Banks fear bad debt as demand for loans rises
A Bank of England (BoE) survey suggests demand for loans is set to increase at a time when banks start to slow down lending and prepare for a wave of bad debts. Lenders told the BoE’s Credit Conditions Survey the availability of mortgages and unsecured debt is likely to decrease in the coming weeks, with concerns over borrowers' ability to repay. The poll saw banks and building societies flag worries over customers who have opted for payment freezes on mortgages, credit cards and other loans, with lenders seemingly concerned that customers will have to restart payments in a period when jobs are increasingly at risk as the furlough scheme stars to wind down. It is noted that the Q2 survey was conducted before Chancellor Rishi Sunak announced a temporary stamp duty cut that has since seen signs of low-deposit mortgage lending making a comeback.
Watchdog sets out cash access guidance
The Financial Conduct Authority (FCA) has issued guidance saying cash machine and bank branch closures must be reported 12 weeks in advance. Lenders will also have to consider alternatives so communities can continue having access to cash, with concerns that many ATMs and banking facilities are being lost because of the coronavirus crisis. More than 3,500 branches have closed over the past five years, with this accelerated as banks look to cut down costs during the pandemic. Under the guidance drafted by the FCA, banks also have to consider opening shared hubs, where several banks will use the same space, or mobile branches that can send bank managers to remote locations. HSBC has 13 branches yet to reopen out of its total network of about 600, while of Santander’s 565 branches, 84 closed during the pandemic and only 29 have reopened, while 88 of 883 Barclays branches are still closed.
RBS to rebrand as NatWest Group
Royal Bank of Scotland has confirmed it will formally change its name to NatWest Group on July 22, moving away from a brand that was tarnished by a £45.5bn state bailout in 2008. Bank branches will continue to trade as RBS but investors and advisers will now know the listed entity as NatWest Group. CEO Alison Rose unveiled the name change in February and chairman Howard Davies explained: “We have exited a lot of the international businesses which were not profitable. That was branded RBS and that's gone”. “It really makes no sense for us to continue to be called RBS. It was designed for a global group of brands, which we no longer are," he added.
Monzo revamps Plus account
Monzo has relaunched and revamped its packaged premium 'Plus' bank account. The account, which costs £5 per month, offers customers the opportunity to earn 1% interest on balances up to £2,000. For the first time, Monzo Plus customers will be able to view and move money from different bank and credit card accounts in the Monzo app - including HSBC, Barclays, Lloyds and Nationwide.
40% of Lloyds staff prefer home working
Two-fifths of Lloyds staff do not want to go back to the office, according to the banking group's largest trade union, BTU. With 5,000 of the 45,000 Lloyds staff currently working from home, 40% said they would like to do so full time, while half would work away from the office for two to three days a week if able.
BofA profit halves
Profit halved in the second quarter for Bank of America as it set aside $5bn against future loan losses. Net income applicable to common shareholders fell to $3.28bn for Q2 from $7.11bn a year earlier. Net income for the bank's global markets unit rose 81% to $1.9bn, while its net interest income fell 11% to $10.8bn. Revenue, net of interest expense, fell 3% to $22.3bn. Consumer banking net income dropped to $71m from $3.29bn a year earlier, while global wealth and investment management income fell more than 40%. Elsewhere, quarterly profits rose at Morgan Stanley, boosted by a surge in trading and investment banking. The Wall Street Bank posted net income of $3.2bn for the quarter, versus the $2.2bn earned a year earlier. Revenues were a record $13.4bn, up 31% year-on-year.
ECB leaves interest rates on hold
Interest rates have been left on hold by the ECB at its key deposit rate at minus 0.5%. The central bank will continue its purchases under the pandemic emergency purchase programme (PEPP) with a total allowance of €1.35trn (£1.2trn).
BMW agrees €2bn battery cell contract with Northvolt
BMW has agreed a €2bn battery cell contract with Northvolt in a bid to secure supplies for its upcoming electric models.
Gresham House grows AUM
Gresham House recorded a £467m increase in AUM in the first half of the year. The investment firm’s AUM grew 17% to £3.3bn over the six months to 30 June 2020, of which £283m was organic growth. The group said the figure was “at least in line with market expectations”. The specialist alternative asset management firm’s real assets business contributed the bulk of growth during the period, adding £360m through net flows, performance and funds acquired.
Wirecard boss’ secret £32m loan
It has been revealed that former Wirecard boss Markus Braun borrowed nearly £32m from the payments firm just months before it collapsed. He received the personal loan from the company's banking arm in January, with Wirecard's group supervisory board initially unaware. Mr Braun is reported to have asked for the loan from Wirecard Bank as part of his efforts to refinance a separate £136m personal loan from Deutsche Bank. His lawyer said the loan was repaid in March.
