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Economics
The economy: Britain’s economy shrank less than expected in the second
quarter, further raising hopes that the country would emerge from recession
by the end of the year. The Office for National Statistics said that gross
domestic product had contracted by 0.6 per cent between April and June, up
from the 0.7 per cent decline it had estimated earlier. Most economists are
now forecasting a return to positive growth in the third quarter. However,
GDP shrank by 5.5 per cent compared with a year ago, the biggest annual
decline since records began.
Sterling: The pound rallied sharply on foreign exchange markets as the
Bank of England emphasised that it had no immediate plans to change the rate
that it pays to commercial banks on sums deposited with it overnight.
Sterling, which had traded as low as $1.5768 on Monday, rallied as high as
$1.5989 once the comments began to circulate in the market. Yields on
two-year gilts also rose by 14 basis points at one stage, one of the biggest
one-day moves this year.
Household savings: Figures from the Bank of England showed that
consumers repaid a record net £309 million of unsecured debt, mostly credit
card balances, trumping the £259 million record set in July. Figures from
the Office for National Statistics showed that the household savings rate
had risen to 5.6 per cent in the second quarter, from 3.9 per cent in the
first three months of the year, its highest since late 2003.
Manufacturing sector: Figures showed that the manufacturing sector
contracted by 0.1 per cent in the second quarter, compared with a steep 5.4
per cent fall in the first three months of the year. Output from services
industries fell by 0.6 per cent in the second quarter, from a decline of 1.9
per cent between January and March.
Current account deficit: Official figures showed that there has been a
widening in the current account deficit, which means that Britain’s imports
of goods and services are greater than its exports. The second-quarter
current account balance showed a deficit of £11.4 billion, far deeper than
consensus forecasts for a deficit of £7.8 billion and a widening in the £4.1
billion shortfall in the first quarter of the year.
Mortgage approvals: Official figures showed that the number of mortgage
approvals had slipped slightly in August to 52,317, but remained close to
July’s upwardly revised 52,404, the highest since April 2008. Net mortgage
lending rose by £1,009 billion, the biggest rise since February.
Eastern European economies: Eastern Europe’s banks have underestimated
the value of bad loans they hold, which will have an effect across the
region next year, Erik Berglof, chief economist at the European Bank for
Reconstruction and Development, said. Mr Berglof said that Russia was one
economy where bad debt levels were still “significantly worse” than
officially reported.
Banking
&
finance
Royal Bank of Scotland: Stephen Hester, chief executive of Royal Bank
of Scotland, said that the sale of the bank’s non-core operations in China
and India was “well advanced”. Standard Chartered is considered to be a
likely buyer. Speaking at a Bank of America Merrill Lynch European banking
conference in London, Mr Hester also confirmed that the bank’s aircraft
leasing business was up for sale.
Barclays: The bank is buying the Portuguese credit card division of
Citigroup, the US banking group, for an undisclosed amount. Citi cards are
expected to be rebranded under the Barclaycard name.
BNP Paribas: The French bank has joined others striving to pay back
state support with a rights issue that aims to regain management flexibility
and boost its capital ratio. The bank announced a capital increase to raise
€4.3 billion (£3.9 billion) as part of its move to reimburse the French
State early on its capital advance. Next month it will repay the €5.1
billion in non-voting shares subscribed to by the French State on March 31
and will make an interest payment of €226 million.
London Stock Exchange: Shares in the bourse rose by 6½p to 842½p after
it said that Barclays Capital and Morgan Stanley would replace Bank of
America Merrill Lynch in advising it on mergers and acquisitions, sparking
hopes of big deals in the near future. JPMorgan Cazenove and Nomura will
remain as the LSE’s corporate brokers.
Banking executives: Gordon Brown declared at the Labour Party
conference that banking executives would be disqualified from holding
directorships if regulators believed that they had overpaid themselves and
their employees.
Payment protection insurance: Banks and loan companies — including
Lloyds and Barclays — that sell payment protection insurance have been
ordered to improve their handling of customer complaints by the Financial
Servies Authority, the City regulator, amid widespread evidence of abuse.
Construction
&
property
Landlords: Extra rules to regulate “sale and rent back” property deals
will be brought in by the Financial Services Authority next year. The
regulator said that it would ban “exploitative advertising and high-pressure
sales techniques”.
NR Nordic & Russia Properties: The Euronext Amsterdam-listed
company, which invests in property opportunities in the Nordic and Baltic
regions and Baltic Russia, has been the subject of a possible cash offer,
which is expected to value the company at more than €120 million (£110
million), from Ian and Richard Livingstone, the brothers who control London &
Regional Properties. L&R already owns 34 per cent of the company.
Consumer
goods
Dairy Crest: The milk supplier said in a trading statement ahead of its
interim results that its top brands, including Country Life, Cathedral City
cheese and Frijj flavoured milk, were selling well. It also announced that
it intended to close its defined benefit pension scheme to future accruals
from April 1, 2010, when consultations with employees were completed.
AG Barr: The Scottish maker of Irn-Bru reported a 20 per cent increase
in first-half pre-tax profits to £13.5 million and said that it was
confident about meeting market expectations for the full year. It also
raised its interim dividend by about 8 per cent to 6¼p.
