RBS SETS UP EQUITY CAPITAL TEAM
Royal Bank of Scotland (RBS) has set up a financial institutions-focused equity capital markets team, to take advantage of the need for banks to increase capital.Charles Lucas, who previously ran RBS’s equity capital markets (ECM) business in central and eastern Europe, will head the team.
VIRGIN SEALS £1.3bn DEAL ON BIRTHDAY
Virgin Atlantic splashed out on its 25th birthday yesterday with a $2.1bn (£1.28bn) deal, saying it would take delivery of 10 new Airbus A330-300 aircraft between now and 2012. The birthday goodies will allow the airline to expand while it waits for the delivery of Boeing’s troubled 787 Dreamliner. The planes, each seating up to 270 passengers, will allow the airline to expand its reach to Beijing, Cancun and Vancouver.
GAS WAR LOOMS AS UKRAINE SEEKS CASH TO PAY GAZPROM
A summer gas war is brewing in Ukraine, threatening another cut-off of Russian gas supplies into Europe and a worsening of the cash squeeze on Gazprom, Russia’s biggest company. Eleventh-hour talks are under way between the European Union, the International Monetary Fund (IMF) and the European Bank for Reconstruction and Development to secure a stop-gap loan of $4bn (£2.44bn) to pay for Ukraine’s gas needs.
ANGLO SAYS NO TO XSTRATA MERGER
Anglo American, led by chief executive Cynthia Carroll, snubbed rival miner Xstrata’s takeover approach last night, calling its rival’s terms “totally unacceptable”. Anglo said Xstrata’s £40bn plus merger proposal was “unattractive” and would hurt its interests in the platinum, iron ore and diamond markets. Xstrata has strong coal and copper interests. Anglo added that its current business strategy of cutbacks on investment would make “substantial savings”.
BRAMDEAN FUND POSTS HEAVY FALL
Bramdean Alternatives, the listed fund of alternative funds, has posted its worst monthly fall in net asset value in sterling terms since its inception two years ago. The fund, which is managed by Nicola Horlick’s Bramdean Asset Management, suffered a 7.7 per cent fall in net asset value to 81.35p in May, reflecting the currency movement in its dollar-denominated portfolio of investments. However, the underlying movement in the value of the company’s portfolio of assets – mainly stakes in hedge funds and private equity funds as well as about a third in cash – was largely static.In dollar terms, the net asset value climbed slightly by 0.5 per cent.
INSURERS FACE $6BN BILL FOR D&O
The financial crisis could cost insurers $6bn (£3.7bn) on policies that protect US companies and directors from legal costs, insurance consultants have warned. Disgruntled investors hoping to recover their losses have filed a spate of lawsuits against companies and their executives since 2007, resulting in a dramatic increase in claims activity under so-called directors and officers (D&O) policies. Towers Perrin and Cornerstone Research said 210 securities class actions were filed last year, up 19 per cent on 2007.
EUROPE’S NEW CDS PRICE STRUCTURE
Europe’s market for credit default swaps – used to protect investors against bond defaults – adopted a new pricing structure on Monday as part of a drive to eliminate counterparty risk. The introduction of fixed coupons to price the CDS on single name European company debt means the seller of default protection will receive part of the premium upfront, with the other part paid over the term of the contract.
MARKETS TAKE FRIGHT OVER WORLD RECOVERY PROSPECTS
Shares tumbled on both sides of the Atlantic yesterday as stock markets took fright over uncertain prospects for a global recovery after a series of warnings from key policymakers and institutions.
SEC CHARGES BERNARD MADOFF ASSOCIATES WITH FRAUD
America’s leading financial regulator has for the first time alleged that disgraced financier Bernard Madoff did not work alone on planning and carrying out his $65bn (£40bn) fraud, charging four of his associates with securities fraud. The Securities and Exchange Commission alleges the quartet assisted the orchestrator of the largest Ponzi scheme in US history by bringing in investors to his fund in return for generous pay-offs.
CITY WARNS EU RULES ARE A THREAT TO UK ECONOMY
The City of London has warned that new European regulations could ride roughshod over the interests of the UK, where the financial services sector employs more than 1m people and generates billions of pounds in income.
KODAK TO STOP MAKING KODACHROME
Eastman Kodak has said it will discontinue its iconic Kodachrome color film this year due to tumbling sales as photographers embrace newer Kodak films or digital-imaging technology. Kodak introduced the amateur color film in 1935 and it became the first commercially successful color film.
AUTO SURVEY SHOWS PROGRESS FOR DETROIT
Detroit auto makers increased their new-vehicle quality scores by an average of 10 per cent in an influential industry survey despite being rocked by bankruptcies and a world-wide economic recession. Ford Motor Co., General Motors Corp. and Chrysler LLC reduced the number of troubles reported by consumers during their first 90 days of ownership.
