BANKING & INSURANCE
Royal Bank set to report record lossThe Royal Bank of Scotland is set to report a half-year deficit of at least £1 billion- a record loss for a UK bank.
(The Herald) The bank's real profit for the first half of the year, likely to be around £4.9 billion, will be wiped out by £5.9 billion of writedowns from US investments. A rise in bad debts could increase the loss to as much as £1.7 billion, according to investment bank Merrill Lynch. The forecast loss will be three times higher than the biggest previous loss by a UK bank, suffered by Barclays in 1992. The results will increase pressure on chief executive Fred Goodwin to deliver promised £4 billion in disposals by the end of the year. The American insurance group Allstate was reported at the weekend to have submitted a formal bid for the bank's insurance business, which includes Direct Line. Allianz and Travellers are thought to be wavering over bids after Zurich pulled out of the running for the insurance arm, which the Royal Bank vales at £7 billion. The Royal Bank sold its stake in a joint banking venture with Tesco last week for £950 million and sold Angel Trains to Babcock & Brown for £3.6 billion last month. These sales raised £750 million in real gain towards the necessary disposals. National Australia Bank last month pulled out of a deal last month to purchase an investment banking business in Australia and New Zealand although Commonwealth Bank of Australia is said to be interested in the £600 million valued business.
Scottish insurers sound warning over new pension schemeScottish insurers have voiced fears that the proposed national pension scheme being created by the Personal Accounts Delivery Authority (Pada) will damage retirement saving and put a burden on the taxpayer.
(The Herald)In four years time the auto-enrolled Personal Accounts will become statutory. Every employee will be enrolled with a minimum 8 per cent contribution including 1 per cent from the government and 3 per cent from the employer. Insurers have said that Pada is making secret and untested assumptions about the scheme which could result in a risk for the taxpayer and threaten the continuation of good company pension schemes already in place. Those who wish to opt out of the scheme will have to ask for their contributions back after they have been automatically deducted from their pay. So far, the industry has failed in attempts to amend the Pensions bill, which goes to the Lords report stage next month. Rachel Vadhey, head of pensions development at Aegon UK, said: "It is really an employment bill, not a pensions bill. The implications for employers are immense, but not many people realise what is happening."
Read all today's banking news from scotsman.comECONOMY
Interest rate rise may be imminentEconomists have warned homeowners and borrowers that they could be hit with a rise in interest-rates when the Bank of England meets this week
(Aberdeen Press & Journal). steep rises in energy bills while the monetary policy committee battles against inflation already running at 3.5% - nearly double the 2% target – has lead some experts to believe rate setters could be forced to increase the cost of borrowing, despite the risks of recession. Investec economist Phillip Shaw said: "Pressures for higher rates are likely to linger on the committee. We cannot entirely rule out the risk that the committee will sanction higher rates this time." While Capital Economics economist Vicky Redwood warned: "If interest rates change this month, they are more likely to go up than down." Official figures estimated that the economy grew by only 0.2% between April and June, the slowest pace for 3 years, while a Nationwide survey revealed the average UK home has lost 8.1% of its value over the past year.
Read all today's economics news from scotsman.com ENERGY & UTILITIES
Centrica consider British Energy mergerCentrica will sound out major shareholders over a possible £22 billion all share merger with British Energy, or a joint venture for nuclear new builds in Britain (
The Scotsman). The British Gas owners are weighing up the move following the collapse of French company EDF's £12billion takeover of nuclear power firm, British Energy. EDF's share offer is understood to have been scuppered by investors, Invesco and M & G, who felt the French utility's 765p a share offer undervalued East Kilbride based British Energy. Both institutions hold significant shareholdings in Centrica. EDF said they will take stock of last week's developments, but added that they still wanted to be involved in the British nuclear industry.
Murray Capital looks to invest in the North-eastMurray Capital has announced plans to invest up to £50million in oil services firms in the North-east of Scotland (
The Scotsman). The investment arm of Rangers chairman David Murray's business-empire disclosed that it was looking to support both management buy-outs and acquisitions. David Murray Jr, Managing Director, said: "We are looking at oil and gas service companies predominantly. I think there are a number of opportunities up there for the foreseeable future." Although Mr Murray was unable to mention any names of businesses he has held talks with, he said he was looking at firms with growth potential which work in the Middle East, Africa and South America. The move would be the first time Murray Capital has bought into the oil services industry.
Read all today's energy and utilities news from scotsman.com RETAIL
Highland outfitters in children's furniture ventureTHREE brothers who have quadrupled the size of the MacGregor & MacDuff kilt hire business since they took over the chain are now moving into children's furniture with a Scotland-wide franchise. (The
Herald) Five years ago the Capaldi brothers branched out from running the family hotel, the Orchard Park in Giffnock. The Highland outfitting business now boasts three outlets in Glasgow, one in Prestwick and is opening a new sales room at its Bath Street premises. They have now taken on a Scotland-wide franchise for Danish furniture designers Flexa which sell children's furniture across the world through selected retailers and franchisees. Flexa is represented in 40 countries and is already established in italy, Spain and England. The first store in Scotland will be in glasgow and it is planned that five others will follow over the next two years. Plans for other stores at Silverburn and Braehead shopping centres and in East Kilbride, Edinburgh, Dundee and Aberdeen are being looked at. Gerald Capaldi said: "We just felt we weren't working enough hours, we were looking for something else that was quite similar. Danish furniture and Scottish kilts- they are both specialist....you need to know about the product and its history, get to know the customer and build a relationship."
Read all today's retail news from scotsman.com TRANSPORTCoachbuilder signs record bus contract with FirstGroupFalkirk-based bus and coach builder Alexander Dennis has signed a record UK bus contract with FirstGroup.
The Herald) The two-year deal will see Alexander Dennis supply more than 250 buses to FirstGroup in 2008-09 with an option of a follow-up order for the following year which would take the contract value to over £80 million. Chief Executive Colin Robertson said:"This must represent one of the most significant contract arrangements ever struck in the UK bus sector." Brian Souter and Ann Gloag, founders of FirstGroup's rivals Stagecoach, are major shareholders in Alexander Dennis.
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