BANKING
Banks yet to return to pre-pandemic hours
The Mail looks at how a number of bank branches that operated part-time services during the lockdown have yet to reinstate operating hours seen before the pandemic. Lloyds Banking Group, which includes Halifax and Bank of Scotland, says the majority of its branches are operating reduced hours; Barclays say that while hours vary across the network, they are 30% shorter; Santander's 565 sites have reduced hours, as have a third of HSBC’s 621 branches. While a majority of NatWest branches are open for less time that before the lockdown, 5% of branches remain shut. Around 2% of Nationwide branches are closed, with the rest running reduced hours. UK Finance said the “vast majority” of bank and building society branches have been open throughout the crisis and are reviewing customer demand for branch-based services.
Barclays launches online investing service
Barclays has launched an online investing service designed for those without the knowledge, time or confidence to get started in investing. Plan & Invest builds a tailored investment plan for each user, which is then monitored by the same active managers behind the bank's wealth management service. It is initially only available to Barclays current account customers with at least £5,000 to invest, but will soon be rolled out further. A spokesperson said: “Whilst there are numerous wealth management firms who offer tailored, face-to-face advice and a handful of good robo-advice providers, there’s very little support in between.”
FSCS extends bank collapse refund cover
New rules from the Financial Services Compensation Scheme (FSCS) will mean savers with a large balance will be entitled to a refund for longer than the usual limit if their bank collapses. The financial lifeboat opted to reform rules in an effort to reassure customers concerned that the COVID-19 pandemic has made bank failures more likely. The FSCS will temporality increase the length of time for which it will protect temporarily high balances of up to £1m from six to 12 months. This covers money such as home sale proceeds, large redundancy payments, a divorce settlement or an insurance payout.
Replacements for Libor are also open to manipulation
Michael Troege, finance professor at ESCP Business School, says that while regulators want to scrap interest rate benchmarks like Libor and Euribor, new rates such as Sofr and €STR are not manipulation-proof.
PRIVATE EQUITY
KKR reports flat Q2 earnings
KKR’s distributable earnings after-tax were almost unchanged from a year earlier in Q2, coming in at $326m compared to $327m a year ago. A rebound after a hit from the COVID-19 outbreak meant investment income rose 37% to $1.58bn, while private equity funds rose 11% and global infrastructure and real estate funds rose 7% and 2% respectively. KKR added a record $16bn to its stock of unspent cash in the quarter.
INTERNATIONAL
France suspends Morgan Stanley from its government debt sales
Agence France Trésor, which manages French public debt, has suspended Morgan Stanley from its role in handling government bond auctions in the country due to alleged market manipulation.
Cerberus vows to work with Commerzbank chair
A person close to the matter says Cerberus "acknowledges the reality" and will work with new Commerzbank chairman Hans-Joerg Vetter, despite voicing concerns over his appointment. The source said investor Cerberus is "looking forward to working with Vetter and the rest of the board to get a good result for Commerzbank".
AUTOMOTIVE
AA whets appetite of private equity firms
Driving association AA is in sale talks with three private equity buyers. It has received potential bids from Platinum Equity Advisors, Warburg Pincus and a joint offer from Centerbridge Partners Europe and Towerbrook Capital Partners. AA said it would also explore other refinancing options including raising new equity.
AVIATION
EasyJet expects rise in air travel
EasyJet expects air travel to increase in the months to come and hopes to recover 40% of its capacity in Q3. In the three months to the end of June, EasyJet made just £7m – 99% down on Q2 2019’s £1.8bn, although costs for the quarter stood at just £332.1m, 79% lower than in the same period in 2019.
Virgin Galactic and Rolls-Royce to work on new supersonic craft
Virgin Galactic has announced that founder Sir Richard Branson will be one of the first people to go into space in one of the firm’s rockets, as the company announced that it had raised $460m (£351m) through a sale of its shares for general corporate purposes.
FINANCIAL SERVICES
Direct Line reports profit fall
Direct Line has reported a 10% fall in profits during the first half, citing bad weather, as the insurer said the impact of the coronavirus pandemic was “broadly neutral” across its divisions. The company reported that profit before tax was down £24.9m, or 9.5%, year on year to £236.4m while operating profit fell 3.4% to £264.9m. CEO Penny James commented: “Despite the significant disruption caused by COVID-19 we have continued the trading momentum we saw at the end of 2019, growing direct own brands by 2% and improving the quality of our earnings with an improved current-year loss ratio.”
