Date: Sunday 17 Jun 2012
Sir Mervyn King has told Britain’s banks to run down their cash reserves in a surprise U-turn that will raise the value of last week’s rescue package for the economy to close to 300bn pounds. The governor of the Bank of England has quietly given permission for banks to release part of the huge cash piles he has ordered them to build up over the past three years. Analysts estimate the radical shift in policy could see 150bn pounds — most of which is now invested in gilts — released for loans to companies and households. It comes on top of two headline-grabbing schemes unveiled last week under which the government will lend up to 140bn pounds to banks, The Times reports.
France wants the European Union to agree before the end of 2012 on growth-boosting measures worth €120bn, according to reports. The weekly Journal du Dimanche said on Sunday, citing a proposal circulated by France ahead of an end-June summit, that France has accepted Germany's rejection of its call to issue mutualised debt in the euro bloc and now agreed that so-called euro bonds were a project to be looked at over a 10-year time frame. The €120bn are to come from a combination of short-term growth instruments such as project bonds, reallocated EU structural funds and fresh investment capital from the European Investment Bank, The Telegraph says.
British businesses are turning against greater integration in Europe and would like to see a “renegotiated” free trade area. In a stark warning to the Government that any economic union as a result of the Eurozone crisis could have negative effects on the UK, the director general of the British Chambers of Commerce, John Longworth, said that the balance of advantages of the single market were being damaged by the weight of regulation. In a survey of 7,500 businesses to be released tomorrow, the BCC found that 35% of all exporters believe that Europe should be a free trade area without the Brussels-led social legislation that many feel hamper their business. Just over 20% supported an economic union and just 6pc supported being members of the single currency, The Telegraph reports.
World leaders at the G20 summit in Mexico this weekend have pushed their official agenda to one side as they await early results from the Greek general election. A victory for the New Democracy party, which would accept the European Union’s tough bailout conditions, is seen as vital if faith in the Eurozone’s handling of the crisis is to be restored. But markets are fearful of a win for the Left-wing Syriza party, which opposes the conditions imposed by the EU in return for its £139bn rescue package. Observers have branded the election a de facto poll on the country’s membership of the euro, arguing that victory for Syriza could see Greece driven from the single currency. Polls have shown the two parties running neck and neck, The Daily Mail reports.
Evraz, the FTSE 100 steel giant part-owned by the oligarch Roman Abramovich, is being sued by a Swiss business partner over a $500m (£318m) port infrastructure project which turned sour. The company, one of the latest Russian giants to join the top-flight UK index, is the subject of a $36m (£23m) claim from Revolution Enterprises, which alleges that a subsidiary of Evraz failed to buy it out of the project in Ukraine, The Telegraph writes.
KKR is in early-stage discussions with the owners of Everything Everywhere about an audacious £8bn takeover of the UK mobile phone venture whose brands are Orange and T-Mobile. The private equity house, whose British assets include Alliance Boots and Pets at Home, is in detailed talks with Everything Everywhere’s (EE) parent companies, Deutsche Telekom and France Telecom, in the hope of winning approval for its debt-backed bid. KKR’s negotiations are being led by Tom Alexander, the founder of Virgin Mobile who quit as boss of EE in July last year, The Telegraph says.
The Bank of England could flood £50bn more into the struggling UK economy within weeks as the latest turbulence from the Eurozone plays havoc with UK recovery hopes, experts warn. Rate-setters are poised to act following the €100bn (£81bn) rescue for Spain's crippled banks and an election in Greece which markets fear could tip the stricken nation out of the euro. The Bank of England Governor Sir Mervyn King warned in his Mansion House speech of a "large black cloud of uncertainty hanging over not only the euro area but our economy". The Bank's so-called quantitative easing (QE) program currently stands at £325bn, but analysts at Barclays Capital said that its monetary policy committee may crank up the printing presses again as soon as next month, The Independent says.
A former director of Goldman Sachs faces the prospect of decades in jail after being convicted of leaking insider information about the Wall Street bank to a corrupt friend. Rajat Gupta is the highest-profile victim yet of a crackdown on insider trading by regulators in the United States. A jury at the Southern District Court of Manhattan found Gupta guilty of three counts of securities fraud and one count of conspiracy for passing confidential information to Raj Rajaratnam, his former friend and business partner. He was found not guilty on two counts. Preet Bharara, the US Attorney for Manhattan, said: “Rajat Gupta once stood at the apex of the international business community. Today he stands convicted of securities fraud. He achieved remarkable success and stature, but he threw it all away,” The Times reports.
Scotland is set for its first flotation this year on the Alternative Investment Market (Aim) as an oil and gas group looks to raise more than £100m to fund a major acquisition in west Africa. Eland Oil and Gas, headquartered in Aberdeen and run by a group of industry veterans, is conducting a roadshow to garner support among investors for the move which would provide it with funds to complete the purchase of a stake in a licence in Nigeria’s Niger Delta. A flotation, which could take place as early as the end of this month, would be a welcome boost for corporate Scotland which has seen a continued shrinking in the number of quoted companies in recent years. Although the final decision on Eland’s flotation will depend on the level of support indicated by investors, it is understood Eland’s pitch has been well received by institutions, according to Scotland on Sunday.
Facebook is considering a dramatic rebuff to Nasdaq over its bungled float with a plan to move its shares to the New York Stock Exchange. The social networking giant is considering the shock move after technical glitches scarred its much-hyped debut last month. Late on Friday, Facebook blamed Nasdaq for the blunders that unnerved shareholders and fuelled a plunge in its share price. Since going public a month ago, more than $20bn (£13bn) has been wiped off Facebook’s value. After floating at $38, Facebook shares closed last week at $30.01. One source in America said that Nasdaq was likely to “pay the price for breaking the Facebook IPO [initial public offering],” The Times reports.
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