BARC.L - Barclays PLC

LSE - LSE Delayed price. Currency in GBp
+5.80 (+5.18%)
At close: 4:35PM BST
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Previous close111.96
Bid117.70 x 0
Ask117.70 x 0
Day's range111.00 - 118.06
52-week range73.04 - 192.99
Avg. volume65,196,415
Market cap20.425B
Beta (5Y monthly)1.23
PE ratio (TTM)10.15
EPS (TTM)11.60
Earnings date29 Jul 2020
Forward dividend & yieldN/A (N/A)
Ex-dividend date27 Feb 2020
1y target est221.84
  • A Looming Contest For Unenviable Bank CEO Jobs

    A Looming Contest For Unenviable Bank CEO Jobs

    (Bloomberg Opinion) -- Plans for a change of leadership at two of Britain’s major banks could hardly be better timed. The economic shock of the pandemic, plus the uncertainty around Brexit, will probably demand a strategic reset at both Lloyds Banking Group Plc and Barclays Plc.Lloyds, the U.K.’s biggest mortgage lender, this week said Chief Executive Officer Antonio Horta-Osorio will step down in 2021 once a successor is found. While Barclays says no search is underway, the lender could seek a replacement for CEO Jes Staley as soon as next year and recently reached out to potential candidates, Bloomberg News reported.Just before markets turned in response to the spread of Covid-19, Lloyds’s stock price was roughly unchanged from its level when Horta-Osorio started in 2011, while Barclays’s shares were down nearly 25% under Staley. Both stocks have fallen sharply in the crisis this year, with the less diversified Lloyds the worst hit. They languish close to lows last seen during the financial and euro-zone debt crises, and trade at discounts to peers.In February, Barclays said Staley was being investigated by the U.K. regulator over how he characterized his relationship with deceased financier and sex offender Jeffrey Epstein. The board unanimously backed him after concluding Staley had been sufficiently transparent with the company. But questions around Barclays’s strategy have been mounting. Staley staked his success on maintaining a sizable securities unit that could compete with Wall Street peers. Among the handful of European firms that still aspire to run global investment banks, Barclays has the advantage of owning an established U.S. franchise through the Lehman Brothers business it acquired during the financial crisis.The approach has rightly attracted opposition. Activist Edward Bramson has been pushing for a retreat from trading given its relatively poor returns. Barclays’s U.K. commercial lending business posted a return on tangible equity of around 18% last year, compared with 8% at the investment bank. At the group level, ROTE stood at 9%.True, a trading surge in the first quarter of 2020 helped the securities unit post better returns than the U.K. business, which had to book provisions for loan losses. But it’s questionable whether this reversal will last once debt markets return to normal activity levels and volatility subsides.Barclays probably needs to dial back, be more selective in investment banking (as are BNP Paribas SA and Deutsche Bank AG) and look elsewhere for growth. Investors would likely reward a less volatile firm with a higher valuation, strengthening the shares as an acquisition currency. Buying a cheaper peer could go some way towards diluting the risk of the investment bank. That opportunity may however not present itself.In the meantime, a further pruning of U.K. retail branches (more than half are within a 10-minute drive of each other, according to analysts at UBS Group AG) and improving cross-selling in the consumer bank look like sensible and available options. All told, that could be enough to re-energize the strategy.As for Lloyds, after almost a decade on the job, Horta-Osorio is one of the longest-serving CEOs in European banking of his time. Having exited state ownership by repairing the balance sheet and becoming more efficient (the cost-income ratio is the envy of European peers) Lloyds is now wrestling with a margin squeeze in the cut-throat home-loans market. It is also exposed to prolonged U.K. economic weakness and any negative impact from Britain leaving the European Union.Horta-Osorio’s successor has little room for maneuver. Overseas expansion would be highly risky. That leaves pushing for further growth in wealth management and insurance, as is reportedly already envisaged. Aside from two dominant players, the U.K. market for financial advice is fragmented with one-third of advisers working for firms with fewer than five professionals. That’s an obvious target for a bank with many affluent account holders on its books.Despite the historically generous pay packets, running big lenders is not an enviable job. A candidate with a choice might find it easier to make a decisive break with the past at Barclays than at Lloyds.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Digital bank for 'mass affluent' set to launch later this year
    Yahoo Finance UK

    Digital bank for 'mass affluent' set to launch later this year

    Monument is targeting clients worth between £250,000 and £5m, putting it in competition against the likes of HSBC and Barclays.

  • Barclays Leapfrogs U.S. Rivals for Home Win in Equity Markets

    Barclays Leapfrogs U.S. Rivals for Home Win in Equity Markets

    (Bloomberg) -- Barclays Plc has notched a very British win in 2020.The London-based bank currently sits at the top of the rankings for equity offerings in the U.K., up from 4th place last year, according to data compiled by Bloomberg. If the trend continues, it would be only the second time in the past two decades Barclays has ended up as No. 1 for a full year.Barclays is leading rivals like Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. in a year in which the engine of revenue generation -- initial public offerings -- has been spluttering. The number of London IPOs is down 58% this year, the Bloomberg data show, because of the impact of the coronavirus on equity market sentiment.In contrast, the number of so-called accelerated bookbuilds in the U.K. is up 74% as companies seek to raise funds to help them weather the economic downturn. Barclays has found itself well-placed to advise on the emergency fundraisings in part thanks to its corporate broking team.“We have a strong corporate broking franchise around leisure, retail and business services which have all been very busy this year,” Tom Johnson, head of equity capital markets for Europe, the Middle East and Africa for Barclays, said in a phone interview.Wall Street DominanceCorporate broking is a uniquely British corner of investment banking, whereby firms provide go-to advice to listed companies on everything from strategy to shareholder engagement. They do so on an ongoing basis for nominal fees, in the hope that the relationships will secure them more lucrative roles on capital market transactions and acquisitions.A number of Barclays’s corporate broking clients have been heavily exposed to the Covid-19 crisis. Its clients include catering firms Compass Group Plc and SSP Group Plc and travel retailer WH Smith Plc, “which unfortunately for them were at the sharp end of the crisis,” Johnson said. All three raised fresh equity this year.In a pandemic-free environment, the capital market cycle would see transactions of various sizes as well as more IPOs, which could also explain why the usual banks haven’t managed to maintain their prime spots in the league table. Wall Street’s titans have been dominating the investment banking scene in Europe at the expense of local advisers, which makes Barclays’s current standing in the U.K. -- a key market -- all the rarer.‘Second Storm’Barclays has been strengthening its ECM business in recent years by investing in its research teams and making senior hires from rivals, including veteran bankers like Ken Brown from Nomura Holdings Inc. and Manuel Esteve from JPMorgan Chase & Co.The bank and its rivals could be about to benefit from a strong second half, with Johnson predicting a comeback in IPOs and rights issues.“We are expecting bigger deals, involving companies that need more capital, so they will likely come in the form of rights issues,” he said. “There’s also a chance that like the U.S. market, we will start seeing IPOs back on the agenda, so we are going to continue to see a fairly active ECM market.”Barclays’s own chief executive officer, Jes Staley, struck a cautious tone on the U.K. economy during a Bloomberg Television interview in late June: “We recovered more right now than what we would have thought a little bit ago, but there is that second storm coming in a couple of months.”For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Barclays Launches 65th Edition of the Equity Gilt Study
    Business Wire

