BANKING
Lenders advised to prepare for coronavirus debt pile
British banks must speed up preparations for dealing with firms unable to repay loans as a result of the COVID-19 crisis, Financial Conduct Authority (FCA) chair Charles Randell has warned. He said lenders will need to “scale their arrears-handling functions quickly, and invest in training and controls.” Mr Randell also said lenders must work with the Government to "apply a shared understanding of how to treat borrowers in difficulty". He added that there needs to be an appropriate dispute resolution system, noting that the FCA is working with the Financial Ombudsman Service and the Business Banking Resolution Service to ensure that there is capacity to deal with issues.
Banks let homeowners switch early
Analysis from mortgage broker L&C shows that lenders are allowing homeowners to move to a better mortgage rate before the end of their existing deal without issuing and penalties. While banks often let borrowers agree a new rate up to six months in advance, there is often a fee to transfer before the current deal concludes. However, Nationwide, Santander, Clydesdale, TSB and Halifax are all offering the chance to transfer in advance without exit fees. Santander is offering a fee-free switch four months before the existing deal expires, with Halifax allowing the jump to be made two months early. The remainder allow borrowers to switch three months before the existing deal comes to an end.
Monzo funding round sees valuation fall 40%
A new £60m funding round for challenger bank Monzo has seen its valuation fall 40% to £1.25bn, with investors including Swiss fund Reference Capital taking part in the round. This follows an announcement by the firm that it would attempt to reduce losses, which reached £47.2m in its most recent accounts published last year, by laying off as many as 80 staff.
Cash plan may see banks share branches
A scheme designed to ensure people can maintain free access to cash could see banks share branches for the first time. Other options that may be rolled out as part of the pilot initiative include the use of mobile ATMs and measures to improve digital skills. Analysis shows that around 2m people still mostly use cash in their day-to-day lives.
UK Finance chief quits over Staveley comments
Stephen Jones, chief executive of UK Finance, has quit over "unpleasant" comments about financier Amanda Staveley in 2008. Mr Jones was a senior banker at Barclays at the time. The bank is being sued by Ms Staveley over a deal struck during the financial crisis, with Mr Jones due to give evidence in the court case in London next month. Mr Jones said in statement he has apologised to Ms Staveley and feels it is the right time to leave UK Finance.
BoE committee position could be filled
Portfolio manager at hedge fund Eisler Capital, Jonathan Hall, a former partner at Goldman Sachs, has been approached by the government to serve as an external member on the Bank of England's Financial Policy Committee. This follows Martin Taylor’s stepping down from the position after a seven-year term in March.
PRIVATE EQUITY
Women less satisfied in private equity
Research conducted by Investec shows that a fifth of women working within private equity are dissatisfied with their work, compared to 8.2% of men. Some 14.7% of women said if they left their current roles they would look to start a business outside of private equity, while 11% of men said the same. The study also saw 20.6% of women in private equity say they would consider a move within the finance industry, while just 3.2% of men would. Three in five women believe they would be paid more for doing the same job if they were male.
INTERNATIONAL
Bank of Japan pledges $1tn in coronavirus loans
Bank of Japan governor Haruhiko Kuroda has indicated that it would be years before any rise in interest rates takes place, with the bank’s coronavirus lending programme increased to over $1trn.
Morgan Stanley’s former head of diversity alleges racial bias
Morgan Stanley's former head of diversity, Marilyn Booker, is suing the bank and CEO James Gorman over claims of "race and gender discrimination, retaliation and unequal pay".
Cerberus continues to seek change in Commerzbank leadership
Activist investor Cerberus has sent a letter to the chair of Commerzbank’s supervisory board advising that it will use “alternative paths” to seek change at the lender, which last week refused demands by Cerberus for two seats on its supervisory board. The letter states: “We stay committed to achieving substantial change to the leadership of Commerzbank and to the bank’s operational and strategic paths for the benefit of all of Commerzbank’s stakeholders”.
AVIATION
EasyJet aircraft order delayed by five years
EasyJet is delaying an order from manufacturer Airbus for 24 new aircraft, with delivery postponed until 2025, after founder Sir Stelios Haji-Ioannou had sought for the order to be cancelled entirely. Chief executive Johan Lundgren stated: “The changes agreed defer capacity in the medium term while continuing our long-term strategy of replacing our older fleet with the advanced and lower fuel burning A320NEO family.”
