-
Ministers meet banks to thrash out two-year mortgage interest holiday
divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/19686?ns=guardianpageName=Politics%3A+Ministers+meet+banks+to+thrash+out+two-year+mortgage+interest+holidaych=Politicsc3=The+Guardianc4=Economic+policy%2CMortgages+%28Money%29%2CBanks+and+building+societies%2CInterest+rates+%28Business%29%2CRecession+%28UK%29%2CCredit+crunch+%28Business%29%2CBusiness%2CMoney%2CPolitics%2CUK+newsc5=Personal+Finance%2CInvestments%2CCredit+Crunch%2CNot+commercially+useful%2CBusiness+Markets%2CProperty+Mortgages+and+Interest+Ratesc6=Jill+Treanorc7=2008_12_05c8=1129267c9=articlec10=GUc11=Politicsc12=Economic+policyc13=c14=h2=GU%2FPolitics%2FEconomic+policy" width="1" height="1" //divpMortgage lenders were last night demanding clarity on the fee they would be charged for the government's two-year guarantee on missed mortgage payments to help struggling homeowners./ppAt a meeting between the major banks and Alistair Darling and Lord Mandelson yesterday, the hastily announced scheme to give customers breathing space was discussed along with a number of other pressing issues affecting banks./ppThe chancellor and the business secretary will also have a number of top-level meetings with lenders next week as the government attempts to ensure that small businesses are not deprived of finance during the continuing economic crisis. Thrashing out the details of the scheme to help households affected by redundancy or a "significant loss of income" is vital for the lenders, who have been told to implement the package in the new year./ppIn working through the fine print of the scheme, the eight lenders - seven banks and one building society - which have signed up to the plan will be anxious for clarity on the price they will pay for the guarantee being provided by the government for missed interest payments./ppThe eight lenders represent 70% of the mortgage market, where there are concerns that as many as 75,000 homes could be repossessed next year as unemployment rises./ppGordon Brown, who stunned parliament with the announcement on Wednesday, yesterday made it clear more lenders should sign up. "The eight major lenders that are responsible for more than 70% of the mortgage market are fully behind the plans. We are now working on getting the remaining 30% signed up," Brown said./ppThe lenders were asked to support the scheme, which will cover mortgages up to pound;400,000 - but only those with less than pound;16,000 worth of savings will be eligible. /ppIt will allow customers in difficulty to defer a proportion of the interest payments on their mortgage for up to two years. The deferred payments will be added to their outstanding mortgage debt, which the borrower will pay off when their finances improve. It could leave the government with liabilities of about pound;1bn. /ppUp to 9,000 homeowners could be helped by the scheme, which is being backed by HBOS, Nationwide, Abbey, Lloyds TSB, Northern Rock, Barclays, RBS and HSBC, although housing minister Margaret Beckett said yesterday that it was "really genuinely quite hard to judge" how many applicants there might be. /ppLenders are determined it should target people who "can't pay" rather than "won't pay". They had already been warned by the Financial Services Authority to treat customers having difficulty with mortgage payments with care. /ppLenders such as Royal Bank of Scotland, which is 58% owned by the taxpayer, and state-owned Northern Rock, had also taken steps to try to avoid accusations of heavy-handedness by promising to wait six months before initiating the repossession process rather than the three-month industry norm./ppThe government is also putting pressure on credit card companies to treat customers fairly during the economic downturn. They have to draw up a new statement of principles to avoid an investigation by the Office of Fair Trading. This might include a "window" when card companies can move rates, and a potential limit on the size of rate rises. The business secretary, Lord Mandelson, is also demanding monthly data from banks on the amount of money they lend to small businesses./pdivullia href="http://www.guardian.co.uk/politics/economy"Economic policy/a/lilia href="http://www.guardian.co.uk/money/mortgages"Mortgages/a/lilia href="http://www.guardian.co.uk/money/banks"Banks and building societies/a/lilia href="http://www.guardian.co.uk/business/interestrates"Interest rates/a/lilia href="http://www.guardian.co.uk/business/recession"Recession/a/lilia href="http://www.guardian.co.uk/business/creditcrunch"Credit crunch/a/li/ul/divdiva href="http://ads.guardian.co.uk/click.ng/richmedia=yessite=Politicscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403848120508252636088"img src="http://ads.guardian.co.uk/image.ng/richmedia=yessite=Politicscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403848120508252636088" border="0" //a/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a
-
Dear Anna: Halifax errors that cost a saver time and worry
Anna Tims: Because fraudsters might have obtained the passbook and be able to masquerade as Savill, the lost indicator means her old account is irrevocably doomed
-
FAQ: Mortgage help
How do I qualify for help with my mortgage? What if I am on income support?
