SME debt could hamstring the recovery
A report from the British Business Bank shows lending to SMEs rose by 82% last year to £104bn, fuelled by emergency Covid schemes. Catherine Lewis La Torre, head of the Business Bank, said that small businesses were likely to divide into those struggling with repayments and those able to borrow and invest in growth. The Federation of Small Businesses said four in ten of those who recently accessed finance described their debt as "unmanageable". The group’s national chairman Mike Cherry said: “More than half of those with facilities say that a student loan approach, whereby repayments are only made once a firm is profitable again, would mark a helpful way forward.”
HSBC launches £15bn fund for SMEs
HSBC is launching a new £15bn fund to help UK SMEs with £10bn of this focussed on regional allocations. Head of small business banking Peter McIntyre, said: “We’ve helped British business get through the last year with over £14bn of COVID-19 lending support. Now it's time to turn our minds to what comes next and how we help companies grow again, opening up a world of opportunity and contributing towards a sustainable future society.”
Long-term mortgages make a come back
Although rare, long-term fixed rate mortgages are beginning to become more popular in Britain, the Times reports, with online broker Habito launching a range of loans with repayments fixed for between 10 and 40 years. Start-up lender Perenna is expected to launch 30-year fixed deals later this year. The paper says roughly half a million homeowners secured mortgages lasting more than 25 years in 2018. Of these, 11,000 took 40-year loans.
M&S brings current account to an end
M&S Bank is closing its current account this summer when it will hand back savers' cash plus any interest earned. However, the good news for M&S customers is that NatWest is set to relaunch its current account switching reward in the next few months.
Deutsche will let City bankers work from home
Deutsche Bank's UK boss Tiina Lee told Bloomberg TV on Tuesday that workers in the UK could be allowed to work from home from between one and three days a week. Ms Lee said that a return to five days a week in the office seemed “like a wasted opportunity”.
Continental scraps dividend but expects ‘significant recovery’ in the car market
Continental expects a “significant recovery” in the car market in 2021, having posted a €718m pre-tax loss for last year, on sales down 15% to €37.7bn.
Rolls-Royce Bergen Engines sale could be blocked by Norwegian watchdog
The agreed sale of Rolls-Royce’s Bergen Engines unit to a Russian entity for $178m may be blocked by Norway’s NSM security watchdog, according to a Reuters report. Separately, Rolls-Royce has agreed a deal with Vertical Aerospace to provide it with electric power systems for a vertical take-off and landing aircraft.
Greensill crisis raises more FCA questions
There have been renewed calls for a probe into the Financial Conduct Authority’s powers following the collapse of Greensill Capital, the supply chain finance group. Because lending to businesses, rather than consumers, is not regulated in the UK, Greensill has avoided oversight by the FCA. Kevin Hollinrake, the Conservative co-chair, said: "The FCA exists to protect consumers and businesses from abuses of financial institutions, but after less than 10 years, already has a string of scandals under its belt. "The fact that Greensill Capital was allowed to operate in the UK in the shadows demonstrates a failure to fulfil its requirements." Separately, the Times’ Katherine Griffiths considers the business of supply chain financing and says shareholders will suffer if supply chain accounting loopholes are not closed. Meanwhile, the Telegraph reports that Gupta’s Liberty Steel will furlough workers at its operation in Rotherham and Stocksbridge this week in an attempt to conserve cash. Mr Gupta is also trying to seal a standstill agreement on repayments to Greensill to remove the prospect of insolvency.
Standard Life Aberdeen cuts dividend
Standard Life Aberdeen (SLA) has announced it plans to cut its dividend after adjusted full-year profits fell 16.6% to £487m. The group said it would pay a dividend of 14.6 pence per share for 2020, compared to 21.6 pence the previous year. SLA said that despite improved investment flows in the second half of 2020, fee-based revenue fell 13% to £1.43bn amid £3.1bn in outflows, largely from clients switching to lower-fee assets and a scheduled withdrawal of assets by Lloyds Banking Group. Assets under management and administration fell by 10bn to £534.6bn, above a forecast of £528.6bn but low compared to competitors. SLA said it was looking to reconfigure its global operations with a renewed focus on Asia.
Bailey told to explain contradictory evidence
The Governor of the Bank of England has been asked by MPs to clarify “apparent contradictions” between evidence he gave to a House of Commons committee and the statements of former Court of Appeal judge Dame Elizabeth Gloster. Dame Elizabeth led a report into the Financial Conduct Authority’s oversight of collapsed investment firm London Capital & Finance when Andrew Bailey was in charge. Dame Elizabeth said that Mr Bailey and other senior FCA officials had sought to remove their names from the report, something Mr Bailey denies. But MPs have received evidence from Dame Elizabeth backing her claims and lawmakers now want an explanation.
