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Daily News Roundup: Thursday, 29th October 2020

Posted: 29th October 2020

BANKING

MPs call for BBLS replacement

The All-Party Parliamentary Group (APPG) for Fair Business Banking has called for the Government to replace the Bounce Back Loan Scheme (BBLS), with leader Kevin Hollinrake saying the group of cross-party MPs want a new scheme to be “rolled out really quickly”. While the BBLS is set to come to an end next month, Mr Hollinrake said it should be immediately replaced by “a new iteration of the scheme” that would run into the middle of 2021. Labour’s Ed Miliband, the shadow business secretary, said: “It’s vital that ministers act to unblock the system and ensure finance is available.” With Yorkshire and Clydesdale banks closing to new BBLS applicants, Starling Bank is the only one of the 28 banks eligible to lend money under the scheme not to have closed to new customers. Research by the APPG suggests that up to 250,000 small businesses could struggle to access the loans as they do not bank with accredited lenders. Mr Miliband said it was “deeply concerning” that businesses on the brink were “being squeezed out” of the scheme.

Policymaker: Bank dividends deferred, not cancelled

Senior Bank of England policymaker Alex Brazier says bank shareholders will eventually receive their withheld dividend payments as regulators have asked for them to be deferred, not cancelled. Mr Brazier, executive director for financial stability, told a Centre for the Study of Financial Innovation event: “This a dividend delayed rather than a dividend destroyed forever. It doesn't change the amount of distributions banks will make over the long run. It does require a degree of patience from investors." He added that the regulators are carrying out "very careful analysis" of whether to allow banks to restart dividend payments.

136k switch in Q3

The number of people switching their current account hit 136,575 between July and September - 38,383 more than from April to June. Current Account Switch Service data shows that Santander lost the most customers, with more than 12,000 switching from the bank, while Starling and Monzo each gained over 11,000. It has been suggested that cash perks designed to attract new customers may have driven the increase in switches, with it noted that HSBC and NatWest are offering £125 incentives.

Banks could follow rivals on fees

With it suggested that some banks may look to introduce charges for current accounts, experts believe that rivals will be quick to follow suit once charges for basic banking services are in place.

PRIVATE EQUITY

Blackstone’s Q3 earnings up

Blackstone’s third-quarter distributable earnings rose 9% year-on-year, hitting $722m compared to $710m a year earlier. This equates to distributable earnings per share of 63 cents, surpassing analysts' average estimate of 57 cents, according to data compiled by Refinitiv. Blackstone said its private equity portfolio appreciated 12.2% in the quarter, while opportunistic and core real estate funds rose 6.4% and 3.5% respectively.

Octopus Ventures announces new investment

Octopus Ventures has announced a £4.5m investment in pet tech start-up Katkin.

INTERNATIONAL

Deutsche Bank sees profit

Deutsche Bank has reported a €309m (£360m) profit for the last three months, its first quarterly profit in more than a year. Investment banking brought in €2.4bn, up 43% on Q3 2019. The firm’s results compare to with a loss of €942m in the same period last year. Deutsche had not made a quarterly profit since the first three months of 2019.

AUTOMOTIVE

Aston Martin - Mercedes deal sees shares rise

All available shares in Aston Martin’s £125m capital raise have been placed or subscribed, the firm has announced, while shares in the firm were up more than 6% on the news that Mercedes-Benz will take a 20% equity stake. Permian Investment Partners, Zelon Holdings, Yew Tree Overseas and other institutional investors are believed to have subscribed for the raise, with CMC markets analyst Michael Hewson noting that the new deal will “break the boom and bust cycle that has been a staple of the UK brand.”

AVIATION

Heathrow cedes position to Paris Charles de Gaulle

Paris's Charles de Gaulle airport has become Europe's busiest for the first time, after Heathrow airport in London announced a 58.7% fall in revenue to £951m and pre-tax losses of £1.5bn in the first nine months of the year. Third-quarter revenue at the UK airport was down 72% year on year to £239m, with earnings before tax and interest at £37m.

FINANCIAL SERVICES

ESG investment continues to rise

Funds network Calastone says inflows into active ESG funds reached a record £392m last month, with the quarterly total reaching £1bn. Kwasi Kwarteng, minister of state for business, energy and clean growth, remarked: “Transforming our financial system for a greener future is crucial as we build back better from COVID-19 and to meet our legally binding target for net zero carbon commissions by 2050.” This comes as the amount raised in green bonds on the London Stock Exchange almost tripled in the last three years, from £8bn to £22.4bn.

Pensions dashboard scheme to come online in 2023

The Money and Pensions Service has announced that the Pensions Dashboards Programme will not be ready until 2023. Pensions minister Guy Opperman said the new timetable for the dashboards was “sensible” and would allow for extensive testing. In response, Kate Smith, head of pensions at Aegon, commented: “Although this is disappointing, we believe the delay is worthwhile using the extra time to get things right. Critical mass is needed from day one, to allow people to find the majority of their pensions.” However, Royal London’s Helen Morrissey commented: “After already progressing at a snail’s pace for some time, it is hugely disappointing to see this project further delayed.”