-
House prices hit by biggest annual fall in 25 years
divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/26546?ns=guardianpageName=Money%3A+House+prices+hit+by+biggest+annual+fall+in+25+yearsch=Moneyc3=The+Guardianc4=House+prices+%28Money%29%2CHousing+%28Society%29%2CMortgages+%28Money%29%2CBanks+and+building+societies%2CInterest+rates+%28Business%29%2CRecession+%28UK%29%2CCredit+crunch+%28Business%29%2CBusiness%2CMoney%2CUK+newsc5=Personal+Finance%2CInvestments%2CCredit+Crunch%2CNot+commercially+useful%2CBusiness+Markets%2CCommunities+Society%2CProperty+Mortgages+and+Interest+Ratesc6=Kathryn+Hopkinsc7=2008_12_05c8=1129268c9=articlec10=GUc11=Moneyc12=House+pricesc13=c14=h2=GU%2FMoney%2FHouse+prices" width="1" height="1" //divpHouse prices in the UK fell by their biggest amount in 25 years over the last 12 months - and economists predict that they have much further to fall./ppHalifax, Britain's biggest lender, said that prices dropped 2.6% in November and 16.1% over the last 12 months, to leave the average price of a house falling just over pound;30,000 to pound;163,605. This is worse than the early 1990s, when the country was last in recession, and is the biggest fall since 1983. Howard Archer at IHS Global Insight said: "The latest Halifax house price data are a real shocker, even by the recent very low standards of the housing market."/ppWould-be buyers are currently unable to get on the property ladder as it is so difficult to obtain a mortgage. Housing experts are doubtful that yesterday's one percentage point cut in interest rates will help boost the housing market. /ppLiam Bailey, head of residential research at Knight Frank, said: "This cut is unlikely to have any immediate effect on the housing market, although it may tempt some buyers to make a decision. Prices will continue to fall into 2009. Much depends on whether the new rate is passed on to borrowers." /ppSimon Ward, chief economist at New Star, the fund management group, predicted earlier this week that house prices might not return to their August 2007 peak until the mid-2020s. The Liberal Democrat Treasury spokesman, Lord Oakeshott, said: "The Halifax house price index is at last catching up with what property professionals have known and auction prices have been shouting since the spring: there is a market, but in a mortgage famine houses only sell at the levels cash buyers are prepared to pay."/pdivullia href="http://www.guardian.co.uk/money/houseprices"House prices/a/lilia href="http://www.guardian.co.uk/society/housing"Housing/a/lilia href="http://www.guardian.co.uk/money/mortgages"Mortgages/a/lilia href="http://www.guardian.co.uk/money/banks"Banks and building societies/a/lilia href="http://www.guardian.co.uk/business/interestrates"Interest rates/a/lilia href="http://www.guardian.co.uk/business/recession"Recession/a/lilia href="http://www.guardian.co.uk/business/creditcrunch"Credit crunch/a/li/ul/divdiva href="http://ads.guardian.co.uk/click.ng/richmedia=yessite=Moneycountry=usaspacedesc=rsssystem=rsstransactionID=1228465403841120508252636088"img src="http://ads.guardian.co.uk/image.ng/richmedia=yessite=Moneycountry=usaspacedesc=rsssystem=rsstransactionID=1228465403841120508252636088" border="0" //a/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a
-
Rate cut brings mix of relief and dismay
divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/42223?ns=guardianpageName=Money%3A+Rate+cut+brings+mix+of+relief+and+dismaych=Moneyc3=The+Guardianc4=Mortgages+%28Money%29%2CInterest+rates+%28Business%29%2CEconomic+policy%2CBanks+and+building+societies%2CBusiness%2CMoney%2CPolitics%2CUK+newsc5=Personal+Finance%2CInvestments%2CCredit+Crunch%2CNot+commercially+useful%2CBusiness+Markets%2CProperty+Mortgages+and+Interest+Ratesc6=Miles+Brignall%2CTony+Levenec7=2008_12_05c8=1129264c9=articlec10=GUc11=Moneyc12=Mortgagesc13=c14=h2=GU%2FMoney%2FMortgages" width="1" height="1" //divpHolders of tracker mortgages are looking forward to the lowest monthly payments in a lifetime following yesterday's base rate change, which is also set to slash the rates paid to savers./ppWithin hours of the Bank of England's announcement, all the big banks said they would pass on the rate cut to some extent. Customers can expect lower monthly repayments from January 1. However, savers can expect to see the interest they are paid fall to 1% or less. The Bank's second big rate cut in recent months was also bad news for anyone who is about to retire./ph2Mortgages/h2pSome lucky tracker mortgage customers - whose interest rates shadow the Bank of England base rate - will be paying just 0.99% for their home loans./ppSomeone with a pound;100,000 interest-only deal at that rate is now paying just pound;82.50 a month - a payment that would have been unthinkable as little as a year ago./ppAfter the heavily-trailed rate cut and pressure from the government, the majority of the big banks said they would pass on the full one percentage point cut. HSBC, Lloyds TSB/Cheltenham Gloucester and Bristol West announced immediately that they would pass it on in full /ppThe majority state-owned Royal Bank of Scotland group, which includes NatWest, said it would not. Instead, it said it would adjust its rates by an amount that would strike "an appropriate balance between the interests of savers and borrowers in any decision it makes". This is understood to mean it aims to cut standard variable rate (SVR) by half a point to allow it to lessen the impact on savings rates./ppIt was joined by fellow government-backed lender Halifax Bank of Scotland. Britain's biggest lender said it would only cut its SVR by a quarter-point to 4.75% - again from January 1./ppEarlier in the day Halifax said 500,000 customers on tracker deals would receive the full benefit of yesterday's rate cut. The announcement followed the intervention of the Financial Services Authority, which had been concerned Halifax would use terms buried in its small print that allow it not to pass on the full rate cut. Later Nationwide, the UK's biggest building society, said it would lower its SVR by 0.69 of a point. It said it would not enforce a controversial "floor" that allowed it not to pass on reductions to tracker customers if rates went below 2.75%./ppOverall, the UK's 4m tracker mortgage holders have been the main beneficiaries of the collapse in interest rates. Since the Bank of England started cutting rates in the autumn, those with interest-only tracker mortgages will see their monthly mortgage payments halve by January 1./ppAnyone with a fixed rate deal has had to watch in dismay as their borrowing costs have remained unchanged. Around 1m households have deals linked to the SVR and they are now paying 4%-6% - considerably more than those on trackers./ppThere was a ray of hope yesterday for anyone who has been frozen out of the mortgage market by the credit freeze. Cheltenham Gloucester and First Direct launched reasonably-priced mortgages for up to 90% of