City investor warns HSBC and StanChart in Hong Kong row
Aviva Investors has voiced its concern at the decision by HSBC and Standard Chartered to back new security laws being imposed on Hong Kong by China. Aviva's investment chief David Cumming said as the banks have chosen to “make political statements, they must accept the corporate responsibilities that follow.” He added: "Consequently, we expect both companies to confirm that they will also speak out publicly if there are any future abuses of democratic freedoms connected to this law.” Elsewhere, US Secretary of State Mike Pompeo has weighed in saying such “corporate kowtows” got little in return from Beijing. “That show of fealty seems to have earned HSBC little respect in Beijing, which continues to use the bank’s business in China as political leverage against London,” he said.
Approval rate for CBILs remains just over 50%
The approval rate for Coronavirus Business Interruption Loans Scheme (CBILS) remains significantly lower than for bounce back loans at just over 51%, according to Treasury figures. Bounce back lending has an approval rate of 81%. Applications for the Coronavirus Large Business Interruption Loan Scheme (CLBILS) has the lowest approval rate of any of the government’s three emergency coronavirus credit programmes, at 40%. British businesses have borrowed almost £35bn under the three programmes.
Marcus halts applications for savings account
Goldman Sachs is temporarily pausing new applications for its digital bank’s online savings account. Marcus has attracted around £21bn from savers since its launch two years ago. However, ring-fencing rules mean Marcus would be forced to become a separate legal entity in the UK if retail deposits total more than £25bn.
UK tech start-ups attract investors despite shutdown
Research for the government's Digital Economy Council show investors poured £4.1bn into British technology start-ups this year, including Revolut and Octopus Energy.
Softbank’s Vision Fund to cut 15% of jobs
Softbank is to trim staff numbers at Softbank Investment Associates (SBIA), the investment arm which manages its $100bn Vision Fund by 15%. SBIA has 500 global staff and has recently seen $18bn wiped off the value of its technology bets.
Business failures: raze like a phoenix
The FT’s Lex suggests business collapses triggered by the coronavirus pandemic should make money for specialist private equity groups, but opaque restructurings could result in scandals a year or two.
Banking stocks take a hit
Banking stocks led market falls yesterday after forecasts from the World Bank that the global economy will contract by 5.2% in 2020 unnerved traders. Société Générale led European banking stocks lower after a business update from the lender suggested a recovery in revenue would be slower than expected. Disappointing German and French trade data and new restrictions on bank dividends also hit financial stocks.
Gorman: ‘The worst is behind us’
James Gorman, the CEO of Morgan Stanley, said yesterday that the bank expects to reserve less money for potential loan losses in the current quarter, compared with the first quarter. “The worst is behind us,” Gorman said, adding that the bank expects to cover its dividend “very easily” this year.
Deutsche Bank backs US operations despite stretched balance sheet
Deutsche Bank has continued to back its investment banking operations in the US through the coronavirus pandemic to keep up with demands for extra financing and trading, regional chief executive Christiana Riley said.
The minds behind Germany’s shifting fiscal stance
The FT reports on how former Goldman Sachs banker Jörg Kukies, now Germany’s deputy finance minister, was instrumental in driving last month’s Franco-German proposal to raise €500bn through common EU debt.
French aerospace industry to receive bailout from government
The French government has said 100,000 jobs are in jeopardy as a result of the coronavirus pandemic, as it unveiled a €15bn (£13.3bn) assistance package to save its aerospace industry. This includes a €7bn loan to Air France, a €500m investment fund for the development of medium sized suppliers, and some €300m to help sub-contractors modernise plants and production sites. Meanwhile, Ryanair’s Michael O’Leary said a €9bn Lufthansa deal which will see the German state take a 25% stake in the airline would breach competition rules.
