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Daily News Roundup: Thursday, 21st May 2020

Posted: 21st May 2020


Rishi Sunak considers extending mortgage holidays for three more months

The Chancellor is working with the Financial Conduct Authority and the banking sector on plans to extend the mortgage payment holiday UK banks have provided to homeowners struggling financially due to the coronavirus pandemic. An FCA spokesman said: “We have not yet made any final decisions. We will confirm plans in the coming weeks.” Sources say ministers are also considering a ban on repossessions while the crisis continues.

Government to raid £150m from dormant bank accounts

Forgotten bank and building society accounts are to be raided by the state to help pay for a charity support package for those affected by the COVID-19 pandemic. Culture secretary Oliver Dowden said £150m will be pledged to charities. Some £71m will be sourced through the government’s Dormant Assets Scheme while the remaining £79m will come from money already “unlocked” in the scheme.

Tom Blomfield stands down as Monzo CEO

The co-founder of digital banking start-up Monzo is to stand down as CEO to take up a new position as the payment company’s president. Tom Blomfield will be replaced by TS Anil, who was hired in December to head Monzo’s push into the US. Mr Blomfield told TechCrunch that the move to president would allow him to spend more time working on the “longer term vision.”


Citigroup gives workers an extra day off

Citigroup staff worldwide will be granted an extended bank holiday weekend after the American bank gave them Friday off for working “harder than ever” during the coronavirus crisis. In a memo to employees, CEO Michael Corbat said that he and his team “deeply appreciate how you’ve responded” to the crisis and wanted to “express our gratitude for all you’ve done”. The Times notes that other US banks, including JP Morgan and Goldman Sachs, have also offered their staff additional holiday.

Venezuela demands UK hand back gold

The Bank of England is being sued by Venezuela over its refusal to release gold kept in its vaults. The country's Banco Central de Venezuela (BCV) has filed a $1bn lawsuit demanding the transfer of £820m in gold to the UN to aid coronavirus relief.


Rolls-Royce job losses warning

Some 9,000 jobs are to be cut at Rolls-Royce, with the manufacturer warning that it would take "several years" for the effects of the coronavirus pandemic to wear off for the airline industry. Chief executive Warren East said the firm had not yet concluded "exactly" where the job losses would be. It comes as investment bank Baird predicts a decline of 45% for global air traffic this year, with airlines expected to lose $310bn (£253bn) in revenue.

Trade union head accuses airlines of exaggerating pandemic effects

Brian Strutton, general secretary of the British Airline Pilots' Association, has warned that carriers are exaggerating the impact of coronavirus.


Vistry announces job cuts following merger

Vistry has said a consultation on reducing its employee headcount is continuing, with the housebuilder consolidating operations in the wake of the merger of Bovis Homes and Galliford Try’s residential business. Chief executive Greg Fitzgerald commented: “In these unprecedented times, the Group’s performance during lockdown has been better than initially expected in respect of reservations, completions and cash management.”


Aviva and QBE face legal threat from bars and restaurants

A raft of bars and restaurants have teamed up with Mishcon de Reya to form the Hospitality Insurance Group Action to bring a case against Aviva and QBE. The legal action comes after the businesses were told costs related to the coronavirus pandemic were not covered by the business interruption policies sold by the insurers. Lawyers from the firm said they were focusing on pursuing Aviva and QBE after reviewing over 500 policies from different insurers. There are now almost a dozen groups seeking compensation from insurers over business interruption claims. The UK’s Financial Conduct Authority is looking to launch a test case in the High Court in the hope of providing clarity for insurers and their customers.

Experian first quarter revenue expected to take hit

Experian has predicted a 10% first quarter revenue hit as it reported annual statutory pre-tax profit falling 1.6% to $942m (£768m) for the year ended 31 March, while revenue was up 7% to $5.18bn, an increase from $4.86bn a year earlier. Chief executive Brian Cassin remarked: “While we continue to assess the impact of the crisis on our markets, and we expect near-term revenue to be affected, the nature of our business means we have a degree of resilience. We are taking mitigating cost actions in the short term, but we are also positioning ourselves to emerge strongly by continuing to invest in our people and growth initiatives.”


Biopharma IPO points to South Korea rebound after coronavirus

Shares in South Korean conglomerate SK Corp were up 6% after plans to list its biopharmaceuticals division SK Biopharmaceuticals on the country’s bourse in June were announced.

Financial Times

UK turns to bank boss to help deliver faltering tracing programme

Former Nationwide deputy CEO Tony Prestedge has been drafted in to help the UK government deliver its coronavirus testing and tracing programme.


William Hill foresees up to £150m windfall after HMRC decision

William Hill has announced a possible tax windfall of as much as £150m after the betting industry was overcharged VAT on FOBT machines in betting shops. This follows an announcement from HMRC that it would not appeal a tribunal ruling on the matter.


ONS figures show house price increase before crisis

Data from the Office for National Statistics reveal that the average UK house price increased 2.1% in the year to March, an increase from 2% in February, while London house prices were up 4.7%. Lucy Pendleton, property expert at James Pendleton, commented: “Enquiry levels are off the chart at the moment and we are gradually bringing back more staff… Only time will tell how we can convert those enquiries and how that translates into all-important prices for vendors.”

Great Portland Estates announces fall in value of estate

Toby Courtauld, chief executive of Great Portland Estates, has predicted continued difficulties related to the effects of the coronavirus crisis, with the value of its estate falling 0.3% to £2.6bn in the year to March.


M&S profits down 21%, as clothing and home divisions struggle

Marks & Spencer has reported a 21.2% drop in full-year profits, with higher food sales offset by a plunge in revenues in its troubled clothing division. Profits hit £403m for the 12 months to March 28, below an average City estimate of £415m; it recorded one-off charges of £335.9m, with £212.8m of that down to costs and stock writedowns related to pandemic disruption. Total annual revenue fell 1.9% to £10.8bn.


ONS reveals price fluctuations as inflation rate falls

Figures from the Office for National Statistics (ONS) show that the UK's inflation rate fell last month to its lowest since August 2016, while the prices of games and toys was up, which the ONS attributed to people spending more time at home. Jonathan Athow, deputy national statistician for economic statistics at the ONS, commented: "While the coronavirus limited the availability of some goods and services, its effect on prices was more muted." Meanwhile, average petrol prices dropped by 10.4p a litre between March and April, while clothes retailers launched more discount sales than usual.

Bonds with negative yield sold by UK government for first time

Policymakers are coming under increasing pressure to take new action to boost the economy, as the UK sells bonds with a negative yield for the first time. Melanie Baker, senior economist at Royal London Asset Management, remarked: “With inflation now more than 1 percentage point below target, the governor of the Bank of England will… have to write a letter to the Chancellor explaining why inflation is so far below target and what he intends to do about it. The next step we expect to see is more asset purchases.”


Treasury set to curb property investments by councils

The FT reports that councils could be banned from borrowing money through the Public Works Loan Board to invest in commercial property – which has become more common as councils seek to make up for funding cuts.

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