FINANCIAL SERVICES
Watchdog to tackle investment loophole
The Financial Conduct Authority (FCA) is considering closing a loophole which allows unregulated and high-risk investment schemes to be sold to consumers, saying people could be exposed to inappropriate investments that they believe are safe as they are sold by regulated firms. FCA chairman Charles Randell said authorised firms “should not be facilitating the offering of high-risk products to ordinary retail consumers who cannot afford the risk of loss.” He added that while the watchdog has banned the marketing of speculative mini-bonds, “regulation of authorised firms in this area is still not where it needs to be for the future.” Mr Randell has also hit out at internet firms such as Google for allowing such schemes to be promoted on their platforms while taking thousands of pounds a month from the FCA to carry advertisements warning consumers over rogue investments.
Deferred pension payments spread alarm in $4tn muni bond market
With the coronavirus pandemic putting pressure on authorities in the US, bond investors are monitoring widening public pension deficits. Fitch analyst Doug Offerman called for top-ups to states’ pension funds.
MEDIA AND ENTERTAINMENT
Sky to receive large rebates
Sky is to receive up to £330m in rebates from organisers of sporting fixtures, with the Premier League alone agreeing to return £170m to the broadcaster. Sky Sports managing director Rob Webster said the firm was seeking to “mitigate the impact on our business [from] the lack of live sport over the past 12 weeks.” This comes as analysts predict the financial fallout from the coronavirus pandemic will cause broadcasters’ spending on rights to lessen in the future.
REAL ESTATE
M&G UK property fund suspension continues
A six-month suspension of M&G’s $3.2bn UK Property Portfolio is to be extended as the coronavirus crisis prevents the insurer and asset manager from accurately assessing the value of its real estate assets. The firm said in a statement: “Reopening the fund for dealing will depend on cash levels but will also be contingent on the material uncertainty clause being lifted.”
KKR leads $650m deal for stake in Vietnam property group
A consortium led by KKR has taken a stake in Vinhomes, the listed property division of Vietnam’s biggest conglomerate Vingroup, for $650m, alongside investors including Singapore state investment fund Temasek.
RETAIL
Poundstretcher considers closures
Poundstretcher could close more than 200 stores, with the discount retailer considering plans to shut half of its 450-strong estate as part of a restructuring plan designed to stem losses.
Boohoo eyes Oasis and Warehouse
Boohoo is set to buy Oasis and Warehouse, snapping up the retailers two months after their collapse into administration. Oasis and Warehouse’s online business and intellectual property assets were sold to Hilco Capital in April.
SPORT
Investors look to score football bargains
The Times says football clubs facing financial turbulence amid the COVID-19 crisis could become the target of investors, with investment funds weighing the possibility of buying into troubled clubs at discount prices. "Private equity is emerging as the main option for distressed leagues. Firms have realised that the crisis ... presents opportunities," suggest François Godard of Enders Analysis.
ECONOMY
Pay levels fall at record rate
Office for National Statistics (ONS) figures show that April saw pay levels fall at the fastest rate on record, with workers taking home an average of £503 per week in regular pay during the month, representing a drop of over £6 in real terms compared to the previous month. Nomura’s George Buckley comments: “Clearly this reflects the operation of the furlough scheme, with many of those on furlough reporting that they are taking home 80% of their pre-virus pay.” Considering the impact of the furlough scheme, Berenberg economist Kallum Pickering noted a risk of “a massive wave of layoffs” when the programme is wound down. Meanwhile, separate ONS data has revealed the largest increase in benefit claims for a century, with a record 2.8m claims. Tony Wilson, director of the Institute for Employment Studies, remarked: “If the public health crisis is just starting to ease, the figures show that the unemployment crisis is only just beginning.”
Shadow chancellor urges emergency Budget in summer
Anneliese Dodds, the shadow chancellor, is urging an emergency summer Budget and stimulus package. She said: “We are increasingly worried that the slow and confused health response is now being followed by a slow and confused response to saving jobs.” Insisting that the “window is closing to protect existing jobs and encourage firms to invest in creating new ones,” Ms Dodds, who voiced concern over an OECD estimate that UK GDP could slip 11.5% this year, called for a “back to work Budget that has one focus – jobs, jobs, jobs.” Jesse Norman, financial secretary to the Treasury, said the Government would do “whatever is needed” to support the economy.