BANKING
Small firms could miss out on Bounce Back loans
Concern has been raised that a lack of uptake for the Government’s Bounce Back Loan Scheme (BBLS) by lenders may mean small firms hit by the coronavirus crisis are at risk of missing out on support. So far, just eight banking groups been authorised to handle applications for the scheme, and most are restricting loans to their own business customers. This raises the possibility that small businesses in need of finance will face delays unless they bank with the larger lenders . Suren Thiru, head of economics at the British Chambers of Commerce, said: “The low number of accredited lenders is troubling as it could see firms who use other lenders effectively locked out of the scheme.” Mr Thiru has urged the Government and British Business Bank to “pull out all the stops to ensure the scheme has sufficient capacity to meet demand”. “This should include an expedited process for accrediting new lenders, including specialist non-bank lenders such as fintech firms,” he added. Meanwhile, Mike Cherry, national chairman of the Federation of Small Businesses, says full transparency over the loan scheme is “a must”, adding: “All accredited banks should be publishing details on applications, approvals and declines – as well as the speed with which money is reaching accounts after approval”. Meanwhile, alternative lenders have asked the Bank of England for funding support, saying the BBLS will hurt competition in the market for loans to small businesses.
Lloyds pays £1bn Bounce Back loans
Lloyds Banking Group has paid more than £1bn to small businesses as part of the Government's Bounce Back Loans Scheme (BBLS), just a day after it launched. The lender’s Gareth Oakley said more than 32,000 of its small business customers applied for a loan on Monday. RBS said that it had received 58,000 Bounce Back loan applications on Monday and Tuesday, with an average loan of £37,000, while Santander said it received 27,591 applications by yesterday afternoon and over 68,000 businesses had asked HSBC for loans as of Tuesday evening. Meanwhile, some applicants said Barclays’ systems were struggling to keep pace with demand, with some taking to social media to complain of error messages. Despite the issue, Barclays has approved 32,000 bounce back loans.
2m taking mortgage holidays
Analysis by Capital Economics shows that around 2m home-owners are on mortgage holidays. This equates to almost a fifth of mortgage holders in the UK and is 400,000 more than the last official figure of 1.6m. The analysis looked at data from the five biggest banks and scaled up for the wider industry, including building societies. The five largest banks, which account for 57% of residential mortgages, reported 1.15m customers on mortgage holiday last week, led by Lloyds with 404,000 and Barclays with 238,000.
Santander cuts rate on savings account
Santander is reducing the rate on its flagship 123 Current Account from 1% to 0.6%. The change, on balances up to £20,000, follows a cut from 1.5% in January. The new rate applies as of August 3.
Pandemic and defaults
Katherine Griffiths in the Times looks at Lloyds’ 2016 acquisition of credit card business MBNA and CYBG snapping up Virgin Money in 2018, considering the moves with respect to the current climate and the impact credit defaults in the wake of the coronavirus pandemic may have.
PRIVATE EQUITY
Serie A the goal for CVC and Blackstone?
CVC Capital Partners and Blackstone are each in talks about investments in Italy’s Serie A. CVC is in talks to buy a 20% stake in the football league for €2bn, while Blackstone is considering lending to clubs to help cover their costs during the shutdown of fixtures.
INTERNATIONAL
BNP Paribas issues profit warning as result of coronavirus
Full-year earnings at BNP Paribas will suffer “major repercussions” from the coronavirus pandemic, the bank has announced, after net income in the first quarter fell 33.2% to €1.28bn. Chief executive Jean-Laurent Bonnafe noted: “The good resilience of revenues and results despite this shock demonstrates the robustness of the group’s diversified and integrated mode.”
Goldman Sachs: No return for London and NY staff yet
Goldman Sachs CEO David Solomon says that while it is gradually returning staff to work at offices in Hong Kong, Sweden and Israel, it will take longer to roll out the phased-in approach in cities still battling large coronavirus outbreaks, like London and New York.
ME Bank urged to reverse limit decision
ME Bank should reverse its decision to suddenly reduce the amount tens of thousands of customers can redraw from their home loans, Australia’s union body ACTU has urged.
AUTOMOTIVE
Car sales lowest since 1946 in UK
The Society of Motor Manufacturers and Traders has revealed that the number of new car sales in the UK was down 97% in April. SMMT chief executive Mike Hawes remarked: “With the UK’s showrooms closed for the whole of April, the market’s worst performance in living memory is hardly surprising… A strong new car market supports a healthy economy and as Britain starts to plan for recovery, we need car retail to be in the vanguard.” Only 871 cars went to retail customers last month, with the rest of the 4,321 cars sold going to fleets or business buyers.
AVIATION
Virgin Atlantic to cut 3,150 jobs
Virgin Atlantic will cut a third of its workforce and cease its operations at Gatwick airport due to the coronavirus crisis. Announcing that 3,150 of its 10,000 staff will lose their jobs, the firm said it had been forced to take decisive action in order to reduce costs and preserve cash. The carrier added that it is continuing to “explore all available options to obtain additional external funding”. The job losses follow similar moves at rival carriers, with British Airways and Ryanair recently announcing cuts of 12,000 and 3,000 jobs respectively.
