City traders express anger over pressure to keep going into the office
The Telegraph reports that anger is growing in the City among traders who have been told to be in the office at a time when the government is urging people to stay at home to stop coronavirus spreading. Banking insiders said traders are regarded as "critical staff" and less suited to working from home compared to other banking roles, mainly due to compliance issues and the equipment required. However, one trader said: “It’s outrageous. We all have to be trusted to do the right thing and work responsibly in a time like this”. Additionally, the Financial Conduct Authority, which oversees the sector, has said it does not object to traders working from home provided calls and trades can be recorded.
Cost of personal loans hiked
As Boris Johnson announced new COVID-19 measures for the UK public, British banks increased interest rates on personal loans amid fears borrowers could run into trouble. Additionally, the limit on contactless payments will be lifted to £45 from next month to reduce the number of cash transactions and risk of transmission. Meanwhile, Baroness Altmann, the independent peer and former pensions minister, suggested that banks should reduce all credit card rates to 0.5% for six months, down from an average of more than 20%.
Lenders take loan fee on the chin
An update to the state aid framework for coronavirus-related support schemes published by the European Commission last week has meant banks are supposed to pay fees to the government when providing state-backed loans to small businesses. Small businesses can apply for loans of up to £5m from about 40 lenders, interest free for 12 months. Lenders have agreed to pay the fees instead of passing the charge on to businesses.
Non-bank lenders push for access to emergency state funding
Specialist lenders have warned that thousands of vulnerable customers could become "mortgage prisoners" if wider access to emergency funding schemes is not granted to support credit during the coronavirus pandemic.
P2P groups call for loan default protection
RateSetter and fellow P2P platform Assetz Capital are calling on the Bank of England and the Treasury to allow access to stimulus schemes that provide liquidity to banks.
SoftBank readies $41bn asset sale
SoftBank is preparing to sell up to $41bn (£36bn) in assets to shore up its market value in the face of the coronavirus pandemic. The sale is likely to include $14bn of Alibaba shares.
Swedbank failings on €37bn of transactions revealed in report
Swedbank carried out €37bn of transactions with a high risk for money laundering over a five-year period, according to a report published yesterday by Clifford Chance. The law firm said the Swedish bank actively targeted high-risk individuals in the Baltic region; the report also describes how the biggest bank in the Baltics lacked proper systems and controls to combat money laundering, and how about $4.8m of transactions could have broken US sanctions. Swedbank has cancelled the SEK20m ($1.9m) severance pay of former CEO Birgitte Bonnesen, with the report stating that she “appeared to lack adequate appreciation for the severe risk” from its high-risk, non-resident business in Estonia, Latvia, and Lithuania.
Fed’s unprecedented action fails to reassure markets
The Federal Reserve yesterday pledged an unlimited supply of money to the US economy and unveiled new financing schemes. It said that there would be no limit to the size of its quantitative easing programme and that it would buy $625bn in bonds and mortgage-backed securities this week. It also announced $300bn of financing for corporate debt markets. However, the action failed to assuage market fears with the FTSE 100 dropping 3.8% to 4,993.89 points – its lowest close since October 2011. France's Cac 40 was down 3.3% while Germany's Dax fell 2.1%. As European markets closed, America's S&P 500 was down 1.1%.
Regulators pressed for looser rules on options
Regulators are being urged to revise rules around how much capital banks must allocate to derivatives trades, amid concerns that current standards are intensifying the volatility caused by the coronavirus crisis.
Mexican startup Credijusto raises $100m
Mexican fintech startup Credijusto has raised $100m in debt from Credit Suisse Group, a move that will help it extend more loans to small and mid-sized businesses as banks gauge how to respond to the impact of coronavirus, joint CEO David Poritz said. Small and medium-sized companies have long struggled to access financing from Mexican banks. That problem could worsen if financial institutions take a more conservative stance amid the market turmoil triggered by the pandemic.
Bank of Ireland closes over 100 branches
Bank of Ireland is temporarily closing 101 branches amid the ongoing spread of COVID-19, but 161 will remain open, with 148 providing a full service.
