Banks call for loan rule clarity
Banks are reportedly concerned that they will face regulatory action in relation to emergency coronavirus loans as a change in lending rules has yet to be officially approved by the Financial Conduct Authority (FCA). Banks were told that rules would be relaxed to support the Bounce Back Loans Scheme, having voiced concern that under existing regulation they may be accused of irresponsibly handing out money. While more than 300,000 loans worth more than £8bn have been handed out since the initiative launched almost two weeks ago, the FCA has still not signed off the change in rules. Stephen Jones of UK Finance said: "The FCA needs to recognise the code, to make sure that it is a code from a regulators' perspective, but it has not yet done that. The law hasn't been changed,” adding: “Obviously that's a risk, it's one of those things left open."
The £820m cost of mortgage holidays
The mortgage breaks taken by 1.6m homeowners due to the COVID-19 pandemic could cost them at least £821m in extra interest. Figures calculated by the broker L&C Mortgages, based on data from UK Finance, show that a borrower on the typical deal will save £2,256 in repayments by taking a three-month mortgage payment holiday. However, they will ultimately pay £500 more than they would have done without the break because of the interest accrued on the unpaid sum. Meanwhile, the Telegraph reports that homeowners who want to take up their lender's offer of a mortgage holiday are still being asked to pay because banks are struggling to approve the payment holidays quickly enough. Also, those who miss a mortgage payment because a break has not yet been confirmed could be marked as going into arrears, potentially affecting their credit score and resulting in extra interest being charged.
One in four hit by savings rate cuts
A quarter of savers are earning very little on their cash after introductory deals have ended. Analysis from Investec Bank shows that two-thirds of people with cash savings opened accounts with short-term perks between 2016 and 2019. It was found that 42% of savers moved their money once the bonuses expired, while 25% left part of their savings in the account, despite the low rate.
Shadow banks call for BoE support
Alterative lenders have called for Bank of England support amid concerns many could be on the brink of collapse, with shadow banks saying they urgently need access to Government liquidity schemes in order to keep lending. The industry wants the Bank of England's Term Funding Scheme to be extended to non-banks, with Greg Stevens, who runs the Consumer Credit Trade Association, saying: "Banks won't serve our customers - they never have and they never will. So restricting term funding to the banks does nothing for the millions of consumers who can't access bank products".
COVID-19 to deliver sector shift?
The Sunday Telegraph’s Lucy Burton looks at the impact the coronavirus pandemic will have on the banking sector, noting a shift that has seen regulators relax rules to encourage lending. Stephen Jones, chief executive of UK Finance, says: “There’s been such a shake-up and reboot, there’s no question the banking landscape will change when we come out of this … The sector as a whole is very well capitalised but individual institutions will be struggling, some existentially, due to the impact on their customer base.” Elsewhere, Emma Dunkley in the Sunday Times examines how the big four banks hold sway over current accounts and she questions whether the coronavirus pandemic could offer challenger banks a fresh chance to break through.
Bad bank may stop firms going under
The Government could take stakes in rescued companies through a bad bank due to concerns of the impact of the ongoing pandemic, with UK Government Investments (UKGI) in talks with investment bankers. Plans include an asset resolution scheme, a bad bank similar to the one set up to manage the remnants of Northern Rock and Bradford & Bingley, and a sovereign wealth fund. The Telegraph says UKGI could engage advisers drawn from its panel of banks, which includes Citigroup, JP Morgan, Goldman Sachs and Morgan Stanley.
Monzo valuation drop in funding round
Monzo is raising cash from investors at a 40% discount to its previous fundraising, according to a report in the FT. The challenger bank is close to a deal that will value it at around £1.25bn, compared to a valuation of more than £2bn at its previous funding round in June, the FT says. Key backers of Monzo include US venture capital groups Y Combinator Continuity, Accel and Goodwater Capital, and UK-based Passion Capital.
Credit warning despite payment holidays
Tesco Bank customers who have been granted credit card payment holidays are being contacted by credit agencies saying they have defaulted on payments and their score could be harmed. Tesco says there are some cases "where a missed payment has been registered with credit agencies before the payment break has been processed".
Italy’s Serie A in exclusive talks with CVC over €2.2bn deal
CVC Capital Partners is in discussions to acquire 20% of a new company that will manage broadcasting rights for Italy's top football league from 2021.
Financiers hid siphoned funds
David Brown in the Times looks at Ilya Yurov and Nikolay Fetisov, Russian financiers who face the seizure of their wealth after being declared among Britain’s biggest bankrupts, with the pair believed to have siphoned off millions in customers’ savings from Russia’s National Bank Trust (NBT). The bulk of their assets are believed to be hidden in a web of companies which was used to hide the bank’s bad assets and conceal money moved out of Russia.
