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Daily News Roundup: Thursday, 7th May 2020

Posted: 7th May 2020


Bounce bank loans prove popular in first 24 hours since launch

Some 69,000 bounce back loans with a value of more than £2bn have been approved during the first day of the government programme. Barclays, Danske, HSBC, Lloyds, RBS, Santander and Virgin Money received over 130,000 applications on May 4. But Mike Cherry, the national chairman of the Federation of Small Businesses, said that despite a “promising start” for the bounce-back scheme, more alternative lenders should be signed up rapidly to improve the reach of the scheme.

Coronavirus loan scheme approves new lenders

Investec, along with Assetz Capital, Atom Bank, Ebury, Fleximize, Social Investment Business, Tower Leasing, Ultimate Finance and White Oak UK have been approved for accreditation under the government’s coronavirus business interruption loan scheme (CBILS). Keith Morgan, chief executive of the British Business Bank, remarked: “The British Business Bank continues to help meet the incredible demand for CBILS by approving additional lenders for accreditation to the scheme, and provide even more choice for smaller businesses in need as a result of the COVID-19 outbreak.”

Virgin Money predicts increase in bad loans

Profits at Virgin Money more than halved in the first half of its financial year, with impairment charges in the six months to March tripling to £232m, from £77m a year earlier. The firm’s underlying pre-tax profit was down from £280m to £120m, with statutory net profit of £22m higher than the year earlier period. Meanwhile, Virgin Money has blocked around 32,000 credit card accounts, advising affected customers that it had reviewed their financial positions and decided to stop any further spending.

Metro Bank reports increase in customer deposits

Metro Bank has told investors that customer deposits increased by £77m since the end of December, with deposits at £14.55bn over the first three months of 2020. Net lending was down by £169m to £14.51bn compared to the end of 2019, with chief executive Daniel Frumkin stating: “Our colleagues have shown incredible commitment to serving our customers and communities in the face of the challenges caused by COVID-19.”

Pandemic sees Co-operative Bank suffer £12m hit

The Co-operative Bank has issued a trading update, reporting an underlying loss of £14.2m in the first quarter. Chief executive Andrew Bester commented: “We have examined the potential impact of the crisis on the Bank and are satisfied we are in a position of resilience,” continuing: “As we look forward, clearly the year ahead will be challenging and, like others, we will need to reprioritise investment spend, given expected pressure on income in a low base rate environment.”

UK banks face £25bn loan default bill

Credit rating agency Fitch has warned that Britain’s five largest banks could report between £17bn and £25bn of loan losses this year after the lenders revealed £7bn in credit losses for the first quarter. “Based on indications by some of the banks in their first-quarter 2020 results announcements, we expect that full-year provisions could be 2.4 to 3.6 times higher than the first quarter,” Fitch said in a research note.

Onesavings Bank hit by payment holiday calls

Buy-to-let lender Onesavings Bank said yesterday that borrowers of 26.7% of its book by value had been granted up to three months' relief on loan payments. The specialist lender said it expected bad loans at the end of March to be roughly double the £42.9m reported late last year.


KKR posts $4.2bn net loss as investment portfolio hit

Buyout giant KKR recorded a net loss of $4.2bn in the first quarter after large areas of its investment portfolio were hit by the effects of the coronavirus pandemic.

Warburg to raise stake in Chinese car rental company

US private equity firm Warburg Pincus is to lift its stake in Chinese car rental company China Auto Rental from 11% to over 17% citing the company’s current low share price.


UniCredit overhaul faces years-long delay as pandemic takes toll

A strategic overhaul planned by UniCredit could be delayed by two years as the bank revealed it swung to a net loss of €2.7bn in the first quarter driven by €1.3bn in provisions to cover an expected surge in bad loans.

HSBC lawyer hired as first Libra CEO

The Libra Association has hired HSBC’s chief legal officer Stuart Levey to be its first chief executive. The Facebook-backed digital currency group will be hoping to use Mr Levey's background in international finance regulation to help the company win over global currency regulators.

Brussels plans new anti-money laundering authority

The EU is to consult on plans to create a new anti-money laundering enforcement body as Brussels seeks to ramp up Europe’s response to a wave of money-laundering scandals.


