Friday newspaper round-up: FSA, Lloyds/RBS, National Express

Fri 24 Jul 2009

LONDON (SHARECAST) - The world’s biggest banks could be penalised with onerous surcharges, forcing them to set aside proportionately far more capital than smaller rivals, Lord Turner of Ecchinswell, chairman of the Financial Services Authority, suggested yesterday.

Lord Turner, speaking after the FSA’s annual meeting, said regulators were determined to address the problem of banks regarded as too big to fail. That would mean a capital surcharge of some sort. “It may have to be x plus 2 per cent or x plus 3 per cent for large, systemically important banks,” he said, referring to the new capital ratio, the Times reports.

Lloyds Banking Group and Royal Bank of Scotland have submitted plans to Brussels on how to slash their businesses, in an attempt to avoid draconian measures being imposed by the European Commission. The two banks, which have received £35bn in aid from the British Government between them, have promised to reduce their share of certain markets and sell businesses. Lloyds is also thought to have said it could sell some of its 3,000 branches in the UK, the Times reports.

Angry investors blasted the Bank of England on Thursday when it sparked a sell-off in the gilts market after one of the biggest government bond offerings of the year. In an interview published 20 minutes after the £5bn bond deal was finalised, Andrew Sentance, an external member of the Bank’s interest rate-setting monetary policy committee, said it was considering whether to put on hold its quantitative easing programme designed to pump money into the economy, the FT reports.

Spain’s Cosmen family has teamed up with CVC, the private equity group, to make a joint takeover bid for National Express, in a deal that could value the debt-laden transport group at more than £500m ($826m). The family, which is the biggest shareholder in National Express with 18.5% of the shares, sent a letter to the board of the bus and rail company three days ago, according to people close to the situation, the FT reports.

Talks between British Airways and Unite, the union, have broken down. Failure of the negotiations, aimed at breaking the deadlock over the airline’s plans to cut thousands of jobs and freeze pay, means that both sides must now abide by a 14-day cooling off period during which time there is no external communication, the Times reports.

Shares in the water utility companies tumbled on Thursday as the industry warned that the regulator's decision to cut consumer bills by £12 by 2015 is "storing up problems for the future". Companies such as Severn Trent, Pennon, Northumbrian and United Utilities could now be forced to cut their dividend payments as they struggle with the cost of upgrading Britain's creaking water infrastructure, the Telegraph reports.

Microsoft posted disappointing results for its fourth quarter with profits and revenue slumping sharply. Revenue in the fourth quarter fell 17% from the same quarter a year ago to $13.1bn. Analysts were expecting $14.4bn. Microsoft's profits in the fourth quarter sank to $3.05bn, or 34c per share, from $4.3bn bn, or 46c per share, in the same period last year, the Times writes.

The number of accountants and actuaries under investigation has doubled in the last year, it emerged yesterday as PricewaterhouseCoopers (PwC) became the second "big four" company to be targeted. The inquiry into PwC – for its audit work on the beleaguered door-to-door lender Cattles – brings the number of firms under investigation to 10, compared with just five last year, the Independent reports.