Half term – half time

Things seemed to slow this week. Maybe it was because it was half term at school or maybe we are just more in a rhythm. Mind you in the wider world there were still a few stories that caught the eye.

Bitcoin

First was the eye-watering increase in the price of Cryptocurrency in general and Bitcoin in particular, reaching over $50,000 last week. This has been a 5 fold increase in the last year alone.

Opinion seemed divided between those who thought that this was the dawn of a new age, the new precious asset and those that thought it is in fact a fools gold, a bubble only to crash in price, all ending in tears.

Seemingly Visa and Mastercard, together with Elon Musk and other corporate business appear to be now on board, and the drums of FOMO (fear of missing out) seem to be beating hard.

However, with only 7-10 transactions per second (for Bitcoin) some constraints on growth do seem to be mathematically built-in, although in a world of quantitive easing, there is undoubtedly some allure to an asset that cannot be indefinitely expanded… time will tell no doubt. As for Bitcoin lending, like ‘gold’ lending not something I have heard of much yet… so bitcoin lending a bit off yet I think.

Bank results

This week the bank reporting season was upon us again. It seemed the outlook for loans remains looking fairly grim, with Barclays expecting £4.8bn in unpaid loans due to COVID. Natwest is in a similar position, also announcing that it would close down Ulster bank too.

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All of this is happening whilst much of impact of the ground still feels quite muted due to government support. A big crunch still seems on the horizon.

Part of these government support schemes are both CBILS and BBLS (BounceBack loan) programmes. The later was in the news this week. BBLS has a 100% government guarenteed for lenders, and new measures for borrowers were annouced this week, allowing businesses to extend payments in order to “pay as you grow”.

However despite further extensions, payments are due to start in May 2021. It is now starting to become real, and that means at somepoint, likely the summer we will see collections impacts.

In anticipation the Banks, together with UK finance, had discussed setting up a joint collections approach, in order to pool resources and minimise costs. This week this seemed to fall apart, with a couple of banks leaving the scheme.

The pressue is still on cost and cost to process, loans provided on a self certification process upfront and high likelihood of default. This no doubt still causing some concerns and a line from the article this week nicely illustrates the challenge…”Government has provided “recoveries protocols”, which set its expectations for how banks should behave while recovering loans”… the how, which influences the cost, is still being worked on.

Lockdown halftime?

So like just like half term, we seem to be at a hiatus.

Future impacts developments and impacts are coming into clearer view, just not quite arrived yet…. all the more reason to continue to watch closely.

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Have a good weekend everyone.


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