UK News

Press Round-up – January 27

Osborne to unveil powers to control banks The British treasury will on Friday publish plans for a radical overhaul of financial regulation that will hand the UK’s finance minister George Osborne new powers. (Telegraph)

NYSE chief sees little chance of Deutsche Boerse deal Duncan Niederauer, chief executive of NYSE Euronext, has admitted he “misjudged” European antitrust authorities’ approach to his exchange’s attempted tie-up with Deutsche Boerse, saying there was only a “glimmer of hope” the deal would succeed. (FT)

Bailout number two for Portugal? Portugal is fighting a losing battle to contain its public debt and may be forced to impose haircuts of up to 50 percent on private creditors, according to a top German institute. (Telegraph)

BNP aims to sell energy loan portfolio BNP Paribas, France’s largest bank by assets, has put on the block up to $11 billion of loans to oil and gas companies. (FT)

from Breakingviews:

UK’s problem: it’s the best in Europe

By Ian Campbell

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

UK GDP stalled in the fourth quarter, contracting by 0.2 percent. That’s bad. But which major west European economy will perform best in 2012? It’s the UK again, the IMF predicted this week.

Britain’s main problem is that it’s doing best in a troubled continent. If it achieves the meagre 0.6 percent growth the IMF predicts in 2012 it will have grown twice as fast as France or Germany and have evaded the 0.5 recession the IMF forecasts for the euro zone as a whole. The euro zone’s fiscal pain is the main obstacle to a firmer British recovery.

UK cuts, it’s true, aren’t helping growth in the short term. Since April austerity has kicked in hard, booting 193,000 unfortunate public sector employees out of work. Unemployment has risen to 2.7 million and will go higher.

But it is Europe, more than government cuts, which has dragged the UK back into negative territory. Half of British exports go to the euro zone. In December the CBI’s export order balance dropped to a 23-month low. Export weakness helps explain why industrial production plunged by 1.2 percent in the fourth quarter. Service industries, more domestically oriented, held up better.

December economic surveys point again to slightly firmer UK growth. The problem is that the European risk isn’t about to go away. In Italy and Spain the IMF foresees deep recessions, GDP declines of close to 2 percent this year and more shrinkage in 2013. What will that do to southern Europe’s debt servicing capacity?

Press Round-up – January 26

Einhorn and Greenlight fined by UK financial regulators David Einhorn, one of the world’s highest profile hedge fund managers, and his firm, Greenlight Capital, have been fined 7.2 million pounds ($11.22 million) by UK regulators for trading before a 2009 equity fundraising by Punch Taverns. (FT)

Ex-Lloyds chief joins UK advisory firm Eric Daniels, former chief executive of Lloyds Banking Group and one of the most high-profile figures in the financial crisis, is joining a little-known advisory firm. (FT)

Clegg urges quicker UK tax cuts to combat crisis The British government’s plans to raise the income tax allowance to 10,000 pounds ($15,600) should be accelerated to tackle the growing economic crisis, UK deputy prime minister Nick Clegg will say on Thursday. (Telegraph)

Iran threatens to act first on EU embargo Iran has threatened to pre-empt a European embargo on its oil by halting its exports to the region immediately, a move that could hit economically weak southern European countries.  (FT)

from John Lloyd:

A yacht not fit for a queen

Her Majesty Elizabeth the Second, by the Grace of God, of the United Kingdom of Great Britain and Northern Ireland, and of Her other Realms and Territories, Queen, Head of the Commonwealth, Defender of the Faith … is in want of a yacht.

She had one, the Royal Yacht Britannia, which she loved very much. When the Labour government of Tony Blair said it was too expensive and decommissioned it soon after assuming office in 1997, she was seen to weep at the ceremony. Last year, Blair was reported as saying he regretted the decision, pressed upon him by the then-chancellor, Gordon Brown, and inherited from the previous, Conservative administration. It cost £11 million a year to run, and a necessary refit would have cost some £50 million. So it was put out to the nautical equivalent of pasture. It’s now on show at a dock in Leith, the port of Scotland’s capital, Edinburgh, where it’s in much demand as a venue for “occasions."

If in want of a yacht, Queen Elizabeth has never lacked for gallant courtiers. Michael Gove, the secretary of state for education, earlier this month wrote to the prime minister suggesting that for her Diamond Jubilee, to be celebrated in June this year, she should be promised (the event is too near for her to be “given”) a replacement yacht, to express the love her subjects bear her. After a little to-ing and fro-ing, Gove clarified that he had not meant that the expense – which might be some £80 million to £100 million – should be borne from the public purse, but rather would be raised from her (presumably better-heeled) admirers. The prime minister said he was all for it, on that basis. The deputy prime minister, Liberal Democrat Nick Clegg, made a not-too-bad joke, saying the world was divided into the “yachts and the have-yachts."

