BANKING
New framework to help businesses deal with Covid loans
The Treasury is in talks with the banking trade body, UK Finance, to develop guidelines for the treatment of borrowers using the state-backed bounce back loan scheme should they fall into difficulty. The Government and the finance industry are working on a code that will establish a standardised process that borrowers could expect, including offers of forbearance to help struggling businesses to stay afloat. However, industry sources say banks will resist applying the framework to other emergency state lending programmes. Kevin Hollinrake, a Conservative MP and co-chairman of the all-party parliamentary group on fair business banking, welcomed the talks, saying that he hoped for a "standardised code of practice to make sure that businesses are fairly treated and given time to restructure their finances should they run into cash flow difficulties".
MPC member warms to negative rates
Another external member of the Bank of England's monetary policy committee has said negative interest rates could be beneficial for the economy. Jonathan Haskel said there was "positive evidence" that negative interest could be a useful tool, but also warned that their “effectiveness is probably going to be contingent on the structure of the financial system and the position where we are in the cycle, so we have to look at that very carefully." His colleague Silvana Tenreyro said a few weeks ago that the Bank had found "encouraging evidence" as part of the review into negative rates.
Scottish state investment bank set to launch by December
Scotland’s new national investment bank is expected to launch before December and start quickly providing long-term capital to projects and companies fitting the Scottish government’s goals.
PRIVATE EQUITY
HPS raises $9bn as investors race into direct lending
US specialist debt investment group HPS has raised $9bn for its latest “mezzanine” debt fund as struggling companies increasingly turn to private investment groups for debt.
Israeli VC firm and Dubai merchant family form tech funding alliance
Israeli venture capital firm OurCrowd is teaming up with Abdullah Al Naboodah’s business development unit to launch a funding platform to facilitate tech investments between the UAE and the Jewish state.
INTERNATIONAL
Further job losses and branch closures announced
Banco de Sabadell’s UK TSB unit has announced that over a third of its branches will shut. This comes in the week after Deutsche Bank stated that 20% of its network would close down amid challenges posed by the coronavirus pandemic. TSB Chief Executive Officer Debbie Crosbie commented: “Closing any of our branches is never an easy decision, but our customers are banking differently –- with a marked shift to digital banking.” UniCredit Chief Executive Officer Jean Pierre Mustier, meanwhile, remarked: “We have to look at clearly how are branches are operating and the format of the branch will evolve. They will shift more toward advisory rather than transactions or execution of transactions for the clients.”
New focus on small deals by Wall Street banks
David Friedland, global head of mergers and acquisitions at Goldman Sachs’ cross-markets team, has said that when “the larger deals are slow, people pick up the smaller deals,” as bankers increasingly focus on deals of $500m or less. Bloomberg data show that in the first nine months of the year, Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase and Morgan Stanley advised on some $61bn of announced transactions in the global small and midsize segment, accounting for a total of 9.2% of that market. Eamon Brabazon, co-head of M&A in Europe, the Middle East and Africa at Bank of America, noted: “Smaller deals are inherently less risky and hence it’s not surprising that we saw a disproportionate amount of smaller deals immediately post-lockdown.”
Jeff Tannenbaum named EMEA head at Bank of America
Jeff Tannenbaum has been promoted to the newly created position of head of global capital markets for Europe, the Middle East and Africa at Bank of America. This comes after the firm’s head of EMEA equity advisory Sam Losada left the company.
Citi’s new boss Jane Fraser faces hard choices
The FT’s Robert Armstrong evaluates the task ahead for Citigroup’s incoming CEO Jane Fraser, who must decide whether to shake things up or tinker with the bank’s existing structure.
AUTOMOTIVE
Fall in car sales recorded last month
Just 328,041 new cars were registered in September, the lowest figure for the month in two decades. Sales were down 4.4% on a year earlier. Mike Hawes, Society of Motor Manufacturers and Traders chief executive, remarked: “This is not a recovery. Unless the pandemic is controlled and economy-wide consumer and business confidence rebuilt, the short-term future looks very challenging indeed.”
Toyota and Nissan seek no-deal compensation
Toyota and Nissan are reportedly planning to task the Government to pay for any losses they suffer from a no-deal Brexit. Japanese media claim the companies want compensation to cover the additional 10% tax on car exports from Britain that the EU would impose should trade talks collapse.
