Sunday newspaper round-up: Euro, Prudential, BP

Date: Sunday 06 Jun 2010

The City watchdog is stress-testing Britain’s biggest banks over fears they could be hit by the growing financial problems of the eurozone.

A “risk map” of Europe has been drawn up by senior officials at the Financial Services Authority, examining potential problems on a country by country basis. Banks have been asked to model a number of disaster scenarios, including Greece defaulting on its loans. Analysts estimate that British banks have a total exposure of more than £100 billion to Greece, Portugal and Spain alone, the Sunday Times reports.

The euro will have broken up before the end of this Parliamentary term, according to the bulk of economists taking part in a wide-ranging economic survey for The Sunday Telegraph.The single currency is in its death throes and may not survive in its current membership for a week, let alone the next five years, according to a selection of responses to the survey – the first major wide-ranging litmus test of economic opinion in the City since the election, the paper reports.

Prudential is considering a daring attempt to resurrect its $30bn takeover bid for Asian rival AIA. Tidjane Thiam, the Pru’s chief executive, believes he could have another chance to table an offer before the end of this year, according to sources close to the company. Although there are no active discussions at the moment, Thiam is said to believe he could muster shareholder support to derail a planned flotation of AIA, the Asian arm of AIG, the troubled American insurer, the Sunday Times reports.

Three of Prudential's largest shareholders have delivered a further blow to the company ahead of its annual meeting in London tomorrow by voting against the pay packages it has offered its executives.Aviva Investors, Schroders and Co-operative Investments, all top 20 investors in the insurer, have told Prudential they cannot approve its remuneration report because of concerns over incentives offered to two of its new executives. The investors are known to have concerns about so-called "golden hello" deals handed to Nic Nicandrou, finance director, and Rob Devey, head of Prudential's UK business, who both joined the company last year, the Sunday Telegraph reports.

American legislators are examining plans to “debar” BP from government contracts and oil exploration deals as punishment for the Gulf of Mexico oil spill.The proposal comes amid frantic attempts by the Obama administration to quell public anger over the British company’s role in the worst oil spill in the country’s history.The administration is understood to be weighing the legality of a process called debarment. It would stop BP from being awarded new fuel supply contracts by government clients and ban it from being granted new oil drilling leases, the Sunday Times reports.

Tony Hayward, the chief executive of BP, says he does not fear the threat of jail and has vowed to still be in his job a year on from the oil company's catastrophic spill in the Gulf of Mexico. In a wide-ranging interview with The Sunday Telegraph, Mr Hayward said the thought of stepping down "had not crossed [his] mind", despite US public hostility to his handling of the crisis, the Sunday Telegaph reports.

The Government is to kickstart the sale of assets with the £2bn auction of the 108kmChannel Tunnel Rail Link from London St Pancras International station to the Kent coast. The Department for Transport (DfT) and rail link owner London & Continental Railways (LCR) are aiming to distribute a sales document to potential bidders ahead of the emergency Budget on 22 June, reports the Sunday Independent.

Simon Eagle, the former stockbroker fined a record £2.8m by the Financial Services Authority for market abuse last month, has missed the deadline to pay the charge and will now be pursued by the regulator, which could possibly end in the banned financier's second bankruptcy, the Sunday Independent reports.

Emerson Electric,the American power giant, is poised to increase its £723m bid forChloride, the British firm that makes high-tech electricity supply systems. The improved hostile offer for Chloride, which is paid by firms around the world to guarantee a supply of electricity, is expected to be tabled in the coming fortnight, the Sunday Times reports.

At least 160,000 employees in staff share-saving schemes will be hit by higher taxes if the government presses ahead with plans to increase capital gains tax in the budget on June 22. The figure, taken from research by IFS Proshare, a not-for-profit organisation that represents employee share ownership, highlights how the tax changes will hit not just the highest earners. An estimated 2m people have invested in company share schemes, and those with holdings worth more than £10,100 incur CGT on disposal, the Sunday Times reports.

Chris Headdon, the disgraced former chief executive of Equitable Life, is free to return to the City after being banned by the Financial Services Authority (FSA) for six years for his part in the insurer's downfall. Under the terms of the disciplinary action, the FSA can revoke the banning order at any time from 26 May this year if Headdon applies for it to be lifted. At present his name still appears on the FSA's list of banned individuals, even though his period of enforced purdah expired on that date, the Observer reports.