BANKING
Emergency bank lending increases, but criticisms remain
The Treasury yesterday announced that 2,500 loans for business had been approved via the coronavirus business interruption loan scheme (CBILS), up from the 2,022 figure revealed on Monday. UK Finance will soon start to publish regular updates on the scheme, the government added. UK banks have now lent £453m through the CBILS, but many businesses are complaining of a slow response from banks. Mike Cherry, national chair of the Federation of Small Businesses, said: “We’re hearing reports that – despite these being ‘emergency’ loans – the application process for securing them is still very demanding. Of course lending can only be made to viable businesses, but banks need to understand that time is of the essence.” Elsewhere, some of the UK’s biggest tech start-ups, including Deliveroo and Citymapper, have written to Rishi Sunak, the Chancellor, telling him that the government’s coronavirus stimulus package remains inaccessible and urging Treasury officials to find a way to support them during the coronavirus pandemic.
Morgan: Bring fintechs in to help administer CBILS
Writing in the Times, Nicky Morgan suggests the UK’s fintech finance providers should be brought in to help get the government’s coronavirus business interruption loans scheme (CBILS) distributed more quickly to small businesses. Baroness Morgan says fintechs will “operate at speed”, require less paperwork and could well value companies differently. “When the virus crisis is over, fintech will be one of the ways in which the UK is able to retain a leading role in the global financial system. Now would be a good time to demonstrate the sector’s reach and abilities.”
HSBC, StanChart and Lloyds drop executive bonuses
Top executives at HSBC, Lloyds and Standard Chartered will forego their bonuses this year and donate part of their salaries to charities supporting victims of the coronavirus pandemic. Bosses at Royal Bank of Scotland and Barclays will also forego bonuses and donate part of their salaries to charity.
RBS cuts 130 jobs in investment bank
Over 130 positions in Royal Bank of Scotland’s investment banking division have been lost during the coronavirus outbreak, reports suggest, as the lender proceeds with a restructuring of NatWest Markets.
Banks want cushion eased
Banks have approached the Prudential Regulation Authority about easing capital requirements so they are better positioned to survive the coronavirus crisis. No decision has yet been made and the PRA has declined to comment.
PRIVATE EQUITY
Private equity denied again in Senate’s new loan bill
Private equity firms appear to have failed in their lobbying attempts to get Congress to agree to provide the companies they own with access to billions of dollars of US government-backed loans. A second bill in the US Senate to provide economic stimulus does not change the rule that affiliate companies do not qualify for the Small Business Administration loans. A wider stimulus package set to be debated after April 20th will provide private equity with another chance to try access the program.
Blackrock will not lay off workers due to coronavirus
US asset manager Blackrock has said it will not make any employees redundant this year as a result of the coronavirus pandemic. CEO Larry Fink added that more than 90% of the firm’s employees were working remotely.
INTERNATIONAL
Wall St urges caution as bullish investors rush into recovery bets
US stocks rose on Wednesday, prompting Wall Street banks to warn investors that equities have a good chance of falling back to last month’s lows. Robert Buckland, head of equity strategy at Citi said: “Equity markets may need to fall 50% before they have priced in this year’s likely earnings drop.” Quadratic Capital chief investment officer Nancy Davis added: “The stock market is at a very uncertain point now. The impact of the coronavirus on future earnings is yet to be determined. We aren’t out of the woods.”
HSBC reports potential money laundering breaches in Australia
HSBC has reported itself to Australia's financial regulator for possible breaches of anti-money laundering rules. The bank told AUSTRAC that the breaches involved small amounts of cross-border foreign currency transactions involving non-banking financial institutions that it was unable to properly report for technical reasons. Lenders face potential fines of up to A$21m (£10.3m) for each breach of the legislation.
Centerview recruits former Lazard head
Centerview Partners has hired the former head of Lazard in France, Matthieu Pigasse, to launch its Paris operations. Centerview has also poached two other former Lazard bankers, Nicolas Constant and Pierre Pasqual.
Fed lifts Wells Fargo’s asset cap
Wells Fargo's asset cap has been temporarily lifted by the Federal Reserve so the bank can lend more to customers who need support during the coronavirus crisis.
