Dollar set to take pound’s strong currency title 6 Aug 2014 Sterling became the FX market strongman during the past year as investors started to believe the UK would be the first big economy to raise rates. They may be right. Even so, shifting market expectations of when U.S. rates will be hiked now look set to boost the dollar.
Higher rates can’t come soon enough for HSBC 4 Aug 2014 Subdued activity and higher compliance costs led to a decline in the global bank’s underlying pretax first-half profit. Interest rate hikes will let HSBC squeeze out better returns from its huge deposit base. They will also test the bank’s claim that it is taking less risk.
Interest rates may stay low in Freelance Britain 31 Jul 2014 The Bank of England is beginning to wonder why wages aren’t rising. Just delay? Or something structural? It’s both. Self-employment explains almost all the gain in jobs. Austerity cuts and recession have bitten hard. Pay, inflation and interest rates will take time to recover.
BoE gives bosses new reasons to avoid UK banks 30 Jul 2014 UK bank regulators are mulling fresh ways to defer executive pay and clarify lines of accountability. The ideas mostly make sense, apart from clawback rules which may backfire. Yet they could worsen the already existing talent shortage at the top of British banks.
Barclays turnaround stays on the rails – for now 30 Jul 2014 The UK lender’s vital investment bank had a mixed second quarter. Fixed income trading was worse than peers on a sterling basis, but advisory and financing fees leapt. Barclays’ challenge is to stay in touch with rivals as its cuts start to really kick in. That won’t be easy.
Russia casts mid-sized shadow over BP 29 Jul 2014 The UK oil major’s results benefitted from strong upstream earnings, including a big contribution from its stake in Russian firm Rosneft. Sanctions and a court judgment have made Russia look less reliable, but the dividend looks safe. BP will have to rely more on self-help.
Ripping off the BoE is new low for British banking 28 Jul 2014 Lloyds was kept afloat by billions of pounds of emergency liquidity from the Bank of England. It has now emerged the UK bank was fiddling repo rates to lower the fees on that lifeline. Every revelation like this sets back the sector’s bid to regain public and political trust.
Reckitt pharma spinoff looks like a cold turkey 28 Jul 2014 The UK group is kicking its Suboxone habit. It plans to demerge its prescription drugs unit whose lead product is a heroin substitute. Reckitt is open to a trade sale and that might be more remunerative, but revenue and profit declines mean valuations could be thin either way.
Sky Europe transforms BSkyB investment case 25 Jul 2014 The UK satellite group is paying its 39 pct shareholder Fox 4.9 bln stg for sister Sky outfits in Germany and Italy. The businesses are close already and the price looks reasonable. Sky Europe promises scale, growth, and cost savings. But leverage will soar and cash returns shrivel.
RBS gains much-needed buffer against bad news 25 Jul 2014 Investors welcomed the UK bank’s lower bad debts, plus asset sales coming faster than expected and at higher prices. The progress brings capital targets closer, lessens pressure on RBS to get a high price for its U.S. arm, and makes forthcoming litigation costs more bearable.
UK’s strong GDP has a soft centre 25 Jul 2014 The headline - 0.8 percent second-quarter growth - sounds good. But construction shrank and industrial production was weak. Only services were strong. It sounds like a warning of future problems. Expectations of a UK interest rate rise may be delayed, leading the pound down.
UK construction tie-up needs more than cost cuts 25 Jul 2014 The mooted amalgamation of Britain’s Carillion and Balfour Beatty might qualify as a merger of equals, but only because Balfour has fallen on hard times. Synergy promises will make the numbers work. The danger is that operational misfortunes will drag down the larger group.
GSK trapped in Big Pharma’s strategic bind 23 Jul 2014 The UK drugmaker no longer thinks it can grow earnings in 2014. Sales are being hit by price pressure and generic competition. Debt limits GSK’s ability to buy its way out of trouble; Chinese probes look like a poison pill to a tax-inverting merger. The stock is cheap for a reason.
Anglo may struggle to make clean platinum break 21 Jul 2014 The UK-listed miner’s South African unit wants to sell high-cost mines that account for a quarter of platinum production and half of the workforce. It’s a sensible move for Anglo, but the politics are fraught. If the buyer gets into trouble, Anglo might end up back on the hook.
Tesco’s new chief should think the unthinkable 21 Jul 2014 Hiring Unilever exec Dave Lewis to replace Phil Clarke as CEO shows necessary decisiveness. A profit alert highlights the urgency of the situation. The UK grocer needs radical reinvention. The structure could be simplified, and braver tactics in the UK price war may be required.
UK banks have much to fear from latest probe 18 Jul 2014 Britain’s top antitrust watchdog has warned lenders to expect a full-blown competition investigation. Forced divestments would be a surprising outcome. But given the persistence of concern in spite of past probes, investors should brace for radical, profit-sapping remedies.
Liberty Global may eventually bid for all of ITV 17 Jul 2014 The cable group bought 6.4 pct of the British broadcaster from BSkyB for 481 mln stg. The stake is too small to confer any sway over ITV or stop a rival bidder. But Liberty is increasingly keen on content as well as distribution. A full takeover could follow.
London real estate at an inflection point 17 Jul 2014 Property values in the UK capital are up 20 pct in a year. But leading indicators – buyer enquiries, new mortgages and volumes – have stalled. For prices to hold, foreign buyers will have to spend more in spite of a stronger pound and punitive taxation.
BoE doves look an endangered species 16 Jul 2014 UK unemployment is falling and inflation has rebounded towards the Bank of England’s 2 percent target. Any policymakers who are opposed to an early rate rise can point to the persistent and puzzling weakness of wage growth. But the cards are increasingly stacked against them.
Hugo Dixon: UK prepares for possible EU failure 16 Jul 2014 David Cameron has appointed a eurosceptic as his foreign minister and nominated a little-known former lobbyist as Britain’s European commissioner. The prime minister looks to be lining up a Plan B of campaigning to quit the EU if he fails to reform it. This would be a mistake.