Banks lend £31bn in Bounce Back Loans
New government data indicate that UK firms have received £30.9bn worth of Bounce Back Loans to help support them following the impact of COVID-19. The figures from the Treasury show that 1.01m such loans have been made. The Treasury also said that more than 53,500 Coronavirus Business Interruption Loans have now been approved, providing £11.5bn worth of funding, and 783 applications worth more than £2.5bn have now been approved for larger firms using the Coronavirus Large Business Interruption Loan Scheme (CLBILS). Meanwhile, HSBC has left small businesses waiting a month or more for their loans, according to a report in the Mail.
Challenger forced to halt Bounce Back lending
The Times reports that fintech firm Tide has been forced to stop lending under the Bounce Back Loan Scheme because third-party funders were not willing to provide the capital. They cited a reticence to back a competitor and poor returns given the low interest rate. Tide has provided less than £100m worth of credit via the programme and had almost 70,000 companies on its waiting list for a loan. Oliver Prill, Tide’s chief executive, called on the Government to step in to provide wholesale finance so that the company could resume lending.
Savers hoard cash during lockdown
Figures from NatWest show mortgage applications fell by 64% across the UK during lockdown while savings are up by £3.7bn nationwide. However, disposable income has fallen for about 40% of the population. Separately, Bank of England figures show savers withdrew cash from Isas at a record pace as dismal returns mean customers can earn more interest with an ordinary savings account.
Lloyds proves merit of being sensible
The FT argues that the next CEO of Lloyds should heed the lessons of the past and ignore the siren calls of international diversification - and concentrate on making the UK bank fit for the future.
Deutsche Bank fined over Epstein compliance failures
The New York Department of Financial Services (NYDFS) has fined Deutsche Bank $150m for compliance failures in connection with its relationship with Jeffrey Epstein, as well as with Danske Bank's Estonia branch and the Federal Bank of the Middle East. The NYDFS accused Deutsche Bank of “a series of procedural failures” and “sloppiness” in how it dealt with Epstein’s accounts. It also said the bank, which agreed to the payment under a consent order, had “failed to properly monitor” activity on the late disgraced financier’s account. This was despite “ample” information concerning the circumstances surrounding his earlier criminal misconduct.
Banks in line for $24bn in PPP fees
The US aid program for small businesses stricken by the coronavirus shutdown could net lenders $24.6bn in processing fees. JPMorgan, Chase and Bank of America are in line to split between $1.5bn and $2.6bn for being the conduits of the Paycheck Protection Program. In addition to the program’s fees, banks are also set to earn 1% in interest on PPP loans they hold that aren’t forgiven, but larger banks have said they intend to donate any profits they make on PPP.
BaFin restructures in light of Wirecard failings
Germany’s financial services regulator BaFin is to be restructured following the Wirecard scandal, which saw the regulator widely condemned for failing to act on warnings about the company. Meanwhile, the FT reports that Deutsche Bank has emerged as one of the potential suitors of Wirecard's payments processing business.
Deutsche Bank signs multi-year strategic deal with Google
Deutsche Bank has chosen Google over Microsoft, Amazon and others for a strategic partnership that will overhaul the bank’s back-end technology. The deal is part of a €13bn technology investment plan Deutsche has mapped out until 2022, as it restructures to recover from five consecutive years of losses.
HSBC to cut jobs in French unit
A report in Les Echos indicates HSBC is planning to cut 255 of 678 jobs in its French global banking and markets unit by the end of 2021. The bank is in the process of cutting around 35,000 jobs worldwide.
Ineos pauses Welsh factory plans
Proposals by Ineos Automotive to build a new off-road vehicle in the UK could be abandoned after “opportunities thrown up by COVID-19” led the firm to investigate a deal to buy the Hambach plant in France from Mercedes owner Daimler. This comes despite the Welsh government beginning to clear a site near Bridgend in preparation for construction of a factory Ineos was to have built there.
Logistics firm trims staff working for JLR
DHL has told unions 2,200 workers involved with its Jaguar Land Rover contract will be laid off. The job cuts will affect full-time and agency staff involved in shipping parts to, from and within plants at all at JLR's major factories.
