UK News
Insights from the UK and beyond
from Breakingviews:
Lloyds chief banks on cuts to fund growth
By Margaret Doyle The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
Antonio Horta-Osorio is applying the medicine he successfully administered at Santander UK to Lloyds. The lender's new chief executive used his first strategy update to unveil plans to slash costs by 1.5 billion pounds by 2014. This, combined with the absence of further bad loan shocks, gave Lloyds shares a boost. But it's less clear how the bank will generate future growth.
The savings equate to 15,000 lost jobs, on top of the 28,000 the bank has already cut by integrating Lloyds TSB and HBOS. With an eye on the UK government, which owns 41 percent of the bank, Horta-Osorio stresses that he prefers attrition to redundancy and won't move UK jobs offshore. Nevertheless, the savings will cut Lloyds' cost-income ratio from 47 percent at the end of 2010 to between 42 and 44 percent.
The savings are necessary to maintain a respectable return on equity despite substantial headwinds. If the Independent Commission on Banking's recommendations are implemented in full, Lloyds will have to maintain a core Tier 1 capital ratio of 10 percent while simultaneously offloading more branches than the 600 it is already being forced to sell by the European Commission. Meanwhile, low interest rates have forced Horta-Osorio to trim the bank's forecast net interest margin.
from Breakingviews:
LSE pays bearable price for misjudging TMX deal
By Chris Hughes and Antony Currie
The authors are Reuters Breakingviews columnists. The opinions expressed are their own.
LONDON/NEW YORK -- The London Stock Exchange has paid a bearable price for misjudging its proposed merger with Canada's TMX. It was naive to think the C$3.6 billion deal, which collapsed on June 29 amid opposition from TMX's shareholders, would be plain sailing. The LSE is now damaged and vulnerable. But it doesn't need a deal and its next transaction -- whether as bidder or target -- probably won't happen in a hurry.
from Photographers Blog:
Wimbledon, William and a Mexican Wave
Rafael Nadal is hurt. A physio and a doctor have arrived on court to inspect his left foot. I scramble to position myself directly across the court from his chair to capture what could be a crucial moment in the match. It is towards the end of a tense first set. Temperatures have only cooled slightly from a sweltering 33 degrees C (91F).
In my haste to capture Nadal's injury I had left my original position with just a 300mm lens and Canon Mark 4 body, knowing I had to be agile as I joined a crush of photographers.
from James Saft:
The unbelievable mercy of UK banks
James Saft is a Reuters columnist. The opinions expressed are his own.
What do you call an entire economy which sweeps its insolvencies under the carpet and hopes that something will turn up?
Britain.
An investigation by the Bank of England, reported in its Financial Stability Report released on Friday, found widespread evidence that banks are extending loan forbearance to weakened borrowers.
from Left field:
Mercury rises on Wimbledon’s ‘Manic Monday’
A record crowd for a Wimbledon second Monday witnessed some breathtaking tennis while finding the time to take onboard plenty of liquids as temperatures soared in London.
The Williams sisters found the going tough and their so far impressive comebacks hit the buffers, while women's number one Caroline Wozniacki's route to a first grand slam title also came unstuck, but in the men's draw there were no real dramas as the top four all hit their straps and made the quarters.
from Breakingviews:
China makes an uneasy saviour for Europe
By John Foley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
HONG KONG -- Expectations that China will help fix the euro zone are writ large as Wen Jiabao, the premier, visits Hungary, Britain and Germany. No wonder: the single currency aids Chinese exports, and buying periphery debt may help win friends on other issues. While China appears to have much to gain, the support isn't wholly likeable from Europe's perspective.
from Breakingviews:
SABMiller won’t get Foster’s on the cheap
By John Foley
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
HONG KONG -- SABMiller’s A$11.2 billion ($11.8 billion) approach to Foster’s Group is unlikely to be its last. The UK-listed brewing giant will have to dangle more to win a recommendation from its Australian target, whose shares jumped 5 percent above the A$4.90 being offered. But SAB cannot afford to stretch too far.
from Left field:
Americans ponder major title drought after McIlroy win
While the European Tour celebrated its fifth successive major champion after Rory McIlroy's astonishing eight-shot victory at the U.S. Open, American golf grappled with an unprecedented title drought.
For the first time since the Masters was launched in 1934, U.S. players have failed to triumph in five consecutive majors. Not since 1994 has a year gone by without an American holding at least one of the four grand slam crowns.
from Left field:
Rusedski’s picks for Wimbledon
With Wimbledon starting on Monday, all eyes turned to the event in Eastbourne. It became very interesting because of Serena and Venus Williams participation. Serena has not played since winning Wimbledon last year because of a freak accident in Munich, were she stepped on broken glass while walking to her hotel room after a night out. She was walking bare foot and cut ligaments in her feet as well as cutting her feet up badly. It took her nearly a full year to recover.
On the other hand her sister Venus hasn't played much due to a hip injury this year. I believe this is only her third event of the year. Serena played really well considering her lay off and beat Pirokova in the first round in 3 sets after starting very poorly. Pirokova was a tough match because she has made the semi-finals at Wimbledon and plays well on grass. Due to the long layoff Serena was not seeded at Eastbourne, because she has lost all her ranking points from last year. The ranking works on a 52 week calendar and if you don't defend your points, your ranking disappears.
from Felix Salmon:
How the UK wants to deal with its biggest banks
In the Republican presidential debate last night, there was unanimity on most issues, including the new orthodoxy on the right that bank regulation -- like any other regulation, for that matter -- is a Bad Thing, and a sign of the government overreaching. It's important to remember that this is not the way that right-wing parties behave elsewhere in the world. Consider for instance the UK, which seems to be cracking down on banks in a manner which would make even Barney Frank blush:
Britain's biggest banks will be forced to put a firewall around their retail operations, the chancellor will announce on Wednesday at the Mansion House...
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The Wall
