Household borrowing hits lowest monthly total on record
UK households sharply cut back on borrowing and repaid loans at a record rate in April, according to Bank of England (BoE) figures. A net £7.4bn of consumer credit was repaid. This is the largest net repayment since records began and double that of March, which was the previous record. £5bn of net consumer credit repayments were on credit cards. Households and businesses continued to increase their bank deposits in April, the Bank of England added. Holdings rose by £37.3bn in April, after an increase of £67.3bn in March. The Bank also said the cost of borrowing fell precipitously in April. The effective rate on overdrafts, including fees, was 10.9% in April, or 15 percentage points lower than in March. Meanwhile, the BoE data show a record collapse in mortgage approvals in April, with 15,800 home loans given the green light. This marks an 80% dip on February, when the market had yet to be affected by the coronavirus outbreak. The figures represent the lowest monthly total since BoE records began in 1993.
Just half of CBILs approved
New figures show that companies have borrowed £31.3bn from banks through the Government’s three main coronavirus loan schemes, but only around half of loans on its flagship Coronavirus Business Loan Interruption Scheme (CBILs) programme have been approved. City groups have said EU state aid rules could be to blame for problems with the CBILs programme, with regulations excluding highly indebted or loss-making firms from receiving loans. More than two-thirds of the £31.3bn lent to businesses under coronavirus support schemes has come via the Bounce Back Loan Scheme for smaller firms, with £21.3bn handed to SMEs. The data show that over 963,000 businesses have asked their banks for support as part of the three bailout schemes, with almost 750,000 firms successful.
Savers see average fixed rate hit 0.3%
The Mail’s Sylvia Morris urges savers to snap up top one-year fixed rates, saying that while larger banks and building societies have already cut one-year deals to below 0.5%, newer banks are now following suit – with some pulling away from the savings market entirely. She notes that Wyelands Bank, Ford Money and Secure Trust are among those no longer offering fixed-rate bonds, while Virgin Money, Masthaven, Atom, Paragon, Shawbrook, Hampshire Trust, Investec and United Trust banks have all reduced their rates. Analysis shows that the average easy-access account now pays just 0.3% compared with 0.75% ten years ago, with the average one-year fixed-rate bond at 0.92% - just better than the 0.9% low recorded in February 2017. TSB and Santander, Ms Morris notes, offer 0.3% and 0.35% respectively. The best one year rates, she adds, are the 1.3% at Atom Bank and 1.25% deals at Kent Reliance, Investec Bank and RCI Bank.
Lenders in talks over access to cheap BoE funds
Alternative lenders and challenger banks are in talks with the Treasury over securing access to cheap funding from the BoE, having been all but locked out of providing state-backed bailout loans.
Fund wants Treasury to match private investment
The Business Growth Fund, a private equity fund backed by HSBC, Barclays, Royal Bank of Scotland, Lloyds, and Standard Chartered, is looking to secure up to £7.5bn from the Government, with an intention to support medium sized businesses after the coronavirus crisis. The plan would see a £15bn fund where the Treasury matches funding from private sector investors.
Private equity firm set to land airline
Private equity firms are the leading contenders to take over airline Virgin Australia, with Bain Capital and Cyrus Capital Partners named as preferred bidders.
Banks settle Mexican bond rigging litigation
JPMorgan Chase and Barclays will pay $20.7m to resolve investors' claims they conspired to rig the Mexican government bond market. JPMorgan is paying $15m while Barclays is paying $5.7m, with both denying wrongdoing in agreeing to settle. A filing with the US District Court in Manhattan saw lawyers for the investors describe the settlements as an "ice breaker" that could trigger settlements for other defendants, which include affiliates of Banco Santander, Bank of America, BBVA, Citigroup, Deutsche Bank, HSBC and UBS.
Nissan warns over trade deal
Nissan has warned that its Sunderland factory, the UK's largest car manufacturing plant, is "unsustainable" if the UK leaves the European Union without a trade deal. CEO Ashwani Gupta said Nissan's commitment to the facility could be hurt if there was not tariff-free EU access. He also said any plans for strategic partner Renault, a 43%-shareholder, to take up spare capacity at the plant would be a matter for the French carmaker.
