PRESS DIGEST - Financial Times - July 8

Financial Times

DARLING IN CLAMPDOWN ON RISKIEST BANKS

Chancellor of the Exchequer Alistair Darling will present a White Paper on Wednesday that will instruct the Financial Services Authority to implement new rules to ensure banks and financial institutions posing the greatest threat to the financial system will be subjected to increased capital and liquidity standards. The new regulatory regime could force banks to split into smaller, less risky operations, but Darling is expected to insist retail and investment banks run their businesses in such a manner that the authorities could wind them down over the course of a weekend.

DATA SHOW SHARP DECLINE IN OUTPUT

According to the National Institute for Economic and Social Research, a decline in manufacturing output resulted in the economy contracting by 0.4 percent in the second quarter, leading the think-tank's director, Martin Weale, to conclude the economy is stagnating and not in a sharp decline. The weakness in the manufacturing sector has increased expectation that the Bank of England will extend its quantitative easing programme when its monetary policy committee meets on Thursday. The British Chamber of Commerce said talk of a recovery was premature due to a continued fall in sales in the manufacturing and services sectors.

DOWNTURN IN JOBS MARKET GIVES SIGN OF EASING

According to a survey of 400 recruitment firms by the Recruitment and Employment Confederation and KPMG, June's fall in job appointments for permanent staff was the weakest for 13 months, an indication there are "signs of life" in the employment market. The REC's chief executive, Kevin Green, said if the labour market continues to improve, some employers might resort to "strategic hiring" to meet specific skills gaps. Green said that while the public sector continued to recruit, it was vital that demand returned to the private sector in order to negate potential public expenditure constraints which could hinder a full jobs market recovery.

CROWN ESTATE SEES ONE BILLION POUNDS WIPED OFF VALUE OF ASSETS

An increased slump in the real estate market has forced the Crown Estate to write off more than one billion pounds from the value of its assets. It will reveal on Wednesday that the capital value of its holdings has fallen by 18 percent to six billion pounds, but it still managed to generate a net income surplus of 226.5 million pounds for the year ending March 31 2009, a 6.1 percent increase on 2008. The Crown Estate's marine business is set to be a focus for future growth due to the potential of wind and wave power.

COFFEE REPUBLIC EYES INSTANT SALE

KPMG Restructuring, the administrator to Coffee Republic (CFE.L), plans to complete the sale of the chain by the end of next week. KPMG's Richard Hill said he had received expressions of interest from numerous interested parties, including some "well-known names". Hill said most interest in the brand, its outlets and franchise operation came from existing coffee bar operators. A preferred buyer will be selected by Wednesday, with completion due on Friday. Shares in the company were suspended on Aim on Friday "pending clarification of the financial position of certain subsidiaries".

FOUR SEASONS IS SET TO BE SOLD

UK care homes group Four Seasons Healthcare is set to be sold after its lenders failed to agree on a restructuring programme. The decision to sell was made on Monday night, when the required number of the company's lenders failed to agree to a debt-for-equity swap that would have restructured 1.5 billion pounds of debt. The move comes at the end of lengthy negotiations complicated by the company's complex capital structure that involves 11 tranches of debt held by several institutions. The group has been in a precarious state ever since it became clear last summer that it could not meet its 1.5 billion pound debt repayment deadline.

ECOFIN BUCKS TREND WITH 140 MILLION POUND RIGHTS ISSUE

Ecofin Water & Power Opportunities has defied the trend for investment company fund-raising by staging the sector's biggest mainstream issuance of the year. The investment trust said it had received commitments for a placing of 140 million pounds in a combination of convertible subordinated unsecured loan stock and zero-dividend preference shares. The issuance, which is 20 million pounds above target, is part of a restructuring that came about after income and capital shares reached the end of their life in March. The group said demand from private client brokers was high as zeros are subject to capital gains tax that is lower than income tax.

JACQUES VERT SEES SOME GREEN SHOOTS