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Monday newspaper round-up: £50bn banks bail-out, Royal Bank of Scotland, Moss Bros

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Date: Monday 21 Apr 2008

LONDON (ShareCast) - An unprecedented £50bn injection to bail out Britain’s ailing banking system could be doubled if it fails to stave off a collapse in the housing market, writes the Times.

Alistair Darling will today tell MPs that the Bank of England is to allow lenders to swap assets for government-backed bonds in an attempt to restore confidence and ease the effects of the credit crunch. The initial offer is for £50bn worth of bonds, but senior Treasury sources told The Times yesterday that further cash injections up to a total of £100bn were possible.

Royal Bank of Scotland (RBS) will announce the £3.5bn sale of Angel Trains and a £10 billion-plus rights issue tomorrow. RBS board members and the bankers advising them were in talks yesterday to finalise the bank’s fund-raising plans. They are expected to be approved by a full board meeting today, reports the Times.

The Telegraph adds that Royal Bank of Scotland shareholders have "reluctantly agreed" that RBS chief executive Sir Fred Goodwin and chairman Sir Tom McKillop should keep their jobs after their dramatic U-turn over the need to raise up to £12bn of new capital. Sources close to the bank admit investors are furious and concede they are likely to call for the appointment of at least one heavyweight non-executive director to counter-balance Sir Fred's power.

Gordon Brown's efforts to right the listing UK economy have been dealt a blow by business leaders issuing a stinging rebuke of his leadership and economists predicting a "sea change" that would see economic growth nearly halve this year. The Ernst & Young ITEM Club, an influential panel of economists, believes that the economy will grow at just 1.8% this year, down from 3.1% last year. Next year will be even worse at 1.5%, it says, unless Brown takes decisive action, reports the Independent.

Britain’s top 350 companies plan to cut spending and jobs and to dispose of assets as they struggle to cope with the credit crisis, but only a few are considering cutting dividends, according to a survey by Deloitte, the accounting firm. Deloitte interviewed finance directors of British companies with a combined market capitalisation of almost £100 billion and found that credit conditions had worsened in this year’s first quarter, reports the Times.

The Moss Bros founding families are hoping one of its biggest suppliers, the tailor Berwin & Berwin, will buy Baugur's 29% stake in the company to effectively kill the Icelandic retailer's planned £40m takeover of the menswear company. Berwin & Berwin is believed to be considering approaching Baugur with an offer price above 42p a share for its stake, reports the Telegraph.

The owners of Pets at Home, the national pet shop chain, have ruled out a sale or flotation after deciding their pedigree retail performer would not attract a deserving price amid the uncertain economic conditions, reports the FT. Bridgepoint, the majority owner since 2004, appointed bankers last year to examine a sale of the retailer with a target price of about £650m.

Eurotunnel is racing to finalise a €900m rights issue in the first week of May that could increase the proportion of equity owned by its 500,000 shareholders. Jacques Gounon, executive chairman of the tunnel operator, is meeting investment banks in the next two weeks to have the issue underwritten with terms that encourage shareholders to take up the new shares, writes the FT.

The Financial Services Authority (FSA) has come under fire over claims it gave too much leeway to collapsed broker Global Trader Europe. The City watchdog allowed the troubled broker to carry on writing new business for five weeks after it was first informed by GTE that it was facing a shortfall of regulatory capital, writes the Telegraph.

Engineer Smiths Group has agreed to sell part of its pension scheme to a buyout specialist. It is understood to have struck a deal with Legal & General to pass on about £250m of assets to the insurer, which will manage risks associated with the scheme. Sources said the assets represent around a fifth of the pension scheme of TI Group, the manufacturing business that Smiths Group bought in 2000, reports the Telegraph.