BUSINESS HEADLINES.
RBS moves towards nationalisation
The UK government “took another step towards full control” of troubled lender Royal Bank of Scotland, reported Bloomberg.com. With further guarantees being put in place on losses from “toxic debt”, the bank is being forced to make £6bn available to British borrowers by signing a “binding agreement”. The RBS chief executive Stephen Hester told reporters yesterday that the bank would be “one of the first guinea pigs” for the structure, but that it would confine its lending to “commercial terms and creditworthy people”.
Markets slide as bail-outs grow
Stocks in Europe and Asia slumped on investor concerns that the increased RBS bail-out would lead to more rescues, as the recession worsens. With the US markets closed yesterday for a holiday the Dow Jones Stoxx 600, which tracks European shares, closed 1.7 per cent lower and in Asia this morning the MSCI Asia Pacific Index dropped 2.4 per cent. HSBC Holdings, the biggest bank in Europe, slumped 6.7 per cent in Hong Kong as investors worried about bank nationalisations and BHP Billiton fell 5.1 per cent as commodity prices declined. In London the FTSE 100 fell 0.4 per cent at the open.
Fiat in Chrysler bid talks
Chrysler and Fiat are in joint-venture talks that would give the Italian auto-maker a “significant stake” in the trouble US company, reported the Financial Times. Those close to the talks indicated that the two companies had signed a memorandum of understanding giving Fiat a 35 per cent stake in Chrysler, with an option to buy the rest of the company. Under the plan, Fiat would help finance the re-tooling of some factories so they could manufacture its cars. A deal is expected “within days” by some, although negotiations are ongoing.
Unemployment set to soar
Unemployment in the UK is set to reach 3.4m as the financial crisis worsens, reported the Guardian. Analysts at the Ernst & Young Item Club said the number of people out of work will pass 3.25m by the end of 2010 and reach 3.4m the year after. The group said that current economic statistics “are in freefall”, as it forecast a 2.7 per cent slump in UK GDP this year. Its chief economic advisor Peter Spencer, said that without additional government measures a deep recession “could evolve into a depression”.
Britain set to boost liquidity
The UK moved further towards “unconventional monetary policy” in Europe yesterday, when the government authorised the Bank of England to print money and buy assets, reported the Financial Times. The BoE can now buy a range of assets “from corporate bonds to asset-backed securities” with freshly-printed money, although it is not following the US path of quantitative easing. This “credit easing” is designed to push down borrowing costs for corporates and boost money supply in the financial system.
France to take stake in car industry
As Brussels “tears up its growth forecasts yet again”, the French government is preparing to take an equity stake in the country’s auto industry, reported the Daily Telegraph. Luc Chatel, the industry minister, told French newspaper Le Figaro that the government would offer an equity stake in exchange for funding, and limits on dividends. The scheme would be open to foreign companies with manufacturing facilities in France, like Toyota, but would be dependent on the factory sites being preserved and closures avoided.
...in brief..................
Northern Rock repayment eased and Asos bucks trend again
Northern Rock has been “given longer” to repay its £26bn government loan and so has announced plans to stop winding down its mortgage book, said the Independent. The move will mean that more borrowers who come to the end of existing deals will be able to stay on…………
Pearson, owner of the Financial Times, expects 20 per cent earnings growth for 2008, despite a “challenging time for newspapers”, reported the Daily Telegraph. The company said it had seen “significant growth” in its US higher education and international education arms…………
Abu Dhabi Investment Authority, the world’s biggest sovereign wealth fund, is understood to have dropped out of the running for Gatwick Airport, said the Times. Six consortia have submitted bids of up to £2bn to own the airport, which had to be in by 3pm yesterday............
Bernie Ecclestone has warned Formula One racing teams to expect a “reduced share of revenues” from the sport in the current climate, said the Financial Times. The commercial director of Formula One is backing a cap on the $1.3bn spent yearly by car companies…………
After reporting its first annual drop in vehicle sales in 10 years, Toyota Motor named Akio Toyoda its new president, reported Bloomberg.com. The appointment marks the “return of the founding family” to leadership of the company for the first time in 14 years…………
Online fashion retailer Asos has been able to “buck the gloomy economic trend yet again”, with buoyant Christmas trading contributing to a 118 per cent annual increase in sales for the nine weeks to 16 January, said the Guardian. The company expects profits for the full year to be in line with forecasts…………
Posts
