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Wednesday newspaper round-up: Royal Bank of Scotland, BHP Billiton, X5

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Date: Wednesday 23 Apr 2008

LONDON (ShareCast) - Hopes that the Bank of England will slash interest rates have been undermined after a key policymaker hinted that the Bank's rescue plan for credit markets will free it up to use rates to fight inflation, reports the Telegraph.

The pound closed in on the $2 mark after Tim Besley's hawkish speech in London stirred fears that Britain is heading towards stagflation, with sluggish growth and high inflation striking the economy simultaneously.

Families have been warned that the prices of basic foods will rise steeply again because of acute shortages in commodity markets. Experts told The Times yesterday that prices of rice, wheat and vegetable oil would rise further. The price of rice, which has almost tripled in a year, rose 2% on the Chicago Board of Trade yesterday as the United Nations food agency gave warning that millions faced starvation because aid agencies were unable to meet the additional financial burden.

Sir Fred Goodwin faces demands from leading investors to step down as chief executive of Royal Bank of Scotland within a year after the bank on Tuesday launched a £12bn rights issue. Several of the lender’s largest shareholders said they would push for a clear succession plan for Sir Fred, the architect of the bank’s acquisitive strategy and its role in the €71bn break-up bid for ABN Amro, the Dutch bank, reports the FT.

BHP Billiton’s takeover battle for Rio Tinto moved into increasingly hostile territory on Tuesday when BHP’s chief executive launched an outspoken attack on his mining rival’s past underperformance and growth prospects. In an interview with the Financial Times at BHP’s Melbourne headquarters, Marius Kloppers rounded on Rio’s chief executive, saying: “Tom Albanese has been comprehensively outperformed [by BHP] in terms of volume growth, earnings per share growth, total return for shareholders and share price performance.

X5 Retail, one of Russia's leading food retailers, has launched a London offering of global depository receipts aimed at raising $1bn (£501m) to fund the acquisition of the Karusel hypermarket chain. The retailer plans to raise just more than $1bn during the coming weeks, by issuing 48m new GDRs, which will each represent 0.25 of an ordinary share, writes the FT.

Kuwait's leading investment bank is also planning to raise $1bn (£501m) in a London stock issue, providing a platform for British investors to capitalise on the petrodollar boom in the Middle East and north Africa. Global Investment House, which is listed in Kuwait, Bahrain and Dubai, operates in 16 countries, including Saudi Arabia and the United Arab Emirates, and enjoys a geographical reach from Hong Kong to Sudan, says the FT.

Jerry Yang, the co-founder of Yahoo!, said yesterday that the online search engine may still recommend a hostile takeover from Unveiling a 9% rise in revenues for the first quarter of the year to $1.82 billion, Yang said he remained “open to any and all alternatives including a sale to Microsoft,” reports the Times.

Merrill Lynch raised a further $7.3 bn (£3.65 billion) yesterday by selling bonds and preferred shares to boost its capital reserves after the $6.5bn hit it took in the first quarter from the credit crunch. Merrill’s latest fundraising comes after the group agreed a $4.4 bn capital injection from Temasek, the Singaporean sovereign wealth fund, and a separate $6.6bn infusion from a group of investors including the Kuwaiti investment authority, writes the Times.

The administrators of collapsed broker Global Trader Europe (GTE) have launched a thorough investigation into the company's affairs - including whether there was any suggestion of wrongful and fraudulent trading. In a letter to a group of creditors, seen by The Daily Telegraph, administrator Smith & Williamson revealed that it is also looking into issues of whether there were any "transactions at an undervalue", where a company sells assets below their real value before going into liquidation.

Internet service providers (ISPs) have just a few weeks to sign up to a voluntary code on the promotion of broadband speeds or the industry will face mandatory regulation, the communications watchdog has warned, reports the Independent.