BANKING & INSURANCEAnalysts call for Lloyds TSB rights issue ahead of the HBOS takeoverLLOYDS TSB should tap shareholders for cash ahead of its takeover of HBOS or run the risk of suffering the same plight as F
ortis, influential analysts warned yesterday (
Scotsman). London-based Lloyds has largely avoided the need to raise cash during the current credit crises and plans to improve the strength of its balance sheet after its planned merger with HBOS. But analysts at JP Morgan Cazenove said yesterday it would be better for Lloyds to take bold action and raise cash now rather than attempt to strengthen its balance sheet over the next few years. Fortis was yesterday handed an 11.2 billion (£8.9bn) cash injection by the governments of Belgium, Luxembourg and the Netherlands in return for a 49 per cent stake. Fears over the solvency of Belgium's largest retail bank were fuelled by the stake it has in ABN Amro – bought as part of the RBS-led consortium's takeover last year – which it will now have to sell.
Bradford & Bingley demise causes grief across sectorBank shares plummeted yesterday after confirmation that Bradford & Bingley is to be carved up between the government and Spanish bank Groupe Santander in a move that could leave taxpayers paying the chief executive's seven figure salary (
Herald). It was a day of bank rescues as continental company Fortis sold stakes to the Belgian, Dutch and Luxembourg governments and America's Wachovia sold most of its assets to Citigroup in a deal brokered by Federal authorities. Investors reacted by dumping bank shares. On a day when the FTSE-100 dropped 269.7 points to 4818.8, a 5.3% fall and its lowest close since April 2005, HBOS fell 18.1% to 142p and Lloyds TSB, which has agreed to buy it, was down 13.5% to 217.25p. Analysts pondered yesterday whether market conditions would prompt Lloyds to re-negotiate the terms of the deal. Royal Bank of Scotland was down 13% at 181p and Barclays off 8.8% to 334.12p. Only HSBC, which has large Asian operations, dodged most of the sell-off closing 1.6% down at 865p. This was despite the intervention of co-ordinated action by nine central banks to pump cash into the banking system.
Read all today's banking news from scotsman.comECONOMYFear of global crash as $700bn bail-out rejected WALL Street plummeted by nearly 780 points in its largest one-day drop last night, as proposed American legislation to bail out troubled banks and kick-start the global economy was rejected by the US House of Representatives (
Scotsman). The price of oil slumped and global financial meltdown loomed after the bill pushed by the Bush administration was voted down. The vote was held open until the last minute, as desperate efforts continued to persuade members to change their minds. However, that failed and legislators were forced to accept the bill in its current form was dead. George Bush, the US president, said he was "disappointed" by the rejection of the bail-out. He added: "We put forth a plan that was big because we've got a big problem. Our strategy is to continue to address this economic situation head-on, and we'll be working to develop a strategy that will enable us to continue to move forward." And Henry Paulson, the US Treasury Secretary, said the bill was "too important to simply let fail".
Read all today's economics news from scotsman.comINDUSTRYDrop in profit sends Lees' shares fallingShares in Lees Foods fell sharply yesterday after the company said pre-tax profits for the first half of the year to June 30 crumbled by almost half, hit by higher prices for raw materials and increased distribution costs. Full-year profits are also expected to be below last year's (
Herald). Revenues for the period rose to £8.89m from £7.85m, reflecting six months of sales at Patisserie UK, which it purchased in December 2007. Profit before tax for the six-month period of this year came in at £222,057 against last year's figure of £413,252. Lees Foods is the parent company of Lees of Scotland, the Waverley Bakery and Patisserie UK. The three businesses are located at separate sites in central Scotland. Lees of Scotland has a long tradition in confectionery, biscuit and meringue manufacture. The Waverley Bakery is a well-established manufacturer of ice cream cones and related products. Patisserie UK, which was acquired in December 2007, manufactures hand-made cakes, tarts and cheesecakes among other bespoke bakery products.
Read all today's industry news from scotsman.comENERGY & UTILITIES
Energy sector powers Scots mergers aheadMERGERS and acquisitions in the energy sector have driven deal-making north of the Border in the first half of 2008, but activity in the rest of the sector has slowed down, a new report has claimed (
Scotsman) The Deal Drivers report, by accounts and business advisers PKF, showed that the total value of deals in the UK reached £159.7 billion in the period – almost as much as in the whole of 2007, when the figure reached £167bn. But the majority of the value came from the £107.5bn approach for Rio Tinto by BHP Billiton, while a further spike was prompted by a change in capital gains tax regulations, which encouraged business owners to sell up before the rules changed in April this year. Graeme Cassells, PKF partner in Scotland, said: "The first quarter saw an increase in activity as owners tried to sell their businesses to benefit from the previous, more generous, CGT regime. This brought forward a lot of sales that would otherwise have been spread throughout the year." Cassells said that oil companies had been involved in the most Scottish deals, apart from the £9.6bn joint bid for the brewing giant Scottish & Newcastle.
Read all today's industry news from scotsman.comMEDIA & LEISURE
BSkyB loses ITV legal challenge BSkyB has lost its legal challenge to the Competition Commission's decision forcing the firm to reduce its stake in rival broadcaster ITV (
BBC). The firm has been told to cut its holding in ITV from 17.9% to below 7.5% by the Competition Appeal Tribunal. Previously, the commission said that BSkyB's stake thwarted competition and allowed it unfair influence over ITV. BSkyB bought the stake in 2006 in a deal which effectively blocked NTL, now renamed Virgin Media, from buying ITV. In April 2007, the Office of Fair Trading reported that BSkyB's acquisition of its stake in ITV shed doubt on the independence of ITV, prompting the Competition Commission to launch a probe. Virgin boss Sir Richard Branson, consumer groups and the regulator Ofcom all opposed the purchase. A Virgin Media spokesperson welcomed the ruling saying that the BSkyB stake had "compromised" ITV's independence.
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