This is a storm in a royal teacup, to be sure: The money may not be raised, the yacht never built. Already, a grand river pageant is planned for June 3, when the Diamond Jubilee will be celebrated with a four-day weekend holiday for all. The star of that show will be a luxury river boat, the Spirit of Chartwell, transformed by the film set designer Joseph Bennett into a gilded, garlanded royal barge. Bennett did the sets for the grandiose TV series Rome, so he may have had in mind the lines heralding Cleopatra’s watery arrival to meet her lover, the Roman general Antony, in Shakespeare’s Antony and Cleopatra: “The barge she sat in, like a burnish'd throne,
 Burn'd on the water."

Is not the barge enough? It will cost £10 million, the cost to be met by private sponsorship and donations. Are there enough generous royalists left after that to put up some £80 million to £100 million for a yacht?

Even if there are, it’s a bad idea. Gove, a former journalist and one of the sharpest minds in the British Cabinet, has allowed his affection for the queen to nudge him into making a rare presentational mistake. The queen should not have a yacht -- and it is the royalists who should be most concerned that she should not.

First, it puts her among the superrich. She is, indeed, very rich: Her fortune is estimated at just under £2 billion, which makes her the 19th wealthiest woman in the world and the second richest woman monarch (after Queen Beatrix of the Netherlands, who tops £2 billion). But her style, her activities and above all her public relations have kept her removed from the yacht set – a set led by a near neighbor of hers, who lives a mile or so west of Buckingham Palace and who owns the Chelsea soccer team. Roman Abramovich’s Eclipse, the largest yacht in the world (557 feet) and the most expensive (nearly £1 billion) is one of four he has, the Eclipse having two swimming pools, two helicopter pads and a small submarine. Abramovich was embroiled till last week in an effort to strike down a suit against him from former fellow oligarch Boris Berezovsky. He has just lost his bid to defeat the suit, and so the substantive case will go to a full trial in October. The sight of these two enormously wealthy men, whose riches were torn from an impoverished country, brawling over billions is at once fascinating and melancholy. The queen shouldn’t join that class.

Press Round-up – January 25

IMF issues $440 billion global warning for 2012 Europe will enter a mild recession this year, Britain will slow to a crawl and growth worldwide will expand significantly less than hoped, the International Monetary Fund said. (Times)

S&P downgrades French banks The loss of France’s long-cherished triple A sovereign debt status spilt over into its banking sector on Tuesday as Standard & Poor’s cut its long-term ratings for Societe Generale and Credit Agricole, two of the country’s top three banks. (FT)

Apple’s revenue surges past forecasts The world’s most valuable technology corporation Apple has blasted past Wall Street expectations, with record quarterly revenues of $46.3 billion (£29.7 billion), powered by the sale of 37 million iPhones in its December quarter. (FT)

EU raises pressure with threat of Greek default EU officials have stepped up pressure on Greece and its creditor banks in a complex game of three-way brinkmanship, signalling that they will allow a Greek default to run its course unless both sides accept more pain. (Telegraph)

Press Round-up – January 24

Berlin ready to see stronger “firewall” Germany is open to boosting the firepower of the euro zone’s rescue funds to 750 billion euros in exchange for strict budget rules favoured by Berlin in a new fiscal compact for all members of the currency union. (FT)

  UK’s Cable plans to curb top pay British business secretary Vince Cable outlined the most ambitious attempt in a decade to reign in soaring executive pay with measures to boost shareholder power and demystify complex pay deals.  (FT)

RIM shares hit by doubts over new chief Shares in Research In Motion have weakened further in reaction to a sweeping board and management shake-up at the BlackBerry smartphone manufacturer after analysts raised doubts about the capacity of its new chief executive to turn the company around. (FT)

Asil Nadir comes to trial 22 years after company collapse The trial of Asil Nadir, one of the most prominent businessmen in 1980s Britain, finally began on Monday – 22 years after the company collapsed into administration owing 550 million pounds. (Guardian)

Press Round-up – January 23

IKEA shelves Indian retail move Sweden’s IKEA, the world’s biggest furniture retailer, is withholding its entry into India in spite of New Delhi’s move to open its market to foreign retailers as the Swedish homewares company accelerates its expansion in other BRIC countries. (FT)

Miliband urges Cameron to block RBS chief’s bonus UK opposition leader Ed Miliband has challenged the Prime Minister David Cameron to block Royal Bank of Scotland chief executive Stephen Hester’s bonus. (Telegraph)

Lenders show faith in Nokia Siemens Nokia Siemens Networks has raised more than 1.2 billion euros of finance from a consortium of 14 European and U.S. banks in a vote of confidence from the lending market in the troubled telecoms equipment maker’s strategic overhaul. (FT)

Tesco throws in the towel on Home Plus Tesco is poised to walk away from its standalone  furnishing stores because of weak sales at the warehouse-style outlets in retail parks. (Times)

Press Round-up – January 20

China set to buy stake in Thames Water A Chinese sovereign wealth fund is poised to buy a stake in the water network that serves London, in what would be the fund’s first acquisition in the UK following investment talks with British politicians. (FT)