a home's value. These deals had disappeared until this week. /ph2Savers/h2pWhen the Bank of England cut rates by one and a half points in November savings rates across the UK were slashed. Last night savers were facing further cuts, and they were racing to grab the last decent fixed rate savings products./ppSaga said yesterday it would pull its one-year fixed rate bond paying 5.75% today and replace it with a 4.75% deal. The firm, which has pound;3bn of savings, said it "can only defy gravity for so long". Overall, savings rates on current accounts look likely to all but disappear. Nationwide, where some rates fell by as much as 1.6 points last month, says it is reviewing savings accounts but "these are not likely [to change] in the next few days". The Anglo Irish Bank's 5.75% fixed rate deal until February 2010 was last night doing brisk business as consumers sought to fix their savings at the remaining decent rates./ph2Retirement/h2pThe rate cut spells more gloom for those about to retire. Those in their 60s have watched on as the value of their pension pot has been badly hit by falls in the stockmarket. When they convert it to an annuity the income payouts are expected to fall to historic lows. Annuity rates - which give an income for life - are pegged to bonds which in turn feed off interest rates. This week bond yields fell to their lowest level for 30 years./pdivullia href="http://www.guardian.co.uk/money/mortgages"Mortgages/a/lilia href="http://www.guardian.co.uk/business/interestrates"Interest rates/a/lilia href="http://www.guardian.co.uk/politics/economy"Economic policy/a/lilia href="http://www.guardian.co.uk/money/banks"Banks and building societies/a/li/ul/divdiva href="http://ads.guardian.co.uk/click.ng/richmedia=yessite=Moneycountry=usaspacedesc=rsssystem=rsstransactionID=1228465403854120508252636088"img src="http://ads.guardian.co.uk/image.ng/richmedia=yessite=Moneycountry=usaspacedesc=rsssystem=rsstransactionID=1228465403854120508252636088" border="0" //a/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a
-
Nuclear industry claims it is now 'sexy' but admits to rising costs
divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/3391?ns=guardianpageName=Environment%3A+Nuclear+industry+claims+it+is+now+%27sexy%27+but+admits+to+rising+costsch=Environmentc3=The+Guardianc4=Nuclear+power+%28Environment%29%2CEnergy+%28Environment%29%2CEnvironment%2CBusinessc5=Business+Markets%2CEnergy%2CEthical+Livingc6=Terry+Macalisterc7=2008_12_05c8=1129223c9=articlec10=GUc11=Environmentc12=Nuclear+powerc13=c14=h2=GU%2FEnvironment%2FNuclear+power" width="1" height="1" //divpWidespread doubts about the ability of nuclear power companies to bring a new generation of reactors on stream at the right time and on budget were raised yesterday within an industry that the UK government is relying on to meet its climate change and energy security goals./ppEDF, the French power company that has positioned itself as a leading player in the market, admitted that its new European Pressurised Reactor programme at Flamanville in France was already 20% over budget, while delays continue to plague a Finnish facility, the only other new plant under construction in Europe./ppPaul Golby, chief executive of E.ON UK, which also wants to build two nuclear facilities in Britain, said the 2017 target for a first new UK reactor was "extremely ambitious" and urged ministers to proceed with a new generation of coal plants, such as the controversial Kingsnorth scheme, to fill the growing energy gap. /ppHe was talking at a London conference organised by the Nuclear Industries Association, which was told by another top industry figure that although the sector might have a range of problems to overcome, it had recently achieved an extraordinary transformation and was now perceived externally as "sexy"./ppLady Barbara Judge, chairwoman of the Atomic Energy Authority, highlighted skills shortages and waste disposal as difficulties but felt they could be overcome. "Atomic was a dirty word but now it's certainly a sexy one," she said./ppBut she did warn that the safety of existing plants remained paramount and, while the difficulties for the industry caused by the Chernobyl disaster and Three Mile Island accident had been overcome, they could return. "Everyone knows just one accident [need occur] and the industry will be shut down for 20 years," she said./ppGolby raised concerns about the shortage of experts at the Nuclear Installations Inspectorate, which governs health and safety, and questioned whether 2017 was a realistic date for a new station. A colleague had suggested that atomic power would be available to cook the Christmas dinner that year but he said: "I have a fear it will be humble pie we will be eating rather than turkey." /ppMeanwhile, at an investors' day in Paris, EDF said the reactor being built in Flamanville would cost euro;4bn (pound;3.5bn) at 2008 prices instead of euro;3.3bn, blaming "higher raw material costs and the impact of technical and regulatory evolutions". /ppThe new total cost of the electricity generated is euro;54 a megawatt hour, instead of the euro;46 announced in 2006. /ppLuc Oursel, president of Areva NP, said despite Flamanville's problems and rising costs and delays at the Olkiluoto site in Finland, nuclear still made commercial sense. He said the lessons learned would help build plants in Britain on schedule./pdivullia href="http://www.guardian.co.uk/environment/nuclearpower"Nuclear power/a/lilia href="http://www.guardian.co.uk/environment/energy"Energy/a/li/ul/divdiva href="http://ads.guardian.co.uk/click.ng/richmedia=yessite=Environmentcountry=usaspacedesc=rsssystem=rsstransactionID=1228465403946120508252636088"img src="http://ads.guardian.co.uk/image.ng/richmedia=yessite=Environmentcountry=usaspacedesc=rsssystem=rsstransactionID=1228465403946120508252636088" border="0" //a/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a
-
Banks urged to pass on historic cut
divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/91167?ns=guardianpageName=Business%3A+Banks+urged+to+pass+on+historic+cutch=Businessc3=The+Guardianc4=Interest+rates+%28Business%29%2CBank+of+England+%28Business%29%2CRecession+%28UK%29%2CCredit+crunch+%28Business%29%2COil+and+gas+companies+%28Business%29%2CManufacturing+sector+%28Business%29%2CHouse+prices+%28Money%29%2CMoney%2CBusiness%2CEconomic+policy%2CEconomics+%28Business%29%2CPoliticsc5=Personal+Finance%2CCredit+Crunch%2CNot+commercially+useful%2CBusiness+Markets%2CProperty+Mortgages+and+Interest+Ratesc6=Ashley+Seager%2CLarry+Elliottc7=2008_12_05c8=1129242c9=articlec10=GUc11=Businessc12=Interest+ratesc13=c14=h2=GU%2FBusiness%2FInterest+rates" width="1" height="1" //divpBritain's bailed-out high street banks risked the wrath of the government last night after they refused to pass on to all their mortgage customers the full benefits of the Bank of England's decision to cut borrowing costs to the lowest level since 1951./ppDespite joint pressure from Gordon Brown and the chancellor Alistair Darling to match the one percentage point reduction in the bank rate to 2%, both the Royal Bank of Scotland and the Halifax said their standard variable rates (SVR) would not be reduced by the full amount. /ppHalifax, Britain's biggest mortgage lender, said it would trim only a quarter point off its SVR home loan although customers on tracker mortgages would receive the cut in full, worth pound;82 a month on a pound;150,000 mortgage. RBS said it would "strike an appropriate balance" between the needs of borrowers and savers, but would pass on the cut in full to business customers./ppThe cuts in mortgage rates were triggered by the announcement from Threadneedle Street that it had cut the bank rate to its joint lowest in history in an attempt to prevent the economy sliding deeper into recession./ppDarling said last night that borrowing costs had come down by a total of three percentage points in two months. "This will help people and businesses - and I want to see these cuts passed on." /ppThe chancellor met bank chiefs yesterday to flesh out plans to offer up to two years' holiday on mortgage payments if homeowners fell into difficulties./ppThe move from the Bank of England was widely expected after a run of poor data from every part of the economy this week suggested Britain was tipping into a longer and deeper recession than the chancellor predicted in last week's pre-budget report./ppBrown welcomed the decision and predicted the cut would not be the last. "They made the right decision. If the banks pass the interest rates on, it's a benefit to homeowners across the country," he said. The prime minister also stepped up the pressure on the bank's monetary policy committee (MPC) to cut rates further in the coming months. "Interest rates could continue to come down. If you've got a period when inflation comes down, you've got to do different things." /ppTUC general secretary Brendan Barber said ministers should get tough with high street banks if they refused to pass on the rate cut. "This decision was spot-on. The Bank of England could not be clearer about what it expects the high street banks to do. The government must now pull every lever of influence to get banks lending. If that doesn't work, radical measures will be needed straightaway. The alternative is a wave of bankruptcy and redundancy."/ppThe Halifax said its decision to cut its SVR from 5% to 4.75% was the result of balancing the interests of customers with "the commercial imperative of managing its business in a sustainable and prudent fashion"./ppFollowing the market mayhem this autumn, the taxpayer now owns almost 60% of RBS and is likely to have a stake of nearly 50% in the country's biggest commercial bank once the merger between Lloyds TSB and Halifax Bank of Scotland (HBOS) is completed. The high street banks believe they are receiving mixed messages from Whitehall, with ministers urging them to both increase their lending and to run their businesses profitably so that they can repay state loans./ph2Rewind to 1951/h2pIt was the year Britain returned Winston Churchill to office aged 77, Newcastle United beat Blackpool in the FA Cup, and free spectacles and false teeth on the NHS were halted. Pendlebury delivered the famous line "It's a good job we're both honest men" in The Lavender Hill Mob - a cinema ticket to see Alec Guinness and Sid James cost 2d, or 21p today, a Morris Minor around pound;520 (pound;12,000). Some goods were still rationed, and a loaf of bread cost 6d. The year was 1951, and it was the last time the Bank's base rate was 2%. It was also the year that Gordon Brown was born.br /strongJo Adetunji/strong/pdivullia href="http://www.guardian.co.uk/business/interestrates"Interest rates/a/lilia href="http://www.guardian.co.uk/business/bankofenglandgovernor"Bank of England/a/lilia href="http://www.guardian.co.uk/business/recession"Recession/a/lilia href="http://www.guardian.co.uk/business/creditcrunch"Credit crunch/a/lilia href="http://www.guardian.co.uk/business/oilandgascompanies"Oil and gas companies/a/lilia href="http://www.guardian.co.uk/business/manufacturing"Manufacturing sector/a/lilia href="http://www.guardian.co.uk/money/houseprices"House prices/a/lilia href="http://www.guardian.co.uk/politics/economy"Economic policy/a/lilia href="http://www.guardian.co.uk/business/economics"Economics/a/li/ul/divdiva href="http://ads.guardian.co.uk/click.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403876120508252636088"img src="http://ads.guardian.co.uk/image.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403876120508252636088" border="0" //a/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a
-
New Star fund management crashes
divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/68889?ns=guardianpageName=Business%3A+From+zenith+to+nadir%3A+the+star+of+the+investment+world+crashesch=Businessc3=The+Guardianc4=New+Star+Asset+Management+Group+%28Business%29%2CInvesting+%28Business%29%2CInvestment+funds%2CMoney%2CBusinessc5=Personal+Finance%2CInvestments%2CBusiness+Marketsc6=Jill+Treanorc7=2008_12_05c8=1129246c9=articlec10=GUc11=Businessc12=New+Star+Asset+Managementc13=c14=h2=GU%2FBusiness%2FNew+Star+Asset+Management" width="1" height="1" //divpMaking money appears to be John Duffield's main motivation in life. For his secretaries and star fund managers, the maverick entrepreneur is able to claim that he knows how to create wealth. At least 250 people have experienced his Midas touch./ppUntil now, perhaps. Slightly scruffy in MS V-neck sweaters and cord trousers, Duffield's illustrious City career hit the rocks this week when the banks seized control of his high-profile New Star fund management operation./ppShareholders in New Star have been all but wiped out in a sign of how the credit crunch is touching every sector of finance. By last night shares in the fund manager had almost reached the "token 1p" that Altium stockbrokers rated them earlier in the week - a painful slide from a high of pound;4.85 barely 18 months ago./ppDuffield had been reluctant to concede control of New Star to a group of banks, which could end up with a 95% stake in the operation he founded amid much controversy seven years ago. An impatient man who does not suffer fools lightly, he is unlikely to have found negotiating with the bankers easy. At times it was far from certain that a deal would be struck. But Duffield, who made more than pound;150m from New Star - with many of his 300 or so staff also becoming multimillionaires - finally caved in on Wednesday./ppWhen the announcement was made, after 72 hours of dire trading in New Star shares, Duffield still had a role in a company over which the taxpayer will have an influence - as the syndicate of banks includes those being bailed out by the government: HBOS, Lloyds TSB and Royal Bank of Scotland./ppBut Duffield is not expected to stay long beyond the radical restructuring, which is due to be completed early in the new year. The banks will want new leadership and Duffield seems unlikely to want to stay - although one of his favoured analogies is of an aeroplane crashing to the ground: do you kick out the pilot, and if so, when?