HSBC was the last of the big UK banks to report results for the second quarter on Monday morning. The bank made $3.8bn of provisions in the quarter for loans it expects to sour, echoing a £2.1bn impairment charge at NatWest (the newly renamed RBS), £2.4bn in new provisions at Lloyds and £1.6bn at Barclays, which had taken a more conservative approach to provisioning in the first quarter. Analysts had expected $2.7bn in charges; last year the figure was $555m.
That left HSBC with just $1.1bn in pre-tax profits for the quarter, down more than 80 per cent from last year’s second-quarter figure and by two-thirds from the first quarter of the year.
Unlike the rest of the big four UK high street banks, HSBC makes most of its profits from Hong Kong, and it said its Asia franchise had showed resilience. But it also warned of the threat to its business from tensions between the US and China. After suspending its dividend in March along with other London-based lenders after pressure from the Bank of England, HSBC said it was now reviewing its future policy on the payout.
Landlord Hammerson has confirmed it is in advanced talks about offloading its stake in its European shopping outlets to joint venture partner APG, and is considering a rights issue to shore up its balance sheet. Even after sites in Europe have started to reopen, rent collection for the third quarter only stands at 30 per cent.
GSK and Sanofi are also in advanced talks, this time with the EU about the supply of up to 300m doses of a potential Covid-19 vaccine. Last week the two drugmakers struck a deal with the UK government to supply up to 60m doses of the jab, and one with the US to supply 100m.
Insurer Hiscox increased its reserves for Covid-19 related claims, to $232m from $150m. Hiscox has been one of the insurers at the centre of the spat over business interruption cover — it has previously estimated business interruption claims could cost it anything between £10m and £250m (net of reinsurance) depending on the outcome of an FCA test case winding its way through the courts. This morning it acknowledged that the dispute — a “defining issue for the industry” — also had a reputational impact.
Finally, estate agent Winkworth said last month was its busiest July in at least the past five years, with the changes in stamp duty having “turbo-charged” the UK property market. Online agent Purplebricks also reported its highest-ever month for instructions in the UK, listing more than 7,000 homes in July. It warned the outlook for the second half of the year still looks wobbly, though.
Beyond the Square Mile
Microsoft is to press ahead with talks to buy TikTok’s US operations from the video app’s Chinese owner ByteDance despite the reservations of Donald Trump, following a conversation between chief executive Satya Nadella and the US president. Microsoft also revealed that the potential transaction would include TikTok’s business in Canada and its Australia and New Zealand operations. The Trump administration has repeatedly raised fears that Chinese ownership of TikTok could put the personal information of 100m American users into the hands of the Chinese government and threatened to ban the app on Friday.
Donald Trump’s longtime private banker at Deutsche Bank, Rosemary Vrablic, is facing an internal investigation into the terms of a previously-unknown apartment deal between her and a company co-owned by the US president’s son-in-law, Jared Kushner. Ms Vrablic’s 2013 purchase of an apartment linked to Mr Kushner came to light after his latest annual financial disclosures, which are required because he is a senior adviser in the White House.
Wirecard processed payments for a Maltese online casino that was later revealed to have laundered money for a powerful arm of the ’Ndrangheta, one of Europe’s most dangerous mafia organisations. Italian legal sources and documents seen by the Financial Times confirmed that, up to 2017, Wirecard processed payments for CenturionBet, a Malta-based gaming company that was later judged by Italian courts to have been used by organised criminals to move cash out of the country in a sophisticated money laundering operation.
Essential comment before you go
Andrew Hill Planning for the zombie apocalypse is helping companies and other organisations prepare for a potential second wave of coronavirus.
Pilita Clark The longer remote working goes on, the more it is starting to pall. Both managers and the managed are starting to feel the strain and for many, there is no end in sight. But there may be a simple fix.
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