BANKING
Tenreyro backs idea of negative interest rate
Silvana Tenreyro, one of the nine members of the Bank of England’s monetary policy committee, said negative rates had worked in other countries and could assist a UK recovery. Cutting the UK interest rate below zero would be good for growth and would not necessarily mean the profitability of banks would be adversely affected. The Bank is expected to publish its views on the feasibility of negative rates after next month's policy meeting. Tenreyro said she did not want to prejudge the review but made it clear that she would be in favour of negative rates. "While we can never have complete certainty, negative interest rates should with high likelihood boost UK growth and inflation," she said. "Cutting the bank rate to its record low of 0.1% has helped loosen lending conditions, and I believe further cuts would continue to provide stimulus."
Letter: Botín should worry about digital banking
In response to comments from Ana Botín, executive chairman of Santander, Simon Tobelem says business is turning to digital banks because corporate banking “has become painful, complicated, costly, time-consuming and inefficient.”
INTERNATIONAL
Moody’s warns of credit risks in southern eurozone states
Italy and Spain are highly vulnerable to another shock to investor confidence, Moody’s has warned, with the credit ratings agency issuing a negative outlook for the eurozone’s sovereign debt in 2021. “Credit risks are highest in Italy, Cyprus, Spain and Portugal given their high economic exposure to the crisis, together with their more limited fiscal space,” its analysts said.
JP Morgan profits to be announced this week
JP Morgan is poised to reveal annual profits of some $31bn this week, with many of the firm’s traders expected to collect a “competitive” bonus at the end of the month. Meanwhile, rival Goldman Sachs is due to announce its own full-year results next week.
Ex-Credit Suisse chief Tidjane Thiam to launch blank cheque vehicle
Former Credit Suisse chief executive Tidjane Thiam is raising a $250m special purpose acquisition vehicle to invest in financial services businesses in the developed and developing world.
Why going global has proved so hard for the big banks
The FT suggests the failure of big banks to profit from globalisation to the same degree as other industries is down to the extreme cyclicality of the business and a poor understanding of new markets.
AUTOMOTIVE
Ford to cease manufacturing in Brazil after more than a century
- announced yesterday that it would stop manufacturing vehicles in Brazil this year with the loss of up to 5,000 jobs. Bosses said losses had not been reduced sufficiently.
Baidu teams up with Geely to make smart electric vehicles
China’s search engine Baidu has announced it will partner with Geely to make smart electric vehicles. Baidu will provide “intelligent driving capabilities”, while Geely will offer design and manufacturing expertise.
AVIATION
EasyJet seals £1.4bn state-backed support agreement
Budget airline easyJet has secured a £1.4bn loan facility with a syndicate of banks, supported by an 80% guarantee from the UK Government. The company said that the facility would “be secured on aircraft upon drawing and will significantly extend and improve EasyJet’s debt maturity profile and strengthen EasyJet’s balance sheet by increasing the level of available liquidity”.
Global Infrastructure Partners to buy Signature Aviation in £3.4bn deal
Signature Aviation is to be sold to Global Infrastructure Partners for £3.4bn after the latter firm outbid Blackstone and others. Private equity group Carlyle was also believed to be interested.
Heathrow reveals decline in passenger numbers
Heathrow Airport authorities have revealed a 73% fall in passenger numbers year-on-year, with 22.1m travellers passing through the hub last year.
FINANCIAL SERVICES
City watchdog issues warning to Bitcoin investors
The value of Bitcoin dropped almost 15% yesterday and was down 25% on Friday’s all-time peak, prompting the Financial Conduct Authority (FCA) to issue a warning to investors: “Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money. If consumers invest in these types of product they should be prepared to lose all their money.” Susannah Streeter, of fund shop Hargreaves Lansdown, said Bitcoin breaching the $40,000 mark last week had spooked investors and prompted some to cash in substantial profits. Meanwhile, the FCA has pushed back plans to monitor nearly 100 cryptocurrency firms amid money laundering concerns, while a proposed new US Treasury rule intended to reduce illicit cryptocurrency transactions has been criticised by the industry.
Sunak: City set for a post-Brexit “Big Bang 2.0”
The Chancellor told MPs on Monday that the UK’s position as a globally pre-eminent financial centre will only be reinforced by Brexit, and that Britain would now be able to “start doing things differently and better” in terms of regulation. In an interview with City AM, Rishi Sunak said that he would “get on and make sure that the City of London remains the most dynamic place to do financial services anywhere in the world”.
