BANKING
One in seven borrowers fail to pay on time
Research by the Institute for Fiscal Studies (IFS) shows that one in seven households are falling behind on repaying their mortgages due to the coronavirus pandemic. The study found that 1.4m homeowners, or 14%, had failed to pay their mortgages last month. The IFS said both lower income households and higher earners were struggling to keep up with payments. Meanwhile, a survey of over 4,000 customers by Virgin Money found one in eight had called on their bank for help in the form of overdrafts and payment holidays on mortgages, personal loans and credit cards, the equivalent of about 8m people.
Mortgages at 1.99% for ten years
Homeowners with a 40% deposit or more can now secure their mortgage for ten years at less than 2% after Barclays cut rates for well-off borrowers while increasing costs for first-time buyers. Meanwhile, lenders are making it tough for borrowers who can only get a 15% deposit together, data shows, as the number of mortgage deals available has almost halved from 664 to 357 since March, according to Moneyfacts. Additionally, banks are scrutinising applications from the self-employed more closely, causing delays and raising fears vendors could attempt to avoid them in future.
Bank of Scotland reports surge in mortgage applications
As the Scottish property market prepares to get back to work, new lending appointments have surged 470%, according to Bank of Scotland data. The majority of these enquiries and appointments are from first-time buyers. Graham Blair, mortgages director at Bank of Scotland, said: “As Scottish estate agents look to reopen their doors, we are seeing an increase in mortgage applications and new lending appointments as more people want to get moving.”
‘Too big to fail’ banking reforms hailed by Financial Stability Board
The Financial Stability Board says while reforms designed to prevent banks being "too big to fail" have made lenders more resilient and risk-averse, there are still gaps in the system.
Lloyds seeks to expand income streams
Lloyds Bank is planning to extend its push into wealth management and insurance in its next strategy update in order to diversify its sources of income.
TSB sees online surge
TSB has seen a jump in customers using its mobile app and online banking during the COVID-19 crisis, with the average number of customers registering for the app since lockdown started nearly trebling, while the number enrolling for internet banking is up 137%.
OakNorth tips Yorkshire as new base
Despite the uncertainty caused by Brexit and the pandemic, challenger bank OakNorth has lent a quarter of a billion pounds to businesses in the North of England. Head of debt finance Ben Barbanel said OakNorth as looking to set down roots and open an office “in Leeds or somewhere in Yorkshire.”
PRIVATE EQUITY
Investors rue lack of protections on €7.1bn Thyssenkrupp debt
Analysts says the bonds offered by Advent and Cinven for their purchase of Thyssenkrupp’s lifts business had some of the worst protections they had ever seen, but demand for the high-yield debt remained.
Broadstone put up for sale
Buy-out firm Livingbridge has appointed advisers to find a buyer for Broadstone, a company that specialises in selling pensions advice to SMEs.
INTERNATIONAL
Commerzbank mulls ambitious cost-cutting programme
Commerzbank CEO Martin Zielke could slash 7,000 jobs and close as many as 400 branches as shareholders and the German government express frustration at the pace of the bank’s cost-cutting programme.
AUTOMOTIVE
Aston Martin seeks fresh cash injection
Aston Martin is looking to raise around £260m through new shares and high-interest debt as the luxury carmaker seeks to bolster its finances further in the face of the coronavirus pandemic. The move comes only two months after a £536m rescue led by executive chairman and F1 billionaire Lawrence Stroll.
AVIATION
Bain swoops on Virgin Australia
American private equity firm Bain Capital has agreed to buy Virgin Australia, which collapsed in April after the coronavirus pandemic shut down most air travel. However, Virgin's 6,000 unsecured bondholders tabled a separate recapitalisation proposal on Wednesday which could frustrate the Bain deal. Separately, Ryanair boss Michael O'Leary has called on the EU Commission to block what he termed an "illegal" subsidy to Dutch flag carrier KLM.
Virgin Atlantic engineering privately funded bailout
Virgin Atlantic is in talks with stakeholders about a £900m refinancing package after the airline concluded it was unlikely to secure an emergency government bailout. The plans could see shareholders Virgin Group and Delta Air Lines inject an additional £250m of new cash into the company.