AVIATION
easyJet row continues as carrier takes loan
Sir Stelios Haji-Ioannou, founder of easyJet, has described the board’s taking out an emergency £600m taxpayer loan, as possibly “the biggest scandal in British corporate history and UK government support since the bailout of the UK banks", as his dispute with the carrier’s executives continues. Chief executive Johan Lundgren said earlier this week that the loan was intended to "increase our liquidity in the event of a prolonged grounding of the fleet".
CONSTRUCTION
Housebuilder in relief package launch
Taylor Wimpey has launched a £5m financial package intended to help self-employed construction workers survive the coronavirus pandemic, becoming the first housebuilder to do so. Under the scheme, funds will be handed in advance to subcontractors with whom the company has long-term relationships, with jobs to be completed when lockdown restrictions are lifted. It is estimated that the initiative will help around 2,750 people to get through until government relief schemes come into effect.
FINANCIAL SERVICES
Insurers announce cancellation of dividends
With the coronavirus outbreak affecting the economy and financial markets, Aviva, RSA, Direct Line and Hiscox have abandoned plans to pay dividends under pressure from the Bank of England. Legal & General has said it will continue with its final dividend, while Phoenix, M&G and Admiral and Hastings have made no announcements on the issue, and Beazley has already paid its dividend. The Prudential Regulation Authority stated: “We welcome the prudent decision from some insurance companies today to pause dividends given the uncertainties associated with COVID-19.”
Few guarantees for financial services
Alex Newman in Investors Chronicle says that active fund managers whose profit margins were already struggling have been hit hard by the recent market turmoil. He singles out Jupiter Fund Management and Standard Life Aberdeen as being among the worst hit. He adds: “While it’s hard to know what Brewin Dolphin and St. James’s Place might say in a trading update, wealth managers’ silence to date highlights the sector’s limited capacity for self-help or remedial action in a crisis.”
HEALTHCARE
NMC Health succumbs to administration
NMC Health could enter administration as early as today after the private hospitals company failed to halt an application brought by a major creditor, Abu Dhabi Commercial Bank, to place it into the insolvency process.
LEISURE & HOSPITALITY
Tour firm withdraws guidance for the year
On the Beach has cancelled its dividend and withdrawn guidance for the year, with the travel operator’s chief executive Simon Cooper to forego his salary and the rest of the board to take a 20% pay cut.
MEDIA & ENTERTAINMENT
Channel 4 furloughs staff as ad revenue drops
Channel 4 has said 10% of staff are to be furloughed and executives will take pay cuts in an attempt to save £245m as the coronavirus crisis saps advertising revenue. The broadcaster warned of a 50% fall in the TV ad market in April and May.
Jewish newspapers collapse into liquidation
The Jewish Chronicle and The Jewish News are seeking voluntary liquidation after their parent company, the Kessler Foundation, reportedly ran out of money due to the coronavirus outbreak.
PROFESSIONAL SERVICES
Recruiters report fall in profits as pandemic hits
Robert Walters has cited the “savage” economic effects of the coronavirus pandemic, as UK fee income fell 29% during the first quarter. The recruitment agency’s UK performance saw fee income sink to £19.7m and pulled down overall fee income to an 11% year-on-year decline. Meanwhile recruiter Page Group said gross profit last month was down 26%, and down 11.7% for the first quarter overall. Hays and Sthree have also issued warnings this month.
RETAIL
Tesco defends £900m dividend
Tesco has defended its decision to hand investors a £900m dividend while accepting a business rates holiday worth £585m from the government's emergency coronavirus support package. CEO Dave Lewis said the cash payout was "reflective of last year's performance and the strength of the business" and that 220,000 small investors stand to benefit. "We looked at whether the business needs more liquidity even in the most stressed scenario and it was decided we do not," he said. Mr Lewis also argued that the coronavirus outbreak will add £925m to costs as the grocery giant hires more staff, pays sick workers and fits stores with protective equipment and screens.
ECONOMY
Eurozone’s two biggest economies sink into historic recessions
Both Germany and France are seeing steep declines in their economies, with the former expected to have shrunk by 10% by June, while French GDP is forecasted to have fallen by 6% since the beginning of the year. In the UK output fell 4% in the first quarter and is set to shrink by another 11% between April and June. Meanwhile, the World Trade Organization has said that global trade is expected to plummet by up to 32% due to the COVID-19 crisis, far faster than the 12% decline seen in 2009.