BANKING
BBB under pressure to reform after CBILS bungles
The role of the British Business Bank (BBB) should be reviewed after the coronavirus crisis with Tory MP Kevin Hollinrake saying its shortcomings had been exposed through its handling of the Coronavirus Business Interruption Loan Scheme (CBILS). Christian Faes, chairman of the Digital Finance Forum and co-founder of LendInvest, also said a review of the BBB’s role would be “a very sensible idea”. The pace of lending through the CBILS scheme also came under fire from the British Chambers of Commerce while Barclays was questioned by MPs over its application process. Separately, Allied Irish Bank in the UK, the Co-operative Bank and Starling Bank have joined the list of lenders accredited by the British Business Bank to lend under the Bounce Bank Scheme.
Banks can withstand £80bn in losses, governor says
Bank of England governor Andrew Bailey has said he urged banks nearly every day to increase lending to businesses and individuals struggling with the coronavirus crisis, asserting that credit “is the best way to actually prevent a more adverse outcome which could affect them more.” An assessment by the Bank's financial policy committee estimated that banks could write off £80bn in credit losses but this would be below the £120bn they demonstrated they could withstand under the Bank's 2019 stress test of the sector.
Virgin Money reverses block on card purchases
Virgin Money has rowed bank on a decision to block some customers from making new purchases on their credit cards, saying it has listened to feedback and decided it is not the right time to make the changes. The bank also decided to reinstate purchases for all of the credit cards affected, with previous credit limits reinstated.
COVID-19 accelerates shift away from cash
The Sunday Times looks at how the coronavirus has accelerated the decline of cash as people opt for mobile banking apps and contactless payments. "We've seen five years' worth of decline happen in five months,” said John Howells, chief executive of Link.
Bonus restrictions hamper City mortgage borrowers
Mortgage lenders are being more cautious around applications from bankers and other financial workers for whom bonuses constitute much of their overall pay as a result of the coronavirus pandemic.
Savings accounts now paying 0%
Ali Hussain reports in the Sunday Times that four savings accounts are now paying no interest at all while a further 214, including from the Post Office, Nationwide, Barclays and NatWest, are paying just 0.01%.
Lenders grant 1.2m repayment holidays
Nearly 1.2m payment holidays on credit cards and personal loans have been granted by UK banks for customers struggling with the COVID-19 outbreak, according to UK Finance.
Odey increases bet against Metro
Hedge fund boss Crispin Odey has increased his short position in Metro Bank arguing that it could be looking at a £300m writedown of its loan book.
PRIVATE EQUITY
Government considers investing in start-ups alongside private backers
The government is considering a plan to invest in start-ups alongside investors that use the Enterprise Investment Scheme (EIS). The move comes amid fears innovative firms will be starved of funding as capital investment dries up. The government could co-invest in start-ups alongside private backers through the Treasury’s £500m Future Fund, but it has not yet been decided whether the tax relief that comes with EIS would be maintained.
Daniel Loeb looks to back out of $2.6bn Global Blue deal
Silver Lake, the private equity backers of Global Blue, have been dealt a blow by Daniel Loeb after he said he wants to back out of a $2.6bn deal to buy the Swiss payments company.
INTERNATIONAL
EU’s top court reasserts primacy after German challenge
The European Court of Justice (ECJ) has attempted to assert its authority over member states after Germany’s constitutional judges demanded the European Central Bank (ECB) prove that its key bond-buying program is justified and appropriate. The ECJ said on Friday that it alone “has jurisdiction to rule that an act of an EU institution is contrary to EU law”. Germany’s Federal Constitutional Court on Tuesday declared that the ECJ had acted beyond its mandate when in 2018 it approved the ECB’s programme. Judges also instructed the Bundesbank not to participate in any future eurozone-wide bond-buying schemes without the ECB justifying its measures. The ECJ’s statement comes after ECB president Christine Lagarde said the central bank was “undeterred” in its mission to revive the eurozone economy.
Eurozone governments given access to cheap loans
Eurozone finance ministers have agreed to allow member states to borrow from the European Stability Mechanism on terms normally reserved for those with the best credit ratings. Eurozone governments will have access to cheap funds worth up to 2% of their 2019 output under the emergency support measures. Italian bonds rallied in response to the news, which could give Italy access to €36bn in funding.
Turkey bans FX trades with trio of international banks
Turkey has frozen UBS, Citibank and BNP Paribas out of its currency market as part of efforts to stop a wave of selling that sent the lira tumbling to a record low on Thursday.
Elevated risk levels at top US banks spark concern
Potential daily trading losses at top Wall Street banks hit their highest level since 2011 during the first quarter, prompting speculation that their capital-intensive markets businesses would be further scaled back.
AUTOMOTIVE
Toyota plant in Wales gets back to work on Monday
Toyota’s European division is to reopen its engine manufacturing factory in Deeside, north Wales, and its plant in Turkey – the chief recipient of the UK-made engines. The Deeside plant will resume work today, but production at its factory in Burnaston, Derbyshire remains suspended. Toyota reopened its factories in France and Poland late last month. Aston Martin, Bentley and Jaguar Land Rover are all resuming work in the UK this month.
AVIATION
Buyout giants circle Branson’s Virgin Atlantic
Greybull Capital and Apollo Global Management have joined the likes of Centerbridge Partners, Temasek and Cerberus Capital Management on a list of parties interested in Virgin Atlantic. The pair have reportedly scheduled to open negotiations with the airline’s advisers Houlihan Lokey this week. Separately, a US securities filing by Virgin Galactic last week clears the way for Richard Branson to sell up to half his stake in the space tourism venture, a move that could raise $1bn to help Virgin Group’s airlines businesses. Meanwhile, the second-largest carrier in Latin America, Avianca, filed for Chapter 11 bankruptcy in the US on Sunday.
