BANKING
Lenders update systems in preparation for negative rates
The Mail on Sunday reveals that banking chiefs have been preparing lenders for negative interest rates telling the Bank of England they could be ready within weeks if they were introduced. Industry figures are understood to have warned Bank officials that their systems cannot currently cope with a zero or negative value for interest rates, as they were designed only for positive values. The paper understands that major lenders have no plans to charge ordinary savers, current account customers or small businesses for holding money in their accounts if rates go negative. However, they would levy fees on deposits held by large corporate clients and wealthy individual customers may also face extra charges, sources said.
Banks consider outsourcing recovery of Covid loans to debt collectors
The Times reports that high street lenders may employ debt collectors to recover state-backed loans, arguing that the scale of the task is too great for the banks to manage directly. The paper claims officials have contacted debt collection companies to assess whether they could take on the loans to seek repayment, for which they would receive a fee. Unpaid debts would return to the banks, which would then claim on the state guarantee attached to the loans.
Lockdown restrictions see a shift towards saving
Research from Aviva published last week revealed that nearly two thirds of people have become more of a saver during the pandemic, with 36% planning to continue in this vein. Alistair McQueen, head of savings and retirement at Aviva, comments: “The UK’s household savings ratio hit an all-time high of 29.1% in the second quarter of 2020. In the last quarter of 2019 it was only 7.7%. More than £80bn has been deposited in the six months since lockdown in March. That is the equivalent of about £3,000 per household, indicating a big change in behaviour.”
Pandemic accelerates decline of cash
Charity and consumer groups have warned that the UK is “hurtling towards a cashless society” despite millions of people still relying on notes and coins. The decline in cash usage has been accelerated by the pandemic but Gareth Shaw, from consumer group Which?, says the “fragile” system could collapse without government intervention leaving “many consumers abandoned.” A Treasury spokesperson said it is in the process of developing legislation to “ensure people can get hold of cash when they need it and that the UK’s cash infrastructure remains sustainable”.
Banks raise mortgage rates to cream off boom
Analysis by the financial data firm Moneyfacts shows banks are taking advantage of a mini housing boom by raising mortgage rates to try and claw back losses. Ian Gordon, an analyst at Investec, said lenders “have been so swamped with demand from home movers and first-time buyers that they have been able to price up across the board."
Second charge mortgage market picks up
The Times reports on an increase in homeowners taking out second mortgages to fund improvements, buy another property or start a new business. After taking a hit following the start of the pandemic, the second charge mortgage market is gradually picking up again, with the number of agreed deals up to almost 1,000 from about 486 in May, according to the Finance and Leasing Association.
Could BBLS lending clip Starling’s wings?
The Sunday Times’ Emma Dunkley says the Government’s emergency bounce back loan scheme (BBLS) has boosted Starling’s lending book and customer base, but concerns remain about the challenger’s exposure to bad debt and the operational headache of chasing loan repayments when the time comes.
New digital bank for the rich set for launch
The Sunday Times reports on the launch next year of Monument bank, a digital challenger for people with assets of between £250,000 and £5m, excepting the value of their homes. Customers will have to deposit £25,000 to open a savings account.
HSBC makes $1trn green promise
HSBC has promised net zero carbon emissions across its entire customer base by 2050 an to provide up to $1trn in financing to help clients make the transition. However, the bank was criticised for not taking more immediate action to curb its fossil fuel financing.
Banks call back stayaway staff abroad amid tax warning
Major lenders are asking staff working remotely from abroad to return to the UK, even if they don’t return to the office, warning of tax and regulatory consequences if they stay too long.
PRIVATE EQUITY
Private equity-owned companies in ‘intensive care’ due to pandemic
New analysis has found that half of the companies owned by private equity managers are moderately or very affected by the coronavirus pandemic, while one in ten is in “intensive care”.
INTERNATIONAL
Dimon: “I don’t expect normality until summer 2021”
Jamie Dimon, the CEO of JPMorgan, told a conference on Friday that he did not expect to fully staff the bank’s offices until the middle of next year at the earliest. Dimon said as many as 40% of employees could work from home even after the pandemic, but remote working “has to work for clients and customers not just for employees.” Responding to news that Morgan Stanley has agreed to buy asset manager Eaton Vance, Dimon said he expects more mergers in the industry, adding that his door was open deals, too.
Goldman Sachs offers US staff free tests
Goldman Sachs told bank employees in the US on Friday that it will make free coronavirus tests and antibody tests available in a bid to encourage staff back into the office. The programme is also being considered for employees in other offices including London. The Telegraph notes that Santander mass-tested staff in its Madrid hub in September while JP Morgan and Credit Suisse also have testing programmes.
Morgan Stanley bets on fixed-income jobs
Morgan Stanley has added back about half of the 1,200 jobs cut from its fixed-income division five years ago following accelerated growth at the division in recent years.
AVIATION
Heathrow fails in bid to lift fees
The Civil Aviation Authority has rejected a plea from Heathrow airport to increase the fees it charges airlines in an effort to claw back £1.7bn pandemic losses, arguing that it had failed to demonstrate the request was a proportionate response.
FINANCIAL SERVICES
Investment firms move €150bn of UK assets to France
The governor of the Banque de France claims that at least €150bn of assets have been decamped from the City to France since September. François Villeroy de Galhau told the Europlace International Financial Forum that the bank had in that time authorised 21 investment firms, four credit institutions and seven third-country branches to “ensure continuity of activities in France”. Mr de Galhau went on to encourage more firms to follow suit, arguing that companies “operating under the European passport must quickly finalise their relocation to the EU if they want to operate here as of next year.”