Rogue pension advisers target sacked Rolls-Royce workers

Regulators have warned that rogue pension advisers are targeting Rolls-Royce staff who are being made redundant. The Financial Conduct Authority, The Pensions Regulator and the Money and Pensions Service said they had been in talks with Rolls-Royce and its scheme trustees after a surge in the number of DB transfer requests.

Visa profits fall

Visa’s fiscal fourth quarter profits dropped 29%, hitting $2.14bn compared to $3.03bn in the same period a year earlier. Payments on its network were down 11.9%, with transactions slipping 23.6% quarter-on-quarter amid the ongoing fallout of the coronavirus crisis.

HEALTHCARE

Covax alliance sees GSK and Sanofi sign up

A non-profit deal signed by GlaxoSmithKline and Sanofi will see a minimum of 200m doses of a coronavirus candidate vaccine made available to residents of some of the world’s poorest countries. The Covax global inoculation alliance, which the two firms have signed up to, aims to provide 2bn doses by the end of next year.

LEISURE AND HOSPITALITY

Heineken announces restructuring as profits fall

Heineken has reported that net profit for the first three quarters of the year was down 76% to £358.6m year-on-year, as it announced that a restructuring of its head and regional offices next year would help it to cut related personnel costs by 20%. The firm withdrew guidance for the year last April, and has announced that only a general overview of the rest of the year would be provided.

MEDIA AND ENTERTAINMENT

M&C Saatchi profits hit

Profits at advertising group M&C Saatchi have fallen nearly 60%, with pre-tax profits hitting £2m for the six months to June. Revenues fell 30% to £149m amid "extremely challenging economic conditions" from coronavirus. The firm’s shares remain suspended after it missed a September deadline to file its annual results to December 2019.

5G deal between BT and Ericsson

Ericsson has been selected by BT to provide 5G radio equipment in London, Edinburgh, Belfast, Cardiff and other cities throughout the UK.

Sony sets 100m sales target for new PlayStation 5 console

Sony has predicted that a pandemic-inspired boost to the gaming industry will allow it to reach a sales target of over 100m units for its new PlayStation 5 console.

REAL ESTATE

Stamp duty holiday boosts property pipeline

Analysis from Zoopla shows that there are 140,000 more homes currently progressing through the system than at this time last year, with a rush to get deals over the line before the stamp duty holiday comes to an end in March 2021. The property platform says more than 400,000 property sales worth £112bn were working their way through the pipelines in October. The report says that sales agreed were up 40% to 60% between July and October compared to the same period last year, with a peak increase of 62% recorded in August. Zoopla's price index shows that annual house price growth is running at 3%, up from 1.1% in October 2019.

Property sector calls for stamp duty holiday extension

The property sector is urging Rishi Sunak to extend the stamp duty holiday by six months, with industry bodies writing to the Chancellor to warn that the sector does not have the capacity to process the enormous volume of sales in the pipeline before the tax holiday expires on March 31. Signatories argue that a six month extension would allow deals to complete and "avoid a disorderly and distressing period" for buyers and sellers - and prevent transactions "falling off a cliff edge". This comes with analysis from data agency TwentyCi suggesting that 325,000 buyers could miss out on the tax break if the deadline is not extended.

Landsec names new finance chief

Vanessa Simms has joined Land Securities from Grainger, and will take up the role of finance chief by June 2021.

RETAIL

Next raises profit forecast as sales beat expectations

Next has upgraded its full-year profit forecast for the third time this year after sales grew more than expected in the third quarter. It has lifted its projections for the year to January 2021 by £65m to £365m. The company said full-price sales improved 2.8% in the three months to October 28, with total sales up 1.8%.

ECONOMY

Economists call for extended support measures

Economists have urged Chancellor Rishi Sunak to extend the furlough scheme and increase support for businesses amid concern increasing rates of coronavirus infections could result in a nationwide lockdown that could trigger a double dip recession. Capital Economics and Oxford Economics say Government support must be upgraded if lockdown measures are extended, warning of the risk of a higher rate of business closures and an economic slump. Oxford Economics economist Martin Beck urged ministers to announce a “bigger and bolder” rescue package that would protect the economy under tougher lockdown rules. Lord Skidelsky, emeritus professor of political economy at Warwick University, called for protection measures to be extended but warned that “even with generous support there are going to be many redundancies as the economy slows down”, while Lord Jim O’Neill, a former City economist and Treasury minister, said that if minsters pledge to replace the income of firms unable to trade under lockdowns, “they stand a chance of making it through the winter.”

OTHER

ONS report reveals insolvency risk

The Office for National Statistics (ONS) has released the results of its latest Business Impact of Coronavirus Survey, finding that two-thirds of all UK firms currently trading have a “low to severe risk of insolvency.” The ONS analysis shows that 64% of businesses are at risk of insolvency, with 43% running on less than six months’ cash reserves. The report also notes that 14% of UK businesses have paused trading under local lockdown restrictions.

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