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Daily News Roundup: Wednesday, 27th May 2020

Posted: 27th May 2020

BANKING

CLBILS loan size expanded to £200m by Treasury

Rishi Sunak has announced that over £32bn in loans and guarantees has been issued to firms so far during the coronavirus crisis. The Chancellor is extending the CLBILS loan size to £200m, with companies receiving help through this and the Bank of England’s Coronavirus Corporate Financing Fund (CCFF) to be asked to agree to not pay dividends and “exercise restraint on senior pay”. The £32bn includes 268,000 bounce back loans worth £8.3bn, and 36,000 loans worth over £6bn, according to the Treasury.

FCA warns homeowners over mortgage holidays

The Financial Conduct Authority has warned homeowners to be cautious over taking advantage of mortgage holidays, after the scheme was extended for a further three months. The FCA said that homeowners face paying thousands of pounds in extra interest if they put off making payments. The FCA's Christopher Woolard says that if customers can afford to restart payments “it is in their best interests to do so”, but support will be given to those who can't.

Metro Bank braces for rise in bad loans

Metro Bank CFO David Arden has said the bank is ready to consider asset sales if necessary to bolster its balance sheet in the event there is a significant increase in bad loans due to the economic crunch caused by the COVID-19 pandemic.

Goldman Sachs ramps up cash management plans despite coronavirus

Goldman Sachs is hoping to launch its new cash management business in the UK by September and across Europe by the end of the year as CEO David Solomon diversifies the bank’s revenues.

HSBC’s Noel Quinn needs to crack on with cost-cutting

The FT’s Cat Rutter Pooley urges HSBC CEO Noel Quinn to get on with the bank’s restructuring: sell poor performing businesses and get on with cutting jobs, as painful as that is.

PRIVATE EQUITY

S4 Capital buys data analytics firm Digodat

Martin Sorrell’s S4 Capital has acquired data analytics group Digodat, which will merge with S4’s media business MightyHive. Mr Sorrell commented: “Data and analytics are at the heart of our tech-led new age/new era model and we look forward to working with our clients in Latin America as they invest in deeper first-party data-driven content and programmatic capabilities.” This comes after S4 reported a 17% rise in first-quarter revenue despite the impact of the COVID-19 pandemic.

Private equity firm now wants to walk away from investment in corporate travel business

Mark Vandevelde reports on Carlyle’s attempt to walk away from a deal to buy a stake in the corporate travel business of American Express, which is now the subject of a lawsuit.

INTERNATIONAL

Jamie Dimon says no immediate return of share buybacks

JPMorgan CEO Jamie Dimon said on Tuesday that US banks will wait for evidence of recovery before resuming their share buyback programmes, as the bank predicted another big provision for loan losses in Q2. However, Mr Dimon said the odds were good for a swift economic recovery. Shares in the bank rose after Dimon added that he thought JPMorgan was “very valuable” at the current price.

Scotiabank credit provisions more than double in Q1

Bank of Nova Scotia has reported that credit provisions for the first quarter more than doubled to C$1.85bn ($1.33bn) from a year earlier, with commercial and corporate performing loan provisions increasing by C$275m as the lender prepares for increased losses as a result of falling oil prices.

ECB warns of challenge for eurozone from soaring public debt

Investors could reassess European sovereign risk as government debt levels soars reigniting “pressures on more vulnerable sovereigns,” the ECB has warned.

AUTOMOTIVE

McLaren announces redundancies

McLaren has announced plans to reduce to its workforce by over 25%, citing the effects of the coronavirus pandemic on sales and advertising revenue. Chairman Paul Walsh remarked: "This is undoubtedly a challenging time for our company, and particularly our people, but we plan to emerge as an efficient, sustainable business with a clear course for returning to growth."