Frozen UK property fund could soon reopen
M&G’s CEO John Foley has said the asset manager will reopen its suspended UK property fund soon, as the company’s shares jumped on better-than-expected 2020 operating profit. M&G suspended its £2.1bn UK fund in December 2019, citing uncertainty about Brexit and weakness in the retail property sector. Operating income fell 3.9% to £1.9bn with declines across its insurance and asset management divisions. Assets under management and administration totalled £367bn at the end of December, above a forecast £353bn.
TP ICAP boss wants brokers to return to office
TP ICAP CEO Nicolas Breteau has said he wants to see brokers return to the firm’s offices at Liverpool Street, Broadgate and Victoria. This comes after the firm reported a fall in revenue of 2% to £1.79bn, while profit was down 3% to £223m, in the year to December.
Arix Bioscience net asset value increases
Arix Bioscience has reported a 62% increase in net asset value last year, with its market capitalisation increasing from £202m in 2019 to £328m last year. A spokesman for Arix remarked: “We have achieved our first major exit, underlining the validity of our business model. We have also increased our NAV by 62% to £328m, moving us significantly closer to our year-end 2023 NAV target of £500m, that we set out in our 2020 interim results.”
LEISURE & HOSPITALITY
Domino’s eyes bigger slice of the action with new stores
Domino’s has announced it is planning to open 200 new stores in a bid to increase sales to £1.9bn. The pizza chain, which reported that sales increased 11.4% to £1.35bn last year, has launched a new strategic plan to beat competitors that have invested in online delivery capability during the pandemic. Domino’s said that in order to deliver its medium-term ambition of total sales of £1.6bn to £1.9bn, it will open an additional 200 stores and “turbo-charge” its collection business to double market share. Domino’s reported statutory profit before tax of £39.7m in the year ended 27 December 2020, up from £2.8m in the previous year.
Chair of M&B should not be re-elected, advisors say
Glass Lewis is urging Mitchells & Butlers shareholders to vote against the re-election of chairman Bob Ivell for failing to address shareholder dissent over the pub chain’s board composition.
Domestic cruises could resume in May
Domestic cruises in the UK could resume from 17 May, according to maritime minister Robert Courts. Under the current "roadmap" for easing lockdown restrictions, 17 May is the earliest date which could see foreign and domestic holidays resume.
MEDIA & ENTERTAINMENT
ITV riding high
ITV has released an update as profits for the year fell 39% to £325m, with revenues down 16% to £3.3bn. Chief executive Carolyn McCall noted “We are definitely seeing a recovery. Advertisers know there is a lot of pent-up demand from consumers, the ad market is looking strong and healthy.”
Vodafone masts float could raise €2.8bn
Vodafone’s planned initial public offering of its mobile masts business Vantage Towers later this month could raise some €2.8bn (£2.4bn). Bank of America, Morgan Stanley and UBS are to act as joint global coordinators on the float, with Barclays, Berenberg, BNP Paribas, Deutsche Bank, Goldman Sachs and Jefferies to act as joint bookrunners.
Video game firm sets record with Aim listing
Seattle-based video game company Tinybuild has become the largest ever US firm to list on the Alternative Investment Market, having raised gross proceeds of £154m from an oversubscribed listing after placing new and existing shares at 169p per share.
CapCo sees Covent Garden estate value decline 27%
Capital & Counties’ Covent Garden estate saw its value fall by £692m last year. Chief executive Ian Hawksworth remarked: “There is a lot of optimism about the opportunity to take part in London’s recovery, and demand is beginning to grow from occupiers. We are optimistic that the enduring appeal of Covent Garden will drive a recovery of footfall and trade over the course of this year and next.”
Kingfisher to build-up DIY chain in Middle East
B&Q owner Kingfisher has announced plans to expand the DIY chain to the Middle East. Kingfisher said it had signed a franchise agreement with the Al-Futtaim Group, with the first Middle East stores to launch in Saudi Arabia. The first two 50,000 sq ft sites will open in autumn this year and will operate under the B&Q banner, with Al-Futtiam Group workers employed to run the in-store and support office functions.
OECD predicts UK GDP will rise 5.1% this year
UK GDP is now forecast to increase 5.1% this year and 4.7% in 2022, according to the Organisation for Economic Cooperation and Development (OECD). It said the recovery from the pandemic has been “faster than expected”, with global GDP now expected to grow 5.6% in 2021, up from a previous forecast of 4.2%. The OECD also said a stimulus bill from the US would also provide a boost to the country’s trading partners. But the Telegraph’s Ambrose Evans Pritchard says Joe Biden’s $1.9trn injection will run out of fizz after three months leaving the US economy looking at a short-term boom in the rear-view mirror.