/ppstrongShort temper/strong/ppHis experience of running firms when he is not the master has not been successful, but helped to create the legend that surrounds this short-tempered and slightly ill-mannered man. When he sold his Jupiter fund management operation to Commerzbank, he had a very public falling-out after describing three executives of the German bank as Goering, Goebbels and Hitler./ppHe later said he did it with a "smile on my face". The joke was obviously lost on the Germans but did not stop Duffield's rise. He went on to set up New Star - an obvious play on Jupiter - taking many colleagues with him but leaving behind Edward Bonham Carter, who still runs the operation. All this came with another high-profile spat that almost ended up in the courts./ppNew Star had been a raging success. It hauled in billions of pounds from small investors attracted by the company's galaxy of star fund managers, whose names were displayed on advertising billboards that Duffield made his senior staff check personally to ensure they were lit correctly and clearly displayed./ppHis "stars" were sometimes trusted with his own money and motivated not by their salaries but by the lure of potentially lucrative share stakes. Staff owned about 50% of New Star when it floated three years ago, although that stake has halved since they started to sell out last year./ppThe precipitous decline in the share price makes it harder to keep them motivated - hence the pound;10m of shares that the banks have agreed can be used to tie in staff. /ppA collapsing share price also does little to instil confidence among the investors in New Star's funds, which have plummeted down performance tables. Investors have begun to withdraw their savings from the group's unit trusts and investment funds. At its height New Star had pound;20bn under management, but this week admitted this had fallen to just under pound;15bn. Last week, New Star temporarily closed the doors on its international property fund to stem the exodus./ppAt the core of New Star's problems was debt: some pound;240m was borrowed in March 2007, before the credit crunch began, to allow the group to return pound;383m to shareholders, who were mainly Duffield and his staff. Duffield is not a high spender and has given pound;12m to charity in recent years. His main indulgence is in the farms he owns in Newbury and Oxford./ppNew Star admitted that amid all the turmoil, investors had been expressing concern about the debt burden, which required millions of pounds a year to service at a time when profits were being hit by the deepening malaise./ppFrom the moment that New Star admitted in an announcement to the stock exchange early on Monday morning that it was asking for trading in its shares to be suspended while negotiating with its bankers, the outcome looked painful for Duffield. The authorities rejected the request to suspend trading - in a rare public disagreement between a company and the Financial Services Authority - and the shares dived 70%. /ppDuffield has been reluctant to speak openly about the events of the past week but appeared unrepentant in a statement. "The cost of this restructuring is regrettably a substantial dilution for ordinary shareholders, including me. However, in current market conditions we have to recognise that there is no other option to ensure the stability of the business," he said./ppstrongWell-connected/strong/ppQuite what the future holds for the well-connected Duffield is uncertain. Richard Pease, of the Barclays banking clan, is on the New Star board and one of the top fund managers; the former FSA chief executive John Tiner is a non-executive director; Martin Gilbert, who runs the rival Aberdeen Asset Management, is a friend. /ppWith his 70th birthday looming in June, he could easily settle for retirement, but friends say the prospect of relaxation will not come easily to him. Although he has an unusually leisurely start for the City - at about 11am - he puts in 12-hour days, usually involving lunch and dinner in Signor Sassi, the Italian restaurant he frequents near his Knightsbridge office./ppHe tried retirement before: at the age of 30, he lived the high life with his heiress wife Vivien Clore. It did not last and neither did the marriage - they divorced after seven years but not before having two children, Arabella and George./ppClore, a philanthropist, is said to have described him as a wonderful fund manager but a lousy husband. Only she can confirm his credentials as a husband but the reality is that he does not manage money directly. He describes himself as "manager of mangers" and has said that "you don't need colossal brains to succeed in this business but you need common sense - and you must work hard."/ppEducated at Harrow, then Oxford, where he obtained a first in biochemistry, Duffield's few interests outside work appear to be his farms and his children. Friends say he showed little appetite for taking a back seat even as the credit crunch started to hurt his business. /ppBut whether he has the appetite to start another venture from scratch in what is expected to be the worst economic climate since the Great Depression remains to be seen. But, Duffield being Duffield, anything is possible./ph2John Duffield/h2pstrongBorn/strong 1939/ppstrongEducation/strong Harrow school and Christ Church, Oxford, where he read biochemistry/ppstrongCareer/strong Became a stockbroker after university/ppstrong1985/strong Founded Jupiter Asset Management/ppstrong1995/strong Sold Jupiter to Commerzbank/ppstrong2001/strong Founded New Star Asset Management/ppstrongHobbies/strong Farming, eating at Signor Sassi/ppstrongFamily/strong Formerly married to Dame Vivien Duffield. Two adult children/pdivullia href="http://www.guardian.co.uk/business/newstarassetmanagementgroup"New Star Asset Management/a/lilia href="http://www.guardian.co.uk/business/investing"Investing/a/lilia href="http://www.guardian.co.uk/money/investmentfunds"Investment funds/a/li/ul/divdiva href="http://ads.guardian.co.uk/click.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403866120508252636088"img src="http://ads.guardian.co.uk/image.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403866120508252636088" border="0" //a/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a
-
Case-study: Behind on payments, with 56 days to sell up
divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/6064?ns=guardianpageName=Business%3A+Behind+on+the+payments+-+with+56+days+to+sell+upch=Businessc3=The+Guardianc4=Housing+market+%28Business%29%2CMortgages+%28Money%29%2CInterest+rates+%28Business%29%2CBanks+and+building+societies%2CRecession+%28UK%29%2CCredit+crunch+%28Business%29%2CBusiness%2CMoney%2CUK+newsc5=Personal+Finance%2CInvestments%2CCredit+Crunch%2CNot+commercially+useful%2CBusiness+Markets%2CProperty+Mortgages+and+Interest+Ratesc6=Kathryn+Hopkinsc7=2008_12_05c8=1129269c9=articlec10=GUc11=Businessc12=Housing+marketc13=c14=h2=GU%2FBusiness%2FHousing+market" width="1" height="1" //divpJassette Donaldson, 53, a checkout assistant from Leytonstone, east London, who has fought for months to keep her three-bedroom house, is not sure if the government's repossession scheme will help her. She has been given 56 days to sell her house after falling behind with her pound;1,230-a-month mortgage repayments in 2005/pp"I ruled myself out of this," she says of the scheme . But so few details have been released that homeless charities are unsure who will qualify. Shelter, which helps people facing repossession, was inundated with phone calls yesterday from confused people and local councils asking them who can benefit from the scheme./ppDonaldson was unable to keep up with her mortgage after she was hit by a car and had to take six months off work. She then returned part-time and was supporting her daughter at university./ppShe went to court and made some repayments with help from her son, but he is now unable to help further. Donaldson, who suffers from arthritis and sciatica, said: "Sometimes I can't walk as I'm in too much pain but my employers are threatening to sack me because I'm off work." /ppWhen the Guardian spoke to her two weeks ago, her solicitor was about to go to court for the second time to ask the judge if she could have more time to sell her house. The courts granted her 56 more days. /ppHer house was valued at pound;300,000, but is on sale for pound;250,000. She also had to buy a home information pack, which cost pound;300, to put her house on the market. "I could've used that money to help with my mortgage repayments," she said./pdivullia href="http://www.guardian.co.uk/business/housingmarket"Housing market/a/lilia href="http://www.guardian.co.uk/money/mortgages"Mortgages/a/lilia href="http://www.guardian.co.uk/business/interestrates"Interest rates/a/lilia href="http://www.guardian.co.uk/money/banks"Banks and building societies/a/lilia href="http://www.guardian.co.uk/business/recession"Recession/a/lilia href="http://www.guardian.co.uk/business/creditcrunch"Credit crunch/a/li/ul/divdiva href="http://ads.guardian.co.uk/click.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403833120508252636088"img src="http://ads.guardian.co.uk/image.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403833120508252636088" border="0" //a/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a
-
Big three US carmakers plead for $34bn more
Ford, Chrysler and GM pitch more detailed and costlier bail-out plan, received with wariness from Congress
-
Morrisons triumphs over Tesco with sales leap
divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/70907?ns=guardianpageName=Business%3A+Morrisons+triumphs+over+Tesco+with+sales+leapch=Businessc3=The+Guardianc4=Morrisons+%28Business%29%2CTesco+%28Business%29%2CSupermarkets+%28business%29%2CBusinessc5=Business+Marketsc6=Richard+Wrayc7=2008_12_05c8=1129226c9=articlec10=GUc11=Businessc12=Morrisonsc13=c14=h2=GU%2FBusiness%2FMorrisons" width="1" height="1" //divpMorrisons, Britain's fourth-biggest supermarket chain, yesterday announced a better than expected 8.1% leap in third-quarter sales, in stark contrast to the poor performance of bitter rival Tesco./ppThe company, also one of the UK's largest food manufacturers, has successfully attracted cost-conscious shoppers with "Price Crunch" deals such as its pound;4 Sunday roast lunch offer. Its advertising campaign starring Top Gear presenter Richard "the Hamster" Hammond has also helped to bring customers in. /ppRival Asda yesterday said it is also performing well as shoppers worried about their jobs conserve cash by trading down to value brands and own-label goods. Asda's American parent Wal-Mart said November was a strong sales month, though it refused to give precise figures. /ppAsda boss Andy Bond said: "Offering shoppers everyday low prices across both food and non-food continues to deliver strong sales and market share gains. The extra 900,000 customers coming through our doors is clear proof that our strategic focus is the right one for these difficult times."/ppAsda claims it is growing at almost twice the rate of Tesco and Sainsbury's and still outpacing Morrisons, which said yesterday it is pulling in an extra 700,000 shoppers a week, compared with last year. Tesco reported its worst sales figures for a decade and a half this week./ppRecent data from TNS showed that Tesco grew the least among the big four supermarkets during October. Its market share is estimated to have dropped 0.4 percentage points to 31.3% as a result of the success of Morrisons and discount retailers./ppBradford-based Morrisons, meanwhile, said Christmas will be "hard-fought" as it announced that sales in stores that have been open for at least a year increased 8.1% in the 13 weeks to November 2. The City had been expecting a rise of about 7.1%./ppMorrisons has been particularly successful in attracting "value" shoppers, including a quarter of a million taking up its cut-price Sunday lunch offer./ppMorrisons' results were in contrast to those of Tesco, which said this week that like-for-like sales, excluding petrol, rose 2% in the past three months - half the growth achieved in the previous quarter. Tesco's chief executive Sir Terry Leahy was uncharacteristically downbeat, saying that while he was pleased with progress "we are also realistic - the current economic climate and the strain this is putting on consumers everywhere is something that all businesses are feeling, including ours."/ppRetailers across Britain are hoping that the Bank of England's one-point reduction in interest rates announced yesterday will help support consumer confidence and see off the threat of one of the worst Christmas trading periods in a generation./pp"We all know how tough it is for the consumer," Morrisons finance director Richard Pennycook said yesterday of the rate reduction. "Any incremental steps that can help ease that situation must be positive."/ppHowever, shares in Morrisons dropped as much as 5% after it announced plans to spend pound;223m on buying 38 Co-op stores, which the chain is selling as part of its move to gain regulatory approval for its pound;1.6bn acquisition of Somerfield's 800 stores announced in the summer./ppAnalysts said the price looked steep. The retail team at investment bank JP Morgan pointed out that Morrisons sold 117 former Safeway stores to Somerfield four years ago for pound;260m. It is now paying 86% of that for just 43% of the retail space./ppThe deal also means that Morrisons will be suspending its share-buyback programme, having spent pound;145.4m of a planned pound;1bn over two years. Provided it does not make any more acquisitions, the company may return pound;500m next year./ppPhilip Dorgan, analyst at Seymour Pierce, said the third-quarter results were good "but they are history. At first sight, we don't like the acquisition and next year Morrisons could face the heady brew of falling like-for-like sales, falling margins and a struggle to integrate a costly acquisition."