Renault to cut 5,000 jobs by 2024

French carmaker Renault is about to announce plans to cut 5,000 jobs by 2024 in its drive to save €2bn in costs. Meanwhile, President Emmanuel Macron has unveiled an €8bn plan to make France the top producer of clean vehicles in Europe and urged French carmakers to make vehicles in their own country.

AVIATION

Ryanair to appeal Lufthansa's €9bn bailout

A rescue deal worth €9bn (£8bn) has been agreed between Lufthansa and the German government, which will take a 20% stake in the firm. But Ryanair’s CEO Michael O'Leary said the rescue was "illegal state aid" which would massively distort competition and his airline would appeal the decision.

EasyJet finance chief announces resignation

EasyJet chief financial officer Andrew Findlay has resigned from the airline, after founder Sir Stelios Haji-Ioannou launched a vote to oust executives as part of an ongoing conflict regarding the firm’s £4.5bn deal to buy 107 Airbus aircraft.

Latam Airlines files for bankruptcy after ‘collapse’ in demand

Chile-based Latam Airlines has filed for bankruptcy protection, announcing that it intends to keep operating passenger and cargo flights as it restructures its business, subject to demand and travel restrictions.

FINANCIAL SERVICES

UK property funds could remain frozen for months

Investors could find they are locked into property funds for months as the market is impossible to value due to the COVID-19 crisis, industry sources say, adding that some funds may need to restructure to survive. Ten big open-ended property funds tracked by Morningstar, with a total of £6.5m under management, stopped investors from getting their money out in mid-March, saying valuers could not accurately assess real estate assets in a plunging economy.

Wirecard postpones issuing annual results again

German payments company Wirecard has postponed the publication of its 2019 annual results for the third time this year because its auditor needs additional time to finish its work.

HEALTHCARE

Exscientia in $60m fundraising round

British biotech firm Exscientia has raised $60m (£49m) in a fundraising round led by life sciences specialist Novo Holdings alongside Evotec, Bristol Myers Squibb, and GT Healthcare Capital.

LEISURE & HOSPITALITY

Shearings coach operator ceases trading

The UK’s largest coach tour operator, Shearings, has ceased trading. CEO Richard Calvert commented: “The effects of COVID-19 on our 117-year-old company and the wider travel industry have been devastating.” Other sectors within the domestic travel industry, such as seaside resort hotels, are likely to see a knock-on effect from the failures of firms such as Shearings, with the coach industry keeping many coastal resorts in business.

MANUFACTURING

Bombardier wants repayments and penalties suspended

Bombardier has told the government that its transportation unit will have to shut down without support. The company is asking for penalty payments to its rail franchise customers and bond payments to Transport for London to be suspended for several months.

MEDIA & ENTERTAINMENT

Warner to go ahead with IPO after pandemic delay

Warner Music Group has announced potentially the largest New York IPO so far this year, with as much as $1.82bn in stock, as the market rebounds in the wake of the COVID-19 crisis. The firm had delayed its IPO two months ago as the health crisis disrupted capital markets.

RETAIL

June shopping surge will require retailers to invest heavily in safety precautions

Figures from data firm Springboard show consumers headed back to shops in force over the weekend leading to predictions of a rush to the high street when restrictions are lifted further next month. Diane Wehrle of Springboard said retailers will need to invest heavily to put measures in place to keep staff and customers safe. Separately, The British Retail Consortium, which represents high street stores, said the lockdown had cost non-food shops some £1.8bn in lost sales each week "and with sales expected to remain weak, even as shops begin to reopen, many retailers will still be in a fight for survival".

ECONOMY

Andy Haldane predicts rapid V-shaped recovery

The Bank of England’s chief economist has said the UK economy is on course for a short V-shaped recession following signs of a "modest recovery" in spending and business confidence. However, Andy Haldane also warned of a “paradox of thrift” unless the government can instil confidence in businesses and households. Meanwhile, global stock markets rose yesterday as lockdown measures across the world began to lift. The FTSE 100 closed up 1.2% boosted by big gains in travel shares.

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