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Daily News Roundup: Wednesday, 30th September 2020

Posted: 30th September 2020

BANKING

Mortgage approvals climb in August

UK monthly mortgage approvals hit a near 13-year high in August, supported by the release of pent-up demand as consumers resumed spending and the Government’s stamp duty holiday. Home loan approvals for August reached 84,700, the highest rate of approvals since October 2007, according to the new data from the Bank of England. August’s total marks an increase on the 66,300 approvals recorded in July, with Jonathan Harris, managing director of mortgage broker Forensic Property Finance noting that “The market has been buzzing during what is usually a quiet, holiday month as buyers, free from lockdown restrictions, got on with moves to the country and took advantage of the stamp duty holiday while they can.” Samuel Tombs, chief UK economist at consultancy Pantheon Macroeconomics, added that the figures suggest mortgage approvals “will remain well above trend for at least another couple of months.” Total mortgage lending in August reached £3.1bn, up from £2.9bn in July but below the average of £4.2bn in the six months to February - before the coronavirus outbreak.

Committee calls for clarity on account closures

The Treasury Committee says banks should give Britons living in the EU “sufficient warning” before closing down their current accounts due to Brexit. Committee chair Mel Stride has written to the Financial Conduct Authority (FCA) calling for the City watchdog to clarify how much time customers should be granted to transfer their funds and set up alternative bank accounts. Mr Stride has warned that with some expats being told that their UK bank accounts will be terminated at the end of the year, it is “vital that they’re given sufficient warning so that they have time to make alternative arrangements.” Lloyds, Barclays and Coutts have told a number of retail and business bank customers that accounts will be closed by December 31, the date the Brexit transition period ends, with other banks expected to follow suit. Those whose bank has an EU-based subsidiary, such as HSBC, will retain accounts. Barclays says it is “reviewing the situation,” while both Santander and NatWest, owner of Royal Bank of Scotland, said they were reviewing how Brexit negotiations unfold.

Lockdown leaves thousands miles from ATMs

Analysis by the Financial Conduct Authority and Payment Systems Regulator shows that around 60,000 Britons lost access to cash during the lockdown, with the mass closure of bank branches and cash machines leaving 59,534 people unable to access cash within a three-mile radius of their home. Figures show that up to 12% of all branches and ATMs were closed between April and June.

PRIVATE EQUITY

Advent raises $2bn fund

Advent International has raised a $2bn fund to invest in Latin American companies. This is the US private equity firm’s seventh fund focused on the region. It says it is looking at a number of opportunities in financial services, healthcare, industrials, consumer and technology, focusing mainly on Brazil, Colombia, Mexico and Peru.

INTERNATIONAL

JPMorgan hit with £773m fine

JPMorgan, which faced claims from the US Justice Department related to market manipulation between 2008 and 2016, has admitted wrongdoing and agreed to pay £773m to settle market manipulation claims, the Commodity Futures Trading Commission has said. The bank was found to have engaged in manipulation in the precious metals futures and Treasury futures market.

Upbeat bond market at odds with banks over scale of COVID risks

The FT reports on how US banks’ loan loss reserves have increased by $110bn since the beginning of the coronavirus pandemic, now equating to 2.2% of their loan portfolios.

Goldman Sachs names first woman to run major division in years

Stephanie Cohen has been appointed co-head of Goldman Sachs’ consumer and wealth management business, where she will run the unit alongside Tucker York.

AUTOMOTIVE

AA bid deadline extended until late October

TowerBrook and Warberg Pincus have been given an extra month to make an offer for the AA, with the firm extending a deadline for bids that passed at 5pm yesterday. The roadside recovery business says pre-tax profit in the six months to July fell 38% to £26m on revenues 2.6% lower than in the year earlier period. AA boss Simon Breakwell hailed a “remarkably strong performance”, considering the impact of the coronavirus crisis.

Pendragon posts results as car sales fall

Car dealer Pendragon has posted a post-tax loss of £31m for the year ended 30 June, making a profit of £7m in the first two months of the new financial year. Revenue was down 50.4%, falling from £2.45bn to £1.22bn across the whole of the first half. This comes as trade body the Society for Motor Manufacturers and Traders revealed that new car sales were down 48.5% in the first half of the year.

