RBS sell-off investigation ruled out

Government admits prospect of selling off bank remains distant, despite speculation over potential sale of rival group Lloyds

The government has ruled out a broad investigation into whether Royal Bank of Scotland should be broken up and sold off in smaller component parts to foster more competition in the banking sector.

As shares in rival bailed-out bank Lloyds Banking Group hit their highest levels in more than two and a half years, of 67p, amid speculation that a sale of the government stake was imminent, the coalition admitted that the sell-off of the 81%-owned RBS was a more distant prospect.

The parliamentary commission on banking standards called for a wide-ranging review of the structure of RBS, but the government said splitting RBS into smaller parts "would generate significant additional costs". It added that it would "cause uncertainty and disruption for customers, creditors and staff. This would risk undoing much of the good work that RBS has done in strengthening the bank in recent years. As the majority shareholder, the taxpayer would ultimately bear the majority of the costs."

Splitting RBS into smaller parts 'would generate significant additional costs', according to the governmentThe Archbishop of Canterbury, Justin Welby, a member of the commission, raised the idea of regional banks to bolster competition in lending.

Chancellor George Osborne has already asked investment bank Rothschild to look at splitting off a "bad" bank from RBS in a move that is delaying any plans to start selling off the government stake, but does not go as far as the commission wanted.

While he has ruled out splitting up RBS into "multiple entities", George Osborne has already asked the competition authorities to look at whether it should hive off more branches than the 316 it is selling to meet EU rules. RBS has to sell the branches because of European rules on state aid – which also require Lloyds to sell 631 branches.

The government reiterated Osborne's previous assertion that it would not close down UK Financial Investments (UKFI), which looks after the taxpayer's stakes in the bailed-out banks, as recommended by the commission.

UKFI is currently deciding which banks will be appointed to sell off Lloyds and RBS and also strengthened its management team yesterday by naming a former banker to run its "bad bank".

Christopher Fox has joined from UBS to run UK Asset Resolution, the arm of UKFI which looks after the nationalised mortgage books of Northern Rock and Bradford & Bingley, which are being run down.

Article Source : http://www.guardian.co.uk

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Warmer weather helps boost retail sales

British Retail Consortium says retail sales for June were up 1.4% following a rise of 1.8% in May

A washout spring for retailers has given way to a sun-assisted summer revival, with an outbreak of hot weather leading to a second consecutive monthly sales increase.

The British Retail Consortium said total sales for June were up 1.4% on a like-for-like basis, following a rise of 1.8% in May. .

Helen Dickinson, the director general of the BRC, said: "Despite challenging economic conditions continuing, June saw another strong performance from the UK's retailers. At this halfway point in the year we are able to see that sales are well ahead of the previous six-month period."

Sales growth of 2.3% since the start of the year is ahead of last year's annual growth of 1.5%. The strong figures are a further boost for a UK economy that is heading for growth of around 0.5% in the second quarter and is dominated by service industries such as retail.

Clothing was the best-performing category, according to the BRC, although this was mainly due to poor spring weather leaving clothes rails packed with unsold summer outfits that were then sold at a discount in a bid to shift stock.

Better weather lifted sales of clothing and footwear in JuneDavid McCorquodale, head of retail for KPMG, which compiled the data, said: "It's difficult to say at this stage how much discounting went on, but we know that the cold weather meant retailers were forced to try and shift the extra stock they had."

Several clothing retailers have issued profit warnings or delivered lower-than-expected results this year because of the weather. On Tuesday Marks & Spencer is expected to blame the weather for a fall in clothes and general merchandise sales over the past three months.

McCorquodale added: "Periods of sunshine helped to lift the gloom on the high street and retailers celebrated another month of rising sales. These figures certainly underline the impact that weather can have on a retailer's performance."

DIY and gardening centres also got a well-needed boost in sales after suffering a washout over Easter, a period seen as more important to the chains such of B&Q and Homebase than Christmas. Food sales also rose by 1.4% in June, despite tough comparisons with the diamond jubilee last year, with sales of drinks and ice creams increasing as the weather improved. The earlier timing of Ramadan also helped stimulate sales, the BRC added.

Online sales were up 14.1% on a year earlier, strongly ahead of the 10.5% long-term average. However, house textiles and home accessories were the worst-performing categories as they struggled against last year's jubilee boost and shoppers spending more on fashion.

Article Source : http://www.guardian.co.uk

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