Financial Times
BANK URGES RESTRAINT IN BOOM TIMES
The Bank of England's consultation paper into the financial
crisis will conclude that new discretionary tools should be
considered to help smooth the peaks and troughs of the economic
cycle, even if they were only introduced in Britain. The bank's
report will call for stronger measures than those in the
Treasury's Financial Services Bill including the creation of
"macroprudential" powers to be used as an effective way of
dampening future credit booms. The main tool would be raising
the capital required to be held by banks in good times, with
less tight capital requirements during downturns.
ASB CALLS FOR GOVERNMENT BOND PENSIONS BENCHMARK
Britain's leading accountancy group, the Accounting
Standards Board, has called for company pension liabilities to
be discounted by an interest rate equal to that on risk-free
government bonds. UK and international accounting standards
currently call for pension liabilities to be discounted at a
rate consistent with either high-quality or AA-rated corporate
bonds. National Association of Pension Funds chief executive
Joanne Segars described the ASB proposals as"extremely
disappointing". The International Accounting Standards Board is
thought unlikely to consider the proposals for several years.
PRIVATE BANKS SEEK HOME LOAN CASH DEPOSITS
Leading UK private banks are demanding upfront cash deposits
from buyers seeking mortgages in excess of one million pounds as
extra security against uncertain bonus income. Brokers say some
private banks now require a year's worth of mortgage interest
payments in advance and that this money is ring-fenced with
clients unable to draw on this money until the end of the
lending facility or until conditions improve. Nigel Bedford of
largemortgageloans.com said: "Banks are using this to give them
a little more comfort that there is money there just in case
bonuses dramatically reduce."
OPPOSITION THREATENS TO BLOCK DIGITAL REFORM BILL
The Conservative and Liberal Democrat parties have
threatened to block the digital economy bill unless the
government makes concessions. Both opposition parties suggested
on Friday that they would demand changes to legislation entered
into the bill by Lord Mandelson which would affect copyright
law. The Conservative party also warned that that they would
oppose the reform if the government kept powers to allow the
industry regulator OFCOM to use part of the licence fee to pay
for regional news provided by commercial broadcasters.
FULLERS HIGHLIGHTS SECTOR SPLIT
Fullers Smith & Turner reported an 18 percent increase in
pre-tax profit to 14.1 million pounds for the six months to
September 26, on revenue that increased from 106 million pounds
to 117 million pounds. The pub group's figures highlighted a
growing divide in the sector between successfully managed
operators and struggling leased and tenanted ones. Mark Brumby,
analyst at Astaire Securities, said Fullers fared better than
many of its rivals as most of the group's pubs are in London and
the southeast. Brumby said: "Food-led managed houses have
generally outperformed wet-led tenanted houses and southeast
England has been outperforming the north."
L&G SEARCH FOR CHAIRMAN ENDS
Legal & General, the UK's third-largest life and
pensions company, hopes to name former National Australia Bank
head John Stewart as its new chairman by the end of next week. A
source close to the situation said the appointment of Stewart is
subject to the approval of the Financial Services Authority and
the finalisation of some contractual terms. L&G is thought to be
one of the primary targets of Clive Cowdery's Resolution vehicle
as it looks to consolidate the insurance sector.
GARTMORE TO CUT DEBT WITH 250 MILLION POUND IPO
Asset manager Gartmore is looking to raise 250 million
pounds as it makes its debut on the London Stock Exchange. The
group said the proceeds of the capital-raising would be used to
reduce its 400 million pound debt. Gartmore is also expected to
release another tranche of shares, enabling U.S. private equity
group Hellman & Friedman to sell most of its 58 percent stake.
The issue is expected to be priced within the next fortnight
with the listing to occur in the second or third week of
December.
MORTGAGES BEFORE CURRENT ACCOUNTS AT TESCO
Tesco could introduce mortgages by the end of next
year as it looks to stake a claim in the UK financial services
sector. However, the supermarket group told analysts Friday that
current accounts may not be offered until 2011. Tesco said: "We
have said that we plan over time to extend the financial
services business from a collection of successful financial
products to that of a full-service retail bank. We need to build
the systems and infrastructure platforms to enable us to provide
these services."
RIO TINTO BOLSTERED BY U.S. COAL SALE
Miner Rio Tinto has continued its
recapitalisation drive with the 741 million dollar sale of Cloud
Peak Energy, a unit that comprises most of Rio's former U.S.
coal business. The deal follows the 764 million dollar sale of
the Jacobs Ranch mine to Arch Coal in October. Both disposals
are part of an attempt to halve net debt by the end of the year
from its peak of 39.1 billion dollars on June 30. The initial
public offering of Cloud Peak raised 434 million dollars; a
further 307 million dollars was raised through its share of a
simultaneously placed offering of debt.
NATIONWIDE LASHES OUT AT RESCUED BANKS
Graham Beale, chief executive of Nationwide Building Society , has criticised the aggressive strategies of
government-backed banks such as Northern Rock and
Lloyds Banking Group as "seriously distorting" the
savings market with "uneconomic pricing". Beale singled out
National Savings & Investment's current market leading one-year
bond which pays 3.95 percent interest saying: "NS&I is way
outside the competitive spectrum, way, way off the scale."
Nationwide revealed a 64 percent fall in underlying pre-tax
profits in the six months to September, citing lower interest
rates and tough competition.
Prepared for Reuters by Durrants
Keywords: PRESS DIGEST Financial Times Nov 21
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