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Daily News Roundup: Thursday 5th November 2020

Posted: 5th November 2020


Lloyds job losses confirmed

Lloyds is proceeding with cost-cutting efforts, with over 1,000 jobs at risk under the plans. The bank, which revived its restructuring plans in September after temporarily freezing redundancies at the start of the COVID-19 pandemic, told staff that it is cutting 1,070 roles but creating 340 new ones. A spokesman said the decision reflects the "changing needs and makes parts of our business simpler", adding: “Change does mean making difficult decisions”. The move comes on the back of 865 job losses announced in September, with these mainly in its insurance, wealth and retail teams. Unite officer Rob MacGregor commented on the announcement, saying the union “cannot comprehend” why Lloyds would choose to let go of staff “who have given the bank such commitment and dedication during a global pandemic.” The union said the decision was "shameful" given Lloyds' Q3 pre-tax profit, which hit £1bn.

Watchdog details payment holiday proposals

The Financial Conduct Authority, which earlier this week announced plans to extend payment holidays on credit cards, car finance and personal loans as England confirmed it would enter a second national lockdown, yesterday outlined plans for extended support. It said consumer credit borrowers who have not yet had a payment holiday during the pandemic would be eligible for two payment deferrals lasting up to a total of six months, while those who have already been granted a payment holiday would be eligible for another deferral of up to three months. Borrowers with high-cost short-term credit products, such as payday loans, would be eligible for a one-month payment deferral if they have not already taken one. Under the FCA’s proposals, customers would have until 31 January to apply for their first payment holiday.

FCA chief warns banks over small business debt

Financial Conduct Authority chief executive Nikhil Rathi has warned banks over the treatment of small businesses when recovering state-guaranteed debt issued during the coronavirus pandemic, saying: “If we are seeing activity which we believe is inconsistent with our rules, we will be supervising that closely and we will intervene”. Mr Rathi told the Commons Treasury Select Committee: “We're well aware of the history here … I think the banks are also well aware that they don't want a repeat of what happened after the last financial crisis and hopefully collaboratively we can make sure that doesn't happen."

Business goes remote as lockdown starts

With England today entering its second nationwide coronavirus lockdown, the Telegraph looks at the measures the business world is taking, noting that many firms that had started to return staff to offices in recent months will once again ramp up remote working. The paper highlights that NatWest told 50,000 staff in July they would be working from home until next year, as did Standard Life Aberdeen. It adds that while JPMorgan and Schroders had already “called a permanent halt to the daily commute”, Goldman Sachs and Deutsche Bank had been increasing the number of people in their offices - but are now sending workers home.

Malta timeshare repayments for Barclays customers

Barclays has sent letters to borrowers advising that all interest, fees and charges paid since the start of a loan agreement with a Malta-based timeshare operator will be refunded after regulators ruled that the timeshare loans had been improperly sold.


Endless bids for a slice of bread market

Private equity firm Endless is close to takeover of bread maker Hovis after Italian food producer Newlat Food pulled out of the race. Sources say a £100m deal could be confirmed this week. Hovis is the subject of a number of bids from private equity and turnaround investors, with suitors including Endless, Epiris and Aurelius Equity Opportunities.


Crédit Agricole warns over drag from second French lockdown

Crédit Agricole has increased its provisions for bad loans by less than expected as third-quarter profits fell 19% from the year-earlier period to €977m, with revenues up 2% to €5.2bn.


BMW reports rise in Q3 profits

Quarterly profit at BMW increased 9.6% to €2.46bn in Q3, with an 8.6% increase in deliveries of luxury cars helping the firm lift its figures. The firm saw growth of 9.8% in BMW-branded vehicle deliveries during the quarter, with a 31% jump in China helping to offset a 15.7% reduction in US demand.


Airports face £300m hit from tax shake-up

A new poll suggests Government plans to end tax-free shopping after the Brexit transition period will cost airports £300m every year. A survey of the 20 biggest members of the Airport Operators Association shows that scrapping duty-free shopping will see them each lose an average of £15m annually. Heathrow has filed a pre-action notice in a legal challenge to halt the tax change, with tax refund specialist Global Blue supporting the airport.


