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Economy

UPDATE 4-Five Canadian banks cut credit card interest rates to ease coronavirus impact

(Adds details of Scotiabank rate reduction)

TORONTO, April 4 (Reuters) – Bank of Nova Scotia, Toronto-Dominion Bank, Royal Bank of Canada, National Bank of Canada and Canadian Imperial Bank of Commerce said on Friday they are cutting interest rates on credit cards to provide relief to customers affected by COVID-19 pandemic.

Late on Friday, Scotiabank said it would reduce credit card interest rates to 10.99% for personal and small business clients who have been approved for, or seek, payment deferrals.

Earlier, in separate statements, TD Bank said it will cut credit card interest rates by 50% for customers experiencing hardship, and Royal Bank said it will reduce the charges by the same extent for clients receiving minimum payment deferrals.

National Bank will allow credit card customers to defer minimum payments for up to 90 days and reduce annual interest rates to 10.9% for these clients, it said.

CIBC too will reduce interest rates to 10.99% on personal credit cards for users who request to skip a payment, Canada’s fifth-largest lender said. (reut.rs/3aHZM9Q)

Most Royal Bank, TAD, Scotiabank and CIBC credit cards charge 19.99% interest on purchases. Most National Bank cards charge 20.99%.

Last week, Prime Minister Justin Trudeau said his government had urged banks to help alleviate the burden credit card interest rates placed on Canadians. Friday’s moves are the latest in a raft of measures announced by the banks to ease the impact of the coronavirus pandemic on customers.

Canada’s six biggest banks unveiled a mortgage-relief plan two weeks ago to allow homeowners to defer or skip mortgage payments for up to six months as businesses come to a grinding halt due to the pandemic.

National Bank said it will refund additional interest accrued on the deferred mortgage payments. The lender will also waive fees for transfers and stop payments on checks and pre-authorized debts, and will not charge overdraft fees on checking and high-interest savings accounts, it said.

Since the mortgage-relief plan was announced, the banks have received nearly half a million requests that have been completed or were being processed. (Reporting by Bharath Manjesh in Bengaluru and Nichola Saminather in Toronto Editing by Matthew Lewis, Cynthia Osterman, Sandra Maler and Diane Craft)

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Economy

UPDATE 1-Hungary prepares $30 billion package to jump-start economy

* PM Orban to announce big package on Monday

* Central bank to unveil more substantial steps

* Separate fund to handle virus crisis

By Marton Dunai

BUDAPEST, April 4 (Reuters) – Hungary is preparing to announce a roughly $30 billion package of measures to help jump-start the economy amid the coronavirus outbreak, a top government official said on Saturday.

Parliament, where the ruling Fidesz party has a strong majority, has granted Prime Minister Viktor Orban the right to rule by decree to fight the coronavirus, ignoring calls by opponents and rights groups to put a timeframe on the extra powers.

Orban, who has been in power for a decade, has flagged the biggest economic package of the country’s history to offset the economic impacts of the pandemic, which has already led to tens of thousands of job losses.

The premier is expected to unveil the measures on Monday, after the government approves them, his chief of staff Gergely Gulyas told a news conference. The National Bank of Hungary will announce steps after its policy-making Monetary Council meets on Tuesday.

Gulyas said the total package would amount to 18-22% of Hungary’s GDP, which amounts to about $30 billion. It was not immediately clear where the cash would be targeted, though some steps have already been taken.

The government has imposed a blanket moratorium on all repayments on corporate and household loans this year, and the central bank has launched a series of steps to provide liquidity for banks.

It has also created a $2 billion special fund to aid the fight against the novel coronavirus, which will include contributions from banks and foreign retailers.

Domestic banks will be expected to pay 55 billion forints ($163 million) into the fund this year, with multinational retailers adding 36 billion forints.

Another $4 billion fund was created to aid economic and employment efforts.

