100k face repossession risk as banks pull pandemic support
More than 100,000 homeowners are at risk of repossession as banks’ coronavirus-related mortgage support comes to an end. Pressure will also increase as a ban on taking back property from indebted borrowers ends. As of yesterday, borrowers are no longer able to apply for a mortgage holiday, while lenders are once again able to begin repossession proceedings against borrowers who have fallen significantly behind on payments and broken agreed payment plans. UK Finance data shows that, as of the end of February, 104,000 borrowers still had ongoing mortgage deferrals. Eric Leenders, of UK Finance, said the mortgage holiday scheme had been hugely successful, helping “millions of people who have been affected financially by the pandemic”. Despite applications closing and existing payment deferrals concluding in July, Mr Leenders said lenders “want to help any borrowers with financial difficulties and will continue to offer support through more tailored assistance plans.”
Nomura and Credit Suisse prospects dim
Moody's and Fitch have downgraded their outlooks for Nomura and Credit Suisse, with the credit rating agencies concerned over risk management as the banks face losses amid issues at Archegos Capital Management.
Credit Agricole Italia welcomes Creval's response to merger bid
Credit Agricole Italia (CAI) has welcomed comments from Creval in relation to its takeover offer for the Italian regional bank, but criticised its valuation of the deal. CAI is offering €10.50 a share to buy out Creval investors. While Creval said a takeover offer by CAI was a good strategic move, the lender added that a fair price would be between €12.95 and €22.7, based on analyses by advisers Bank of America and Mediobanca. CAI, Creval's largest shareholder, said these valuations are "considerably wide" and "potentially misleading".
CBA wrongly charged A$55m in fees
The Australian Securities and Investments Commission (ASCI) says the Commonwealth Bank of Australia wrongly charged almost one million customers nearly A$55m in monthly fees. The ASCI has started legal action in the Federal Court over the fees, which were charged between 2019 and 2019. The Commonwealth Bank said fee waivers were not applied and apologised to customers, adding that it has repaid A$64.2m, including interest, to all affected customers.
Goldman to offer bitcoin
Goldman Sachs has joined BNY Mellon with plans to offer investments in bitcoin and other digital assets to its wealth management clients from the second quarter.
FCA plans to reform Spac rules
The Financial Conduct Authority (FCA) has outlined plans to reform rules on blank-cheque companies, with the City watchdog set to relax rules that deem acquisitions by special purpose acquisition companies (Spacs) as reverse takeovers. Under the current system, this sees trading in their shares suspended. Under the mooted reform, the FCA will no longer require Spacs to suspend their listing when they announce an acquisition. The move, which is designed to make the London market more competitive, follows a review by Lord Jonathan Hill in which he recommended that the UK follow other countries by loosening rules on Spacs. A consultation on the change will be open for four weeks and the FCA aims to bring in new rules or guidance by early summer.
Firms face fines over card market cartel
The Payment Systems Regulator, a subsidiary of the Financial Conduct Authority, has found that Mastercard, Allpay, Prepaid Financial Services, Sulion and APS operated a cartel affecting the most “vulnerable members” of society between 2012 and 2018 – with the firms now facing fines totalling more than £32m. The regulator found the companies had “co-ordinated their commercial behaviour to share the market and allocate customers in relation to the supply of pre-paid card services used for welfare disbursements to public bodies in England, Scotland and Wales”. The cards are used by public bodies to distribute welfare payments to vulnerable individuals. The watchdog found that due to this collusion, public bodies had been left with a limited choice of suppliers, likely leading to higher prices for potentially substandard services.
Lloyd's of London hit by Covid costs
Lloyd's of London has reported a pre-tax loss of £900m compared with profits of £2.5bn for 2019. The pandemic marked its most costly single event on record and sent the insurance market tumbling to its worst underwriting result for three years. Lloyd's sales were down during 2020, with gross written premiums dipping to £35.5bn, £400m less than the year before. Excluding the £6.2bn bill related to the coronavirus outbreak, Lloyd's would have delivered an underwriting profit of £800m. CEO John Neal called the last year "extremely challenging".
Former Blackstone and Treasury figure hired at FCA
Former Blackstone and Treasury executive Ramesh Chhabra has been appointed senior adviser to Financial Conduct Authority chief executive Nikhil Rathi. Mr Chhabra is to focus on driving through the maintenance of open markets after Brexit, embracing new tech opportunities and other priorities.
Credit Suisse targets GFG trading company
Bankers acting for Credit Suisse have filed papers in the insolvency court as they look to wind up trading company Liberty Commodities, which is owned by Sanjeev Gupta's GFG Alliance. GFG has been in the headlines after Greensill Capital, its main provider of capital through the advance of loans secured on future cashflow, was put into administration last month.
