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Economy

Morning business news

Written by Gary Howes

Wednesday, 19 November 2008

Institutional investors seek more power in the City as Barclays institutional investors are cautioned.

The City’s leading institutional investors are gearing up for an assault on corporate Britain by demanding the right to vote out the board of every listed company each year.

Fund managers have been spurred to act after seeing their rights eroded during the Government’s £37bn bailout of the banking sector and in the wake of a controversial £7.3bn capital-raising drive by Barclays.

This comes after the Association of British Insurers (ABI) yesterday expressed 'grave concerns' via its Institutional Voting Information Service over Barclay's forthcoming capital-raising vote.

The board at Barclays Bank (LON:BARC) has come under increased pressure with its institutional investors over the capital raising saga with Middle East investors.

The Treasury has however warned rebellious shareholders in Britain's troubled banks that a public bail-out will be far more costly if they follow through with threats to block any of the lenders' current planned fundraisings.

In a clarification statement setting out "the detail of dealing with future applications to the [state bail-out] scheme", the Chancellor made clear on Tuesday that investors in Barclays, HBOS, Lloyds TSB and Royal Bank of Scotland have little option but to approve the recapitalisation deals already on the table, reports the Telegraph.

Woolworths sale

Woolworths (LON:WLW) is in talks to sell its entire high street business to Hilco, the specialist distressed fund, for £1.

Any deal will require the approval of the troubled chain’s banking syndicate, which recently appointed restructuring advisers from Deloitte to guide it on further loan negotiations with Woolworths.

The talks are likely to hinge on how much of Woolworth’s debt Hilco, a global turnaround specialist, is willing to take on, reports the Times.

Other news

EasyJet (LON:EZJ) is poised to canvass all its big shareholders over its future strategy in the wake of an escalating row with founder Sir Stelios Haji-Ioannou, who has refused to sign off the full-year accounts.

Sir Stelios, who controls a 26.9%stake in the low-fare airline and is a non-executive director, issued a two-page statement with the results, detailing his objections to the company's accounting policies, reports the Telegraph.

Marks and Spencer will on Thursday hold a one-day “20 per cent off” sale – its biggest pre-Christmas promotion for four years – to stimulate flagging revenue, according to people familiar with the retailer’s plans. The sale comes amid increasingly gloomy news for the retailer.

Market share data from TNS, seen by the Financial Times, also shows M&S continuing its slide in both men’s wear and women’s wear in the 26 weeks to October 12, although it is strengthening its position in children’s clothing, reports the FT.

Meanwhile, George Davies, the veteran fashion designer behind the Next and George at Asda brands, will step down as part-time chairman of Marks & Spencer's Per Una clothing range next month. Davies's daughter Melanie, a Per Una director, will leave with him. The surprise departures have sparked a wider reshuffle of M&S's clothing operations just as the retailer gears up for the busiest trading weeks of the year, reports the Telegraph.

Customers withdrew £200m from Bradford & Bingley on the Saturday morning in September ahead of its nationalisation on the Monday as customers took flight from the stricken buy-to-let lender. As speculation increased that B&B would have to be rescued by the taxpayer, withdrawals jumped from £26m on Thursday September 25 to £90m on Friday and £200m on Saturday, Richard Pym, B&B's executive chairman told the Treasury Select Committee yesterday, reports the Telegraph.

At least 12,000 British businesses have had vital insurance cover withdrawn in the past week as the credit crunch begins to bite deep into the UK’s supply lines. Atradius, the UK’s largest credit insurer, confirmed on Tuesday that it was clawing back the insurance offered to the suppliers of these companies against non-payment of bills for goods received on credit. One broker said the extent of the withdrawal by Atradius was “unprecedented in my life”, reports the FT.

Premier Foods is to scrap its interim dividend payment after agreeing to pay its creditors almost £5m in return for a postponement of an examination of whether the company has breached its banking covenants, reports the Independent.

Wolseley, the troubled plumbing and building materials group, yesterday refused to rule out the need for a rights issue next year as the company struggles against what it described as "unprecedented circumstances," reports the Independent.

Henry Paulson, the US Treasury Secretary who controls Washington's $700 billion bailout fund, stuck to his guns yesterday and insisted that his rescue scheme must not be used to save America's biggest car companies, even as the head of General Motors said that without state aid the industry would trigger a “catastrophic collapse” of the entire economy, reports the Times.