HSBC pauses business account applications
HSBC has stopped accepting applications for new business bank accounts as it looks to focus on clearing a backlog of applications for loans for small firms under the Government’s Bounce Back Loan Scheme. Official figures show that lenders have handed out about £38bn under the initiative, with 1.3m businesses handed financial support designed to soften the blow dealt by the coronavirus crisis. HSBC has approved 194,000 bounce back loans, with a total value of nearly £5.9bn. The bank says it is approving a new loan every 20 seconds. It announced yesterday that new small business customers will not be able to open accounts until December 14. An HSBC UK spokesman said: “As one of the only banks that remained open to applications from all UK businesses since the scheme’s launch, we received a huge level of demand. With the scheme closing on November 30, we need to focus our resources on fulfilling existing applications.”
Casino entrepreneur invests in start-up bank
Ruth Parasol, co-founder of Party Gaming, has had a £25m investment in a new bank approved. She is investing in City of London Group, an Aim-listed company which is launching a bank, Recognise. The bank, which will target SMEs, is expected to receive a banking licence in the next few weeks. It will be led by Jason Oakley, former managing director of commercial banking and mortgages at Metro Bank, with Philip Jenks, a former HBOS banker, serving as chairman, and Bryce Glover, former commercial director at Nationwide, set to be deputy chief executive.
Goldman to buy GM's credit card unit
Goldman Sachs is buying General Motors' credit card business in a deal worth around $2.5bn, reportedly outbidding Barclays. GM's credit card issuer Capital One and Goldman are said to have agreed upon the purchase price and expect to finalise the deal within weeks. The acquisition will enhance Goldman's focus on its consumer banking business, an area where it has a smaller presence than rivals JPMorgan Chase and Citigroup.
Credit Agricole eyes Banco BPM tie-up
Credit Agricole is exploring a possible deal to buy Italy's third biggest bank, Banco BPM, having opted against alternative options including mid-sized lender Creval.
Oxford autonomous driving lab opens
The Darwin SatCom Lab in the Harwell Science and Innovation Campus in Oxfordshire, backed by O2 and the European Space Agency, opened yesterday. Renault electric cars fitted with Lidar laser sensors will be used for trials at the centre, with O2 chief operating officer Derek McManus hailing the development as "the next step in getting autonomous vehicles on the road." Minister for science, research and innovation Amanda Solloway commented: "I am incredibly excited that O2’s first of its kind driverless car lab will enable our most innovative businesses to test these technologies.”
BlackRock attacks Volkswagen’s post-Dieselgate governance
Fund manager BlackRock has criticised Volkswagen’s management and supervisory boards, voting against members of both. VW’s fourth-largest shareholder has voiced concern over a lack of independent governance at the automaker.
Cazoo announces successful funding round
Cazoo has raised an additional £240m in its latest funding round. The used car sales platform’s total funding now stands at £450m.
Rolls-Royce launches rescue rights issue
Rolls-Royce has announced plans for a rescue rights issue aimed at raising some £2bn. Chief executive Warren East said that by raising additional capital, the firm “will improve our liquidity headroom and reduce our level of balance sheet leverage, while supporting disciplined execution and investment to ensure we maximise value from our existing capabilities.” This comes as the global reduction in demand for air travel resulting from coronavirus has seen the firm’s “power by the hour” model, under which it is paid for the time its engines are in the air, come under increasing pressure. Banks including BNP Paribas and HSBC are understood to have taken part in the cash call, while Goldman Sachs is advising Rolls-Royce's board.
FCA issues post-Brexit guidance
The Financial Conduct Authority (FCA) has updated its rules ahead of the Brexit transition period coming to an end. While the new rules will apply from January 2021, the City watchdog said it will temporarily waive some of them, meaning businesses can continue to comply with existing requirements for a limited period – although it insisted there are some areas where it would not be appropriate for relief to be granted beyond December this year. Full compliance with updated regulatory obligations is expected by March 31, 2022. Conor Lawlor of UK Finance welcomed the FCA’s flexibility, saying the regulator “acknowledges the scale, complexity and magnitude of some of the changes in relation to key requirements”.
