BANKING
Loan schemes extended
The Treasury has announced extensions of its business loan guarantee schemes until the end of March. The new round of funding from the Treasury covers the Coronavirus Business Interruption Loan Scheme, the Bounce-Back Loans Scheme and the Coronavirus Large Business Interruption Loan Scheme. Bounce-back loans carry a full guarantee from the Government for up to £50,000, while the other schemes have a guarantee that covers banks for about 80% of the value of the loan. Rain Newton-Smith, chief economist at the Confederation of British Industry, said that “with cashflow difficulties still at the forefront of the minds of many business owners, continued access to Government-backed loans through to spring will bring great comfort.”
SARs increase as pandemic fuels fraud
Some 33,000 suspicious activity reports (SARs) linked to the coronavirus pandemic have been filed this year, suggesting government schemes designed to help people and businesses through the pandemic are open to abuse. City AM highlights that fraud has “rocketed during lockdown”, with UK Finance data showing that impersonation frauds almost doubled during the pandemic, with criminals acquiring around £208m from fake government loan forms, phishing emails and bogus websites. More than 15,000 impersonation scams were reported in the first half of 2020, an 84% increase compared to the same period last year. Investment scams were up 9% during lockdown, with criminals taking £55.2m by duping investors through cloned websites impersonating regulated firms.
NatWest relaunches 10% deposit deals
NatWest has launched four new 90% loan-to-value mortgages, having pulled similar products earlier this year due to the economic effects of the pandemic. The four new products offer two and five-year fixed rates and are open to both first-time buyers and home movers. They are being offered under the NatWest and Royal Bank of Scotland brands. NatWest said customers who took advantage of the Government's mortgage payment holiday are able apply for one of the new loans if the breaks have concluded and at least one full monthly payment has been made. NatWest stopped offering mortgages to new customers at more than 80% LTV in April, but relaunched its 85% products in July.
PRIVATE EQUITY
Blackstone eyes Signature Aviation
Blackstone has made a £3bn offer for private jet services group Signature Aviation. Blackstone offered to pay 383p per share, a 42% premium to the price before the offer was revealed. Signature says it has rejected a rival approach at a lower price from Global Infrastructure Partners.
INTERNATIONAL
Credit Suisse charged in money laundering case
The Swiss attorney general’s office has filed an indictment against Credit Suisse, alleging that it failed to do enough to stop money laundering linked to drug trafficking by a Bulgarian criminal organisation. An indictment put before Switzerland’s Federal Criminal Court claims the bank processed more than SFr140m of transactions for the group. Credit Suisse acknowledged the case "with astonishment", "unreservedly" rejecting the allegations and vowing to defend itself “vigorously”.
Citigroup to offer new employee perks
Citigroup employees are to be offered the ability to take a 12-week sabbatical as part of a range of new employee perks in the wake of the coronavirus pandemic. Staff will also be able to buy as many as five extra holiday days annually starting next year.
CONSTRUCTION
Construction suppliers fined by CMA
The Competition and Markets Authority (CMA) has fined Vp and MGF over £11.2m and £3.7m respectively. The CMA said the firms, which supply groundworks products to construction firms, colluded for two years to reduce competition and maintain or increase prices, including sharing information on future pricing.
FINANCIAL SERVICES
FCA criticised over LCF
An independent investigation has criticised the Financial Conduct Authority (FCA) over its regulation of collapsed London Capital & Finance (LCF), saying the City watchdog did not effectively supervise and regulate the mini-bond firm. The investigation, which was led by former judge Dame Elizabeth Gloster, found “significant gaps and weaknesses” in the FCA’s policies and practices. It found that the FCA’s approach to its regulatory perimeter “was unduly limited”, saying this enabled LCF to “use its authorised status to promote risky, and potentially fraudulent, non-regulated investment products.” The report adds that responsibility for the failure in the FCA’s approach to its perimeter rests with the Executive Committee and former FCA boss Andrew Bailey, who is now Governor of the Bank of England. Treasury Select Committee chairman Mel Stride said the report “exposes a litany of failings at the FCA.” Charles Randall, chair of the FCA, said the watchdog is “profoundly sorry for the mistakes.”
Lloyd’s of London to end investment in thermal coal-fired power plants
Lloyd’s of London has announced it is ending investment in thermal coal-fired power plants, thermal coal mines, oil sands and new Arctic energy exploration activities as part of the market’s first ESG strategy. Managing agents in the market will also be asked not to provide new insurance cover for thermal coal-fired power plants, thermal coal mines, oil sands, or new Arctic energy exploration activities from January 2022, with the target date for phasing out the renewal of existing insurance cover for these types of businesses set to January 2030.
LSE Europe’s most active market
The LSE has retained its title as Europe’s most active market this year. LSE proceeds have accounted for almost a third of total European proceeds in 2020. So far there have been 26 London IPOs this year, which is in line with 2019’s 27. With a small number of IPOs still due to complete in December, 2020 is likely to outperform 2019. Financials and industrials were the largest sectors for London in 2020, respectively raising almost £2.7bn from 11 IPOs and £2.6bn from 6 IPOs year-to-date.
