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Friday newspaper round-up: Barclays, Marks & Spencer, HBOS

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Date: Friday 20 Jun 2008

LONDON (ShareCast) - A unit of Sumitomo Mitsui Financial Group, one of Japan’s largest banks, is in talks with Barclays to invest about Y100bn ($926m) for a small equity stake in the UK bank.

Barclays has been looking to raise as much as £4bn ($7.9bn) in fresh capital in an effort to shore up its balance sheet without having to launch a rights issue that could lead to aggressive write-downs, reports the FT.

The Bank of England has been given the lead mandate to step in and take over failing banks under the biggest government shake-up at Threadneedle Street in more than a decade. Alistair Darling's decision to give the Bank the responsibility for his new “special resolution regime” is a blow to the Financial Services Authority ,which had lobbied the Chancellor to secure the role, reports the Times.

Leading retailers and economists have slammed the Office for National Statistics after it published sales figures that suggested Britons were spending at the fastest rate for 30 years. Despite rising inflation, higher fuel bills, lower consumer confidence and a slowing economy, the ONS said sales volumes grew by 3.5% last month - the largest jump since 1979 - taking the annual increase in sales to a staggering 8.1%. "The ONS doesn't appear to understand how people shop," Justin King, Sainsbury's chief executive said. "These figures are based on a small basket and exclude promotional activity," reports the Telegraph.

Marks & Spencer has distributed almost one million "discount vouchers" in an attempt to boost sales ahead of next month's trading update. The retailer is repeating a "families and friends" promotion it ran for the first time last February. More than 70,000 staff have been sent a dozen vouchers, offering 20% off clothing, food and homewares. Staff have been asked to give the vouchers to friends and families, although in February a number were sold on eBay, writes the Telegraph.

HBOS yesterday wrote down the value of its equity stakes in UK housebuilders by half - or about £100m - because of the turmoil in the sector. The bank has stakes in six UK housebuilders, including 50% in Crest Nicholson, and 20% in retirement homes specialist McCarthy & Stone, reports the FT.

Hedge funds have warned the City regulator that new rules designed to shore up rights issues could backfire and push up the cost of raising capital as they tried to delay today's introduction of new disclosure requirements for short-sellers. The Alternative Investment Management Association, the hedge fund trade body, told the Financial Services Authority in a strongly worded letter that the "flawed" disclosure rule "undermines the confidence of the wider financial industry that its regulator will 'play fair' " reports the FT.

A German motorway services operator owned by Guy Hands’s Terra Firma and a Deutsche Bank property investment fund is being sued by Swiss bank UBS over a €2.3 billion (£1.8 billion) buyout loan. The bank resorted to the courts after Tank & Rast blocked its efforts to sell on about €40 million of the buyout loan to infrastructure funds, writes the Times.

Sainsbury’s has lost nearly £1.5m of sales after an IT glitch forced the supermarket chain to suspend its grocery home shopping service for two days. More than 20,000 customers were left scrabbling to find delivery slots with one of Sainsbury’s high street rivals after the company cancelled all deliveries and back-office staff battled to bring the site back online, the Times writes.

British-born billionaire trader Mickey Gooch has filed a $220m (£110m) lawsuit accusing one of his former lieutenants of orchestrating and executing "an elaborate plot" to poach 22 staff from inter-dealer broker GFI. Mr Gooch, chairman and chief executive of GFI, is accusing former GFI credit derivatives head Donald Fewer of luring the GFI staff to rival Tradition as part of a five-month campaign to decimate his former firm, reports the Telegraph.

Citigroup yesterday warned of further large write-downs and credit losses in the second quarter, saying its business remained under pressure amid "unprecedented" market conditions. The announcement was made by Gary Crittenden, Citi's chief financial officer writes the FT.

Government borrowing ballooned by 50% in the first two months of this year compared with the same period last year, and could soon exceed £50bn. Analysis by the independent Institute for Fiscal Studies of the latest data on the public finances reveals tax revenues are growing much more slowly than the Government expected, while public spending is still on track. Borrowing has risen in April/May 2008 to £12.7bn, against £8.4bn in the same months last year, reports the Independent.

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