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Daily News Roundup: Thursday, 13th August 2020

Posted: 13th August 2020

BANKING

NatWest to cut 550 branch jobs

NatWest is asking 550 branch staff to apply for voluntary redundancy following dramatic shifts in customer behaviour during the coronavirus crisis. Branch managers, personal bankers and managers of its premier banking business are among those affected. The bank will also close a major London office currently occupied by 2,500 staff, who will work from elsewhere in future. Last month, the lender told 50,000 employees to stay at home until at least next year. The move comes days after TSB announced 1,000 cashiers would be losing their jobs as the bank adapted to the shift online which has been accelerated by the pandemic.

Diversified fintech will exit pandemic in better shape

The Telegraph’s James Cook reviews the state of Britain’s challenger banks, which have reportedly agreed to row back on expansion plans following virtual board meetings with their investors. The latest annual reports from Revolut, Monzo and Starling Bank have elicited pessimism from analysts who say pressures experienced pre-Covid have been exacerbated by the pandemic, which has reduced revenue from international transactions. Although larger digital banks such as Starling rely less on international transactions, smaller start-ups like Soldo, which offer prepaid cards popular amongst business travellers, will “struggle massively”, says David Brear, CEO of fintech consultancy 11:FS.

INTERNATIONAL

Fannie and Freddie to apply “adverse market fee”

Fannie Mae and Freddie Mac have said lenders would be charged an extra fee from next month to cover potential losses on refinanced mortgages they guarantee. The fee will apply to most loans they buy that borrowers have refinanced to lock in a lower interest rate. Bob Broeksmit, chief executive of the Mortgage Bankers Association, commented: “For the GSEs to add a 50 basis-point surcharge on refinances when the nation is struggling with the greatest economic downturn since the Great Depression is outrageous,” he said in an interview, referring to Fannie and Freddie’s status as government-sponsored enterprises, or GSEs.

Barclays and Goldman Sachs compete for General Motors' credit card arm

Goldman Sachs and Barclays are both bidding for the $3bn (£2.3bn) credit card arm of US carmaker General Motors, according to reports. While Goldmans is looking to use a deal with GM to push it further into consumer banking, Barclays could use the acquisition to cement its place as a transatlantic bank and would mark a significant victory for boss Jes Staley.

ABN Amro to slash size of investment bank

Following a review led by CEO Robert Swaak, ABN Amro is to wind down all of its non-European corporate banking operations and stop providing trade and commodity finance.

AVIATION

BA could offer pre-flight Covid tests

British Airways passengers could be offered pre-flight COVID-19 tests in an effort to boost traveller numbers as more countries require proof of a negative test on arrival. The airline has proposed linking up with a third party – possibly Boots – to provide the test. Emirates made pre-flight tests available in April and since then has made them mandatory, as has Eithad, but BA said it had no plans to follow suit.

Bondholders disrupt Virgin sale

Credit Suisse, Deutsche Bank and UBS are among those supporting a push by bondholders to prevent the sale of Virgin Australia to Bain Capital.

CONSTRUCTION

Balfour Beatty slumps to £26m loss

Balfour Beatty suffered a £26m loss in the first six months of the year, from a profit of £63m a year ago. Chief executive Leo Quinn said the financial impacts of Covid were "unavoidable, but they will pass".

FINANCIAL SERVICES

M&G profits down after funds withdrawn by retail investors

Insurer and asset manager M&G has reported adjusted pre-tax profits down 59% to £309m in the six months to the end of June, following a demerger and retail investors withdrawing funds during the coronavirus pandemic. The firm’s net outflows were £4.1bn for the period, with assets under management falling from £341bn to £339bn and fee-based revenue from £637m to £580m. Meanwhile, M&G has extended the gating of its property fund for a third time, saying this was needed to protect the interests of its investors.

Admiral reports increase in first-half profit as dividend reinstated

Car insurer Admiral’s special dividend has been reinstated amid an increase in first-half profit, with statutory pretax profit up 31% to £286.1m for the six months to 30 June. The firm stated: “Lockdown restrictions in the group’s markets resulted in significantly lower motor insurance claims frequency as customers stayed at home and fewer miles were driven.” Chief executive David Stevens added: “This year’s interims benefit again from our consistently competent underwriting and conservative reserving on past years, feeding into another strong set of results in the core business and beyond.”

City AM

Property funds at risk of liquidation

Investment analysts have warned that proposed rules requiring investors to give notice to receive their cash from property funds are adding to a perfect storm in the sector. Specialists predict the notice period proposed by the Financial Conduct Authority, which could be up to 180 days, combined with the economic slump, already suspended portfolios, and the uncertain fate of many office and High Street buildings, could result in the end of open-ended property funds. “The perfect storm is here for these funds” said Tom Becket of Psigma.

UK life insurers pay £90m in COVID-19 claims

The Association of British Insurers (ABI) has revealed that UK life insurers paid £90m in claims related to deaths from the COVID-19 pandemic in the three months to end-May. In a statement, the ABI said insurers received 7,000 life insurance claims from families of people who died from COVID-19 and 83% have been paid so far. The average payout is expected to be £63,000 for an individual policy and £137,000 for a group policy.

HEALTHCARE

US nursing home operator warns of bankruptcy

Nursing home operator Genesis Healthcare, which is backed by Apollo Global Management, says it will not be able to survive pandemic-related losses without government support.

REAL ESTATE

CLS reports lower occupancy levels in London than on continent

Office leasing firm CLS has said workers in London are returning to offices less than in other European cities, with occupancy levels at about 15% - 20% at its London sites. The firm’s German sites are seeing a figure closer to 50%, and in Paris between 40% and 50%. This comes as first half net rental income for the company rose 5% to £56.5m, while it recorded a 62.8% decline in pre-tax profits to £31.5m.

RETAIL

Asos raises revenue growth forecast

Online fashion retailer Asos expects revenue growth to be between 17% and 19% for this financial year, with profit before tax expected to come in the range of £130m to £150m. The news sent shares in the retailer up 6% on Wednesday morning to £44.74.

SPORT

Billionaire puts £30m into Derby

MSD Capital, owned by American billionaire Michael Dell, has pumped £30m into Derby County, secured against the club's assets.

ECONOMY

UK suffers deepest recession on record

The UK economy shrunk by a fifth and fell into its deepest recession on record in the second quarter. Official data released on Wednesday confirmed a 20.4% fall in GDP quarter on quarter, a decline double that of the US. The contraction followed a 2.2% dip in the first quarter, sending the country into a technical recession. In Germany, GDP fell 11.9% in the first half, Italy shrank 12.4%, France 13.8% while Spain suffered the worst second-quarter slump of any leading economy of 18.5%. Samuel Tombs, of Pantheon Macroeconomics, said the length of the lockdown in the second quarter worsened the performance, a view shared by former Treasury minister Lord O’Neill, who added: “It’s not as though our system-wide shutdown resulted in better health outcomes."

OTHER

Blockchain start-up hires former national security adviser

US tech start-up L3COS has hired Britain's former national security adviser Sir Mark Lyall Grant to provide it with strategic advice as it seeks to woo central banks with its blockchain-based technology.

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