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Daily News Roundup: Thursday, 27th August 2020

Posted: 27th August 2020

BANKING

UK banks told to offer mortgage support when payment holidays end

Lenders have been ordered by the Financial Conduct Authority to offer various repayment options to mortgage borrowers affected by coronavirus and not take a “one size fits all” approach as homeowners lose the option of taking a payment holiday after the end of October. About 2m borrowers have taken a mortgage holiday, according to UK Finance - about one in six mortgage holders. Christopher Woolard, FCA interim chief executive, said: "We are proposing that firms contact their borrowers in good time before the end of a payment holiday, and work with them to come up with a tailored plan to help get them back on track."

HSBC expands environmental focus

HSBC’s asset management arm, alongside ESG specialist Pollination, is to focus on “natural capital” investments as part of a series of new investment products, including a $1bn natural capital fund. HSBC Global Asset Management Chief Executive Nicolas Moreau remarked: "Clients are increasingly focused on environmental matters and this initiative is designed to help them achieve a financial return, while at the same time creating a positive impact on the world´s biodiversity."

Banks must be wary of turning in to the bad guys again

The Times’ James Coney calls for banks to step up and prove they deserve to no longer be perceived as villains by making extra efforts as mortgage holidays come to an end. So far they’ve had “a good pandemic” reputation-wise, Coney asserts, but now they need to be “transparent and fair across the board”, spend more on innovation and “embrace better technology to help small businesses who rely on traditional branch services.”

Open banking needs to be extended into open finance

The Scotsman carries a supplement entitled Doing Data Together, which calls for open banking to be extended into open finance. For customers to get the most from both their data and money, the paper says, they need to be able to securely share a wider pool of data including, for example, pensions, insurance and mortgages.

INTERNATIONAL

HSBC comes under fire from US Secretary of State

Chinese officials have bullied HSBC into locking pro-democracy campaigners out of their accounts in Hong Kong, US Secretary of State Mike Pompeo has claimed. He went on to state: "The United States is dismayed to learn the Chinese Communist Party continues to bully our British friends and their corporate leaders,” adding: “HSBC maintains accounts for individuals sanctioned for denying Hong Kongers’ freedom, while shutting accounts for those seeking freedom." The Telegraph suggests the comments will alarm the bank, which was at risk of losing its crucial US dollar licence in 2012 after billions of dollars were laundered through its Mexico branch by drug cartels. Both HSBC and Standard Chartered publicly backed China’s new security law in Hong Kong.

Most banks make no bonus changes, despite pandemic

A survey in June by Pearl Meyer, a global remuneration consultant, found that nearly two-thirds of international banks have neither made nor contemplated changes to bonus structures in the face of the pandemic, even though 70% expect COVID-19 to have a moderately or slightly negative impact on their businesses. A fear of losing talent to rivals means these “banks move broadly in lockstep, no one wants to cut anything first," said Simon Patterson, managing director at Pearl Meyer.

Pandemic may offset some benefits of negative rates, ECB official warns

Isabel Schnabel has warned that an expected rise in eurozone loan defaults will offset one of the key benefits of negative interest rates for the bloc’s banking system.

Investment banks in line for bumper payday from Ant IPO

The dual listing of Chinese payments company Ant Group will see Citigroup, JPMorgan and Morgan Stanley share at least $300m in fees.

AUTOMOTIVE

Ineos set to make Grenadier in France

Sir Jim Ratcliffe’s Ineos has made a formal offer to buy a factory in north-east France, dispelling hopes the company’s new Grenadier 4x4 car could be built in the UK. The Welsh government was optimistic Sir Jim would build his successor to the Land Rover Defender in Bridgend, but Ineos said it is confident that final terms will be agreed to take over the plant in Hambach, near the German border, from Daimler. Meanwhile, BMW is axing 520 production roles at its car manufacturing plants in Birmingham, Oxford and Swindon.

Carmakers cannot cope with no-deal too

Figures from the Society of Motor Manufacturers and Traders show car production was 40% lower in the first seven months of 2020 compared with the same period in 2019, after suffering three months of lost output during workplace lockdowns. Although output is improving, it “remains deeply uncertain," said SMMT CEO Mike Hawes, who warns against a further shock from a no-deal Brexit.

AVIATION

Gatwick to cut up to 600 jobs

Gatwick Airport is to axe up to 600 jobs, nearly a quarter of its workforce, after British Airways and Virgin Atlantic both suspended operations at the airport. Gatwick said it is operating at 20% of last year's capacity, with over 75% of its staff on furlough.

CONSTRUCTION

London Square sales up for year to March

Housebuilder London Square has reported an increase of over 400% in potential buyers taking real and virtual viewings or visiting show homes in the week ending May 24, as it reported revenue of £272.4m, up from £168.3m, in its annual accounts for the year to March.

FINANCIAL SERVICES

Provident Financial cites COVID-19 effects on results

Shares in Provident Financial rose 17% yesterday after the subprime lender predicted an improvement in business as unemployment rises following the end of the furlough scheme. The firm reported a half-year loss of £32.6m against profits of £80.4m a year ago while revenues were down 11% year on year to £446m. As the losses were not as bad as predicted, Provident has pledged to repay employee furlough cash to the Government. Chief executive Malcolm Le May commented: “Our market will grow due to the pandemic, but at present it appears the supply of credit into the market is decreasing, which cannot be a good outcome for customers, nor a public policy one for the UK.”

