Starling defends BBLS performance
Oliver Shah examines the performance of Starling Bank in distributing state-backed emergency loans to small businesses in the Sunday Times. Starling is the only fintech aside from Tide to be accredited to lend under the government’s Bounce Back Loan Scheme (BBLS) and many say the digital bank has failed to deliver. Led by Anne Boden, Starling has been accused of using credit checks to reject bounce back customers, against application rules outlined by the British Business Bank, and of conducting a mass decline of applications mid-May, something the bank denies happened. Starling has also rowed back on a promise to make the loans available to new customers, saying now that they cannot apply until next month. But Boden insists the lender can cope with the demand: “We have a highly automated process and our response and turnover were best in class.”
Bank of England works to bring fintechs into Term Funding Scheme
The Telegraph reports that talks on a support package for non-bank lenders have advanced but remain stuck over risk as non-traditional lenders do not have to comply with the same rules as mainstream banks. It is understood non-bank lenders would likely receive help through the Bank of England's Term Funding Scheme (TFS), but funds would be channelled via a special purpose vehicle to reduce risk to the Bank.
Small business champion optimistic credible scheme will be in place this Autumn
The Times’ James Hurley talks to Lewis Shand Smith, chairman of the nascent Business Banking Resolution Service (BBRS), which has still not gone live due to ongoing arguments over which small businesses will be eligible for its support. Banks say those who have been through a previous redress process, or who have tried to sue their bank, should be unable to apply, but SME representatives say the credibility of the scheme will be fundamentally undermined if valid cases are excluded.
Goldman Sachs mulls paying for staff to have private COVID-19 tests
Goldman Sachs is considering following the example of Credit Suisse and paying for antibody tests for staff. The Swiss bank is testing staff in its major hubs from next month while JP Morgan is offering private at-home tests to all UK staff. It is hoped such testing will encourage staff who have antibodies to return to the office. Goldmans said no decision had yet been made.
Banks consider scrapping expensive backup facilities
Banks are considering whether to continue paying for dedicated disaster recovery sites after the COVID-19 emergency showed working from home practices were so successful. RBS said it is “actively reviewing” the need for such sites while the Sunday Telegraph notes that Goldman Sachs stopped using its backup office in Croydon in March because so few people were using it.
Mortgage holiday scheme extended to September
The Treasury has confirmed that the mortgage payment holiday scheme is set to be extended for a further three months. The scheme had been due to end in June after launching March and aiding more than 1.8m homeowners. The Treasury and Financial Conduct Authority said borrowers would either be able to continue to withhold payments until the end of September or start making reduced payments instead.
Nationwide halts repossessions for a year
Nationwide has pledged to suspend repossessions of borrower’s homes for the next 12 months as part of a packet of measures to support customers. Nationwide says it will offer borrowers flexibility around repayments, which may include temporarily moving onto interest-only. Elsewhere, RBS has confirmed that 200,000 of its one million mortgage customers across the UK have so far been approved for mortgage repayment holidays.
HSBC board rethinks overhaul and seeks even sharper cuts
HSBC’s board is pushing for restructuring plans to be restarted after they were paused as the COVID-19 pandemic struck. The board is considering even more drastic measures than the proposed 35,000 job cuts, such as the sale of its US business alongside its retail network in France.
NS&I attracts savers as rate cuts delayed
Savers are increasingly turning to National Savings & Investments as banks and building societies slash their rates. The NS&I income bond is now the best easy-access rate available offering a return of 1.15%. NS&I said it had delayed its rate cuts to help savers whose investment incomes and values have fallen during the coronavirus crisis.
Shake-up in private equity is due
The Sunday Times’ Oliver Shah says the private equity industry “doesn’t deserve to be penalised as a matter of course” during the coronavirus crisis just because it has its share of bad actors. However, Mr Shah suggests a reckoning is due for those “buyout barons” who use debt to manufacture statutory losses and lower corporation tax bills. Elsewhere, the Mail on Sunday claims the government is actively considering the creation of a £25bn sovereign wealth fund that will take stakes in struggling regional firms in the wake of the coronavirus crisis.
