PRESS DIGEST - British business - Oct 5

The Times

HUNGER FOR BIOFUELS WILL GOBBLE UP WHEAT SURPLUS

Ensus's new 300 million pound bioethanol refinery at Wilton, on Teesside, will consume so much wheat that home grown supplies of the crop will become exhausted to such an extent that to feed the nation as well could see Britain become a net importer of the crop for the first time in its history. BP (BP.L) and Associated British Foods (ABF.L) are building another plant, costing 200 million pounds, in Hull, and the two plants will consume an estimated 2.3 million tonnes of feed wheat between them every year, up to 19 percent of the total UK crop.

BAE SAYS IT WILL SETTLE CORRUPTION CASE, BUT NOT WITHOUT EVIDENCE AT ANY COST

BAE Systems (BAES.L) is prepared to settle the Serious Fraud Office's probe into allegations of bribery in Africa and Eastern Europe, but sources say the defence group will not do so "at any cost". According to sources, BAE will settle only if it is presented with irrefutable evidence supporting the SFO's claim that it paid bribes to secure lucrative contracts. A spokesman from the SFO said it too was prepared to agree a settlement. The spokesman said: "If BAE wants to continue talking, I am sure the SFO would welcome the approach. It's up to them to come back and make that approach." However, reports over the weekend suggest the two sides are far from agreeing on an amount.

TREND TOWARDS SHOPPING AT A DISCOUNT LIFTS TJ HUGHES

TJ Hughes, the department store chain specialising in discounted branded goods, reported a 30 percent increase in underlying profits in the year to the end of January. The chain, which has 50 locations across England, Scotland and Wales, benefited from the trend towards more cost conscious consumerism that has seen supermarket chains such as Lidl and Aldi prosper. Earnings before interest, taxation, depreciation, and amortisation rose to 9.2 million pounds. Since June last year, under chief executive Sue Tennant, TJ Hughes has undergone aggressive expansion and a 51st store is set to open soon.

The Daily Telegraph

EDF TO SELL THREE BILLION POUND STAKE IN UK NUCLEAR POWER PROJECT

Energy group EDF (EDF.PA) is seeking an investor to help build four new nuclear power stations in the UK. The French group said this weekend it plans to sell a 20 percent stake in its business for three billion pounds and that it is prepared to form alliances for the planned reactors. EDF sold a 20 percent stake in the venture to Centrica (CNA.L) last May and industry speculation suggests the group is looking for another partner as part of ongoing efforts to sell off assets in order to reduce debt. Chief executive Pierre Gadonneix wants to retain a 51 percent stake in the nuclear venture.

TESCO CARD GOES INTERNATIONAL

Tesco (TSCO.L) has launched its Clubcard in Poland, Thailand and Slovakia, adding three million new cardholders to its customer loyalty scheme. The supermarkets giant now has 12.5 million Clubcard holders overseas. The company says more people in the UK have a Tesco Clubcard than own a Barclaycard. Carolyn Bradley, Tesco's marketing director, said: "It is more important than ever to say thank you to our customers for their loyalty."

RBS MOVES TOWARDS FOUR BILLION POUND SHARE PLACING

Royal Bank of Scotland (RBS.L) is set to meet investors this week to tie up the minutiae of a four billion pound share placing as negotiations with the Treasury about joining the toxic loans insurance programme intensify. The cash raised will be used to reduce the number of shares it will have to cede to the government to cover the 19.5 billion pound cost of joining the Asset Protection Scheme to insure its worst loans. Chief executive Stephen Hester is keen to see taxpayers' ownership is kept to a minimum. Reports that the bank was considering a convertible bond issue to generate cash have been dismissed by sources close to RBS.

The Independent

INVESTMENT BANKS SET FOR BONUS CURB TALKS

The world's biggest investment banks, including Goldman Sachs (GS.N) and Deutsche Bank (DBKGn.DE), are expected to meet Lord Myners, the Treasury Secretary, to hold talks about signing up to proposals aimed at curbing excessive bonuses. This follows on from last week's agreement by domestic banks, including HSBC (HSBA.L) and Barclays (BARC.L), to sign up to similar proposals. However, Lloyds Banking Group (LLOY.L) has hit back at reports that it has agreed the next round of senior management bonuses to be unveiled in the new year.

STANCHART PULLS OUT OF RBS ASIA ASSETS DEAL

Standard Chartered (STAN.L) has withdrawn from talks to buy Royal Bank of Scotland (RBS.L) assets in China, India and Malaysia after failing to agree on a price. It is understood Standard Chartered offered 125 million pounds for the assets, but RBS said this was not enough. RBS has already sold off businesses in Asia to Australia and New Zealand Banking Group as it looks to refocus on its core market in the UK and to raise cash.

SKY ATTACKS RIVALS' CALL FOR REGULATION

BSkyB (BSY.L) has criticised rivals Virgin Media [VMEDL.UL] and BT (BT.L) over their submissions to Ofcom over the pay-TV review. The two companies reported that Sky's "near monopoly" was stifling competition. A spokesman for Sky said it was no surprise its rivals wanted to pay lower prices. Regulators do not generally intervene unless there is evidence of excessive profits or prices. Ofcom's threat of imposing limits on pricing is a worry to Sky, but the spokesman went on to say Ofcom's review produced "no compelling evidence that prices or profits in this sector are excessive".

The Guardian

CBI WARNS OF FINANCIAL JOB LOSSES

Amid International Monetary Fund warnings that the UK faces a jobless recovery, the quarterly industry health check published today by the CBI and PricewaterhouseCooper, says the financial services sector could shed up to 60,000 jobs this year. A separate report by the Construction Products Association also paints a grim picture, predicting it will be 2021 before construction output returns to 2007 levels. The IMF contends that the UK's position is worse than the rest of the eurozone, due to its over-reliance on both sectors.

GOVERNMENT LOOKS AT REMUTUALISING NORTHERN ROCK TO LIFT TAXPAYER BURDEN

Along with a number of politicians and academics, the Building Societies Association is lobbying the government to remutualise Northern Rock (NRKx.L) rather than embarking on a private sale process or flotation. The government is thought to be considering the proposals as it seeks a way to extricate the taxpayer from its support of the former building society. Treasury Select Committee Chairman John McFall argued that a mutualised Northern Rock would help meet the government objective of increasing competition in the financial industry.

GALA GAMBLES ON DEBT-EQUITY DEAL

Gambling group Gala Coral is close to finalising a debt-for-equity restructuring deal with lenders. The deal will see Gala's lenders write off 540 million pounds of debt, with the group's private equity owners expected to relinquish up to 50 percent of their stake. Gala, which is battling the effects of the smoking ban as well as the recession and increased taxes on gambling, is currently servicing a 2.6 billion pound debt-pile.

Prepared for Reuters by Durrants