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Daily News Roundup: Friday, 11th June 2021

Posted: 11th June 2021

BTG Advisory

Renewed COVID-19 turbulence hampers recovery for airline sector

BTG Advisory’s Mark Fry outlines how the airline industry’s recovery has been set back by a surge in Covid infections and the threat posed by the Delta variant. Fry notes the net debt of the global airline industry soared to $220bn at the end of 2020, according to IATA figures, and the “longer it takes for demand to recover, the greater probability of debt defaults and, ultimately, airline failures.”


Global banking regulator calls for toughest capital rules for crypto

The Basel Committee on Banking Supervision has called for cryptocurrencies to carry stricter bank capital requirements than any other asset, citing greater risk. It suggested that the likes of Bitcoin be subject to the highest capital requirements as a result of the concerns. In practice it means that a $100 exposure to assets such as Bitcoin will come with a minimum capital requirement of $100. But stablecoins and other tokenised traditional assets would continue to be subject to the existing rules. Possible cryptocurrencies issued by central banks are not included in the proposed crackdown.

Amigo warns of insolvency

Subprime lender Amigo has warned that it was basically insolvent without an appropriate scheme to compensate hundreds of thousands of current and former borrowers who had complained about being sold loans that they could not afford. Analysts suggest the alert is designed to pressure the Financial Conduct Authority to give the company some leeway in devising an alternative scheme to that dismissed by a court last month.


BC Partners strikes a $7bn deal with . . . itself

BC Partners has just arranged one of Europe’s largest “continuation fund” deals, transferring its 47% stake in the academic publisher Springer Nature to a new fund that it will continue to control.


ECB sticks to bond-buying plan despite improving eurozone economy

The European Central Bank has announced that the pace of its bond purchases is to be maintained even as policymakers urge a reduction in monetary stimulus. The ECB's former chief economist Jürgen Stark says the ECB has succumbed to naked "fiscal dominance" and is engaged in a disguised bail-out of insolvent states.

France and Switzerland to trial wholesale digital currency payments

The Swiss National Bank and the Bank of France are to trial Europe's first cross-border central bank digital currency payments. Switzerland's UBS, Credit Suisse and France's Natixis are involved in the project, along with Swiss bourse operator SIX Digital Exchange, fintech firm R3 and the Innovation Hub at the Bank for International Settlements.

Goldman bankers ordered to report vaccine status before return to office

Goldman Sachs bankers in the US have been ordered to disclose their Covid vaccine status ahead of a return to the office. While the firm has strongly encouraged staff to get a vaccine, a memo to staff said: "We understand that the choice to get vaccinated is a personal one." It went on to say that registering vaccination status would help plan for a safer return to the office.

Court ruling could cost Deutsche Bank €100m

Deutsche Bank expects to book a €100m charge in the second quarter after a court ruled some of the lender's clients could challenge fee hikes. The German regulator has warned the judgment could see banks see half of banks' annual profit wiped out by compensation claims.

State Street sets up digital unit to capitalise on crypto craze

US custody bank State Street is setting up a new digital division to be led by Nadine Chakar, who told the FT that crypto developments were moving fast while blockchain was set to make finance more efficient.

El Salvador approves bitcoin as legal tender

El Salvador has passed a bill to make Bitcoin legal tender, with 62 of 84 possible votes, a move which has attracted both support and warnings from analysts.

Mizuho boss to resign after tech problems

The CEO of Japan's Mizuho Bank, Koji Fujiwara, could step down this month, taking the rap for a series of technology problems this year.


BA puts thousands of staff back on furlough

British Airways is to place thousands of staff back on furlough as the company awaits a meaningful return to international travel. The carrier has already cut more than 8,000 jobs in a bid to cut costs amid the worst downturn in aviation history. BA had begun to bring people back ahead of the easing of restrictions on foreign holidays on 17 May, but only a small number of countries have been put on the Government's green list. Moreover, official advice remains not to visit amber countries for leisure, leaving the travel industry almost at a standstill.

Wizz Air CEO optimistic about recovery

Wizz Air chief executive Jozsef Varadi has said the Hungarian airline is on track to fly more this summer than before the pandemic began, commenting: "We are ramping up. We are seeing a less constrained environment going into peak summer and quite likely we're going to be above our 2019 capacity in a month or two from now."


SoftBank investment helps Klarna to $45.6bn valuation

Buy-now-pay-later firm Klarna has increased its valuation by 50% to $45.6bn in the last three months, with SoftBank’s Vision Fund 2 leading a $638m fundraising round at the Swedish company. The group said that it was now the biggest fintech by value in Europe and the second highest in the world after Stripe, the online payments group.

Trafigura reports record half-year profits of $2.1bn

Trafigura generated net profit of $2.1bn for the six months to the end of March, up from $500m in 2020, on revenue of almost $100bn, which was up 18%.


Hospitality group CVA approved by creditors

Bar and restaurant operator Drake & Morgan is to shut three of its venues after some 90% of the company's creditors voted in favour of a company voluntary arrangement restructuring deal for the firm. The locations affected are in London and Manchester.


Altice swoops on BT

French billionaire Patrick Drahi has bought a 12.1% stake in BT with the Altice founder thought to be targeting Openreach, BT’s broadband infrastructure business which Drahi believes is undervalued. Analysts say that if Openreach is spun off it would slow down Britain’s fibre broadband rollout.

French music group Believe shares tumble on market debut

Shares in French music group Believe were down over 13% on its first day of trading on the stock market, reaching a maximum valuation of around €1.67bn.


Frasers and Boots frustrate landlords with hardball rent talks

The British Property Federation has found a majority of landlords and tenants had reached agreement over pandemic rent debt built up, but Frasers and Boots were among the big chains continuing to exploit the moratoriums.


Morrisons boss suffers huge pay revolt

Shareholders in Morrisons have voted against plans to award bumper pay deals to its bosses. Just over 70% of shareholder votes were cast against the firm's remuneration proposals, which include paying CEO David Potts a maximum £1.7m bonus despite profits plunging to £165m last year, from £435m the previous year. He was awarded a total pay package in the year to 31 January worth up to £4.2m, including the bonus. He made just under £4m the year before.

Selfridges in £4bn sale talks

Selfridges could be sold after the department stores’ owner was approached by a mystery buyer. The Weston family have lined up advisers at Credit Suisse to consider their options with bids likely to value the retail group at about £4bn.

John Lewis staff to be given equal right to parenthood leave

The John Lewis Partnership is to offer equal parenthood leave and paid leave for employees who experience the loss of a pregnancy. The employee-owned company is the first UK retailer to introduce the measures.


UK economic recovery lags other G20 nations - OECD

Figures from the Organisation for Economic Co-operation and Development (OECD) show the UK's recovery from the pandemic lagged behind other G20 economies in the first three months of 2021. Comparing Q4 2019 to Q1 2021, the UK and Italy recorded the largest falls in GDP, down 8.7% and 6.4% respectively, while Germany, France, the euro area and the European Union all recorded declines of more than 4%. China, by contrast, was up 7.1% and Turkey 6.8%.

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