Italy’s banks tap into ECB fund Italy’s banks, led by UniCredit, were the biggest users of the special three-year funding mechanism launched by the European Central Bank in December, according to a new research report. (FT)

  Warren Buffett buys shares in Tesco U.S. billionaire Warren Buffett has given Tesco a 500 million pound vote of confidence by buying millions of shares in the aftermath of last week’s shock profits warning. (Times)

BofA Record $2 billion profit in Q4 Bank of America has pledged to accelerate the pace of building capital buffers to absorb future shocks as its fourth-quarter results helped drive its battered share price to the best level since October. (FT)

IMF warns of threat posed by austerity drives The leaders of the International Monetary Fund, the World Bank and the World Trade Organisation on Friday issued a warning about the economic and social risks of austerity programmes in a “call to action” designed to boost growth and fight protectionism. (Guardian)

Google takes a $20 billion hammering Investors wiped nearly $20 billion off Google’s <GOOG.O> market value on Thursday after the search giant reported a dramatic slowdown in profits growth in the final quarter. (Times)

Press Round-up – January 19

RBS tests Cameron’s resolve on pay-outs David Cameron’s pledge to curb executive pay and stop “rewards for failure” is set to face its biggest test, as Royal Bank of Scotland prepares to offer a bonus of more than 1 million pound to its chief executive, even though the state-controlled bank’s share price has almost halved in a year. (FT)

Fears rise over looming Commerzbank and MPS fiscal plans European regulators are convinced that two of the continent’s banks, Commerzbank  and Monte dei Paschi, will fail to produce credible plans to plug capital deficits by Friday’s deadline, exposing both to the risk of full or partial nationalisation. (FT)

Cameron to reveal vision for ‘moral markets’ British prime minister David Cameron will spell out his vision of “moral markets” on Thursday, as he enters the intense political debate over how to create a more “responsible capitalism.” (Independent)

RBS is fined £2m over file tampering Two insurance companies owned by Royal Bank of Scotland, Direct Line and Churchill, have been reprimanded by the UK financial regulator for a series of internal failings, including the forgery of signatures on documents. (Times) Cairn investors criticize chief’s bonus Some of the biggest shareholders in Cairn Energy, the oil group, are marshalling support to vote down a pay award worth nearly 2.5 million pounds for the Edinburgh-based oil group’s chief executive-turned-chairman Bill Gammell. (FT)

BA won’t abandon Heathrow for “Boris Island” British Airways would not move to a Thames Estuary airport unless Heathrow was closed by the government, the chief executive of BA-owner International Airlines Group Willie Walsh has said. (Telegraph)

LSE in U-turn on Italian stocks The London Stock Exchange plans to shift the trading system used for trading Italian stocks back to Milan after complaints from Italian banks and brokers that their trades had been slowed down by taking place in the UK capital. (FT)

UK Prison Service makes late bid for private jails The controversial 2 billion pound privatisation of nine English prisons took a surprise turn on Wednesday after the UK Prison Service put in a late bid to run the jails in a joint venture with the private sector. (Times)

Press Round-up – January 18

King holds fast on bank supervision The governor of the Bank of England on Tuesday dismissed suggestions that its proposed new powers be subjected to internal checks and balances, in an often testy encounter with British MPs. (FT)

Citigroup plunges as rival overtakes Citigroup’s investment banking business plunged into the red in the fourth quarter of last year as revenues from trading and deal advice dried up. (Times)

DS Smith makes bet on recycled packaging Britain’s DS Smith is paying 1.3 billion pounds for a Swedish corrugated board business in the belief that environmental challenges are likely to prompt manufacturers to use more cardboard and less plastic, glass or metal. (Times)

Goldman faces backlash over $12.6 billion staff payout Goldman Sachs’ staff are in line to collect $12.6 billion in pay and bonuses this year despite a fall in profits, sparking another row about bankers’ remuneration. (Telegraph)

Airbus promises 600 new UK jobs Airbus has pledged to create up to 600 jobs in the UK this year, but sent a shot across the bows of domestic manufacturers by warning that Britain’s GKN recently lost out on a lucrative parts contract to a Korean rival because it was not competitive enough. (Guardian) Jobs boost fuels hope for U.S. industry Manufacturing employment has grown faster in the U.S. than in any other leading developed economy since the start of the recovery, as productivity gains and subdued pay rises raise hopes for an American industrial renaissance. (FT)

Hydrogen cell cars move  to fast lane Hydrogen-powered cars are to receive the support of ministers in an initiative, backed by industry, that aims to make the technology commercially viable by 2015. (FT)

KPMG defends effort on MF Global claims Winding-up collapsed U.S. brokerage MF Global has thrust the UK’s Financial Services Authority’s new rules under the spotlight but critics argue the new regime is not working, damaging London’s reputation. (FT)