Home News UBS AG Libor settlement could surpass the fine paid by Barclays plc in June
UBS AG Libor settlement could surpass the fine paid by Barclays plc in June
Monday, 03 December 2012 09:41

News round up: UBS, Barclays, Tesco, Funding for Lending, Starbucks, Royal Bank of Scotland, John Lewis, Thames Water and Executive pay.

UBS AG (NYSE:UBS) is close to agreements with regulators to pay more than 290m pounds ($465m) in a Libor settlement, which is likely to surpass the 290m pounds Barclays Plc (LON:BARC) was fined in June for manipulating Libor benchmark interest rates.

An announcement may come as soon as next week, said a person with knowledge of the talks who declined to be identified because the talks are private. More than 25 people have already left UBS, Switzerland’s biggest lender,  after the lender’s own internal probe, another person said last month.

Global authorities are investigating claims that more than a dozen banks altered submissions used to set benchmark such as the London interbank offered rate to profit from bets on interest-rate derivatives or make the lenders’ finances appear healthier, writes Bloomberg.

Tesco

Tesco will warn this week that sales in the UK have slipped into decline again, provoking new question marks about chief executive Philip Clarke's £1bn turnaround plan and the strength of the UK economy. In the first half of the year, Tesco reported its first fall in profits since 1994 as the decline in UK sales was coupled with pressure on the retailer's international businesses.

In the third-quarter results on Wednesday, Deutsche Bank is forecasting that Tesco will say like-for-like sales in Asia fell 1.9% as it battles legislation in South Korea that is forcing supermarkets to close at the weekend. In the US, Tesco's Fresh & Easy business is set to report a 4% growth in like-for-like sales, but this will be a slowdown on the 6.9% in the second quarter and spark new doubts about the future of the division, The Sunday Telegraph says.

Funding for Lending

The Bank of England is poised to deliver the first verdict on its flagship scheme to boost lending in the economy tomorrow, amid growing fears of an early flop. Threadneedle Street launched the Funding for Lending Scheme (FLS), which allows financial institutions to access cheap funds in return for maintaining or increasing lending, in August. Some 30 lenders, including all the UK's biggest banks and mutuals except HSBC, signed up.

The Bank, which took stock of the banks' lending levels at the end of June, will publish figures on how much participants have increased credit in first three months of the FLS. Despite initial hopes that the scheme would help the financial system to grow net lending by as much as £80bn or 5%, analysts are more pessimistic. Jens Larsen, the chief European economist at RBC Capital Markets, said: "Given that we are just two or three months into the scheme, it is likely to be something more in the order of £10bn," according to The Independent on Sunday.

Starbucks

Starbucks has become the first multinational to cave in to public anger and political pressure over what MPs called "outrageous" and “immoral” tax avoidance. After months of controversy over its tax affairs in Britain, the US coffee giant admitted it "needed to do more" by agreeing to review accounting practices that reduce its taxable profits. It is now looking to declare larger profits in Britain and thus pay more tax, The Telegraph reports.

Royal Bank of Scotland

It will take ten years to fully return Royal Bank of Scotland to the private sector, the state-owned lender has predicted, underlining the scale of the challenge facing its executives and successive governments. It intends to be ready to start paying dividends in late 2014, a key indicator of its return to health and a signal that it will be ready to re-enter the private sector.

After 18 months of further repairs to the bank’s balance sheet, senior RBS figures believe that then it will be returned to the private sector in four offerings over ten years. That would equate to four rounds of shares worth more than 10 billion pounds — a colossal amount to unleash on the market, assuming that the Government achieves the price for which it bought the bank, according to the The Times.

John Lewis

Department store chain John Lewis enjoyed one of its best weeks yet as the recent cold snap combined with the start of the Christmas shopping season to help it outperform the struggling high street. The employee-owned business said sales in the week to Saturday were 9.3 per cent higher than the same week last year at £124.2 million. It was the third best week the retailer has seen, boosting hopes that renewed consumer confidence will give the UK high street a much needed shot in the arm this month, The Scotsman writes.

Thames Water

One in 25 water bills are not being paid in London, leading to an evaporation in profits at Thames Water. The soaring bad debt problem has arisen as households throughout the capital are braced for a big hike in bills. Britain’s largest water supplier has attracted criticism for its financial arrangements.

It pays no tax but distributes huge dividends to its shareholders, including some of the world’s richest sovereign wealth funds. At the same time, it is preparing to saddle Londoners with a 25 per cent increase in bills to pay for a new taxpayer-funded supersewer. Today, however, Thames is to report a 6 per cent slide in operating profits in the first half of its financial year to £311 million, reports the The Times.

Executive pay

A failure by the Government to clamp down on executive pay is to blame for the growing wealth gap between fat-cat bosses and the general workforce, according to a report out today. The High Pay Centre think-tank said that despite promises from ministers, the remuneration culture has not changed.

Business leaders' pay rose by an average of 12 per cent in the last financial year, according to the corporate governance specialist Manifest and consultancy MM&K, while the average worker's wages rose 2.8 per cent, The Independent says.


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