City workers embrace homeworking shift
The Times highlights how City workers have responded to the widespread switch to homeworking ushered in by the COVID-19 pandemic. It says many bosses have been surprised by how successful they have found the transition, which could result in permanent changes to the way in which businesses operate. Goldman Sachs has said it will allow its employees to hold on to their home trading kit for the foreseeable future, even though staff are beginning to return to the office. And at Schroders, the fund management firm, senior executives will be working remotely at least one day a week from now on to encourage flexible working among the workforce. However, while a legacy of the pandemic is likely to be a more widespread acceptance of home working, the crisis also has highlighted its drawbacks. Andrew Croft, chief executive of St. James’s Place, comments: “We all have our own anxieties and concerns, but the hardest thing I’m finding at the moment is the demarcation line between home and work. It’s all very blurred. I’m looking forward to getting into the office more.”
Virus crisis exposes tensions over tighter controls for investment funds
The Financial Conduct Authority is resisting calls for stricter rules on investment funds, despite the Bank of England pushing for tighter controls to prevent them becoming a source of contagion in financial markets. The FCA’s Nausicaa Delfas said: "It's important that we recognise that the non-bank sector is critical in enabling recapitalisation of companies to promote growth and recovery from the pandemic".
Lansdowne closing main hedge fund
Lansdowne Partners plans to close its main hedge fund in a move that will significantly scale back the firm’s short-selling activities. The group has told its investors that it will shut its $2.8bn Developed Markets Fund after a prolonged period of underperformance.
Hardline Brexit stance threatens City market access, UK warned
Luxembourg’s finance minister, Pierre Gramegna, an advocate of close links between the City and the EU, voices fears that Britain’s demands for enhanced equivalence contradict its desire for regulatory divergence.
LEISURE & HOSPITALITY
Whitbread reports increasing demand for bookings
Whitbread has reported healthy demand for bookings in traditional tourism destinations even as it revealed a fall in sales of 79.4% in the first quarter. The company has opened 270 hotels in the UK and 24 restaurants and said the majority of the rest of estate was due to open this month. CEO Alison Brittain has been tipped to succeed Antonio Horta-Osorio at Lloyds, but she insisted she had her “hands full” with her current job.
Polypipe issues redundancy warning
Doncaster-based Polypipe, one of Europe's biggest manufacturers of plastic pipe systems, has warned that it could lay off 250 employees, or 8% of its workforce as it adjusts to lower levels of demand.
MEDIA & ENTERTAINMENT
New corporate communications group to form from merger
A new corporate communications firm is to be formed from a merger of Finsbury, Glover Park Group and Hering Schuppener, aiming to provide firms with a one-stop shop for dealmaking, crisis management and lobbying advice. Alexander Geiser, managing partner of Hering Schuppener, is to become chief executive of Finsbury Glover Hering, which will have over $200m in combined revenues, while Mark Read, chief executive of WPP, will join the board of the new group.
Chancellor to announce immediate stamp duty cut
Rishi Sunak is expected to announce an immediate cut to stamp duty to boost the housing market. However, it is not yet known whether the temporary tax break will apply just to first-time buyers or all house purchases. The Chancellor is expected to raise the threshold from £125,000 to £500,000 – properties costing £500k accounted for nine in 10 of all transactions last year.
Sunak to unveil 'kickstart jobs scheme' for young people
Rishi Sunak will today announce a new scheme to stave off youth unemployment as part of attempts to revitalise the economy following the COVID lockdown. A new £2bn "kickstart scheme" will subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment. The Government said it would lead to "hundreds of thousands of new, high-quality government-subsidised jobs". The Chancellor is expected to make his summer statement at 12:30 BST after PMQs, with changes to stamp duty and VAT also expected, alongside a £3bn programme to make homes and public buildings more environmentally friendly.
GDP to fall 11% this year, providing there’s no second wave
A report from the Centre for Economics and Business Research forecasts GDP will fall 11% this year - but only if there is no large-scale second wave of coronavirus or another national lockdown. It warns that another peak in the pandemic and lockdown would send Britain's GDP tumbling 19% and see exports fall by 23%.
Italian mafia bonds sold to global investors
Documents seen by the FT show how international investors bought bonds backed by the crime proceeds of Italy’s most powerful mafia.