BANKING
FCA extends payment holiday
The Financial Conduct Authority (FCA) has told banks and credit providers to extend payment holidays on overdrafts, loans and credit cards until October as people continue to feel the financial impact of the COVID-19 pandemic. While a policy that allows those whose income has been hit by the lockdown was expected to be wound up at the end of July, the watchdog has proposed an extension of the support window. The FCA says lenders will be expected to continue offering repayment breaks, as well as offering support to those yet to request it. While the extension covers credit cards, store cards, personal loans and overdrafts, the FCA is yet to update separate guidance on motor finance, payday loans, rent-to-own, pawn-broking or buy now pay later. Figures show 4.2m people have taken advantage of the repayment breaks to date.
Rules may protect cash access
British banks could soon follow a Swedish model designed to protect access to cash to ensure the elderly and vulnerable are not cut out of payments if they do not use digital banking or debit cards. The Times says regulators including the Financial Conduct Authority and the Payment Services Regulator are working out details such as how far consumers should be expected to travel to obtain cash. UK Finance data show cash accounted for 31% of UK transactions in 2018 and 23% last year, while the number of free-to-use cash machines fell from 52,040 in 2018 to 45,355 last year.
Lenders give 1.9m mortgage holidays
Figures from UK Finance show that 1.9m mortgage payment holidays have been taken by borrowers in the last three months, equivalent to one in every six mortgages in Britain. On average, £755 is being deferred each month. In addition to mortgage holidays, UK Finance said banks have offered 962,000 credit card payment deferrals and 689,000 breaks to personal loan customers during the coronavirus pandemic.
Specialist lenders call for parity with big banks
Non-bank lenders are to meet Treasury officials this week as they lobby for access to ultra-cheap funding from the Bank of England and the same loan guarantees provided to big banks. Stephen Haddrill, director general of the Finance & Leasing Association (FLA), warned: "Non-banks are stretched between providing forbearance, satisfying the people they get their funding from, and trying to satisfy demand for new lending.”
Barclays tightens rules on buy-to-let mortgages
Barclays is to slim down its mortgage offering later this month by halting lending to private landlords looking to buy properties with more than one unit and to limited-liability partnerships. The bank will also stop giving mortgages to buy-to-let landlords who buy property through their own limited company. Experts say lenders are moving to cut their exposure to the economic fallout from the coronavirus pandemic.
Covid increases adoption of digital services
The use of digital services offered by Europe's largest banks has accelerated due to social distancing rules, according to Moody’s, but the ratings agency warns that heightened adoption of digital services will require further investments in IT infrastructure and may increase cyber risk. Separately, in the UK, technology services company Olive found that 58% of consumers were frustrated by their bank’s level of online services during the pandemic.
Lloyds gives frontline staff bonus
Lloyds Bank is to give its 40,000 frontline staff £250 each to thank them for their efforts over the course of the coronavirus crisis. CEO Antonio Horta-Osorio said in an internal memo that he was "proud" of employees for working tirelessly in branches, offices, and at home, during the lockdown. However, branch managers are disappointed not to also be recognised, according to complaints on internal message boards.
Bank lets customers cancel Netflix and Spotify
Customers who use the Lloyds banking app will soon be able to cancel Netflix, Amazon Prime or Spotify services from their account following a trail of the tool which starts today.
PRIVATE EQUITY
Private equity primed for action
Private equity groups are waiting to deploy a huge amount of capital as they weigh opportunities in the wake of the coronavirus pandemic, the Sunday Telegraph reports. KKR has been preparing itself for a decade after finding itself wanting following the last financial crash, the firm’s joint COO Scott Nuttall told investors last month. In Britain, nearly $16bn has been spent on deals this year, up 41% from the same period in 2019. "A lot of private equity funds are looking for opportunities as the government stimulus begins to be withdrawn and businesses are weaned off the support that has been provided," says Tom Whelan, partner at law firm McDermott Will & Emery. "This could open up more opportunities for private equity to bridge the gap."
INTERNATIONAL
Tokyo seeks to lure financial groups from crisis-hit Hong Kong
Japan is considering a range of measures to persuade asset managers, traders and bankers to move from Hong Kong to Tokyo, including visa waivers, tax advice and free office space.
ING names van Rijswijk to succeed Hamers as chief
Dutch lender ING has announced that chief risk officer Steven van Rijswijk will replace Ralph Hamers as CEO when the latter takes charge at UBS.