/ppHe said the 38 stores have an average size of 13,000sq ft (1200sq metres) and the full cost of the deal is equivalent to pound;642 a square foot - which, when compared with Morrisons' own enterprise value per square foot of pound;729, "doesn't look that good a price, especially when you consider that the acquired stores are around one third of Morrisons' average store size"./ph2The promotions/h2pstrongSeptember/strong Five energy-efficient light bulbs for 50p; fish supper meal deal for pound;4./ppstrongOctober/strong Family roast chicken meal deal for pound;4. /ppstrongNovember/strong Bonfire party meal deal for pound;4; Sunday brunch meal deal for pound;4. /ppstrongDecember/strong Christmas price crunch offers will include 42-inch LCD TV for pound;449, buy one get one free on Cadbury's selection boxes and two for pound;4 on Cadbury's Roses and Heroes./pdivullia href="http://www.guardian.co.uk/business/morrisons"Morrisons/a/lilia href="http://www.guardian.co.uk/business/tesco"Tesco/a/lilia href="http://www.guardian.co.uk/business/supermarkets"Supermarkets/a/li/ul/divdiva href="http://ads.guardian.co.uk/click.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403927120508252636088"img src="http://ads.guardian.co.uk/image.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403927120508252636088" border="0" //a/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a
-
Ryanair adds sweetener to Aer Lingus bid
divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/87522?ns=guardianpageName=Business%3A+Ryanair+adds+sweetener+to+Aer+Lingus+bidch=Businessc3=The+Guardianc4=Ryanair+%28Business%29%2CAirline+industry+%28business%29%2CMergers+and+acquisitions+%28business%29%2CBusinessc5=Business+Marketsc6=Dan+Milmoc7=2008_12_05c8=1129225c9=articlec10=GUc11=Businessc12=Ryanairc13=c14=h2=GU%2FBusiness%2FRyanair" width="1" height="1" //divpRyanair offered the Irish government a euro;200m (pound;173.4m) sweetener in its bid to buy Aer Lingus yesterday as it sensed a weakening of political opposition to the proposed deal./ppEurope's largest domestic airline said it would set up a euro;200m fund that the Irish government can draw on if Ryanair does not reduce Aer Lingus fares by 5% or eliminate all fuel surcharges at the carrier. The move, a characteristic piece of showmanship by Ryanair chief executive Michael O'Leary, came in the same week that the Irish finance minister, Brian Lenihan, said a renewed takeover bid from Ryanair would have to be considered "carefully". /ppHoward Millar, Ryanair's deputy chief executive, said the proposals were delivered to the Irish transport minister yesterday. "The Irish government is in listening mode," Millar said. "It is under considerable financial pressure and it is looking at ways to raise cash."/ppThe government owns 25% of Aer Lingus and has vigorously opposed Ryanair's previous overtures./ppHowever, a downturn in the airline market prompted Ryanair to return this week with a new bid of euro;1.40 a share, valuing the airline at half what it offered two years ago./ppRyanair said yesterday it would restore daily Aer Lingus services between Heathrow and Shannon airport, and give the Irish government a veto over selling Aer Lingus's Heathrow slots./pdivullia href="http://www.guardian.co.uk/business/ryanair"Ryanair/a/lilia href="http://www.guardian.co.uk/business/theairlineindustry"Airline industry/a/lilia href="http://www.guardian.co.uk/business/mergersandacquisitions"Mergers and acquisitions/a/li/ul/divdiva href="http://ads.guardian.co.uk/click.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403939120508252636088"img src="http://ads.guardian.co.uk/image.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403939120508252636088" border="0" //a/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a
-
Woolworths cuts deepest on high street
divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/39844?ns=guardianpageName=Business%3A+Woolworths+cuts+deepest+on+high+streetch=Businessc3=The+Guardianc4=Woolworths+%28Business%29%2CRetail+industry+%28Business%29%2CBusinessc5=Business+Marketsc6=Richard+Wrayc7=2008_12_05c8=1129227c9=articlec10=GUc11=Businessc12=Woolworthsc13=c14=h2=GU%2FBusiness%2FWoolworths" width="1" height="1" //divpWoolworths will raise the stakes on Britain's high street today with the launch of its largest sale - including 50% off toys and greetings cards - as the frantic search for a buyer for the retailer continues./ppAdministrators Deloitte last night denied the mammoth discounts, for which the company has taken on extra staff, is an attempt to clear shelves before the firm is liquidated. Talks are continuing with financial and trade buyers interested in the 815-strong chain as a going concern./pp"Additional goods have been moved to all stores and further stock will be added in coming days," said Neville Kahn, joint administrator. "There is continuing interest in the core Woolworths business."/ppRetailers have become desperate to attract shoppers. Several have launched short-term sales and are adding promotions such as "buy one get one free" to encourage more trade. Yesterday Marks Spencer repeated its 20%-off pre-Christmas sale only a fortnight after it slashed pre-Christmas prices for the first time in four years. The MS sale ran in the middle of another three-day Debenhams sale with the department store offering up to 20% off everything. John Lewis is expected to respond with its own reductions./ppHighlights of the Woolworths sale include up to 50% off toys, 30% off Christmas trees and decorations and half-price greeting cards./ppOne potential buyer of the business, entrepreneur Theo Paphitis, has pulled out. The owner of stationery chain Ryman, who became a household name through the BBC's Dragons' Den series, said he could not agree a deal with Deloitte./pp"It is with disappointment that I confirm we could not reach a deal," he said. "My vision was that we could retain the Woolworths brand name through purchasing a large share of the existing retail business ... Unfortunately, the constituent parts of Woolworths are more valuable than the whole."/ppKahn stressed yesterday that talks were continuing with "a number of parties" interested in Woolworths' retail business and its distribution arm, Entertainment UK. Suitors include "a number of new parties which have approached us in the last few days", he added. "At the same time, we have received a substantial number of bids from parties interested in the Woolworths properties and have gone under offer on a large number of stores." /ppBids have also been received for Woolworths' books distribution business, Bertram Group, which has not yet gone into administration. The BBC, Woolworths' partner in the 2entertain DVD publishing business, is in talks to buy out that division and is understood to be trying to push down the asking price of pound;100m./pdivullia href="http://www.guardian.co.uk/business/woolworths"Woolworths/a/lilia href="http://www.guardian.co.uk/business/retail"Retail industry/a/li/ul/divdiva href="http://ads.guardian.co.uk/click.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403905120508252636088"img src="http://ads.guardian.co.uk/image.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403905120508252636088" border="0" //a/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a
