the main headlines..........
Shares drop on profit-taking
Shares around the world broke their winning streak as investors took profits after recent rallies. In New York yesterday the Standard & Poor’s 500 Index dropped 1.3 per cent, dragged down by financial shares, and in Asia today the MSCI Asia Pacific excluding Japan Index fell 0.9 per cent. With the Japanese market closed for a holiday investors in the region sold banks and technology shares on fears that government plans to end the financial crisis will fail. In London the FTSE 100 Index was 0.60 per cent lower in early trade.
Rock made risky loans after rescue
The government allowed Northern Rock to keep issuing “risky loans” after it received support from the Treasury, reported Bloomberg.com. The National Audit Office found that it kept writing the loans after government officials “failed to adequately examine” the bank’s accounts before the takeover in February last year, resulting in a £1.4bn loss. The NAO report is issued today and includes findings that the Treasury knew as long ago as 2004 about problems in the system. Vince Cable of the Liberal Democrats called it a “damning” document.
Northern Rock and the madness of crowds 
Weavering Capital collapses
$639m London hedge fund Weavering Capital collapsed last night, reported the Financial Times. The failure came after the discovery that the main asset of its flagship fund was a $637m derivatives trade with an offshore company in the control of its founder and chief executive. The fund was set up in 1998 by Magnus Peterson, former head of trading at Swedish Bank SEB, and reported “solid” returns of 10-12 per cent a year for the last five years. The problem was discovered after investors tried to withdraw $223m, of which “only $90m” has been returned.
How Porsche stung the hedge funds
IMF cuts forecasts again
The International Monetary Fund warned yesterday that failure by the G20 summit on April 2nd to cope with the global recession will result in an “even more prolonged downturn”, reported the Independent. The IMF “slashed” its growth forecasts in its latest bulletin and issued a “stark warning” that the failure of some economies in central and eastern Europe could usher in “another wave” of banking failures. The report has been prepared ahead of the upcoming G20 meeting and warns of a potential domino effect in Europe.
BBC to cut spending by £400m
Mark Thompson, Director-General of the BBC, has warned that the broadcaster will have to make £400m of cutbacks over the next three years, reported the Times. The cuts are necessary to ensure it doesn’t go over its overdraft limit and will be achieved by “clamping down” on the wages of some of its top stars like Jonathan Ross. The corporation will bring in a “pay freeze” and ban bonuses for its 17,700 staff. With a wage bill of around £1.1bn, 1,200 jobs are already due to be cut in a previously announced programme.
New claims on Barclays tax deals
Whistleblowers have provided “further detailed allegations” about tax avoidance schemes employed by Barclays Bank, reported the Guardian. The bank is said to have made up to £1bn profit a year from the “elaborate” tax avoidance deals, which were set up using offshore bases like the Cayman Islands and a number of Luxembourg companies. The deals were alleged to be “enormous” and so complicated that HM Revenue & Customs struggled to “unravel” them. Barclays has “vigorously” denied the claims, which were leaked to the Liberal Democrats.
...in brief..................
Recession puts paid to Motor Show and Tata cuts Nano production
The recession has put a stop to the 2010 British International Motor Show, a feat “only ever achieved before by a world war”, reported theIndependent. Half a million visitors were expected at the London ExCel centre but due to poor sales big manufacturers have pulled out…………
The oil price is “poised to gain for a fifth week” on US government plans to buy debt and maintain low interest rates, reported Bloomberg.com. It rose above $50 per barrel yesterday, hitting a three-month high, and commodities “surged” as the dollar weakened…………
Mark Tucker’s replacement as Prudential chief executive, Tidjane Thiam, has probably the “most interesting” biography of any former heads, said the Independent. He is the first black chief executive of any top 100 British company and had a previous career as a politician in the Ivory Coast…………
Royal Bank of Scotland cancelled plans to purchase a luxury private jet, reported the Daily Telegraph. It had planned to buy a long-range Falcon 7X, worth around £31m, for Sir Fred Goodwin and his team, but the order was cancelled last October. The bank says its £4m deposit has not been lost…………
Luxury kitchen maker Smallbone went into administration yesterday, but was bought immediately by entrepreneur Leo Caplan, reported the Times. The company was listed on the AIM market, but after a period of “difficult trading” suspended its shares and put itself up for sale…………
Tata has cut the production target for its new Nano, the world’s cheapest car, at $1990, which is to launch on Monday, reported the Financial Times. The initial run will be 40,000 vehicles, which is a “fraction” of the company’s original plans and will have “little impact” on its profits as a result…………
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