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Daily News Roundup: Tuesday 16th June 2020

Posted: 16th June 2020

BANKING

Metro Bank sets sights on RateSetter

Metro Bank has announced that it has entered into a "period of exclusivity" with peer-to-peer lender RateSetter. The bank, which confirmed that it had entered talks to buy Retail Money Market, which owns Ratesetter, said: “There can be no certainty at this stage that a formal agreement will be reached, nor as to the terms of any agreement.” Metro Bank, which said a further announcement “will be made if and when appropriate”, added that the prospective acquisition “could accelerate the company’s stated strategy to grow its unsecured consumer lending book”.

Nationwide offers redundancy packages

Nationwide has offered redundancy packages for about 200 workers in an attempt to avoid compulsory job cuts. The building society will begin laying off staff early next year unless enough of its workforce volunteer for the redundancy programme. A spokeswoman for Nationwide, which employs around 17,000 staff, said: “As a result of the low interest rate environment and the impact of COVID-19, we are consulting on potential redundancies with a number of individuals.”

Raab questions HSBC’s HK stance

Foreign Secretary Dominic Raab has criticised HSBC’s backing of China's national security law for Hong Kong, a stance which contradicts that of the British government. Mr Raab said: “In relation to HSBC, ultimately businesses will make their own judgment calls … But let me just put it this way, we will not sacrifice the people of Hong Kong over the altar of banker bonuses." Aviva, a top-20 shareholder in HSBC said it was "uneasy" that the bank – as well as Standard Chartered - had opted to support the law without knowing details of it and how it will operate.

Savers hit as interest rates fall

Analysis by Moneyfacts shows that average savings rates for easy access, fixed bonds and Isas are at their lowest levels since records started in 2007. The average easy access account rate on the market in June offers savers 0.3% - around half of the typical 0.59% rate available in January, while a typical easy access cash Isa comes in at 0.4%, down from the 0.85% available in January. The average one-year fixed ISA rate has fallen from 1.15% in January to 0.75% this month. The report also reveals a dip in choice for savers, with the number of savings accounts on the market falling from 1,388 to 1,133 between January and June, an 18% decline.

PRIVATE EQUITY

EC1 shutters operations

Venture capital firm EC1 Capital, which has invested in early stage businesses, has shuttered its operations after opting against raising a new fund during the coronavirus pandemic. EC1 was a subsidiary of Sabban Capital, an investment group operating out of the United Arab Emirates.

INTERNATIONAL

Funds financing Vision Fund bets invested in by Softbank

Softbank has made investments of more than $500m (£399m) in Credit Suisse’s $7.5bn range of supply-chain finance funds focused on start-ups backed by the Japanese firm’s Vision Fund. This follows an announcement by Softbank in May that it may not pay a dividend after taking an $18bn hit on the Vision Fund.

Commerzbank job losses and branch closures expected

Commerzbank is to lay out its strategy review in August, with branch closures and job cuts expected to be announced. Stefan Wittmann, who represents labour on the supervisory board and is a trade union secretary at the Verdi union, criticised investor Cerberus, which has rejected his demand for board seats. Mr Wittmann also warned: “There will be considerably more branch closures and more job losses than previously announced.”

AVIATION

Easyjet implements safety measures as flights resume

Easyjet has resumed domestic flights with social distancing and other safety measures in place. Chief executive Johan Lundgren said such measures “will remain in place for as long as is needed to ensure customers and crew are able to fly safely as the world continues to recover from the impact of the coronavirus pandemic.” He went on: “While we are starting with a small number of flights this will build over the coming weeks to cover around 75% of our network by August.”

CONSTRUCTION

MJ Gleeson predicts £100m hit to revenue due to coronavirus

Revenue at housebuilder MJ Gleeson is expected to fall over £100m as a result of the coronavirus lockdown, with turnover for the year to June 30 expected to fall 42% to £145m. This comes as 275 of 456 staff members who were furloughed in April returned to work, with all staff expected back by July 30.

FINANCIAL SERVICES

Travelex scraps sale despite offers

Travelex has pulled the sale of its business, saying the non-binding offers it had received were unacceptable to bondholders and the lenders that provide its revolving credit facility, which include Barclays, JPMorgan, Bank of America Merrill Lynch, Goldman Sachs and Deutsche Bank.