FINANCIAL SERVICES
FCA orders Wirecard’s UK operations to cease activities
The Financial Conduct Authority (FCA) has ordered Wirecard’s UK subsidiary, Wirecard Card Solutions, to cease all regulated activities in order to protect customer funds. The German fintech filed for insolvency last week after revealing a €1.9bn hole in its accounts. The move means customers of fintechs such as Pockit and Curve are unable to access their cash. Wirecard Card Solutions told the FT that it is taking steps to lift the suspension so business can resume as usual. Separately, the European Commission has written to the European Securities and Markets Authority calling for it to assess whether BaFin responded appropriately to allegations of improprieties at Wirecard.
Direct Line tells customers to talk to their bank over cancelled holidays
Direct Line has been criticised for telling customers they must seek refunds for cancelled holidays from credit card companies before turning to the insurer. The Times reports that the Financial Conduct Authority (FCA) says Direct Line should not be doing this, but was unable to say what it might do to stop the practice. Direct Line said: “We are not in contravention of any FCA guidelines. Our reason for asking customers their payment method is to assist our claims handlers so that they can identify other potential routes of recovery.”
Post Office reopens money exchange services
The Post Office is to restart its foreign exchange services as the Government plans to open up air travel for tourists. Other providers, such as Travelex, have maintained some delivery services throughout lockdown. The Post Office will now accept online orders with a minimum of £400 applied, and make click and collect available from some branches from July 1st, also with the £400 minimum.
HEALTHCARE
Healthcare developer calls for £5bn investment in GP surgeries
Ministers have been urged to unlock £5bn of funding for GP surgeries across the UK to help the NHS cope with future pandemics and kickstart the economy. The call comes in a letter to housing secretary Robert Jenrick from the UK’s biggest developer of primary care properties, PHP. Harry Hyman, chief executive, was responding to Mr Jenrick’s call earlier this month for proposals on “shovel ready” building projects to spur growth in the wake of a record-breaking recession. Mr Hyman said the Government could make use of private capital to invest in schemes typically costing around £5m each.
LEISURE & HOSPITALITY
Holiday bookings rocket as travel restrictions ease
Travel companies have reported an explosion of bookings after the Government announced restrictions on non-essential overseas travel will be relaxed from July 6th. A spokesperson for TUI said the move was a "hugely positive step forward" while Lastminute.com said it experienced an 80% increase on holiday sales compared to the previous week.
Marston's says the coronavirus pandemic has cost it £40m in lost revenues as it reported half-year pre-tax profits had plummeted by over 70%. The brewing and pub group said it would open about 85% of its pubs in England when restrictions are lifted. Those which fail to make enough sales will be closed.
MANUFACTURING
Six companies in ‘Project Birch’ rescue talks with Treasury
The Treasury is in talks with six companies as part of its programme to provide state aid to strategically important businesses. Celsa Steel UK, Jaguar Land Rover and Tata Steel are among them.
REAL ESTATE
Blackstone skips payment on $274m hotel loan
The asset management giant Blackstone has skipped a payment on a $274m loan secured on four US hotels, joining other real estate investors who have requested forbearance during the coronavirus crisis.
ECONOMY
CBI: UK private-sector activity suffered record Q2 fall
British economic output suffered a record 20% fall in April, according to the Confederation of British Industry (CBI), whose monthly growth indicator dropped to -71 in June from -63 in May, its lowest since the series began in 2003. “These figures show the full impact of coronavirus on the economy after three months of shutdown. However, there are signs that we’ve hit rock bottom,” CBI economist Alpesh Paleja said. Separately, a quarterly survey from the British Chambers of Commerce will this week show Britain suffered the biggest drop in economic activity since the report was first published 31 years ago. The manufacturing and services sectors fell to record lows in Q2, underlining the severe impact of the COVID-19 crisis.
Firms call for fairer economy
Business and trade union leaders have called on the Government to deliver a "stronger, fairer and greener" economy in the wake of the COVID-19 crisis. Organisations including the Federation of Small Businesses and leaders including Confederation of British Industry director-general Dame Carolyn Fairbairn and TUC general secretary Frances O'Grady have signed a petition setting out areas they want ministers to prioritise over the coming months and years, including improvements to public services, the creation of sustainable jobs and further investment in renewable energy sources.