Hungary’s economy grew by 4.9% last year but several analysts now expect a recession this year, as big carmakers have already announced temporary shutdowns lasting for weeks, and sectors like tourism have collapsed. (Reporting by Marton Dunai; Editing by Mark Heinrich and Pravin Char)

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Economy

UPDATE 2-Mexico's Pemex slides deeper into 'junk'

(Adds details, investor quotes)

By Stefanie Eschenbacher

April 3 (Reuters) – Mexican national oil company on Friday slid deeper into “junk” territory after Fitch Ratings cut the rating of its bonds by another notch to BB with a negative outlook amid fears that its stand-alone credit profile will deteriorate further.

While the ratings agency had previously singled out Pemex as “the most vulnerable” to low oil prices among its Latin American peers, the decision to cut the rating further comes just as the market rebounded in recent days.

“This was too fast,” said Luis Gonzali, a portfolio manager at asset manager Franklin Templeton, adding that oil prices might well rebound next week. “If oil prices had stayed low for months, I would have understood.”

Mexican Energy Minister Rocio Nahle told Reuters on Friday that oil prices would not stay this low. “We’re going to wait, just like the rest of the world,” Nahle said, adding that the crash did not merit a change in strategy.

(GRAPHIC: reut.rs/3axFfEX)

The new rating and the negative outlook, which signals a further downgrade is likely, applies to $80 billion of bonds, which are widely held by investors ranging from sovereign wealth funds to pension funds. It reflects a “limited flexibility to navigate the downturn in the oil and gas industry given its elevated tax burden, high leverage, rising per barrel lifting costs and high investment needs to maintain production and replenish reserves,” the statement said.

In June, Fitch Ratings became the first of the three main ratings agencies to label the bonds junk ,and investors have warned that Moody’s Investors Services, which rates the bonds one notch above junk, could follow soon.

Patti McConachie, a senior analyst at asset manager Columbia Threadneedle Investments, said for Pemex to avoid a second downgrade it needs to invest in stabilizing reserves and production, and the government needs to lower its tax burden.

“When we analyze their cost structure per barrel, the largest difference versus peers is the high level of taxes and duties,” McConachie said, adding that the current market volatility should be “a wake up call” for energy companies.

S&P Global Ratings downgraded both Mexico and Pemex last week but maintained the coveted investment grade rating. If another were to flip to junk, it would likely substantially increase the cost of borrowing for Mexico and Pemex. (Reporting by Stefanie Eschenbacher in Mexico City and Kanishka Singh in Bengaluru; Editing by David Gregorio, Grant McCool and Cynthia Osterman)

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Economy

City of Kawartha Lakes working to get more services on track during coronavirus pandemic

While the coronavirus pandemic continues, roads still need repairs in the City of Kawartha Lakes.

But how to tackle the issue is still a major question mark as the municipality can’t send out teams together during a time where physical distancing is mandated and gatherings of five or more are prohibited.

“We are still focusing on essential services,” Mayor Andy Letham said on a teleconference with reporters Friday morning.

“We’re working with our managers and directors to start bringing some of the other businesses online, you know, landfills, roads and some regular maintenance that’s falling behind.”

But Letham stressed staff safety as the municipality brings the services back.

“We recognize as we feed these processes back, we need to lead by example and we need to keep our staff and the public safe in this process,” Letham said.

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“Traditionally we fill potholes with four guys in a truck.  We can’t do that anymore.  How do we do that and do it safely?”

Letham suggested sending more than one truck, but said that’s still up for discussion, noting that it will likely take longer to do the same work during this pandemic.

“We’re challenging our managers and directors over the next few weeks, as the weather clears up, and how do we do that and do it safely?  Does that involve two guys in two trucks?  It’s not going to happen as fast as it’s happened in the past, but we’re getting back to these services,” said Letham.

The mayor also touched on residents going out to enjoy the warmer weather saying to be mindful of physical distancing and not gathering in groups.

“We’re getting a lot of calls about people out and about, getting fresh air.  We need to stay home and listen to advice about gatherings.  We can’t have our police running around every time we see 5 or 6 people walking down a street.”

The mayor also said the city isn’t looking at closing its only municipally-owned 172-site seasonal trailer park near Kirkfield, Ont., yet.