Qantas non-stop London and NYC flights plan postponed
Plans to commence non-stop flights to London and New York have been suspended by Australian flag carrier Qantas as a result of the coronavirus pandemic. Plans to purchase 12 Airbus SE A350 planes were also put on hold, with Qantas chief executive Alan Joyce saying international travel demand could take years to recover to pre-crisis levels.
FINANCIAL SERVICES
Watchdog falls short over pension transfer advice
The Telegraph’s Jessica Beard says the Financial Conduct Authority (FCA) has “fallen significantly short” in tackling poor pension transfer advice, saying it has failed to crack down on rogue advisers. She points to data showing that while the City watchdog suggested that nearly 1,400 firms fall below required standards, it launched just 27 investigations in 2019 – a 59% decline on the 39 probes carried out in 2018. The analysis shows that just eight individuals have been penalised over issues related to pension transfers over the past five years.
JPMorgan Chase among new backers for paperless voting fintech
JPMorgan Chase, HSBC, Deutsche Bank. State Street and BNY Mellon are investing $20m in online shareholder voting platform Proxymity, which is being spun out of Citigroup's venture arm.
Interest rates for Ratesetter investors lowered
Peer-to-peer platform RateSetter is lowering interest rates for investors by utilising a previously unused clause in its terms and conditions. Customers will now receive 2%, 1.75% or 1.5% interest, depending on their investment plans.
LCF compensation decisions expected this month
The Financial Services Compensation Scheme (FSCS) is to begin issuing decisions on London Capital & Finance (LCF) claims relating to misleading customer advice.
LEISURE AND HOSPITALITY
August return planned by cruise line
Carnival Cruise Line is planning for services to resume on August 1, with eight ships sailing from Miami, Galveston and Port Canaveral.
MEDIA AND ENTERTAINMENT
Vodafone to crash O2-Virgin Media party?
Industry experts suggest Vodafone could seek to gatecrash the proposed merger between O2 and Virgin Media, with the firm having previously been linked with a deal with Virgin Media. Kester Mann, a telecoms analyst at CCS Insight, believes the O2 news may prompt Vodafone to make a rival offer, while James Craven at GCA Altium says a bidding war may be on the horizon. Analysts at HSBC have suggested that Vodafone's bosses are debating “whether to crash the party”.
Sky free advertising fund for small firms launched
Sky has launched a £1m fund to provide free TV advertising campaigns to 100 small firms affected by the coronavirus pandemic. It will be delivered through the company’s Adsmart platform.
REAL ESTATE
UK property groups plead for extended business rates holiday
Over 50 commercial property firms have warned the government that without assistance, many companies risk bankruptcy, calling for all sectors of the economy to benefit from a business rates holiday.
Grosvenor announces cautious approach as profits fall
Grosvenor Group is to adopt a “very cautious stance” on new investments as profits fall due to the coronavirus pandemic, with chief executive Mark Preston stating: “It is only right and sensible to take our time on any new purchases or projects until we know more about how we will emerge from this.” Revenue profit was down to £65.9m from £131m in 2019.
RETAIL
Ocado faces revolt over executive pay
Shareholder advisory service Glass Lewis has recommended that investors reject Ocado’s remuneration report because of the “excessive compensation” awarded to the online grocer’s executives, with ISS and PIRC offering similar recommendations. Royal London Asset Management, which holds a 0.3% stake, has declared an intention to vote against the pay report.
SPORT
EFL clubs face £200m financial hole
Considering the impact the coronavirus crisis could have on the finances of the English Football League, chairman Rick Parry has warned clubs face a £200m financial hole by September.
Cancelled events lead Spurs to take financial hit
Tottenham Hotspur will miss out on more than £10m in revenue as a result of the cancellation or postponement of stadium events due to the COVID-19 pandemic. The club is largely dependent on money made through its £1bn stadium, with loan repayments still owed.
ECONOMY
Index slump prompts recession warning
The coronavirus crisis may be driving the UK toward the worst recession in living memory, with concerns raised after a closely watched survey revealed the dominant services sector contracted at the fastest pace on record. The latest IHS Markit/Cips composite purchasing managers’ index for the UK fell to 13.8 last month, representing the lowest score in over two decades on an index where anything below 50 represents decline. Nearly 80% of companies reported a drop in activity in April, compared with 43% in March. Tim Moore, economics director at IHS Markit, commented: “April’s PMI data highlights that the downturn in the UK economy during the second quarter of 2020 will be far deeper and more widespread than anything seen in living memory.”
Extended lockdown would put 1m firms at risk
A report from the Centre for Economics and Business Research (CEBR) think-tank and polling company Opinium shows that 591,000 businesses are at high risk of going bust as a result of the COVID-19 pandemic – a figure representing one in ten UK businesses. The study also suggests that more than a quarter of a million firms will not survive if the lockdown lasts for another month, while 1.1m firms could collapse if the lockdown rolls on for another three months. Pablo Shah, senior economist at CEBR, said that the findings “provide the first glimpse of the deep and long-term scars that the coronavirus crisis is set to inflict upon the UK economy”.