Economics
UK mortgage approvals for house purchases fell to a record low in July,
Bank of England figures show. Only 33,000 such homeloans were approved, down
71 per cent from July last year. This is the lowest figure since the Bank
started its series in 1993. The number of remortgage deals approved fell to
69,000, the lowest level since 2001.
Manufacturing Britain needs to do more to boost manufacturing, even to
the extent of formulating some kind of industrial policy, the
Director-General of the CBI told The Times. Manufacturing activity fell for
the fourth consecutive month in August. The Chartered Institute of
Purchasing and Supply/Markit purchasing managers’ index registered an
activity reading of 45.9 last month, up slightly from a 10-year low of 44.1
in July. Any reading below 50 indicates contraction.
Sterling The pound plunged to a record low against the euro as
investors took flight after weak economic data and gloomy forecasts from
economists. Sterling hit €1.229, the lowest rate since the European currency
was launched in 1999, before recovering slightly.
Eurozone For the third month running, manufacturing shrank in the
eurozone, revised figures from the Markit Eurozone Purchasing Managers Index
showed. The index showed a reading of 47.6 for August, up slightly from the
initial estimate of 47.5. Any reading below 50 indicates a contraction.
Slowdown World economies will feel the full impact of the deepening
slowdown early next year, the Centre for Economics and Business Research
said. American growth will fall to 0.8 per cent in 2009, less than half the
growth in 2007, while prospects in Europe have “darkened markedly”, with
growth falling to 1.4 per cent in 2008 and 1.1 per cent in 2009.
Banking
& finance
Bank liquidity British banks could soon be scrambling for short-term
funding, amid reports that supplies from Threadneedle Street and Frankfurt
may be drying up. The Bank of England explicitly ruled out extending its
Special Liquidity Scheme, while the European Central Bank is reportedly
considering tightening its lending criteria.
Mortgage fraud Property developers offering cash and other perks in an
attempt to attract homebuyers will have to give mortgage lenders full
details of their “give-away” deals as part of an anti-fraud initiative.
Dresdner Kleinwort Stefan Jentzsch, the investment bank’s chief
executive, became the first casualty of the takeover of the Dresdner empire
by Commerzbank, the German giant. He told staff that he would step down at
the start of next year. He will be followed out of the door by about half of
Dresdner Kleinwort’s 2,000 workers in the City.
Catastrophe insurers are facing a $9 billion (£4.99 billion) claims
bill for damage to American homes and businesses after Hurricane Gustav tore
into the US Gulf coast and breached storm barriers protecting New Orleans.
Atticus became one of the biggest hedge fund casualties of the credit
crunch as it emerged that turbulent stock and bond markets had wiped more
than $5 billion off the value of its portfolio. The 25 per cent slide meant
that its funds under management stood at $14 billion at the end of July,
against a high last year of $20 billion.
Bradford & Bingley Fitch downgraded Bradford & Bingley’s
long-term rating to BBB+ from A- and said that the bank’s outlook was
negative because of its “deteriorating asset quality and profitability”. The
ratings agency said that further downgrades could occur if the bank’s bad
debts continued to rise.
Marsh & McLennan, the American insurance group, emerged as a
potential bidder for Benfield, sending shares in the Lloyd’s of London
reinsurer higher. Benfield shares rose about 2.5 per cent amid speculation
that Marsh might break up a previously agreed £844 million bid from Aon, the
risk management specialist.
Construction
& property
Oak Holdings, the property developer, said that its YES! project, a
leisure resort in South Yorkshire, is valued at £21 million. It is
continuing to evaluate options to provide further working capital for the
project before finalising a development loan.
Consumer
goods
Headlam Group, the flooring distributor, reported a 1.7 per cent rise
in first-half profit but said that it might find it tough to hit its targets
for 2008. The Birmingham-based company reported pre-tax profit of £20.94
million for the six months to June 30.
Engineering
Aston Martin will revive its famous Lagonda brand in an effort to
broaden its range and move beyond sports cars only. The plans to
re-introduce Lagonda after an absence of nearly two decades is the first key
move by the carmaker for several years.
Tata The future of the Nano — the world’s cheapest car — remains in
doubt as protesters besieged the partly built factory where production of
Tata’s £1,250 vehicle is supposed to begin in a month.
Spanish car sales Sales of new cars in Spain plunged 41.3 per cent in
August, the sharpest fall since 1993, as the economy sputtered to a halt,
ANFAC, the Spanish automobile manufacturers’ association, said.
Italian cars New car registrations fell for the eighth month in a row
in August, down 26.42 per cent to 77,156 units. Fiat, the country’s biggest
carmaker, also suffered a sharp drop, down 23 per cent to 25,567 units.
Health
SkyePharma shares soared amid speculation that the specialist drug
delivery company is to announce a re-negotiation of its convertible bonds
this week.
Industrials
Uralkali, the Russian fertiliser producer, said that it had more than
tripled its first-half net profit to 13.8 billion roubles (£310 million).
Revenue at Uralkali, whose main shareholder is Dmitri Rybolovlev, a Russian
billionaire, stood at 28.60 billion roubles, in line with forecasts.
Acertec, the steel manufacturer, is in talks to sell BRC, its
steel-making subsidiary, and a 50 per cent interest in BRC McMahon
Reinforcements, its Irish joint venture, to Celsa Steel Service. Acertec is
based in Stratford-Upon-Avon, Warwickshire.