FITCH HIGHLIGHTS NEGATIVE EQUITY
A report by credit agency Fitch Ratings will today say that one in 10 borrowers with excellent credit ratings are trapped in negative equity, owing more on their mortgage than the value of their homes. The agency will also forecast a peak-to-trough fall in house prices of up to 35 per cent. The report, which is based on loan information from 2.7m borrowers, found the highest concentration of negative equity was in Northampton, where 17 per cent of borrowers were under water, while Northern Rock and Bradford & Bingley are among the lenders with the highest number of borrowers in this position.
YELL WARNS ON DEBT
Shares in Yell Group, which recently appointed ex-Merrill Lynch man Bob Wigley as chairman, slumped nearly 14 per cent to 25.5p yesterday after the directories publisher warned that a nine per cent dip in earnings would force it to renegotiate its debt covenants for a second time.
JAPAN AIRLINES TO GET STATE AID
Japanese finance minister Kaoru Yosano said yesterday the government was preparing a loan for loss-making Japan Airlines (JAL), which has been caught up in the global economic crisis. A Development Bank of Japan official said it would likely provide around 100bn yen (£635m) in emergency financing to JAL. Government support for JAL will encourage commercial banks to lend to the airline, say analysts. In February JAL predicted an annual loss of 34bn yen.
BLUE OAR, NOW ASTAIRE, FINED £225,000 BY LSE FOR BREACHING AIM REGULATIONS
Stockbroker Blue Oar Securities, which recently changed its name to Astaire, was yesterday hit with a £225,000 fine from the London Stock Exchange (LSE) and publicly censured for breaching the Aim market rules. The LSE said Blue Oar failed in its duty as a nominated adviser (Nomad) to Worthington Nicholls, now called Managed Support Services, for over a year between 2006 and 2007. It said Blue Oar did not adequately assess the firm’s appropriateness for Aim prior to admission and that it did not carry out appropriate due diligence or advise the firm properly on certain issues at and after admission.
ITV FLATTERS BONDHOLDERS
ITV’s bondholders have won improved terms on the broadcaster’s proposed bond exchange just two days before the offer closes. The struggling broadcaster said that, following discussions with “several substantial holders” of its 2011 bonds, the new bonds will pay a coupon of 10 per cent rather than the 9 per cent offered previously.
APPLE’S NEW iPHONE SELLS 1M IN WEEK ONE AS JOBS RETURN
Apple said yesterday that it had sold more than 1m of its iPhone 3GS in the first three days of launch, making it the most successful smart phone debut to date.The rush to secure the latest model beat analyst expectations and matched the sales for the old 3G model, despite being launched in just eight countries compared to 21.
THAMES WATER DRINKS IN PROFITS BUT WARNS OF RISING BILLS TO COME
Thames Water said yesterday that tighter cost controls had driven a full year pre-tax profit rise of four per cent to £435.1m, but warned of a challenging year to come. The UK’s largest water company said that for every 100p of profit it made, it has invested 226p in a programme which included replacing London’s worn-out Victorian water mains. But it warned that its 8.5m customers faced rise in their water bills of 17 per cent over the next five years.
WORLD BANK DASHES HOPES OF A RECOVERY
Hopes of a global recovery were dealt a blow yesterday after the World Bank slashed its 2009 growth forecasts and said the burden of bank restructuring will hinder recovery in developed nations. The Bank said the US economy will shrink by three per cent this year and the eurozone by 4.5 per cent, compared to the 2.4 per cent and 2.7 per cent contractions it forecast back in March.
US POURS CASH INTO HOUSING PLAN
The US Treasury is to plough $268m (£164m) into efforts to create new jobs and provide affordable housing, the department announced yesterday. The cash injection forms part of the American Recovery and Reinvestment Act, aimed at funding housing developments in key states such as Washington D.C. “This initiative will help spur construction and development, create much needed jobs, and increase the availability of affordable housing for families around the country,” said Treasury deputy secretary Neal Wolin. “Today’s announcement of housing funds demonstrates how President Obama's Recovery Act is putting our nation on the path to economic stability, one community at a time,” he added.
FALLING RENTS HIT LANDLORDS
The proportion of surveyors reporting a fall in rent in the three months to the end of April hit its highest since the poll of surveyors began in 1999. The Royal Institution of Chartered Surveyors' (Rics) found that 55 per cent more surveyors and estate agents reported a fall in rents than a rise.
BA’s ALL BUSINESS CLASS CITY FLIGHTS SET FOR TAKE OFF
Troubled British Airways (BA) said yesterday it would go ahead with its all-business class London City to New York service, despite having reported record losses earlier this year. The service, which will begin on 29 September, sees each Airbus A318 plane take just 32 passengers over the Atlantic. The plane will stop in Ireland for refuelling en route.
