BANKING
Nationwide increases minimum deposit
Nationwide has announced that it will only lend to mortgage borrowers with a deposit of at least a 15%, scrapping its deal for those with 10% of the property’s value amid concerns about falling house prices in the wake of the coronavirus crisis. Nationwide, which before the pandemic offered loans where a deposit of just 5% was needed, said the change, which is due to "unprecedented times and an uncertain mortgage market", is "prudent". It added that the 85% loan-to-value (LTV) ceiling will help protect borrowers from potentially slipping into negative equity. It also noted that the existing mortgage customers will still be able to obtain loans at up to 95% LTV.
HSBC job cuts to go ahead
A programme of job cuts is being revived by HSBC after being suspended due to the coronavirus outbreak. Chief executive Noel Quinn stated: “The reality is that the measures and the change we announced in February are even more necessary today. We could not pause the job losses indefinitely - it was always a question of ‘not if, but when’.” The redundancies form part of a restructuring plan revealed in February which included 35,000 losses over the next three years and annual cost reductions of $4.5bn.
Commerzbank fined over money laundering claims
The Financial Conduct Authority (FCA) has fined Commerzbank’s London branch £38m for failure to implement adequate money laundering checks over a period of five years. FCA executive director of enforcement and market oversight Mark Steward said: “Commerzbank London’s failings over several years created a significant risk that financial and other crime might be undetected… Anti-money-laundering controls are vitally important to the integrity of the UK financial system.” Commerzbank said it had co-operated fully with the FCA, and had “implemented new and enhanced anti-money laundering systems, processes and controls.”
PRIVATE EQUITY
Bridgepoint to buy private equity firm EQT’s €3.9bn credit business
Bridgepoint Advisers has agreed to buy EQT Partners’ €3.9bn credit arm and will merge the unit with its own credit business. EQT appointed JPMorgan to review options for the business in January.
BlackRock faces backlash in Brussels over ESG contract
Two members of the European Parliament have announced plans to complain to the European Ombudsman about the EU’s selection of BlackRock to advise on sustainability in its banking regulations.
AUTOMOTIVE
EU probes $50bn Fiat Chrysler merger with PSA
The European Commission has opened an in-depth antitrust probe into the $50bn merger of Fiat Chrysler and France’s PSA. Competition commissioner Margrethe Vestager said: “In many countries, either PSA or Fiat Chrysler Automobiles is already the market leader in light commercial vehicles, and the merger would remove one of the main competitors.”
CONSTRUCTION
Berkeley calls for government support for housebuilders
Head of housebuilder Berkeley Group, Rob Perrins, has called for tax cuts and incentive schemes for buyers, after sales fell by around 50% in April and May due to the coronavirus pandemic. Pre-tax profits were down 35% in the 12 months to April 30 to £503m, compared with £775m in the year-earlier period, with shares in the firm up 3.5% to £43.72 on Wednesday.
FINANCIAL SERVICES
Pensions superfunds given go-ahead
The Pensions Regulator has approved a system that will allow several defined benefit schemes to be collected together into pensions superfunds. The regulator has laid out rules on capital, governance and management that analysts say could release a logjam of deals, with companies desperate to offload their defined-benefit schemes and all the uncertainty that goes with them. Supporters of the schemes say the funds, which have faced obstacles in gaining regulatory approval, will be run more cheaply and efficiently than the firms that set them up, while critics suggest the funds provide scheme members less security. Guy Opperman, the minister for pensions, said: "Well-run superfunds have the potential to deliver more secure retirement incomes for workers, while allowing employers to concentrate on running their businesses."
FCA flags equity release advice problems
The Financial Conduct Authority (FCA) has warned that homeowners taking out equity release loans are not always being given adequate advice. A review by the watchdog found a number of failings in the equity release market, with instances where companies were unable to demonstrate that the advice given was suitable. The FCA’s Jonathan Davidson said that entering into a lifetime mortgage “is a big decision with a big financial impact” so it is critical that advice is suitable, but warned the review makes it clear that advice being offered to consumers, including some vulnerable people, “is still not up to scratch.”