US-backed start-ups could get Treasury support
The Treasury is considering plans to give American-owned start-ups access to government cash. If the businesses are based in Britain but have been through US accelerator programmes they could gain access to the government’s Future Fund. The Sunday Times posits that relaxing the rules could spark a row about taxpayers supporting businesses with overseas investors.
Hong Kong-facing British firms feel China’s threat
Moves by China to tighten its grip on Hong Kong sent shares in British companies with significant Hong Kong-facing operations down on Friday. HSBC fell by 5% while Standard Chartered suffered a 2.4% fall. Prudential slumped by 9.3%.
Deutsche Bank asks top managers to waive one month’s pay
Hundreds of senior managers at Deutsche Bank have been asked to waive a month’s salary in an act of “solidarity” with those suffering due to the coronavirus pandemic.
Companies line up to sell stock as US IPO market reopens
Bankers are expecting a wave of IPOs coming to market in the US following the coronavirus-forced pause in new launches; a move set to be welcomed by investors seeking more liquidity.
US regional banks: on the margins
The FT reports on the threat to US regional banks with large energy lending portfolios predicting that the historic collapse in oil prices is likely to set off a wave of loan defaults.
EU watchdog hopeful most banks can absorb €380bn pandemic hit
Analysis by the European Banking Authority suggests banks on the continent will suffer a €380bn hit to their capital due to COVID-19 but most should be able to absorb the losses.
Hedge funds bet against Europe stocks as short selling bans expire
European companies faced a wave of bets against them as US and UK hedge funds reacted to the lifting of short-selling bans in six countries last week.
JLR seeks £1bn lifeline
Jaguar Land Rover is in talks to borrow more than £1bn through the UK’s emergency coronavirus lending program as the company battles to survive a collapse in car sales brought on by the coronavirus pandemic. JLR is also seeking tax breaks, research grants and other subsidies which could bring the total aid package to nearly £2bn.
VW defeated in landmark Dieselgate case brought by van buyer
Germany’s Federal Court of Justice has ordered Volkswagen to pay over €28,000 to an owner of a diesel minivan, in a ruling related to the firm’s cheating on emissions results.
Palmer to leave Aston Martin
Aston Martin CEO Andy Palmer is set to leave the luxury carmaker as part of a boardroom shake-up. He is expected to be replaced by Tobias Moers, who runs Mercedes-Benz's AMG performance arm.
Aerospace sector faces being slashed by a quarter
Aerospace trade body ADS fears up to 25,000 UK jobs will go in the sector because of the collapse in air travel resulting from COVID-19 - almost a quarter of all jobs in the industry. Analysts expect it to take two years for demand for aircraft to be back to 75% of pre-coronavirus levels, “meaning the global fleet is a quarter too large.” Paul Everitt, chief executive of ADS, adds that the government needs to bring forward defence and space programmes to retain key skills and jobs as well as extra funding for new technologies as a means to support the industry through the downturn.
German government agrees €9bn bailout for Lufthansa
The German state is to take a 20% stake in national airline Lufthansa. The deal will bar the airline from paying dividends and constrain executive pay but the government aims to sell its shares by the end of 2023. The move still has to be approved by the firm's shareholders and the European Commission.
EasyJet founder Stelios loses bid to oust 4 directors
Stelios Haji-Ioannou, the founder of easyJet, has lost his attempt to have four directors, including the airline’s chairman and chief executive, removed following an investor vote on Friday.
Rolet warns over $27bn data merger
The former CEO of the London Stock Exchange has warned that the $27bn takeover of Refinitiv carries risks over obsolete technology at the Blackstone and Thomson Reuters-owned data provider. Xavier Rolet also warned that the competition review being undertaken by the European Commission was highly political and “could go either way.”