Anheuser-Busch InBev: The brewing behemoth behind Stella Artois, Beck’s
and Budweiser has completed the sale of Tennent’s lager and some associated
assets to C&C Group, the Irish cider maker, and is also said to be days
away from agreeing the sale of most of its Central and Eastern European
operations to CVC Capital Partners, the private equity group, for an
estimated €1.7 billion (£1.6 billion).
Health
Pharmaceutical companies: Neelie Kroes, the European Competition
Commissioner, gave a warning to pharmaceutical companies to “look out” for
new investigations in coming months. She said that a recent inquiry into the
pharmaceuticals sector had been examining why generic versions of branded
drugs were slow to come to the market and whether innovation was being held
back.
Four Seasons Healthcare: An agreement has been reached between the
heavily indebted nursing home chain and Royal Bank of Scotland, its main
lender, which is 70 per cent-owned by the Government. Under the deal,
lenders will halve Four Season’s £1.55 billion debt mountain to £780 million
in a debt-for-equity swap. The deal will mean that RBS takes about 40 per
cent of the equity in the chain.
Leisure
TUI Travel: Europe’s biggest tour operator has raised £350 million by
issuing a convertible bond as part of a refinancing of a £900 million loan
from its German parent company. The group also announced the creation of a
joint venture with Sunwing, the family-owned Canadian travel group, and
added that trading, while difficult, was still in line with expectations.
Clapham House Group: The restaurant operator told shareholders at its
annual meeting that it had opened its 50th Gourmet Burger Kitchen outlet in
the UK and its first franchise in Greece, but the outlook remained
challenging, especially in its Tootsies business.
Enterprise Inns: The tenanted pub company said that the resilience of
its core pub estate continued to be offset by the need to provide financial
support to struggling licencees, although the rate of business failures was
slowing. It reiterated its ability to refinance its debt without recourse to
a rights issue.
D&D London: The former Conran Restaurants group said that its
London restaurants would be scrapping the practice of levying a 12.5 per
cent discretionary service charge on customers’ bills. Customers will now be
free to leave tips, which will be pooled and “held for the benefit of the
staff”.
Media
Independent News & Media: The newspaper publisher has reached
agreement in principle with its bondholders for a refinancing, which would
mean a reprieve for the two national Independent titles in the UK and
a block on rival plans by Denis O’Brien, the Irish tycoon, who has a 26 per
cent stake. A working committee of bondholders, speaking for 39 per cent of
the bonds, have agreed to swap them for shares in INM and there will also be
a rights issue to raise another €94 million (£86 million).
Daily Mail and General Trust: The newspaper publisher said that it had
halved the rate of decline in advertising revenue at its flagship national
newspaper in September, a fillip that suggests the industry could start to
recover in the new year. Advertising bookings for September were down by “10
to 12 per cent” at the Daily Mail and its sister Metro
title, compared with a 21 per cent fall in July and August.
Natural
resources
CNOOC: The Chinese state-owned oil company is reportedly bidding for
six billion barrels of Nigerian oil, about a sixth of the country’s
reserves, in what is thought to be a bid to strengthen China’s position with
its Western oil partners.
Xstrata: Shares in the Anglo-Swiss mining group fell by 7p to 921p
after Société Générale downgraded its rating to “hold” from “buy” on the
ground that it no longer expected Xstrata’s proposed merger of equals with
Anglo American to happen.
DNO: The Norwegian oil explorer said that it was considering moving its
listing to London after a row with the Oslo stock exchange over the release
of information that has damaged its business in Iraq. Iraq’s Kurdistan
Regional Government (KRG) has suspended DNO’s activities in the
semi-autonomous region for six weeks and threatened to expel it after the
Oslo exchange published details of a $30 million 2008 share deal between the
KRG and DNO.
Retailing
Jessops: Britain’s largest photographic and camera retailer is coming
under the control of its bank, pension fund and an employee trust under a
debt-for-equity swap that will leave investors with less than 5p in the
pound. HSBC will take a 47 per cent stake in return for forgoing £34 million
of debt. The retailer said that the move would save 2,000 jobs. A new
company, called Snap Equity, will take control of Jessops’s assets.
Support
services
Compass: The London-listed catering group said that it expected to
increase its full-year earnings by about 14 per cent as new business wins,
cost cuts and a weak pound helped to push growth. It has renewed contracts
with Heinz and the Royal Military Academy, Sandhurst, and won new business
with BSkyB. News Corporation, parent company of The Times, has a 39.1
per cent stake in BSkyB.
Mitie: The outsourcing group that cleans the Tower of London and
supplies attendants to the Tate Britain art gallery, said that it would
report a small rise in first-half revenues. It said that the recent
acquisition of Dalkia Technical Facilities Management had performed in line
with expectations.
Technology
Internet Corporation for Assigned Names and Numbers: The US Department
of Commerce is expected to sign an agreement that will give the body that
co-ordinates the internet’s address system and ensures the smooth running of
the web much greater independence and loosens the American grip on it.
Telecoms
Vodafone: The mobile phone company has agreed a deal to sell the Apple
iPhone in the UK and Ireland, although it will miss out on a potential
Christmas bonanza as it will not be able sell the handset until next year.
Orange had said on Monday that it had also won a contract with Apple as O2’s
exclusive deal to sell the iPhone nears its end.
T-Mobile: The telecoms company has signed a deal with Monetise, the
mobile banking and payment service, to provide financial services to its
customers. T-Mobile customers will be able to receive bank balance alerts
via text message as a result of the deal.
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