MP questions whether lending rules are too tight
The Financial Conduct Authority was questioned by MPs on Friday over whether rules intended to prevent risky lending in normal times are causing major delays in the administering of the government’s emergency business loan scheme. During a conference call between the regulator, MPs and banking industry representatives, Tory MP Kevin Hollinrake questioned whether there were “unfair requirements on the banks”. The call was held to discuss a plan for offering a 100% state guarantee on bank loans of up to £25,000 for "micro-firms" – the idea is backed by MPs and senior City executives. The Telegraph’s Ben Marlow questions why such a scheme is required given the success of the grant support package. He also cites RBS boss Alison Rose, who points out that even with full state backing, lenders will still be constrained by the Consumer Credit Act and have a duty of care to ensure customers are capable of repayment. But the Times’ Katherine Griffiths says the new policy will likely excuse banks from observing the Act, which covers loans of up to £25,000 to small businesses.
BBB leaves lenders left in limbo unable to support small firms
As many as a hundred non-bank and fintech lenders are still waiting to be accredited by the British Business Bank (BBB) for the Treasury’s Coronavirus Business Interruption Loan Scheme (CBILS), the Sunday Telegraph reports, with many simply giving up. The BBB said almost 50 lenders have been accredited so far with 80% of SMEs having a relationship with those approved but Oliver Prill, chief executive of fintech firm Tide, said the process was “very slow” and risked the collapse of many small firms, the cost to the economy of which would far outweigh the incremental credit losses. The Yorkshire Post reports that Allied Irish Bank, ThinCats, Paragon Bank and IGF (Independent Growth Finance) have all been approved by the BBB as accredited lenders under the CBILS.
Banks create additional barriers for coronavirus loans
Lloyds Bank has been accused of putting unnecessary barriers in front of businesses applying for emergency loans. The bank reportedly requests nine pages of information from a firm before it considers permitting the formal request. Such “pre-application applications” have caused alarm for industry leaders such as Craig Beaumont, the director of external affairs and advocacy at the Federation of Small Businesses. He said companies in need of loans should be fast-tracked through the process: “This underlines the need for a new approach for smaller loans that does warrant all this bureaucracy.”
BoE warns bank loan reserves risk choking business funding
The Bank of England has said UK lenders should refrain from booking large loan-loss provisions in their first-quarter results, warning the move would reduce their ability to write new loans. Barclays, Lloyds, RBS and HSBC are set to report this week with analysts predicting RBS will earmark £657m for bad loans. Lloyds could set aside £1.1bn for defaults, Barclays close to £1bn and HSBC £650m. Standard Chartered is expected to take a £502m hit.
ISS recommends Staley re-election
ISS has recommended that Barclays shareholders vote to re-elect chief executive Jes Staley. The Barclays boss has faced pressure from Edward Bramson and Sherborne Investments over his relationship with Jeffrey Epstein. The Financial Conduct Authority and Prudential Regulation Authority are looking into whether Staley was forthcoming about his relationship with Epstein, which he claimed was professional. In a letter to investors, ISS said it would recommend Staley for re-election at the company’s upcoming annual meeting. The shareholder adviser said it believed Staley had been “sufficiently transparent with the company as regards the nature and extent of his relationship with Epstein.”
Sainsbury’s may have to bail out its own bank
Barclays analysts suspect Sainsbury’s may have to bail out its banking division after Tesco reported that its bank will lose money in 2020-21.
PPI mis-selling payouts exceed £38bn
The Financial Conduct Authority has revealed that an additional 1.4m PPI complaints were filed in the final month leading up to the deadline last August, sending total compensation for mis-selling up to £38bn.
Hampden & Co boosts client numbers
Hampden & Co has picked up a raft of new clients who have switched from bigger banks which they said have been struggling to service them during the coronavirus pandemic.
Qatar sovereign wealth fund seeks health and tech deals
Ali Sharif al-Emadi, Qatar’s finance minister, has said the Qatar Investment Authority will remain “very active” during the coronavirus pandemic and will seek deals in the health and technology sectors.
Coronavirus: private equity’s bailout moment
The FT looks at the efforts of private equity firms to convince governments in the UK and US to allow them access to state-backed loans for portfolio companies.
Deutsche eases capital targets to trade through coronavirus crisis
Deutsche Bank has released better than expected first-quarter earnings early. Group profit for Q1 came in at €206m on a pre-tax basis, better than consensus expectations for a pre-tax loss of €269m. Net profit was €66m, down from €201m in the first quarter of 2019 and the bank took €500m of provisions for credit losses, up from €140m in Q1 the year before.
JPMorgan tops ranking as best-performing fund house in China
New analysis of the Chinese investment market has found that JPMorgan Asset Management has regained its position as the top-performing foreign fund in China, ahead of UBS and Invesco.
ECB set to beef up asset purchases with shift into ‘junk’ bonds
Economists are predicting that the ECB will start to buy riskier debt and expand the size of its bond-buying programme with the central bank now deemed the “only game in town” to stop the pandemic spiralling into a deeper financial crisis after EU leaders failed to sign off on the terms of a €1tn-plus recovery fund.
US banks pull back from lending to European companies
American lenders are reticent to finance European companies during the coronavirus pandemic, the FT reports, causing concern in Europe about the reliability of US banks in a crisis.
