Sunday newspaper round-up: Government supplier clampdown, UK banks' Fifa fears, Lloyds sale
Companies that supply services to the government are going to feel the screw tightened on them as the Cabinet Office clamps down, the Sunday Times said. The office has begun to demand its biggest contractors, which include BAE Systems, Babcock, Serco and G4S, to report on revenue and profit margins as part of a drive to ensure the taxpayer is getting value for money. Any government contracts worth more than £20m will be subject to annual audits.
Aerospace and Defence
10,383.65
17:10 19/04/24
Babcock International Group
502.00p
16:40 19/04/24
BAE Systems
1,296.00p
17:08 19/04/24
Banks
3,895.51
17:09 19/04/24
Entertainment One Limited
557.00p
16:35 27/12/19
Food & Drug Retailers
3,705.02
17:10 19/04/24
FTSE 100
7,895.85
16:59 19/04/24
FTSE 250
19,391.30
17:09 19/04/24
FTSE 350
4,341.08
17:09 19/04/24
FTSE All-Share
4,296.41
17:08 19/04/24
G4S
244.80p
16:40 04/05/21
Lloyds Banking Group
50.92p
16:34 19/04/24
Media
11,718.72
17:10 19/04/24
Morrison (Wm) Supermarkets
286.40p
16:55 26/10/21
Serco Group
179.10p
16:34 19/04/24
Support Services
10,465.25
17:10 19/04/24
WPP
774.20p
16:40 19/04/24
HSBC, Barclays and Standard Chartered are preparing to be dragged into the FBI’s investigation into bribery and corruption at football’s world governing body, the Sunday papers all reported. Eight global lenders were named in a 164-page dossier released last week that alleged widespread corruption at Fifa. US prosecutors have accused a clutch of current and former Fifa executives of laundering bribes through accounts at UK, Swiss and American banks. HSBC and Standard Chartered have together paid more than $2.5bn (£1.6bn) in money laundering settlements but could face further fines and could still be stripped of their US banking licences if found guilty once again of failing to run robust enough money-laundering checks, the Sunday Times reported.
The FBI investigations into Fifa corruption and the awarding of the next two World Cups could have repercussions for Qatar's property investors - and even London's property market, the Sunday Telegraph said. Property investors in the Middle East country could be burnt for the second time in less than a decade if the country was to lose the right to host the 2022 World Cup, according to a report cited by the paper. Property prices and land values have soared around most of the stadia under construction, according to property company Lamudi. Other experts suggested that this might increase the appetite of Qatari investors to ship their money overseas into places such as London.
The government's institutional sale of its remaining shares in Lloyds Banking Group will be extended, with about £4bn worth of further shares sold through a discounted retail offer to the public, according to the Sunday Times. The paper said one "well-placed source" said this could be launched as early as September. The share sale, which is likely to be similar to the 1986 British Gas “Tell Sid” sell-off, will see the public offered shares at a discount of between 5% and 10% on the prevailing market price.
US regulators have noted with alarm as non-bank lenders, or 'shadow banks', have overtaken the country's banks in the provision of government-backed mortgages, the Financial Times noted. Regulatory curbs on risk-taking and heavy fines have forced mainstream providers to exit the $9.8tn home loan market, with shadow banks such as Quicken Loans, PHH and loanDepot.com accounting for 53% of government-backed mortgages originated in April — almost double their share in April 2013. Shadow banks perform functions such as lending but are subject to lighter supervision than banks because they are funded by professional investors rather than retail depositors protected by government insurance schemes.
A small measure of relief lies ahead for sole traders and freelancers around the UK as HM Revenue and Customs has scrapped its automatic £100 late fine imposed on people who file their tax return after the deadline. Exceptions will now be made for people who can give a "reasonable" explanation for their lateness, it said. The change was revealed following a leaked memo, which according to the Sunday Telegraph, says: "Our penalty regime is intended to influence customer behaviour, but also be clear and cost-effective, fair and proportionate.
