BANKING
BoE governor urges banks to boost SME lending
Bank of England governor Andrew Bailey has called for banks to increase lending to small businesses, saying loans to smaller enterprises must be boosted or there is the risk of “a scarring effect” on the economy. He also suggested that guarantees for small business loans could be extended. While the business interruption loan scheme sees the Treasury guarantee 80% of any losses, Mr Bailey suggested a blanket guarantee for loans under £25,000 may be of benefit. In a call with reporters, he mused: “Is there a case for 100% guarantees for very small firms that account for quite a high volume of applications? Would it unblock things to change the risk appetite for those firms?"
Interest below 0.1% on more than 100 accounts
Figures compiled by Savings Champion show that 111 savings accounts now pay less than the 0.1% bank rate a year in interest, with banks and building societies having also announced that 42 more accounts will have their rate cut to less than 0.1% in the coming months. Barclays, HSBC, Lloyds, NatWest and Royal Bank of Scotland have all announced rate cuts that will see some accounts offer 0.01% in interest. The analysis shows that more than 600 accounts have cut rates since March 11 - or will do shortly. Anna Bowes, of Savings Champion, said the two bank rate cuts in a month have been “brutal” for savers.
Bramson to target Barclays boss
Corporate raider Edward Bramson, a financier who holds 5.5% of Barclays, is continuing his efforts to unseat CEO Jes Staley. Mr Bramson has hired advisory firm Georgeson to canvass opposition to the CEO ahead of the bank’s AGM. The firm is asking investors whether they will support Mr Staley's re-election, with Mr Bramson urging shareholders to withhold their support for the chief executive. The Mail says Mr Bramson is not calling for Mr Staley’s immediate removal due to fears it could destabilise Barclays at a time of coronavirus-driven uncertainty.
Bank takes payments despite loan holidays
Barclays mistakenly took debt payments from 1,500 struggling small firms, despite the businesses having been given loan holidays amid the coronavirus crisis. Barclays has apologised for the error, saying there had been delays in triggering payment holidays after receiving a high volume of requests.
Snoop launches
Money-saving app Snoop has launched ahead of schedule in an effort to help consumers hit by the impact of COVID-19 cut costs. The app, founded and led by former Virgin Money boss Jayne-Anne Gadhia, uses open banking technology to connect to a customer's bank account and credit cards and analyse the data to identify areas were costs might be cut. The average household could save about £1,500 per year, Snoop claims.
Kingman named as Tesco Bank chairman
Sir John Kingman, who has held roles at the Treasury, Legal & General, UK Financial Investments and Rothschild, has been appointed chairman of Tesco Bank. He will replace Graham Pimlott on July 7, with senior independent non-executive director Jim Willens to serve as interim chairman for 12 weeks to ensure a smooth transition.
Collapse concern
Lucy White in the Mail says the financial system may be on the cusp of its biggest test since banks were forced to beef up their balance sheets after the 2008 financial crisis, with concerns that the coronavirus crisis could force a number of firms out of business and unable to make loan repayments. Amanda Murphy at HSBC warns: “It's going to be a really difficult time … If we can't get businesses through this... many will fold.” Ian Gordon from Investec says lenders may offer payment holidays on loans, or agree to overlook breaches of loan conditions.
PRIVATE EQUITY
CVC’s £300m deal for Six Nations rugby pushed back by pandemic
CVC Capital Partners’ proposed £300m investment that would see it take a 14% stake in the Six Nations rugby tournament has been delayed by the COVID-19 crisis.
Imagination Tech will remain in Britain
Chinese-backed private equity firm Canyon Bridge, owner of Imagination Technologies, has told Culture Minister Oliver Dowden it is committed to keeping the chip designer headquartered in the UK.
INTERNATIONAL
ECB pushes for eurozone bad bank to clean up soured loans
European Central Bank officials are pushing for the creation of a bad bank to remove toxic debts from eurozone lenders’ balance sheets, although the European Commission are said to oppose the plan.
Deutsche Bank investor seeks to oust chair
Deutsche Bank investor Riebeck-Brauerei has filed a motion seeking a vote to oust the lender's chairman Paul Achleitner at this year's AGM. It is the third consecutive year the investor has sought the chair's removal, with Riebeck criticising bonuses being handed out despite record losses, large severance packages for former board members and a failure to rein in money laundering issues.
AUTOMOTIVE
Ford to pay nearly 10% on new debt to plug losses
Ford is to pay interest rates of 9.625% to access the bond market. The carmaker, which expects to post a $2bn loss on $34bn in revenue in Q1, has launched an $8bn fundraising.
AVIATION
Airport boss warns fares could soar
John Holland-Kaye, the boss of Heathrow Airport, has warned of higher air fares unless new international airport health and safety standards are agreed. Mr Holland-Kaye says he is in talks with UK ministers, the EU and global airports over measures that could ease pressure COVID-19 has put on airports.
