Mortgage holidays for 1.2m in UK
Figures from UK Finance reveal that over 1.2m UK households have agreed mortgage holidays with lenders, as the coronavirus crisis continues to place extra pressure on borrowers. Chief executive Stephen Jones commented: “We understand that the current crisis is having a significant impact on household finances for people across the country… Lenders have a number of options available to help.” He added that lenders had “pulled out all the stops” to hand out an “unprecedented” number of payment holidays. Robin Fieth of the Building Societies Association added: “We know that this is a difficult time for many homeowners with a mortgage and building society staff have been working hard to offer individuals the right solution.” However, the mortgage holiday scheme has drawn criticism after it was revealed that banks are set to make more than £600m in extra interest paid by cash-strapped homeowners taking payment holidays. Elsewhere, finance experts have warned that, while the Government has promised these payment holidays won't affect credit reports, it can't stop lenders from refusing to lend to these borrowers in future and those who use the scheme may find it harder to remortgage at a later date.
Barclays halts job cuts
Barclays has halted new job cuts while the coronavirus is ongoing. It is also supporting staff in the process of being made redundant, paying up to 80% of an employee’s wages up to £2,500 per month in an initiative modelled on the Government’s furlough scheme. Nationwide earlier this month confirmed it would make no compulsory redundancies during 2020, while HSBC last month said it was halting a majority of 35,000 planned job cuts during the coronavirus crisis.
Lloyds restricts emergency loans
Lloyds is reportedly rejecting applications for emergency COVID-19 loans from firms who benefit from the Enterprise Investment Scheme.
Directors take pay cuts
The Times looks at how a number of company directors have agreed to pay cuts amid the COVID-19 crisis, noting that at executive level, Monzo’s Tom Blomfield is taking a 100% pay cut for 12 months; António Horta-Osório, CEO of Lloyds Banking Group, will take no bonus, while Alison Rose of Royal Bank of Scotland is taking a 25% salary cut and no bonus.
Big banks turn to fintechs
The Telegraph’s Lucy Burton says global banks are teaming up with smaller fintech firms as they seek to get cash out to struggling small businesses as quickly as possible. Santander-backed fintech firm Ebury says it has been approached by a big global bank over a tie-up designed to prop up small businesses by helping companies struggling to access cash across Europe.
Cash-strapped US companies ramp up sales of discounted shares
Listed US firms have raised $17bn in private investments in public equity deals so far this year – up from $9bn in the same period last year.
Softbank cites coronavirus and bad bets in $16.7bn loss
Softbank has blamed the coronavirus pandemic for an expected loss of $16.7bn on tech start-ups its Vision Fund has invested in, such as Wework and bankrupt internet satellite start-up OneWeb.
Coronavirus hits profits
JP Morgan has announced that first quarter profit was down 68% on the year earlier period, with the bank setting aside $6.8bn (£5.4bn) in credit provisions related to coronavirus. This comes as it reports net earnings of $2.9bn, down from $9.2bn for the same period in 2019. Elsewhere, Wells Fargo has reported an 89% drop in profit in Q1 to $653m.
Toyota, Renault and Volkswagen to reopen European plants
Toyota, Renault, Hyundai, Volkswagen and Volvo are among carmakers that have opened - or are preparing to reopen - plants in Europe after a month-long shutdown following the coronavirus outbreak.
Renault pulls out of China joint venture as sales disappoint
Renault is to withdraw from the petrol car market in China, as it announced an agreement with Dongfeng to sell out of the 50-50 joint venture between the two partners.
IATA: Airline revenues could fall 55%
The International Air Transport Association (IATA) estimates that global airline revenues are forecast to drop by more than half in 2020, with a predicted decline of £249bn. The figures would mean a 55% drop in revenue from 2019. IATA director general, Alexandre de Juniac, said: “The industry’s outlook grows darker by the day”. Meanwhile, Heathrow Airport has forecast a fall in passenger demand of more than 90% for this month, with passenger numbers already down 52% in March compared with the same period last year.
Stelios refers easyJet to FCA
Sir Stelios Haji-Ioannou, founder of easyJet, has referred the airline to the Financial Conduct Authority (FCA), saying it failed to show the “highest standards of disclosure and transparency” in its decision to defer an order for 24 new aircraft from Airbus. Mr Haji-Ioannou has urged the airline to cancel an order for new planes, citing concern over the impact the deal with have on easyJet’s revenues.
Interest increases in savings platforms
An increasing number of savers with large pots are turning to platforms as they look to safely spread their money across multiple accounts to benefit from savings protection amid market turmoil caused by coronavirus. The likes of Flagstone, Raisin, Hargreaves Lansdown Active Savings and Octopus Cash have all reported a surge in interest over the last month, with savers choosing short-term fixed-rate bonds in particular as they seek to secure the best rates and ride out market turmoil.
