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Monday newspaper round-up: Royal Bank of Scotland, Tesco, Chrysalis

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Date: Monday 25 Feb 2008

LONDON (ShareCast) - Royal Bank of Scotland is expected to write down US sub-prime-related assets worth well over £1bn when it announces its full-year results on Thursday.

The bank is expected to announce a dividend increase to try to assuage fears about its capital ratio, which is thought to be the lowest of any bank in Europe after its takeover of ABN Amro, the Dutch bank, last year. Analysts expect Sir Fred Goodwin, RBS's chief executive, to announce plans to offload assets, including Angel Trains and Condor Ferries, rather than to try to shore up the bank's capital ratio with a much-feared rights issue, reports the Times.

Investment banks are secretly profiting from emergency European Central Bank funding by acting as brokers to funnel billions of euros of much needed liquidity to Britain's banks and building societies. UK lenders with no operations in Europe are particularly at risk of funding problems because they have been struggling to access central bank money. In what one executive said was a way of "levelling the playing field" for those without access to eurozone funding, investment banks are acting as go-betweens to provide smaller UK lenders with ECB access, reports the Telegraph.

Swiss banking giant UBS is to be sued for alleged mis-selling of sub-prime mortgage securities in what is likely to open the floodgates for further litigation against investment banks following their catastrophic losses in so-called "toxic" debt. HSH Nordsbank, one of Germany's largest financial institutions, will file a lawsuit in New York courts by the end of this week in an attempt to recover "significant losses" in a $500m (£254m) fund, writes the Telegraph.

Chrysalis, the independent music publisher which has put its music publishing arm up for sale, has agreed a deal to transfer all its pension liabilities. The company will today announce its Retirement Benefits Scheme will be passed on to specialist pensions buyout company Paternoster. According to the group's 2007 accounts, Chrysalis' pension plan had liabilities of around £18.5m and assets of £13.9m, leaving it with a deficit of £4.6m, reports the Telegraph.

Vincent Tchenguiz, the property entrepreneur, is to sell his share in a £490m Tesco supermarkets joint venture. The sale will be followed by a refinancing of up to £700m of Mr Tchenguiz's residential property to help to fund expansion elsewhere, The Times has learnt. The financial rejigging at Mr Tchenguiz's Consensus Group comes amid growing concern over the ability of many highly leveraged private property investors to refinance borrowings on their assets this year as loan terms come up for renewal, reports the Times.

House prices have fallen in February for the fifth month in a row, deepening the gloom over the property market. The average price of a new property decreased by 0.2% to £174,400, according to Hometrack, the property research group. The annual rate of house price inflation fell to 1.4 per cent, its lowest in nearly two years, says the Times.

British banks' multibillion-pound profits from Payment Protection Insurance (PPI) are set to be decimated over the next two years, as a result of an imminent crackdown on the discredited sector. According to a report by Defaqto, the financial analyst, the forthcoming Competition Commission report into the sale of PPI policies will kickstart a "massive upheaval" for underwriters, lenders and consumers, wiping out a significant chunk of the £1.5bn of profits derived from PPI every year, reports the Independent.

The United Nation’s agency responsible for relieving hunger is drawing up plans to ration food aid in response to the spiralling cost of agricultural commodities. The World Food Programme is holding crisis talks to decide what aid to halt if new donations do not arrive in the short term, writes the FT.

National Express is to launch a new luxury commuter coach service that will offer reclining leather seats, wi-fi access, newspapers and a bottle of water, as well as a text message to alert customers that the coach is on its way. Significantly, it promises a fare 60-70 per cent cheaper than a monthly rail ticket and a journey time of two hours. In April National Express will launch a service from Swindon and Reading to London, says the Times.