RBI announces liquidity measures to combat COVID-19 crisis, hints at possible rate cut in next MPC meet. Digital payments slip 30% on back of coronavirus restrictions. US airlines seek $50bn coronavirus aid package. Yes Bank share price surges over 1000% in seven sessions. ArcelorMittal, Nippon Steel sign $5.15bn loan pact to refinance Essar Steel buy.
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...Things Fall Apart
As per an ET report, digital transactions - both online and offline - witnessed a 30% fall over the past few weeks on the back of the curbs placed on mobility owing to the coronavirus outbreak.
Air travel, hospitality and retail sectors have been the worst hit by the pandemic.
While customer traffic on digital channels are still high, the value of transactions has significantly declined. Online payment solutions provider Razorpay and payment gateway platform CCAvenue said transactions processed in the travel segment - which accounts for over 25% of all online spends - have reduced by nearly 35% to 40%. [ET Tech]
Is This How It All Ends?
The fear of coronavirus has caught the world in a death grip and the US airlines are seeking over $50bn in financial assistance from the Government as they try to recover from the losses already approaching $9bn. FYI, this is more than three times the size of the industry’s bailout after the September 11th attacks.
Industry trade group Airlines for America (A4A) also proposed $8bn in grants and guarantees for cargo carriers. US airports are separately seeking $10bn in assistance to counter forecast full-year losses. They are also seeking the suspension of federal excise taxes on fuel, cargo and airline tickets through the end of next year and possibly longer. [AP]
Cut Another Day
The RBI has not (yet) followed the steps undertaken by its peers in the US and UK and announced an emergency rate cut to combat the coronavirus crisis, which has rattled markets across the world. Instead, it has sought to provide liquidity relief and assure investors that it has other tools to support the economy, whilst hinting at a rate cut in the next Monetary Policy Committee (MPC) meet on April 2nd.
Yesterday, the Central Bank announced two liquidity measures including another rupee-dollar swap to prevent any undue volatility in the exchange rate and additional long-term repo operation (LTRO) to the extent of ?1Lcr ($13.4bn) to address any sudden liquidity requirements in the banking system. [Financial Express]
COVID-19 has businesses everywhere in turmoil – except for Amazon, which is seeing a surge in demand and orders as more people stay at home and shop online.
The ecommerce giant has said that it intends to hire 100,000 people more across the US to keep up with the crush of orders. It said it will also temporarily increase pay by $2 an hour through the end of April for hourly employees. [AP]
The Court Beckons
The Enforcement Directorate (ED) has issued summons to a host of of borrowers of Yes Bank, including Essel group Chairman Subhash Chandra, Jet Airways founder Naresh Goyal, Cox & Kings promoter Peter Kerkar, Dewan Housing Finance promoter Kapil Wadhawan, in the money laundering case against Yes Bank co-founder Rana Kapoor.
ED has also summoned Reliance Group Chairman Anil Ambani for questioning over the stressed loans sanctioned by Yes Bank to the group during the tenure of Rana Kapoor. [BS]
Get Into the Groove
Shares of distressed private lender Yes Bank have jumped over 1000% in seven sessions after it hit a life-time low of ?5.50 a share on March 6th, primarily on back of the resolution plan approved by the Government.
In addition to this, Yes Bank share price rose 72% in intraday trading today before closing at ?58.65 (+58.09%) after rating agency Moody's upgraded its ratings with a positive outlook. [Moneycontrol]
Private lender RBL Bank reported that it has lost about 3% of its total deposits in the last one week owing to withdrawals by institutional depositors and a couple of state government organisations. There was however no material impact on retail deposits.
As of December 31st, the bank’s total deposits stood at ?62,907cr ($8,499m), of which ?16,855cr ($2,277m) were in current and savings accounts.
The news comes shortly after the RBI last week wrote to state governments advising them against moving their deposits from private sector banks in the wake of concerns regarding the health of private sector lenders after the RBI imposed a moratorium on Yes Bank.
Meanwhile, the bank assured that it was financially strong, well-capitalised and profitable. [Livemint]
As per a Livemint report, IndusInd Bank stock, once priced to perfection, has fallen over 56% so far this year, with 38% fall coming in the past seven trading sessions. Now while this fall may partially be assigned to the bloodbath in the stock market on coronavirus fears, there is a palpable concern that smaller private banks could face some deposit flight in the wake of the Yes Bank debacle.
Moreover, the bank's large exposure to the automobile industry through vehicle loans (as much as 28% of total loan book), only adds to the concerns. [Livemint]
Pay for Speed
Japanese steelmaker Nippon Steel has announced that its joint venture with ArcelorMittal has signed a $5.15bn loan agreement with Japanese banks to refinance their acquisition of Essar Steel India, now known as ArcelorMittal Nippon Steel India Ltd.
Last November, the Supreme Court of India had cleared the way for ArcelorMittal to take over bankrupt Essar Steel. [Reuters]
In Other News...
The Board of Directors of pharmaceutical company Sun Pharma has approved the buy back of 4cr shares of the company at $425, a premium of 15.48% from the last close - representing 1.67% of the total number of shares of the company. [ET Markets]
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