He noted Centennial Trailer Park isn’t opened for the season until May.

On March 30, the city put out a call for more personal protective equipment (PPE) for its paramedics.

It’s appealing to manufacturers and health-care practitioners, such as veterinarians, dentists and other medical offices that may have the following items available to contact the municipality:

  • Surgical Gowns or Coveralls – disposable, elasticized cuffs, cover front and back with ties to fasten and be fluid resistant
  • N95 Masks – 3M1870+, 3M9210+ and 3M9211+
  • Surgical Masks
  • Face Shields – need to cover the entire face, manufactured of a clear, anti-fog material, disposable, adjustable, be capable of being worn over eyeglasses
  • Hand Sanitizer – be a minimum of 99.0 per cent effective against a broad range of bacteria, be alcohol-based with a minimum concentration 60 per cent, be available in personal-size containers
  • Cavi Wipes

Anyone with a supply of these items is asked to call Launa Macey, supervisor of procurement with the City of Kawartha Lakes at 705-324-9411, ext. 1875 or by email at [email protected]

“Donations from the public have greatly helped with our supply, but we continue to need additional support for the coming weeks as we endeavour to prevent the spread of COVID-19,” stated Patricia Bromfield, Deputy Chief of Operations, Kawartha Lakes Paramedics.


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Economy

Lebanon central bank FX unit to work with banknotes at "market rate" – governor

BEIRUT, April 3 (Reuters) – The Lebanese central bank’s new foreign currency unit will deal with banknotes at the “market rate” and choose which money exchangers it works with, Central Bank Governor Riad Salameh said told Reuters on Friday.

Salameh said the official currency peg would be maintained in bank transactions and for imports of critical goods: medicine, fuel and wheat.

He said this policy would allow for “the availability of foreign currency and mitigate the inflationary pressures”. (Reporting by Laila Bassam and Ellen Francis; Editing by Alison Williams)

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Economy

UPDATE 1-Lebanon central bank to centralise parallel FX rate, allow withdrawal of small deposits

(Adds details, context)

BEIRUT, April 3 (Reuters) – Lebanon’s central bank said on Friday it was launching a foreign exchange unit to centralise the price of dollars for money-changers, part of efforts to rein in the parallel market as hard currency runs short amid a deepening financial crisis.

In a separate circular, it said deposits of less than $3,000 could be withdrawn in Lebanese pounds at a “market” rate, allowing the country’s smallest depositors to cash out their savings despite tight banking controls.

Neither circular defined the market rate.

“We will choose the dealers with which we transact. We work on banknotes only at market rate. We buy and sell,” central bank governor Riad Salameh told Reuters.

He said the official currency peg would be maintained in bank transactions and for imports of critical goods: medicine, fuel and wheat.

The Lebanese pound has been officially pegged at 1,507.5 pounds to the U.S. dollar for 22 years, but in recent months it has been widely traded on an informal parallel market which has become the main source of cash for people during the crisis.

Its value there has plunged by nearly 50% versus the official rate since October, after foreign investment inflows dried up and anti-government protests erupted.

The currency has traded at around 2,800 pounds per dollar on the informal market in recent days despite efforts by authorities to enforce a rate of 2,000 pounds per dollar.

A senior government source told Reuters Friday’s central bank measure will allow the full withdrawal of about 60% of all bank deposits. Banks have capped cash withdrawals at as little as $100 per week in recent months as the crisis escalated.

The source also said a market rate for the Lebanese pound would be set daily and that exchange houses which did not follow it would have their licenses revoked.

The second circular said banks must now pay out deposits of 5 million Lebanon pounds or less at the request of customers. It said this would be done by converting the funds first to U.S. dollars at the peg and then back to Lebanese pounds at the market rate that day.

