PRESS DIGEST - Financial Times - March 8

Financial Times

SANTANDER DEAL HERALDS GROWING CONFIDENCE

Bankers are growing increasingly hopeful that investor confidence is returning to securitisation markets. The boost comes in light of the fact that a 1.4 billion pound ($2.11 billion) deal for banking group Santander (SAN.MC) has become the first since the start of the economic crisis without a redemption guarantee. The deal, consisting of loans originated through Santander's Alliance & Leicester arm, was sold off in three parts on Friday. While the pricing was lower than current market estimates for similar bonds issued in January by banking rival Lloyds (LLOY.L), it was a little higher than Santander's unsecured paper, further raising expectations that lending conditions could be eased for so-called "toxic assets".

BCC REDUCES GROWTH FORECAST AND WARNS ON DEFICIT ACTION

The British Chambers of Commerce has reduced its economic growth target for 2011 from 2.3 per cent to 2.1 per cent and issued a warning to the government to abandon proposals to raise national insurance. In addition, the trade organisation has suggested the government needs to address public sector pensions and to freeze public sector pay if it hopes to make any progress on tackling the UK's deficit. Despite an encouraging cut in the BCC's peak unemployment forecast from its June estimate of 3.2 million people to 2.65 million people, David Kern, chief economist at the BCC, suggests that "longer-term growth prospects remain weak".

BUSINESS CALLS FOR SPEEDIER CUTS IN SPENDING

The CBI employers' organisation and the Institute of Directors are both publishing Budget submissions on Monday and are expected to urge the chancellor to hasten cuts in public spending so that the savings made can be used for easing pressure on companies. The business groups will call for a quicker reduction in government borrowing to boost confidence in financial markets and to restore credibility to public finances, as well as introducing deep cuts in spending to achieve a target of zero real growth in current expenditure. The CBI's director-general, Richard Lambert, said: "The job of a Budget is to set out a credible path to healthy public finances and to do that in such a way as to allow our economy to grow."

BUSINESSES SEE CONFIDENCE RISE

Research conducted by banking group Lloyds TSB (LLOY.L) in February has revealed that 65 per cent of UK businesses are considerably more confident about the economy than at the end of 2009, believing the weak pound to have raised trading expectations. Just ten per cent of those surveyed were less hopeful. In its monthly Business Barometer, Lloyds found that 46 per cent are optimistic that business activity will increase over the coming year and this confidence has had a positive effect on forecasts for individual company performance.

SMALL OIL EXPLORERS EYE BIG ROLE IN NORTH SEA

Smaller UK oil companies are eagerly awaiting the forthcoming Conservative energy policy review which is expected to contain incentives for new explorers and measures to cut costs of ageing fields for small companies. The Conservative review is likely to be presented as a direct challenge to chancellor Alistair Darling's January announcement of a multimillion-pound package to encourage development of oil and gas reserves in the Shetland region. Many of the oil companies hoping to benefit from any government initiatives believe the main stumbling blocks threatening one of the UK's largest industries are taxation issues and the high decommissioning cost for old fields. Many hope that the Conservatives will allow these decommissioning costs - which are expected to rise to 26 billion pounds by 2040 - to become tax deductible.

IG GROUP CONNECTS TO BATS EUROPE

Spread betting company IG Group (IGG.L) is set to offer its clients share trading access on alternative trading platform BATS Europe. IG's customers will be able to take advantage of so-called "smart order routing" to BATS, a technology designed to determine where the best prices are likely to be on a range of trading platforms. Tim Howkins, IG's chief executive, says the move will afford clients "even further, better liquidity" resulting in "more competitive pricing when they trade, either with IG Markets or IG Index".

RBS SEEKS SECURITIES LICENCE IN CHINA

Royal Bank of Scotland (RBS.L) is planning to refashion its Chinese mainland business by obtaining a securities licence in China. The banking and insurance group, which has already signed a securities deal with a local partner, has reportedly applied to Beijing for regulatory approval. The move is of particular note as it marks RBS's first foray into global growth opportunities since it was bailed-out by the UK government in 2008. While the approval process is usually a prolonged affair, RBS would be expected to use a securities licence to help UK companies tap into Chinese capital. Although RBS refused to comment on any speculation, RBS Asia Pacific's chief executive, John McCormick, said: "We have many 'acorns' planted in China and I am confident these will grow steadily in the coming years."

AIM NEWCOMERS POINT TO A THAW IN THE IPO MARKET

The latest statistics from the London Stock Exchange and a trio of companies lining up to launch initial public offerings on Aim are being seen as clear indications that the IPO market is thawing. So far, a total of 33.4 million pounds of new money has been raised on the junior market in 2010, 11 times more than the same period last year. If successful, healthcare software provider Emis, Malaysian data centre company CSF Group, and retail property group Squarestone Brazil are all expected to contribute to a sharp rise in new money generated in March.

FORMER BRITISH LAND RETAIL BOSS TO LIST PROPERTY COMPANY ON LSE

This week, Andrew Jones, the former retail boss and board director at property development company British Land (BLND.L), is expected to announce plans to list his new company, Metric Property, on the London Stock Exchange. The listing is likely to raise more than 150 million pounds which will be used to buy retail property the value of which has been decreased by the market crash, or in situations where tenancies can be improved or the vendor has been forced to sell due to financial considerations. Metric will be seeking an immediate main market listing before potentially converting to a real estate investment trust when the portfolio reaches an appropriate size, which, with debts, is estimated to top more than 300 million pounds.

INVESTMENT AT RISK, REPORT WARNS

Professional services firm Ernst & Young has published a report that claims energy companies must commit to 35 billion - 50 billion pounds of investment in energy infrastructure if they are to meet government targets for cutting carbon dioxide emissions and providing reliable energy supplies. The report, which was commissioned by energy supplier Scottish & Southern Energy (SSE.L), comes as fears grow that the forthcoming election may create uncertainty over energy policy, causing an "investment hiatus" that will have a detrimental effect on the electricity system over the coming decade. According to Scottish & Southern's chief executive, Ian Marchant, the report is "a timely reminder to all policymakers of the need to maintain a pro-investment climate in which investors can have confidence". ($1=.6652 Pound)