BANKING
Credit card and home loans set to slide
The Bank of England (BoE) has forecast that demand for mortgages and credit card lending will decline in Q2. The BoE’s quarterly credit conditions survey, conducted shortly before the Government imposed the lockdown designed to slow the spread of COVID-19, shows that lenders were planning to scale back the availability of such loans. A net balance of -71% said that they expected demand for mortgages to rise in the coming months, while -23% anticipated that they would be issuing more loans. On unsecured lending, a net balance of -26% of lenders expect to issue more credit, while -4.9% reported greater demand. The balance of lenders expecting to increase credit to the corporate sector climbed to 28%, marking an increase of 0.8% and the highest figure since Q3 2009.
PPI deadline drives climb in complaints
Figures from the Financial Conduct Authority show complaints to financial services firm jumped from 4.29m in the first six months of 2019 to 6.02m in the second half of the year. This was driven by a surge in claims for mis-sold PPI ahead of an industry-wide deadline last August. The data show that complaints related to PPI hit 3.71m in H2, marking a 75% increase on the 2.12m recorded in H1. Complaints about PPI accounted for 62% of all complaints made to financial companies during the second half of 2019, with half of these upheld. With those related to PPI stripped out, complaints hit 2.31m in the second half of 2019, compared to 2.18m in the previous six months. Issues around current accounts accounted for 10% of all complaints, while credit cards made up 6% and insurance products were the focus of 5%.
Barclays activist suspends campaign to unseat chief
Activist investor Edward Bramson’s campaign to remove Jes Staley as Barclays’ chief executive has been suspended “in recognition of the complexity of the management situation presented during the COVID-19 pandemic.” Mr Bramson said that while he believes Mr Staley has made a “series of dubious judgements” which had “degenerated into a series of public spectacles”, he will not vote against Mr Staley's reappointment at the annual general meeting on May 7. He will withhold his vote due to fears that Barclays could be destabilised if it lost its CEO during the coronavirus crisis.
SNIB names CEO
Eilidh Mactaggart has been appointed the first chief executive of the Scottish National Investment Bank. She was previously managing director for MetLife Investment Management and a director of the Commonwealth Bank of Australia. Ms Mactaggart said the creation of the bank, which was unanimously approved by the Scottish Parliament in January, “will provide long-term patient capital support for ambitious companies, the third sector and infrastructure projects, underpinned by the transition to net-zero carbon emissions.”
HSBC pauses closures
HSBC has halted the closure of 25 bank branches amid the coronavirus pandemic. Ten of the branches lined up for closure will remain open until December, while 15 others will stay open for at least another three months.
Santander launches money transfer business
Santander has launched PagoFX, a fintech firm designed to compete in the money transfer sector. Fees will be waived until June, with charges between 0.7% and 0.8% from then onward.
PRIVATE EQUITY
Support for VC-backed firms on the cards
The Treasury is set to deliver greater support for fast-growing start-ups under new emergency support measures being rolled out amid the COVID-19 outbreak. Plans are being finalised that will see funds pumped into venture capital-backed businesses, with this potentially in the form of loans that convert into equity. The initiative is expected to offer businesses state-backed debt if their venture capital backers match the funds.
INTERNATIONAL
Morgan Stanley wealth management profit fall weighs on firm
The wealth management unit at Morgan Stanley, which contributes roughly half of the bank’s total revenue, has reported that first quarter profits fell 8% to $4.04bn (£3.23bn). Chief executive James Gorman noted: “Over the past two months, we have witnessed more market volatility, uncertainty and anxiety as a result of the devastating COVID-19 than at any time since the financial crisis.”
Online lenders replace banks as pandemic continues
Gene Marks, writing in the Guardian, argues that online lenders in the US have “stepped up to fill a critical need during this pandemic, when our banks – particularly our big banks – have dropped the ball,” claiming that banks have proved to be an obstacle to the success of the Cares Act pay cheque protection initiative. Sam Taussig, head of global policy at online lender Kabbage, says: “Our technology is specifically designed to process thousands of applications in minutes.”
Neel Kashkari: Big US banks should raise $200bn in capital now
Neel Kashkari, president and chief executive of the Federal Reserve Bank of Minneapolis, writes in the FT urging banks to stop paying dividends and raise equity capital as recession looms.