Virgin Atlantic told to resubmit bailout bid by ‘unimpressed’ UK Treasury
The Treasury has asked Virgin Atlantic to resubmit its proposal for a £500m coronavirus bailout package, with the Government said to be unimpressed by the initial bid.
FINANCIAL SERVICES
Government boost for investment-grade corporate bonds
The Bank of England's move to buy investment-grade corporate bonds, as part of its quantitative easing policy in response to the coronavirus epidemic, is likely to significantly support prices and benefit the funds that own those bonds. Investors should be wary however if their bond fund's holdings are downgraded to junk status, because of the damage caused to businesses by the pandemic.
Gilbert lands Toscafund role
Martin Gilbert, who is set to exit Standard Life Aberdeen, has been appointed chairman of fund manager Toscafund. Mr Gilbert, who is also currently chairman of Aberdeen Standard Investments, is also non-executive chairman of digital bank Revolut, a non-executive director of Glencore and has agreed to become a non-executive of Old Oak Holdings.
Coronavirus bites £7bn off Brewin Dolphin funds
Brewin Dolphin took a £7.1bn hit on the funds it manages during the second quarter as a result of the coronavirus pandemic. The wealth management firm's total funds dropped by 14.6% to £41.4bn in the second quarter, while discretionary funds fell 14.6% to £35.7bn.
LEISURE AND HOSPITALITY
CEOs call for rescue of hospitality sector
Thirteen CEOs of high street brands including Burger King, TGI Fridays and pub chain Fuller’s are calling on the Government to help the hospitality sector, which has been severely hit by the COVID-19 pandemic. The campaigners will send a letter to Chancellor Rishi Sunak proposing their rescue plans. Under the scheme, business forced to close due to the crisis would receive a nine-month rent-free period until January, with landlords exempt from their bank loan repayments for the same period.
The Mail on Sunday, Page: 115
Hotel asks landlords to check out rent rethink plans
Travelodge has drafted advisers including investment bank Moelis as it looks to ease pressures brought about by the COVID-19 crisis, with the hotel chain seeking new rent deals that carry rent-free periods. Travelodge failed to pay its most recent quarterly rent bills, telling landlords that its "comprehensive plan to stabilise the business" included asking them to suspend payments.
REAL ESTATE
Prices slip during lockdown
Figures from Rightmove show that the average price of a property coming to market declined by 0.2% during the coronavirus lockdown. This compares with a 2.1% increase recorded in April 2019. The property portal said, however, that the statistics were not “meaningful” as there is not currently a “functioning market”, with new sales “almost impossible”. The Rightmove data shows that total available stock for sale is down 2.6% since the lockdown was enforced on March 23.
City AM
Workspace halves rents for coronavirus-hit tenants
Workspace will cut rents by 50% for the lockdown period as tenants struggle with coronavirus-related business disruption. The offices landlord, which offers flexible leases to mainly SMEs and start-ups, has received a large number of requests for various forms of rent relief. The firm estimates the rent reduction move will have an impact of around £5m per month on Workspace's rental income.
RETAIL
Debenhams secures new rents
Debenhams has secured new rent agreements with landlords for 120 of its 142 branches after it fell into administration last week. However, seven of the department store chain’s stores will remain permanently closed after the lockdown eases, resulting in the loss of over 400 jobs.
ECONOMY
Bailey: 35% GDP slide ‘not implausible’
Bank of England (BoE) governor Andrew Bailey has said a 35% decline in GDP over Q2 is "not implausible". Pointing to a scenario where the economy slipped by a third, which was set out by the Office for Budget Responsibility this week, Mr Bailey said it was "quite within the grounds of possibility". He told reporters on a conference call on Friday: “I don't think there's anything implausible about a second quarter contraction of that nature.” He also suggested that while the OBR report suggested the economy would bounce back swiftly from such an economic crash, the BoE may not be as optimistic. Mr Bailey also noted that the BoE is using a tool designed to monitor high frequency data on the economy ahead of a potential hard Brexit to gauge the immediate impact of the coronavirus outbreak.
OTHER
FCA proposes payments freeze
The Financial Conduct Authority (FCA) has outlined plans for a payment holiday for those struggling with payday loans, car finance and pawn shop borrowing amid the COVID-19 outbreak. The City watchdog has called on car leasing firms to offer three-month repayment pauses for customers in financial difficulty and rule out vehicle repossessions during the crisis. In addition, lenders should offer a one month interest-free payment freeze on short-term credit agreements, while lenders involved in pawn broking agreements are expected to give customers a three-month payment freeze. The regulator will consult with finance firms and expects to finalise proposals by April 24, "with them coming into force shortly afterwards". The FCA recently announced a three-month freeze on loan and credit card repayments.