Banks refund £47m
The Competition and Markets Authority (CMA) says banks in breach of overdraft rules have refunded £47m to customers over the past two years. The regulator revealed the NatWest owner Royal Bank of Scotland did not send accurate warnings to account holders between February 2018 and December 2019 and will repay any overdraft charges incurred, plus 8% interest - about £2.2m in total, while Santander has set aside £17m to refund customers for repeated breaches of overdraft rules. Metro Bank had to refund £11m to customers, while HSBC paid back £8m and Nationwide handed £7m back to account holders. Andrea Coscelli, of the CMA, said: “While these breaches are disappointing – and may have been preventable had the CMA been able to issue serious financial penalties – our action has put a total of more than £47m back into people’s pockets.” Responsibility for overdraft rules has now passed to the Financial Conduct Authority, which has the ability to fine banks for failings.
Mortgage rates hit ‘extraordinary low’
The Telegraph looks at how banks are attempting entice customers back to the market by offering mortgage deals with interest rates below 1.5%. The mortgage market seized up at the start of the coronavirus outbreak as the number of people seeking new loans dwindled. However, the paper notes that some banks have started offering loans to customers with smaller deposits. Clydesdale Bank, Virgin Money and Yorkshire Building Society, for example, have now relaunched loans for borrowers with a 10% deposit. For borrowers with bigger deposits, many lenders have reduced mortgage rates to below 1.5%. “The mortgage market is over-supplied and consequently highly competitive in terms of pricing. With purchase transactions likely to be 500,000 or so fewer this year, expect lenders to compete hard for the business that is out there,” commented Mark Harris of SPF Private Clients, a mortgage broker. Meanwhile, Melissa Lawford in the Telegraph speculates whether homebuyers could soon be “paid” to take out mortgages, as the Bank of England is reportedly considering a negative official interest rate for the first time in British history.
Draper Esprit portfolio companies to benefit from pandemic
With cloud and automation technology becoming more popular as a result of the coronavirus pandemic, Draper Esprit has said much of its portfolio is “well positioned” to benefit from the crisis. The firm did however lower growth forecasts for this year and next year for those portfolio companies negatively affected by the pandemic.
Judge orders banks to face currency rigging lawsuit
A judge in the US has ruled that institutional investors, including BlackRock and Allianz SE's Pacific Investment Management, can pursue much of their lawsuit accusing 15 major banks of rigging prices in the $6.6trn-a-day foreign exchange market. District Judge Lorna Schofield said plaintiffs including many mutual funds and exchange-traded funds plausibly alleged that the banks conspired to rig currency benchmarks from 2003 to 2013 and profit at their expense. The banks, which sometimes controlled more than 90% of the market, included Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JPMorgan Chase, Morgan Stanley, Royal Bank of Canada, Royal Bank of Scotland, Societe Generale, Standard Chartered and UBS.
CIBC lost C$88.2m in a day
Canadian Imperial Bank of Commerce (CIBC) took a trading loss of C$88.2m in a single day in March due to volatility in the gold market. The March 24 loss, which CIBC said was "mostly attributable to our precious metals trading business", was revealed in a Q2 earnings report.
Nissan closes Spanish plant as it focuses Europe operations in UK
Nissan’s decision to focus European production at its UK plant in Sunderland has seen protests launched by workers in Barcelona. Spanish foreign minister Arancha Gonzalez Laya said of the manufacturer’s announcement that its Spanish plant would shut: "We regret this decision ... despite the enormous efforts by the government to keep the business going." This comes as Nissan posted annual results revealing a net loss of 671bn yen (£5.1bn), with revenues down nearly 15% at 9.9trn yen.
EasyJet job losses likely
As many as 4,500 of easyJet’s 15,000-member workforce could lose their jobs as the firm attempts to save costs in the wake of the coronavirus pandemic. Chief executive Johan Lundgren remarked: “We realise these are very difficult times and we are having to consider very difficult decisions which will impact our people – but we want to protect as many jobs as we can for the long term.” The British Airline Pilots’ Association general secretary, Brian Strutton, commented: “EasyJet staff will be shocked at the scale of this announcement and only two days ago staff got a ‘good news’ message from their boss with no mention of job losses, so this is a real kick in the teeth. Those staff have taken pay cuts to keep the airline afloat and this is the treatment they get in return.”
Losses of £270m reported by Norwegian Air
Norwegian Air has posted a pre-tax loss of 3.28bn kroner (£270m) for the first quarter, compared to a 1.98bn kroner loss for the year earlier period, as the coronavirus pandemic saw most of its fleet grounded. Jacob Schram, chief executive, said: "Our goal is to ensure that Norwegian has a strong position in the future airline industry with a clear direction and strategy. As soon as the world returns to normalcy, we will be prepared to return with improved service to our customers."
