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Daily News Roundup: Thursday, 19th March 2020

Posted: 19th March 2020

BANKING

Fraud victims reclaim money from banks as scams increase

Fraud victims were able to reclaim £41.3m from banks in the second half of last year, even as bank transfer and impersonation scams were up 29% in 2019 to £455.8m. This followed the introduction of a new code in May last year which was intended to provide greater protection from fraud for account holders and to ease the process of getting their money back where they are not at fault. UK Finance, which collected the data, said of the losses: “These include investment scams advertised on search engines and social media, romance scams committed via online dating platforms and purchase scams promoted through auction websites,” with managing director of economic crime Katy Worobec noting that: “This shows why fraud and other economic crime should be included within the new regulatory framework for online harms, to ensure all sectors play their part in tackling the threat posed by fraud to our society.”

Banks detail coronavirus support

With Chancellor Rishi Sunak announcing that those in financial difficulty due to the coronavirus outbreak may be able to take a mortgage holiday, deferring payments for up to three months, a number of banks have detailed new policies. Barclays is offering repayment holidays for up to 90 days and the option of switching from Capital Repayment to Interest Only for up to 12 months. Santander says it is “fully supportive of the industry wide 3-month payment suspension” and confirmed that anyone who applies for a break will not see their credit file impacted. NatWest and RBS, which pledged mortgage holidays last week, are also offering customers to option to close fixed savings accounts with no early exit charge, refunds on credit card cash advance fees and the option to request an increased cash withdrawal limit of up to £500. Lloyds says customers will benefit from no fees for missed payments on credit cards, loans and mortgages and see payment holidays on mortgages and loans.

HBOS report due by year end

A review into whether executives at Lloyds Banking Group covered up a £1bn fraud at HBOS is due to be completed by the end of the year. Dame Linda Dobbs, who in 2017 was appointed to lead the investigation into the bank's handling of the fraud which took place before it rescued HBOS in 2009, said she had originally hoped to deliver the report within a “matter of months” but the “scale and scope of the undertaking” had led to delays.

Coronavirus set to delay HSBC strategy

A senior HSBC source has suggested that one of new chief executive Noel Quinn's first jobs at the lender will be to review the wide-ranging revamp he introduced last month, with the effects of the coronavirus pandemic posing a threat to the success of the move to cut costs, including job losses.

PRIVATE EQUITY

KKR to buy Viridor in £4.2bn deal

KKR is to buy UK recycling company Viridor through its infrastructure fund in a £4.2bn all-cash deal. KKR pipped interested parties including Suez, Veolia, Dalmore Capital, Equitix and Macquarie to tie up the deal for Viridor, water company Pennon Group’s waste management unit.

INTERNATIONAL

ECB to buy €750bn in extra bonds

The European Central Bank has announced plans to buy €750bn in extra bonds by the end of the year. Its Pandemic Emergency Purchase Programme will cover both sovereign bonds and corporate debt.

Australian banks urged to observe new trading regulations

The Australian Securities and Investment Commission is holding discussions with investment banks including UBS, Barclays, Credit Suisse, Goldman Sachs, Bank of America, Citigroup, Morgan Stanley, JP Morgan and Macquarie to ensure that new rules aimed at preventing an overload of market systems are adhered to. The measures were introduced in response to a major spike in trading late last week as fears about the effects of the coronavirus grew.

UBS remains positive as virus affects markets

The coronavirus pandemic has failed to cause high losses in UBS’ Lombard lending portfolio, with CFO Kirt Gardner stating that the lender is comfortable with its liquidity despite the market drops witnessed as a result of the outbreak. He told the Morgan Stanley European Financials Conference: "We have a conservative risk profile, a high-quality credit portfolio and relatively limited exposure to highly impacted industries like oil and gas or air transportation at $1.4bn and $1.9bn, respectively.”

JPMorgan to close 1,000 branches

JP Morgan Chase and Co will temporarily shut about 1,000 bank branches to reduce the spread of the coronavirus. The closures account for about 20% of its branches.

AUTOMOTIVE

Carmakers suspend production

BMW, Toyota and Honda are to temporarily shut down their UK factories because of the coronavirus pandemic. Nissan and Vauxhall have already closed plants, while Jaguar Land Rover is expected to halt production this week. Across Europe, Ferrari, Fiat Chrysler, Ford, PSA - which owns the Peugeot, Opel and Vauxhall brands, Renault, Volkswagen, Daimler, Nissan and Volvo are among those temporarily shutting down or scaling back production. In the US, Ford and General Motors are among firms shutting factories as the outbreak hits the sector, with the firms also closing sites in Canada and Mexico until the end of the month.

