Azure Global : 11/01/13

Friday 1 November 2013

Ross McEwan to make first presentation to City as RBS boss

New Zealander expected to set out ambitions for RBS amid speculation he will also announce outcome of 'bad bank' review

Ross McEwan is to make his first presentation to the City as boss of Royal Bank of Scotland on Friday amid speculation that the outcome of a government review into spinning off a bad bank will be announced with the third quarter results.

The New Zealander is expected to set out an ambition to end lingering concerns about the bank's financial strength after taking over from Stephen Hester on 1 October. It is thought McEwan will outline the outcome of the government-commissioned review into whether a "bad bank" of underperforming loans should be spun out of 81% taxpayer-owned RBS.

He is also expected to publish a report the bank commissioned from the former Bank of England deputy governor Sir Andrew Large after it faced criticism about its lending to small businesses.

It is thought the government will step back from asking RBS to create an extensive bad bank holding as much as £120bn of problem loans. But McEwan is expected to set out his thoughts on the future of the RBS investment bank, its US arm, Citizens, and its private bank Coutts – banker to the Queen.

Citizens, already due for a stock market flotation in 2015, could be sold off more quickly, and there has been repeated speculation that Coutts could also be earmarked for sale. The investment bank, where the headcount has already shrunk from 25,000 before the bailout to 9,000, could be forced to retrench further.

The new chief executive is not expected to use the third quarter results to outline his strategic vision for the bank he joined a year ago as head of the retail operations. Sky News reported last night however that he would open talks with the government over restarting dividend payments to shareholders, although it could be years before such a move was approved.

McEwan has been readying the bank's staff for the outcome of the government review into a breakup. He recently told them he believed it would resolve an outstanding uncertainty about the future of the bank, bailed out five years ago with £45bn of taxpayer money.

In an email to staff a fortnight ago, he said: "The future of this company will not be about whether we operate in particular areas or where our problem assets sit. The future of this company is about how good a job we do for our customers, including those who are having difficulty repaying their loans. And it will be about how well we live up to all our responsibilities, particularly those we have to the UK."

The same week, George Osborne told the Daily Telegraph he was close to a decision on RBS. "We are looking at the case for a bad bank and if not a bad bank, what is the alternative strategy that really gets on top of the problems in that bank and goes on being what I want it to be, which is a bank supporting the British economy," he said.

The City is anxious about the creation of a bad bank although speculation in recent days has focused on the expansion of the existing non-core division. Even so, Ian Gordon, banks analyst at Investec, said: "We still fear that, even in the absence of an outright good bank/bad bank split, more covert steps may still destroy value".

Mortgage firm sues over Libor

US mortgage finance company Fannie Mae sued nine of the world's largest banks yesterday, including Barclays and Royal Bank of Scotland, accusing them of colluding to manipulate interest rates and seeking more than $800m of damages.

In a complaint filed in the US district court in Manhattan, the company accused the banks of manipulating the London Interbank Offered Rate, or Libor, as well as other interest rate benchmarks.

Fannie Mae said this manipulation caused it to lose money on interest-rate swaps and other transactions. It is also seeking punitive damages.

Smaller rival Freddie Mac filed a similar lawsuit in March against more than a dozen banks.

"Fannie Mae filed this action to recover losses it suffered as a result of the defendants' manipulation of Libor," a spokesman said. "We have a responsibility to be good stewards of our resources."

Four of the banks sued by Fannie Mae – Barclays, Rabobank, Royal Bank of Scotland and UBS - have previously settled with regulators over similar allegations and admitted wrongdoing.

The other bank defendants are Bank of America, Citigroup, Credit Suisse, Deutsche Bank and JPMorgan Chase.

Representatives of Bank of America, Barclays, Citigroup, Deutsche Bank, JPMorgan and RBS declined to comment. The other banks did not immediately respond to requests for comment.

The case is Federal National Mortgage Association v Barclays Bank Plc et al, US District Court, Southern District of New York, No. 13-07720.

RBS has already signalled it is involved in the new global investigation into foreign exchange trading and last night it was reported to have suspended two traders.

Article Source : http://www.guardian.co.uk
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Consumer borrowing grows at fastest rate since 2008 crash

Bank of England corrects figure on net unsecured lending, with jump adding to fears UK is relying on debt-fuelled recovery

The Bank of England has admitted to an error in its data and said consumer borrowing has been growing at its fastest rate since before the financial crisis five years ago.

