Bounce Back Loan scheme sees 110k day one claims
Around 110,000 small businesses applied for a new emergency loan scheme in the hours after it launched yesterday. With banks reporting an average loan of about £30,000, the support is calculated to have hit £3.3bn on day one. Early figures show that Lloyds had received 17,000 Bounce Back Loan applications by midday; RBS had 22,000 by 2.30pm, and HSBC had 34,500 by 4pm. Barclays confirmed that, by mid-afternoon, it had made 6,000 approvals worth £200m. Lloyds, Barclays and RBS will offer bounce back loans to existing customers first because they have completed anti-money laundering and other checks, HSBC said it will consider businesses that are not customers. Meanwhile, the Standard reports that some banks fear senior managers could be jailed if it emerges that borrowers should not have been given the loans. Lenders are said to be worried that distributing funds to people without doing proper suitability checks would put managers in breach of rules from the Prudential Regulation Authority, the Financial Conduct Authority and the Consumer Credit Act.
Treasury hears CBILS concerns
The Treasury Select Committee has heard insight from the banking sector in regard to the Coronavirus Business Loan Scheme (CBILS), with David Oldfield, chief executive of commercial banking at Lloyds, saying the scheme was “cumbersome and onerous” when it launched. Matt Hammerstein of Barclays Bank highlighted that some sectors are not able to access the CBILS, noting that his own bank has “historically not lent to the real estate sector” so will not lend to real estate within CBILS. Anne Boden, CEO at Starling Bank, noted that under CBILS, lenders have to send data manually to the British Business Bank to process the loans, saying this method is "not sustainable".
PRA chief: Banks have firepower to save the economy
Sam Woods, a deputy governor of the Bank of England, says commercial banks have been empowered to support the economy through the coronavirus crisis after regulators moved to boost their capacity to lend. Mr Woods, chief executive of the Prudential Regulation Authority, said a cushion that will help lenders to withstand losses marks "the most important step we've taken" to tackle the economic fallout of the pandemic. He said the move to free up enough capital to enable lenders to help other companies “should be enough to accommodate even a pretty upper-end estimate of what might be needed here”.
Virgin Money names chairman
Virgin Money has hired former Alliance & Leicester boss David Bennett as its next chairman. He replaces Jim Pettigrew, who announced his intention to retire as chairman of the banking group in January.
PE funds set to target Aim-listed firms
Private equity funds are likely to target Aim-listed companies once dealmaking resumes post-lockdown, analysis suggests. Data shows that the number of deals for Aim companies trebled in the past 12 months, with private equity firms buying and taking 12 companies private in 2019/20, compared to four in the previous year, while the value of private-equity backed deals of Aim firms hit £1.1bn in the past 12 months.
Former RBS chief Ross McEwan aims to steer NAB through coronavirus
Ross McEwan says turning round National Australia Bank during the coronavirus-driven economic downturn will be easier than overhauling RBS as it does not require a structural overhaul.
SMMT seeks government help to boost industry
Mike Hawes, chief executive of the Society of Motor Manufacturers and Traders, has told City AM that the UK car industry will require a government stimulus programme and extended furlough support if it is to recover from the economic effects of the coronavirus pandemic.
Norwegian Air rescue package approved by shareholders
A £800m rescue plan has been approved by shareholders in Norwegian Air, with almost $1bn of the carrier’s debt to be converted into equity. The carrier is poised to secure a crucial £230m state bailout. The news came as a €7bn bailout of Air France-KLM by the Paris government was signed off by the European Commission.
Investors trust firms that embrace tech
A survey by the CFA Institute shows investment firms that are deploying new technology are the most trusted by both institutional and retail investors. Nearly two-thirds of institutional investors and nearly half of retail investors with an adviser trust their investment firm because of an increased use of technology. The survey also indicates a growing interest in the use of artificial intelligence among investors, with 71% of institutional investors eager to invest in funds that employ AI in the investment process.
Pension Regulator urged to abandon funding review
With the coronavirus pandemic worsening funding holes in pension schemes, the Pensions Regulator is being urged to abandon plans to make companies pay down any deficits faster.
LEISURE AND HOSPITALITY
Travelodge asks landlords to take £146m rent hit
Budget hotel chain Travelodge is seeking to have £146m in rent waived over the next two years, with the firm expecting to lose £350m in sales for 2020.
Factory output in eurozone down at record pace
The IHS Markit Eurozone manufacturing purchasing managers’ index (PMI) has revealed that manufacturing output in the eurozone fell at the fastest pace on record last month, to 33.4. The firm’s chief business economist Chris Williamson remarked: “Euro area manufacturing output plunged to an extent greatly exceeding any decline previously seen in the near 23-year history of the PMI survey in April.”
MEDIA AND ENTERTAINMENT
O2 confirms Virgin Media talks
It has been confirmed that O2 is in talks with rival Virgin Media about a potential merger than Goldman Sachs says could be worth £24.2bn. O2's owner, Spain-based Telefonica, said the telecoms firm was in talks with Virgin Media owner Liberty Global about the deal. Deutsche Bank said a merger would “resolve both companies' long-term strategies for fixed-mobile convergence and provide an increased customer base for Virgin Media to cross-sell its broadband and TV services”.
Tenants hit out at workspace provider
More than 1,000 people have signed a petition calling for flexible workspace provider International Workplace Group to close its 312 UK centres and freeze all rent or memberships, or provide “substantial discounts”. Locked out of their offices due to the lockdown, customers say requests for rent reductions or deferments were ignored as the group insisted full rent was due because its buildings remained open for key workers and to maintain customer services such as mail delivery and IT.
Hotel Chocolat secures £25m coronavirus loan
Hotel Chocolat has secured a £25m coronavirus large business interruption loan, as it warned that the pandemic could continue to impact trading throughout the rest of 2020. The retailer said it had agreed a £35m revolving credit facility with Lloyds Bank, replacing its previous £10m overdraft facility, and also raised £22m through an equity placing last month.
FA chairman Greg Clarke issues budget cut warning
FA chairman Greg Clarke has told the FA Council in a letter that some £75m in budget cuts would be necessary this year and potentially in the next three years as a result of coronavirus. He stated: “In a worst-case scenario, this would be necessary for the next four years to offset a £300m deficit.”
Consumer confidence hits record low
A survey by YouGov and the Centre for Economic and Business Research (CEBR) shows that consumer sentiment has dropped to its lowest level since the monthly gauge of sentiment started in January 2012. The majority of people polled expect the economy to slide into recession in 2020 due to the coronavirus pandemic, with 28% expecting a more prolonged depression. The YouGov/CEBR index, which is based on a survey of 6,000 households in Britain, fell to 92.7 in April, down from 98.6 in March. A score below 100 means that there are more consumers who lack confidence than those who are confident. The poll also saw 89% of people say they expect unemployment to rise this year. Kay Neufeld, head of macroeconomics at the CEBR, said measures to contain the spread of coronavirus “have had a marked effect” on consumer confidence.
Government pays 23% of worker wages
Figures show that the Government is paying the wages for nearly a quarter of UK jobs via a support scheme rolled out during the coronavirus crisis. The job retention scheme, which funds 80% of workers' wages up to £2,500 a month, has seen 6.3m claims, a figure representing 23% of the employed workforce. HMRC says about 800,000 employers have reported furloughing workers since the programme started. It has distributed £8bn, with the average payout at £1,269. With the scheme due to run through June, the total cost could exceed £30bn. Torsten Bell, chief executive of the Resolution Foundation, said: “The 6.3m jobs being furloughed shows in stark terms the scale of the economic shutdown that Britain is living through.”