Shares around the world slid on renewed earnings worries, as the recession continued to take its toll on corporate earnings. In the US the Standard & Poor’s 500 Index dropped 1.1 per cent after investors exited the insurance sector on dividend cuts, and home sales fell. In Asia the MSCI Asia Pacific Index lost 0.8 per cent, with Japan’s Advantest losing 13 per cent after forecasting a loss and Telstra falling 2.4 per cent in Australia. In London the FTSE 100 Index was over one per cent higher in eary trade, after a 0.85 per cent decline yesterday. Royal Bank of Scotland this morning unveiled the biggest loss in UK corporate history, reported the Independent. The bank, 70 per cent owned by the taxpayer, announced plans to sell off “swathes” of the business after a “catastrophic” year when the government was forced to save it from the brink of collapse with a £20bn rescue package in the wake of theLehman Brothers collapse. RBS accrued bad debt charges of $7bn and wrote off £16.2bn on its “disastrous” acquisition of Dutch bank ABN Amroat the peak of the market in 2007. House prices fell 1.8 per cent in February and 17.6 per cent over the last year, according to figures from Nationwide, reported the Times. The UK’s biggest building society said it thought house prices had still to reach their “trough”, with the average cost of a home in the UK now £147,746, £31,612 lower than in February 2008. The drop is the biggest since the survey started in 1952. After data from rival Halifax showing a 1.9 per cent rise in January and some better recent signs from estate agents, the figures “paint a gloomy picture”. ITV has proposed a merger with Channel 4 and Five, in what would be one of the “most dramatic” moves in British broadcasting history, reported the Daily Telegraph. The broadcaster believes the “radical” solution is required to secure the commercial channel’s future as advertising rates “tumble”. Chairman Michael Grade hopes the combined group could create a viable rival to the BBC, although industry figures questioned the approach, claiming that it was merely a “cunning” way of approaching the government for help. The UK sank further into recession in the second half of last year than had been thought, reported the Guardian. The Office for National Statisticssaid that the UK economy shrank by 0.7 per cent in the third quarter instead of the 0.6 per cent previously reported. It also confirmed a further 1.5 per cent contraction in the last quarter of the year, the biggest decline since the mid 1980s, which pushed the UK into its first recession since 1991. Britain’s problems are being “mirrored” around the world, with Japan and America recently reporting dire economic performance. The chairman of the Financial Services Authority has promised a “revolution” in banking regulation, reported the Independent. Lord Turner blamed the “light-touch” approach of his predecessors for allowing the banks too much leeway and said the FSA would “vastly increase” the capital requirements of the banking system. He called the coming overhaul a “revolution in approach” in remarks to the Treasury committee and called the previous approach to regulating banks like HBOS “wrong”, due, largely, to political pressures. Airport operator BAA experienced a “rapid deterioration” in its financial performance last year, reported the Financial Times. The company, a subsidiary of Spanish group Ferrovial, announced a pre-tax loss of £1.3bn for 2008, after a loss of £408m the year before………… The world’s biggest chemical company, BASF, has had its first quarterly loss for seven years after a “slump” in demand, reported Bloomberg.com. The company was forced to “scale back” production after announcing a €313m fourth-quarter net loss, ten times bigger than expected………… Housebuilder Barratt “compounded the gloom” in the real estate sector yesterday, writing down the value of its land bank by nearly half a billion pounds, reported the Independent. The company reported a pre-tax loss of £592.4m in the second half of 2008, including a £494m writedown………… Skipton Building Society has blamed an “unjust” deposit protection scheme for halving its profits, reported the Daily Telegraph. Chief executive David Cutter has “attacked” the scheme for its structure after revealing it would have doubled its profits but for its £16.3m levy to help bail out the banks………… A former senior executive of restaurant chain Belgo has been convicted of insider trading, related to its £9.7m takeover in 1997, said the Times. Timothy Power pleaded guilty to two counts of insider dealing last week. He already has two previous criminal convictions………… Virgin Media has “slashed” the value of its Sit-Up shopping channels by £54.8m after failing to secure a second slot on the Freeview platform, reported the Guardian. As a result the cable operator plunged into the red in the last quarter of 2008, leading to speculation of a sell-off of its businesses…………the main business headlines
Stocks tumble on earnings fears
RBS makes biggest UK loss
House prices plunge 18%
ITV proposes three-way merger
UK recession deeper than thought
FSA chief pledges revolution
...in brief..................
BAA reports plunging profits and Virgin slashes value of assets
Thursday, 26 February 2009
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