Wednesday newspaper round-up: BoE, Greece, Intermediate Capital

Date: Wednesday 18 Jan 2012

The Bank of England was plunged into a row with MPs last night after it rebuffed calls for a sweeping overhaul of the way that it is governed. The Bank published a plan for an oversight committee to review the way it makes decisions, as it prepares to take on new powers to monitor and regulate the financial sector. Sir Mervyn King, the Governor, rejected a proposal tabled by the Treasury Select Committee for its governing Court to be replaced by an influential supervisory board with the ability to scrutinise and critique its performance and decisions, according to The Times.

Greek government and international officials have signalled they will yield to the demands of banks and hedge funds in order to secure a bond deal before the end of the week. Amid fresh warnings of Greek default, Charles Dallara, director of the Institute of International Finance (IIF), flew from Washington to Athens on Tuesday night to try to agree a deal before the European finance minister's summit on Monday. Sources close to the bondholders told The Daily Telegraph there was "enough movement" from officials representing Greece, the International Monetary Fund (IMF), European Central Bank (ECB) and the European Union (EU) to persuade Mr Dallara to meet with them.

The European Commission has launched legal action against Hungary's Fidesz government for violations of European Union treaty law and erosion of democracy, marking a dramatic escalation in the war of words with the EU's enfant terrible. Hungary's defiant premier Viktor Orbán has no hope of securing vital funding from the EU and the International Monetary Fund until the dispute is resolved, leaving him a stark choice of either bowing to EU demands or letting his country slide into bankruptcy. Yields on Hungary's two-year debt jumped to 9.17% on Tuesday, an unsustainable level for an economy in recession with public debt of near 80% of GDP. Hungary's debt was cut to junk status by rating agencies last week, The Telegraph says.

Intermediate Capital Group has signed a deal to sell CPA, its patent business, to private equity firm Cinven for £950m. CPA, which looks after the intellectual property of anything from software to cereal recipes, was bought by ICG just two years ago for £440m. The trend has seen CPA's value and earnings more than double since ICG's investment. CPA's last set of reported accounts showed earnings before interest, tax, depreciation and amortisation of £77m. Cinven beat rival BC Partners in a hotly contested auction that saw the asking price for Jersey-based CPA shoot up almost £300m from original estimates. Shares in ICG, known predominantly for its junior debt funds that back buy-out deals, edged up 3.8p to 250.7p, The Telegraph reports.

The Federation of Small Businesses had warned small firms are looking to shed more staff in the first quarter of 2012, adding to the 2.64m unemployed people already in Britain. New figures from the FSB show 6.5% of small firms plan to lay off workers in the first three months of this year - the highest level since the survey began. Almost 5% reduced headcount in the three months to December, the survey revealed. With heavy cuts in the public sector and a steep rise in the number of people unemployed, more job losses by small businesses would "make for an extremely difficult labour market", the FSB warned, The Telegraph writes.

"(...) Shareholders had become impatient with Yahoo!’s perceived lack of strategy, particularly around its valuable Asian assets. He co-founded one of the brightest lights of the internet’s first decade, then was hounded out as leader after nearly bringing it to its knees. Yesterday Jerry Yang, co-founder of Yahoo!, walked away from the internet company he set up 17 years ago for the second time, succumbing to intense pressure from investors hungry for a change in strategy. His resignation as a board member follows the decision two weeks ago to install Scott Thompson, the former president of PayPal, as chief executive," The Times says.

Millions of customers at Britain’s largest energy firms have been locked in to paying higher bills, excluding them from the recent tranche of price cuts. As Scottish Power became the last of the ‘Big Six’ energy firms to announce a modest trim to its rates (5% for gas from February 27), the Mail has established that all groups were offering long-term tariffs to bind in customers before introducing the cuts. The worst offender was British Gas, which cut electricity charges by 5% and offers a tariff that would leave customers paying 7% more for energy than standard users, The Daily Mail reports.

AB

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