Across the globe in Japan, the government, companies and shareholders are all preparing for a new corporate governance code comes into effect on June 1, the Financial Times reported. The new guidelines are chiefly intended to "repopulate the Japanese stock market with leaner, more transparent, growth-focused companies, force managements to sweat assets, and then share the spoils with shareholders", the paper said, noting that the implications of the code are huge with optimism about the policy helping drive the Tokyo's Nikkei to a near 20-year peak.
Supermarket group Morrisons faces major shareholder resistance over a £3m payout to recently ousted chief executive, Dalton Philips. The grocer is prepared for a substantial vote against its remuneration policies at its annual meeting on Thursday. The Investment Management Association is understood to have issued an “amber alert” to its members, advisory firm Pirc has urged shareholders to abstain and US proxy agency ISS is understood to have told clients to oppose the pay eport.
Likewise, media colossus WPP is also facing another revolt over the pay of chief executive Sir Martin Sorrell, the Financial Times wrote. Sorrel's £43m pay award for 2014 is likely to face opposition at the company's annual meeting on 9 June, with Glass Lewis and Institutional Shareholder Services, which together advise investors that own about a quarter of the equities on the UK stock market, both raised concerns, with Glass Lewis recommending investors vote against the pay deal.
Entertainment One, the company that makes children’s television favourite Peppa Pig and also distributes Hollywood films worldwide, is considering abandoning its London listing in facour of a move to New York in a bid to boost its investor base and stock market valuation, according to a Sunday Telegraph interview with Darren Throop, the chief executive of what is Britain’s biggest listed film and television company. Throop said eOne was pondering a Wall Street listing in order to court more supportive investors. “It’s fair to say it’s been a challenge for us being listed in London. In all fairness to the City there have been some train wrecks in the media space where things have not gone well."
For other industries, London is the place to be, with Irish househilder Cairn Homes working on a London float amid the recovery across the Irish sea. According to the Sunday Times, Cairn will this week unveil plans to raise more than £200m from British institutional investors to fund a number of developments across Ireland. Cairn Homes, which was founded by Punch Taverns and Spirit Group co-founder Alan McIntosh, has hired Credit Suisse and Dublin's Goodbody to advise on the listing.
Also seeking a London initial public offer is Integrated Dental Holdings, the largest dental chain in Europe, which has revived listing plans after failing to tempt private equity buyers, the Sunday Telegraph said. The majority owner of the business, private equity firm Carlyle, is looking to float the company for £1bn. The newspaper quoted sources who said a flotation was now the preferred route and that bankers at Goldman Sachs and Credit Suisse had been informed an autumn listing was on the cards.
The rise of the Uber taxi-replacement app, and a new car-sharing offshoot, could spell more trouble for the automotive industry, suggested a Sunday Times feature. If Uber's Uberpool car-sharing app, plus numours other rivals, including US-based car-lending scheme RelayRides, continue to be hits, what will that do to the huge sales of new cars to hire companies? An automotive analyst at Barclays’ investment bank recently calculated that America could see a 40% slump in annual car sales within 25 years if driverless cars, such as those being developed by Google, take off.
However, in the UK the rise of rail passenger numbers has seen the re-awakening of long defunct railway lines that were closed following the Beeching report on railway modernisation in the 1960s, the Financial Times reported. With a record 1.6bn passenger journeys in 2013-14, Network Rail, the operator of the UK’s rail network, hopes that reviving old lines will be a cost-effective way of increasing capacity.
Britain's rolling stock has been a popular investment for overseas investors in the last year, with Angel Trains, which controls around a third of UK trains, said to have received a bid from the Kuwait Investment Authority's London vehicle, Wren House Infrastructure. The Sunday Times revealed that a consortium led by Wren will contest the purchase with another consortium led by AMP Capital, the Australian pensions giant, which already holds a 25% stake and has the right to match any offer.
The CBI’s monthly indicator, published on Sunday, showed the strongest UK growth for 12 months, the Sunday Times noted, with the latest three months the best for a year. The CBI growth indicator, based on the employers’ group’s own business surveys, will help to allay fears that the economy’s weaker performance in the first quarter — when gross domestic product rose by just 0.3% — signalled that the recovery had run out of steam.