BANKING
Coronavirus: Banks issue emergency loans
Banks are issuing emergency loans to businesses experiencing financial strain on the back of the coronavirus outbreak, with Barclays, Santander UK and Royal Bank of Scotland among those who have been contacting business customers to check whether factory disruptions in China have put their supply chains and cash flow at risk. Ian Rand, chief executive of Barclays’ business banking division, said: “Our network of relationship managers has been reaching out to SMEs across the UK to see if they require additional support during this time, as we do regularly when we see any events which may have an impact on our clients.” The bank has already signed off its first batch of overdrafts and short-term loans designed to ease coronavirus-related pressures. An RBS spokeswoman said: “We are monitoring the potential impact of coronavirus across our personal and business customers to ensure we can support them appropriately through any period of disruption.” Meanwhile, governor Mark Carney has suggested the Bank of England could help small firms mitigate against blows from the virus, saying: “We can have, if we so choose, a direct influence on the cashflow of these small businesses."
Switching scheme to be reformed
Small businesses are to be offered greater incentives to switch accounts away from Royal Bank of Scotland, with an official switching scheme designed to boost competition yet to deliver the results organisers had hoped. The lender is supposed to be offloading 120,000 small business customers by August, but only 30,000 had done so by the end of 2019, with the pace slowing toward year end. While RBS has provided £350m that rivals can use to lure customers, it is believed that many clients feel the bureaucracy involved in changing bank outweighs the financial incentives. Small banks including Metro, Starling, Santander, Co-operative and TSB have signed up to the scheme, which is run by Banking Competition Remedies, and Monzo is expected to join soon.
Branch fraud up, hitting £24m
Figures from UK Finance show that fraud involving bank branches hit a record high in the first half of 2019, with criminals conning customers into withdrawing £24.2m from branches. The analysis shows that the Banking Protocol, which allows branch workers to call police if they believe a customer is being coerced, has prompted 16,462 emergency calls by staff since its launch in 2016, saving around £100m and leading to 664 arrests.
StanChart chairman ‘sounds out’ executives to replace Winters
Standard Chartered chairman Jose Vinals has reportedly approached banking executives to gauge their interest in replacing current chief executive Bill Winters. Commenting on the reports, a Standard Chartered spokesperson said its board and chairman feel Mr Winters is the best CEO the bank could have, and would like to keep him on “as long as possible”. City AM notes that Mr Winters was last year drawn into a spat with shareholders, calling criticism of his pension award “immature and unhelpful”. Mr Vinals was reportedly unhappy with the CEO’s handling of the matter.
Bank boss’s pay cut
Nathan Bostock, chief executive of Santander UK, had his total pay package lowered to £4.3m last year, from £4.6m in 2018. The dip stems from a reduced bonus as a result of a 37% fall in pre-tax profit, which hit £981m in 2019.
PRIVATE EQUITY
CD&R agrees Huntsworth takeover
Private equity firm Clayton, Dubilier & Rice (CD&R) has agreed a takeover deal worth around £400m for Huntsworth, which owns the Citigate, Grayling and Red PR firms, paying 108p in cash per share. News of the deal saw shares in Huntsworth surge almost 53%. CD&R said it plans to help Huntsworth pursue future acquisitions.
INTERNATIONAL
Coronavirus prompts US rate cut
The US central bank has cut interest rates in response to concerns over the economic impact of the coronavirus. The Federal Reserve’s Federal Open Market Committee lowered the benchmark rate by 50 basis points to a range of 1% to 1.25%. The central bank said it was “closely monitoring developments and their implications for the economic outlook” and would “use its tools and act as appropriate to support the economy.” Chairman Jerome Powell said the Fed believes the rate reduction “will provide a meaningful boost to the economy."
Egypt plans to sell Banque du Caire stake
Egypt aims to sell a minority stake in state-owned Banque du Caire in an IPO, chairman Tarek Fayed has revealed. He said: “Our plan is to go with the IPO by mid-April, but it depends on the market conditions. For us, if you're talking about the readiness of the bank, we are very ready.” He said the objective is to raise around $500m, saying this “could leave us in the range of 20% to 30% of the float of the bank´s ownership.”
AUTOMOTIVE
PSA expects no-deal compensation for factories
Vauxhall's owner PSA is expecting the Government to compensate it for the extra costs involved in the event of a no-deal Brexit from the EU, chief executive Carlos Tavares has said. He said the EU-UK trade deal holds the key for the future competitiveness of its Ellesmere Port factory, saying that a deal offering free trade and no tariffs on cars or parts would mean the carmaker could make required investments in the site, but suggested that if those conditions were not met, PSA would ask ministers “would you like to compensate?"