Leisure
Reel Cinemas, the award-winning Midlands-based group that specialises
in small luxury theatres, could be taken over by one of the giants of the
Indian film industry. Pyramid Saimira Group is in talks about a deal that
would value the British company at between £25 million and £30 million,
sources in Bombay said.
Intercontinental Hotels Group has sold the 524-room Jamaica Holiday Inn
Sunspree Hotel to Octagon Hotels Group for $30 million (£16.6 million),
which is $2 million in excess of its net book value.The property has been
sold with a ten-year Holiday Inn franchise agreement.
Goals Soccer Centres, the five-a-side football pitch operator, said
that competitive pricing had helped it to weather the consumer downturn as
it unveiled a 20 per cent rise in first-half profits. It reported pre-tax
profits of £3.7 million for the six months to June 30. Like-for-like sales
were up 4 per cent, with average entry charges of £5.50 per player at its 29
UK sites.
Media
Informa Private equity companies bidding for the events and exhibitions
group are believed to be close to securing financing for the £3 billion
acquisition. Sources close to the deal told The Times that the bidders,
which include Providence Equity Partners and Carlyle Group, had made
excellent progress.
Natural
resources
BP Standard & Poor’s, the rating agency, lowered the oil
multinational’s corporate credit rating. Citing BP’s turbulent relationship
with its Russian partners and the doubts over the long-term ownership of
TNK-BP, its Russian joint venture, S&P cut the rating on BP’s corporate
debt from AA+ to AA.
Sterlite Energy, a subsidiary of Vedanta Resources, the miner, will
invest up to $2.3 billion (£1.27 billion) in a coal-fired power plant in the
Indian state of Punjab. Sterlite said that it would spend 90 billion rupees
(£1.1 billion) to 100 billion rupees on the power plant, which would have a
capacity of 1,980 megawatts.
Griffin Mining said that it would continue to expand its operations and
production at Caijiaying in China. For the six months to end-June, the
AIM-listed mining company said its pre-tax profit fell to $13 million from
$18 million a year ago, largely because of sliding world market prices for
zinc and increased smelter charges.
Gippsland said that ore reserves at the Egyptian Abu Dabbab
tantalum-tin project have doubled to 30.24 million tonnes from 14.60 million
tonnes, a 107 per cent increase in total ore reserves.
Fortune Oil said that Wilmar International and a subsidiary of Kerry
Holdings would invest £39 million in the company’s gas business, in return
for a 15 per cent stake in the venture. Fortune Oil will own 70 per cent of
the equity of Fortune Gas, which reported an operating profit of £2.3
million for the first half.
Retailing
Jil Sander, the German fashion brand, has a new owner after Onward
Holdings, a Toyko-based clothing group, bought the business for €167 million
(£135.2 million) from Change Capital, the private equity company founded by
Luc Vandevelde, the former Marks & Spencer chief executive.
Woolworths Steve Johnson insisted that Woolworths was “a great brand”
with a great future as he started his first day as chief executive of the
99-year-old business. Mr Johnson will present half-year results from the
group in two weeks’ time.
Marks & Spencer A worker at the retailer faced a three-hour
disciplinary hearing after he “blew the whistle” on plans to cut redundancy
pay for the company’s staff. The GMB union, which represented him, said it
was expecting a decision in the next few days.
Aldi, the German-owned discount supermarket chain, said that sales in
July were 44 per cent higher than the same month a year ago as it continues
to win customers from larger rivals. Footfall in its stores was 32 per cent
higher.
ASOS Nick Robertson, the chief executive of the online fashion store,
took £352,000 in pay and bonuses last year after more than doubling pre-tax
profits at the business to £7.3 million.
Support
services
Babcock International is part of the private sector consortium that won
a 30-year £3 billion contract to overhaul the Army’s historic Royal School
of Military Engineering. The contract will be delivered by Holdfast Training
Services, a joint venture between Babcock and Carillion. Babcock said that
its part of the contract should be worth £1.5 billion.
Business Direct Group, the courier service business, has gone into
administration, with the loss of 70 jobs. Delivery companies are suffering
from high fuel prices and falling spending. The collapse of Business Direct
comes after Amtrak went into administration last week.
Technology
Google will today launch its own web browser called Google Chrome. The
internet search giant’s new browser will take on Microsoft, whose Internet
Explorer dominates the browser market with a 74 per cent share.
Autonomy said that it had signed an agreement to license its
intelligent data operating layer software to Thomas Cook.
Telecoms
Avanti, the satellite operator, has signed a distribution agreement
with a prominent systems integration and telecom service provider in
Germany. No financial details were given, but it said that this partnership
would focus on rural broadband projects.
Ericsson, the telecom equipment maker, said that it had won a deal
worth $450 million (£249.8 million) to develop and modernise Hanoi Telecom’s
mobile network as it moves from CDMA technology to GSM/EDGE. Under the
three-year deal, Ericsson will design, manage and operate the network.
Transport
Ryanair, Europe’s largest airline, plans to revive a €1 billion (£810
million) bid for Aer Lingus as part of a wave of consolidation in European
aviation. The budget carrier said that the worsening economic climate would
force European competition regulators to adopt a more flexible attitude
towards mergers.
Utilities
RWE Innogy, the renewable energy unit of the German company, is taking
a £6 million stake in Quiet Revolution, a two-year-old British enterprise
that has developed a wind turbine design capable of generating power in
turbulent urban landscapes.
