Daily Mail - 05.03.2020

Daily Mail, Thursday, March 5, 2020^

City Editor: Alex Brummer http://www.thisismoney.co.uk Business Editor: Ruth Sunderland

City Finance

£39 billion

funds made available

by the IMF to fight

the coronavirus

Lifeline for firms

crippled by virus

by James Salmon

PLANS to provide emergency loans

to stop small firms going bust dur-
ing the coronavirus crisis are being

drawn up by officials at the Bank of

England and the Treasury.
Andrew Bailey, who takes over as Bank
Governor on March 16, told MPs he has
discussed ways to help British business
grappling with the outbreak with Chan-
cellor of the Exchequer, Rishi Sunak.
Describing Covid-19 as the ‘most pressing
issue that we face’, he said he would ‘have
to move quickly’ to address the threat of
the disease on employers and the wider
economy when he takes over from Mark
Carney.
The comments came as Bailey was quizzed
by MPs on the Treasury committee about
his suitability to be Governor.
The 60-year-old, who is chief executive of
the Financial Conduct Authority (FCA),
said: ‘I think it is quite reasonable to expect
that we are collectively going to have to
provide some form of supply-chain finance
in the not-too-distant future to ensure the
shocks from the virus are not too damaging
to firms... particularly to small firms.
‘We will have to move very quickly to do
that. I have met the Chancellor and we have

SALES at the world’s best-known dia-

mond group have been hit.

De Beers said demand has slumped

in China, the biggest luxury goods

market, which makes up around 15pc

of world sales.

Rough diamonds sales fell 28pc to

£278m at its second auction of the

year, compared with the same

period last year. That was 35pc down

on the £431m in the previous sales

round, reversing what seemed to be

an industry recovery.

De Beers boss Bruce Cleaver said:

‘Following an improvement in

demand for rough diamonds during

the first sales cycle, we recognised

the impact of Covid-19 on customers

focused on supplying the Chinese.’

Intu on the rocks as shares crash to new low

SHARES in Intu crashed to record lows by Matt Oliver
after the shopping centres owner aban-
doned plans to raise up to £1.5bn – fuelling
fresh fears over its future.
The troubled company hoped the emer-
gency cash call would cut its £4.5bn debt as
it grapples with falling rental incomes.
But it scrapped the move as ructions on
financial markets triggered by the coronavi-
rus made investors reluctant to commit.
It came just weeks after Hong Kong inves-
tor Link Real Estate Investment Trust
pulled out of the fundraising.
Intu said: ‘Intu has engaged in extensive
discussions with shareholders and poten-

tial new investors regarding a possible

equity raise. Following these discussions,

Intu has concluded it is unable to proceed.

‘The board believes the uncertainty in the

equity and retail property investment mar-

kets precluded a number of potential inves-

tors from committing capital.’

The setback was a major blow to boss

Matthew Roberts’ turnaround efforts and

triggered a brutal sell-off. The shares hit a

record low, down 41pc, or 4.36p, to 6.28p,

leaving its market capitalisation at £85m.

That knocked £16m off the value of tycoon

John Whittaker’s 27.3pc stake, held through

Peel Group, which was worth just £23m.

The turmoil sent shares in its rivals

Hammerson, British Land and Capital &

Counties tumbling.

Analysts at Peel Hunt branded the Intu’s

shares ‘increasingly worthless’. They have

fallen 80pc in the past year. Intu, which

owns the Trafford Centre in Manchester

and Lakeside in Essex, insisted it was still

discussing options to tackle its debts.

It said these could include restructuring

the debts, trying to raise cash again at a

later point, or selling more properties.

The company banked about £200m last

year by selling Spain’s largest shopping

centre in Zaragoza. Its property portfolio

was worth £8.4bn overall as of June.

But it said that if the value of that portfo-

lio continues to fall it could be at risk of

breaching the terms of its overdrafts –

potentially triggering demands for repay-

ments of about £143m.

It may have to repay another £34m in

loans if its rental income drops 10pc.

Liberum analysts Tom Musson and Chris-

topher Spearing said Intu faced having to

sell its properties at a discount.