US lenders work through mortgage refinancing backlog
US banks are hiring new staff to help with a backlog of mortgage refinancing applications. Eric Schuppenhauer, president of consumer lending at Citizens Bank, predicts demand will continue through the summer.
McLaren given £300m to help steer through pandemic
McLaren shareholders have injected an extra £300m into the supercar manufacturer to help it weather the coronavirus pandemic.
Tesla hires former Japanese pension chief as board director
Hiro Mizuno, the former CIO of Japan’s $1.5tn Government Pension Investment Fund, has joined the board of Tesla.
Branson seeks rescue party for Virgin Atlantic
Virgin Atlantic has hired investment bank Houlihan Lokey to seek out a buyer for the loss-making airline after Sir Richard Branson put his attempts to secure a government bailout on ice, according to the Sunday Telegraph. Sources say interested parties include Lansdowne Partners, Temasek, Northill Capital, Centerbridge Partners and Cerberus Capital Management. Houlihan Lokey is aiming to complete the rescue by the end of May with Sir Richard continuing to bankroll the business in the meantime.
Heathrow chief calls for health checks at UK airports
The CEO of Heathrow airport, John Holland-Kaye, has asked the UK government to introduce mass health screening for coronavirus at the country’s airports. Transport Secretary Grant Shapps indicated the measure could be introduced but not until the test, track and trace phase of the response to the pandemic. Meanwhile, Gatwick Airport’s boss Stewart Wingate has warned that passenger numbers were not likely to return to normal for four years. Finally, the Government is being urged by Airlines UK to extend the £40bn wage subsidy scheme as carriers face a cash crisis if support is withdrawn.
Boeing scraps $4.2bn Embraer deal
Boeing is abandoning its $4.2bn acquisition of Embraer’s commercial-aircraft business as plane-makers prepare for a shrunken jetliner market after the coronavirus pandemic.
New home builds to drop by over a third
The number of houses being built could slump by up to 35% across the UK, as property sales and building work suffers under the COVID-19 lockdown. A study predicts that private developers will build 104,500 homes – about 56,000 fewer than forecast by the OBR.
Persimmon gets back to work
Persimmon has announced that workers will return to building sites today, joining rivals Taylor Wimpey and Vistry in restarting work under new safety protocols. The housebuilder added that cancellations of house purchases are still at “historically low levels”.
Car finance customers offered payment holiday
The Financial Conduct Authority has said it is going ahead with a package of proposals to support people facing payment difficulties because of the coronavirus pandemic, including allowing payment holidays for drivers with car finance deals. Customers will be able to request a temporary suspension of their payments for up to three months, with the scheme covering motor finance, buy-now-pay-later, rent-to-own and pawnbroking agreements.
British insurers to pay £1.2bn in coronavirus claims
The Association of British Insurers (ABI) has estimated that insurers could pay out more than £1.2bn in claims to people and businesses affected by COVID-19. Of the £1.2bn, £900m relates to business interruption claims, £275m paid to customers in cancellation claims on travel insurance, and £25m across wedding insurance, school trips and events. Lloyd’s of London boss John Neal believes the coronavirus pandemic is likely to be the most expensive event in history for the insurance industry.
Sanofi warns Europe on COVID-19 vaccine
French pharma group Sanofi has criticised a lack of co-ordinated action in the EU on the development of a vaccine for COVID-19, calling for government backing for firms similar to that provided in by the US.
LEISURE & HOSPITALITY
Betting companies win multibillion-pound rebate over slot machines
HMRC will have to pay out over £1bn to gambling firms Betfred and Rank Group after a court said they had wrongly been charged VAT on fixed-odds betting terminals (FOBTs) and other slot machines.
Greene King furloughs over 36,000 employees
Greene King has furloughed more than 36,000 employees, or 95% of the pub chain's staff, due to the coronavirus crisis, which has led to the closure of all its pubs in the UK.
Tata Steel seeks £500m government support
Tata Steel has approached the UK and Welsh governments for about £500m in support after a slump in orders from carmakers, manufacturers and the construction industry knocked steel production hard.
Banks cap property loans
Some banks have had to cap mortgages at £500,000 due to surveyors being unable to make physical appraisals during the COVID-19 lockdown. Sources at lenders said that professional indemnity insurance does not cover big loans for expensive homes they have not been to in person. Only simple online assessments of properties can be done at the moment and this has led banks to impose strict price limits during the lockdown. Virgin Money and Clydesdale have a property price ceiling of £500,000 while Precise Mortgages and Kent Reliance capped mortgage lending at £600,000. Aldermore's limit is £750,000 outside the M25 motorway and up to £1m within it. NatWest has a more generous ceiling of £3m.
UK retail sales in historic drop as lockdown triggers shopping freeze
UK retail sales declined 5.1% in March from February, the ONS reports, the largest drop since the agency started collecting the data in 1996.
CVC re-evaluates rugby investment
CVC Capital Partners is reviewing the purchase of a £120m stake in the PRO14 Welsh rugby tournament, with the coronavirus crisis, as well as CVC's return on investment in Premier Rugby in England, leading to second thoughts.
British households to spend £23bn less
Researchers at the CEBR expect British households to hold on to £23bn in savings in the months to come as people drastically rein in their spending. This is despite average incomes predicted to fall by £515 in the second quarter of the year.