the main business headlines..........
US mortgage rescue good for UK
The £110bn US government bailout of struggling mortgage giants Freddie Mac and Fannie Mae is “good news for British banks and, in turn, British homeowners” reported The Times. UK banks have billions of dollars in bonds insured by Freddie and Fannie and if they had gone under this would have resulted in “huge losses” for the British banking industry. In turn this would have meant less money for mortgage lending. Markets across the globe have taken the news as positive, with London’s FTSE 100 up 3 per cent in early trade.
Nationwide in merger talks
Nationwide, the UK’s largest building society said yesterday that it is in talks with smaller rivals the Derbyshire and the Cheshire to create a merged group worth £191 billion. Confirmation is due later today of the deal, in which no money is likely to change hands, with the smaller building societies retaining their own brands and branches. As a result there is likely to be no repeat of the windfall payments received by members in previous industry takeovers and mergers.
Chancellor to suspend golden rule
Chancellor Alistair Darling is thought to be close to temporarily suspending the government’s fiscal rules, said The Independent. Rather than changing these constraints, Darling is likely to abandon them for a set time in his pre-Budget report this autumn “with a commitment to return to them within a specific period”. Public borrowing in the UK will surpass £50 billion this financial year and breach the 40 per cent ceiling on total debt in 2009. Suspension is likely to be “more acceptable” to the markets.
Silver State goes to wall
Silver State Bank was shut down by the US authorities on Friday, the 11th bank to fail in America this year, reported the Financial Times. The institution was “heavily exposed” to Las Vegas and other speculative areas and numbered presidential candidate John McCain’s son among its employees, in a development likely to “cause ripples” across the election campaign. Andrew McCain was a director of the bank and a member of its audit committee, responsible for the accounts. He resigned in July for “personal reasons”.
Primark sales lift ABF
Continued growth at Primark, the budget clothing chain, lifted profits at parent Associated British Foods, the company said in a trading update. Its grocery brands Kingsmill bread and Twinings tea also performed well, offsetting weakness in its sugar operations. Primark, which now has nearly 10 per cent of the UK clothing market, is expected to report a 2 per cent rise in like for like sales for the second half, slightly below the first half performance of 4 per cent growth.
Paulson looks to financial sector
Paulson & Co, last year’s most successful hedge fund, is considering a switch to backing financial restructuring from betting against it, said the Financial Times. John Paulson, the fund’s founder, told investors last week that although he remains “extremely bearish” he is now prepared to buy as financial stocks fall to low levels. The firm gained publicity last year when its bet against US subprime mortgages made it a profit of “more than $10bn” across its funds, the most profitable trade in financial history.
...in brief..................
Ferrovial sells airport and ConocoPhillips buys into Origin jv
Ferrovial, the Spanish owner of BAA sold George Best Belfast City for £132.5n at the weekend. The company paid £43m for the airport five years ago, and this 300 per cent increase bodes well for its likely sales of Gatwick and Stanstead next year…………
Struggling home-furnishings group MFI is likely to be merged with a competitor, said The Daily Telegraph. The company and backers Merchant Equity Partners are “reviewing strategic options” after poor sales, which include a merger with the UK’s Homeform and Sweden’s Nobia…………
Lehman Brothers continued its management shake-up, announcing the departure of its head of international operations. Jeremy Isaacs will leave at the end of the year, as will Benoit Savoret, chief operating officer for Europe and the Middle East, and Andrew Morton head of the fixed income division…………
Formula One’s performance is falling short of the excitement generated by the sport’s races, said The Daily Telegraph. Its latest accounts reveal that revenues have been “stuck in a rut” since the San Marino Grand Prix was ditched in 2007, leaving one less race in the schedule…………
Former ITV executive Charles Allen is to return to the industry when he becomes a non-executive director of Endemol, producer of Big Brother. He has been appointed senior adviser to the private equity division of shareholder Goldman Sachs, fuelling rumours Endemol may bid for ITV…………
ConocoPhillips has agreed to pay up to $8 billion towards a joint natural gas venture in Queensland with Origin Energy. The move for a 50 per cent stake effectively scuppers the current offer for Origin from the UK’s BG Group and pushed Origin shares up 28 per cent…………
Posts