The battered currency has come under more pressure during Lebanon’s coronavirus lockdown, with banks halting access to already scarce dollars and forcing up the cost of imports on which the heavily indebted country relies. (Reporting by Ellen Francis, Laila Bassam and Eric Knecht, Writing by Ellen Francis; Editing by Catherine Evans)

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Economy

UPDATE 1-Swiss govt doubles size of coronavirus loan scheme to $41 bln

(Adds details, background)

By John Revill

ZURICH, April 3 (Reuters) – The Swiss government is doubling the size of its coronavirus emergency loan scheme to 40 billion Swiss francs ($40.94 billion) after being flooded by requests for help by businesses, it said on Friday.

The government said it was expanding bridging loan guarantees from an initial 20 billion francs after banks made loans of 14.3 billion francs in the first few days of the scheme. So far more than 76,000 agreements have been made, the government said.

The Swiss death toll from the new coronavirus rose to 484 people from 432 people on Thursday, while the number of positive tests rose to 19,303.

Businesses have been clamouring for the loans to help them stay afloat as customers stay away or supply chain problems emerge. A string of big Swiss companies have issued profit warnings, while many firms have put staff on short-time work as the economy slowed.

The government had said this week it was considering expanding the scheme after receiving a flood of applications. On Friday it said the initial 20 billion francs allocated would likely be exhausted in the next few days.

The government asked parliament to approve the higher amount, with an extra 10 billion francs requested as a matter of urgency on April 7.

The loans, which are part of Switzerland’s largest ever economic aid package, come at low or zero interest.

Under the scheme being administered by hundreds of banks including heavyweights UBS and Credit Suisse, loans of up to 500,000 Swiss francs are fully secured by the government. Credits of up to 20 million are 85% secured.

The government said it believed the loans were not being abused, but it was also taking steps to prevent applicants from cheating the scheme. ($1 = 0.9770 Swiss francs) (Reporting by John Revill, editing by Michael Shields)

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Economy

ADB cuts 2020 growth forecast for South Caucasus countries

TBILISI, April 3 (Reuters) – The Asian Development Bank (ADB) has slashed its 2020 economic growth forecasts for the South Caucasus countries as they are hit by the spread of the new coronavirus, but projected a recovery in 2021.

Georgia’s gross domestic product growth is expected to decline to 0% in 2020 as the impact of COVID-19 and lower oil prices constrain consumption and limit expansion in tourism and trade, the bank said in its outlook report published on Friday.

That was down from the 4.9% the bank forecast in September.

The bank forecast, though, that the former Soviet nation’s economy would bounce back and register 4.5% growth in 2021.

The Georgian government has taken measures to soften the economic shock of the virus in the country of 3.7 million people, which has reported 148 cases but no deaths. They include imposing a moratorium on collecting property and income taxes in the hospitality sector, easing bank lending regulations, and increasing spending on infrastructure.

Georgian inflation is projected to slow to 4.5% in 2020 and 3.0% in 2021, in line with the central bank’s target, as a result of the introduction of administered prices on food.

The ADB forecasts growth in neighbouring Armenia will slow to 2.2% in 2020, but will expand by 4.5% in 2021 “as reforms initiated in 2019 and 2020 take hold and improve infrastructure, human capital, finance, and public administration”.

Inflation is projected to accelerate slightly to 2.8% in 2020 and slow to 2.2% next year. The country of around 3 million had reported 736 cases of the virus by Friday, the highest number in the South Caucasus region. Seven people have died.

Growth in oil-rich Azerbaijan is meanwhile expected to slow to 0.5% in 2020 but rebound to 1.5% next year. The nation of about 10 million people has reported 443 cases of the coronavirus with five deaths.

Inflation is expected to decelerate slightly to 2.5% in 2020, due to sluggish economic activity, and increase to 3.5% in 2021.