APPG calls for end to mortgage prisoner exploitation

The All Party Parliamentary Group (APPG) on Mortgage Prisoners has called for a probe into the alleged exploitation of mortgage prisoners by unregulated funds. In a letter to the Competition and Markets Authority (CMA) and the Financial Conduct Authority (FCA), the APPG requested an “urgent investigation” into "price gouging" by unregulated funds and inactive lenders.

UK small firms launch claim against Hiscox

A group of small businesses has launched a £40m insurance claim against Lloyd's of London insurer Hiscox over disputed cover for business disruption caused by the coronavirus pandemic. Mishcon de Reya is representing the policyholders known as the Hiscox Action Group and has written to Hiscox to trigger arbitration clauses in nearly 350 contracts.

Mutual insurer LV puts itself up for sale

LV has confirmed that it is assessing a wide range of strategic options which may include a sale, saying some of the options “may involve a transaction with a third party”.

HEALTHCARE

Astrazeneca commits to 400m coronavirus vaccine doses for Europe

Some 400m doses of Astrazeneca’s potential coronavirus vaccine will be supplied in Europe before the end of the year, after the firm partnered with the University of Oxford to develop the treatment. The company has an order of 100m doses for the UK, delivery of which Mr Soriot has said will begin in September.

LEISURE AND HOSPITALITY

Cineworld withdraws from £1.6bn takeover of Cineplex

Cineworld has withdrawn from a £1.6bn American deal to take over Canadian chain Cineplex. The firm stated: “Cineworld has notified Cineplex that it has terminated the arrangement agreement with immediate effect.” Cineplex responded by stating: “The arrangement agreement explicitly excludes any ‘outbreaks of illness or other acts of God’ from the definition of material adverse effect,” and claims Cineworld has no legal basis to withdraw from the agreement.

REAL ESTATE

Hammerson chairman announces exit

David Tyler, who has chaired FTSE 250 landlord Hammerson since 2013, has announced his resignation. He will stand down on October 1, with former Land Securities chief executive Rob Noel stepping into the role. Mr Tyler’s announcement comes less than a month after David Atkins quit as chief executive.

RETAIL

Shoppers hit the high street as stores reopen

The easing of lockdown measures across England which enabled many stores to open after three months saw a surge of consumers descend upon high streets, retail parks and shopping centres yesterday. Analysis by Springboard shows that as of 5pm on Monday, footfall was 38.8% higher than a week ago. All shops in England are now allowed to open, but with strict safety measures, with stores having to ensure social distancing rules are adhered to and plastic screens are in place at tills. HMV owner Doug Putman says he expects a rush in the first week of trading but warns that retailers will come under pressure if shoppers do not return in the same numbers as before the lockdown, saying that if operating costs remain the same but sales dip 20% “it makes a lot of companies unviable.”

Travis Perkins announces job losses and closures

Builders merchant Travis Perkins has announced plans to cut some 2,500 jobs and shut 165 outlets. CEO Nick Roberts said: “Whilst we have experienced improving trends more recently, we do not expect a return to pre-COVID trading conditions for some time and consequently we have had to take the very difficult decision to begin consultations on the closure of selected branches.”

ECONOMY

Morgan Stanley confident of bounce back

Morgan Stanley expects global growth to bounce back from the impact of the COVID-19 pandemic, saying economic output will return to pre-lockdown levels by the end of the year and the recession will be short but sharp. Chetan Ahya, the bank's chief economist, said: “Recent upside surprises in the incoming growth data and policy action have increased our confidence that this will be a deep V-shaped recession.” Morgan Stanley said its projections assumed that a "second wave" of coronavirus infections would appear by the autumn, "but that it will be manageable and will result in selective lockdowns".

OTHER

Pandemic to drive payments shift?

Sulabh Agarwal, managing director of global payments at Accenture, looks at moves away from cash amid the coronavirus pandemic. He says that while contactless card payments may have helped reduce the spread of the virus, spending limits “make larger purchases without physical contact more challenging”, whereas digital wallets typically have no purchase limit as they use two-factor authentication. Mr Agarwal says central bank digital currencies (CBDC), an electric form of traditional money, issued and governed by a country's central bank, will gain in prominence as economies look to recover from the pandemic. He notes that Sweden's Riksbank is already testing an e-krona, which could become the first CBDC.

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