    Barclays Launches 65th Edition of the Equity Gilt Study

    Barclays Research today released the Equity Gilt Study 2020 (EGS). The 65th edition of this flagship Barclays report delves into the long-term changes wrought by the COVID-19 pandemic and the extraordinary shocks it has delivered in both developed and emerging markets.

  • Barclays Informally Gauged Interest for CEO Staley’s Role

    Barclays Informally Gauged Interest for CEO Staley’s Role

    (Bloomberg) -- Barclays Plc has reached out to potential candidates in recent months to gauge their interest in the bank’s top job, part of a long-term succession plan to replace Chief Executive Officer Jes Staley.While there is no formal search currently under way, Barclays’s board has asked search firm Spencer Stuart to work on what is known as market mapping, which can be a prelude to kicking off a process, people familiar with the matter said, asking not to be identified because the deliberations aren’t public. A select group of global banking executives has been contacted to determine their preliminary interest in the role, the people said.Staley, who became CEO in December 2015, could leave the bank as soon as next year, people with knowledge of the plan have previously said.A Barclays spokesman said “there is no search under way.” A spokesman for Spencer Stuart in London declined to comment.Barclays Chairman Nigel Higgins, who has backed Staley’s leadership, is under increasing pressure from an activist investor to replace the CEO. Edward Bramson’s Sherborne Investors stepped up his campaign against Staley this year after regulators questioned an account of his ties to Jeffrey Epstein, the deceased financier and sex offender. At the time, Barclays said its board believed Staley “has been sufficiently transparent with the company as regards the nature and extent of his relationship.”Bramson had also been a fierce critic of Staley’s focus on investment banking, which had been a less profitable business than the bank’s other units.“The choice of the next CEO is critical,” said Fahed Kunwar, a bank analyst at Redburn. “There remains investors who would like to see the investment bank wound down further.”Staley has also faced regulatory scrutiny for his attempts to unmask a whistle-blower. He was personally fined but kept his job after a probe by the Financial Conduct Authority.However, the CEO’s hand has been strengthened in the past few months. Barclays’s securities division, which is at the heart of Staley’s plan to drive growth, posted a 77% jump in first-quarter trading as the virus whipsawed markets, beating the average 30% gain at U.S. peers. Barclays, the third-largest U.K. bank by market value, is due to report second-quarter results later this month.Barclays has one of the longest-serving CEOs in British banking, after a swath of senior changes in the past year. HSBC Holdings Plc tapped company veteran Noel Quinn as CEO in March, while Royal Bank of Scotland Group Plc promoted Alison Rose to the top job last September. Lloyds Banking Group Plc said on Monday that CEO Antonio Horta-Osorio will step down next year after a decade in charge.“Global banking executives with a blend of mainstream banking and bulge bracket investment banking leadership experience will be sounded out,” said John Cronin, analyst at Goodbody. UniCredit SpA CEO Jean Pierre Mustier and Standard Chartered Plc’s boss Bill Winters could be among the candidates, he added.The bank’s shares have fallen more than a third this year, partly due to the economic onslaught of the coronavirus pandemic.(Adds analyst comments from sixth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Who will be the next Lloyds CEO?
    Yahoo Finance UK

    Who will be the next Lloyds CEO?

    Investors favour an external candidate but attracting someone as a recession and Brexit loom could be a challenge.

  • Barclays Announces Changes to the Quarterly Composition of the CIBC Atlas Select MLP Index
    Business Wire

    Barclays Announces Changes to the Quarterly Composition of the CIBC Atlas Select MLP Index

    Barclays Bank PLC ("Barclays" or the "Issuer") announced today that during the next quarterly index rebalancing period, which will commence following the close of business on Friday, July 10, 2020 (the "Rebalancing Date"), the following changes will be made to the Index constituents.