M&G chairman takes stress-related leave
Mike Evans, the chairman of M&G, has taken a temporary leave of absence due to a stress-related illness. He will be replaced on an interim basis by Fiona Clutterbuck, the chair of Paragon Banking group, who also serves as the senior independent director on the board of M&G.
HEALTHCARE
Sanofi acquires immunotherapy biotech Kymab
French pharmaceutical group Sanofi has bought UK biotech Kymab for $1.45bn. Sanofi is also considering making COVID-19 vaccines for rivals whose jabs are further along in development.
LEISURE & HOSPITALITY
Entain CEO announces resignation
UK gambling firm Entain’s chief executive Shay Segev has announced that he is to step down to become co-chief executive of privately owned sports streaming platform DAZN.
MANUFACTURING
JCB unveils new pothole filler
JCB has launched a new machine nicknamed ‘The Cruncher’ that it says can significantly reduce the manpower needed to fill in potholes, and has the repair capability of three normal machines. At a cost of £600 per week to lease, the company believes the Pothole Pro is affordable for local authorities.
MEDIA & ENTERTAINMENT
Vodafone towers deal to include UK masts
Vodafone’s 15,000 UK masts are to be included in a €20bn flotation of its international phone masts business. Vodafone and O2-Telefonica, which co-own the UK towers in a joint venture, have agreed to try and sign up other mobile companies to take space on its masts, in a bid to maximise cost savings and profits.
KKR joins race for songbooks
KKR has leapt on the lucrative song rights bandwagon buying a majority stake in the catalogue of songwriter Ryan Tedder, who has penned hits for Beyoncé, Adele, Paul McCartney and Stevie Wonder.
REAL ESTATE
British Land ‘to emerge from pandemic intact’
Nicholas Hyett, equity analyst at Hargreaves Lansdown, has predicted that British Land will survive the coronavirus pandemic despite seeing the rents it receives at London sites Broadgate, Regent’s Place and Paddington Central, among others, more than halved last month. He commented: “A shakeout in retail looks increasingly inevitable and that will be painful. Demand for retail space looks set to decline dramatically as a larger portion of sales shifts online. British Land’s higher quality assets may be better positioned to weather the storm than others, but the shift is still likely to mean years of disrupted rental collection and is probably bad news for property valuations.”
RETAIL
Day agrees deal to save Edinburgh Woollen Mill empire
Philip Day has reportedly agreed a deal with Middle Eastern investors to save Edinburgh Woollen Mill, Ponden Home and Bonmarché brands from collapse, which could save up to 2,500 jobs and 300 stores. Although details of the rescue were still being finalised, the Telegraph reports that Mr Day will use his position as a secured creditor to acquire the assets of the brands to sell them on to the new owners in a “complex” transaction. Marks & Spencer is taking over Mr Day's fashion brand Jaeger in a separate agreement. Jaeger had 244 staff and some 63 stores and concessions. In addition, 13 stores closed after administrators were appointed, with the loss of more than 120 posts across stores, head office and distribution. It is unclear if any jobs will be saved.
JD Sports bucks retail gloom with forecast upgrade
JD Sports is predicting that its full-year profit will be “significantly ahead” of market expectations of about £295m, due to strong online sales during coronavirus lockdowns. The sportswear retailer group forecast full-year, pre-tax profit to January 30th to be “at least” £400m. Total revenue for the 22 weeks to January 2nd 2021 in the group’s like-for-like businesses was more than 5% ahead from a year earlier, and the group added that the outturn for the full year is expected to be at least £400m.
UK retailers see little respite from Covid gloom over festive period
Figures from the British Retail Consortium show retail sales for the year as a whole were 0.3% below 2019 levels - the worst performance in the 25 years. While food sales growth rose 5.4% on 2019, non-food fell about 5%.
ECONOMY
Chancellor warns UK economy will get worse before it gets better
Rishi Sunak has warned that while the vaccine provides hope the UK economy will "get worse before it gets better" telling MPs on Tuesday that "the road ahead will be tough". The Chancellor said that fiscal stimulus provided so far amounted to more than £280bn, while 1.2m employers had furloughed almost 10m employees. The new national restrictions were necessary to control the spread of coronavirus, he continued, but they would have a further significant economic impact. Mr Sunak’s update was criticised by Anneliese Dodds, who accused the Chancellor of being “out of ideas”. The shadow chancellor added: “The purpose of an update is to provide us with new information, not to repeat what we already know.”