RPT-PRESS DIGEST - Financial Times - Aug 12

Financial Times

FSA STEPS BACK FROM PAY RULES FOR BANKS

Hector Sants, chief executive of the UK Financial Services Authority, says that the regulator's final remuneration code, to be unveiled Wednesday, is designed to protect against compensation policies that "subordinate the interests of capital providers to those of employees". However, it is believed that the regulator has stepped back from making specific recommendations on how bonuses should be structured for fear that such a move could damage Britain's ability to compete internationally.

NOT CLEAR IF QE AIDING ECONOMY, IMF STUDY SAYS

A study by the International Monetary Fund found that the Bank of England's quantitative easing policy appears to have suppressed long-term UK government bond yields by around 40 to 100 basis points. The IMF said that it is not clear whether the policy, which was extended last week with the purchase of a further 50 billion pounds worth of gilts, is having a positive effect on the economy. Though the U.S. Federal Reserve has pledged to acquire assets worth up to 14.7 percent of GDP, the Bank of England's intervention is currently the largest of any Western economy, with assets worth 7 percent of GDP so far purchased by the bank.

RISING OIL IMPORTS WIDEN TRADE DEFICIT

Office for National Statistics figures show that Britain's trade deficit widened in June, though a weaker pound and the subsequent boost to exports meant that the deficit declined over the second quarter as a whole. A rise in oil imports and a bigger trade gap in goods saw the overall deficit rise from 1.9 billion pounds in May to 2.2 billion in June; the surplus in services was steady at 4.3 billion. The total deficit in the second quarter was down to 7 billion from 8.3 billion in the first quarter.

ABF SELLS POLISH SUGAR UNIT IN EUROPEAN 'TIDY-UP'

Associated British Foods (ABF.L) is to sell its Polish sugar business to Pfeifer & Langen. The unit is profitable, with sales of around 100 million pounds per year, according to ABF finance director John Bason. Cazenove analysts estimate the proceeds of the disposal at 120-130 million. Investec Securities (INVP.L) analyst Martin Deboo said, "This is all about ABF tidying up their European sugar operations and focusing on countries where they have scale and competitive advantage."

COLLINS STEWART SIGNALS OPTIMISM

Collins Stewart CLST.L has posted a 6.1 million pound pre-tax profit for the first half of the year, down 36 percent on last year. The stockbroker struck a cautiously optimistic note about market conditions and has announced a round of appointments to strengthen its corporate broking and securities businesses. Mark Brown, chief executive, said that a decision to streamline the business in response to the financial crisis was "bearing fruit".

UNITE SELLS STAKE TO OASIS

Unite Group (UTG.L) plans to sell a majority stake in its committed future developments to Oasis Capital Bank, highlighting the appetite from overseas investors in the UK specialist property sector. The student accommodation company is creating a 200 million pound joint venture with the Bahrain-based bank to hold three schemes that will be completed in 2010, totalling 1,125 new beds, all located in London. Oasis Capital Bank will acquire a 75 percent stake in the new vehicle, with Unite holding onto the remaining 25 percent.

INTERSERVE CLOSES PENSION SCHEME TO MORE STAFF

Interserve (IRV.L) has reported a 19 percent rise in interim pre-tax profits while its pension deficit of 250 million pounds has prompted the company to close its final salary pension scheme to a further 900 staff. Interserve's final salary pension scheme was closed to new entrants seven years ago. The support services and building company will continue to honour defined benefit deals for a small proportion of staff transferred from the UK's public sector whose defined benefit pensions continue to be partly underwritten by the government.

IHG WARNS OF TWO-YEAR LULL AMID FALL INTO RED

Intercontinental Hotels Group (IHG.L), the world's largest hotel group, has warned it could take two years for trade in the hotel sector to return to previous levels after "it swung into a pre-tax loss of 50 million dollars (30.3 million pounds) for the first half". Like its peers, IHG has been hard hit by the recession-related fall in global travel from leisure and business groups. IHG said that, while occupancy levels were stabilising, room rates remained under pressure as rival operators fought for customers with deep discounting.

GREGGS REVEALS RECIPE FOR SUCCESSFUL EXPANSION

Greggs (GRG.L) has reported a 1.5 percent increase in first-half like-for-like sales, despite tough trading conditions, and plans to step up its core expansion drive after making good progress with its year of consolidation. The bakery chain expects to have only ten more stores by the end of the year after withdrawing from Belgium and moving some stores to better sites. Total sales for the 26 weeks to June 30 were 312.4 million pounds "up from a pro forma 299.2 million pounds for the same period last year".

AUSTRALIAN HEATWAVES GIVE BOOST TO INTERNATIONAL POWER

International Power (IPR.L) has been given a boost from air conditioning usage during Australian heatwaves and beneficial currency effects which have buoyed profits at the energy provider. However, the company reiterated its full-year results would be below last year's due to lower electricity prices and a fall in demand from the liberalised markets that are not subject to long-term fixed contracts. For the half year to July, pre-tax profit jumped from 2 million pounds to 579 million on revenue up 56 percent to 2.7 billion pounds.

Prepared for Reuters by Durrants