CONSTRUCTION
HS2 and housebuilding boost construction output
British builders boosted by HS2 contracts enjoyed their strongest growth in output for over a year in February, according to IHS Markit's latest purchasing managers’ index, which reveals that the sector's fastest rise in new orders for four years swung the measure from 48.4 to 52.6 last month. Max Jones, at Lloyds Bank Commercial Banking's infrastructure and construction team, said: “Next week's Budget has the potential to improve the outlook further given the Government's hints that infrastructure will feature prominently.”
FINANCIAL SERVICES
Short positions reach four-month high
February saw the highest number of short positions reported to the Financial Conduct Authority for four months, amid growing investor concerns surrounding the coronavirus outbreak and that the UK could fail to secure a free trade deal with the EU. Britain’s financial regulator received 865 reported short positions during the month, with 298 filed in the last week alone, which is the highest number over a week in more than a year of data. Firms are under a regulatory obligation to report all changes to short positions once they surpass a threshold of 0.2% in a company but make those public once they hit over 0.5%.
Coronavirus likely to hit travel business, Direct Line says
Direct Line has already received travel insurance claims of around £1m related to the coronavirus outbreak. Direct Line's profit-before-tax for 2019 was £509.7m, down 12% on the year prior, while gross written premiums upped 0.3% to £3.2bn. Despite its combined operating ratio increasing 0.6 percentage points to 92.2%, Direct Line announced a £150m share buyback - with staff given £500 of free shares each - along with a proposed final ordinary dividend of 14.4p, which is up 2.9% on 2018.
French insurer Covéa set to buy PartnerRe for $9bn
French insurer Covéa is set to buy Bermuda-based reinsurer PartnerRe for $9bn in an all-cash deal.
HEALTHCARE
Astrazeneca HQ costs climb
The cost of Astrazeneca’s new global headquarters has risen to about £1bn, three times the estimate. The firm, Britain's biggest drugs company, had planned to spend £330m on the Cambridge site which will also serve as its research and development centre. The project had been due to be completed in 2016.
MANUFACTURING
Chinese group confirms British Steel takeover
Chinese firm Jingye Group has confirmed plans to invest £1.2bn in British Steel, which collapsed in May last year. A spokesperson for the Chinese company, which will pay approximately £70m to buy British Steel, said the deal was due to be completed on March 9.
MEDIA AND ENTERTAINMENT
Sky in Disney Plus deal
Sky has confirmed a multi-year deal with Disney Plus, which launches in the UK on March 24, to make the streaming service available to its pay-TV customers.
PROFESSIONAL SERVICES
Robert Walters warns virus could hit profits
Recruiter Robert Walters says the coronavirus outbreak was likely to “negatively impact” its full-year profit for 2020. Chief executive Robert Walters nevertheless observed: “Whenever there has been a pause in recruitment activity, you tend to get a pent-up demand that is satisfied when things return to a stable basis." The company, which has exposure to markets in Asia, has recently invested in technology to enable staff to work from home.
RETAIL
High street calls for reform of business rates
Retail businesses and lobby groups have written to the Chancellor ahead of his first Budget, calling for an urgent review of a business rates system that British Chambers of Commerce director-general Adam Marshall describes as “broken”. Traditional retailers say they shoulder an unfairly high burden from business rates, which are based on a property's estimated value, with online rivals paying lower rates as they operate from vast out-of-town warehouses. The letter to Chancellor Rishi Sunak was signed by representatives of groups including the British Chambers of Commerce, the Federation of Small Business and the British Retail Consortium.
ECONOMY
Carney: Policymaker response to coronavirus 'powerful and timely'
Bank of England (BoE) governor Mark Carney says policymakers around the world are working on a “powerful and timely” response to the potential economic hit from the coronavirus, with the outbreak prompting fears of a global recession. Comparing the potential economic damage to that seen in the financial crisis, Mr Carney said: “The 2007-2008 crisis caused some lasting scarring effects on the economy. The prospect with this situation is that we will have disruption, not destruction.” On the shock coronavirus may have on the UK economy, he suggested it could be “large but temporary”. Meanwhile, Mr Carney has suggested the BoE would be prepared to cut interest rates and let banks use “rainy day” funds to soften the impact of the outbreak on the economy. The Times says the BoE is “poised to cut interest rates within days” and is expected to lower rates by a quarter of a percentage point to 0.5%.