In September, the ADB had forecast that Armenia’s 2020 growth would be 4.5% and Azerbaijan’s 2.4%. (Reporting by Margarita Antidze; Editing by Pravin Char)

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Economy

TABLE-Toronto housing strength in early March reversed by COVID-19 uncertainties

    TORONTO, April 3 - It was a game of two halves for Toronto's housing market
in March as the COVID-19 pandemic brought surging sales in the first two weeks
to a grinding halt in the latter part of the month, data from the Toronto
Regional Real Estate Board showed on Friday. 
    Home sales in Toronto, which jumped 49% in the first half of March from a
year earlier, fell 16% in the second half, while listings, which also climbed in
the first half, pulled back in the second, the industry group said in an
e-mailed report. 
    "Uncertainty surrounding the outbreak’s impact on the broader economy and
the onset of the necessary social distancing measures resulted in the decline in
sales since March 15," TRREB President Michael Collins said. "Sales figures for
April will give us a better sense as to the trajectory of the market." 
    Even so, he said, "Late March numbers still suggest that there is activity
in the marketplace."
    Home prices pulled back in the second half of March from earlier in the
month, but remained 10.5% higher than a year earlier, TRREB said. 
               MARCH      MARCH      MARCH      MARCH       YR/YR      YR/YR
               1-14,     15-31,      1-14,      15-31,      (MARCH     (MARCH
               2020       2020       2019        2019       1-14)      15-31)
 TOTAL         4,643      3,369      3,124      4,008     +48.6%      -15.9%
 SALES                                                                
 AVERAGE     C$931,788  C$862,563  C$797,851  C$780,559   +16.8%      +10.5%
 PRICE                                                                
 NEW           7,756      6,668      5,834     8,170      +32.9%      -18.4%
 LISTINGS                                                             
                 MARCH 2020     FEBRUARY     MARCH 2019   YR/YR PCT CHANGE
 TOTAL SALES      8,012        7,256        7,132         +12.3%
                                                          
 AVERAGE PRICE  C$902,680      C$910,290    C$788,133     +14.5%
 NEW LISTINGS     14,424       10,613       14,004         +3.0%
 Sales by type of property
                       MARCH 2020      YR/YR PCT CHANGE
 DETACHED           3,760              +17.4%
 SEMI-DETACHED        751              +13.8% 
 TOWNHOUSE          1,388              +11.6% 
 CONDO APARTMENT    2,014               +2.9% 
 Average price by type of property
                       MARCH 2020      YR/YR PCT CHANGE
 DETACHED           C$1,107,870        12.5% 
 SEMI-DETACHED        C$889,480        12.3% 
 TOWNHOUSE            C$721,006        11.6% 
 CONDO APARTMENT      C$658,791        17.7% 
    

 (Reporting by Nichola Saminather in Toronto; Editing by Leslie Adler)
  

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Economy

UPDATE 1-China-backed AIIB proposes $5 bln funding line for coronavirus crisis

(Adds details of facility, quotes of vice president)

BEIJING, April 3 (Reuters) – Beijing-backed Asian Infrastructure Investment Bank (AIIB) said on Friday it was proposing to its board to form a $5 billion financing facility to help public and private sector entities navigate the coronavirus pandemic.

The proposed crisis recovery facility is in response to urgent economic, financial and public health pressures, and to support a quick recovery after the current crisis, AIIB said in a statement.

The facility will aim to help efforts to deal with both the health crisis – from basic health infrastructure to advanced healthcare – and the economic fallout, Joachim von Amsberg, a vice president at AIIB, told Reuters.

It is also part of the coordinated international response to counter the pandemic, following the recent extraordinary summit of G20 leaders, the bank said.

The facility is open to proposals and loans are expected to start being approved “within a very few weeks”, von Amsberg said.

Smaller enterprises, which have fewer buffers to weather a crisis, will be one focus of the facility, with funding to reach them indirectly through national-level banks, he said.

China’s extensive monitoring, tracing and testing systems, which have been a key part of its epidemic response, are examples of health infrastructure that the AIIB would be happy to help other countries build, he said.

Other projects in AIIB’s pipeline may well see delays as clients focus on dealing with the outbreak, said von Amsberg.

“Governments’ attention is distracted away from their long-term projects towards their short-term crisis response,” he said. (Reporting by Gabriel Crossley and Ryan Woo; Editing by Tom Hogue and Muralikumar Anantharaman)

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