Emirates cuts thousands of jobs
Dubai-based Emirates is making thousands of staff redundant with sources saying 600 pilots and nearly 7,000 cabin crew could lose their jobs. An Emirates spokesperson said: “Given the significant impact that the pandemic has had on our business, we simply cannot sustain excess resources and have to right-size our workforce in line with our reduced operations.”
Bellway reopens sites with home sales down
Bellway has announced that it sold around 1,000 fewer homes between August and May, as the Newcastle-based housebuilder restarted construction activity on around 230 sites. Reporting an order book of £1.57bn at May 31, with net bank debt at £157m, the firm stated: “Sales activity has remained restrained since initially closing our sales centres, with the net reservation rate rapidly declining to an average of 71 homes per week in the ten weeks from 23 March to 31 May.”
Hedge funds nearly crashed markets in March
Sir Jon Cunliffe, deputy governor for financial stability at the Bank of England, has told the Investment Association that banks have proven resilient during the coronavirus crisis, but hedge funds, insurers and money markets funds did not fare so well. Sir Jon said highly leveraged hedge funds became “an amplifier of stress” as they dumped treasuries in a dash for cash, putting pressure on pension funds, insurance companies and ultimately super-safe money market funds. Reforms may be necessary to bring more liquidity resilience into the non-bank parts of the financial system, Sir Jon added.
Turkey joins settlement house Euroclear after 8-year talks
Turkey is set to join Belgian settlement house Euroclear, opening up Turkish debt to cautious investors such as sovereign wealth funds and pension funds.
LEISURE & HOSPITALITY
Cunard announces cancellation of all sailings until November
All Cunard voyages have been cancelled until November as travel restrictions and concerns around safety persist. The firm’s president, Simon Palethorpe, remarked: "With many differing restrictions across countries, people’s ability to move freely and safely across borders remains seemingly some way in the distance. For Cunard, where we celebrate having a truly international mix of guests and sail all over the world, this becomes particularly impactful." This follows the firm raising $6.25bn (£4.7bn) in April to cope with the coronavirus outbreak and its effects.
MEDIA & ENTERTAINMENT
News Corp centralises operations, with job cuts at various titles
News Corp Australasia executive chairman Michael Miller has informed staff at the Herald Sun, the Daily Telegraph and the Australian of job cuts as the firm centralises its reporting, subediting and production. A spokesman for the firm stated: “We are reshaping our operations to meet the needs of customers and clients – we will be much more focused on digital, growing digital subscriptions and simplifying our structures to be less complex for advertisers to leverage… These initiatives to reposition News Corp Australia for growth will involve some job role changes and regretfully, some job losses.”
UK’s 5G progress will be damaged by Huawei policy, warns Vodafone
Vodafone has warned that Britain’s ambition to expand 5G coverage will be harmed by demands that equipment made by Huawei be removed from the network.
Segro outlines £1bn to tap online shopping boom
Warehouse giant Segro has unveiled plans to raise £650m to fund the acquisition of new distribution facilities. The firm hopes the move will allow it to tap into the consumer shift to online shopping during the coronavirus lockdown. A spokesperson for the firm said the coronavirus pandemic had “accelerated the adoption of technology and e-commerce across society” and it planned to invest more than £1bn in developing new warehouses by 2021 to take advantage of the shift.
Cancelled capex projects threaten speedy recovery
Analysis by Peel Hunt indicates British listed companies have cut capital expenditure budgets by £23bn for this year, raising serious questions about the ability of the economy to bounce back swiftly. Banks are also cutting back, with HSBC predicted to cut its capex by £600m to £6.5bn; Barclays by £300m to £700m; and Lloyds Banking Group by £400m to £600m.
Consumers fear handling cash
A poll by Nationwide Building Society reveals that consumers are so concerned about the risk of contracting coronavirus from cash that 20% have resorted to disinfecting banknotes. The survey found that people had gone an average of 44 days without using cash, while the number of contactless payments made by Nationwide members increased from just over 7m in the first week of lockdown to 10.3m in the week beginning May 18.