FINANCIAL SERVICES

BoE governor says markets will not shut down

New Bank of England governor Andrew Bailey has said financial markets must remain open even as the coronavirus pandemic causes more chaos for currencies and share prices. Mr Bailey said he would be hesitant to intervene as “so far the financial system is standing up well to this”. He stated: “My philosophy is that as long as we are not seeing markets that I would call out of control then keeping markets open is important.”

BlackRock will punish companies that fail stewardship benchmarks

Directors of firms that fail to meet BlackRock’s expectations on issues ranging from executive pay to environmental risk management will face penalties, as the company seeks to focus on sustainability.

LEISURE AND HOSPITALITY

Virus cancellations warning from travel industry bodies

With coronavirus causing an increasing number of travel cancellations, the industry is urging the Government to change regulations requiring tour operators to refund customers whose holidays have been affected by the coronavirus. Abta, the UK travel association, and the Association of Independent Tour Operators have said firms will collapse under the weight of refunds.

Taxpayers face £156m Thomas Cook bill

The National Audit Office says taxpayers face a bill of at least £156m over the collapse of Thomas Cook, warning that "the final cost may not be known for some time".

Marston's making cost savings as virus spreads

Marston's is seeking to cut costs as the effects of the coronavirus hit, with the pub chain stating that it is "unlikely" to pay out its £20m interim dividend this year. It stated: "We are taking an extremely prudent approach and being cautious in our management of the business during this period of unprecedented uncertainty." Meanwhile rival Mitchells & Butlers said the virus had "severely impacted" recent trading, with containment measures expected to decrease sales further.

REAL ESTATE

Property funds halt trading

A market sell-off prompted by coronavirus has seen Standard Life Aberdeen halt trading in its £1.7bn and £1.1bn UK property funds, as Columbia Threadneedle, Legal & General and BMO Global Asset Management followed suit in their £1.1bn, £2.9bn and £510m funds. The Financial Conduct Authority has given its approval, saying: “Suspensions can be used by managers of open-ended funds, in line with their obligations under applicable regulations. In these circumstances suspension is likely to be in the best interests of fund investors.” Paul Richards, managing director of trade body the Association of Real Estate Funds, noted that funds had little choice but to suspend so that “investors, mostly long-term pension savers, are protected”.

RETAIL

Retailers hit by virus

Inditex, the Spanish owner of high street chain Zara has confirmed that 3,785 of its stores around the world will close as the coronavirus spreads. This comes as group sales fell 24.1% per cent in the first two weeks of the month. Elsewhere, Superdry has predicted that the coronavirus outbreak will cause it to miss its targets for the year, with online sales not expected to offset losses. Meanwhile, Morrisons is to defer its dividend as the coronavirus presents “unprecedented challenges” for the chain, even as it announced its fourth consecutive year of profit growth. Casual dining chain Wagamama’s owner Restaurant Group has also warned of the impact of the outbreak, saying it will result in sales being almost halved over the first six months of the year, with investors advised to prepare for a 45% fall.

ECONOMY

BoE and Treasury to soften Covid-19 impact

The Treasury and the Bank of England (BoE) have suggested fresh measures designed to soften the impact of the coronavirus on the economy may be necessary. Chancellor Rishi Sunak said the Government is looking to change the law to enable ministers to bail out large companies, telling MPs: “There may well be an argument for the taxpayer, through the state, to step in and provide some short-term liquidity or other financing support to a private business.” Andrew Bailey, the new governor of the BoE, has warned that the virus could deliver an economic emergency and further measures would be needed to prevent greater disruption. With the BoE last week cutting interest rates and easing capital requirements on banks, Mr Bailey said: “Those were big steps we and the Government took a week ago. They were the right steps,” adding: “It is unquestionable, though, that things have moved on a lot in the ensuing period.” Meanwhile, Mr Bailey has criticised those making money by short-selling company stocks, saying: “Anybody who says, ‘I can make a load of money by shorting’, which might not be frankly in the interest of the economy or the interest of the people, just stop doing what you’re doing.”

Pound plunges to 35 year low

The coronavirus outbreak has seen the pound fall to its lowest level against the dollar since 1985, with sterling falling almost 5% in a single day and declining 12% since the beginning of last week. Analysis of financial markets shows that the FTSE 100 closed down 4% yesterday, while the Dow dipped 6.3%, the S&P 500 fell 5.1% and the Nasdaq dropped 4.7%.

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