FINANCIAL SERVICES
City must prepare for hard swerve from Brussels
The international director at the Financial Conduct Authority (FCA), Nausicaa Delfas, has said the City of London must be prepared for a clean break from Brussels when the Brexit transition period ends in December. She voiced concern to the Telegraph that finance chiefs in the Square Mile had taken their eye off the ball amid the coronavirus crisis. Ms Delfas said financial services businesses were among the most well-prepared for Brexit, but added that “the risks that remain are the ones we can’t resolve unilaterally”.
Small businesses call on insurers to end “callous” approach to claims
Thousands of small companies face collapse unless insurers start to pay out on business interruption claims, the industry has been warned. Hiscox, QBE, Allianz, RSA and Zurich are among insurers that have been threatened with legal claims from policyholders, the Times notes. Meanwhile, the FCA is seeking a High Court judgment to determine whether insurers should be obliged to pay out on more claims for business interruption caused by the coronavirus. Finally, Sir John Vickers has expressed concern about the Bank of England’s decision to abandon stress tests for insurers adding that if they are paused they so too should dividend payments.
Rogue advisers worry regulators
The Financial Services Compensation Scheme (FSCS) has passed on the details of nearly 120 suspect financial advisers to the FCA since September, its CEO Caroline Rainbird has said. The FSCS and the FCA are said to be increasingly concerned at the number of advisers mis-selling pension schemes then shutting their business down.
Trillion-dollar club tightens grip on fund market during crisis
New research has found that multi-trillion dollar managers including BlackRock, Vanguard, State Street and Fidelity have tightened their grip on the investment industry during the recent market correction.
FCA publishes timetable of revised regulation
A timetable of revised dates for financial regulation initiatives to take place over the next 12 months has been published by the Financial Conduct Authority.
HEALTHCARE
Funding secured by UK-Dutch start-up for instant-result coronavirus test
Anglo-Dutch biotech start-up ViroTact has secured funding thought to value it at up to £10m from Dutch venture capital firm Carduso and John Molina, of US medical business Molina Healthcare.
Private equity managers rebuked for slashing US doctor pay
Blackstone has hit back at claims by Democratic senator Elizabeth Warren and others that private equity-owned medical companies are to blame for cuts to doctors’ pay and benefits.
Bain Capital makes $1bn bet on Japan’s nursing homes
Bain Capital is acquiring Japanese nursing home business Nichii Gakkan for $1bn, borrowing ¥98.6bn from three of Japan’s major banks in the process.
LEISURE & HOSPITALITY
IHG warns of pandemic weighing on occupancy levels
InterContinental Hotels Group has warned that occupancy levels reached historic lows in March and April as a result of the coronavirus pandemic, with chief executive Keith Barr noting: “COVID-19 represents the most significant challenge both IHG and our industry have ever faced.”
MANUFACTURING
Investors hail better-than-expected profit slump at Siemens
Investors welcomed news that Siemens’ profit plunge was not as bad as feared in its second quarter with shares rising nearly 5% on Friday. Quarterly net profits at the German industrial group fell 64% to €697m, compared with profits after tax of more than €1.9bn a year earlier.
MEDIA & ENTERTAINMENT
BT cuts dividend as target for fibre roll-out is raised
Shares in BT fell 8.5% to 104p after the company axed its dividend to help pay for an ambitious target for fibre roll-out. The new target aims to hit 20m homes by the late 2020s - 5m more than it was previously planning for. The upgrade along with the launch of 5G across the UK will cost the firm about £12bn over the next decade, CEO Philip Jansen said.
Virgin Media and O2 agree £31bn merger
Broadband provider Virgin Media and mobile operator O2 are to merge to create a £31bn media and telecoms giant and a major rival to BT.
REAL ESTATE
Experts predict £500m cash call at Hammerson
Analysts are predicting that Hammerson will tap investors for up to £500m to cope with the coronavirus crisis. The firm is expected to try and raise money in a rights issue after a £400m deal to sell seven retail parks to private equity buyer Orion fell through.
RETAIL
Matalan seeks help from banks
Matalan owner John Hargreaves is pressing Barclays and Lloyds, two of its existing lenders, to inject a combined £50m as part of the government-backed coronavirus business interruption loan scheme, to save his retail empire from running out of funds.
Hedge funds double short positions in supermarkets
Data reveals that Blackrock, Citadel, GLG Partners and Pelham Capital have doubled their short positions in Morrisons and Sainsbury’s over the past month as they bet that the food retailing sector will lose its appeal.
A new bailout fund for retailers, this time from a big landlord
Brookfield Asset Management is launching a $5bn rescue fund for US retailers that need extra capital to weather the coronavirus pandemic as the Canadian shopping mall operator seeks to aid the retail recovery.
ECONOMY
BoE foresees doubling of unemployment and contraction of economy
The Bank of England has cautioned that the UK economy could contract by 14% this year with unemployment figures more than doubling. GDP could fall by 25% in the second quarter, according to its estimates. Governor Andrew Bailey did however predict a relatively rapid recovery once social distancing measures are eased. Meanwhile, the Bank has lined up another £100bn of QE in June to support the economy after the MPC decided to leave the emergency package unchanged this month.