AVIATION
Quarantine rules damage Wizz Air recovery
Wizz Air’s passenger capacity fell 20% in September amid re-imposed quarantine restrictions. This comes after fellow budget carrier Ryanair revealed that it had flown 5.1m passengers last month, compared to 14.1m in the year-earlier period. A spokesperson for that firm commented: “… as customer confidence is damaged by government mismanagement of COVID travel policies, many Ryanair customers are unable to travel for business or urgent family reasons without being subjected to defective 14-day quarantines.”
FINANCIAL SERVICES
Seedrs and Crowdcube merger announced
Merger plans have been announced by crowdfunding platforms Seedrs and Crowdcube, with the firms stating that: “Going forward, the combined company will aim to deliver new innovations and products that will make it significantly easier, more affordable and valuable for ambitious businesses to raise growth finance, and for investors to have an even greater selection of investment opportunities with richer investment tools.” Seedrs’ Jeff Kelisky is to become chief executive of the combined business, with Crowdcube’s co-founder Darren Westlake to become executive chairman.
LEISURE & HOSPITALITY
Cineworld closures and job cuts in US and UK
All of Cineworld’s UK and US cinemas are to close their doors indefinitely, with shares in the firm down 40% in Monday afternoon trading in London on the news. Some 45,000 staff will be affected, with 5,500 workers in the UK having their roles reviewed by management. Cineworld released a statement saying that it “cannot provide customers in both the US and the UK — the company’s primary markets — with the breadth of strong commercial films necessary for them to consider coming back to theatres against the backdrop of COVID-19.”
UK pub and restaurant bonds sink on new round of COVID-19 curbs
Bonds issued by pubs, clubs and restaurants are falling in value after coronavirus restrictions placed further strain on the businesses, underlining the risk to investors from the sector’s exposure to consumer demand.
MANUFACTURING
Johnson vows to make UK the Saudi Arabia of wind energy
Boris Johnson will suggest in his address to the virtual Tory conference today that the coronavirus crisis should be used as a catalyst to invest in green energy and wind power. The PM will promise to power every home in the UK with offshore wind energy within a decade. Mr Johnson will say: “We will invest £160m in ports and factories across the country to manufacture the next generation of turbines. And we will not only build fixed arrays in the sea, we will build windmills that float on the sea — enough to deliver 1 gigawatt of energy by 2030, 15 times as much as the rest of the world put together.”
MEDIA & ENTERTAINMENT
Jobs hope seen in 5G venture
Some 5,000 new jobs could be created in the UK as a result of the introduction of 5G technology in the country, with Virgin Media owner Liberty Global, and O2’s Spanish owner Telefonica, announcing plans involving the creation of new roles and apprenticeships.
Hopes for profits recovery at ITV
The Times reports that things are looking up for ITV, whose investments in its online catch-up service and Britbox are paying off. Analysts at Citi raised their profit forecasts for this year amid "signs of optimism" among advertisers, sending shares up 3.3%.
REAL ESTATE
Chanel buys shop for £310m
Chanel has bought its showpiece boutique on Bond Street for about £310m, £70m more than the asking price. The deal cements the reputation of Bond Street as a safe haven for investors and marks a vote of confidence for central London, the Times’ Louisa Clarence-Smith says.
RETAIL
Mulberry reports losses up tenfold
Luxury fashion and leather goods brand Mulberry has reported a 10% fall in revenues and a ten-fold rise in pre-tax losses to £47.9m in the 12 months to the end of March. The company said that even before lockdown, the UK market had been challenging.
Curfew threatens high street recovery
High street footfall has tumbled for the second week running with analysts blaming the 10pm curfew on bars and restaurants for the slump. Footfall was 7.1% lower last week than during the prior seven days, and down 3.5% across all retail areas, data firm Springboard found.
ECONOMY
Services sector figures released by IHS Markit
The IHS Markit/CIPS Purchasing Managers’ Index (PMI) for the services sector fell to 56.1 last month from August’s score of 58.8. However, although the pace of the recovery has slowed, the reading was better than an initial "flash" estimate of 55.1. Any figure above 50 indicates expansion.
Sunak warns of hard choices ahead
The Chancellor yesterday told the Conservative Party conference that the Government has a “sacred responsibility” to balance the books for future generations warning that there were “hard choices” ahead. Rishi Sunak said that the “mismatch” between public spending and tax revenues “can’t go on forever”, adding that balancing the books was “economically and morally” the right thing to do.