The world’s top banker, on salary of US$31.5m, notices ‘people left behind for too long’ and wants everyone to ‘invest for the common good. NZME abandons latest StuffMe bid  

Wake-up call: JP Morgan CEO Jamie Dimon has described the coronavirus outbreak as a “wake-up call” for government and business to build a fairer economy for millions of people “who have been left behind for too long”. In a memo to staff ahead of today’s annual shareholders’ meeting, America’s best-known banker said the crisis had already prompted JPMorgan to extend payment and interest relief to more than 1.5m account holders.

Living on the edge: “The last few months have laid bare the reality that, even before the pandemic hit, far too many people were living on the edge,” Dimon wrote, days after new figures showed that 36.6m people had applied for jobless benefits in the US since the pandemic hit. (CNBC)

Time to act: “This crisis must serve as a wake-up call and a call to action for business and government to think, act and invest for the common good and confront the structural obstacles that have inhibited inclusive economic growth for years,” said Dimon. JP Morgan has come under fire in recent weeks for helping bigger clients such as burger chain Shake Shack and Ruth’s Chris Steak House to tap a small business rescue fund that was created to help struggling firms to stave off bankruptcy.

His salary? Jamie DImon, who is tipped as the next Treasury Secretary if Joe Biden were to win the presidency, was paid US$31.5m last year after the bank had the most profitable year in its history.

Rebuffed again: NZME has finally admitted defeat with its second attempt to buy rival news publisher Stuff after failing in a High Court bid to force Stuff’s owner, Nine Entertainment, to continue negotiations on a deal that Nine decided was over.

No go: Justice Sarah Katz threw out NZME’s application for an injunction requiring Sydney-based Nine to honour the terms of an exclusivity agreement that the Auckland-based publisher accused Nine of “unilaterally” abandoning. The ruling’s details are likely to be made public later this week.

‘We still think we should own it’: “Should there be a credible buyer for Stuff who will protect jobs, newsrooms and mastheads then NZME believes this should be positive for New Zealand media,” NZME said. “However, if this is not the case, then NZME continues to believe that it would be best placed to sustain and support Stuff’s mastheads, newsrooms and jobs in the interests of maintaining a robust fourth estate and plurality of voice in New Zealand.” 

Negative outlook: Three of the countries smallest banks have had their outlook revised by international rating agency Fitch. Taranaki based TSB Bank, Southland based SBS Bank and Wellington based Co-operative Bank have all had their outlook revised to negative from stable.

Potentially at risk: Fitch said government support for the the three banks as well as the Wairarapa Building Society and some credit unions, was possible but cannot be relied on. The Reserve Bank’s open bank resolution policy also made it less likely the government would provide TSB, SBS and Co-operative with financial support if required.

Downside risk: Fitch said that its base case scenario was they survived the current downtown, but it said there was “significant downside risk” to its base case arising from increased unemployment, a sharp economic contraction and a potential rise in non-performing loans which could impact the three smaller banks significantly.

Boom times: Following on the heels of technology company PushPay’s recent result, mobile marketing success story Plexure Group believes the post-Covid environment and social distancing requirements would be good for business, driving demand for its mobile sales platform. The company said Covid-19 had amplified the requirement for customers to shop at a distance, which has accelerated the adoption of products such as Mobile Order and Pay with its built-in analytics and customer engagement functions.

Fries with that: Plexure, which is 9.9 percent-owned by McDonalds, markets products by offering discounts to users of its mobile app. Reporting 72.7 million new users and a 50 percent jump in revenue to $25.3 million for the year to March, Plexure’s net profit rose to $1 million from a $703,000 loss last year. Plexure also has $14.2 million in cash on its books, which it plans to use to fund its on-going growth.

Growing fast: The Plexure app is now one of New Zealand’s largest cloud-based technology platforms, sending 5.6 million push notifications to 182.7 million users in 60 countries each month. The company has established offices in Chicago, Atlanta, New York, Tokyo, Copenhagen and London. Shares in Plexure closed up 3.3 percent at 96c.

Pay to be watched: Banks, insurance companies and other financial services industry participants are set to pay more towards funding its watchdog, the Financial Markets Authority (FMA). The government is cutting the amount it funds the FMA to 17 percent of its total budget by 2023 from 25 percent currently requiring to industry to pick up the difference.

Payback time: With a $36 million operational budget currently, 83 percent of which will eventually be funded through industry levies under the new proposal, the move is unlikely to be welcomed by a sector already under pressure in the wake of the covid-19 pandemic. In addition, the industry is facing increased regulatory scrutiny in the wake of damning findings from last year’s Australian Financial Services Royal Commission which found serious regulatory breaches by both banks and insurance companies in Australia.

More money for FMA: The changes were announced in last week’s budget, when the government lifted the budget for the financial regulator by $12.5 million for financial year 2020/21, increasing to $60.8 million by 2022/23 no doubt intended to avoid any repeat of Australia’s experience here.

European economic relief plan: France and Germany appear to overcome long held objections towards establishing a common fund for allocating to member states to aid them in reviving their economies in the wake of the covid-19 pandemic. The proposal involves the European Commission, the executive arm of the European Union (EU) raising 500 billion euros (NZ$900 billion) in public markets which would then be used as grants for sectors and regions where the impact of the coronavirus has been most stark.

Big bucket: The allocation of these funds would be done via the European budget — a common basket that receives contributions from all 27 member countries and which finances projects across the region.

A new deal: In the wake of the coronavirus economic crisis, several European countries including Italy, Spain and France have pushed for “corona bonds” — a financial instrument that would combine different national debts and would be sold as one bond in public markets. Austria, the Netherlands and Germany have long opposed such a mechanism, but appear to have been won over on the basis that the 500 billion euros would be debt raised by the Commission and spent through the EU budget in the normal way.

Migrant worker job losses will see poverty rise: Migrant workers around the world who are losing their jobs are the new face of a crisis that will cause financial distress for millions of people in their home countries who rely on worker remittances to buy food and medical supplies. The World Bank estimates that global remittances will fall 20 percent in 2020 due to Covid-19 — cutting about $100 billion from a vital source of funds for the world’s poorest people. By comparison, the fall in remittances in 2009 after the global financial crisis was just 5 percent.

Quote du Jour: “The kind of fall we are expecting in remittances is unprecedented in history,” said Dilip Ratha, lead economist for migration and remittances at the World Bank, who wrote the analysis on the payments migrants send back to their low and middle-income home countries.

Growth will slow: According to the UN, an estimated 800 million people — one out of every nine people on Earth — are supported by remittances sent by family members working overseas. The drop in remittances will also dramatically impact the growth rate in developing countries that have come to rely on the income to spur their economies. Remittances contribute more than a third of GDP to the tiny economies of Tonga, Haiti and South Sudan, for example, according to the World Bank.

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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