Pandemic leads to surge in equity release requests
The coronavirus pandemic has led to a surge in the number of homeowners trying to raise cash from equity release, as rates on the scheme hit a record low. Equity release lifetime mortgages are now being offered from as little as 2.68%. Enquiries jumped 13% in March, according to specialist over-55s adviser Age Partnership, as many who previously considered a plan now have a pressing need for money. Applicants are looking to release an extra £18,139 on average, with most applicants hoping to raise £86,454.
Drugmakers announce coronavirus vaccine plans
GlaxoSmithKline and Sanofi are aiming to get a COVID-19 treatment to market in the next 12 to 18 months, as they collaborate on the development of a vaccine for the disease. Sanofi’s head of vaccines David Loew noted that “the challenge is not just to discover a vaccine that works but to deliver it at scale and be able to make millions of doses as soon as possible.” Meanwhile, AstraZeneca is fast-tracking a clinical trial for its blood cancer drug Calquence, which it is hoped can increase the survival chances of those severely ill with COVID-19.
LEISURE AND HOSPITALITY
Ticketmaster amends coronavirus refund rules
Ticketing site Ticketmaster has been criticised after apparently changing its refund policy to cover only those events cancelled due to coronavirus, with postponed or rescheduled events no longer eligible for refunds. The firm declined to comment on the move, under which ticketholders unable to attend an event after a date is changed are being encouraged to resell their tickets on the site.
B&Bs seek financial support
Operators of bed-and-breakfasts have warned they are struggling as they are not eligible for Government financial support for businesses affected by coronavirus. Despite being forced to close, many are unable to access grants of £10,000-£25,000 because they pay council tax and not business rates.
MEDIA AND ENTERTAINMENT
Ex-BT chair joins Huawei board
Former BT chairman Mike Rake has joined Huawei’s UK board. This follows his open letter last month in support of the firm’s involvement in telecoms networks in the UK, in which he said attempts to restrict Huawei’s 5G equipment or remove existing 4G equipment “will not only incur very significant costs, but prejudice trade relationships with China and will significantly set back the Government’s broadband ambitions.”
TruPhone announces £30m funding
Telecoms firm Truphone has raised £30m from Russian billionaire Roman Abramovich to further its mobile network business, under which corporate customers such as big banks are not charged roaming fees.
Help to Buy extension planned to boost housebuilding
The Government is in talks with housebuilders about extending the Help to Buy scheme in order to stimulate the industry once lockdown measures are eased. Help to Buy is due to be replaced in April next year with a scaled-back version. Further possible initiatives being considered by ministers to support builders with cashflow concerns include deferring the payment of planning obligations and extending planning permissions that may otherwise lapse.
Newcastle takeover moves closer
A takeover of Newcastle United has been agreed subject to Premier League approval, according to sources close to the deal. The prospective owners are headed by financier Amanda Staveley, whose PCP Capital Partners will take a 10% shareholding, while Saudi Arabia’s Public Investment Fund is expected to acquire an 80% stake in the club. The Reuben Brothers, who hold a property portfolio worth £18bn, will take the remaining 10%.
OBR predicts record contraction of economy
The Office for Budget Responsibility (OBR) has warned that the economy could contract by a record 35% by June, with chairman Robert Chote saying this would mark the biggest decline “in living memory". The OBR forecast suggests a three-month lockdown followed by three months of partial restrictions would see an economic decline of 35.1% in Q2, following growth of 0.2% in Q1. If this scenario plays out, the OBR suggests the UK economy would contract by 12.8% this year but get back to its pre-crisis growth trend by the end of 2020, with extra spending by the Treasury in support of the economy set to help limit damage. The budget watchdog has forecast that unemployment will rise to 10%, from the current 3.9%. Considering the OBR report, Chancellor Rishi Sunak said that while the report was “not a forecast or a prediction but one possible scenario”, he is “deeply troubled” by the warning which highlights the "serious implications" COVID-19 will have for the UK economy. "These are tough times, and there will be more to come," Mr Sunak said, while noting that the OBR expects the economic impacts to be “significant” but “temporary, with a bounce back in growth.”
IMF: Global GDP set to fall 3%
The International Monetary Fund (IMF) has warned that the coronavirus pandemic is set to deal the global economy a blow that exceeds the hit seen during the financial crisis, forecasting that $9trn (£7trn) of output will be lost this year and next. IMF economists expect global GDP will fall by 3% in 2020, the biggest drop since the Great Depression of the 1930s. It forecasts that the UK economy will shrink by 6.5% this year, its biggest fall since 1921, while Germany will see a 7% dip and Italy will see its economy slip 9.1%. Japan, the US and Canada are forecast to see recessions of 5.2%, 5.9% and 6.2% of GDP respectively.