EU yet to recognise equivalence, says FCA

The Financial Conduct Authority says the EU is failing to recognise that UK and European rules are “the most equivalent in the world”, suggesting Britain could deviate from EU rules on share trading if Brussels does not give the City of London market access. The City watchdog says British investors will be allowed to keep trading shares on European exchanges even if no deal between the UK and EU is agreed before year-end, saying transitional permission that will apply until the end of March 2022 will avoid market disruption and ensure open markets and competition. The EU, however, will only permit trading by European investors on London-listed shares in limited circumstances. Nausicaa Delfas, head of the FCA’s international unit, said: “At the end of the transition period, the UK’s and EU’s regimes will be the most equivalent in the world, but as it stands this has not been recognised by the EU.”

Law firms prepare claims over collapsed fund

Lawyers representing investors in Neil Woodford's Equity Income Fund have cautioned that compensation will not be available for another two years at the earliest, should claims against the firm be successful. Link Group, the administrator of the fund, and fund shop Hargreaves Lansdown, which promoted it, are facing claims from several class action groups.

Asset management firm restructuring as Odey steps down

Hedge fund manager Crispin Odey has stepped down from Odey Asset Management, resigning from the role of co-chief executive in order to focus on managing his own funds. Co-head Timothy Pearey will remain as sole chief executive. Odey Asset Management will split as part of a wider restructuring, with a new legal entity, Brook Asset Management, to be formed in the near future.


Advertising trends up at STV

STV has reported that advertising trends improved “materially” during the third quarter and at the beginning of the fourth, with the Scottish broadcaster reporting advertising revenue down 4% year on year in the three months to the end of September and total revenue for the year to October at 13% lower.


Mitie reduces Interserve deal price

The terms of Mitie’s acquisition of rival Interserve’s facilities management arm have been reduced by over £80m, with the company now planning to issue 248m shares, while the cash consideration element of the agreement will remain at £120m. Revenue was reported at £972m, 9.8% lower than in the year-earlier period.


London climbs property investment rankings

London has climbed from fourth to second in a league table of European cities with the most attractive property investment and development prospects. The survey, by the Urban Land Institute, saw London rank behind Berlin as the top city in which to invest. Investors polled said London was boosted by good liquidity and Brexit-related pricing discounts relative to continental markets.


M&S reports loss

Marks & Spencer has reported its first loss in 94 years as a publicly-listed company. The retailer unveiled an £87.6m statutory loss before tax for the six months to September 26 after its clothing shops were forced to shut for half of the period. This compared with a profit of £158.8m last year. The group's clothing and home division lost £600m in sales compared with the previous year after suffering a 40.8% drop to £917.2m. As a result the department store chain reported an operating loss of £107.5m.

John Lewis to cut 1,500 more jobs

The John Lewis Partnership has said it will axe up to 1,500 jobs at its head office as it makes further cost cuts. It says the move will help it to save another £50m as it looks to make £300m in annual savings by 2022.


Services sector recovery slows in October

The IHS Markit/Cips services purchasing managers’ index (PMI) was down to 51.4 last month, from 56.1 in September. The measure of the services sector, which accounts for three quarters of economic activity, shows a slowdown in its recovery and marks the slowest monthly growth since June. Tim Moore, IHS’s economics director, said the service sector was “close to stalling” even before the latest lockdown announcement, adding that the economy “seems on course for a double-dip recession this winter and a far more challenging path to recovery in 2021”. Pantheon Macroeconomics economist Samuel Tombs said the data suggests the recovery “essentially ground to a halt in October”, adding the impact will be seen in lower GDP growth.

BoE set to launch further QE

The Bank of England is expected to launch a fresh round of quantitative easing (QE). The measure, set to be announced today, comes with Britain facing a double-dip recession, with Samuel Tombs, chief UK economist at Pantheon Macroeconomics, warning: “Hopes of a V-shaped recovery are dead and buried.” Experts predict that, having already cut interest rates to a record low of 0.1%, the Bank's Monetary Policy Committee will opt against a move toward negative rates, instead choosing to roll out further QE worth £100bn. This would add to the £300bn of emergency cash created through QE since the outbreak of COVID-19. James Smith, an economist at ING, said he also expects the Bank to offer some idea of the impact the four-week lockdown in England could have on the economy, suggesting it could see 6%-7% “shaved off” November’s GDP.

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