Analysts at JP Morgan Chase said: ‘Intu is

between a rock and a very hard place.’

coronavirus chaos

R E C E S S I O N F E A R S T h e

coronavirus outbreak threatens

to plunge France and Italy into

recession, European finance

ministers have been warned.

Both France and Italy con-

tracted in the final quarter of

last year and could do so again

in the first quarter of this year,

leaving them in recession.

The warnings came in a Euro-

pean Commission briefing note

on the impact of the outbreak

seen by Bloomberg.

CANADIAN CUT Canada’s

central bank has cut interest

rates to help shield the economy

from the coronavirus.

Just a day after the Federal

Reserve made an emergency

cut to borrowing costs in the

US, the Bank of Canada fol-

lowed suit by reducing rates

from 1.75pc to 1.25pc.

‘It is likely that as this virus

spreads, business and consumer

confidence will deteriorate,’ the

bank added.

AIRLINE GROUNDED Low-

cost European carrier Wizz Air

has revealed plans to slash

routes, cut costs and freeze

recruitment as part of measures

to offset plunging demand amid

the outbreak.

T h e a i r l i n e s a i d t h a t i t

will reduce flights from March

11 to countries affected by the

virus – mostly to Italy – and is

looking at cutting capacity by

about another 10pc between

April and June.

BOOKING BLUES Budget

travel accommodation website

H o s t e l w o r l d h a s w a r n e d

that the disease has led to big

falls in bookings.

The spread of Covid-19 since

late January has prompted peo-

ple to travel less, and therefore

there is less demand for places

to stay.

The company said: ‘As the

coronavirus has spread from

r e g i o n t o r e g i o n , w e h a v e

observed a material reduction

in bookings and an increase in

marketing cost as a percentage

of net revenue.’

SALES SURGE Cook-it-your-

self food delivery service Mind-

ful Chef has seen a massive

increase in the last week as fears

surge in the UK.

The business, which delivers a

box of ingredients to customers’

front doors, said that deliveries

had increased by 165pc in the

last week.

In other countries gripped by

the virus, such as China, there

has been an increase in deliver-

ies as people self-isolate.

■

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DIaMonD

sales lose

sparkle

As Bank and Treasury hold emergency talks...

Page 81

talked about this.’
Bailey said support could be
provided by the Bank, which is
drawing up plans, or the Govern-
ment. He said officials would ‘look
closely at evidence’ before launch-
ing any emergency package.
A string of companies have
warned their supply chains have
been hit by Covid-19, which has
locked down much of the Chinese
economy and is wreaking havoc.
There are fears that small firms
in supply chains may run out of
cash, and be unable to obtain a
loan to keep going. It is reported
that high street banks are already
rolling out emergency loans to
firms across the UK amid fears

that factory disruptions in China

are threatening supply chains and

cash flow.

Barclays, Santander and Royal

Bank of Scotland have begun con-

tacting thousands of business

customers to check if they are

under financial strain and need

overdrafts or short-term loans.

Sunak has promised more help

for households and businesses in

his first Budget next week, with

the Treasury expected to spend

billions to manage the impact of

the epidemic.

As the Bank of Canada became

the latest central bank to slash

interest rates, Bailey also refused

to rule out an emergency cut, ech-

oing the move by the US Federal

Reserve on Tuesday.

The Bank of England’s Monetary

Policy committee which sets inter-

est rates is not due to announce

its decision until March 26, but

can cut rates before then.

The urgency was underlined yes-

t e r d a y b y I n t e r n a t i o n a l

Monetary Fund boss Kristalina

Georgieva who said the rapid

spread of coronavirus will wipe

out any chance of stronger growth

this year.

The Washington-based eco -

nomic watchdog now expects glo-

bal growth to fall short of the

2.9pc registered last year. Appear-

ing in front of MPs, Bailey also

faced questions over his track

record at the FCA. MPs took turns

to criticise the regulator for being

slow to protect consumers during

a series of scandals including the

fall of London Capital & Finance

and the implosion of Neil Wood-

ford’s investment empire.

Bailey said the FCA had tackled

high-cost consumer credit and

launched insider trading cases,

which resulted in a conviction.

In a message to his successor, he

said the role at the FCA was ‘hell-

ishly tough’. He added: ‘But I

don’t regret it for a moment.’