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Daily News Roundup: Thursday 22nd October 2020

Posted: 22nd October 2020

BANKING

Metro Bank releases trading update revealing half-year loss

Metro Bank has issued a trading update showing that the loan book rose by 2% in the last three months to £15.09bn, while a loss of £240m was recorded in the first six months of the year. The lender stated: “The bank has continued to provide support to its customers, communities and colleagues, demonstrating the critical importance of community banking to the regions we serve,” while Ian Gordon at Investec said shares “remain speculative, and we do not expect it to return to profit before 2024.” Metro warned that its capital levels remained below buffers expected by regulators meaning the bank may have to raise more funds.

House buyers face race to complete as banks refuse to extend mortgage offers

House buyers are rushing to complete property purchases as mortgage lenders refuse to extend offers on the same terms, the Telegraph reports. After being approved for a mortgage, borrowers typically have six months to complete the transaction before their offer expires. At the start of the pandemic, banks agreed to extend mortgage offers by a further three months, but many of these offers are now due to expire.

FCA says 12m in UK set to be left struggling with debt

The Financial Conduct Authority is urging borrowers affected by coronavirus lockdowns to seek support from their banks, as its figures show 12m Britons are likely to struggle with bills or loan repayments. The FCA also found that the pandemic has hit the finances of ethnic minorities and young people the most.

PRIVATE EQUITY

Apollo founder’s Epstein ties prompt US pension fund to halt investments

Leon Black is being investigated over his ties to Jeffrey Epstein, leading one of the biggest US public pension funds, the Pennsylvania Public School Employees' Retirement System, to freeze new investments in Black’s Apollo Global Management.

INTERNATIONAL

Abu Dhabi fund drops lawsuit against Goldman over 1MDB

The International Petroleum Investment Company has dropped a lawsuit alleging Goldman Sachs bribed its officials as part of a conspiracy to embezzle billions from Malaysia’s 1MDB.

AVIATION

Airlines planning common digital virus test

A digital coronavirus pass is to be tested by United Airlines as part of an effort to establish a common international standard for coronavirus test results. Paul Meyer, chief executive of The Commons Project, commented: “The goal of these trials is to demonstrate to governments that they can rely on someone getting tested in one country and present their credentials in another country.” This comes after Heathrow Airport launched the first pre-departure testing facility in the UK, part of a partnership between Swissport and Collinson. Heathrow chief executive John Holland-Kaye remarked: “We need a Common International Standard for pre-departure testing, and we welcome the UK government’s recent announcement that it wants to take a global lead in establishing this.”

FINANCIAL SERVICES

PayPal finally embraces cryptocurrencies with New York licence

PayPal has been granted a “Bitlicense” by the New York State Department of Financial Services permitting it to trade and hold cryptocurrencies. Customers can now buy, sell and hold bitcoin, bitcoin cash, ether and litecoin in digital wallets on PayPal. The company said customers would be able to use cryptocurrencies as a funding source for online transactions next year. Dan Schulman, chief executive of PayPal, said: “The shift to digital forms of currencies is inevitable, bringing with it clear advantages in terms of financial inclusion and access; efficiency, speed and resilience of the payments system; and the ability for governments to disburse funds to citizens quickly. We are eager to work with central banks and regulators around the world . . . to meaningfully contribute to shaping the role that digital currencies will play in the future of global finance and commerce.”

Scotland remains top destination for relocations

A survey of leading financial services firms with significant market share in Scotland has found that a skilled workforce north of the Border and an excellent quality of life means Scotland remains the most attractive location outside of London in the UK for inward investment or relocation by financial services firms. Linda Hanna, interim CEO at Scottish Enterprise, points out that the report also “highlights the burgeoning fintech sector in Scotland, which is built upon a collaboration between our robust financial services industry, vibrant tech sector and our internationally renowned universities.”

