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Daily News Roundup: Friday, 12th June 2020

Posted: 12th June 2020

BANKING

Lloyds Banking Group fined £64m by FCA

The Financial Conduct Authority has found that Lloyds Bank, the Bank of Scotland and The Mortgage Business failed to treat hundreds of thousands of mortgage customers in arrears fairly. Lloyds Banking Group has been ordered to pay a fine of £64m, after the banks’ systems and procedures were found to have caused call handlers to sometimes lack the necessary information to assess mortgage customers’ circumstances and affordability accurately. Mark Steward, FCA executive director of enforcement and market oversight, remarked: “Banks are required to treat customers fairly, even when those customers are in financial difficulties or are having trouble meeting their obligations.”

Goldman Sachs reportedly planning UK reopening

Goldman Sachs is reportedly planning to reopen its London headquarters on 15 June. The firm’s Richard Gnodde sent an email to staff advising that the location was being prepared for “a safe and effective transition back to office when the time is right.” It continued: “This follows many of our offices in continental Europe safely opening over the last few weeks for our people, including Frankfurt, Madrid, Milan, Paris and Warsaw.” Staffing patterns are to be planned to ensure a gradual increase in occupancy levels.

Mortgage lenders retreat from first-time buyers with low deposits

Mortgage lenders have narrowed their offering for first-buyers after several deals were taken off the market. Lenders including Virgin Money and Clydesdale Bank pulled products with 90% LTV or higher.

Private bankers canvassed over wealth tax

The Treasury is reportedly consulting with executives at major banks and wealth management firms on how Britain’s richest citizens might be able to help pay for the UK’s costly coronavirus relief packages.

New chiefs for RBS NatWest Markets unit

Royal Bank of Scotland Group has appointed Robert Begbie as chief executive of its NatWest Markets investment banking arm. David King has been appointed its chief financial officer.

PRIVATE EQUITY

UK equity sales top £10bn since pandemic struck

The FT reports that corporates flush with cash from equity raises will have competition from private equity firms and hedge funds if they are thinking of snapping up companies trading at distressed prices.

Bain Capital’s $1bn Japan nursing home bet hits opposition

Hedge fund Lim Advisors has claimed Bain Capital’s $1bn bid for Japanese medical services group Nichii Gakkan is too low and alleged conflicts of interest that could derail the deal.

Bill Ackman targets $1bn for buyout vehicle

Pershing Square, the hedge fund run by Bill Ackman, is planning to raise more than $1bn from the stock market for a so-called special purpose acquisition vehicle.

INTERNATIONAL

European regulator accepts virus could delay futures rules

The European Securities and Markets Authority has admitted that new rules for futures markets are unlikely to come into effect next month due to the disruption caused by the coronavirus pandemic.

AUTOMOTIVE

Nissan to axe almost 250 temporary workers

Nissan will not extend the contracts of 248 temporary workers at its Sunderland plant after a steep fall in demand for new cars. The Japanese car firm, which resumed operations at the start of this week, said a second production line will reopen on June 22, but will not require the additional staff on temporary contracts.

AVIATION

Heathrow Airport responds to quarantine by announcing job cuts

Frontline jobs are to be cut at Heathrow Airport in the wake of the introduction of the government’s 14-day quarantine measures. Chief executive John Holland-Kaye commented: “Throughout this crisis, we have tried to protect front line jobs, but this is no longer sustainable, and we have now agreed a voluntary severance scheme with our union partners. While we cannot rule out further job reductions, we will continue to explore options to minimise the number of job losses.”

Bombardier to cut up to 600 jobs

Bombardier's aircraft manufacturing plant in Belfast is to shed over 600 jobs amid the severe downturn in the aviation industry.

Airbus set to drop plans for derivatives trading market

Airbus is reviewing plans to launch Skytra, a derivatives market for the airline industry to hedge against highly volatile ticket prices to instead focus on licensing specialist data and indices.