Insurance brokers could face legal action from businesses over pandemic
Hotels, pubs, dentists and other businesses could launch legal action against City brokers for failing to advise them correctly if insurers such as Hiscox, Aviva and QBE refuse to compensate them for profits lost during the coronavirus pandemic, according to lawyers. Ravi Nayer, a partner at Brown Rudnick, remarked: "There is every chance that certain brokers with large exposures on certain policies might also face significant claims," while Bruce Hepburn of advisory firm Mactavish noted: "Much insurance related litigation is a three-cornered fight amongst brokers, insurers and policyholders and it would be surprising if this were any different.”
GSK seeking to expand vaccine capacity
GlaxoSmithKline has announced that it is in talks with Governments to support an expansion of its manufacturing capacity that would help to scale up production of future coronavirus vaccines. GSK global vaccines president, Roger Connor, stated: “We believe that more than one vaccine will be needed to address this global pandemic and we are working with partners around the world to do so.” This follows the US last week securing nearly one third of the first 1bn doses planned for an experimental vaccine from AstraZeneca.
LEISURE AND HOSPITALITY
End to quarantine called for by travel sector executives
The government is being urged to abandon a planned 14-day quarantine for foreign visitors, with more than 70 heads of travel companies signing a letter to Home Secretary Priti Patel on the issue. It states: “The very last thing the travel industry needs is a mandatory quarantine imposed on all arriving passengers which will deter foreign visitors from coming here, deter UK visitors from travelling abroad, and most likely cause other countries to impose reciprocal quarantine requirements on British visitors.”
Cineworld announces July reopening plans
Cineworld has announced $110m (£90m) in funding from lenders, with shares in the chain up nearly 25% as it said it hoped to reopen cinemas by July. The firm is also applying for a $45m loan through the government’s CLBILS programme and expects a further $25m through the CARES act in the US.
Quarter of manufacturers planning to cut jobs
A survey of 224 companies by manufacturing trade body Make UK shows that a quarter of UK manufacturers plan to cut jobs over the next six months, while less than a third ruled out any reduction in staff numbers. Of those planning to cut jobs, more than a quarter believe they will have to let half of their staff go and almost a third are planning to cut up to a quarter of the workforce. Stephen Phipson, chief executive of Make UK, said: “These figures make for awful reading with the impact on jobs and livelihoods across the UK.”
MEDIA AND ENTERTAINMENT
DMGT reports fall in print advertising revenues
Daily Mail & and General Trust has reported that print advertising revenues for its portfolio of titles fell 70% in April and May, with circulation revenues down 17%, total advertising revenue down 46%, print ads down 69% and digital advertising 16%.
Monsoon Accessorize on the brink
Monsoon Accessorize is expected to file a notice of intention to appoint administrators, in a move that would put 3,500 retail jobs at risk. Peter Simon, the retailer’s founder, is thought to be considering another rescue deal despite pumping £12m into the business last year. The chain is in talks with landlords to secure a rent holiday until business is more stable again.
Premier League agrees June 17 kick off
The Premier League is set to resume on 17 June, subject to government consent, three months after it was forced into hiatus by the COVID 19 pandemic. Clubs agreed the date at a shareholders’ meeting yesterday, although it remains provisional: the league must wait for, and then implement, government guidance on staging matches safely behind closed doors before any plans can be completed.
Vacancies fall almost 60%
Job vacancies in the UK are down nearly 60% this month as the coronavirus crisis saw the fastest rise in unemployment in over 70 years. Figures released by the Office for National Statistics and job search engine Adzuna revealed that vacancies fell from 820,000 at the beginning of April to 373,000 in May. Low-income workers have been hardest hit by the crisis, with 64% of job losses hitting workers earning between £15,000 and £25,000.
BoE policymaker: Economy may struggle to recover
Bank of England policymaker Michael Saunders has warned that Britain’s economy is unlikely to recover fully from the “searing experience” of the coronavirus over the next two to three years. He warned: “If unchecked, there are risks of a vicious circle, whereby the economy gets stuck in a self-feeding loop of weak activity, pessimistic expectations and low investment.”
Business optimism remains low
The Lloyds Bank Commercial Banking Business Barometer shows that overall business confidence fell by a further percentage point to -33 in May, while economic optimism fell to -42%, the lowest since January 2009. Elsewhere, the Bank of Scotland’s Business Barometer shows that business confidence in Scotland rose 17 points during May to -33%. Despite the increase, optimism remains close to record lows.