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Daily News Roundup: Monday, 20th July 2020

Posted: 20th July 2020

BANKING

Majority of homeowners restart mortgage payments

The majority of homeowners who took payment holidays due to the economic challenges brought about by the coronavirus outbreak have resumed making mortgage repayments. Analysis shows that just a fifth of those who took a three month mortgage holiday asked for an extension when banks offered a second quarter-year payment break in May. NatWest and Royal Bank of Scotland said 16% of borrowers who originally requested a mortgage break had asked for it to be extended, while at Nationwide 20% have asked for a second payment holiday. Figures from UK Finance show that 1.9m homeowners had asked for a mortgage holiday at the peak of the initiative, a total equivalent to one in every six UK mortgages.

Banks urge leniency over coronavirus debts

Banks have urged ministers to take a lenient approach to recovering debts linked to coronavirus support loans. Lenders have suggested the Government should resist chasing small business owners through the courts where possible, while also proposing that customers in default should be contacted on two or three occasions before the loan is written off and taxpayers are left to foot the bill. Banks are said to be assessing the support measures they could put in place before chasing businesses for loan repayments, while the Treasury is considering a proposal put forward by TheCityUK which suggests businesses could repay coronavirus support loans as a tax on their profits.

Banks reject borrowers who took payment breaks

Banks are turning away some mortgage applicants who took repayment holidays amid the coronavirus crisis, despite ministers and credit agencies saying pausing repayments would not impact their ability to borrow, reports the Mail on Sunday. In March, Business Secretary Alok Sharma said banks had negotiated rules around payment breaks with the Financial Conduct Authority, saying they would not affect a customer's credit score, while Jonathan Westley, chief data officer at Experian, said the credit agency – as well as TransUnion and Equifax – would make sure payment holidays or other arrangements would be reflected in credit reports so payment freezes would not hit credit scores. MP Siobhain McDonagh, who sits on the Treasury Select Committee, said she intends to write to Chancellor over the matter.

HSBC global equities boss leaves

HSBC's global equities chief Hossein Zaimi is reportedly leaving the bank, with sources saying that Adrian Lewis, the bank's equity capital markets head in EMEA, is also set to leave. Andrew Robinson, head of EMEA equity syndicate, is to succeed Mr Lewis.

Lloyds CEO front-runners emerge

The Mail on Sunday reports that Vim Maru, head of Lloyds' personal banking business, could be in line to replace outgoing CEO Antonio Horta-Osorio, with David Oldfield, head of Lloyds' business bank, and William Chalmers, the bank's finance chief, also among the frontrunners. Lloyds, which will see a new chairman when Robin Budenberg takes the role in 2021, will also seek out external candidates for the CEO role. Analysts at JPMorgan say Lloyds has a “solid internal bench” of candidates to replace Mr Horta-Osorio.

Banks covered by mask rules?

Banks are seeking clarity on whether customers are expected to wear face coverings, with HSBC, Barclays, Santander, RBS and Lloyds still waiting on Government guidance over whether banks count as shops ahead of new rules coming into force on Friday that will make wearing a face mask mandatory in all shops.

PRIVATE EQUITY

BlackRock trims MasMovil stake

BlackRock has trimmed its stake in Spanish telecom operator MasMovil to 4.27% from 5.7% over the past week. This comes ahead of a possible takeover, with MasMovil's board backing a $3bn bid by Providence, Cinven and KKR to take the company private.

TMT’s Iniutin snaps up stock

Artemii Iniutin, head of investments at AIM-listed venture capital firm TMT Investments, has spent £2.9m snapping up stock, buying a million shares in the company which focuses on technology start-ups.

INTERNATIONAL

Danske warns of job losses

Danske Bank has warned of further layoffs under a four-year plan to cut costs, with CEO Chris Vogelzang saying: “To ensure adequate progress, we will take additional cost-reduction measures, which unfortunately will have to include further staff reductions.” He was speaking as Danske reported a net profit of 2.33bn Danish crowns in Q2, with this marking a year-on-year fall of 42% but exceeding the 992m crowns average forecasted by analysts.

Natixis owner BPCE has explored buying remainder of French bank

Sources close to the matter say French co-operative bank BPCE may look to snap up the 30% of Natixis it does not already own, having worked with advisers on a buyout plan.

Chinese state seizes control of 9 insurers, trusts and brokers

The China Banking and Insurance Regulatory Commission has seized control of four insurers and two trust companies, while the China Securities Regulatory Commission is taking over two securities brokers.

AVIATION

Revolt over Wizz Air bonus payout

Corporate governance groups have raised concerns over Wizz Air’s decision to hand boss Jozsef Varadi a £485,000 bonus even though the firm missed the profit target required for a payout. The Investment Association has issued a "red top" alert over the bonus, while ISS and Glass Lewis have recommended that investors vote against the pay report.