AVIATION

Travel industry argues against air tax increases

Air Passenger Duty (APD) is likely to increase even as travel industry representatives urge the Government to temporarily scrap the tax. Tim Alderslade, chief executive of travel association Airlines UK, said: “The Government should bring forward a targeted package of support measures [including] a 12-month APD waiver to ensure our industry can play a vital role in the economic recovery.”

The Daily Telegraph

Menzies Aviation revenue down 33%

Menzies Aviation has reported a £39m loss in the first half. The baggage handling firm reported revenue down 33%, from £649.9m to £431.5m, with passenger flight volumes falling 43% during the six month period. The firm said profitability would benefit from “a more significant contribution from various government support programmes and continuing tight cost management.”

City AM

FINANCIAL SERVICES

Insurers fear action groups may delay FCA deal

Insurers have warned that a deal between the industry and the Financial Conduct Authority (FCA) in regard to payouts to firms hit by the coronavirus crisis could be scuppered by business action groups. The matter has arisen following a court ruling on business interruption policies and whether payouts were due in relation to coronavirus-related claims. While insurers and the FCA are seeking to reach agreement on payouts, the Telegraph says some insurers are concerned that action groups represented by law firm Mishcon de Reya could scupper the deal, potentially triggering an appeal process and delaying payments.

Government rules out pension tax relief review

The Government has ruled out a review into the impact of pension tax relief within the next year, despite recommendations from the Public Accounts Committee. Rather than a review the Treasury said it would continue to engage with stakeholders and gather evidence but added it does "not think it is the right time now for a formal evaluation”.

Amigo investors halt founder’s comeback bid

Amigo shareholders have rejected the appointment of the lender’s founder and former chief executive James Benamor as a director, with 57% of votes cast against the proposal. Shareholders also rejected resolutions to remove Roger Lovering, acting chairman, and Nayan Kisnadwala, chief financial officer.

UK financial watchdog admits consumers confused by protection rules

The Financial Conduct Authority says consumers are confused about what products the watchdog has authority over, with interim CEO Chris Woolard describing the matter as a “key issue” for the regulator.

MEDIA AND ENTERTAINMENT

Nokia chosen to supply BT with 5G equipment

Nokia has been selected to supply BT’s 5G radio equipment. BT chief executive Philip Jansen commented: “In a fast-moving and competitive market, it’s critical we make the right technology choices.” This comes after Mr Jansen called for sweeping reforms to the network coverage system in the UK, requiring £9bn worth of tax and red tape cuts.

REAL ESTATE

Retail rent arrears set to exceed £2bn

Industry body Revo says retail rent arrears are set to exceed £2bn, with landlords expecting to receive less than half of due payments for Q3. Revo says around £1.5bn of rent payments went unpaid during the first half of the year, with retail and hospitality firms holding off payments or agreeing delays due to a ban on business evictions until the end of the year, a measure rolled out to help firms hit by the coronavirus crisis.

Consortium closes $5.5bn real estate investment partnership

The Abu Dhabi National Oil Company (ADNOC) has closed its $5.5bn real estate investment partnership with entities owned and/or advised by Apollo Global Management subsidiaries and a group of institutional investors. The closing of the partnership takes the combined investment in select ADNOC real estate assets by the consortium to $2.7bn.

RETAIL

Greggs seeks to avoid job cuts by reducing hours

Greggs has launched a consultation with employees to shorten their working hours as the bakery chain seeks to cut costs when the government’s Job Retention Scheme ends next month. The company nevertheless aims to open new sites despite the pandemic hitting sales. New store openings will largely be away from city centres, the company said as it reported same-store sales in the 12 weeks to September 26 at 71.2% of 2019 levels.

SPORT

Premier League clubs to vote on bailout for Football League

Premier League clubs facing government pressure to award a multi-million pound bailout to the Football League are expected to argue that they have already advanced solidarity payments and are under significant financial strain themselves. Plans for how to deal with any second wave of coronavirus infection or other unforeseen event are also expected to be voted on by the clubs.

ECONOMY

Britons borrowed more and saved less in August

Bank of England figures show £21.3bn was borrowed on cards and loans in August, up from £20.9bn in July, and less was being saved. While the amount borrowed by consumers on credit cards, overdrafts and loans increased again last month, households also paid back more, meaning the net amount borrowed fell to £0.3bn. The Office for National Statistics data suggest an increasing number of Britons are finding themselves in financial difficulty and more people are having to use savings to cover their living costs or are turning to debt. The share of people unable to pay a bill is now at levels last seen in late April, having risen from 26% in mid-June, according to the figures.

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