETAIL
Frasers Group delivers rise in first-half profits
Frasers Group has reported that online sales and a resilient performance from its stores had boosted first-half pre-tax profits by 17.6%, to £106.1m. Revenues in the six months to October 25th declined 7.4% to £1.9bn. The retailer has raised the lower end of an earlier full-year forecast, and now expects a 20%- 30% improvement in underlying Ebitda. Frasers' chief financial officer Chris Wootton also confirmed the group is still in talks to buy parts of stricken rivals Arcadia and Debenhams, adding that the company’s interest in the collapsed high street chains was driven by its belief that bricks-and-mortar retail can still thrive in Britain.
Ocado profits to double as shoppers stay at home
Ocado has raised its full-year profit forecast for the second time in two months, with the COVID-19 pandemic continuing to generate huge demand for home delivery. The company said that sales at Ocado Retail, its joint venture with Marks and Spencer, increased 34.9% to £579.6m in the 13 weeks to November 29; average orders per week rose 3% to 360,000; and average order size was £133, with M&S’ essential and fresh ranges proving most popular. The company now expects full-year Ebitda of over £70m, ahead of an earlier forecast of over £60m.
SPORT
FA takes out £175m loan from BoE
The Bank of England has lent the Football Association £175m to ease financial problems caused by the COVID-19 pandemic. The financial impact of the virus has led the FA to plan for losses that could reach £300m.
ECONOMY
Rebound stalls as growth slows in October
The UK economy grew by just 0.4% in October as the recovery continued to slow in the face of tougher coronavirus restrictions. According to the ONS, the economy remains well below the size it was before the crisis. The UK has been recovering from a record slump earlier this year induced by the first coronavirus lockdown. But output is expected to shrink again in November after England's second shutdown forced businesses to close. October was the sixth consecutive month of growth for the UK after the economy contracted by a record 19.5% in April amid the first lockdown. The economy initially rebounded at a record rate, but growth has now begun to slow - with October's growth figure down from the 1.1% seen in September.
OTHER
World's richest banker dies
Joseph Safra, the world's richest banker and the wealthiest person in Brazil, has died from natural causes at the age of 82. He was estimated to be worth about $23.2bn when he died, according to Forbes