Airbus takes measures to cope with virus effects
Airbus has secured a new €15bn credit facility as it moves to mitigate the financial impact of the COVID-19 outbreak, while guidance for the coming financial year was updated and a 2019 dividend, worth approximately €1.4bn, abandoned. The firm’s voluntary top up of employee pension funds will also be suspended while the pandemic continues. Chief executive Guillaume Faury commented: “Our first priority is protecting people while supporting efforts globally to curb the spread of the coronavirus. We are also safeguarding our business to protect the future of Airbus and to ensure we can return to efficient operations once the situation recovers. We have withdrawn our 2020 guidance due to the volatility of the situation.”
Boeing shuts Washington State factories
Boeing has temporarily closed its operations in Washington State in an effort to slow the spread of the coronavirus among its employees. factories will close for two weeks and all of the 70,000 employees affected will continue to receive paychecks during the period.
Pension pots slump in value
Between 13% and 18% of the value of pension pots saved by some 7.5m low and moderate earners in Britain has been lost since the beginning of the coronavirus crisis, according to the National Employment Savings Trust (Nest), which is the default pension fund used by 400,000 employers auto-enrolling their staff. Many members of other defined-contribution pension schemes are expected to have lost far greater amounts, the Times adds.
Travel insurers face £275m coronavirus bill
The Association of British Insurers (ABI) estimates that travel insurers will make a record £275m in coronavirus-related payouts, most of which will be for cancellations.
HIV drug to be trialled on coronavirus patients
- from the University of Oxford last week enrolled the first patient in a trial to see if coronavirus patients can be treated with the HIV combination drug Lopinavir-Ritonavir and the steroid dexamethasone, which is used for people with severe asthma or chronic obstructive pulmonary disease to reduce inflammation. The researchers were among a group of six handed £20m yesterday by the UK government.
AbbVie drops patent rights for Kaletra antiviral treatment
AbbVie has become the first major drugmaker to drop its rights to make money from a drug that might be used as a treatment for the coronavirus after the firm gave up its patents relating to Kaletra.
LEISURE & HOSPITALITY
Retail, hospitality and leisure firms given rent reprieve
The government has provided thousands of retail, hospitality and leisure firms with the opportunity to suspend rent payments to landlords for at least three months. Landlords will be banned from evicting commercial tenants during the period as ministers increase measures to protect businesses during the coronavirus crisis. Kate Nicholls, chief executive of UKHospitality, which represents hundreds of restaurants and pubs, said: “With the next pending rent day falling this Wednesday, this move by the Government is hugely welcome and will help to protect jobs across the sector.” Meanwhile, the FT reports that Burger King is joining hundreds of businesses in the UK, including Carluccio’s and Yo! Sushi, that are planning to withhold rents this week. Elsewhere, pub chain Fuller’s has cancelled commercial rents on its tenanted properties after announcing that it would close all of its 215 pubs and hotels due to the COVID-19 pandemic.
MEDIA & ENTERTAINMENT
ITV dividend and outlook abandoned as advertising takes virus hit
With the COVID-19 pandemic damaging the advertising sector, ITV has announced that it would no longer propose a 5.4p per share dividend for 2019 at its annual general meeting, nor a full-year payout of 8p for 2020. It is believed the decision to abandon the dividend would save the firm over £300m, while shares were down more than 10% after the update. Chief executive Carolyn McCall stated: “We are actively taking measures to reduce costs and manage our cash flow so that we are best positioned to continue to deliver our strategy of building a digitally led media and entertainment company over the medium term.”
COVID-19 crash to be worse than 2008
The coronavirus crisis will damage the global economy more than the 2008 financial crisis, the OECD and the IMF said yesterday. IMF boss Kristalina Georgieva called for countries to “undertake more bold fiscal actions” adding that she hoped the world would see a recovery in 2021. Separately, analysts at Goldman Sachs predict that the slowdown caused by the COVID-19 pandemic will cause the global economy to shrink by 1% this year. Meanwhile, UBS economist expect Europe's economy to shrink by 4.5% this year, similar to 2008.