Call to extend car finance relief
Motor industry experts have said owners with finance should be given an extra three-month break from paying their bills after mortgage holidays were extended to help borrowers. The Finance and Leasing Association said that in the eight weeks to May 1st, members had received an estimated 1,243,000 requests for COVID-19 related forbearance from customers, 82% of which had been granted by that date.
Insurance prices rise across the board as coronavirus hits
With insurers facing a double whammy from coronavirus claims and volatile markets hitting reserves, prices for commercial insurance are rising at rates not seen for almost two decades.
UK’s largest pension scheme stockpiles cash
Nest, the UK state-backed pension scheme, has increased its cash reserves from a normal range of 1-2% to roughly 5% due to risks developing as a result of the coronavirus pandemic.
PayPal enables QR code payments
PayPal has launched a new phone-to-phone contactless payment service based on QR codes amid fears that notes and coins could aid the spread of COVID-19.
LEISURE & HOSPITALITY
Carluccio’s bought by Giraffe owner in deal that cuts 1,000 jobs
Carluccio's has been bought out of administration by Boparan, the owner of Giraffe restaurants. The deal saves 800 jobs and 30 sites at the Italian chain, but 40 restaurants and more than 1,000 jobs will be lost, more than half the total workforce.
Specialist Leisure Group collapses into administration
Specialist Leisure Group, the owner of coach company Shearings, has collapsed into administration putting around 2,400 jobs at risk.
Pizza Express appeals for permission to delay accounts
Pizza Express is seeking to delay its 2019 accounts as the casual dining chain races to restructure its £1.1bn debt.
Marston’s and Carlsberg UK announced £780m joint venture
Marston's has announced plans to merge its brewing arm with Carlsberg UK to create the Carlsberg Marston's Brewing Company. Marston’s will own a 40% stake and receive a cash payment of as much as £273m.
MEDIA & ENTERTAINMENT
UK to cut Huawei's involvement in 5G network
Boris Johnson has instructed officials to draw up plans to reduce Huawei’s involvement in Britain’s 5G network. The Prime Minster wants China’s involvement in UK infrastructure scaled down to zero by 2023, the Telegraph reports.
Axel Springer among bidders for eBay’s classifieds business
KKR-backed German media group Axel Springer has made an initial bid for eBay’s classifieds business as the ecommerce group embarks on one of the largest sale processes since coronavirus outbreak.
Heineken CEO to chair Vodafone
Jean-François Van Boxmeer, the outgoing CEO of Heineken, has been appointed chairman of Vodafone. He will succeed Gerard Kleisterlee on November.
British Land looks set for coronavirus hit
British Land is expected to have taken a substantial hit from the COVID-19 pandemic when it reports its full-year results tomorrow. Its £11.7bn portfolio is 55% London offices, while 41% is retail properties. However, the firm recently stressed it had more than £1bn in cash and that it had no material debt repayments until 2024.
Property fund to stay closed
One of Britain’s biggest commercial property funds has announced that it will continue to ban withdrawals to "best protect the interests of all its investors". The M&G property fund owns shopping centres and holds more than £2bn of investors' money.
ONS: Retail sales fall by record 18.1% in April
According to figures from the Office for National Statistics (ONS), April saw retail sales fall by a record 18.1%, following a 5.2% decline in March, when the Government implemented the national lockdown in response to the COVID-19 outbreak.
CVC ties off Pro14 deal
CVC Capital Partners have completed a £116m deal for Pro14 as the private equity firm continued its growth into rugby. The move gives CVC a 28% share of the competition’s commercial rights and comes despite the sporting economic downturn looming as a result of the COVID-19 crisis. CVC own a similar stake in Premiership Rugby while negotiations with Six Nations are on hold due to the pandemic.
Borrowing rose to its highest level on record in April
Government borrowing climbed to £62.1bn in April as the UK fought to support the economy through the COVID-19 lockdown. Office for National Statistics data also show the national debt climbed to £1,887.6bn, or 97.7% of GDP - up from 80.3% in April last year. April’s borrowing is the highest monthly figure since records began in 1993 and almost equals borrowing for the entire last financial year.