United Kingdom

Hugo Dixon: UK’s self-immolation beggars belief

12 Dec 2011

The government’s clumsy attempt to extract concessions from euro zone countries in their time of need has set off a chain reaction which could undermine Britain’s interests and even drive it out of the EU. This vicious cycle must be stopped.

RBS shows watchdogs need power to stop bank M&A

12 Dec 2011

Flawed capital rules, reckless management, a risky takeover and supine supervision all contributed to the UK lender’s collapse, a probe has found. Many shortcomings have been fixed, but more changes are needed – such as giving regulators real power to block big bank deals.

UK’s euro isolation may backfire on City of London

9 Dec 2011

David Cameron says he was defending Britain’s financial industry when he opted out of the pan-European deal to save the euro zone. But the prime minister’s stand leaves the City exposed in Europe - and at home. And it further diminishes the UK influence over designing new rules.

UK banks need government to solve funding squeeze

6 Dec 2011

The Bank of England’s new 30-day facility should help keep lenders afloat if the euro crisis causes short-term liquidity to dry up. But banks also need help refinancing 140 billion pounds of term debt in 2012. For that, the state may need to guarantee their debt once more.

UK Investors’ bank bonus campaign needs teeth

6 Dec 2011

The Association of British Insurers has asked the UK’s five largest banks to cut compensation to the point where returns exceed the cost of equity. The request is reasonable. But it will only work if shareholders are also prepared to vote against directors who don’t respond.

The real UK plan B: protecting against euro chaos

1 Dec 2011

Pundits say Britain needs an alternative strategy to boost growth. What’s really needed is a contingency plan to handle a euro explosion. The central planks should be for the government to keep adequate fiscal firepower to handle a crisis and to recapitalise the country’s banks.

New London air hub plan needs public money to fly

1 Dec 2011

Heathrow is a jam-packed embarrassment for those who promote London as a global financial centre. A brand new four-runway hub in the Thames estuary is appealing but expensive. Even using rosy forecasts, it is hard to see an all-private enterprise earning a decent return.

Bagehot to cenbanks: liquidity needn’t be cheap

30 Nov 2011

The 19th-century British financier believed in lending freely during crises but at high rates. Wednesday’s coordinated action by the ECB, the Fed et al boosted liquidity and reduced its cost. That could worsen imbalances. A Bagehotian approach would be workable and less risky.

Team Rothschild can’t lose in Kurdish oil

30 Nov 2011

Shares in Nat Rothschild’s cash shell wilted on their re-listing after merging with Kurdish oil group Genel. This risky asset may yet pay off handsomely for Genel’s outside investors, politics permitting. But slick reward schemes mean Nat and his co-founders win either way.

Fiscal fear keeps UK clinging to plan triple-A

29 Nov 2011

George Osborne warns of a growth stall that will worsen deficit and debt. But he is doing little for growth. His fear: that straying from austerity plan A would deprive the government of its AAA rating. The result: a long wait for recovery that will test the UK.

UK’s bank levy hike is wrong on three counts

29 Nov 2011

Upping Britain’s balance sheet tax may look like a clever way of extracting cash from an unpopular sector. But the fiddling undermines confidence. It also gives banks another reason to shrink. If they do, there’s a third problem: Ministers may have to raise the rate even further.

James Murdoch no longer alone in BSkyB hot water

29 Nov 2011

The shareholder revolt against the satellite broadcaster’s chairman was no worse than he probably feared. But investor discontent is spreading. Other BSkyB directors are now also coming under fire for failing to represent the dissatisfaction of independent investors.

Mayhew’s JPMorgan Caz legacy hard to sustain

29 Nov 2011

The veteran banker is retiring as chairman after four decades with the UK broker. The deal he engineered with JPMorgan is a rare success, with the U.S. bank’s balance sheet complementing Caz’s relationships. Maintaining the trust he engendered while flogging services will be tough.

Cheap loans for UK firms will need robust policing

28 Nov 2011

The government is set to launch a 20 billion pound scheme to help credit-starved businesses. It’s an improvement on previous attempts to force banks to lend to small businesses. But ministers will have to ensure that the subsidised loans help companies, not just banks.

Don’t privatise infrastructure, outsource it

28 Nov 2011

The British government wants pension funds to help bankroll big infrastructure schemes. But with sovereign bond yields at record lows, private finance could be much more expensive. Better for governments to take advantage of cheap funding while outsourcing management.

Technical measures won’t curb pay extravaganza

22 Nov 2011

The UK High Pay Commission has a 12-point plan to limit the “gross inequality” of corporate compensation. It’s worthy stuff – more disclosure, stronger boards and so forth. But the trend to ever more money at the top will not change until voters and citizens get really angry.

UK’s housing plan won’t deliver what’s needed

21 Nov 2011

Building more homes could ease Britain’s housing shortage and create jobs. But the government’s 400 million pound scheme to help housebuilders is modest, while stimulating sales by subsidising some mortgages looks a mistake. The plan is unlikely to make much of an impact.

Lloyds needs CEO shortlist ASAP

18 Nov 2011

The UK bank’s board is meeting to discuss its leadership vacuum. Investors need to know if CEO Antonio Horta-Osorio will return after illness. If not, there aren’t many replacements with experience running public companies. Ex-HSBC boss Mike Geoghegan could be one place to start.

Northern Rock sale barely dents UK bailout tab

17 Nov 2011

Selling the good part of the collapsed UK lender to Virgin Money raises up to 1 billion pounds for the government. But the proceeds are small beer compared to the 21 billion pounds the state has lent to Rock’s bad bank. Fully reimbursing taxpayers will take well over a decade.

Music gods again divert EMI’s destiny

11 Nov 2011

With both EMI and Warner under new owners, it seemed the stars might finally uncross for their long-awaited union. But Sony and Universal brought their own karma and cash to the EMI auction, and Warner is again alone at the altar. Further twists of fate are in regulators’ hands.