LONDON (ShareCast) - UK Bank Barclays was Saturday considering a direct plea from Hank Paulson, the US Treasury Secretary, to assemble a cut-price rescue bid for Lehman Brothers, the investment bank which has become the latest victim of the global financial crisis.
Paulson, the former head of Goldman Sachs, has urged Barclays and a number of other large financial institutions to intervene in the Lehman crisis, which is threatening the future of one of Wall Street's most venerated businesses, the Sunday Telegraph reports.
The accountancy firm KPMG resigned as auditor of XL Leisure, the travel firm that collapsed on Friday, after saying its board had ignored “potential accounting irregularities”, according to the Sunday Times. In a strongly worded resignation letter, a copy of which has been seen by The Sunday Times, KPMG said the company had “not satisfactorily addressed the concerns we had raised about other arrangements and potential accounting irregularities in the financial statements”.
Troubled Italian airline Alitalia may start grounding flights from Monday to save money, amid growing concerns about the impact of fuel prices on the industry following a warning by Willie Walsh, the BA's chief executive, that 30 more airlines could go bust before Christmas. The possible total collapse of Alitalia has come the day after thousands of British holidaymakers were left stranded by the grounding of XL and travel experts have warned other airlines facing failure because of the credit crunch, the Sunday Telegraph reports.
Defence and aerospace giant BAE Systems has started a review of its troubled Astute nuclear submarine programme after discovering problems that could further delay the Royal Navy taking charge of the first vessel. The £3.8bn project to design and build the first three attack submarines has for years been overshadowed by rising costs and was the subject of a huge rift between BAE and the Ministry of Defence (MoD). But the two sides presented a united front this weekend, saying that they had launched a review "to determine how best to minimise the impact on the programme, the Sunday Telegraph says.
A SWEDISH power giant has singled out Britain as its next big target market, stoking speculation that it could be readying a bid for one of the UK’s remaining independent energy groups. “We believe we can add competition to the UK,” Lars Joseffson, chief executive of Vattenfall, told The Sunday Times. Industry sources said a bid for Scottish and Southern Electricity would fit with Vattenfall’s strategy of diversifying internationally and increasing its exposure to alternative power, the Sunday Times reports.
Cable & Wireless is to accelerate plans to break itself up by announcing the £4.5bn demerger of its international business as early as the end of this month. The board of the telecoms group is set to meet on September 29 to discuss a plan that is expected to see shareholders receive one share in its UK division and one share in its CW International for every one they own, according to the Sunday Telegraph.
The Treasury will open the race to succeed Sir John Gieve as a deputy governor of the Bank of England, with responsibility for financial stability, when it advertises the job this week. Paul Tucker, the executive director of markets and a member of the Monetary Policy Committee, is the favourite internal candidate to take over from Sir John, who will step down early next year, the Independent on Sunday reports.
Stanley Fink, the former boss of hedge fund manager Man Group, who became one of the City's best-known financiers, is teaming up with Lord Levy to make a spectacular comeback to the hedge fund industry he quit last year. Known as the "Godfather" of British hedge funds, Fink is to become chief executive of International Standard Asset Management (ISAM), a small London-based commodities trader. Lord Levy, the former Labour treasurer who was Tony Blair's special envoy to the Middle East, is to be chairman of the group, the Sunday Telegraph says.
Jamie Dimon, the ambitious chief executive of the investment bank JP Morgan, is close to putting his signature to a new £1.5bn European headquarters in London’s Canary Wharf. It is a building that will show the stark contrast between its financial fortunes and some of its wounded peers in the investment banking sector. Dimon’s decision to press ahead with the project even in the current financial turmoil is a huge vote of confidence in London’s future, the Sunday Times says.
At least a dozen big-name mining firms are eyeing a takeover or joint venture with International Consolidated Minerals (ICM), the copper and lead producer listed on the Alternative Investment Market. ICM chairman Greg Smith said that up to six mining companies, three valued at more than $25bn (£14bn), had visited its key asset, the Pachapaqui mine in Peru, since Credit Suisse was hired to look at strategic options for the business earlier this year, says the Independent on Sunday.
LONDON’s West End has experienced an extraordinary summer spending boom fuelled by rich international shoppers who enabled it to defy the credit crunch that has hit the rest of the country. According to the tracker firm Springboard, shopper footfall in the West End, which includes Oxford Street, Regent Street and Bond Street, increased by 2.5% in August compared with a decrease of 8.5% nationally, says the Sunday Times.
Private equity firms are bidding for an estimated £1.25bn worth of NHS contracts to run primary healthcare centres, in a move that is expected to attract strong opposition from doctors and unions. Private equity firms have formed consortiums for contracts. Among them are likely to be Merrill Lynch Private Equity, 3i and ECI Partners. One confirmed bidder is Alliance Boots, owned by US private equity giant KKR, according to the Observer.
Breweries have decided to hike their prices for the second time this year, bringing to the market, for the first time, the £4 pint. Draught and bottled Stella Artois, Beck's and Tennent's lager, all owned by brewery InBev, will go up by about 3p a pint tomorrow, while in two weeks' time Carling and Grolsch drinkers will also see 3p added to a pint. Marston's, the Wolverhampton-based brewery behind Pedigree bitter, is adding 10p to a pint, the Observer says.
The latest salvo in the battle for budget business hotel customers will be fired tomorrow when Travelodge targets finance directors at Britain’s top companies in a move aimed at bitter rival Premier Inn, owned by Whitbread. Travelodge chief executive Grant Hearn will send out a personal letter to every finance director of a FTSE 100 company Monday offering a free night’s stay in a bid to persuade them to switch their contracts to the UK’s second-biggest hotel chain, the Mail on Sunday says.
Tragus, owner of the Café Rouge and Strada restaurant chains, is expected to unveil a 60% leap in profits Monday, helped by customers trading down in the tough economic climate, as well as acquisitions and new openings. The group, which is owned by private equity group Blackstone, is believed to have made profits of about £45m in the year to May and enjoyed stong like-for-like sales growth of three to four percent, the Mail on Sunday says.
More economic misery is expected to be inflicted this week with key figures showing prices rising and High Street sales grinding to a halt. Inflation – measured by the Consumer Prices Index – is expected by most city analysts to have jumped to 4.6% in the 12 months to August, from 4.4% in July, reports the Mail on Sunday.
Drinks giant Diageo is holding talks with Indian billionaire Vijay Mallya's United Breweries Group about buying a stake in its United Spirits business in India. Mallya, who owns whisky firm Whyte & Mackay in Scotland, says he has received "several expressions of interest" from foreign companies, including Diageo, which are keen to get a stronger foothold in the booming Indian drinks market, says the Scotland on Sunday.
Two of the UK's biggest credit insurers, Euler Hermes and Atradius, have stopped providing new cover for firms supplying high street chain Woolworths and cancelled some existing policies linked to the company. Ahead of the store's announcement of half-year earnings on Wednesday, expected to show heavy losses, confidence in its long-term viability seems to have hit a new low, the Independent on Sunday says.
The true scale of the jobs disaster facing Britain is revealed Sunday as experts issue dire warnings that up to half a million workers will lose their jobs over the next two years, as companies cut costs and scale back investment plans to survive the economic downturn. Official figures are widely expected to reveal this week that the number of people out of work and claiming benefits increased for a seventh successive month in August, the Observer reports.
Meanwhile, unemployment is set to top 1m this winter, shattering on of Labour’s most loudly trumpeted economic achievements, the Mail on Sunday says.
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