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Daily News Roundup: Thursday, 4th June 2020

Posted: 4th June 2020


Banks urged to prepare for no-deal Brexit

Lenders including Barclays, HSBC, Lloyds Banking Group and RBS have been urged to prepare for a no-deal Brexit by Bank of England governor Andrew Bailey, according to Sky News. A banker briefed on a call between Mr Bailey and industry chiefs said Brexit had been "the number one agenda item" during the discussion. Commenting that it is “fundamental to the Bank of England’s remit that it prepares the UK financial system for all risks that it might face,” the BoE said: “The possibility that negotiations between the UK and EU over a future trading relationship might not conclude in a deal is one of a number of outcomes that UK banks need to prepare for over the coming months.” The Telegraph notes that analysts at Citibank and Deutsche Bank both warned late last year over the possible economic damage caused by a no-deal Brexit.

Scottish Building Society bans repossessions

The Scottish Building Society has pledged a 12-month pause on repossessions as it looks to support customers amid the coronavirus pandemic. It is also extending a three-month mortgage break to six months. Paul Denton, chief executive, said the Scottish Building Society wants to “offer reassurance to customers worried about keeping a roof over their heads”.

The Scotsman


Private equity eyes $400bn windfall from US retirement savers

Ordinary savers in the US can now invest in private equity funds via employer-sponsored retirement accounts, with the labour department saying private equity can be used within the professionally managed funds.

Blackstone’s property arm assets swell to €250bn

The value of assets managed by Blackstone’s property division saw a 23% increase in 2019, climbing to €248.5bn. Brookfield’s property assets rose almost 10% to €180bn.


HSBC and Standard Chartered back security law

HSBC has publicly supported the controversial new national security law which China is imposing on Hong Kong, with Peter Wong, the chief executive of HSBC's Asia business, having signed a petition in support of the law. Standard Chartered has also offered support for the legislation, saying it believes the new law, which would criminalise anti-government movements, would help maintain the long-term stability of Hong Kong.

ECB set to add €500bn of QE

With the European Central Bank (ECB) set to detail forecasts pointing to the impact the coronavirus pandemic has had on the eurozone, it is expected to announce a further €500bn of quantitative easing.

Bank of India chief urges business borrowing

Rajnish Kumar, chairman of the State Bank of India, says Indian businesses need to overcome risk aversion and start investing to help the economy. He told the Confederation of Indian Industries that while banks have funds waiting, companies are not coming forward to borrow.


Bristol Street Motors optimistic on industry prospects

Robert Forrester, chief executive of the business behind Bristol Street Motors, has said the car industry in the UK is poised for a rapid recovery from the coronavirus pandemic. Car dealership Vertu Motors announced it made profit of £23.5m in the year to February before the virus took hold and is confident the business will thrive despite a loss of £20m for April and May. Revenues for the year were up almost 3% to £3.1bn, with like-for-like sales up 1.2%.


737 Max compensation agreed between Boeing and Tui

Boeing and holiday operator Tui have reached a compensation deal under which delivery of the aircraft maker’s grounded 737 Max planes will take place at a slower pace. By delaying the deliveries by around two years, the travel firm hopes to “significantly reduce” its capital and financing requirements for aircraft, with CEO Fritz Joussen remarking: “The agreement provides TUI with compensation for a large part of costs that were incurred due to the grounding of the 737 Max. The new delivery schedule gives us considerable flexibility because we will have fewer new aircraft delivered in the next years.”

London City Airport to reopen at end of month

London City Airport is to reopen for commercial flights from the end of the month, with domestic flights to resume first followed by international flights beginning again in July.


Insurers and holiday firms top consumers' list of complaints

The Financial Ombudsman Service (FOS) has received a flood of complaints about insurers and travel companies, with 271,468 complaints in the year to April. A large number of the more than 32,600 complaints about insurance companies followed the two large storms Dennis and Ciara, which caused severe flooding and damage to businesses and homes. More recently consumers complained about travel insurers, which stopped selling cover altogether as the coronavirus spread and travel restrictions were introduced. The data also show the FOS found in favour of the consumer in 89% of the 1,043 cases in regard to unsecured guarantor loans. This compares with the industry average of 32% of cases that are decided in favour of the consumer.

