Background
The Policy and Technical team continue to speak with treasurers to understand what issues they are facing and in what areas the ACT can help. We are also talking with the main banks to understand how they are responding to the COVID-19 crisis. At the same time, we have held a number of conversations with HM Treasury, the Bank of England, the CBI, the City of London Corporation and UK Finance. Through these forums, we have been able to ensure that the views of the treasury community are heard by policymakers through a number of different channels.
A list of useful material from the ACT, the Regulators, the Government and Others can be accessed from the ACT Knowledge Hub.
Useful articles
The IMF has issued a report on The Economic Effects of COVID-19 Containment Measures. Sarah Boyce has written a synopsis of the executive summary which can be found here.
The EIB has produced a COVID-19 Economic Vulnerability Index which focuses on countries outside of the European Union. The report may be useful to treasurers in assessing the risks that businesses operating in these countries may face.
McKinsey & Co has written a report on Spend Control Towers as an additional short term governance team and process to manage costs.
The CCFF scheme
Taken from the Bank of England report, the following table provides some interesting insights.
The data shows that only 32% of applicants to the CCFF facility have currently drawn on this facility (unchanged during August), and the notional sum of drawing capacity and the actual amount currently outstanding has increased slightly.
Details of current borrowers under the facility can be found at: https://www.bankofengland.co.uk/-/media/boe/files/markets/covid-corporate-financing-facility/cp-held-by-ccff-by-business.xlsx
More information on the programme can be found here.
If you have questions you’d like raised with the Bank of England, please email technical@treasurers.org
We are starting to hear from firms that have been able to access the CCFF programme; we provide anonymised feedback to the Bank of England. If you’d like to share your experiences, please drop an email to technical@treasurers.org.
Other Schemes
Following recent EU changes in State Aid Law relating to the ‘undertaking in difficulty’ test for businesses, the British Business Bank amended its Coronavirus Business Interruption Loan Scheme. This means that from 30 July 2020, lenders may now be able to offer CBILS to businesses who had previously been unable to access CBILS.
It has been reported in the press that the UK state-backed British Business Bank (BBB) has given banks extra time to grant state-backed loans to medium-sized and larger businesses affected by the COVID-19 crisis with the date of the final approval extended to 30 November.
Previously applications for the coronavirus business interruption loan scheme (CBILS) aimed at medium-sized businesses with a turnover of up to £45 million had to be in by midnight on 30 September meaning that firms have two more months to consider cases.
The deadline for approving large CBILS (CLBILS) is set for 31 December.
The Bank has also made available details of the other schemes being made available. The tables below show an extract from this and it shows that:
Update from the UK regulators
The governor of the Bank of England – Andrew Bailey delivered a speech at the Jackson Hole Economic Policy Symposium on 28 August on the use of central banks’ balance sheets as a policy tool. In his speech, the Governor quoted “We are not out of firepower by any means, and to be honest it looks from today’s vantage point that we were too cautious about our remaining firepower pre-COVID”
The ONS produces a fortnightly analysis of business responses in a number of key areas. The highlights from the latest report included the following table:
Of businesses that had not stopped trading, the percentage reporting having no or less than six months cash reserves remained unchanged at 44% and the percentage reporting having more than six months cash reserves fell slightly from 36% previously.
Views from across the world
As a member of the International Group of Treasury Associations, and the European Association of Corporate Treasurers and working with our colleagues in the US National Association of Corporate Treasurers we are keeping an eye on developments overseas.
Engaging with the treasury community
We welcome conversations with our members on:
How you’re dealing with the crisis
What you’d like us to raise with the various bodies we are in regular contact with
How the ACT can support you during this challenging time.
Send an email to technical@treasurers.org and either James Winterton, Naresh Aggarwal or Sarah Boyce will be in touch with you.
If you have found any resources which you feel we should add to our COVID-19 web collection, please email us with details.
Naresh