  • Universities Drop the Ball in Hiring Minority Bankers

    Universities Drop the Ball in Hiring Minority Bankers

    (Bloomberg Opinion) -- As the U.S. deals with social unrest and the focus on  fairness and equality grows, many public and private leaders have asked a simple question: “How can we do better?” It’s a fair question, one which got me thinking about the public finance sector, long considered among the most diverse and inclusive areas in investment banking. While this sector has seen many positive developments over the 30-plus years since I started my career on Wall Street, there is clearly much work to do.As of late, my phone has been ringing off the hook with calls from other chief executives wanting to know what they can do better when it comes to promoting diversity and inclusion. We have heard this narrative before, yet never with this great a sense of urgency. Some major banking institutions have gone beyond simple lip service and begun to hold leaders directly accountable for diversity goals and objectives. Major cities such as New York, Chicago, Atlanta and Washington have been consistent leaders in not just a broad commitment to inclusion, but have gone the extra mile to ensure equality as well. They have made the deliberate choice of involving minority- and women-owned business enterprise banking firms, and other diverse professional-services firms, in leading and meaningful roles. This is not just about offering small monetary compensation to appear inclusive. These cities further a broader mission of building trust, respect and reputation in these firms — in an industry where those characteristics mean everything. It has been through the responsibility shown by many entities in the public sector that we have started to see real change trickle into other areas of finance, such as corporate banking and the buy-side of the industry. Institutions and organizations in other areas should be commended as well. They include sub-sectors such as transportation, water and sewer, housing and K-12 education. However, one sector has had a poor and often erratic record with regard to inclusion and diversity: higher education. It is a disappointing irony that an industry whose institutions have often been the most vocal promoters of tolerance, inclusion and diversity, should be one so lacking in the tangible promotion of those values within the financial industry.The higher education sector has issued a record volume of debt since the Covid-19 shock began in March — over $12 billion. While some major universities and colleges have an open-door policy in terms of inclusion and equity for professional-services providers, others have been shockingly closed, seemingly inconsistent with their core mission. For example, in the mighty Ivy League, only Penn, Princeton, Columbia and Cornell regularly have minority- and women-owned firms in their bond underwriting syndicates, along with other professional-services providers for bond transactions. Harvard, Yale, Brown and Dartmouth rarely, if ever, have such companies. Almost none have included minority law firms. We’ve seen much the same disappointment at other prestigious institutions, including the Massachusetts Institute of Technology, Johns Hopkins, the California Institute of Technology, Notre Dame and Boston College, to name a few.Harvard says its mission is to educate its citizens into leaders of our society. Yale takes it one step further: Its mission is to educate leaders who serve "all sectors of society." I suspect Yale didn’t apply that principle to its $1.5 billion transaction priced in early June, one in which the school used no minority-led law firms and just three major firms —  Barclays Plc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. — for its underwriting syndicate. And remember, Yale is located in New Haven, Connecticut, a city where almost two-thirds of the residents are people of color.But this is not just about the Ivy League or private schools. Ohio State has beaten Michigan eight straight years in football, and it appears that the Buckeyes beat the Wolverines in the inclusion area as well. Michigan issued almost $1 billion in debt recently and failed to include a single minority-owned law firm or underwriter. Whereas Ohio State recently executed a $187 million transaction that did include a minority underwriter — it joins fellow Big Ten members Northwestern and Purdue, which have also recently completed deals with minority- and women-owned businesses in their transaction teams. Unfortunately, Michigan State, Indiana, Nebraska and Penn State have not, and each executed transactions that exceeded $500 million. We have seen similar inconsistencies out west. The University of Southern California, the University of California Regents, the Cal State System and the Universities of Washington and Colorado have been very inclusive. On the other hand, Stanford, Arizona, Arizona State, Oregon and Oregon State have lacked minority participation. Elsewhere, major systems that should be commended for their inclusion policies include the University of Texas, Texas A&M and the Universities of Massachusetts and Connecticut. Institutions such as Temple, the University of Chicago and Kent State deserve solid marks as well.  Some of the least inclusive schools have been in southern states. Georgia Tech, Emory, Duke, North Carolina, North Carolina State, Vanderbilt and Wake Forest have not used minority firms. These are institutions which have never failed to be inclusive on the gridiron or hardwood, but this “inclusivity” would seemingly stop at professional services.More broadly, in the municipal and not-for-profit sectors — which in many respects are not dissimilar from the nation as a whole — there has been much progress, but much work remains. Many of our municipal issuers understand this and have been inclusive and equitable, with positive results. New York City’s first deal after the onset of Covid-19 was senior-managed by a minority firm, to spectacular results. The State of Ohio recently did the same for an $800 million taxable and tax-exempt transaction that generated over $360 million in much-needed budgetary and cash-flow savings. Finally, many minority- and women-owned business enterprise firms have formed partnerships with large banks to provide additional liquidity to universities. The argument that an institution only uses so-called “credit banks” is no longer valid. Minority- and women-owned firms have time and again shown the capability to provide outstanding execution on some of the largest and most complex financial transactions in the country. It is time that grand American institutions such as Harvard, Yale, Stanford, Duke, Michigan and the like give their coveted stamps of responsibility and trust to minority firms that can help universities build a capital structure worthy of their academic prowess.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Jim Reynolds is the chairman and chief executive of Loop Capital.For more articles like this, please visit us at now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    This New Boss Will Need to Be Her Own Activist

    (Bloomberg Opinion) -- It’s time for someone else to have a go at one of the toughest jobs in European finance: deciding the future of Aviva Plc.The U.K. insurer’s pick of Amanda Blanc as chief executive officer has brought a leader with the necessary sense of urgency. The appointment of a woman to such a prominent leadership role at a European financial institution should be celebrated too, not least given it’s mainly men who enter the actuarial profession.Aviva is an incoherent global empire with life insurance, general (home and motor) insurance and asset management operations. Adjusted for currency movements, the shares have roughly halved in value in the last five years, against a European sector down 6%. They are where they were in 2012, trading on just six times expected earnings, a discount of 20% to peers Legal & General Group Plc and 45% to Prudential Plc.Against that backdrop, this latest strategic reset thankfully sounds more substantial than what’s gone before. A former executive at Zurich Insurance Group AG and Axa SA, Blanc brings an outsider’s perspective to Aviva’s problems. Since May, there’s also been an outsider in the chairman’s seat.There are no big-bang fixes without snags. The weak share price precludes a transformative merger or acquisition. Some investors want a breakup, potentially separating Aviva’s life and general insurance pieces. Unfortunately, that would end the capital benefits in combining the two.But there are moves that could work over time, so Blanc’s promise of an end to “business as usual” is unlikely to be a hollow claim. Slaying sacred cows could mean gradually selling off some of Aviva’s businesses to buyers who put more value on them than what’s implied by Aviva’s lowly 11 billion-pound ($14 billion) market capitalization.For instance, there’s no need for the company to own its own fund management unit when it can buy in those services externally.The international operations could be cut back too. Analysts at Barclays Plc last year argued Aviva should retrench to its domestic business and use the proceeds from overseas disposals to cut debt and return cash to shareholders. The resulting payout today may be smaller than the 10 billion pounds mooted at the time. But the logic of creating a simpler, U.K.-focused Aviva that’s easier to manage, and easier to understand, remains.The difficult question is why Aviva hasn’t attracted an activist investor when some of its rivals have. The likely answer is that Aviva is just next on the list. There are worrying alternative explanations. Perhaps agitators are struggling to construct a campaign arguing that management is neglecting to take some obvious action that would boost the shares — such as the U.S./Asia split Dan Loeb sought at Prudential — because they know no such silver bullet exists. Worse, perhaps they don’t see much upside from shaking up Aviva, whereas Elliott Management Corp. reckons NN Group NV is worth almost double its share price. Blanc won't want any activists on her back, but she'll also want to quickly dispel the notion that Aviva isn't worth the bother.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Chris Hughes is a Bloomberg Opinion columnist covering deals. He previously worked for Reuters Breakingviews, as well as the Financial Times and the Independent newspaper.For more articles like this, please visit us at now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Barclays Bank PLC Announces Commencement of Cash Tender Offer and Consent Solicitation
    Business Wire

    Barclays Bank PLC Announces Commencement of Cash Tender Offer and Consent Solicitation

    Barclays Bank PLC (the "Issuer") announced today that it has commenced a cash tender offer (the "Offer") to purchase any and all of its iPath® MSCI India Index ETNs due December 18, 2036 (CUSIP: 06739F291/ISIN: US06739F2911) (the "Notes") and a solicitation of consents (the "Consent Solicitation") from holders of the Notes (the "Noteholders") to amend certain provisions of the Notes as described below (the "Proposed Amendment"), subject to applicable offer and distribution restrictions. Noteholders who validly tender (and do not validly withdraw) their Notes will be deemed to have consented to the Proposed Amendment under the Consent Solicitation.