Chinese authorities consider new stock exchange launch
A new stock exchange for overseas-listed firms could be launched in China. Reports suggest that the government is reportedly hopeful that companies such as Apple and Tesla could be attracted to the new bourse.
LEISURE AND HOSPITALITY
Deliveroo shares fall on stock market debut
Deliveroo saw its shares fall 36% on its London market debut, marking one of the worst opening-day performances by a large company IPO on record. Having sold shares at 390p, Deliveroo plunged when trading began and ended the day at 287.45p. The decline came despite efforts to shore up the stock by the food delivery app’s lead bankers Goldman Sachs and JPMorgan. The dip cut its value to around £5.6bn from £7.6bn. Deliveroo had already cut its top-end valuation by £1.2bn before the shares went on sale.
Coates lands the UK’s biggest ever salary
Denise Coates, the boss of Bet365, has increased her salary by 45% to £469m – the biggest salary in UK history. Ms Coates' salary of £421m was topped up with a £48m dividend payment from her 50% stake in the business. Her pay packet exceeds the previous record of £343m, which went to hedge fund manager Sir Chris Hohn last year, while Chartered Institute of Personnel and Development analysis shows that Ms Coates’ payout is close to matching the £466m total paid to FTSE 100 bosses in 2019.
Fuller’s seeks to raise £54m
Pub chain Fuller, Smith & Turner has reported that revenues declined 80% during the past year, as the firm announced plans to raise about £54m via a share placing. Chief executive Simon Emeny said that despite a “really challenging” 12 months, he can “really see the skies opening up.” He added: “I feel really optimistic. We’re seeing a lot of evidence of pent-up demand.”
Parsley Box IPO successful
Parsley Box, which provides ready meals for the over-60s, has floated on AIM with a placing price of 200p for a market value of around £83.8m. This comes after the firm saw revenues of £24.4m last year.
Rolls-Royce rethinks bonus plan
Rolls-Royce chief executive Warren East’s pay packet more than halved in 2020, with the company rethinking its traditional bonus plans and opting for an incentive scheme less focused on the share price and more on delivering short-term targets around cash generation, profit, efficiencies and restructuring. Mr East received a total of £1.1m in pay, benefits and pension last year, down from £2.5m in 2019. He will receive 30% of his base salary in shares over the next three years.
MEDIA AND ENTERTAINMENT
Apple backs start-up aiming to disrupt music labels
US start-up UnitedMasters, which aims to help artists distribute their music online, has announced a successful $50m investment round with Apple among participating firms.
Allen & Overy announces staff bonus
Allen & Overy staff are to receive a one-off fee bonus equal to 5% of their annual salary next month, with the law firm saying it comes “in recognition of their hard work and contributions in very challenging circumstance over the last 12 months.” This comes after rival law firms Linklaters and Clifford Chance recently made similar offers to employees.
House prices dip in March
Data from Nationwide shows that house prices fell 0.2% month-on-month in March when accounting for seasonal factors, compared to a 0.7% rise in February. The slip in prices reflected a dip in demand ahead of the original end of the stamp duty holiday, with the cut-off having been extended from March 31 until June 30 in the Budget. The Nationwide report shows property prices were up 5.7% year-on-year last month, down from a 6.9% rise in February. The average property price was £232,134 in March. Despite the dip in UK house prices recorded last month, Nationwide’s chief economist Robert Gardner said recent signs of economic resilience and the stimulus measures announced in the Budget suggest market activity “is likely to remain buoyant over the next six months”.
Economy bouncing back stronger than expected
Revised data from the Office for National Statistics (ONS) shows that Britain’s recovery during the second half of last year was stronger than first estimated, with the figures showing that the economy expanded by 16.9% in Q3 2020 and 1.3% in Q4, marking an increase on initial estimates of 16.1% and 1%. However, the revised numbers also show that GDP shrank by more than had been initially thought in Q2, declining by 19.5% between April and June as opposed to the 19% previously estimated. The ONS said GDP fell by 9.8% in 2020, marking a slight shift on the 9.9% initially estimated. Bank of England figures suggest this was the biggest contraction since 1709. The ONS report also shows that while disposable incomes rose by just 0.1% in 2020, the saving rate - money saved as a share of disposable income - increased from 14.3% in Q3 to 16.1% in Q4.
FTSE 100 dividend yields set to jump 24%
Research from Bowmore Asset Management suggests dividend yields on FTSE 100 shares may rise by 24% this year. The study, which is based on a consensus of analysts’ views, found that dividend yields are set to jump from 2.56% to 3.17% in the next 12 months. While many firms were conservative with dividends amid the coronavirus crisis, companies are expected to start announcing higher payouts as the economy starts to recover. Charles Incledon, client director at Bowmore, said: “With the recent success of the vaccine roll out, the UK economy is now earmarked for a quicker and stronger rebound than was previously expected”.