PRESS DIGEST - British Business - March 24

The Times

BANKS OPPOSE CITY WATCHDOG OVER PLANS TO BAN LIARS' LOANS

The Financial Services Authority's plans to make self-certified mortgages illegal have attracted strong opposition from a number of large banks and building societies, which could stop or delay a ban. The mortgages have been cited as one cause of the housing bubble, as they allowed borrowers to state their own income and were thus open to abuse by people who wished to exaggerate their true assets. However, banks argue that a ban would be unfair on the self-employed.

BG AGREES 40 BILLION DOLLAR DEAL TO EXPORT COAL-SEAM GAS...

The oil and gas company BG Group (BG.L) is on the verge of signing a contract worth 40 billion dollars to supply natural gas to China over the next 20 years. The deal with the state-owned oil producer CNOOC, expected to be confirmed on Wednesday, will supply China with 3.6 million tonnes of gas from eastern Australia per year. It has also been stipulated as part of the agreement that CNOOC will purchase five per cent of BG's coal-seam gas interests in Queensland and a 10 per cent stake in a gas processing unit.

TEMPUS

Cairn Energy (CNE.L) (Hold)

Aberdeen Asset Management (ADN.L) (Hold for growth to

Aberdeen Asset Management (ADN.L) (Hold for growth to resume)

Trafficmaster (Buy)

The Daily Telegraph

L&G LIFTS DIVIDEND 33 PER CENT AFTER PROFITS SOAR

Insurance group Legal & General (LGEN.L) has lifted its final dividend to 2.73 pence after announcing full-year pre-tax profits of 1.24 billion pounds, up from a loss last year of 2.1 billion pounds. Operating profit was at 1.1 billion pounds, up from 592 million pounds in 2008. L&G said that it had been able to lift its final dividend by a third as surplus capital grew to 3.1 billion pounds. Chief executive Tim Breedon said: "These results show that L&G is in excellent health and ideally placed to take advantage of new opportunities."

TNK-BP TO SELL KEY GAS FIELD TO RUSSIA AFTER 10-YEAR BATTLE

Viktor Vekselberg, one of the four Russian oligarchs who own half of TNK-BP, a joint venture involving British energy company BP (BP.L), has announced that the company is to sell the Kovytka gas field to Russian state holding company Rosneftegaz by the end of the year. The Kovytka prospect is one of the world's largest gas fields and the deal is expected to be worth at least 700 million dollars. Earlier negotiations between TNK-BP and state-owned Gazprom broke down over a failure to agree a price.

BANK BONUS TAX COULD NET TREASURY TWO BILLION POUNDS, E&Y SAYS

Accounting firm Ernst & Young calculates that the Treasury could raise two billion pounds from the one-off bank bonus tax - enough to fund targeted measures to be announced in Wednesday's Budget. The Treasury had initially predicted that the measure, announced in December's pre-Budget report, would raise 550 million pounds. E&Y also called on Chancellor Alistair Darling to aid businesses by providing a detailed outline of the future direction of UK tax policy.

INFLATION DROPS TO THREE PER CENT AFTER TOY PRICES AND GAS...

The Consumer Prices Index, the official measure of UK inflation, dropped from 3.5 per cent to 3 per cent in February, a steeper decline than the 0.4 per cent fall predicted by economists. The drop was attributed to February's fall in the prices of games and toys and a decrease in average gas bills. Retail price inflation was steady at 3.7 per cent. The Ernst & Young ITEM Club predicted that inflation will near the two per cent target by the end of the year.

QUESTOR

Gulfsands Petroleum (Buy)

VT Group VTG.L (Sell)

The Independent

HIGH STREET SALES WOBBLE HIGHER

A survey from the Confederation of British Industry indicates that retailers are seeing a second month of rising sales, though the annual rate of growth has decreased since February and conditions are still difficult. The Distributive Trades Survey discovered that 39 per cent of retailers had experienced an increase in sales during March, with 26 per cent recording a drop in sales. However, this net balance of 13 per cent was not as impressive as the net balance of 23 per cent seen in February.

RECOVERY IN BANK LENDING FALTERS AGAIN

Research from the British Bankers' Association indicates that there was no significant rise in mortgage lending during February, with the total value of the month's mortgage lending dropping to 4.9 billion pounds from five billion pounds in January. The news does not bode well for the progress of the housing market throughout the rest of 2010. The BBA also noted a decline in the amount of lending from banks to companies during February.

INVESTMENT COLUMN

Halfords (HFD.L) (Buy)

Aberdeen Asset Management (ADN.L) (Buy)

Henry Boot (Buy)

The Guardian

UPBEAT CHANCELLOR PROMISES A BUDGET FOR GROWTH

UK chancellor Alistair Darling will deliver a budget on Wednesday designed to enable the economy to grow its way out of recession. Plans for a green infrastructure bank and financial aid for businesses having difficulties obtaining credit will be announced, with the troubled state of the public finances preventing a pre-election giveaway. Businesses are hoping the plans for a one penny increase on small companies' corporation tax will be abandoned, coupled with a freeze on fuel duty. Darling said: "I am confident about the future, I think government can make a real difference."

BRITISH GAS STAFF TO STRIKE OVER 'MACHO MANAGEMENT BULLYING'

82 per cent of British Gas (BG.L) workers in the GMB union have voted to strike following complaints of what has been described as "macho management and bullying". GMB has called for an independent review of the worsening morale at British Gas and given the company a week to respond to the demand. Matthew Bateman, director of heating services at British Gas, said: "We have robust contingency plans in place to make sure our service to customers is unaffected, and we remain utterly committed to talking with the GMB and avoiding this unnecessary industrial action."

M&B FIRES PAY CONSULTANT AND PENCILS IN 100 PER CENT RISES...

Large pay rises are being planned for the non-executive directors of pubs group Mitchells & Butlers (MAB.L). John Lovering, the private equity specialist who took over as chairman in January, is looking to more than double the basic pay of the non-executive directors recommended by a group of offshore investors who constitute M&B's largest shareholders and increase his own pay from 200,000 pounds to almost 400,000 pounds. Deloitte's Carol Arrowsmith has been fired as M&B's executive pay consultant, with PricewaterhouseCoopers being brought in to pro