  • Lloyds chief executive António Horta-Osório to step down after decade in charge
    Yahoo Finance UK

    Lloyds chief executive António Horta-Osório to step down after decade in charge

    Lloyds also announced that veteran banker Robin Budenberg CBE will take over as chairman from next year.

  • Coronavirus: Banks could lose up to £10bn on defaulted payments
    Yahoo Finance UK

    Coronavirus: Banks could lose up to £10bn on defaulted payments

    As job losses increase, customers will be asked to resume their payments on mortgages, personal loans and credit cards.

  • Starling CEO Anne Boden on Bounce Back loans and growing during COVID-19 pandemic
    Yahoo Finance UK

    Starling CEO Anne Boden on Bounce Back loans and growing during COVID-19 pandemic

    Starling has hired 100 new staff during lockdown, while rivals have been forced to let people go.

  • 2020 stock market recovery: I’d buy these 2 cheap FTSE 100 shares to make a million

    2020 stock market recovery: I’d buy these 2 cheap FTSE 100 shares to make a million

    These two FTSE 100 (INDEXFTSE:UKX) shares could deliver an improved performance as the stock market recovers over the long run.The post 2020 stock market recovery: I’d buy these 2 cheap FTSE 100 shares to make a million appeared first on The Motley Fool UK.

  • SoftBank-Backed Lemonade to Raise $319 Million in IPO

    SoftBank-Backed Lemonade to Raise $319 Million in IPO

    (Bloomberg) -- Lemonade Inc., the online home insurance provider backed by SoftBank Group Corp., is set to raise $319 million in its U.S. initial public offering.The company will sell 11 million shares at $29 apiece, Lemonade said in a filing, confirming an earlier Bloomberg News report. It was marketing 11 million shares at $26 to $28 each after boosting the range from $23 to $26, according to filings with the U.S. Securities and Exchange Commission.At $29, Lemonade would have a market value of $1.6 billion, based on the number of shares outstanding listed on its IPO filings.SoftBank led a $300 million funding round in Lemonade last year, valuing the company at $2.1 billion at the time, Bloomberg News previously reported. SoftBank will own a 21.8% stake in the company upon the IPO, the filing shows. Sequoia Capital Israel and General Catalyst are also among backers.Lemonade has yet to turn profitable since its inception in 2015, it said in its prospectus. It reported a $36.5 million net loss in the three months ended March compared to a net loss of $21.6 million during the same period last year. Its sales have more than doubled in that period.The company allows customers to buy insurance policies on a mobile app after answering several questions. It also pledges to donate the leftover funds, after expenses, to a charity in order to discourage fraudulent claims.While the company is headquartered in New York, it has roots in Israel and it has 123 full-time employees there, its filing showed.Goldman Sachs Group Inc., Morgan Stanley, Allen & Co. and Barclays Plc are leading the offering. Citadel Securities is the designated market maker for the listing.Lemonade will list on the New York Stock Exchange Thursday under the symbol LMND.(Updates with details from statement in second paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • How Are Planet Fitness and IHOP Securitizations Doing Now?

    How Are Planet Fitness and IHOP Securitizations Doing Now?

    (Bloomberg Opinion) -- It looked like the perfect feat of Wall Street ingenuity. Then the coronavirus pandemic struck.For the past few years, asset-backed securities known as “whole business securitizations” had become a steadily growing presence in the structured-finance market. Chain restaurants like Dunkin’, Hooters, TGI Friday’s and Wendy’s were among the first to take up bankers on this process, which involves companies selling almost all revenue-generating assets into bankruptcy-remote, special-purpose entities in exchange for investment-grade credit ratings and much cheaper financing. More recently, other franchise-focused enterprises like Planet Fitness Inc. and Massage Envy LLC followed.There’s a lot to like about these securities for fixed-income investors. They usually offer higher yields than comparably rated corporate bonds, for one. They’re backed by cash flow from hundreds, if not thousands, of individual locations across the country that each have unique demand dynamics and would likely keep operating and sending money to investors even if the parent company filed for bankruptcy.You might be able to guess where the story goes from here. Yes, some securitizations are doing fine, like Domino’s Pizza Inc., whose stock price reached a record this month. And Driven Brands, which has more than 3,200 automotive services shops across 49 U.S. states and all Canadian provinces, successfully priced $175 million of debt on Friday in the first such deal since March. But a handful of the bonds are showing signs of cracking under pressure from Covid-19. Specifically, restaurants that are overwhelmingly dine-in or concentrated in malls, as well as the aforementioned Planet Fitness and Massage Envy. Consider Dine Brands Global Inc., the parent of the Applebee’s and IHOP brands. Obviously, it’s hardly a boom time for going out for breakfast. Its whole-business securitization from 2019, rated triple-B by S&P Global Ratings, traded at more than 100 cents on the dollar on March 11, then tumbled to about 77 cents in April, Trace data show. While trading in this kind of debt is relatively sparse, it seems to have rebounded to 87 cents, equivalent to a yield of about 8%. The average junk bond yields 6.77%, according to a Bloomberg Barclays index.S&P said in a report last week that it could lower the transaction’s ratings within the next three months, given the sharp drop in dine-in revenue. In a sign of how serious this is for Dine Brands, it’s waiving its right to a management fee at least through the beginning of September and has redirected the residual to pre-fund debt service, S&P said. Dine Brands also voluntarily doubled the interest reserve to $32.8 million from $16.4 million.At least in S&P’s view, the situation is even worse for TGI Friday’s, which had already cut total restaurants to 796 in March from 894 three years earlier. In mid-May, the rating agency downgraded the chain’s 2017 notes to B+, four steps below investment grade, and said there’s a 50-50 chance it would drop it even further. “Though the pandemic has placed significant stress on the restaurant industry broadly, we believe TGIF will face near-term revenue stress that is particularly severe,” the S&P analysts wrote. They found the securitization can withstand a 43% decline in collections before experiencing an interest shortfall in the next several months. That’s a high hurdle, to be sure, but hardly impossible.Focus Brands, the parent of popular mall chains like Auntie Anne’s, Cinnabon and Jamba, is also having a rough time. Its whole-business securitization from 2017 traded at about 93 cents on the dollar last week, implying a yield of 12% (its expected maturity is April 2021). Kroll Bond Rating Agency has said it might downgrade the transaction, along with others that combined have a $3.1 billion outstanding balance.Planet Fitness’s whole-business securitization, which helped Guggenheim Securities win GlobalCapital’s 2019 best securitization bank of the year award, sunk to as low as 64 cents on the dollar in April, down from 103 cents previously. One of its gyms in West Virginia may have exposed more than 200 people to Covid-19, according to reports Monday. The company said the gym was closed “for an additional deep cleaning by a third party” but would quickly open again. Whether customers return just as swiftly is an open question.If there’s one company to watch, though, it just might be Massage Envy. The private-equity-backed spa chain, which had more than 1,000 locations when it issued its whole-business securitization, was always something of an outlier, given a 60-minute wellness massage or healthy skin facial costs about $50 for members. That’s a different price point than Domino’s, Five Guys or Taco Bell. The price of its securitization fell to 73 cents on the dollar in May. Now at 82 cents, that’s still equivalent to a yield of more than 12%, a level in the corporate-bond market that would indicate distress.It’s still quite likely that investors end up unimpaired, even in these struggling bonds. But this is certainly not what they thought they were signing up for, with plenty of competing forces now muddling the outlook. Anecdotally, I’ve made buffalo wings twice during lockdown that I’d consider better than TGI Friday’s and generally feel more adept in the kitchen than ever. I suspect others feel similarly. All else equal, how many people will want to venture out to support a dine-in chain over a small business, given all the painful stories about their struggles to make ends meet? Who exactly is eager to stroll around a shopping mall, let alone get their hands messy with a Cinnabon or Auntie Anne’s pretzel?I try not to get too committed to any one post-coronavirus future, but at least within the whole-business securitization market, a clear dichotomy is starting to emerge that roughly aligns with common-sense expectations. If a chain delivers food to customers in the comfort of their own home or car, it’ll be fine. If it’s a ubiquitous dine-in establishment, it’s a more dicey proposition. If it’s a gym that offered free at-home classes during lockdowns, people might very well just keep doing that, or make a one-time splurge on their own equipment. And it could be a while before customers feel truly relaxed when getting a massage or facial.That’s what this niche market is saying, at least. If investors think that assessment is out of whack, some huge yields beckon.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.