Tide to release payroll service
Tide is to release its first payroll service via its banking app in early 2021. Tide Payroll will be HMRC compliant and will allow SMEs to conduct their payroll from within their Tide account with an all-in-one payroll service that will allow users to run payroll and pay employees through Tide. Members will also be able to process salary payments directly from their Tide account.
LEISURE AND HOSPITALITY
Losses widen for Revolution Bars
Revolution Bars has posted a £31.7m pre-tax loss for the year to the end of June, compared with a £5.6m loss during the same period last year. Revenues declined by almost a third to £110m. The bar chain criticised restrictions imposed on the industry, adding that the Government was "deliberately" sacrificing businesses. CEO Rob Pitcher said: “The recent grants of £1,000 per pub as compensation for being deprived of our most important trading period is derisory and insulting, and underlines a complete lack of understanding of the costs associated with businesses of this nature."
MANUFACTURING
Jet boost for economy
Lockheed Martin’s F-35 fighter jet will generate economic benefits of more than £40bn by 2038, mostly through its supply chain, according to a report which also notes that the programme will support 20,000 British jobs a year.
MEDIA AND ENTERTAINMENT
Facebook and Twitter scrap changes designed to stop spread of misinformation
Facebook and Twitter have scrapped changes made to their services that were aimed at stopping the spread of misinformation online. Facebook has stopped amplifying accurate news sources on its social network, a policy it introduced following the US election. Twitter has also undone a major change it made around the time of the US election when it made it more difficult for its users to retweet posts published by other people.
TalkTalk deal agreed
TalkTalk has agreed a £1.1bn deal with shareholder Toscafund and private equity firm Penta that will take the broadband supplier private. Under the offer, TalkTalk shareholders will receive 97p per share, a 16% premium on shares as of October 7, when the offer was first made. CMC Markets’ Michael Hewson said that the deal would hopefully give Talktalk the “necessary firepower” to compete with bigger players.
WPP plans tech acquisitions to ignite earnings growth
WPP has said it expects to spend £200m to £400m a year on acquisitions in high-growth areas, with the goal of expanding the advertising group’s ecommerce and marketing technology business.
Google’s AI unit DeepMind swallows £1.6bn as losses continue
The latest accounts of Google’s AI unit DeepMind show it lost half a billion pounds last year, a similar figure to 2018, and its parent company Alphabet wrote off a further £1.1bn in debt.
PROFESSIONAL SERVICES
Serco on course for profit increase
Serco has said it was on course for a 35% increase in profit this year thanks to its role in supplying key government coronavirus programmes. The outsourcer said that profit would come in at £160m-£165m for the year, while revenue is also set to increase 19% to £3.9bn. Serco also confirmed that it would pay back all the money it had received through the furlough scheme, as well as making a one-off extra payment to its 50,000 staff. In combination, it said, these payouts will amount to £8m, or 5% of its 2020 profit.
RETAIL
Pandemic bites into food firm’s profits
Upper Crust owner SSP said profit plummeted from £197.2m in 2019 to a loss of £425.8m in the year ended September 30 as the impact of coronavirus restrictions hurt sales. The travel food operator reported a 47.9% drop in revenue to £1.43bn with like-for-like sales down 50.8% due to the closure of most global travel markets since March. The company said sales had sunk 93% in the third quarter but had begun to recover as passenger numbers increased over the summer. By the end of September sales were 76% lower than last year. Sales in the first quarter are expected to be around 80% lower than 2019 levels.
ECONOMY
BoE holds interest rates at 0.1%
The Bank of England (BoE) has kept interest rates at the lowest levels on record, with its monetary policy committee voting unanimously to keep the official interest rate at 0.1%. The committee also opted to keep the Bank’s quantitative easing bond-buying programme unchanged at £895bn, having pumped an additional £150bn into the economy last month. The BoE says it expects GDP to be down by 11% over 2020, with pandemic-driven lockdowns and restrictions delivering a decline in Q4, although a projected increase of 2.1% in Q1 2021 is set to avert a double-dip recession. The committee said the development of coronavirus vaccines was "likely to reduce the downside risks to the economic outlook" but warned that if no post-Brexit trade deal is agreed with the EU, “inflation would be likely to be higher and GDP growth weaker” than projections made in November. Meanwhile, economic output grew by 0.4% in October, the Bank revealed, but it still remained around 8% lower than at the end of 2019.
Inflation expectations on the up
A YouGov poll for Citi shows that people expect average inflation in the UK over the next 12 months to hit 3.8%. The figure, which is up from 3.3% in November, is the highest since 2011. The poll of 2,020 people shows that expectations for inflation over a five- to 10-year period held steady at 3.4%. Citi economists said: “Despite recent moderation, inflation expectations remain relatively high.”