PRESS DIGEST - Financial Times - March 31

The Financial Times

FSA FACES HEAT OVER BAILOUT OF MUTUAL

The Financial Services Authority has been put under pressure to explain how it monitored Dunfermline after the government revealed a 1.6 billion pound bailout. Chancellor of the Exchequer Alistair Darling ordered the watchdog to produce a report on how the mutual failed. The FSA already faces pressure over its regulation of banks after Conservative leader David Cameron said he would give the Bank of England new powers to prevent banks from engaging in reckless lending. The Scottish building society built up an 800 million pound book of "toxic loans" in commercial property and subprime mortgages backed securities that will now be the responsibility of taxpayers.

PRESSURE GROWS OVER EQUALITY BILL

Business is mounting a final campaign against a planned new reserve power in the equalities bill which could be used to force employers to disclose details of the race, gender and disability breakdown of their workers. The issue has revived tensions between Harriet Harman, the equalities minister, and Business Secretary Lord Mandelson. Harman has stressed the need for private sector employers to improve their reporting of indicators such as the gender pay gap. The CBI employers' organisation argued on Monday night that ministers should not be considering the introduction of such a "regulatory big stick" amid the recession. The CBI's John Cridland said the proposed indicators could be used to "name and shame, in a way that's very unfair to business".

MORTGAGE APPROVALS INCREASE SHARPLY

Economists said they noted signs of a turning point in the recession after mortgage approvals rose to 37,937 in February from 31,791 in January -- the biggest jump since 2006, according to data from the Bank of England. Additionally, Bank figures on M4 money, which includes notes and coins as well as money in bank accounts, showed lending to private non-financial companies grew at a five percent annualised rate over the three months to February. Collin Ellis, an economist at Daiwa Securities SMBC, said the data "adds to the glimmers of hope that the UK is nearing a bottom, or will reach the bottom in the first quarter of this year".

THEO FENNELL CHIEF DEPARTS AFTER SPARKLE FADES

Jeweller Theo Fennell (TFL.L) has accepted the resignation of its chief executive Pamela Harper and turned to her predecessor Barbara Snoad. Harper was hired by the company in 2007 to pursue an aggressive global expansion strategy, but the downturn saw the Aim-listed group suffer a 21 percent drop in sales over the Christmas period. Theo Fennell said: "Given the dramatic change in the economic climate the business's priorities have changed with a decision to focus on the core strong jewellery brand and the opportunities for developing it."

CARPHONE AND BSKYB STILL OPEN TO TISCALI DEAL

Carphone Warehouse (CPW.L) and BSkyB (BSY.L) remain interested in the possibility of bidding for the UK business of Tiscali (TIS.MI). Sources familiar with the matter said both groups were potential buyers, but said no deal was imminent. The Italian group is trying to agree a deal to restructure its debt after failing to sell its UK business to BSkyB. Carphone was one of seven companies that made indicative offers for all or parts of Tiscali, but its 550 million pound offer for the group's UK assets was rejected. However, Tiscali and Carphone held further talks in September. BSkyB entered exclusive talks with Tiscali in November, but reached no agreement on price for the firm's UK assets.

AG BARR BOLSTERED BY IRN BRU'S METTLE

AG Barr (BAG.L) has defied market trends in the UK soft drinks sector as sale of its Irn Bru brand helped boost profits by 12 percent. The group raised its dividend for the year to January 31 as it registered more growth in like-for-like sales in the first seven weeks of 2009. Chief executive Roger White pointed out the sales growth came against a backdrop in which the UK soft drinks market contracted by 2.2 percent. Nevertheless, while sales of Irn Bru grew by eight percent, the group's Strathmore bottled water brand saw sales drop "in line with the general market place". The company said on Monday it had struck a new deal with Orangina Schweppes to extend its Orangina franchise by six years.

PHORM IN KOREA BROADBAND DEAL

Phorm PHOR.L is beginning a trial of its targeted advertising system after signing a deal with KT, the large South Korean broadband provider. The deal is crucial to the group's attempts to prove its worth to broadband providers, publishers and advertisers. UK deployment of its technology, which targets web users according to their browsing habits, was delayed following protests from privacy campaigners. Kent Ertugrul, chief executive of Phorm, said the group's trial with KT would be "significantly larger" than its work with BT (BT.L). The company estimates South Korea's online advertising market is worth 1.1 billion pounds a year.

BBH TO POLL STAFF ON TAKING PAY CUT

Advertising agency BBH is asking staff to take a voluntary pay cut as it acts to avoid making workers redundant. The group has asked 400 employees to vote on whether to take nine days' unpaid leave this year -- the equivalent of a 3.5 percent wage reduction. The group froze pay in January as it budgeted for a 10 percent drop in revenues this year. The group has also decided not to attend the advertising industry's Cannes Lions extravaganza in June. The group's move contrasts with job losses at larger groups such as WPP (WPP.L) and Aegis (AEGS.L).

ROYAL LONDON HIGHLIGHTS ROBUST STANDING

Mutual life and pension group Royal London [ROLGPI.UL] has said it is strong enough to withstand another global economic slowdown, despite revealing that its capital reserves more than halved in 2008 in the wake of the banking crisis. The group said its regulatory surplus fell to 800 million pounds by December 31, compared to the 1.9 billion pounds it held a year earlier. The company pointed to significant falls in its biggest investment areas, including equities and property markets, and widening in corporate bonds spreads. The company said, however, that 685 million pounds of the reduction was also attributable to goodwill and certain assets from its purchase of Resolution's active insurance book "not being admissible for regulatory capital purposes".

Prepared for Reuters by Durrants