Optimism grows among bankers after positive vaccine news
The Telegraph’s Lucy Burton reports on the hopes for a return to health for the banking sector after news that a successful COVID-19 vaccine was on the horizon. Credit Suisse analysts said: "With a successful vaccine, we think regulators will be more willing to allow banks to pay a normalised dividend for 2020, as well as some catch-up for 2019.” UK banks could get the biggest boost from a vaccine alongside rivals in France, Spain and Holland, they added, because they had been hit hardest since the pandemic began. But Axel Weber, chairman of UBS, told CNBC that recovery is a long way off and that Pfizer’s vaccine announcement needs to be taken “with a grain of salt”. Wall Street executives are more bullish than their European counterparts, with Stephen Scherr at Goldman Sachs saying the vaccine will "inevitably" boost banks by helping the yield curve slope upwards. Ian Gordon, banks analyst at Investec, suggested provision for bad debt should become less severe and the odds of negative rates should fall.
BoE policymaker says negative interest rates could benefit economy
Bank of England policymaker Silvana Tenreyro believes negative interest rates could lead to lower lending rates and an increase in banks' profitability, and help the economy at large recover from the effects of the coronavirus crisis. She remarked: “The positive evidence related to negative interest rate policy comes from Europe, where it has worked fairly well.” This comes after Bank of England deputy governor Ben Broadbent noted recently that the issue of whether sub-zero interest rates could have counterproductive effects on banks’ balance sheets during times of stress should be considered by policymakers.
Inflation targets could be raised by ECB
With prices falling across the EU, the ECB has been urged to increase its inflation target. Klaus Adam, economics professor at the University of Mannheim, said a strict policy controls on rates meant “the only other tool available for lowering real interest rates is a promise to achieve higher inflation in the future,” while Bank of Spain chief economist Oscar Arce called on the ECB to act “swiftly and forcefully” next month in a bid to boost European economies. Meanwhile, ECB president Christine Lagarde is reportedly planning more QE and cheap funding for banks to keep borrowing costs down as part of next month’s stimulus package.
China’s banking regulator signals tougher fintech antitrust laws
A Chinese banking regulation official has warned that monopolies could result from technological advances in the financial sector, as new antitrust rules are unveiled in the country.
Borrowers still taking payment holidays on $90bn of loans at top US banks
The largest US lenders have seen third-quarter loans in forbearance more than halve, with customers taking payment holidays on loans of $90bn at the end of September.
China Construction Bank to issue offshore bond based on blockchain
China Construction Bank has partnered with Fusang Exchange to launch a blockchain-based offshore bond backed by deposits at the bank’s branch in Labuan, an island tax haven in Malaysia.
Sweden opens door to resumption of bank dividends
Sweden’s financial regulator has said banks could resume dividend payments next year if the economy stabilises and lenders stay profitable.
Cargo plane conversions undertaken by Emirates
Emirates has adapted its Airbus A380s as cargo planes, after temporarily converted 10 Boeing 777s to carry more cargo earlier in the year. Demand for passenger use of the A380 is not expected to reach pre-pandemic levels until 2023 at the earliest, with Air France-KLM retiring the model earlier than it had planned to and Lufthansa grounding its fleet permanently.
Goldman backs BA owner
Analysts at Goldman Sachs estimate that IAG could be worth four times its present value, or roughly 660p a share, once the headwinds of COVID-19 ease. After the note was published IAG’s shares went up 8.3% to 148¾p.
Half of UK financial services trade surplus generated outside the City
Financial services exports from Scotland accounted for 8.2% or £9.2bn of Britain's total financial services exports last year, according to a new report from TheCityUK. Some 37% of Scottish financial services exports went to the EU and the remaining 63% went to the rest of the world. Sandy Begbie, chief executive of industry body Scottish Financial Enterprise, said: "It is positive to see Scotland's financial and professional services exports increasing for the fifth consecutive year, illustrating our significant contribution to the UK's position as the world's leading exporter of these services.” Anjalika Bardalai, chief economist and head of research, TheCityUK, said: "This report dispels the common misconception that London sells financial and related professional services overseas and the rest of the UK focuses on domestic activity. The British financial services sector made a £56bn trade surplus in 2018 and almost half of this was accounted for by regions and nations outside the capital.”