FCA action against companies dropped at start of pandemic
The Financial Conduct Authority opened just 36 new enforcement cases between March 1 and May 31 this year, compared with 148 during the same period in 2019. The FCA has imposed just four fines so far this year - a record low. “Enforcement has continued as normal during the pandemic,” a spokesman said. “The FCA will open cases where it suspects serious misconduct, with the number of new cases fluctuating month on month and year on year.”
Lloyd’s of London to transform working practices
The chairman of Lloyds of London, Bruce Carnegie-Brown, told the Sunday Telegraph that the world’s largest insurance market will abandon traditional office working and embrace a flexible approach which “enables the best of remote working with the benefits of a flexible work space.” Carnegie-Brown added: “COVID-19 has accelerated Lloyd’s progress towards becoming a truly flexible workplace.”
Pension trustees could gain power to fight scammers
The new Pension Schemes Bill could give trustees the power to temporarily block suspicious transfers to give them time to obtain more information and mitigate the risk of fraud. The Pensions Regulator told the parliamentary work and pensions committee recently that it wants to strengthen pension scheme powers to tackle pension transfer scams.
LSE confirms €4.3bn sale of Borsa Italiana to Euronext
The London Stock Exchange Group has agreed to sell the owner of Milan stock exchange to rival Euronext for €4.3bn. It is hoped the move will secure the EU's regulatory approval of its $27bn acquisition of data and trading group Refinitiv.
TP ICAP to buy trading venue Liquidnet in $575m deal
London broker TP ICAP has entered the share trading market with the $575m acquisition of US equities trading business Liquidnet, funding the purchase with a $425m rights issue.
HEALTHCARE
Care home provider issues warning over pandemic risk
Care UK, which is one of the country’s largest care home providers with over 8,000 beds across 121 sites, has warned that fewer residents and rising costs as a result of the pandemic could drive it out of business. Despite receiving financial support and have banking covenants waived, the Bridgepoint-owned company said future demand for beds was unclear as was the impact of any resurgence of the virus and measures to contain it. Despite the warning, CEO Andrew Knight said Care UK was “financially well-positioned” to operate through the pandemic and was “confident in the long-term future of our company”.
LEISURE & HOSPITALITY
Hospitality bosses prepare legal challenge to lockdowns
Lawyers for the Night Time Industries Association (NTIA), the British Beer and Pub Association, brewers, pub operators and an assortment of other hospitality organisations, are mounting a legal challenge to the Government’s lockdown restrictions, which they say have decimated the industry. They argue the restrictions are not based on any “tangible scientific evidence” that closing venues suppresses transmission of coronavirus. The Government is already facing a challenge to its 10pm curfew for pubs and restaurants in England and a Commons vote on the issue has been scheduled for Tuesday, although defeat for the Government seems unlikely.
Vue announces midweek closures
Vue is to shut a quarter of its cinemas for part of the week to help it survive the pandemic. The cinema network will cut back opening times to four days a week at 21 of its 87 sites, keeping them closed on Tuesdays, Wednesdays and Thursdays. The temporary closures come after chief executive Tim Richards said Vue is “looking at all options” following the postponement of the release of the new James Bond film No Time To Die.
Pizza Express to be handed over to bondholders
Bondholders will take control of Pizza Express after a sale process failed to drum up a competitive offer. The deal will see Beijing-based Hony Capital relinquish the restaurant chain via a debt-for-equity swap.
MANUFACTURING
BASF slashes outlook after €2.6bn loss
German chemicals group BASF has taken a €2.8bn hit in fixed-asset impairments because of weaker demand in the automotive and aviation industries. The write-offs sent it to a quarterly net loss of €2.6bn.
MEDIA & ENTERTAINMENT
Arm races to meet legally binding jobs pledge
Microchip company Arm is rushing to hire nearly 500 staff in the UK over the next twelve months in order to satisfy a legally-binding pledge made by Japan’s Softbank when it bought the company in 2016. To meet its 2016 targets, it must have 3,494 UK staff by next September, an increase of 490. SoftBank recently agreed to sell the company to US giant Nvidia, raising concerns that Arm’s graphics division could be dissolved, claims dismissed by the company’s CEO Simon Segars.
REAL ESTATE
British Land resuming dividend
Shopping centre owner British Land is to resume dividend payments amid a recovery in the market. The company said that dividends would be paid at 80% of underlying earnings per share, and would be paid twice a year rather than quarterly, with an interim dividend declared next month.
RETAIL
Edinburgh Woollen Mill to appoint administrators
Edinburgh Woollen Mill Group has confirmed plans to appoint administrators in an attempt to save the business, putting up to 21,500 jobs at risk. The owner of Jaeger, Peacocks and Austin Reed – had been seeking a buyer for some weeks and will spend the next few weeks considering its options. The company said it was “responding to the harsh trading conditions caused by the impact of the COVID-19 pandemic and a recent reduction in its credit insurance”.
SPORT
Liverpool FC and Boston Red Sox owner looks at stock market listing
Fenway Sports Group, the holding company for Liverpool FC and Boston Red Sox, is in talks to merge with the special purpose acquisition company RedBall Acquisition Corp and list with an $8bn valuation.
ECONOMY
Poor growth figures raise doubts about V-shaped recovery
Data from the Office for National Statistics show the UK economy grew by just 2.1% in August, far below the 6.4% expansion recorded in July. The 2.1% was less than half of the 4.6% which had been expected by analysts, according to a consensus taken by Pantheon Macroeconomics. Head of economics at the British Chambers of Commerce, Suren Thiru, said: “While the latest data confirms a rebound in economic activity continued into August, the sharp slowdown in growth indicates that the recovery may be running out of steam, with output still well below pre-crisis levels.”