    Beyond Meat Slips on Barclays Downgrade

    By Christiana Sciaudone

  • Coronavirus: Mortgage approvals plummet to all-time low
    Yahoo Finance UK

    Coronavirus: Mortgage approvals plummet to all-time low

    Just 9,300 new mortgages were approved across the UK in May, as the COVID-19 pandemic pushed the housing market to near standstill.

  • Another stock market crash could be imminent! Here’s what I’d do now

    Another stock market crash could be imminent! Here’s what I’d do now

    A stock market crash could be imminent due to recent over-optimism and the chance of a second Covid wave. One Fool looks at what to do in preparation. The post Another stock market crash could be imminent! Here's what I'd do now appeared first on The Motley Fool UK.

  • Fintech Zopa set to launch first banking products
    Yahoo Finance UK

    Fintech Zopa set to launch first banking products

    Zopa has been granted a full banking licence with no restrictions, allowing it to launch its fixed savings account and credit card to the public later this year.

  • Robinhood Crowd Misses Out on Convertible Bonds

    Robinhood Crowd Misses Out on Convertible Bonds

    (Bloomberg Opinion) -- It’s growing more likely by the day that we’ve reached peak “bored retail trader” in the financial markets.Bloomberg News, The Wall Street Journal and seemingly every financial news publication has now profiled Dave Portnoy, founder of the website Barstool Sports, who has turned to day-trading stocks with sports on hold because of the coronavirus pandemic. Robinhood Financial’s trading app is all the rage, being credited with the shocking rally in shares of bankrupt Hertz Global Holdings Inc. that almost prompted an unthinkable offering of potentially worthless stock. My Bloomberg Opinion colleague Matt Levine has called this entire phenomenon the “boredom markets hypothesis.” If this trend is close to running its course, more traditional investors might want to consider what happens when the music stops and Portnoy’s No. 1 rule — “stocks only go up” — doesn’t work so flawlessly. The S&P 500 Index’s sharp rally from its March lows is already starting to fizzle, with the index down more than 3% during the past two weeks. While hardly backbreaking, it’s the largest loss over such a sustained period since the worst of the selloff three months ago. Even sideways trading for the summer would violate the day trader’s mantra.Fortunately for sophisticated investors who might side with Warren Buffett and Leon Cooperman over the Robinhood crowd, there’s an intriguing asset class for this crossroads: convertible bonds.The securities, which can be swapped for shares at specified prices, have already been having something of a moment. The Bloomberg Barclays U.S. Convertibles Composite Total Return index jumped to a record on June 8 and remains close to that lofty level. Convertible bonds have gained 7.8% so far in 2020, better than the 5% return on investment-grade corporate bonds and the roughly 3% loss for the S&P 500. I’ve written before about how it seems as if there’s something inherently “cheap” about convertibles that boosts returns above and beyond a mix of stocks and bonds. Part of it might be the types of companies that offer such securities. Within the Bloomberg Barclays index, some of the biggest names include Tesla Inc., Carnival Corp., Southwest Airlines Co., Microchip Technology Inc. and Workday Inc. In other words, a combination of technology companies that have powered the U.S. stock market rally and brand-name businesses particularly harmed by the coronavirus but part of the “recovery trade” strategy. American Airlines Group Inc. is in the market selling convertible notes, too.Some of these individual companies are favorites of the new day-trading crowd. But for those who want to bet on convertible bonds, and specifically to keep trading relatively small sums with zero commission, the $4 trillion exchange-traded fund market is probably their best bet. Yet even the asset class’s sharp rally hasn’t been enough to lure individuals from the thrill of wagering on the trendy stock pick of the day. Consider the $717 million iShares Convertible Bond exchange-traded fund (ticker ICVT), which has soared since March and is up more than 6% this month alone. A few weeks ago, it looked as if it might have been discovered — on June 3, its assets increased by 21% as investors poured a net $108.3 million into the fund, the most since its inception roughly five years ago, according to data compiled by Bloomberg. It gained an additional $69 million on June 9, good for the second-biggest inflow ever. On the flip side, State Street’s $4.47 billion SPDR Bloomberg Barclays Convertible Securities ETF (ticker CWB) suffered an outflow of $107.6 million on June 10, the largest daily withdrawal on record, followed by a $75 million exodus on June 11. That’s a stark contrast to the tens of billions of dollars flowing into credit ETFs.That seeming lack of interest is just fine for investors like Eli Pars, co-chief investment officer and head of alternative strategies at Calamos Advisors. The Naperville, Illinois-based firm is the largest public holder of convertible bonds issued in April by Carnival and Southwest Airlines, according to data compiled by Bloomberg.“It’s a great way to play the stock market in a less volatile way,” he said in a phone interview. While this is the common elevator pitch for investing in convertibles, the securities backed up that claim during March’s turbulence by tumbling less than benchmark equity indexes. That’s because investors can always fall back on interest payments if equity prices fall while capitalizing on a rally because the value of the option to convert to shares increases as well.Pars says convertibles are compelling for those with significant equity holdings who want to dial back their risk a bit after the sharp rebound in the past three months, or for those who sat out the entire rally and want some protection from a reversal. It’s a safer bet than simply taking short positions on the S&P 500; Bloomberg News’s Cameron Crise calculated that speculators have ratcheted up their bets against the index to the most extreme level since 2011.In some ways, the new band of Robinhood traders plays right into the hands of investors like Pars. He manages the $9 billion Calamos Market Neutral Income Fund, which partly employs a strategy known as convertible arbitrage. The trade involves buying and holding the convertible bond while hedging with a short position in the common stock, in theory generating a nearly riskless profit from price discrepancies between the two assets. That’s more likely to happen when there’s added volatility — and especially when the fluctuations seemingly come out of nowhere. “It’s one thing when you have volatility driven by real fundamentals,” Pars says. “When you have more noise volatility, that’s perfect for an arb.”With so much uncertainty surrounding how quickly states can emerge from lockdowns, and just how quickly Americans will travel the way they used to, even modest downside protection, like the 1.25% interest rate on Southwest Airlines’s convertible securities, can be a comfort for investors. That could wind up being a better yield than similar maturity Treasuries over the next five years, given that it’s anyone’s guess whether the Federal Reserve will have raised short-term interest rates from near-zero by then.These are the prudent — albeit less entertaining — calculations that professional investors are paid to think about. There’s still a large divide between the newbie traders who fly in and out of stock and ETF positions on a whim thanks to no-fee trading, and Wall Street denizens who scrutinize market segments mostly out of reach of Robinhood. The former are best thought of like shares of Hertz, surging 682% in the span of days but now sputtering toward zero again.Convertible bonds, by contrast, have delivered average annual returns of 9% or higher over three-, five-, 10- and 15-year horizons. It stands to reason they’ll keep doing so long after the legions of bored traders find a new hobby.This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brian Chappatta is a Bloomberg Opinion columnist covering debt markets. He previously covered bonds for Bloomberg News. He is also a CFA charterholder.For more articles like this, please visit us at now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • EM Review: Stimulus Actions Helped Outweigh Second Wave Concerns

