Fintech start-ups criticise pandemic support
A report from the Digital Finance Forum highlights dissatisfaction with support measures rolled out during the coronavirus pandemic, with just 25% of fintech start-ups saying the Government has done enough to support digital banking businesses. The poll saw 67% of executives say their views are not properly heard by policymakers and regulators, while 90% believe the pandemic has made it harder to raise funding in the next year. The report found that some executives feel Government-backed lending schemes “were unduly tailored to banks,” with banking start-ups an “afterthought.” The Telegraph notes the strain put on digital banks by the COVID-19 crisis, with Monzo saying the pandemic had caused "material uncertainties" about its operations.
Activist investor vows to push Barclays
Activist investor Sherborne has reiterated it is committed to pushing for change at Barclays, saying it intends to “continue its dialogue with Barclays for as long as it appears to be appropriate to do so”. The investment firm, which is run by Edward Bramson and holds a 6% stake in the bank, has been pushing Barclays to cut parts of its investment bank, saying they are weak and dragging down the performance of its consumer lending divisions. In a letter to investors earlier this month, Mr Bramson said the argument for shrinking Barclays’ trading division remains, while Sherborne yesterday said its proposals “could increase Barclays’ financial strength and its long-term competitive position, leading to an increase in shareholder value”. The Times notes that Mr Bramson, who earlier this year criticised Barclays’ corporate governance, picks companies he believes are undervalued because they have the wrong strategy, with F&C Asset Management and Electra Private Equity among previous targets.
Javid role prompts debate
Considering the news that former Chancellor Sajid Javid has been appointment as an adviser to JPMorgan, both the FT’s Matthew Vincent and Guardian’s Simon Jenkins consider the links between politics and the banking sector and question whether close ties are appropriate.
A clue in the name
Matthew Vincent looks at Banking Competition Remedies’ grants designed to facilitate the commercialisation of fintech, describing the names of recipients Onfido, Codat, Previse and ezbob as “utterly daft”.
Central banks reduce dollar lending
The European Central Bank, Bank of England, Bank of Japan and Swiss National Bank have reduced the US dollar liquidity they offer via emergency swap lines with the Federal Reserve.
Car sales accelerate
Car dealerships have reported a jump in new and used vehicle sales, with Lookers seeing sales across new and used cars up 17% year-on-year in July. The firm said revenues fell by £1bn in the first half of the year, marking a 38% dip. Vertu said new car sales rose by 18% on the year in July, while second-hand sales were up 14%. Vertu made an adjusted profit before tax of £7.4m in July, having posted a £5.2m loss from March to June. Meanwhile, a survey by Close Brothers Motor Finance shows that 95% of UK car dealers are confident their business will survive the impact of the coronavirus pandemic.
Lookers’ accounting probe extended
Car dealer Lookers has extended an investigation into its accounts and delayed its annual results. It previously warned of a potential £19m hit to its accounts to correct overstatements of profits dating back several years and its shares have been suspended since July because of the uncertainty caused. Lookers yesterday said investigations have now spread to the company’s corporate leasing and vehicle financing operations.
Qantas posts huge loss amid low demand
Qantas has reported a A$2.7bn (£1.4bn) pre-tax loss, most of which is due to the costs of mothballing 100 aircraft and redundancy payouts following a “near-total collapse” in demand due to the COVID-19 pandemic, which took a $4bn bite out of revenue in the first half of the year. Qantas boss Alan Joyce does not expect international travel to and from Australia to restart until mid-2021.
Coronavirus eats into John Laing profits
Profits at John Laing fell in the first half. The negative impact of coronavirus, along with poor renewable energy performance, took the infrastructure investor and manager's total return down 6% in the six months to June 30.
Eurex's slow start leaves London well ahead
Deutsche Boerse’s Eurex Clearing's euro clearing division has grown less quickly than expected, leaving London as king of the clearing industry for the foreseeable future. Eurex accounted for €19tn (£17tn) of the €100tn notional outstanding value in euro interest rate derivatives and forward contracts. London's LCH made up the rest.