Insurers decide to pay out on business interruption claims

RSA is among six insurers that have decided not to challenge to a High Court ruling demanding they pay out on business interruption policies. The insurers will start to assess claims for certain policies but may still challenging the court's decision on others. Nevertheless, Sonia Campbell, a lawyer at Mishcon de Reya who is representing policyholders, said it is “a huge win” for the businesses, but added: “Given the insurers' approach to policyholders' claims to date, businesses should not expect it to be plain sailing. Every policyholder has to prove its loss, and this is where we expect insurers to continue to frustrate the process.”

Paypoint in deal to offload Romanian unit

Paypoint’s Romanian division is to be sold for £47m to Innova Capital. The payments operator’s chief executive, Nick Wiles, remarked: “Consistent with our strategic priorities, we are pleased to have agreed the sale of Paypoint Romania.” The unit has delivered revenue of £69.7m and profit before tax of £6.8m in the 12 months to the end of March, while gross assets stood at £48.5m at the end of the last financial year.

TPR issues superfunds guidance

The Pensions Regulator has issued guidance for employers that want to transfer their defined-benefit obligations to consolidated superfunds. The move is set to kickstart the creation of multibillion-pound aggregator companies, according to the Times, while removing liabilities from hard-hit companies and lowering management costs.

LEISURE & HOSPITALITY

William Hill reveals toll taken by coronavirus restrictions

Revenues at William Hill were down 9% in the three months to the end of September compared with the year earlier period, with the firm citing a lack of spectators at sports events. Overall revenues across its online division grew 1% during the first half of the year. However, the firm’s international division performed better, despite a new licensing regime in Germany, which will see deposit limits capped at €1,000 and live casinos banned.

Hospitality sector troubles damage C&C recovery

C&C Group has warned that ongoing restrictions in the hospitality sector resulting from the second wave of the coronavirus pandemic could affect its recovery. The Bulmers and Magners owner reported a loss of €11.7m for the six months ended 31 August, while net revenue more than halved from €866.1m in the first half of last year, to €386.7m.

MEDIA & ENTERTAINMENT

Nvidia acquisition of Arm stokes fears Chinese firms could be excluded

The $40bn (£31bn) sale of Cambridge chip design business Arm to US company Nvidia has prompted regulatory concerns from Chinese firms, including Huawei, who fear they will be restricted from using its technology. Nvidia chief executive Jensen Huang remarked: “As soon as we explain the rationale of the transaction and our plans, the regulators around the world will realise that these are two complementary companies. The two companies being complementary when combined will create new innovations, which is good for the market.”

Live music sector continues to suffer under pandemic restrictions

A new report commissioned by campaign group LIVE and carried out by Media Insight Consulting has found that more than 26,000 permanent jobs in the live music industry will be lost this year unless government support continues.

Netflix’s subscriber stream slows to a trickle

Netflix shares were down more than 6% at lunchtime in New York yesterday after it missed analyst forecasts for 3.6m new subscribers and the company's own guidance for 2.5m.

REAL ESTATE

House prices at record levels in August

New figures reveal that house prices increased by 2.5% in the 12 months to August 31, representing an increase from the 2.1% rise seen a month earlier. Figures from the Office for National Statistics reveal that the average house price in the UK reached £239,000 in August, some £6,000 more than in the year earlier period.

East London warehouse acquired by Segro

Electra Park, a 13 acre urban warehouse in Canning Town, east London, has been acquired by property development firm Segro for £133m.

ECONOMY

Spending review announced after record borrowing spree

Chancellor Rishi Sunak has launched a spending review intended to set out financial plans for 2021-22. The review, which had been expected to cover a three-year period, will be shortened to one year as a result of uncertainty around the coronavirus pandemic. Tax hikes that could help to address the deficit will not be included, given the risk of damage to any economic recovery. The move comes after official figures showed a record £208.5bn was borrowed in the first six months of the financial year. At the end of September, the national debt was £2.06trn, equivalent to 103.5% of GDP, a 60-year high, according to the ONS. Separately, UK inflation was up last month, with consumer prices rising 0.5% on an annual basis, up from 0.2% in August.

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