G20 trader bonus limit tensions |
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| Economy | |
| Written by Catherine Murray and ShareCast | |
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Morning business news, Monday 7 September: G20 financier bonus row, T-Mobile bidding war, UK economy risks. The future of the French investment banking industry was last night under threat after the Elysée Palace refused to back down over demands to cap traders’ bonuses. At the G20 meetings in London that concluded on Saturday, finance ministers and central bankers agreed on guidelines for the payment of bonuses to financiers, but stayed short of imposing a limit on how much an individual can be paid, the Times writes. France and Germany may be forced to semi-nationalise more of their stricken banks after the G20 imposed new, stricter rules on banks' balance sheets. Despite resistance from French and German finance ministers, the G20 has insisted that banks will in the future have to raise more capital to shore up their balance sheets, and that only the highest quality of capital - such as shareholder equity - will be counted, the Telegraph reports. Meanwhile, European banks face pressure to issue far more shares in order to meet a tough new global regulatory framework outlined at the weekend by finance ministers of the G20 group of nations which calls for much bigger and better capital buffers against shocks, analysts warned. The move follows criticism that some banks have relied too heavily on complex securities that have proved poor defences against big losses, writes the FT. After two days of meetings in London, the Group of 20 finance ministers and central bankers this weekend agreed the broad outlines of a tough new regulatory framework for financial institutions that stops short of setting caps on bankers’ bonuses but leaves open the possibility that regulators will have a say on pay. In broad terms, the group agreed three major points about banking regulation: banks must raise much more capital once the financial crisis has passed, complex financial institutions should develop “living wills” to plan for their unwinding should that ever become necessary and banks should be required to retain some portion of loans they repackage and sell as asset-backed securities, says the FT. Bidding war starts for T-Mobile UKA bidding war has started for T-Mobile UK after Vodafone and Telefónica made informal offers worth about £4bn for Deutsche Telekom’s British subsidiary. The cash offers for Britain’s fourth largest mobile operator were submitted at the end of last month and underline how Vodafone and Telefónica are keen to prevent each other from securing clear market leadership in the UK, the FT reports. UK economy "risks"The UK economy faces "huge risks" as it inches towards a recovery "where the risks of a relapse are high", two of the nation's leading business organisations warn. The British Chambers of Commerce and the Engineering Employers Federation stress the "challenges" facing companies as they emerge from the worst slump in the three-quarters of a century, reports the Independent. EU opens door to US aircraft negotiationsThe European Union has opened the door to negotiations with the US as a way to bring an end to the long-running trade battle over state aid to their respective aircraft manufacturers, Airbus and Boeing. Baroness Ashton, the EU’s trade commissioner, said the US and Europe needed to ensure they maintained competitive aircraft industries despite the dispute between Boeing and Airbus now before the World Trade Organisation, the FT reports. PwC reports record fee incomePricewaterhouseCoopers (PwC), Britain’s biggest accounting firm, has reported record fee income in the UK of £2.25bn amid the financial crisis. PwC’s role as administrator of the European arm of Lehman Brothers, the US investment bank that collapsed spectacularly almost a year ago, alone generated about £100m in fees for the year to June 30, the Times writes. BAE Systems negotiates settlementBAE Systems is negotiating a possible settlement with the Serious Fraud Office (SFO) over bribery and corruption allegations that could see Europe’s largest defence company pay a fine but admit no guilt. Several outcomes are understood to be on the table as the SFO looks to wrap up investigations into BAE arms sales in Africa and Eastern Europe, the Times writes. O'Brien to bail out INMDenis O'Brien, the 26% activist shareholder in Independent News & Media (INM), is willing to stump up between €40m to €60m (£35m to £52m) of his own cash to prop up the struggling media group. Sources close to O'Brien confirmed that he will invest more money in the company if he gains the support of other shareholders for a radical shake-up of the company, the Telegraph reports. |
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