‘Safety trades’ fail to offset stock market’s turbulent September
The MSCI All-Country World index has recorded a fall in global equities of 4% in September, with assets such as gold and US Treasuries failing to provide a hedge.
Bayer details pandemic pressures
Pharmaceutical and life sciences company Bayer has warned that the coronavirus crisis would cause more damage than expected. CEO Werner Baumann said the firm expects the pandemic to “particularly weigh on our crop science business in the second half of 2020 and then throughout fiscal 2021,” noting that the firm’s agricultural business would take a several billion euro writedown of assets. UBS analysts said: “Relative to consensus expectation, the 2021 outlook is €2bn-€3bn lower on sales with the majority of the shortfall coming from crop science.”
Manufacturers leading the way on recovery
Figures from the Chartered Institute of Purchasing and Supply reveal that manufacturing is leading the UK’s economic revival. The latest index - where a score over 50 signals growth - registered 54.1 last month. CIPS director Duncan Brock said manufacturers “made solid progress towards recovery” but also warned that firms had cut jobs for the eighth month in a row. Thomas Dvorak, economist at Oxford Economics, said: “While manufacturing is less contact-intensive than the service sector, a further deterioration of the health situation and an increase in uncertainty could sharply curtail demand, while re-imposed restrictions could disrupt supply chains again.”
MEDIA AND ENTERTAINMENT
Google pledges $1bn to pay for news
News publishers are to receive around $1bn over the next three years as Google rolls out its Google News Showcase in Germany and Brazil initially.
Warehouse rentals hit record in Q3
A record amount of warehouse space was let in Q3, with take-up hitting 13.3m sq ft in the July through September quarter. The increase was driven by online retailers looking to expand capacity as demand surged amid the coronavirus pandemic.
Halfords profits expected to be higher than predicted
Halfords has reported surging profits after a leap in demand for bicycles amid the COVID-19 pandemic. Group like-for-like sales rose 22% year on year in the five weeks to September 25, with cycling product sales jumping 46%. The company now expects first-half pre-tax profit to be more than £55m, up from the £35m-£40m it previously guided for.
H&M to close 250 stores as leases come up
H&M is planning to close about 250 stores in 2021, having already closed 50 this year, as the coronavirus crisis sends more of its customers online. The Swedish retailer’s lease agreements are structured so that it can renegotiate or exit one quarter of its leases in any given year. The announcement came alongside its third-quarter report, which revealed pre-tax profit fell to £205.31m.
BCC survey points to ‘exceptionally weak’ economic conditions
The British Chambers of Commerce (BCC) says more British companies saw a fall in sales in the last quarter than experienced an increase. The BCC's quarterly economic survey found that 46% of firms saw sales fall in Q3, an improvement on the 73% who reported a decline in Q2, while just 27% of the businesses surveyed reported higher sales than three months earlier. The poll saw 41% of the 6,410 businesses surveyed say they expect sales to improve over the next 12 months, compared with 35% who foresee a decline. It was also found that while 45% of businesses have seen a dip in cashflow, among the smallest firms, the rate hit 51%. Commenting on the findings, BCC economist Suren Thiru said: “Economic conditions remained exceptionally weak in the third quarter”.
GDP expected to contract
S&P Global has predicted the UK economy will contract by 9.7% in 2020 before seeing a rebound next year. It said the economy was on course to grow by 15% in Q3 2020 adding that it could rebound by as much as 7.9% in 2021. The firm also suggested that the economy may not return to pre-coronavirus levels until at least 2024. S&P Global Ratings’ senior economist Boris Glass said that while initial signs of a rebound have been promising, “many hurdles are ahead on the path to recovery”.