Date: Sunday 13 Jun 2010
BP is considering putting several billion dollars into a ring-fenced clean-up fund to appease American concerns over the soaring cost of the Gulf of Mexico oil spill.The fund is one of several options to be put to the company’s board tomorrow ahead of a meeting on Wednesday between Barack Obama and Carl-Henric Svanberg, BP’s chairman. Yesterday Obama told David Cameron, the prime minister, he had “no interest in undermining” the company’s value. BP’s directors are discussing a reduction in dividend payments as part of a peace offering to Obama, who has made stinging attacks on the group and its management, the Sunday Times reports.
Tony Hayward, the beleaguered BP chief executive, will face hostile questioning from US politicians over the Gulf of Mexico disaster live on television this week, at a time when the company's board is coming under growing pressure to cut its dividend payment.BP's board will meet on Monday to decide whether it will trim the dividend or take some other kind of initiative as a peace offering to the US government, the Observer reports.
Meanwhile, BP was last night given a 48-hour ultimatum to improve its response to the Gulf of Mexico oil disaster, after the US Coast Guard accused the company of failing to have the right equipment and back-up plans. Rear Admiral James Watson blamed the company for lacking the necessary equipment to capture all the oil flowing from its catastrophic leak. In an open letter to BP, he gave the company just two days to explain how it can capture more oil, after raising concerns that current plans to increase the amount siphoned off from the leak would take until mid-July, the Sunday Telegraph.
One of the world’s biggest insurers is planning to move its £35bn British life assurance business to Dublin to cut its tax bill. Zurich is in negotiations with the Financial Services Authority over the move, which is expected to be confirmed within weeks. The insurer would join a growing list of firms choosing to quit Britain in favour of Ireland’s lighter tax regime. Shire Pharmaceuticals, United Business Media and WPP, the marketing group, are among those that have already switched. Corporation tax is 10% in Ireland, against 28% in Britain, the Sunday Times reports.
The Bank of England will be given prime responsibility for preventing or responding to future financial crises, George Osborne will say this week, dealing a blow to the standing of the Financial Services Authority (FSA). The chancellor will announce a new architecture for financial regulation in his maiden Mansion House speech on Wednesday. The coalition will keep the tripartite structure between the Bank, FSA and Treasury that was criticised for not preventing the banking meltdown, the Sunday Times reports.
The Business Secretary Vince Cable has given the clearest indication yet that Britain's leading banks are going to be broken up despite assurances from the Treasury that the Government's "too big to fail" banking commission would not be bounced into any conclusions. Mr Cable, the Liberal Democrat Cabinet minister who is thought to be distant from the Conservative Chancellor, George Osborne, said that there was an obvious "direction of travel" towards separating retail and investment banking. He also suggested that the UK could act unilaterally if there was no global agreement, the Sunday Telegraph reports.
The Bank of England could be forced to abandon its “highly expansionary” monetary policy — and raise interest rates — in the second half of the year, according to a member of its monetary policy committee. Andrew Sentance, writing in The Sunday Times today, casts doubt on the Bank’s official view, which is that the spare capacity left over by the recession will bring inflation down, the Sunday Times reports.Resolution will this week sound out its investors about backing a massive £2.8bn rights issue to fund the takeover of Axa's UK life and pensions business. The insurance industry consolidator, run by tycoon Clive Cowdery, confirmed on Friday that it was in talks to buy the bulk of Axa's UK arm in a £2.8bn deal, just a year after buying Friends Provident for £1.9bn, the Sunday Telegraph reports.
The Belgian bank KBC could pull the sale of its Peel Hunt broking business in London in the coming weeks, if a management-led buyout stalls. Peel Hunt was put up for sale last summer and received a large amount of interest from potential buyers. The process was handled by the corporate finance boutique, Lexicon. But the buyers have fallen away, which has left a management-led buyout as the only option, the Sunday Independent reports.
BT is preparing to parachute hundreds of middle managers back into frontline engineering services and call centres as it draws up plans to combat the threat of strike action. The telecoms group is preparing for the worst after pay talks with the Communications Workers Union (CWU) broke down last week. It is seeking to minimise disruption for phone and internet customers if engineers vote to walk out for the first time in 23 years, the Sunday Times reports.
Tesco and J Sainsbury, two of the UK's largest supermarkets, are both likely to confirm that sales across the supermarket sector have slowed markedly when they release trading updates this week. Tesco, which shocked the market last week with news of the surprise departure of its chief executive, Sir Terry Leahy, is expected to say on Tuesday that like-for-like sales over its first quarter rose by between zero and 1.5%, according to analysts' forecasts, the Sunday Telegraph reports.
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