AVIATION
Treasury lobbied to accelerate military spending plan
Unions and aerospace bosses are urging the government to accelerate defence procurement programmes to help stem the flow of job losses from the industry. A document from the aerospace lobby group, the ADS, describes the Ministry of Defence (MoD) as receptive to bringing forward spending. It notes, however, that “the challenge lies in persuading the Treasury that amending defence and space procurement budgets is appropriate at this stage”.
IAG may ask investors for £1.5bn
British Airways owner International Consolidated Airlines Group (IAG) is reportedly looking to raise up to £1.5bn of fresh cash and could tap investors via a rights issue over the next few weeks, according to reports.
FINANCIAL SERVICES
Wirecard chief quits as crisis deepens
Wirecard’s chief executive Markus Braun has resigned amid a scandal over £1.9bn missing from its bank accounts. The firm has mandated Houlihan Lokey to “develop a sustainable financing strategy.” Meanwhile, the Financial Conduct Authority has come under fire for turning a blind eye to the problems at Wirecard, which head of short-selling firm Shadowfall Matthew Earl said he raised with the regulator in 2016. The German regulator BaFin had also been alerted but allegedly joined Wirecard in pursuing the whistleblowers instead of acting on the evidence.
UK leads Europe on financial services investment
The UK was Europe’s most attractive location for financial services investment last year, attracting 99 projects compared with Germany, which came second with 43. The US contributed a third of the investment in the UK. London receiving the bulk of UK-focusses investment with 67 projects in all – Paris recorded 29.
Insurers vs small businesses: a high-stakes battle over lockdowns
The FT reports on how insurers around the world are facing claims they have reneged on business interruption policies following the coronavirus pandemic, with small business in the UK minded to stop buying such cover.
Online payment firm raises $150m after use surges in lockdown
The value of Checkout.com has tripled to $5.5bn after the London-headquartered online payments business raised $150m in new funds from investors. Use of Checkout’s payments technology has surged, with online transactions involving its service seeing a 250% year-on-year increase in May.
HEALTHCARE
Insurers are delaying life cover over COVID-19 concerns
Medical unions say a decision by life insurers to delay the issuance of new policies to people who may be at risk from COVID-19 is deterring some doctors from getting tested for the virus.
LEISURE AND HOSPITALITY
Travelodge landlords back CVA
Travelodge landlords have approved the hotel chain's CVA, agreeing to vote for the deal, which includes temporary rent cuts, after Travelodge gave them the option to break leases on the majority of the 564 hotels it operates in the next five months. Shareholders have agreed not to take money out of Travelodge before it returns to paying full rents in 2021.
MEDIA AND ENTERTAINMENT
Saudi’s PIF amassing stake in BT
Saudi Arabia is believed to be taking a position in BT through its $325bn sovereign wealth fund - the Public Investment Fund (PIF). The telecoms company is currently worth just £11.7bn with shares down 40% this year following a fall in confidence in the group and the broader coronavirus slump.
REAL ESTATE
Business eviction ban extended
The Government has extended measures to prevent landlords from evicting businesses. While rules rolled out when the lockdown started said tenants cannot be evicted before June 30, this has now been extended to the end of September. Communities Secretary Robert Jenrick said the new code was developed and signed alongside the British Chambers of Commerce, British Property Federation, British Retail Consortium, the Commercial Real Estate Finance Council, Revo, the Royal Institution of Chartered Surveyors, and UK Hospitality.
RETAIL
Retail sales bounce back
British retail sales rebounded last month, with a stronger than forecast increase as the country gradually relaxed its coronavirus lockdown. The Office for National Statistics said that sales were up 12% last month, compared to April, which saw an 18% fall in sales. Despite the upturn, sales in May were still 13.1% down on the same month a year ago. Sales at non-food stores increased by 24% in May, but were still 42% down on a year earlier, with clothes stores the hardest-hit category, down by more than 60%. Online sales represented a third of all spending, a new record. In the three months to May, overall sales fell by 12.8% compared with the previous quarter.
ECONOMY
UK debt worth more than the economy
The UK borrowed £55.2bn in May, nine times more than in May 2019. May’s borrowing took total Government debt to £1.95trn – or 100.9% of GDP, with national debt now worth more than the economy for the first time since 1963. While Government outlay included funding for support measures rolled out amid the coronavirus crisis, income from tax, National Insurance and VAT fell, with HMRC data showing tax payments were down £16.2bn - or 43% - on the same period last year. The Office for National Statistics estimates that borrowing for the 2020/21 financial year will hit £298bn.