    EM Review: Stimulus Actions Helped Outweigh Second Wave Concerns

    (Bloomberg) -- Emerging-market stocks recorded a second weekly gain in June last week amid optimism over central-bank measures to support economies and progress in the U.S. and China trade negotiations. Most developing-nation currencies declined as the dollar gained. Policy makers in Brazil, Indonesia and Russia cut interest rates, while the Federal Reserve said it would start buying individual corporate bonds under its emergency lending program.The following is a roundup of emerging-market news and highlights for the week through June 21:Click here to read our emerging-market weekly preview, and here to listen to out weekly podcast:Highlights:Covid-19: Brazil’s Covid-19 infections passed the 1 million mark; Mexico reported record numbers of daily casesAt least 158 people have been infected in a new outbreak in Beijing after a lull of two months without cases in the capital. Officials are trying to strike a balance between containment and keeping the economy running in the cityIndonesia surpassed Singapore as the country with the highest number of infections in southeast AsiaA surge in cases in Iran may prompt renewed lockdownsU.S. states including Texas, Florida and Arizona reported a jump in casesU.S. Macro: The Federal Reserve said it would begin buying individual corporate bonds under its Secondary Market Corporate Credit Facility, an emergency-lending program so far focused only on exchange-traded fundsFed Chair Jerome Powell urged Congress not to pull back too quickly on federal relief for households and small businessesThe Trump administration is preparing a near $1 trillion infrastructure proposal as part of its push to revive the economy, according to people familiar with the matterU.S.-China Relations: U.S. Secretary of State Michael Pompeo said China’s top foreign policy official committed in a meeting to honor all of his nation’s pledges under the phase-one trade dealChina confirmed that a proposed national security law would allow Beijing to override Hong Kong’s independent legal system, shedding new light on a move that has stoked tensions with the U.S. and threatens the city’s status as a top financial centerPresident Trump signed a measure punishing Chinese officials for imprisoning more than a million Muslims on the same day a new book alleged he encouraged Beijing to build internment camps to house themArgentina extended a deadline for bondholders to accept a debt-restructuring proposal for a fifth time after talks hit a roadblock; the new date is July 24Both creditors and the government submitted new restructuring proposals earlierArgentina’s Ad Hoc and Exchange Bondholder groups said in a joint statement Friday after the extension was announced that they’re “united in disappointment” about the decision to “terminate dialog” with creditors at a critical junctureBrazil’s central bank left the door open to more monetary easing after cutting rates by 75 basis points to a record low 2.25% to support the economyMexico’s airliner Aeromexico is considering filing for Chapter 11 bankruptcy, according to sources; firm said it hasn’t made a decision yetThe Asian Development Bank cut its inflation forecast for developing Asia to 2.9% from 3.2%North Korea destroyed an inter-Korean liaison office on its side of the border, and pledged to move troops into a disarmed border areaChinese and Indian soldiers attacked each other with stones, iron rods and bamboo poles along their disputed border; 20 Indian soldiers and an unknown number of Chinese were killedIndonesia’s central bank cut rates for the first time in three months and lowered its growth outlookPoland may be opening a new line of defense for the pandemic-hit economy after cutting interest rates to near zeroRussia lowered interest rates by the most in five years and signaled another reduction is likelyA rebound in appetite for emerging-market exchange-traded funds proved to be short lived as outflows resumedAsia:China will sell 1 trillion yuan ($141 billion) of special sovereign bonds by the end of July, with the proceeds used to combat the impact of the coronavirus, according to people familiarChina’s cabinet signaled the central bank will act to make more liquidity available to banks so they can lend moreChina’s economy continued to inch out of the coronavirus slump in May, although growth in industrial output was slower than forecast and consumer demand remained sluggishChina will push the financial industry to sacrifice 1.5 trillion yuan in profit this year; central bank wants the total flow of credit to rise by almost a fifth in 2020G-7 foreign ministers urged China to reconsider its plan to impose a new national-security law on Hong KongSouth Korea announced new steps to curb overheating in the property market, underscoring its concerns about the side effects of liquidity pumped into marketsSouth Korea warned the North against further provocations, saying the latter must bear the consequences of its actionsIndia’s trade fared slightly better in May than a month ago as restrictions easedThe country’s credit score moved a step closer to junk after Fitch Ratings cut the outlook to negative, citing weak growth prospects and rising public debtIndonesia lowered its outlook for economic growth to a range of 0% to 1%, while warning of the possibility of a full-year contractionThe nation registered a larger trade surplus than forecast in May, as a 42% decline in imports outweighed a larger-than-expected drop in exportsThe Philippine central bank governor said the peso’s recent depreciation wasn’t a concern and excess liquidity in the financial system is unlikely to stoke inflationThe Philippines will keep Manila under loose restrictions, allowing most businesses to continue operating even as coronavirus cases riseThe country is weighing new taxes to fund economic stimulusBank of the Philippine Islands says it plans to issue what will be the country’s first Covid Action Response BondsNation’s current account swung to a $92m surplus in 1QThai Cabinet has approved a 22.4 billion baht ($723 million) package to boost domestic tourismThe biggest party in Thailand’s pro-military ruling coalition is due to pick a new leader soon, a step that’s expected to strengthen the stability of the governmentTaiwan has passed the worst economic damage from the coronavirus, according to the central bank, which kept rates unchanged and forecast an upturn in the second halfTaiwan launched an investigation into three men accused of spying on behalf of BeijingTaiwan’s central bank stepped in to FX market in June due to “huge” foreign inflows in a short space of time after outflows seen in January to May, governor Yang Chin-long saidEMEA:Turkey airlifted commandos into northern Iraq, stepping up a military drive against Kurdish militants after its parliament kicked out two pro-Kurdish lawmakers on separatism