FINANCIAL SERVICES

High Court to settle FCA’s business interruption policy test case

A High Court case starting today will determine whether hundreds of thousands of firms will receive payouts for damage to their business from coronavirus. The Financial Conduct Authority will test the wordings of policies from eight insurers to establish whether they cover the pandemic. Businesses have formed action groups to pursue a range of insurers including Hiscox, Axa, RSA and Zurich - and some have launched legal claims. The Association of British Insurers has estimated insurers will pay out £1.2bn to businesses and individuals for losses related to COVID-19 - a figure that will rise much higher if the Court rules that many policies do cover business losses.

SJP identifies failing funds

St. James’s Place’s annual value assessment report has analysed 39 of its funds and found that 28 failed to achieve their objectives or industry benchmarks. SJP said that only five of the failing funds “challenge whether overall value is being delivered”. SJP said nine of its funds are not comparable with any benchmark or peer group, including the Alternative Assets fund.

Financial advisers remain unseen

A study by wealth manager Bancroft suggests that many people go years without meeting their financial adviser. It was found that 53% of 1,000 people who have between £50,000 and £1m invested with a financial adviser had not had a face-to-face meeting with them for two years or more. The poll also revealed that investors paid on average 1.5% a year in fees, or £2,835 based on the average portfolio size of £188,948.

Annuity secrecy: the cost of pension kickbacks

The Times reports that insurers are refusing to reveal the commissions they pay to brokers who sell annuities, prompting concerns that savers are being short-changed. In some cases, the commissions paid to middlemen who sell a product without providing advice are understood to be more than it would cost someone to get full financial advice on all their money issues.

Wealthy investors to boost equity investment in face of pandemic risk

Joe Stadler, head of the global family office unit at UBS, expects wealthy investors to increase their exposure to public and private equity in the coming months.

LEISURE AND HOSPITALITY

Ask and Zizzi sold out of administration

Azzurri Group, owner of the Zizzi and Ask Italian restaurant chains, has been sold out of administration to TowerBrook Capital Partners. The move will see around 225 restaurants and shops continue to operate, protecting about 5,000 jobs. However, the 75 sites not included in the deal are set to close, with 1,200 roles set to go.

REAL ESTATE

£230bn hit for commercial property

The Office for Budget Responsibility (OBR) predicts that the value of commercial buildings will fall by nearly 14% this year, with this representing a £230bn decline in value. It is predicting prices will fall by 13.8% in 2020/21, recovering slowly to rise by 0.9% in 2021/22, 2.6% in 2022/23, 1.5% in 2023/24 and 2% in 2024/25. Transactions are expected to slip by 23.7% in 2020/21.

Property prices hit record high

House prices have hit a new high, according to the latest Rightmove house price index. Properties put up for sale in the last month have carried an average price tag of £320,265, a 2.4% increase on the average new listing price recorded before COVID-19 effectively shut down the industry in March. The sector has been boosted by the Chancellor’s stamp duty holiday on properties worth up to £500,000 and more banks reintroducing mortgages for customers with small deposits.

RETAIL

Iceland reports losses

Iceland has reported pre-tax losses of £71.8m for the year to the end of March, compared with £53.8m previously. Adjusted earnings before interest, tax and other charges fell to £133.7m from £140.1m. Sales, however, rose from £3.08bn to £3.25bn.

ECONOMY

Britain’s economic prospects ahead of G7 average

Analysis by the Organisation for Economic Co-operation and Development (OECD) suggests Britain’s economic prospects for the rest of this year and into 2021 are stronger than the average for the G7. The OECD’s forward looking index has rated the UK at 97.4, while the average across the G7 advanced economies is 96.7. The index looks at six criteria deemed to be future facing rather than figures relating to growth, employment, inflation and retail sales, which are focused on past activity.

OTHER

Firms in no rush for office return

Fewer than one in six workers has returned to the office, with a number of Britain's biggest employers saying they will continue to allow staff to work from home for months to come. Only 800 of Goldman Sachs’ 6,000 London staff have returned, while fewer than 2,000 of the 12,000 at JPMorgan are back. RBS, which has about 50,000 of its 65,000 staff working from home, will see the vast majority of its staff continue to work remotely until at least September, with Lloyds Bank planning to keep roughly 50,000 of its 63,000 workers at home until September at the earliest. With analysis suggesting firms are in no rush to have staff on site again, Edwin Morgan at the Institute of Directors said: "Certainly there's a lot of caution among business leaders, they will have to consult with staff, and many have found remote working works quite well."

Dividends down 57% in Q2

Analysis by Link Group shows that dividend payments fell by a record 57% in Q2 as the coronavirus crisis prompted an unprecedented cut. Dividend payments fell to £16.1bn in the three months to the end of June, meaning investors missed out on £22bn. The second quarter saw 30 firms reducing their payout while 176 paid no dividends at all, with just 61 businesses increasing their dividend payout. Among the biggest cuts were the £3.2bn at HSBC, £1.5bn at Lloyds Banking Group and £812m at Aviva. Link Group predicts total dividend payouts for 2020 could fall to £56.7bn in the worst-case scenario, down from £110.5bn last year, while a best-case scenario would see £61.6bn handed out.

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