Lloyd's of London to pay compensation over founders’ slavery links
Lloyd's of London has pledged reparations to ethnic minority communities for historic involvement with the slave trade. A database compiled by University College London shows that after slavery was abolished in 1833 the founders Lloyd’s received sums equivalent to hundreds of thousands of pounds in compensation. A Lloyd’s spokesman said: “We are sorry for the role played by the Lloyd’s market in the 18th and 19th century slave trade... We will provide financial support to charities and organisations promoting opportunity and inclusion for black and minority ethnic groups.”
Amigo founder loses board battle
Amigo Loans founder James Benamor is to sell his entire 60.7% stake in the lender after more than 90% of the firm’s minority shareholders rejected his request to replace its five directors with his two nominees. Following the vote, Mr Benamor tweeted: "Shareholders have spoken. They believe in the board’s vision, not mine". He added that it is “not the first time I’ve thought investors were wrong about something, but it is the most painful".
Lloyd’s of London underwriting room to reopen in September
Lloyd’s of London is to open its underwriting room in September. The reopening will see the building operating at 45% capacity, with new queueing and one-way systems in place.
LEISURE AND HOSPITALITY
Domino's profits to take hit from pandemic
Domino’s has warned that underlying profits for the six months to June 30 will be “slightly lower” than the £52.4m recorded in the first half of last year, as a result of costs linked to social distancing measures. Chief executive Dominic Paul remarked: “Throughout this crisis we have focused on looking after our people and working together with our franchisee partners to safely serve our customers and help our communities.”
Cruise firm seeking emergency funding after Barclays refusal
Cruise and Maritime Voyages (CMV) is seeking emergency funding after Barclays declined to offer the firm a £25m loan under the Coronavirus Large Business Interruption Loan Scheme. A spokesperson for CMV commented: “As the majority of other cruise lines have already done or are presently doing, CMV is also looking for additional financing to improve its liquidity position until sailing will resume again.”
MANUFACTURING
De La Rue printer expects boost from pandemic
Banknote printer De La Rue has suggested that the coronavirus pandemic will see demand for new currency increase, with chief executive Clive Vacher stating: “COVID-19 means it’s less acceptable to have grubby old banknotes and it also means more demand for plastic notes, which is good for us.” The pandemic could also benefit the firm in other ways, with the company's technology being used to develop authentication stamps for tests for the disease, among other uses.
REAL ESTATE
Legal & General London retirement site acquired
Legal & General’s first London retirement homes development is to go ahead after the firm acquired land in Uxbridge for the project. Guild Living will develop the site, with director Eugene Marchese stating: “There is a clear and growing need for age-appropriate housing both in London and across the UK.” Phil Bayliss, chief executive of later living at Legal & General, added: “London is often seen as a young city, but actually has the fastest growing over-50s population. We have to be prepared to meet these changing dynamics.”
RETAIL
Retailers win Visa and MasterCard fees challenge
Supermarkets are in line for a cash injection worth “billions” after winning a long-running legal battle against Mastercard and Visa over swipe fees. The Supreme Court ruled that both credit card providers set fees at an unlawful level, which restricted competition. The so-called swipe fees are changed every time a customer uses a Visa or Mastercard debit or credit card to make a purchase.
ECONOMY
Inflation sinks to four-year low
A record fall in fuel prices pushed the UK's inflation rate down to 0.5% in May, the second full month of the coronavirus lockdown. This means inflation, which was 0.8% in April, remains below the Bank of England’s target of 2%. Fuel prices declined by 16.7% during May, the Office for National Statistics (ONS) said, dragging the Consumer Prices Index to the lowest level since June 2016. The lockdown has forced the ONS to change the way it collects data on prices as social distancing means that statisticians have to rely to a greater extent on online prices. Jonathan Athow, deputy national statistician at the ONS, said: “The growth in consumer prices again slowed to the lowest annual rate in four years.” Samuel Tombs, chief UK economist at Pantheon Economics, says headline inflation is set to fall even closer to zero in the coming months.
BoE expected to boost QE
The Bank of England is expected to increase its asset purchase programme by at least £100bn today, as the central bank ramps up quantitative easing to shore up the economy. Economists also almost unanimously predict that the Monetary Policy Committee will keep the benchmark interest rate at a record low 0.1%.