Emergency schemes provide £53bn in loans
Figures from the Treasury show almost £53bn of credit has been issued through the Government's emergency coronavirus lending schemes, with more than 1.23m businesses benefitting. Around £35.5bn has been approved through the bounce back loan scheme for small companies, with £13.7bn provided to businesses through the coronavirus business interruption scheme, while a version for large companies has handed out £3.5bn. Stephen Pegge, managing director of commercial finance at UK Finance, said that the schemes are part of a “broader strategy for supporting the nation's enterprises", adding that they operate alongside commercial lending, capital repayment holidays, extended overdrafts and invoice finance facilities.
Perfect storm brewing for home loan rates
Brokers have warned that a “perfect storm” in the market may deliver higher mortgage rates, despite Bank of England measures designed to keep them at record lows. In the wake of the coronavirus pandemic, uncertainty over house prices and employment has made lenders more cautious, while demand has risen as borrowers look to benefit from the Chancellors stamp duty cut. Private Finance believes banks may increase rates to stem the flow of applications. The firm’s Chris Sykes said: “The stamp duty changes really have spurred on a tsunami of business and lenders and brokers are struggling to deal with the level of demand”. Eleanor Williams of Moneyfacts expects rates to rise in the coming months, saying reports of bank profits falling and a need to set more funds aside for potential defaults, “could signal the end of the historic low mortgage rates".
Savings rates hit record lows
Savings rates have hit a record low, with figures from Moneyfacts showing that the average easy access rate is now 0.22%, down from 0.56% in March after five consecutive months of declines. All major providers, including HSBC and NatWest, now pay 0.01% on easy access accounts. The average one-year fixed rate Isa currently pays 0.56% compared to 1.14% in March, while the average easy access Isa offers 0.32%, down from 0.83%. Bank of England figures show £45.3bn was deposited into easy access savings accounts in the four months to the end of June, up from £5.7bn in the same period last year.
Deposit data raises questions over fintechs
Katherine Griffiths in the Times considers the climate for fintechs, with Monzo, Revolut and Starling having recently published financial results. The three digital banks made most of their money from card transactions, while “it has been tougher getting people to actually place their deposits with the new players.” Between them, the three digital challengers held £4.8bn of customers' money, while Virgin Money has £64bn and Metro Bank £14.5bn. Ms Griffiths says the low level of deposits at fintechs “raises the question of whether people will ever cut ties with their established banks”, noting that people usually choose to put their cash in their main bank.
Gadhia: Women in banking are judged differently
Dame Jayne-Anne Gadhia, co-founder of fintech start-up Snoop and the former boss of Virgin Money, says women in the City are treated differently to men. Noting that over her career a number of people, “usually older white men”, have referred to her as a “bloody difficult woman”, she says she has wondered whether Lloyds boss Antonio Horta-Osorio or Barclays CEO Jes Staley “would be thought of as bloody difficult men”.
Security fear over mobile banking
Cybersecurity firm Kaspersky has warned that hackers are increasingly targeting phones set up for mobile banking. The firm estimates that around half of people who use their phone for banking do not have antivirus or security software installed.
Blackstone eyes Takeda unit
Blackstone is set to buy Takeda Pharmaceutical’s over-the-counter unit, having come out on top in a final bidding round that included Bain Capital and CVC Capital Partners. Takeda is looking to sell Takeda Consumer Healthcare for more than $2.85bn by the end of the month.
Persimmon dividend reinstated as sales rise
Persimmon has restored its shareholder payout after it saw sales since the start of July hit a level 49% higher than the same period in 2019. With the lockdown halting construction, pre-tax profit for the six months to the end of June fell 43% to £292m. The firm’s order book has reached £2.5bn, a 21% increase on a year ago. The housebuilder, which pulled its 125p a share interim dividend at the start of the pandemic, will pay an interim dividend of 40p a share on the back of the bounce in demand and “cautious optimism” for H2.
UK firms could face delay to EU financial market access
European Commission executive vice president Valdis Dombrovskis has warned that the City of London may not know whether post-Brexit access to EU markets will be possible until 2021. He noted that it could be months before regulatory equivalence is granted, remarking: “In some areas we will not be in a position to adopt equivalence decisions… not all EU parameters are in place in these areas.” Mr Dombrovskis went on to say that UK firms may have to broker individual financial services arrangements with EU countries to ensure continued access to mainland Europe in the new year.
City of London Group reports loss
The City of London Group has reported a loss of £9.7m in the year to March 31, an increase on the £3.5m loss reported a year earlier. Costs related to subsidiary Recognise Financial Services’ banking licence application hit £3.4m compared to £1.7m a year before. Another subsidiary, Acorn to Oaks Financial Services, set up its commercial finance broking division this year and delivered a profit.
ETFs set to usurp active funds in world of ethical investing
According to research by Invesco, exchange traded funds and other passive vehicles are set to usurp active managers as the dominant ethical investing approach.
Merck plans £1bn UK research hub
US pharmaceutical firm Merck is to build a new London research hub as part of a £1bn investment in Britain. The site will have capacity for 800 staff and is expected to create around 120 jobs for scientists and technicians. The facility, which will be opposite King’s Cross station in London’s Knowledge Quarter and named the Discovery Research Centre, will be Merck’s first lab outside the US to carry out early-stage research on new medicines.
Purplebricks fined over money-laundering breach
Purplebricks has been fined more than £260,000 for breaching laws on money laundering, with HMRC saying the online estate agent was guilty of "failures in having the correct policies, controls and procedures, conducting due diligence and timing of verification". Rules introduced in 2017 say agents and buying agencies are responsible for carrying out checks on the financial background of their clients so as to stop money being laundered through property transactions.
Shop trips climb but mask rule hits visits
Data show that consumers are visiting supermarkets and grocery stores more regularly than at the height of the COVID-19 pandemic but are spending less on each trip. Customers spent £9.7bn over the past four weeks, the lowest level since February. The average spend per trip of £24 was the first dip below £25 since March but still exceeds the pre-pandemic average of £19. Analysis suggests that the introduction of a rule saying shoppers must wear masks drove a decline in visits to stores, with 2m fewer supermarket trips in the week after the rule was rolled out than would have normally been expected. Meanwhile, a sales monitor produced by the Scottish Retail Consortium reveals that total sales in Scotland fell by 8.3% during July, compared with the same month in 2019.
M&S to cut 7,000 jobs
Marks & Spencer will cut 7,000 jobs over the next three months as it overhauls its business. The move aims to save around £100m a year as the company looks to focus more on its online business. In the two-month period since shops re-opened from lockdown, total sales have been down 29.9%, the company said, with some town centre stores and shopping centres remaining “heavily impacted by social distancing and reduced footfall”.
Credit cards paid off
UK Finance figures show that outstanding balances on credit cards contracted by 12.6% in the year to May. Spending fell 44.7% in May, with parts of the economy shut off due to the coronavirus lockdown. In May there was £4.5bn of spending across 440m contactless transactions, almost a third down on a year ago.