LEISURE AND HOSPITALITY
Pub sales down 40%
Pubs and restaurants that have reopened as lockdown measures were eased have yet to see a surge in sales. Pubs open in the week beginning July 6 posted a 39% decline in sales compared with the same period last year, while bars were down 43% and restaurants declined 40%, a tracker from consultancy CGA shows. Considering the sales figures, CGA director Karl Chessell said: “Trading at almost 60% of pre-coronavirus norms is actually a better performance than many other markets internationally.” The analysis also shows that 70% of pubs or pub restaurants surveyed had reopened their doors, compared with 42% of bars and 17% of restaurants.
Pizza Express mulls CVA
Pizza Express is to close up to 75 of its restaurants as part of a rescue plan. The restaurant chain is reportedly lining up a CVA, while investment firm Hony Capital may lose control of Pizza Express to bondholders under a debt-for-equity swap. Meanwhile, Azzurri, which owns the Ask Italian and Zizzi restaurant chains, is in advanced talks over a sale to Towerbrook Capital Partners via a pre-pack administration.
GVC CEO to leave role
Kenny Alexander, CEO of GVC Holdings, is to leave the Ladbrokes Coral owner. Mr Alexander, who will be replaced by chief operating officer Shay Segev, spent 13 years at the helm of GVC, during which time he turned it into one of the world’s largest gambling companies.
Heineken set for loss as it cuts value of assets by €550m
Heineken has said it expects a net loss of about €300m in the second quarter — down from a net profit of €1bn a year earlier as it cut the value of its assets by €550m amid the COVID-19 pandemic.
MEDIA AND ENTERTAINMENT
Vodafone wants 5G auction scrapped
Vodafone has urged the Government to cancel the forthcoming telecoms spectrum auction following a decision to phase out Huawei from the UK’s 5G market. The company believes radio frequencies for 5G mobile services should instead be evenly distributed for a set price. The auction had been scheduled to start in the spring but was delayed because of the coronavirus. It is now expected at some point in the next year.
Tech to keep London jobs market moving
Hays expects the tech industry to help keep the London jobs market moving. The recruiter’s Paul Venables said that companies were still on the hunt for digital roles, and had begun pressing ahead with job searches put on ice in March. Hays saw group quarterly incomes from fees slump 34%, with the UK down 42%, hit by a longer lockdown than most nations. Its London income fell 37%.
New development planned for Canary Wharf
Plans for a large new development in London’s financial district have been lodged by Canary Wharf Group. The property firm, owned by Canada’s Brookfield, and Qatar Investment Authority, wants to create a new scheme at North Quay, Canary Wharf. The planned project, up to eight buildings potentially and next to the new Crossrail station, would have mostly office space, as well as some 700 apartments.
Boohoo accused of turning a blind eye to factory issues
Boohoo has been accused of turning a blind eye to problems in its supply chain, with Philip Dunne, chairman of the House of Commons environmental audit committee, disputing claims the fashion retailer was not aware of potentially illegal working practices at factories where staff were allegedly paid as little as £3.50 per hour. Writing to the firm’s founders, Mr Dunne said: “'It is shameful that it took a pandemic and the ensuing outrage about working practices in their supply chain for Boohoo finally to be taken to task for turning a blind eye.”
Payrolls shrink by 649k jobs in lockdown
Official figures indicate that the number of workers on UK company payrolls fell by 649,000 between March and June. The overall jobless rate was unchanged but there are 47,000 more young people unemployed than there were a year ago. Unemployment has not surged amid the COVID-19 crisis, as many feared, because large numbers of firms have put employees on the government-backed furlough scheme. Economists say the full effect of the pandemic on employment will not be felt until the scheme ends in October. The Office for National Statistics (ONS) said that, since the start of the pandemic, total weekly hours worked in the UK had fallen by a record 175.3m, or 16.7%, to 877.1m hours. Job vacancies fell to 333,000 between April and June – almost two-thirds lower than in the same period last year and the lowest level since the ONS began collecting comparable data in 2001.
UK to raise £530bn debt
The Government is set to raise more than £500bn in debt this year, with the Debt Management Office planning to sell Government bonds worth £385bn between April and November. This marks an increase on the £275bn it had previously pencilled in for April to August. If it raises money at the same rate through to the end of the financial year, it will have issued around £530bn over the 12-month period. The previous annual record for gilt sales was £227.6bn in 2009/10.