Standard Life boss to take helm of UK audit watchdog
Keith Skeoch, departing chief executive of Standard Life Aberdeen, is to be named interim chairman of the Financial Reporting Council ahead of an overhaul of the audit industry.
LEISURE AND HOSPITALITY
Pizza Express to close 67 restaurants
Pizza Express has announced plans to shut 67 – or 15% - of its 449 UK restaurants, with up to 1,100 jobs at risk. The decision comes as the chain looks to broker a CVA with its unsecured creditors.
MANUFACTURING
Babcock cuts dividend as profits fall 40%
Babcock shares were down 12.5% as the defence firm warned of the “significant impact” the coronavirus pandemic had had on its finances. First-quarter operating profit was down 40% year-on-year, as the company chose to cancel its final dividend for the financial year ending in March. Chair Ruth Cairnie said this would allow Babcock to “prioritise strengthening our balance sheet and reducing net debt.”
MEDIA AND ENTERTAINMENT
Tiktok could relocate to London
Video sharing app Tiktok may relocate its global headquarters to London after the UK Government said it has no objection to the move. The announcement is likely to further damage ties with the US, which has alleged that the app poses national security concerns due to its links to the Chinese government.
Twitter under investigation in US
The US Federal Trade Commission is investigating social media site Twitter for potentially misusing people’s personal data to display ads, with fines of between $150m and $250m suggested.
REAL ESTATE
Valuable properties could face higher business rates
Chancellor Rishi Sunak is considering increasing business rates for the "most valuable properties", having called for industry opinion on whether high end shops, offices and other large premises should pay a new, higher business rate. Feedback has also been requested on proposals to create different rates for different types of businesses. March saw the Chancellor announce a one-year £10bn business rates holiday for the retail, hospitality and leisure sectors in a bid to ease pressure brought about by the coronavirus crisis, a move which means revenue from the levy is down by about 40%.
IWG reports first-half charges of £155.8m related to pandemic
Mark Dixon, chief executive of flexible workspace provider IWG, has said the coronavirus pandemic is causing a shift to suburban working at the expense of city centres. He remarked: “All of the new franchise agreements we’re signing are in the provinces and the suburbs,” as the firm reported total charges of £155.8m resulting from the virus in the first half. Revenues were up from £1.28bn to £1.32bn.
RETAIL
Dixons Carphone restructure to see 800 jobs cut
Some 800 roles at Dixons Carphone are to be lost as part of a store management restructuring plan launched by the firm. Chief operating officer Mark Allsop said the firm want to “empower our store leadership teams” and create “a flatter management structure”. Regarding job losses, he commented: “This was not an easy decision and we’ll do everything possible to look after those colleagues we can’t find new roles for, financially and otherwise.”
ECONOMY
Recovery may be ‘two-steps-forward, one-step-back’
The Independent’s Hamish McRae considers how real-time data gives an insight into the economy, saying that the most current figures show activity is “coming up steadily”. Calling real-time data “the great revolution in economic statistics”, he says previous measures centred on factors such as GDP, retail sales and unemployment are “backwards-looking and … frequently revised”. Assessing the latest round of data, which he says shows the economy has recovered to around 95% of its pre-coronavirus level, Mr McRae says seated diner numbers have risen to 80% of the level seen a year ago, while hotel occupancy is running at 50% in the regions and 20% in London. He notes that public transport use is “climbing steadily”, while property searches are higher than normal for the time of year but data on travel is “still very weak”. On what the next batches of data will tell us about the economic recovery, Mr McRae says the coming months may be a “two-steps-forward, one-step-back affair.”
BoA: BoE to cut interest rates in November
Bank of America has predicted that the Bank of England (BoE) is likely to pursue a package of interest rate cuts and quantitative easing in November, suggesting rates could be lowered to zero, or even go negative. The report says: “The BoE has, in our view, no monetary ammunition left if it believes the lower bound for bank rate is the current 0.1%.” Warning of downside economic risks that lie ahead, the report continues: “With few options left we see the probability of the BoE cutting bank rate negative next year approaching 50%.”