BMW guidance lowered citing effects of coronavirus

BMW has announced that the coronavirus pandemic would affect all of its markets, with its earnings margin for 2020 to fall to 0% - 3%, down from a previous forecast of 2% - 4%. The firm stated: “The BMW Group still expects the spread of the coronavirus and the necessary containment measures to seriously dampen demand across all major markets over the entire year 2020”.


IHS Markit/Cips construction PMI at lowest level ever in April

The IHS Markit/Cips construction purchasing managers’ index (PMI) has revealed that UK construction sector activity slowed to a halt last month, with an all-time low rating of 8.2. Duncan Brock, group director at Cips, the Chartered Institute of Procurement & Supply, commented: “The coronavirus continued to ripple across supply chains, devastating all productivity in its wake. Though a fall in output was not a complete surprise, the scale and suddenness of the drop has knocked the wind out of building work in the UK.”


Direct Line allows some policyholders to lower expected weekly driven mileage

Direct Line Insurance Group has reported a 70% fall in last month’s motor insurance claims, with lockdown restrictions leading to fewer drivers on the roads. This came as the company announced a 4.7% increase in first-quarter gross written premiums to £789.6m, and predicted that travel-related claims of some £44m would result if restrictions are maintained until the end of September. Customers have been advised that they can lower their expected weekly mileage driven on some policies during the current situation.

UK investors rush back into equity funds during market rally

Net inflows into equity funds reached record numbers last month as support measures unveiled by governments and central banks to counter the economic effects of coronavirus boosted global stock markets.

HSBC seeks to remove management of ZenRock Trading

HSBC is seeking the removal of Singapore-based ZenRock Commodities Trading’s management as investment banks tighten credit and scrutiny of loans to commodities traders after the collapse of Hin Leong Trading.

House moves behind £19.4bn in lost pensions

Research by the Association of British insurers (ABI) suggests there are about 1.6m pension pots worth £19.4bn which are going unclaimed due to savers failing to contact their pension provider when they move house.


Smith & Nephew announces fall in revenue

Smith & Nephew has announced that revenue fell 7.6% to $1.1bn (£885m) in the first quarter after elective surgeries were put on hold due as a result of the coronavirus outbreak.


June reopening hoped for by cinema chains

The UK cinema industry is believed to be touting a proposed reopening scheme to the government under which cinemas would reopen by the end of next month. Phil Clapp, chief executive of the UK Cinema Association remarked: “We’ve made representations to government on the safeguards which UK cinemas would look to have in place for audiences and staff alike upon re-opening, and have asked that consideration be given – with these in mind – to allow cinemas to open by the end of June.”

New York Times warns of advertising slump

The New York Times has reported 587,000 new digital subscriptions in the first three months of the year, representing a record rise in new subscribers even as it warned of a fall in advertising revenue as a result of the coronavirus pandemic.


Nearly 2,000 Airbnb workers lose jobs

Some 1,900 Airbnb staff are to be made redundant, representing around 25% of the firm’s global workforce, with 2020 revenues predicted to be half the $4.8bn (£3.9bn) seen in 2019. Chief executive and co-founder Brian Chesky told staff: “We don’t know exactly when travel will return. When travel does return, it will look different.”


Debenhams to close five stores after lockdown ends

Debenhams has confirmed that another five stores will not be re-opening after lockdown restrictions are lifted. Meanwhile, landlord Hammerson has said its £400m deal to sell seven retail parks to Orion European Real Estate has collapsed after the private equity buyer pulled out, sacrificing its £21m deposit.


Formula One 2021 budget cap offer made to teams

Formula One bosses, seeking to cap budgets at the top end of £117m per team, have presented teams with a final offer for the 2021 season. Teams are expected to vote on the proposal in the next 48 hours, with the sum decided upon by F1 chairman Chase Carey, managing director Ross Brawn and FIA president Jean Todt.


EU predicts 8% contraction for UK economy

Paolo Gentiloni, European commissioner for the economy, has predicted that the UK economy will contract by 8.3% in 2020, stating: “Europe is experiencing an economic shock without precedent since the Great Depression.” He predicted a 7.7% slump in GDP across the eurozone this year with recovery not expected until the end of 2021 with France expected to contract by 8.2%, while Germany is set to suffer a predicted fall of 6.5%. Southern states are expected to see contractions closer to 10%.

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