TFG Trade Briefing, 21st October 2019

Your Monday morning coffee briefing from TFG. Here are some of the last week’s updates from the trade sector. Bank of England has warned that the world economy is increasingly risky as ultra-low interest rates drive banks, pension funds and insurers to make dangerous financial decisions in search of returns. FCA proposed a new version of the Climate Change disclosure guidelines. The European Council appointed Christine Lagarde to be the President of the European Central Bank. Brexit insolvency fears boost demand for trade credit insurance.

What happened last week?

Sir Jon Cunliffe issues warning over ultra-low rates

Bank of England Deputy Governor Sir Jon Cunliffe has warned that the world economy is increasingly risky as ultra-low interest rates drive banks, pension funds and insurers to make dangerous financial decisions in search of returns. Speaking at the Society of Professional Economists’ annual conference, Sir Jon also warned that households and businesses are taking on bigger debts, which may be affordable now but which could cause trouble if a recession strikes. Read more →

FCA introduces new guidelines on climate change and green finance transparency

The investment sector is set to become more transparent with a number of green business initiatives as part of the Financial Conduct Authority’s (FCA) proposed climate change disclosure guidelines. Company disclosures around climate change and regulated firms’ green business risks and opportunities will be closely scrutinised under the financial watchdog’s new proposals. Chief executive Andrew Bailey said: “This feedback statement is the next step in our drive to provide clarity for firms and consumers about how our work will help support the response to the climate challenge and the development of the green finance market”. Read more →

FSB: Small businesses ‘exasperated’

Federation of Small Businesses (FSB) national chair Mike Cherry has warned that small firms are in a state of “exasperation” as Brexit-related matters keep other issues – such as late payment, business rates and rising costs – off the political agenda. He said: “There’s an element of almost exasperation rather than anything else. Our members were almost split 50-50 at the referendum and, remain or leave, they now just want to get on with this.” “They’ve been marched up the hill twice already and don’t want to be marched up a third time. They need clarity around what they’ve got to do,” he added. On measures that could help SMEs, Mr Cherry said the FSB wants the Government to reform business rates in the expected November Budget, as well as increase the National Insurance allowance for businesses creating jobs and working with people in hard-to-reach groups. Read more →

Funding Circle signs government charter to fund small firms

Funding Circle has signed up to a government scheme to fund small businesses “through Brexit and beyond”. The charter, formulated by the Department of Business, Energy and Industrial Strategy, commits lenders to five pledges that include supporting loan applications and alerting small firms to alternative forms of funding. Signatories also pledge to work with the government’s British Business Bank, which has helped channel £6.6bn of loans to almost 90,000 small firms since it was set up in 2014. Funding Circle UK managing director Lisa Jacobs added: “No matter the terms on which the UK leaves the European Union, Funding Circle will remain open for business. We have investors who are ready to lend to small businesses across all corners of the UK”. Other bankers include Ultimate Finance, and Natwest, which has raised available loans for small businesses by £2.2bn to £8.2bn. Read more →

Christine Lagarde appointed President of the European Central Bank

The European Council appointed Christine Lagarde to be the President of the European Central Bank for a non-renewable term of 8 years.Christine Lagarde will replace the outgoing President, Mario Draghi, as of 1 November 2019.

On 2 July 2019, the European Council considered Christine Lagarde to be the appropriate candidate for President of the European Central Bank. The Council (Economic and Financial Affairs) then issued a formal recommendation on 9 July 2019. The European Parliament and the European Central Bank delivered their opinions to the European Council, respectively on 17 September 2019 and on 25 July 2019. Read more →

Brexit insolvency fears boost demand for trade credit insurance

Companies are stepping up purchases of insurance to protect themselves against insolvencies in Britain, industry sources say, in part due to concerns about the impact of Brexit. UK insolvencies rose by 12% in the second quarter compared with a year earlier, according to government figures, bringing insolvencies to their highest level in five years. Read more →

Ship financing drops to the lowest level since 2008

According to Petrofin’s research, a significant $44.3bn has been knocked off the portfolios of the top 40 banks over the last year. Global bank finance stands at the lowest level of the last 12 years. Banks are well underway in addressing their non-performing loan portfolios and some, like Nord LB are progressing rapidly with the sale of their portfolios. Others are concluding the process that started years ago. Compared to 2010, the European share of the global ship finance market has dropped from 83% to 58.7%. Far Eastern share stood at 34.8% in 2018 compared to 35.07% in 2017, still representing a significant rise since 2010 of approx. 140%. Regarding the American banks, they now occupy 6.48% of the market. Read more →

Want to find out more about digital trends in the alternative and receivables finance? TFG has partnered up with BCR at both their Alternative & Receivables Finance Forum and Masterclass in November.