PRESS DIGEST - Financial Times - July 20

Financial Times

FSA TAKES A HARDER LINE ON REGULATION

As part of a harder line adopted by the Financial Services Authority following the credit crunch, its regulators are joining bank board meetings, questioning brokers' business plans and demanding more data. In addition, the City regulator has expanded the list of the strategically important institutions it subjects to intense supervision from 50 to 75. Lyndon Nelson, FSA head of risk, said: "There's a lot more detailed investigation and requests for numbers, a lot more fundamental analysis of the building blocks."

TORY PLAN GIVES BANK SWEEPING POWERS

A Conservative government would give the Bank of England sweeping new powers to prevent another financial crisis. George Osborne, shadow chancellor, is set to reveal a regulatory shake-up that would rip up Prime Minister Gordon Brown's 12-year-old tripartite system. Osborne insists he would not forcibly break up Britain's largest banks, although he would impose capital penalties on retail banks that conduct "casino" investment operations. His regulatory reform, which will be announced on Monday, would also see the end of the Financial Services Authority to ensure that lines of responsibility go straight to Threadneedle Street.

FALL IN DEMAND FOR OFFICE SPACE SLOWS

Surveyors are reporting that the fall in tenant demand for offices and shops has started to slow, showing that confidence is slowly returning to the commercial property market. According to a report from the Royal Institution of Chartered Surveyors, demand for commercial property still dropped in the second quarter of the year, although the pace of decline has eased markedly. There are expectations that property prices will come under pressure from the fall in rents caused by the shortage of new occupiers, following a two-year slump in capital values.

BOARD BONUSES FALL TO A THIRD OF SALARY

In the year to April company directors' bonuses averaged almost a third of basic salary amid anger, over executive pay, sparked by the banking crisis. According to pay research group Incomes Data Services (IDS), board directors' bonuses were down from 40 per cent of basic salary the previous year. Steve Tatton, editor of IDS's Executive Compensation Review, said: "Despite the current climate of salary freezes these figures show that bonuses remain very much an integral part of current pay packages."

RECORD TOTAL OF FRAUD CASES IN COURT - AND WORSE TO COME

KPMG's forensic auditors revealed on Sunday that a record number of fraud cases reached the courts in the first six months of this year. The numbers, which at 163 cases are the highest seen in a six-month period during the 21 years the accounting firm has run a "fraud barometer", are expected to rise even further in the recession. "These figures are bad, but the worst is yet to come," said KPMG's Hitesh Patel.

WORKER ABSENCES DROP IN PRIVATE SECTOR

The Chartered Institute of Personnel and Development (CIPD) has observed a sharp drop in employee absence in the private sector, which has opened up a wider gap with the public sector. "There is no simple explanation for the public/private absence gap, with a number of factors in play including differences in demographic profiles, with a higher proportion of women and older workers in the public sector," said CIPD's senior public policy advisor, Ben Willmott. According to the CIPD's annual absence management survey, while private sector absence has dropped from 7.2 days to 6.4 days per employee per year, public sector absence has remained high, averaging 9.7 days, compared with 9.8 days for the previous year.

TESCO SEEKS TO BOOST BANK ARM

The largest retailer in Britain, Tesco(TSCO.L), is considering seeking a separate credit rating for its financial services arm. The supermarket hopes the move will give the group more clout for its aggressive assault on banking. Tesco is planning to launch a current account within the next 18 months and also a mortgage account, possibly within the next two years. The chief executive of Tesco's retailing services business, Andrew Higginson, said: "We are very much moving to being a standalone bank."

TOP-EARNING BARCLAYS BANKER TO SET UP SOVEREIGN WEALTH VENTURE

Top-earning Barclays(BARC.L) executive Roger Jenkins is due to leave the bank to set up his own business working with sovereign wealth funds on corporate investments and takeovers. The news is likely to negatively impact Barclays' shares, which closed at 313 pence on Friday. Mr Jenkins' new venture is expected to have offices in London, the Gulf and Los Angeles. It is thought that one of its first deals could be to arrange Middle Eastern backing for a London-listed hedge fund firm.

JJB STANDS BY JONES AFTER NEW DISCLOSURE

JJB stood by Sir David Jones, its chairman, after the disclosure of further details of a loan agreement with rival Mike Ashley, the chief executive of Sport Direct(SPD.L). JJB has been under scrutiny in relation to a 1.5 million pound loan extended to Sir David by Mr Ashley, who released an agreement signed by the two rivals last weekend that detailed how the loan came to be made. The agreement said former JJB chief executive Chris Ronnie had approached Mr Ashley in October 2007 about a possible short-term loan for Sir David, who was allegedly facing "temporary personal financial difficulties".

KCP BUYS SOUP MAKER FOR 24 MILLION POUNDS

TSC Foods, the maker of chilled and frozen soups, has been bought by private equity group Key Capital Partners for 24 million pounds. The announcement shows deal-makers are still hungry to acquire food and drinks companies. Due to the defensive nature of the industry, banks are more willing to finance leveraged buy-outs in the sector than in more risky areas, such as retail. TSC also bought out its partner this year in the Glorious brand of fresh soups.

Prepared for Reuters by Durrants