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Daily News Roundup: Tuesday 30th June 2020

Posted: 30th June 2020

BANKING

Record bank deposits in May

Bank of England (BoE) data shows that UK households’ bank savings increased by a record amount last month, with deposits up £25.6bn in May to £1.5trn. Households have banked £57bn since March, the analysis reveals. The figures also show that repayments on consumer credit dropped to £4.6bn in May, down from £7.4bn in April. Samuel Tombs of Pantheon Macro said spending is likely to rebound over the summer, with reopened shops and businesses drawing consumers, but predicts that consumer spending will still be 5% below pre-virus levels by Q4, even if there is no second wave of coronavirus infections. BoE analysis also shows that there were just 9,300 mortgage approvals in May, down from almost 16,000 in April and 87% below February’s total. Hansen Lu, a property analyst at Capital Economics, said May’s fall “isn't a sign that the market is struggling to recover … Rather, it probably reflects the gap in the sales pipeline from when the market was closed between March and May.” Mark Harris, CEO of mortgage broker SPF Private Clients, said: “COVID-19 has had a devastating impact on the mortgage and property markets, so it is no surprise that lending was weak in May, with approvals for house purchase falling.”

TSB adds staff to Edinburgh site

TSB has recruited 79 staff to work in its technology centre in Edinburgh. The bank announced in January that it was creating 100 high-skilled technology focused jobs as it unveiled plans for a new technology hub. TSB, which has pledged to invest £120m to transform its digital channels, says the remaining roles are due to be filled over the summer.

PRIVATE EQUITY

Draper Esprit sees portfolio value increase 18%

Draper Esprit has increased its gross portfolio value to £703m after investing £90m in the year ended March 31. The firm saw profit after tax fall from £111m last year to £40m this year, with chief executive Martin Davis noting: “Our strong performance for the period reflects that our portfolio of investments includes some of the most exciting private technology companies in Europe and, while the COVID-19 pandemic has clearly impacted companies globally, we firmly believe in the role that technology will play in helping to support the wider recovery.”

INTERNATIONAL

Goldman Sachs to maintain dividends despite Fed capital demands

Goldman Sachs, which was left with a capital shortfall by a Federal Reserve “stress capital buffer”, says it can meet additional capital demands without changing its strategic direction.

Monte Paschi to offload bad loans

Italy's Banca Monte dei Paschi di Siena has approved a plan to offload more than €8bn in gross bad loans. The deal with state-owned bad loan manager AMCO includes spinning off a package of gross bad loans worth €4.8bn and unlikely-to-pay loans worth €3.3bn. It also includes more than €1bn euros in equity and €3.2bn in debt from bridge loans granted by JPMorgan and UBS.

AVIATION

Airbus in production warning

Guillaume Faury, chief executive of Airbus has warned that production would be reduced by 40% over the next two years as a result of the coronavirus pandemic. The firm has already lost €8bn in the first quarter, while some 3,200 staff in the UK have been placed on the Government’s furlough scheme.

FINANCIAL SERVICES

Report flags inequality in pensions tax relief

The Association of British Insurers has called for reform of pensions tax relief, saying the existing system widens inequalities between the sexes and different generations. Research by the Pensions Policy Institute think-tank found that workers earning less than £50,000 made up 83% of all taxpayers but received only a quarter of the pensions tax relief paid in relation to defined contribution pensions. The report concluded that the system favours higher earners, with the proportion of people who earn less than £30,000 but qualify for tax relief increasing from 52% to 62% due to automatic enrolment – while just 24% of tax relief goes to those in this bracket. The study shows that 42% of those who contribute to a defined contribution pension are under 40, yet this group only receives 27% of the available tax relief, while those in their 40s and 50s typically receive two and a half times as much tax relief.

Wirecard UK could enter administration

Advisers have been called in by Wirecard’s UK subsidiary, Wirecard Card Solutions. Options under consideration include placing the UK business into administration. Meanwhile, the Financial Conduct Authority last night lifted a ban on Wirecard Card Solutions’ payment activities – although it remains subject to restrictions on asset transfers and where customers’ money is kept. Elsewhere, subprime lender Morses Club said customers of its current account service had been affected by the payments freeze.

Hargreaves shakes up best buy fund

Hargreaves Lansdown is set to publish its recommended funds as it tries to repair its image following the Neil Woodford debacle. The Wealth Shortlist will replace the investment platform's Wealth 50 list, which fell into disrepute for recommending the doomed Woodford Equity Income Fund right up until the fund's suspension last year, with investors losing at least 27% of their savings. The updated shortlist will contain 68 funds and Hargreaves said it has “listened and learned and taken action” when selecting them.

Pension superfund chief vows to press ahead despite Bank of England concerns

Pension SuperFund CEO Luke Webster says he will proceed with plans for the private equity-backed scheme as soon as he has approval from The Pensions Regulator, despite Bank of England reservations.

LEISURE AND HOSPITALITY

Holiday searches up as quarantine rules change

Online holiday comparison site Travelsupermarket has revealed that searches for holiday breaks in Europe doubled this weekend as quarantine regulations change as part of a system of ‘air bridges’ with other countries. Searches for Spanish holidays were up 100% on the previous week, Greece 216%, Italy 170%, and France 167%.

MEDIA AND ENTERTAINMENT

Vodafone towers business listing could take place in Frankfurt

Vodafone is considering listing its multi-billion-pound European towers business Towerco in Frankfurt, after last week inviting advisers to pitch for a role on the planned flotation of the units. This comes as the firm attempts to ease its €42.2bn debt, seeking a valuation of between €10bn and €20bn for the unit. With nearly 62,000 masts across 10 countries, Vodafone says Towerco could bring in annual revenue of around €1.7bn.

Times Radio launches in industry first

Times Radio has begun broadcasting in the first launch by a British newspaper group of a news and current affairs radio station. The debut breakfast show, hosted by Aasmah Mir and Stig Abell, included interviews with the Prime Minister, Mayor of Liverpool Joe Anderson and editor of the Times John Witherow.

REAL ESTATE

Report warns of housebuilding slump

A report from Shelter suggests that the COVID-10 pandemic could result in 125,000 fewer homes being built this year than expected, with the shortfall potentially increasing to 318,000 over the next five years, in a worst-case scenario. The study says just 4,300 social rent homes will be built this year - a drop of 30% from expected levels and the lowest number in any year since the Second World War.

RETAIL

Monsoon landlords agree rent deal

Monsoon Accessorize is to keep 57 more stores open than initially planned after a number of landlords agreed to new turnover-based rents. The chain’s administrator now hopes to preserve 157 of the company's 230 branches, saving 2,400 jobs.

SPORT

McLaren agrees loan facility with National Bank of Bahrain

Supercar maker McLaren has secured a £150m loan facility with the National Bank of Bahrain, after the COVID-19 pandemic led to a fall in sales and some 1,200 redundancies.

FA job losses announced

The Football Association is attempting to cover expected losses of some £300m as it announced plans to make 82 positions redundant.

ECONOMY

Treasury to borrow further £50bn

The Treasury is to borrow another £50bn in August, with this meaning borrowing will hit £275bn in the opening five months of the financial year. The update marks the third revision to the Treasury’s financing requirement since March. The Debt Management Office raised £58.3bn in April, £62.6bn in May and £60.3bn in June. The revised remit means it must raise £93.75bn in July and August together, or £46.9bn each month.

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