FCA tells insurers to review product value

The Financial Conduct Authority (FCA) has directed insurance firms to consider the impact of COVID-19 on the value of their products, saying they should evaluate services and detail any alterations within six months. Examples of changes given by the FCA include changing how benefits are delivered, refunding some premiums or suspending monthly payments for a certain period of time. Sheldon Mills, interim executive director of strategy and competition at the FCA, said: “Customers should expect value from the insurance products that they buy, but the exceptional circumstances of coronavirus may have materially reduced the value they are getting”.

Axa to defy regulators with dividend payment

Axa is planning to proceed with payment of a dividend to shareholders even after the French regulator, ACPR, and Eiopa, the EU supervisory body, asked insurance firms to delay payouts.

Nomura reviews scale of operations in Hong Kong

Nomura’s Greater China strategy is being reviewed alongside the scale of its operations in Hong Kong, chief executive Kentaro Okuda has stated, as the firm expands its operations in Singapore.


Portugal and UK eye ‘air bridge’ deal

Portuguese foreign minister, Augusto Santos Silva, has told BBC Radio 4’s Today programme that “quarantine is an enemy of tourism” and anyone seeking to holiday in the country this summer would be “most welcome”, amid suggestions that an air bridge between the UK and Portugal could be agreed by the end of this month. This comes as the London Chamber of Commerce warns that a blanket quarantine for all international arrivals suggested that the UK is closed for business, with chief executive Paul Scully proposing a “risk-based approach” involving country-by-country assessments.

Magners cider sales down during pandemic

Drinks firm C&C has said sales of Magners cider were affected by the closure of the pubs sector, with the manufacturer seeing no revenue generated from its on-trade division, which supplies bars, restaurants and hotels. Full-year sales to February were up 7.8% to €1.7bn in line with forecasts.


Chemring posts strong results

Shares in Chemring has posted a rise in revenues and profits, which reached £24.2m from £9.9m the year before. Analysts at Peel Hunt remarked: “Chemring is weathering the COVID-19 storm well and the long-term outlook is also reassuring”.


Zoom benefits from lockdown as revenue surge reported

California-based video chat firm Zoom has reported a significant increase in revenue for the first quarter of $328.2m (£260.8m), representing an increase of 169% on the year earlier period. The company lifted its full-year revenue forecast to between $1.78bn and $1.8bn, up from a previous range of $905m to $915m, while net profit increased to $27m from just $200,000 last year. Per Roman, co-founder and managing partner of GP Bullhound, commented: “Adoption of Zoom as the de-facto standard for video communication is well under way. I am already seeing Zoom being used as a verb similar to Google, which is not to be under-estimated for long-term stickiness.”


Shops slash prices as coronavirus sees sales plummet

British retailers struggling during the coronavirus pandemic have cut their prices by the most in a month since 2006, according to industry figures revealing the scale of the economic fallout. The British Retail Consortium said shop prices fell by 2.4% in May following a decline of 1.7% in April as people continued to stay away from the high street during lockdown. Clothing and furniture saw the sharpest price drops while food prices increased slightly due to higher business costs, implementation of social distancing measures, and labour shortages in the industry.


Services sector activity declines

The IHS Markit/Cips services purchasing managers’ index picked up in May, although the dominant sector of the UK economy remained severely depressed, with coronavirus restrictions remaining in place. The index came in at 29 last month, up from April’s record low of 13.4, and also ahead of estimates of 27. The survey found that the 54% of respondents reported a drop in business activity during May, while only 13% signalled an increase. Tim Moore, of survey compiler IHS Markit, said: “A number of firms cited limited opportunities to win new orders with clients placed on furlough, as well as a hit to workloads from the postponement of new projects. Consumer demand also remained very subdued, with large areas of the service economy still in the planning stage of restarting business operations”.


More than half of all payments made by card

More than half of all payments were made by card last year, according to UK Finance, with this coming before the coronavirus crisis saw retailers encourage consumers not to use cash where possible. Its research showed that, out of 40bn payments made last year, about 30bn were "spontaneous" day-to-day transactions by consumers. Overall, cards were used in 51% of transactions. The number of contactless payments rose by 16% last year, often in supermarkets. A new limit of £45, rising from £30, has since been introduced.

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