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Monday newspaper round-up: Freddie Mac, Dawnay Day, Royal Bank of Scotland

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Date: Monday 14 Jul 2008

LONDON (ShareCast) - The US government last night moved to provide state support to ailing mortgage agencies Fannie Mae and Freddie Mac amid heightened concern over their solvency.

The Federal Reserve took the unprecedented step of bailing out Fannie and Freddie in a move designed to prevent their collapse and with it to secure the stability of the wider mortgage market. The board of the Fed, chaired by Ben Bernanke, voted to allow the New York Federal Reserve to lend to Fannie Mae and Freddie Mac should such lending prove necessary, reports the Telegraph.

The Bank of England must guard against keeping interest rates too high for too long and from tipping Britain's economy into a slump as it fights to curb inflation, one of its most influential officials says today. The warning that the Bank must strive to avoid interest-rate overkill, from Kate Barker, the longest-serving external member of its Monetary Policy Committee, will dampen City speculation that rates will be raised soon to combat rising inflation, writes the Times.

The financial services conglomerate Dawnay Day has called in administrators from Ernst & Young to carry out an emergency review of several of its businesses after failing to raise the funds it needs to keep the company afloat.The group – which operates in the property investment, fund management and private equity arenas, and whose investments include the clothes retailer Austin Reed – has appointed a group led by the E&Y veteran Alan Bloom, the administrator who oversaw the Railtrack file following its collapse seven years ago, reports the Independent.

Royal Bank of Scotland has ruled out any sale of its stake in Bank of China, in spite of its capital difficulties, and intends to Bank of Chinapress ahead with a two-pronged Chinese expansion strategy, according to one of the UK bank's senior executives. Gordon Pell, chairman of regional markets at RBS, told the Financial Times that the bank remained committed to its relationship with the mainland's second-largest lender, which includes formal co-operation agreements in credit cards and wealth management.

Resaca Exploitation, a Texas-based independent oil and gas producer, will today announce that it has raised £53m through a listing on Aim. The company is planning to revitalise old oilfields by using water and carbon dioxide to flush out oil and gas from mature wells, a technique known as enhanced oil recovery, reports the FT

Wolseley, home to Plumb Center and Build Center, is understood to have drafted plans to step up a £70m cost-cutting plan announced only two months ago. The company, which employs 14,000 people in Britain, is also expected to tell investors in a trading update on Wednesday that it may not hit profit targets after the sharp downturn in the housing market, reports the Times.

Yahoo! has rejected the latest break-up proposals that would see it sell its search business to Microsoft and hand over the remainder of the company to activist investor Carl Icahn.The search giant said it had received the joint proposal from Microsoft and Mr Icahn late on Friday and was given less than 24 hours to accept. It said Microsoft and Mr Icahn made clear they were unwilling to negotiate the fundamental terms, which included the immediate replacement of Yahoo!'s board and removal of top management, writes the Telegraph.

Building contractors have been hit by 806,000 HM Revenue & Customs fines since November for failing to file tax returns on time. The scale of the penalties, which start at £100 for smaller contractors, have shocked the industry as it shows both ignorance of the new Construction Industry Scheme and non-compliance, reports the Telegraph.

Budweiser brewer Anheuser-Busch agreed on Sunday night to be taken over by Belgian rival InBev for $70 a share, marking an amicable end to a month-long takeover battle that had recently grown hostile. Anheuser’s board held a meeting on Sunday afternoon to approve the $50bn (£25bn) deal, which will create a global brewing giant with ownership of some of the world’s best-known brands. InBev produces Stella Artois, Bass and Hoegaarden, reports the FT.

The lights will go out across the UK in seven years if the Planning Bill coming up for review this week is rejected in the House of Lords, according to a leading business trade body. It estimates the country needs £100bn of investment in major energy plants by 2020. The CBI has urged the House of Lords to pass the Planning Bill, under consideration tomorrow, to help secure the nation's energy and infrastructure needs, reports the Independent.

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