LONDON-Wednesday newspaper round-up: BP, Bank tax, Jupiter

Date: Wednesday 16 Jun 2010

From his desk in the Oval Office, President Obama demanded last night that BP hand over control of compensation payments for the Gulf Coast oil spill and challenged America to break a century of addiction to fossil fuels to ensure that such a disaster never happens again.

As official estimates of the oil being spilled rose to 60,000 barrels a day - twelve times the original figure - Mr Obama vowed that BP would pay for its “recklessness” and promised that 90% of the oil pouring from the ruptured well would be captured “in the coming weeks”, the Times reports.
BP’s credibility as an international oil company was under further threat last night after the Brazilian Government raised doubts over its $7 billion deal to buy deepwater assets in Brazil. The Times has learnt that the Brazilian oil industry regulator is reviewing the BP deal with Devon Energy announced on March 11 — six weeks before the Deepwater Horizon blast that killed 11 people and sent hundreds of thousands of barrels of oil spewing into the Gulf of Mexico. Top Brazilian officials are being sent to Texas to question BP about the catastrophe.
George Osborne will use the chancellor’s annual Mansion House speech to warn big banks that they will have to pay for the damage they inflicted on the British economy and could be broken up. Mr Osborne will confirm his plans to introduce a bank levy and faces pressure from his Liberal Democrat partners in the coalition to raise a substantial amount from the tax in next week’s Budget The chancellor has also approached Sir John Vickers, former head of the Office of Fair Trading, to lead a review into whether Britain’s biggest banks should be forced to split their retail and investment banking arms, the FT reports.
House buyers could be refused mortgages under new Bank of England powers to be unveiled by George Osborne.The Chancellor will announce that he will hand a host of new controls to the Bank to prevent another financial crisis. The powers will mean that, for the first time in the modern era, the Bank could impose restrictions on the amount banks can lend, reports the Telegraph.
Taxpayers should poise themselves for as much as an extra £10bn of tax increases in next week's emergency Budget as the coalition Government takes drastic action to bring the public finances back into order, economists said. This week's Office for Budget Responsibility (OBR) report has paved the way for £20bn of extra fiscal tightening next Tuesday, half of which may take the form of tax increases, according to Morgan Stanley, the Telegraph reports.
Spain has upped the ante in a high-stakes poker game with Germany, pushing for the release of EU stress test results for major banks in a move that risks precipitiating a dramatic escalation of Europe's financial crisis. "We're not afraid of transparency," said the Spanish Banking Association (AEB), saying the full truth would put an end to rumours battering Spain's instutitions, the Telegraph reports.

The FT adds that Spanish banks are borrowing record amounts from the European Central Bank as the country’s financial institutions struggle to gain funding from the international capital markets. Spanish banks borrowed €85.6bn ($105.7bn) from the ECB last month. This was double the amount lent to them before the collapse of Lehman Brothers in September 2008 and 16.5% of net eurozone loans offered by the central bank.

A sell-off of Greek government debt is threatened after Barclays Capital and Citigroup removed the country’s sovereign bonds from their indices. The banks’ move followed Moody’s decision to relegate Greek credit to junk status on Monday. Moody’s downgrade of Greek debt to below investment grade will force some index-tracking investors to sell it and may force the European Central Bank to step in, purchasing Greek bonds, in order to avoid a sharp sell-off, the Times reports.
Greece's debt-ridden economy has received unexpected endorsement from China as the two countries announced multibillion euro accords to boost cooperation in fields as diverse as shipping, tourism and telecommunications, reports the Guardian.

Queues outside cinemas to see Takers, a new film starring Matt Dillon, will attract more than the usual amount of interest on Wall Street and in Washington when it opens on August 20. The movie is expected to be the first to test the market for box-office futures, after the Commodity Futures Trading Commission approved the new market this week, despite protests from lawmakers and film studios, the Times reports.
Research in Motion (RIM), which makes BlackBerry smartphones, is thought to be trialling a portable device to compete with Apple's iPad, possibly one of a series of tablet computers coming to market this year. Talk has emerged in the US that the Canadian company is in the early stages of developing a tablet-style device that would use its BlackBerry smartphones to connect to the internet, the Independent reports.
The Libyan government is backing a new London hedge fund with hundreds of millions of dollars, as the Arab state seeks to diversify its economy away from oil and train a generation of investment professionals in the ways of the financial markets. FM Capital Partners has been hiring staff at its offices in Knightsbridge, has applied for registration with the Financial Services Authority and plans to launch later in the summer, the Independent reports.

The fund manager Jupiter is set to sell shares in its initial public offering (IPO) towards the bottom of its guidance, showing that investors are still cautious amid weak markets, a source close to the deal said. Jupiter's offer to sell 122m new shares and the sale of up to 59m sold by the current owners was covered at 160p to 170p per share. The new guidance values the company at up to £748m. The offer began on 2 June with an original price range set at 150p to 210p, the Independent reports.