London Stock Exchange Group faces new hurdles over Refinitiv deal
The London Stock Exchange Group is facing a potential obstacle to its $27bn takeover of Refinitiv after it emerged that competitors plan to raise concerns about the deal with Brussels. The LSE has pledged to allow competitors access to data after its acquisition of Refinitiv, but at least two rivals are reportedly planning to tell European regulators that this will not be enough to limit the British group's dominance. The rivals are also expected to warn competition authorities that the stock exchange group could have an edge over them after Brexit because it might not have to follow the same market rules.
Questions remain over City’s post-Brexit role
Simon Nixon in the Times reflects on Rishi Sunak’s speech on the future of Britain's financial services sector and his decision to unilaterally grant equivalence status to the EU. He says the speech contained “an implicit acknowledgement that Brexit has proved costly for the City,” adding that the City's most promising growth opportunity “is one that Mr Sunak did not mention. That would come from extending the equivalence being offered to the EU to other financial centres. This is something that the EU was reluctant to concede, except where other jurisdictions closely followed EU standards. Britain is now free to take a more pragmatic approach.”
Trading blackout brings calls for compensation
The Financial Conduct Authority has said investment platforms should plan for unexpected scenarios so that they can continue providing services to customers. It issued the statement after brokers including Hargreaves Lansdown, AJ Bell Youinvest and Fidelity Personal Investing refused to compensate investors for missed trades after IT failures blocked millions of customers from their accounts on Monday. "We are aware of the issues and are discussing it with the [companies] involved," the FCA said.
Louis Dreyfus sells stake to Abu Dhabi sovereign wealth fund
A 45% stake in Abu Dhabi state-owned holding company ADQ is to be sold by Louis Dreyfus Company, with the sale price not disclosed but a portion of the proceeds expected to be reinvested in LDC.
Hedge fund manager places corporate credit bet
Pershing Square hedge fund manager Bill Ackman has told a digital conference of private equity investors and investment bankers that he had bought insurance against corporate defaults, predicting that firms would struggle to repay debts as a result of the economic effects of coronavirus.
EU to buy up to 300m doses of BioNTech-Pfizer’s Covid vaccine
An agreement to buy as many as 300m doses of a coronavirus vaccine expected from BioNTech and Pfizer has been finalised by EU authorities.
LEISURE & HOSPITALITY
Wetherspoons chairman hits out at ‘baffling’ Covid restrictions
JD Wetherspoon chairman Tim Martin has condemned “constantly changing national and local regulations” as the chain warned the second UK lockdown would cost it more than the first.
Flutter lifts earnings outlook as it draws more punters
Gambling firm owner Flutter has upgraded its earnings forecast by around £100m, with earnings before interest, tax, depreciation and amortisation for non-US brands expected to be around £1.28bn to £1.35bn.
UK shipyards owner looks beyond building vessels
New owner Harland and Wolff shipyard owner InfraStrata is diversifying its operations, having acquired Devon manufacturer Appledore and seeking defence and other government contracts.
New nuclear reactors consortium led by Rolls-Royce
Rolls-Royce is leading a consortium of firms in designing and building a fleet of 16 mini nuclear reactors planned to be deployed across the country.
Massive rent shortfall poses risk to landlords
Landlords are facing a £4.5bn rent shortfall by the end of the year with collection rates remaining at around 75% and service charge payments at similar levels. With the Government’s ban on evictions and aggressive rent collection, concerns are growing that tenants increasingly will turn to company voluntary arrangements and this in turn could affect property owners’ ability to meet repayments on loans secured against properties.
Fnatic crowdfunding campaign follows $10m funding round
A crowdfunding campaign is being launched by London firm Fnatic as interest in esports grows, with venture capital firm Beringea leading a $10m round alongside existing investors Unbound, LVL1 Global and JHD.
Charity says Britain 'sleep-walking' into personal debt crisis
StepChange has warned that Britain is “sleep-walking” into a personal debt crisis with the number of people in severe financial difficulty now at approximately 1.2m due to the coronavirus pandemic. The charity said a further 3m people are at risk with 5.6m already in arrears or borrowing to make ends meet. Household borrowing and arrears linked to the coronavirus pandemic have soared 66% since May to £10.3bn. StepChange CEO Phil Andrew said the Government and banks needed to provide further protective measures.