FCA urged to probe insurer
Which? has asked the Financial Ombudsman and Financial Conduct Authority to investigate wedding insurance firm UK General Insurance, saying it “acted in bad faith” to deny payouts to people whose weddings were cancelled due to coronavirus-related restrictions. The firm, which is backed by insurer Great Lakes and is the underwriter for wedding insurance at Debenhams and Dreamsavers, had advised policyholders that they would get a pay-out but these were later withheld.
Woodford investors to share £183m capital return
Investors in the failed Woodford Equity Income fund will be recompensed as part of a £183m payout “on or around August 26.” The payout adds to the £142m paid in March and the £2.1bn in January, meaning investors have received around £2.4bn of their money back from Link Fund Solutions, which has overseen the suspension and liquidation of the fund.
LEISURE AND HOSPITALITY
Cruise ship operator Genting Hong Kong halts payments on debts
The coronavirus-prompted recession has taken down Genting Hong Kong, which was formerly known as Star Cruises. The Hong Kong-listed cruise ship operator has stopped payments on its $3.4bn debt pile.
Frasers calls for business rates rethink
Mike Ashley's Frasers yesterday reported a 20% drop in annual profits, with pre-tax profit at £143.5m for the year ending April 26, while revenues rose 7% to almost £4bn. The retail group said 2020 will be remembered as the most challenging year in its history, but estimated that profits will increase by up to 30% this year despite disruption brought about by the coronavirus crisis. Announcing the results, Frasers’ CFO Chris Wootton called for reform of business rates, saying store closures are likely when the business rates holiday comes to an end.
PE firms eye Asda
Former Asda CEO Paul Mason is fronting an approach for the supermarket with Lone Star, while Rob Templeman, the former chief executive of Debenhams, is advising rival private equity firm Apollo Global Management on a bid. The two firms are believed to frontrunners in the race to secure a share of Asda as owner Walmart looks to reduce its stake, with KKR, Carlyle, CVC and Clayton, Dubilier & Rice not expected to take part in the second round of bids despite previous interest in the chain. TDR Capital, another private equity firm, is said to be considering a bid.
ONS: Furlough numbers fall while footfall increases
Office for National Statistics (ONS) figures show that shops and restaurants have seen an increase in visitors, with footfall last week at its highest level since March. However, the number is still well below where it would be expected to be if the coronavirus crisis had not occurred, with the number of people visiting retail areas 32% down on that seen a year ago. The ONS report shows that firms remain concerned about the future, with 10% saying they are at a “moderate” risk of insolvency and 1% saying the risk is “severe”. While 4% of companies have less than six months' worth of cash reserves, 1% have none. Separate ONS data shows that 12% of the UK workforce was on furlough leave in the two weeks to August 9, down from 14% in the fortnight to July 26 and half the number recorded two months earlier. The analysis shows that the total number on workers on the coronavirus job retention scheme has fallen by more than 60% since its peak. ONS figures also show that the number of online job adverts slipped in the two weeks to August 14, falling from 62% of the 2019 average to 58%.
UK firms leading lockdown recovery
A report from Bank of Scotland shows that UK business are outperforming their international peers as industries start to recover from the impact of COVID-19. The Recovery Tracker, produced along with IHS Markit, analysed purchasing managers’ index (PMI) data and found global PMI rose to 50.8 in July from 47.8 in June on a scale where a reading above 50 denotes rising output, with increased output across both the manufacturing and service sectors. It was found that UK businesses saw output increase faster than the global benchmark in all but two of the 14 sectors monitored. The UK’s composite index reached 57 in July, compared with 54.9 within the eurozone and 50.3 in the US. Jeavon Lolay, head of economics and market insight at Lloyds Bank‘s commercial banking unit, said the index “paints an encouraging early picture for a number of domestic industries”, but notes a “major caveat” in that output is rising from an extremely low base.