LEISURE & HOSPITALITY

Slump in beer sales underlines need for exit clarity

Sales of beer slumped to their lowest level in 20 years in the first quarter of the year as 47,000 pubs and bars were forced to shut for the last 10 days of the period due to the coronavirus lockdown. The industry is likely to suffer much steeper falls when figures for April to June come out. The British Beer and Pub Association (BBPA) said the figures are a reminder of the need for clarity about when pubs will be allowed to reopen.

Just Eat Takeaway combines with Grubhub in $7.3bn deal

European food delivery service Just Eat Takeaway has agreed to buy the US-based app Grubhub for $7.3bn (£5.8bn) in a deal that would create the world’s largest food delivery service outside China, able to serve customers in 25 countries. Just Eat Takeaway and Grubhub together processed 593m orders in 2019 and have more than 70m active customers globally.

MANUFACTURING

Manufacturing company Johnson Matthey announced 2,500 job losses

Some 2,500 jobs are to be lost over the next three years at manufacturing firm Johnson Matthey in the wake of the coronavirus crisis, with the company’s underlying profit down by £60m in its annual results.

Engineering firm Babcock suspends dividend as full year loss of £178m recorded

Babcock has suspended its final dividend after the engineering firm swung to a full year loss of £178m, with shares down 4% in morning trading. Revenue for the year was £4.45bn compared with £4.47bn for the year earlier period.

MEDIA & ENTERTAINMENT

Talktalk reports pre-tax profits of £146m

Talktalk has reported pre-tax profit of £146m for the year, up from a £5m loss in the year-earlier period. David Madden, market analyst at CMC Markets pointed out that although no guidance was issued in light of the current environment, the full year dividend of 2.5p was maintained — “which sends out a positive message.”

CityFibre to create thousands of jobs as full-fibre rolled out

Telecoms firm CityFibre is to create 11,000 jobs over three years as part of a £4bn investment. Having already built full-fibre broadband networks in around 25 smaller cities and towns, the company now plans to reach 8m homes in 100 locations.

Angela Ahrendts appointed to WPP board

Former senior vice president of retail at Apple, Angela Ahrendts, has been appointed non-executive director at WPP.

RETAIL

Unilever picks Britain as best option as it ends Anglo-Dutch era

Unilever is to unwind its dual Anglo-Dutch legal structure and create a single company in Britain to give it more flexibility for mergers and acquisitions as the coronavirus pandemic overwhelms businesses worldwide. The move comes two years after the consumer goods giant vowed to shift its headquarters to Rotterdam, only for investors to rebel and force a U-turn.

ECONOMY

Fear of a new virus outbreak sends global stocks down sharply

Shares slumped yesterday after investors were spooked by the prospect of a second wave of coronavirus infections in the US as states from Florida to California to Arizona to Texas see increases in cases after lifting restrictions put in place to limit the virus’ spread. The Dow shed 1,861.80 points, or 6.9%, to 25128.17 while the S&P 500 lost 188.04 points, or 5.9%, to 3002.10. The Nasdaq declined 527.62 points, or 5.3% and the Russell 2000 index fell by 7.6%. Earlier, European and Asian shares also dropped, with the UK's FTSE 100 sinking about 4%. In Germany, the Dax fell 4.4%, while in France the CAC 40 ended 4.4% lower. Banks and manufacturers were hit hard as were energy and travel stocks. Yields on European government bonds fell as hopes dimmed of agreement on an aid package. James Athey, senior investment manager at Aberdeen Standard Investments, said markets aren’t pricing in the likelihood talks will fail considering the opposition from some EU nations.

ONS figures reveal lockdown savings for UK households

Research by the Office for National Statistics (ONS) has found that during the financial year ending March 2019, UK households spent a weekly average of £182 on activities that they have largely been unable to pursue in recent months due to coronavirus restrictions. This equates to 22% of a usual weekly budget of £831 which has been saved in each household since lockdown was implemented.

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