The Bank said on Thursday that net unsecured lending to consumers – overdrafts, personal loans and credit cards – rose by £864m last month, the biggest increase since December and more than double the £411m figure it first reported.

The jump meant unsecured lending in the three months to September increased by 5.8% on an annual basis, the strongest growth since April 2008.

The surge in borrowing will raise concerns that Britain is relying on a debt-fuelled recovery at a time when policymakers have repeatedly stressed the need to rebalance the UK economy away from spending and towards manufacturing and exports.

Ross Walker, UK economist at Royal Bank of Scotland, said: "There is an amber warning light here – not an immediate risk but a medium-term financial stability concern. The notion that we have gone through a full deleveraging cycle is abject nonsense."

On Thursday, new data showed UK consumer confidence has risen to its highest level for six years despite the ongoing squeeze on disposable incomes. While levels of confidence lag those reported in Germany, Australia and the US, and a degree of pessimism remains, confidence has grown at a faster rate in the UK than in most European countries, according to figures from the market research firm Nielsen.

Its survey of more than 30,000 online consumers in 60 countries found those in the UK rated their confidence at 87 in the three months to the end of September, with levels above 100 indicating optimism and below pessimism. German confidence stands at 92 and the US at 98, France stands at 61 and Portugal and Spain at 55 and 56 respectively.

Chris Morley, managing director of Nielsen in the UK and Ireland, said British consumers had coped with rising household costs and falling real-term wages by shopping carefully and hunting bargains.

He added: "Throughout this period, British consumer confidence remained stubbornly weak, but in recent months it has finally taken an upward turn as the green shoots of economic recovery start to show."

Positive news on the UK housing market has boosted sentiment. But Nielsen also revealed a growing perception that the economic downturn in Britain is over.

With a move towards optimism, the proportion saying they were willing to spend crept up five percentage points to 39%.

Utility bills are now by far the biggest concern for people living in the UK. Energy and water bills were highlighted as a top concern by 31% of those questioned, compared with 27% a year ago as several of the major gas and electricity providers have raised prices in recent weeks.

BT Sport channels attract 2 million customers

Telecoms company enjoys rekindling of consumer business with sales rise of 4% in second quarter, the best for 10 years

BT's multimillion-pound venture into sports broadcasting has rekindled its consumer business, with 2 million viewers now signed up to the BT Sportchannels.

Revenues from consumer sales are up 4% in the September quarter, the best performance for 10 years, and BT's television service has added 70,000 subscribers, more than in any quarter since 2008. A further 156,000 customers signed for broadband, meaning BT grabbed the lion's share of new internet subscribers in the quarter.

BT is spending an estimated £1.5bn over three years on premier league football rights, big name presenters Jake Humphries and Clare Balding and lavish television studios in the former Olympic park, in an effort to stop the leakage of customers to rivals Sky and TalkTalk.

The loss of customers with a BT telephone line – a key measure of defections from the company – fell to 65,000 for the quarter, the best performance in five years. The telecoms firm beat City forecasts to report revenues flat at £4,491m, comfortably outstripping the consensus forecast of £4,440m, while profit before tax was also ahead at £499m.

"BT Sport has made a confident start and is already delivering for viewers," said chief executive Gavin Patterson, presenting his first financial results since taking over from Ian Livingston. "More than 2 million of our customers are signed up to it and our wholesale contract with Virgin Media means it is available to around four million homes in total."

BT now has 900,000 television customers – still some way behind Virgin's 3.8m and Sky's 10.5m. But its broadband and TV signings were ahead of Sky for September – the satellite broadcaster added 111,000 broadband customers and 37,000 to its television service.

Jerry Dellis, an analyst at Jefferies bank, said fears Sky had successfully countered the impact of BT Sport by giving away broadband free to TV subscribers had been overblown. "Robust broadband net adds from BSkyB … had raised some concern that BT's heavy investment in TV might be having rather limited initial impact at stemming the loss of retail lines within the BT base. In fact BT Retail KPIs are quite encouraging."

BT increased its interim dividend by 13% to 3.4 pence per share, and investors bumped the stock up 6.5p to 376p in early trading before the shares fell back to 372p.

Days after its August launch, BT Sport reached 1 million direct subscribers. That number has now doubled to 2 million. More than half are Sky subscribers watching via satellite, while others are viewing the programmes online or via the BT Sport app.

Following a deal signed a £75m a year deal with Virgin Media, which is offering the channels free to the 2 million customers who are already signed up to its most expensive TV package, the BT channels now have a potential audience of 4 million.