Lufthansa board approves €9bn government bailout
Lufthansa's supervisory board has approved a €9bn (£8bn) government bailout. The deal will see the government take a 20% stake in Europe's largest airline, which it plans to sell by the end of 2023. The government will also inject €5.7bn in non-voting capital. Lufthansa will separately receive a €3bn three-year loan from state-backed KfW and private lenders.
EasyJet to resume most European routes this summer
EasyJet plans to resume flying to almost half of its route network by July and three-quarters of the network by August, although with a lower frequency of flights equating to around 30% of the normal July to September capacity. The carrier has put one million summer flight seats on sale for £29.99 each way to boost interest.
French flight crew accuse Ryanair of 'redundancy blackmail'
Ryanair staff in France have accused the Irish carrier of blackmailing them to take pay cuts or else risk losing their jobs. Ryanair had told French flight crew members that it was imposing 20% salary cuts for flight crew and 10% for attendants. Those who are already on legal minimum wages will have their hours reduced, the airline said. The SNPNC-FO flight attendants’ union said pay cuts would take cabin crew below the minimum wage.
LCF probe hit by delays
A report on collapsed savings firm London Capital & Finance will come out nearly three months late, with former appeals court judge Dame Elizabeth Gloster, who is leading the inquiry, saying the probe has been held up by long waits for documents from the Financial Conduct Authority (FCA). Further delays came as the lockdown enforced amid the COVID-19 pandemic made it harder to interview people who may have information pertinent to the investigation. In a letter to FCA chairman Charles Randell, Dame Elizabeth said she did not believe the delays were intentional or the result of deliberate foot-dragging by the City watchdog. The report is now due to be delivered by September 30.
LEISURE AND HOSPITALITY
Hotel firm eyes £140m rent reduction
Travelodge is set to launch a radical overhaul of its business, turning to a CVA as it looks to secure rent cuts of more than £140m. Rejection of the CVA could see the firm call in administrators, the Telegraph notes. A source says 90% of owners will be given at least 50% of rent until the end of next year, bettering a previous proposal of 38%, while landlords will be entitled to 50% of any profits above £200m over the next three years. The hotel chain reportedly plans to raise £100m of debt from bondholders, with shareholders injecting up to £40m more by buying new stock.
Boeing eyes job cuts
Boeing is considering cutting jobs at its plant in Sheffield amid pressures brought about by the coronavirus crisis. The aircraft maker is reducing up to 10% of its global workforce after the pandemic caused a slump in air travel. It is in the process of cutting around 12,000 of its 160,000 workers and has said thousands of additional roles will be eliminated in the next few months. A spokesperson said: “We are taking several actions, including reducing commercial aircraft production rates and staffing levels.”
MEDIA AND ENTERTAINMENT
Vodafone offers free broadband to small firms
Vodafone is offering six months' free broadband to small businesses to help them following the pandemic. The company's business broadband package is to be made free for six months with unlimited usage. The package, which is available to all UK businesses with fewer than 50 employees, also includes six months of Microsoft 365 business standard free of charge.
House prices fall at fastest rate since 2009
House prices fell 1.7% in May from the previous month to an average of £218,902, the largest monthly fall for 11 years, according to Nationwide. As well as the biggest monthly slump since February 2009, annual growth in house prices slowed to 1.8% from May 2019, down from 3.7% in April and the slowest rate since December. Recent Nationwide research indicated that one in eight people had put off moving because of the lockdown. The drop in Nationwide's house price index in May "is just the start of a protracted decline over the remainder of this year," warns Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
Tesco CFO steps down
Tesco CFO Alan Stewart plans to step down next April, after five years in the role, extending a management overhaul at the UK’s biggest retailer. The move comes as chief executive Dave Lewis prepares to hand over to former Walgreens Boots Alliance executive Ken Murphy. Tesco said it will search internally and externally for Mr Stewart’s successor.
8.7m workers furloughed
Government figures show that 8.7m workers have been placed on furlough as part of the UK job retention scheme, accounting for more than a quarter of the 33.1m person workforce. The HMRC data show 1.1m firms are using the job retention scheme, with the cost to taxpayers currently at £17.5bn. Analysis shows a net 300,000 workers were furloughed last week.