chargesBelarus raised $1.25 billion in international debt markets, seizing on a revival in global credit availability to secure long-sought financingRussia is comfortable with an oil price of about $50 a barrel, a level that would cover the government’s financial needs and wouldn’t create problems for consumersVladimir Putin said he’ll consider running for a fifth presidential term in 2024, arguing that the hunt for any successor risks paralyzing Russia’s government as the next election nearsGermany’s top prosecutor filed charges against a Russian citizen for a murder in a Berlin park last summer, saying it was a contract killing ordered by officials from MoscowPoland’s central bank warned of the risks to an economic recovery from an overvalued currency after keeping rates unchanged at 0.1%. The new signal is tantamount to a verbal intervention that it would like to see a weaker zloty, analysts saidSaudi Aramco will consider selling bonds or taking on loans to help meet its commitment to paying dividends, Chief Executive Officer Amin Nasser saidThe world’s biggest oil exporter, has begun cutting hundreds of jobs as it looks to reduce costs after a slump in energy prices, according to people familiarSaudi Arabia resumed all commercial activities and lift restrictions on movement even as coronavirus cases show no signs of easing. The curfew was lifted across the nation from 6am on Sunday but international travel and the Muslim pilgrimage known as Umrah will continue to be bannedAramco has negotiated more time to pay for an almost $70 billion acquisition of Saudi Basic Industries Corp. as this year’s slump in oil prices stretches its financesMorocco’s central bank delivered the biggest rate cut in history and exempted lenders from holding cash in reserves, looking to jolt an economy emerging from a three-month lockdownEgypt’s bond market has been humming for months, helped by a stable currency and elevated interest rates. It may now take a more flexible pound to help keep investors coming backIsrael’s consumer prices plunged more than expected despite the central bank’s spate of foreign-currency purchases designed to weaken the shekel and boost inflationThe U.S. imposed sanctions on Syria’s President Bashar Al-Assad and his wife as the Trump administration increases pressure on the regime in an effort to end the nine-year civil warSouth Africa told asset managers and banks it needs 1.5 trillion rand ($86 billion) of infrastructure investment over the next decade, the country’s biggest specialist fixed-income fund saidThe nation’s debt levels will exceed 100% of gross domestic product in 2025 and rise to almost 114% before the end of the decade, according to a document presented by Finance Minister Tito Mboweni and seen by BloombergIt will ease lockdown rules for a third time since imposing them in March and allow a range of businesses including eat-in restaurants, casinos and beauty salons to reopen despite an increase in coronavirus infectionsNamibia’s central bank, whose currency is pegged to South Africa’s, diverged from its neighbor’s moves on monetary policy for the first time in two years as the country seeks to balance supporting its economy with safeguarding investment inflowsBanco de Mocambique cut its benchmark rate for a second meeting as it tries to boost growth, and counters risks from the coronavirus pandemic and an Islamist insurgencyZimbabwe’s central bank abandoned a currency peg it introduced in March and said it would allow the rate to be set by an auction systemNigerian companies are poised to raise a record amount of local short-term debt as businesses take advantage of a drop in borrowing costsChina said it would waive some African nations’ debt and is willing to provide further support including loan-maturity extensions to free up funds needed to deal with the coronavirusDeveloped nations are considering financial support for a plan to relieve African countries of debt payments without triggering default, according to the United Nations committee steering the initiativeGhana’s economic growth slowed to the least in four years in the first quarterLatin America:The International Monetary Fund has extended its safety net under some of Latin America’s biggest economies as the pandemic hits the region particularly hardBrazil’s police arrested a former aide to one of President Jair Bolsonaro’s sons for participation in an alleged corruption scheme, fueling political tensionsSupreme Court voted to move forward with a sprawling fake news investigation targeting some of Bolsonaro’s most influential supportersTreasury Secretary Mansueto Almeida decided to leave the post in July and Education Minister Abraham Weintraub stepped down after repeatedly clashing with Supreme Court justicesEconomic activity index tumbled 15.1% in April from a year earlierArgentina’s government announced a swap for peso bondholders for as much as $1.5 billion in new dollar-denominated local law bondsThe province of Mendoza plans to miss a debt payment, which would make it the third Argentine issuer to default this year, according to sourcesBuenos Aires province is extending the deadline for creditors to accept a bond swap until July 31, according to a statement on its websiteFidelity Investments sold a large chunk of its Province of Buenos Aires bonds in recent months, according to sourcesCoronavirus cases may peak in Argentina sometime between the end of June and beginning of July, the health minister saidEcuador repaid another loan to Goldman Sachs Group Inc. in a move that paves the way for a debt restructuring with its foreign creditorsChile’s central bank tripled its forecast for an economic contraction this year after keeping the interest rate unchanged at a record low and saying it would stay there for the next two yearsOfficials announced an asset-purchase program for as much as $8 billion and increased a credit line to commercial banksChile has among the world’s highest rates of per-capita infections, and its once-praised health minister has been forced to resignMexico’s president will tone down his rhetoric against business leaders, a close senator saidFinance minister said the country’s recovery would be much slower than its rate of contractionColombia is ditching its fiscal deficit targets until 2022 and the debt burden is expected to rise to 66% of GDP this year from 50% in 2019Colombia can’t wait another three years to fix its public finances, Fitch Ratings saidPeru’s economic activity slumped more than 40% in April from a year earlierHonduras sold $600 million in 10-year bonds, becoming the lowest-rated nation in Latin America to sell dollar debt amid the pandemicPresident Juan Orlando Hernandez was hospitalized with Covid-19Belize is seeking relief from foreign debtholders for the third time since 2012For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • The Future of Work in America Is in the Office

