...the main BUSINESS headlines..........
Australia slashes interest rates
Australia's central bank cut interest rates by three quarters of a point to 5.25 per cent, surprising the markets and adding to last month's one point cut, said Bloomberg.com. The bank moved rates down to a three-and-a-half year low in the wake of a slump in house prices and retail sales and steep drops in the country's stock market. Analysts expect more rate cuts as the country moves towards recession. The Australian dollar fell to 66.51 US cents in reaction to the move, adding to the currency's 32 per cent decline since the middle of July.
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Lloyds TSB to shed hundreds of branches, 20,000 jobs
After the creation of the new Lloyds/HBOS "superbank", hundreds of branches and thousands of jobs are set to be lost, reported the Independent. Unions reacted angrily to the plans by Lloyds yesterday to save £1.5bn a year from cost-cutting synergies, with analysts predicting the loss of "up to 20,000 jobs". The savings target is £500m more than at the time of the takeover announcement and represents 16 per cent of the banks's total costs. The figures are expected to be achieved by 2011 and retail branches will "take the biggest hit".
Lloyds rescue would not have been allowed in normal times
M&S profits slump by nearly half
Profits at Marks & Spencer slumped "dramatically" in the first half of the year, reported the Daily Telegraph. Pre-tax profits fell 44 per cent to £307.8m, although the drop wasn't as bad as had been feared by some analysts, who had expected a decline to between £280m and £295m. Overall sales increased 0.8 per cent for the period to £4.2bn, but like for like sales, which exclude new openings, were down 5.7 per cent. The retailer held its dividend at 8.3p after a 65 per cent drop in its shareprice over the last year.
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France threatens to seize banks
The French government has threatened to take control of the nation's banking industry and sack top executives unless they start lending to businesses, said the Daily Telegraph. Prime minister Francois Fillon accused the banks of "hoarding" funds and said they had "got to open up credit to business". He said the government would observe the industry over the next 10 days before making its decision. As part of the terms of the state bail-out banks had agreed to increase lending to companies and households by three to four per cent.
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HSBC not to pass on rate cut
Britain's biggest bank said that it is "unlikely" to pass on any rate cut this week in a snub to homeowners, said the Times. The government expressed "frustration" as an HSBC executive travelling with the prime minister to the Gulf made the comments. They came as lender Abbey "provoked anger" by saying it is raising rates on its tracker deal tomorrow, a day before the Bank of England is widely expected to cut rates by 0.5 per cent. Gordon Brown repeated his desire that the banks pass on any cuts directly to customers.
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RBS announces swingeing cost cuts
Royal Bank of Scotland’s incoming chief executive warned that parts of the business could be sold off to help the bank survive the current downturn, reported the Guardian. Stephen Hester made a commitment to “shake up” the organization and identify underperforming areas of the business. RBS is to raise £19bn to bolster its capital reserves, with the government buying £5bn of preference shares and underwriting £15bn of new shares to be offered to existing customers. Shares in the bank fell to 59p in early trading.
...in brief..................
BSkyB only bidder for Tiscali and Westfield retailers up-in-arms
After the withdrawal of Carphone Warehouse from the bidding process, BSkyB is believed to be the only bidder for the UK operations of Italy's Tiscali. The third biggest broadband operator in its native country, by market share, has been trying to offload the business for several months…………
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US car sales "hit a 25-year-low" in October and things are expected to get worse, said the Daily Telegraph. The poorest result for a domestic maker was for General Motors, whose sales fell 45 per cent, while luxury manufacturer Porsche saw sales retreat 50 per cent…………
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Skipton Building Society has agreed to take over its smaller rival Scarborough, to create a top-five mutual society with around 860,000 members and £16bn of assets. No windfall payments will be paid to members of either society as a result of the deal…………
Richard Branson's Virgin Media has gained approval from its lenders to delay repayments on its £4.3bn debt. The new timetable delays £2bn of payments due by 2012, easing the financial pressure on the group. Over 66 per cent of debt holders approved the move…………
One of Goldman Sachs's "flagship" hedge funds, run by two of the company's highest-profile traders has lost "close to $1bn" since its launch in January, said the Financial Times. The managers said they were "disappointed" by the performance, as the industry continues to suffer…………
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The owners of new west London shopping centre Westfield have "enraged" retailers by demanding a sharp increase in service charges "just days" after the development opened for business, said the Financial Times. The initial cost guide was £8 per sq ft, which has now risen to £14…………
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