AUTOMOTIVE
Bentley factory to open in May
Bentley Motors says a limited number of its 4,000-strong workforce will return to work on May 11 before full factory production resumes from May 18. The carmaker says it is putting “robust safety measures” in place.
AVIATION
EasyJet announces expected pre-tax loss of up to £380m
EasyJet has announced that it expects a pre-tax loss of £360m to £380m on a reported basis for the six months to March, citing the grounding of its fleet as a result of the coronavirus pandemic and significant fuel costs. The company also issued £600m of commercial paper through the Bank of England’s COVID corporate financing facility, as well as fully drawing down on its £400m revolving credit facility.
CONSTRUCTION
UK construction stalls as coronavirus takes toll
British housebuilders are seeing construction stall as a result of the coronavirus pandemic, with Barratt Developments announcing that 85% of its staff would be furloughed while executive pay is reduced.
FINANCIAL SERVICES
Ashmore loses a fifth of its assets in first quarter
Coronavirus’ economic effects have seen emerging markets fund manager Ashmore lose over 20% of its assets in the first quarter, with assets under management reaching $76.8bn last month.
BlackRock assets under management tumble below $7tn on market tumult
Assets under management at BlackRock fell to $6.5tn in the first quarter from $7.4tn at the end of 2019, as clients’ portfolios were damaged by the coronavirus crisis.
Schroders’ boss donates bonus to fight coronavirus
Schroders’ chief executive Peter Harrison is to donate his bonus for 2020, and three months’ salary, to coronavirus relief efforts after supporting pay cuts at businesses struggling due to the pandemic.
HEALTHCARE
Red-top alert on Astrazeneca pension move
The voting advisory service of the Investment Association has issued a red-top alert for Astrazeneca, flagging concern over plans to cut CEO Pascal Soriot’s pension award from 30% of his salary to 20% as the rate still sits higher than the average payment to the drugs firm’s employees. Pirc also opposes the pay report but Glass Lewis and ISS have recommended investors vote in favour.
LEISURE AND HOSPITALITY
Carluccio’s administrators see interest
While no buyer has attempted to snap up collapsed chain Carluccio’s, a number of firms have expressed an interest in its sites and other assets. Boparan Restaurant Group, which owns the Giraffe and Ed's Easy Diner brands, is believed to have lodged a bid with the administrators for the brand and a significant number of its restaurants. Boparan is expected to face competition from Three Hills Capital, backer of the Byron burger chain, while Tesco is reportedly looking to acquire several of the Italian restaurant chain’s sites.
MANUFACTURING
Manufacturing areas set to bear economic brunt of COVID-19
Research by the Centre for Progressive Policy think-tank reveals that Midlands manufacturing areas are likely to be worst affected by economic damage from the coronavirus pandemic.
MEDIA AND ENTERTAINMENT
Informa announces measures in response to crisis
Exhibitions operator Informa is seeking to raise up to £1bn through an emergency share placement ahead of what chief executive Stephen Carter called a pandemic “progressively deeper and more far-reaching than initially predicted.” The firm is also abandoning its dividend and embarking on a cost-cutting programme, seeking savings of over £130m.
ECONOMY
Economy losing £2bn a day
Analysis suggests that the coronavirus lockdown has already wiped £50bn off the economy, with the Office for Budget Responsibility (OBR) estimating that the closure of schools, shops, offices and factories is costing Britain £2bn a day. This means that some £50bn has been knocked off GDP in the 25 days since the restrictions were rolled out on March 23. The sum is equivalent to 2.5% of GDP. While the OBR has suggested that economic output could slide 35% in Q2 if the lockdown stretches to three months, the Resolution Foundation think-tank has suggested that the economy could then return to near-normal levels relatively quickly – with GDP down just 3% in the medium-term – while a six-month lockdown could see a slower recovery and add an extra £1.5bn a day to the national debt.
OTHER
Faulty notes go under the hammer
A collection of unique banknotes that feature a range of errors are irregularities that slipped past the Bank of England's quality control are expected to raise £6,000 at auction. Among the 32 notes dating from the 1950s to the 1980s are two £20 notes printed with just the outline of where the Queen's head should be.