-
Viewpoint: Time to show who's boss at HBOS
divimg alt="" src="http://hits.guardian.co.uk/b/ss/guardiangu-feeds/1/H.15.1/46091?ns=guardianpageName=Business%3A+Time+to+show+who%27s+boss+at+HBOSch=Businessc3=The+Guardianc4=HBOS+%28Business%29%2CBanking+sector+%28Business%29%2CBank+of+England+%28Business%29%2CRio+Tinto+%28Business%29%2CBusinessc5=Investments%2CCredit+Crunch%2CBusiness+Marketsc6=Nils+Pratleyc7=2008_12_05c8=1129228c9=articlec10=GUc11=Businessc12=HBOSc13=c14=h2=GU%2FBusiness%2FHBOS" width="1" height="1" //divpNow we'll find out what an "arm's length" relationship with the part-nationalised banks means. Halifax intends to cut its standard variable mortgage rate by only one-quarter of one percent despite yesterday's full-point cut by the Bank of the England. The decision may be seen as a two-fingered salute to the government./ppSome sympathy with HBOS, owner of the Halifax, is in order. It is in a horrible position, trying to satisfy demands that are simply contradictory./ppIn one ear, it is told to manage its business prudently and ensure it doesn't create yet more financial stability; that imperative requires it to achieve profitable lending margins and offer respectable rates to savers, the most reliable source of funding. In the other ear, it hears demands to pass on rate cuts in full to help the economy and hard-pressed borrowers./ppThis tension was always likely to lead to an explosion. At 2%, the bank rate is so low that, as HBOS sees life, the contradiction must be resolved. Over to you, Mr Brown. Spell out what you want./ppBeyond fury, it is hard to predict how the government will react. There would seem to be only two options. The first is to concede that HBOS has a point, take solace in the fact that only 15% of the bank's borrowers have variable-rate mortgages, and say that savers also need support. This option may be more palatable if further pledges could be wrung from the banks on lending to small businesses, who are perhaps a greater priority than homeowners./ppThe alternative is to take control of the likes of HBOS through full nationalisation or an act of parliament that sets rules on lending rates, including terms for new borrowers. Does the government dare to take such a radical step? It's time to decide./ppstrongRoot of minus one/strong/ppIt sounds odd to describe the rate cut itself - a full one point to 2% - as the timid choice, but it's true: the only credible alternative was a 1.5% reduction./ppThe key phrases in yesterday's statement demonstrated the depth of concern about the state of the economy. Business surveys in the UK suggest "the downturn is gathering pace"; activity in the rest of the world is "weakening"; and conditions in money markets "remain extremely difficult." Those concerns are echoed in yesterday's economic data. New car sales fell 37% in November and the fall in house prices is accelerating./ppWhy wasn't the Bank bolder? The prime reason may be concern about spooking the currency markets. Sterling's decline in the past months to $1.47 is generally a helpful development as it supports exports. A more violent fall in the value of the pound, however, could raise worries about the government's ability to borrow pound;120bn next year. This fear can still (just) be described as hovering in the wings - but best not to encourage it onto centre stage. On balance, 1% was probably right./ppstrongDon't blame it on Riobr //strongbr /Is nobody listening to Rio Tinto? Hasn't anybody heard that the company doesn't need a rights issue and that $40bn of debt - the burden of last year's top-of-the-market purchase of Alcan - is a manageable sum?/ppEverybody has, of course. Almost all mining analysts support Rio's view and regard the shares as cheap. But look at what's happening to the price of those shares. On the day that BHP Billiton declared itself a non-bidder, Rio sank by a third to pound;15.50. That looked dramatic but yesterday Rio briefly traded below pound;10 for the first time in almost a decade. It's as if the commodities bull market, which carried the shares to pound;70 in May this year, never happened./ppWhat's going on? Company officials mutter about short-sellers trying to force the share price so low that a fund-raising becomes inevitable, a plotline borrowed from the banking sector./ppMaybe. More likely, investors really are debating the credibility of Rio's claim that a combination of disposals, cuts in capital expenditure and cash generation will be sufficient. The company could help itself by giving the market something substantial. By how much will the $9bn spending programme be cut? When will the disposals happen?/ppAt the moment, the analysts are probably right to give Rio the benefit of the doubt. The Chinese are still paying pre-crash prices for their iron ore so the most important contributor to Rio's cash flow should still be solid./ppBut Rio needs to offer reassurance. China will demand big cuts next year and copper and aluminium are still falling in price. The lesson from the banks is clear. If you need to raise cash, go early; if not, spell out your plan properly./ppa href="mailto:nils.pratley@guardian.co.uk"nils.pratley@guardian.co.uk/a/pdivullia href="http://www.guardian.co.uk/business/hbos"HBOS/a/lilia href="http://www.guardian.co.uk/business/banking"UK banking sector/a/lilia href="http://www.guardian.co.uk/business/bankofenglandgovernor"Bank of England/a/lilia href="http://www.guardian.co.uk/business/riotinto"Rio Tinto/a/li/ul/divdiva href="http://ads.guardian.co.uk/click.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403898120508252636088"img src="http://ads.guardian.co.uk/image.ng/richmedia=yessite=Businesscountry=usaspacedesc=rsssystem=rsstransactionID=1228465403898120508252636088" border="0" //a/diva href="http://www.guardian.co.uk"guardian.co.uk/a copy; Guardian News Media Limited 2008 | Use of this content is subject to our a href="http://users.guardian.co.uk/help/article/0,,933909,00.html"Terms Conditions/a | a href="http://www.guardian.co.uk/webfeeds/1,,1309488,00.html"More Feeds/a
-
Sales of new vehicles punctured by sharpest monthly fall in 28 years
New car registrations down 37% year on year, as sales of almost all models stall
|
News Feeds 