Breaking finance and business news, tax information, jobs and more for finance directors and senior finance professionals.

Economy

Morning business news

Written by Gary Howes

Thursday, 13 November 2008

HBOS deal still under scrutiny, Pound at record low levels and other market making news.

The two Scottish banking grandees trying to scupper Lloyds TSB's (LON:LLOY) takeover of the rival HBOS (LON:HBOS) said yesterday they have no plans to give up, despite the Prime Minister Gordon Brown and the Opposition leader David Cameron both agreeing there was no real alternative to the deal.

Not only has the plan be criticised by Cameron and Brown - it has also come under fire from UK's largest union Unite - who say they find the motives of the two Scots questionable.

Unite has expressed its fears over the pair's motives and the potential consequences of their actions.

Unite general secretary Derek Simpson said, "the future of these important financial institutions is now at stake. The proposal by these two individuals merely smacks of egos and special interest rather than the livelihoods of our members who work at both HBOS and Lloyds TSB."

Pound continues weak run

Sterling continues to weaken against the Euro providing a new headache to struggling UK industry.

As trading came to a close on Wednesday, sterling slid into the doldrums against the US dollar and euro.

The exchange rates reached historically low levels leaving the pound in a remarkably weak position. Sterling dropped below €1.20 against the euro for the first time ever and below $1.50 for the first time since 2002.

In one day, the pound lost 4% and over 3% against the dollar and euro respectively.

The landslide came on the back of comments earlier in the day from Mervyn King, governor of the Bank of England, who said the drop in value of the pound was part of ‘rebalancing’ the economy.

With unemployment rising and interest rates predicted to fall to 2%, sterling is bound to be put under further pressure.

Elisabeth Dobson, head of private clients at foreign exchange broker World First said, “Sterling is in freefall. Currency markets have been volatile for some time now but to see drops like this in just a few hours is unprecedented.”

“Anyone with overseas liabilities needs to be talking to their broker now. Who knows what’s around the corner?”

Other market making news

The US government on Tuesday abandoned its plan to buy toxic assets, feeding a gathering sense of gloom as investors fled from risk and US equity markets sank to levels approaching their October lows, writes the FT.

BAE Systems is in talks to sell up to 24 Eurofighter Typhoon fighter aircraft to Oman in a deal worth at least £1.4bn, the FT has learnt.

DSG International, the owner of Currys and PC World, was at the centre of renewed concerns about deteriorating credit conditions yesterday as a big insurer reduced the cover it offers to guarantee that the electrical retailer’s suppliers will be paid, according to the Times.

UBS suffered its heaviest blow yet in the investigation into its offshore banking activities for rich American clients as US authorities said they had indicted Raoul Weil, the Swiss bank’s head of global wealth management, reports the FT.

Blackstone’s GSO Capital Partners and GoldenTree Asset Management, two of the biggest hedge funds investing in debt, have turned to investors for more capital in the face of markdowns on their holdings and margin calls from their lenders, says the FT.

Japan is preparing to tap its foreign exchange reserves to the tune of $US100 billion in a massive offer to the International Monetary Fund, government sources have told the Times.

When the London Stock Exchange started the hunt for a successor to Dame Clara Furse, its chief executive of eight years, it was not obvious who might rush to take her place. Given the array of challenges facing the 207-year old exchange, it is hard to see who would be in a hurry to take the top job, reports the FT.

A telecoms company owned by Russian billionaire Mikhail Fridman claims to be the victim of espionage and black propaganda and has urged a rival company to investigate any possible involvement. Altimo, whose advisory board includes a former head of Britain's GCHQ listening station and a former deputy chief executive of Vodafone, said it has received evidence of wide-ranging attempts to discredit the company, writes the Telegraph.