    The Future of Work in America Is in the Office

    (Bloomberg Opinion) -- Ever since the coronavirus sent millions of people home to work, people have been predicting that remote work will endure after the pandemic is over.Color me skeptical.I can’t imagine everyone not wanting to race back into the office the minute it is safe to do so. But my wife and I both have full-time jobs, and we have been home with our two young kids. The corporate world isn’t debating a post-pandemic future of continuing the lockdown, but instead of working remotely from home while kids are at school and cafes are open. So set aside the challenges of the last few months with school closures and social distancing, and consider whether traditional offices may be a thing of the past. Some companies clearly think it is. My fellow Bloomberg columnist Tyler Cowen has bemoaned the tech industry’s apparent conversion. Slack, the messaging technology company, announced last week that most of its employees would have the option of permanently switching to remote work, and that it would increasingly hire people into remote-work positions. Facebook expects that half its workforce could be remote in the next five to 10 years. Last month, Twitter announced that its employees could continue working from home permanently. Other employers are changing policies as well. Nationwide Insurance is planning to close offices around the country by Nov. 1, moving those employees to permanent telework status. Barclays CEO Jes Staley said in April that “the notion of putting 7,000 people in a building may be a thing of the past.” There is some preliminary evidence that remote work is working. Or, at least, that is isn’t failing. Upwork, an online staffing company, recently published results from a survey of hiring managers. The survey finds that over half of the U.S. workforce is working from home. Fifty-six percent of hiring managers think the shift to remote work has gone better than they had expected. Around one-third of managers think remote work has increased productivity, while 23% think productivity has dropped. Over six in 10 hiring managers report that as a result of the pandemic, their organization’s workforce will be more remote than it was before. But it’s critical that managers not overlearn lessons from the pandemic. This spring, managers were nervous that productivity would tank during the shutdown because telework would be unsuccessful. Employees would slack off during the day without colleagues and supervisors nearby, and given all the distraction of home. Surely this anxiety was communicated inside businesses, and workers got the picture. Many likely ramped up their effort during the shutdown to prove to their bosses that they were still valuable as teleworkers. With the rest of the world shut down, too, people had to put off a lot of the functions of normal life, not just going out for social reasons, but also for important things like doctor’s appointments. Add to this workers’ worries about recession-driven layoffs, and it’s no surprise that many managers see productivity increases. But a company that permanently switches to telework once the pandemic is behind us would be doing so in a very different environment. If telework is the norm and layoffs aren’t a pressing concern, workers may not put in special effort. And with the world opened up, the boss can’t be sure employees are tethered to their homes, the way they have been. Like many, I have been surprised by how well working from home has gone. My usual in-person interactions with colleagues have translated quickly and efficiently to Zoom and phone calls. But the sudden nature of the pandemic shutdown meant that I had well-established relationships with all my now-remote colleagues. These relationships were built on months and years of in-person interactions. It’s much easier to work with someone productively using Zoom and email if you have a well-established relationship with them first. Now that the U.S. is in its second quarter of telework, new employees will be hired in this environment. How quickly they integrate into corporate communities and ramp up their contributions will be a much better indicator of whether a company should go remote permanently than the experience with remote work from this spring.Productivity is something of a black box, but anyone with coworkers knows the important role that emotional intelligence plays in getting work done. Being able to read someone’s body language, tone of voice, or slight changes in facial expression is often critical to work in a team setting. It is hard to learn how to interpret these idiosyncratic forms of expression outside of the social setting an office provides. Likewise, trust, group cohesion and collegiality develop in large part through the informal interactions that occur in workplaces throughout the day. In the Upwork survey, nearly one-third of hiring managers reported that reduced team cohesion has been an issue with remote work. Managers should think twice before assuming productivity won’t suffer without this subtle elixir.Having a good working relationship with people outside your immediate group is also important. In an office, you bump into many people once or twice a week while getting coffee or walking to the building from the parking lot, bus or train. In an office setting, you are acquainted with them. Under remote work, they are strangers. Some of the relatively few studies on remote work do show that working from home increases productivity, but those that I am aware of examine companies in which work is solitary. For example, a Chinese travel agency randomly assigned some call-center employees to work from home, leading to a 13% performance increase in that group. The applicability of this result to many businesses is limited. Similarly, the writing part of my job is a relatively solo task, and my editors at Bloomberg work in New York while I work in Washington. I have great relationships with my editors, but I see them in person several times per year, which is invaluable to making my remote arrangement work. Pandemic teleworking has led some to speculate that cities themselves may be depopulated, with people flooding to small towns when given the option to work remotely for big companies. But “work from anywhere” models suffer even more from the problems of remote work, because workers would have even fewer opportunities to interact in person with their colleagues. The economic benefits of close proximity are well known. Under “work from anywhere,” professional networks would fray, or wouldn’t even form. Creativity would suffer. Career opportunities, particularly for young people, would diminish. Lifetime productivity would fall. And the perceived benefits of working from anywhere for those who would rather not live in cities would diminish greatly over time if that business model was heavily utilized. The cost of living in smaller cities and towns would rise, and in major cities it would fall. The coronavirus pandemic has changed daily life more quickly than any event in modern memory. It will leave lasting effects. But once it is behind us, life will normalize to a greater degree than many seem to think. A lot of employees will work from home a few more days per month than they used to. Flying across the country for a one-hour meeting may be a thing of the past. But businesses operated as they did before the pandemic for good reasons, and once the virus is vanquished, those considerations will remain as compelling as ever. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Michael R. Strain is a Bloomberg Opinion columnist. He is director of economic policy studies and Arthur F. Burns Scholar in Political Economy at the American Enterprise Institute. He is the author of “The American Dream Is Not Dead: (But Populism Could Kill It).”For more articles like this, please visit us at now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Coronavirus: Emergency credit card, loan, and overdraft relief to be extended
    Yahoo Finance UK

    Coronavirus: Emergency credit card, loan, and overdraft relief to be extended

    The Financial Conduct Authority wants banks and credit card providers to offer payment holidays and interest free overdrafts for another three months.

  • Brokers bullish on Barclays shares

    Brokers bullish on Barclays shares

    The Barclays (LON:BARC) share price has risen by 13.3% over the past month and it’s currently trading at 118.82. For investors considering whether to buy, hold...

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