BANKING
Which?: Extend loan repayment freezes
Consumer group Which? has urged the Financial Conduct Authority (FCA) to extend loan repayment holidays and interest-free overdrafts until January 2021, saying demand for support will surge after the job retention scheme winds up on October 31. Which? head of money, Gareth Shaw, said: “The regulator has acted quickly and effectively to help those struggling financially due to the pandemic, but it must be prepared to take further bold action to prevent millions of people from being hit by a perfect storm of financial pressures in the coming months.”
HSBC demands 15% deposit for flats
HSBC is to clamp down on how much it will lend to borrowers buying flats. It had been offering mortgages to borrowers with a 10% deposit but as of next week, anyone buying a flat will need at least a 15% deposit – with this climbing to 20% for new-build flats. The move comes a week after Nationwide said buyers applying for a 90% mortgage must prove that no more than a quarter of their deposit was gifted to them by their parents. Moneyfacts data shows that there are currently 48 deals on offer for borrowers with a 10% deposit compared to 758 this time last year.
INTERNATIONAL
NAB posts A$1.5bn profit
National Australia Bank has posted a A$1.55bn cash profit for Q3, marking a 6.1% dip on the A$1.65bn reported a year ago. The bank pointed to COVID-19 challenges as it set aside more money for potential loan defaults. CEO Ross McEwan said that while around 16% of home loan deferral customers have recommenced repayments, “many customers still face an uncertain future”. “Where it makes sense we will offer them extra support to help manage through the pandemic, but providing further credit won't always be the right thing to do,” he added.
Wells Fargo’s chief compliance officer quits
Wells Fargo’s chief compliance officer, Mike Roemer, is to stand down. He will be replaced by Paula Dominick after a transition period. Ms Dominick comes from Credit Suisse Americas, where she was chief compliance officer. She previously worked for Bank of America.
UBS's McCann to step down
Bob McCann, UBS Group's chairman for the Americas, will step down later this year, CEO Sergio Ermotti told staff in a memo yesterday.
FINANCIAL SERVICES
Uncertainty hits dealmaking
The coronavirus pandemic and uncertainty over Brexit have dragged down takeover activity, with the number of takeovers happening in Europe at its lowest level since 2004, according to data provider Refinitiv. Ian Hart, UBS's co-chairman of UK investment banking, said that while COVID-19 put deals on hold while companies and sponsors “assessed their own situations”, there appears to be “a strong level of underlying interest". Dwayne Lysaght, joint head of European dealmaking at JP Morgan, says bosses are taking a cautious approach to talks, while Jan Skarbek, head of UK investment banking at Citi, believes deals in the coming months will come from large corporates offloading non-essential operations.
Just Group sales down as profits up £3m
Just Group has reported underlying operating profit up £3m to £117m year on year for the first half, with profit from active life insurance policies increasing 25% year on year to £50.6m, offsetting a 10% fall in business profit to £73m. Group chief executive David Richardson commented: “I am very pleased with our progress in the first half of 2020 – our capital coverage ratio has increased to 145% during a turbulent and difficult time in financial markets.”
M&G increases UK Mortgages takeover offer
Asset manager M&G, acting on behalf of its M&G Specialty Finance Fund, has tabled a bid of approximately £191m for UK Mortgages Limited, increasing its offer by 3p to 70p per share. The firm accused the board of the UK Mortgages of “refusing to engage” with the bid. This comes after M&G revealed a fall in profit of over 50% in the first six months of the year as a result of retail investors withdrawing funds during the coronavirus pandemic.
LEISURE AND HOSPITALITY
Eat Out scheme boosts sales
Eating-out sales increased by almost a third in the week that followed the launch of Rishi Sunak's Eat Out to Help Out scheme. Research shows food sales in pubs and restaurants were up by between 95% and 106% on the first three days of the scheme, which was launched on Monday, August 3, compared with the same days the previous week. Although sales fell over the next four days, when the discount did not apply, it left the week-on-week increase at 31%. Meanwhile, 38% of people say they have already used the scheme, with more than half of them buying more than one half-price meal. Another 19% have not yet used it but plan to before it expires.
Tour operator Tui racks up €2bn loss as bookings collapse
Tour operator Tui has reported a net loss of over €2bn so far this year and is reportedly considering a rights issue or the sale of parts of its business.
MANUFACTURING
Thyssenkrupps steel woes send shares falling
Thyssenkrupp says its steel unit could see "a good €1bn" of operating losses this year, with orders down 24% year-on-year in the most recent quarter. Shares in Thyssenkrupp ended 16% down yesterday.
MEDIA AND ENTERTAINMENT
Daily Mail publisher to cut up to 100 jobs
Daily Mail and General Trust is planning to cut as many as 100 jobs and has started consultations with staff across its publishing arm DMG Media. This comes after the firm saw a 44% drop in operating profit for the nine months to June, with revenue down 23% in the most recent quarter on the back of the coronavirus crisis.
REAL ESTATE
Repossessions down 93%
Figures from UK Finance show that property repossessions have fallen by more than 90%, with homeowners opting for mortgage holidays amid the coronavirus crisis and banks banned from seizing homes amid the pandemic. There were just 90 owner-occupied homes repossessed in Q2, a 93% decline on Q2 2019, while 130 buy-to-let properties were repossessed, an 80% dip. The Financial Conduct Authority (FCA) warned banks against evicting customers amid the outbreak, with repossessions banned unless the homeowner agreed or the property was empty. The City watchdog also told banks and building societies to grant mortgage payment holidays to homeowners who were hit financially during the crisis. The FCA has said that mortgage lenders should not start or continue court action for repossession until at least October 31.
RETAIL
New Look seeks rent shake-up
Fashion retailer New Look is to ask store landlords to agree to a shake-up that will see rents based on how much each shop takes in sales. New Look is proposing the move to turnover-based rents through a CVA as it looks to reduce the rent bill on its almost 470 stores. New Look, which will inject £40m of new funds to help drive growth and cut debts from £550m to £100m through a debt-for-equity swap deal, has also launched a sale process as it looks to determine interest from investors for its shares and assets.
Very Group revenue hits £2bn
The Very Group, the owner of shopping websites Littlewoods.com and Very.co.uk, expects underlying profits to be between £255m and £270m in the year to June 30, with revenue topping £2bn for the first time. The retailer reported a 36% rise in sales in its final quarter, due to strong sales of electrical goods and demand for DIY and garden tools.
ECONOMY
REC predicts rapid recovery
The Recruitment and Employment Confederation (REC) has revealed that a rapid "V-shaped" economic recovery appears more likely, with Office for National Statistics figures showing that online adverts for vacancies in the UK are now at 62% of their 2019 levels. Figures show that there are 1.1m positions available, with around 125,000 new postings added in the past week. Neil Carberry, chief executive of the REC, has called for a cut to employers’ National Insurance tax to boost hiring and help firms keep on existing workers. He commented: “It’s important to remember that we are not just passengers in all of this – we have tools available that can minimise the unemployment increase that is coming."
OTHER
Return home costs parents £2.7k
Young adults moving back into the family home during lockdown added an average £2,702 to household bills, a Barclays survey has found. The extra cost included additional spending on items such as energy bills and food over an average 10-and-a-half-week stay. While 90% of parents did not ask their children to contribute financially, 51% of adult children chipped in to the cost of running the family home where possible. Analysis by savings firm AJ Bell suggests that nearly one in 10 young people moved back in with their parents for at least part of the lockdown.