Japan’s megabanks put aside a collective ¥1.1tn in loan loss provisions
Mitsubishi UFJ, Mizuho and Sumitomo Mitsui, wary of the hit they are set to face from the coronavirus pandemic, have put aside a collective ¥1.1tn ($10bn) in loan loss provisions.
Ryanair cuts 250 jobs
Ryanair is cutting 250 jobs at UK and Europe offices after coronavirus forced it to dramatically reduce flights. The job cuts, at offices in Dublin, Stansted, Madrid and Wroclaw, are a combination of probation and fixed term contract ends, resignations and redundancies.
FCA asks SMEs to flag insurance issues
The Financial Conduct Authority (FCA) has urged SMEs unable to claim on their insurance policies during the coronavirus crisis to make themselves known to the City watchdog as it looks to put together a High Court test case. The Times says the FCA has been criticised for only giving companies and their representatives three working days to share details of their dispute.
Home bankers until 2021?
Some City bankers may be asked to work from home for the rest of the year, the Mail on Sunday reports. Sources tell the paper that a number of institutions are planning a “phased” return to the office as the coronavirus lockdown eases, with it likely that share traders will be asked to return while administration, operations and middle office staff could be held back for many months.
Barnett leaves Invesco after investor concern
Fund manager Mark Barnett has left Invesco after 24 years with the asset manager. His departure follows a terrible run of investment returns and comes after serious question marks had been raised about some of the fund manager’s portfolio choices.
Just Eat’s Peter Duffy takes top job at Moneysupermarket
Just Eat CEO Peter Duffy is to become chief executive of price comparison site operator Moneysupermarket in September. His appointment comes just months after leading Just Eat through a takeover battle.
UK judge rejects Burford’s stock price manipulation claim
The London Stock Exchange doesn't have to provide confidential trading information to Burford Capital, a litigation funder, which claimed it was the victim of stock price manipulation, a judge has ruled.
LEISURE AND HOSPITALITY
Pubs have to pour 70m pints of beer down the drain
The British Beer and Pubs Association (BBPA) says 47,000 publicans have had to destroy 70m pints of beer nationwide after pubs were ordered to shut as part of the coronavirus lockdown.
Court threat over Travelodge CVA plan
Landlord Combined Property Control Group has warned Travelodge that it could face court action if it pushes ahead with a restructuring to cut rents. The hotel chain has said that unless up to £146m in rent is waived, it will be forced to pursue a CVA.
Homes sales jump as market opens
Analysis by property market website View My Chain shows 906 homes were sold on the day the housing market reopened, while 1,883 properties were listed for sale. While the total was still far short of 4,000 average number of daily sales seen before the coronavirus outbreak, it was double the daily average recorded during the lockdown. Rightmove saw almost 5.2m visits on Wednesday, while Halifax reported a 36% increase in mortgage applications.
OBR chief expects slow recovery
Office for Budget Responsibility (OBR) director Robert Chote says Britain is unlikely to see a swift economic recovery in the wake of the coronavirus crisis. He says the UK should “expect a slower recovery than the v-shaped” rebound that some analysts have predicted, suggesting that the economy may face “permanent scarring” as a result of the pandemic. “I think you’re likely not going to see the economy bouncing back to where we expected it otherwise to be by the end of the year…but instead a rather slower recovery,” he said. He told the BBC’s Andrew Marr Show: “The fact debt goes up doesn't necessarily mean you have to have the sort of austerity that followed the financial crisis … Much more important to that is whether you have scarring of the economy - if the economy is permanently smaller you get permanently less tax revenue.”
BoE economist in unemployment warning
Andy Haldane, the Bank of England’s (BoE) chief economist, has warned that Britain is facing an unemployment crisis, with up to half the workforce set to see incomes hit by the coronavirus pandemic. He said that more than half of the 33m strong workforce is currently unemployed, furloughed or working fewer hours as a result of the shutdown. He added that the “scarring experience” of unemployment in the early 1980s was the “very reason” he got into economics and public policy, warning “we’re going back to that, basically.” Mr Haldane says there is a need to “find a way of reabsorbing all of that labour as quickly as possible in good jobs.” He also said that the BoE is weighing options such as negative interest rates and expanding the scope of quantitative easing “with somewhat greater immediacy” as it looks to boost the economy.
Dyson tops Sunday Times Rich List
Sir James Dyson has been named top of the Sunday Times Rich List for the first time. This came as his wealth grew by £3.6bn over the past year, hitting £16.2bn. Analysis by the Sunday Times shows the overall wealth of the 1,000 richest people in the UK is down by £29bn on last year at £743bn, while £54bn has been wiped off of the total in two months due to coronavirus. Where it had been estimated in February that the number of billionaires would rise to nearly 160, the number has fallen to 147 due to the pandemic, a decline of four. The analysis also reveals that at least 63 people to have made the list have sought to furlough some of their staff under the Government’s job retention scheme, including 20 billionaires and five of the country’s 10 richest people. Meanwhile, a record 25 female billionaires have made the list.