IG allows staff to continue remote working

Online trading firm IG’s chief operating officer Jon Noble has said UK employees can continue working from home until the end of the year. He stated: “We understand this is still an unsettling time so if you wish to carry on working at home 100% of the time for the rest of the year, please continue to do so. We will next review this decision in early 2021.” He noted that returning to the office could be appealing to young staff, commenting: “We are conscious that some people have been living and working from a single room since March.”

Pension savers turn to higher risk assets

Research by My Pension Expert suggests the coronavirus crisis has pushed pension savers towards riskier assets. The advice firm found one in eight savers had moved their pension funds into a higher-risk investment to make up for lost value during the market turmoil caused by the pandemic.

Mark Carney joins Brookfield to launch ‘impact investing’ fund

The former Governor of the Bank of England, Mark Carney, is joining asset manager Brookfield to launch an “impact investing” fund. Bruce Flatt, Brookfield's chief executive, said Carney would join the firm as vice chair and steer its environmental, social and governance (ESG) investment strategy.

ASI closes £500m bond fund after Lloyds pulls assets

Aberdeen Standard Investments is shutting its £500m Global High Yield Bond fund, as Scottish Widows, the fund’s largest investor, looks to withdraw more of its assets.

Vanguard to exit Hong Kong and move regional HQ to China

Asset manager Vanguard has announced that it is to transfer its Asian headquarters to Shanghai from Hong Kong and wind down its operations in Japan.

LEISURE & HOSPITALITY

WTTC in tourism sector warning

The World Travel & Tourism Council (WTTC) has announced that the UK economy could see losses of £22bn this year as a result of the coronavirus crisis, following a warning from the Association of British Travel Agents that the hospitality and travel sector “desperately” needs further government aid.

A third of Wahaca restaurants to close

Mexican restaurant chain Wahaca is to shut more than a third of its 28 sites as it looks to shore up its cash reserves. Rental costs in city centre locations made running the sites untenable, the company said.

Carnival announces cruise cancellations for 2021

Princess Cruises has announced that two cruises set to sail early next year would be cancelled due to COVID-19 restrictions. The company’s shares have fallen from 3470p at the start of the year to 998p.

MEDIA & ENTERTAINMENT

YouTube moderation in overdrive during lockdown

Google-owned video-streaming firm YouTube removed 11.4m videos, more than ever before, in the second quarter of the year as the increase in remote working saw the company make more use of algorithms to detect banned content than of human moderators. The firm stated that “using technology to help with some of the work normally done by reviewers” led to “an increase in the number of videos removed from YouTube; more than double the number of videos we removed in the previous quarter.”

REAL ESTATE

Further woes predicted for Hammerson

Bets against Hammerson are increasing as investors predict the beleaguered firm’s fortunes will continue to deteriorate in the wake of the COVID-19 outbreak. According to data sourced from the UK financial regulator, the short positions against Hammerson have risen to historic highs, with more than 14% of the company's shares held in short bets.

RETAIL

Landlords displeased with New Look’s CVA plans

New Look revealed yesterday that it was hoping to slash costs by switching its store leases to turnover-based rents in an effort to weather the crisis and protect over 11,200 jobs as part of a proposed CVA. The British Property Federation said: “New Look is using this CVA to permanently rewrite its leases. This proposal is not about a time-limited rescue plan. Property owners are increasingly supporting turnover-based rent models underpinned by collaboration and transparency, but CVAs should not become a mechanism to enforce this."

Retail and tech group The Hut to reveal £4.5bn float plan

Retail and technology company The Hut Group is set to reveal details of a potential £4.5bn IPO, with a standard listing preferred in order for founder Matthew Moulding to retain control.

SPORT

Italy's Serie A receives competing private equity bids

CVC Capital Partners and Advent International have made a €1.3bn (£1.17bn) joint offer for a minority stake in the Italian Serie A football league, reports claim. The Financial Times reports that CVC would own half of the stake, Advent 40% and FSI the remainder under the terms of the deal. However, Bain Capital has reportedly also submitted a bid, as have Apollo, Fortress and Blackstone’s credit arm GSO.

ECONOMY

CBI: Firms need to get staff back to work

The Director General of the Confederation of British Industry has called on Boris Johnson to urge UK companies to get workers back into the office or risk commercial centres being turned into permanent “ghost towns”. Writing in the Daily Mail, Carolyn Fairbairn called on the prime minister to “do more to build confidence around getting people back into offices and workplaces”. Ms Fairbairn’s comments come as a survey by the BBC found that 50 of the country’s biggest employers have no plans to return all staff to the office full-time.

OTHER

Sturgeon’s case for independence takes a blow

The Scottish Government's General Expenditure and Revenue Scotland (Gers) figures for 2019/20 reveal that each Scot received £1,633 (12.4%) more than the UK average in public spending thanks to the Barnett Formula. Tax revenue north of the Border was £308 less per head than the UK average. With Scotland's notional deficit now the equivalent of 8.6% of GDP, more than treble the UK figure and nearly three times the 3% required for EU membership, the figures represent “a hammer blow” to the SNP’s drive for independence, according to Murdo Fraser, the Scottish Conservatives’ shadow finance secretary.

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