Finance

British finance proposes repackaging state-backed coronavirus loans

By Huw Jones

LONDON (Reuters) – Britain’s financial sector is proposing the repackaging of some 35 billion pounds ($44 billion) of state-backed coronavirus corporate relief loans to ensure taxpayers do not foot the bill.

The British government introduced the state-guaranteed loans after a coronavirus lockdown in March forced thousands of companies large and small to shut for several months.

“Many business are swimming hard to stay afloat and they can’t face up to the challenge of repaying the debt,” TheCityUK Chair Adrian Montague told a City & Financial online event.

TheCityUK said it will send its report recommending the transfer of state-guaranteed debt into an arm’s length body to Britain’s finance ministry this month.

“The debt can then be replaced either by some kind of tax paying obligation that the report recommends, or converted into long-term capital,” Lloyd’s Bank Chairman Norman Blackwell said.

The government or the new body would then have to find ways to bring in private finance and remove it from the public sector balance sheet “at an appropriate discount”, Blackwell added.

Recapitalised firms would retain control of themselves.

Repayments on the loans, which are administered by banks, are due to start in March. But a third of businesses that took them will struggle to repay unless they are recapitalised, Omar Ali of EY consultancy said.

“We are talking broadly about 35 billion pounds of lending in government schemes by that point potentially becoming unsustainable,” Ali said. Around 750,000 small and medium sized companies and over 3

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Corruption at City Hall won’t end without campaign finance reform

FBI agents removed items from L.A. City Councilman Jose Huizar's Boyle Heights residence during a raid in 2018. <span class="copyright">(Los Angeles Times)</span>
FBI agents removed items from L.A. City Councilman Jose Huizar’s Boyle Heights residence during a raid in 2018. (Los Angeles Times)

To the editor: For far too long, Los Angeles City Council members have handed out high-value zoning and land-use exemptions to deep-pocketed developers, and I share the L.A. Times Editorial Board’s conviction that this must stop.

But I take issue with your observation that councilmembers’ “unchecked power over land-use decisions” constitutes the “larger problem.”

Granted, approvals for projects like the Arts District high-rise you mention in your editorial violate the rule of law, undermine real planning and disfigure the city. But the larger problem is the inherently corrupt practice of funding campaigns with donations from special interests.

Developers are not the only special interest benefiting from the city’s pay-to-play system. The dependence of officeholders on their campaign donations enables police unions to evade transparency and accountability and allows numerous public employee unions to “negotiate” indefensible pay schemes and unsustainable retirement benefits.

Until we step up with public campaign funding, we will continue to get the best government money can buy.

Shelley Wagers, Los Angeles

..

To the editor: The Editorial Board’s suggestions for ending corruption at City Hall are all good, although I think they live on the edge of the problem. Here are three that I believe go to the core.

First, publicly funded elections would prevent institutional bribery through campaign contributions.

Second, public oversight of council members’ private finances would ensure that any unexplained influxes of

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FCA to tell lenders to extend payment freeze on car finance and high-cost credit

New and nearly new cars are displayed for sale on a forecourt of a car dealership. (Matt Cardy/Getty Images)
New and nearly new cars are displayed for sale on a forecourt of a car dealership. (Matt Cardy/Getty Images)

The UK’s Financial Conduct Authority (FCA) on Friday indicated that it will tell rent-to-own firms, car finance providers, and pawnbrokers to keep offering payment freezes to borrowers in financial difficulty in the wake of the coronavirus crisis.

Under extended proposals, customers who have yet to request a payment freeze would also have until 31 October to do so, the FCA said.

Under a payment holiday announced in April, the FCA ordered firms to give drivers a three-month freeze on payments if the pandemic had left them in temporary financial difficulty. It told firms not to end agreements or repossess vehicles for such customers.

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Firms offering rent-to-own, “buy now, pay later” and pawnbroking agreements were also expected to provide a three-month payment freeze for struggling customers.

Customers who have already sought support under these initiatives would be entitled to further support, such as payment deferrals or reductions, for a further three months, the watchdog said.

The ban on repossessions should also continue until 31 October, it advised.

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The FCA said that it had opened a consultation on the proposals and welcomed comments from industry on them by the close of business on 6 July, noting that it expected to finalise the guidance to

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No politics, please! Hong Kong finance professionals impose self-censorship after security law

By Sumeet Chatterjee and Scott Murdoch

HONG KONG (Reuters) – A year ago, growing anti-government demonstrations in Hong Kong were a hot topic in conversations among bankers, lawyers and other investment professionals in one of the world’s biggest and freest financial hubs.

On Thursday, two days after China imposed a controversial new security law on the city, you could almost hear a pin drop. Bankers were tight lipped, shunning any mention of the legislation over the phone or messaging apps in a sign of how much disquiet it has triggered.

More than half a dozen people Reuters spoke to said they chose not to talk about the impact of the law on their businesses with their colleagues and external contacts, though there had been no such official instruction from their respective organizations.

The sweeping legislation pushed the semi-autonomous city, which is the regional home for a large number of global financial companies, on to a more authoritarian path.

The law punishes crimes of secession, subversion, terrorism and collusion with foreign forces with up to life in prison.

While it doesn’t directly impact the financial sector, its provisions including giving a special police unit extra powers of search, electronic surveillance and asset seizure that have stoked concerns among some professionals.

‘IT COULD CHANGE THE WAY WE COMMUNICATE’

Both Hong Kong and Chinese government officials have said the law is vital to plug gaping holes in national security defences exposed by months of sometimes violent protests against the local government and Beijing

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