PRESS DIGEST - Financial Times - July 7

Financial Times

WAGE RESTRAINT SEEN AS BIG HOPE ON BUDGET DEFICIT

Steve Bundred, head of the Audit Commission, has sparked debate after arguing that public sector pay should be frozen in order to cut public spending. Bundred said freezing pubic sector pay would be a "pain free" way of reducing public spending and that changes could be implemented relatively quickly. For the last five years, the public sector wage bill has risen annually by around seven billion pounds to 158 billion pounds. Each year that pay is frozen puts a dent in the deficit of 0.5 percent of national income. However, although the main political parties have warned of a public sector pay freeze, none have sanctioned a move that would affect six million staff.

CITY WATCHDOG TO TRIPLE FINES

The Financial Services Authority has proposed tripling the penalties for financial wrongdoing and a 100,000 pound minimum fine for market abuse. The FSA's tougher approach was detailed in a consultation paper as part of its new emphasis on "credible deterrence". Proposals to fine companies by up to 20 percent of income generated from the offending product or service move the regulator closer to the Competition Commission's practice of basing fines on profits. Margaret Cole, the FSA's enforcement director, said: "The penalties will be tougher and that applies across the board." The FSA said the policy was likely to apply to breaches after February 2010.

SCRAPPAGE SCHEME BOOSTS CAR SALES

Car sales contracted by 15.7 percent year-on-year last month -- the smallest decline in almost a year -- as the government's scrappage scheme began to lure more people in to showrooms. The Society of Motor Manufacturers and Traders said the figures showed the industry was now "making steady progress on the long road to recovery". Paul Everitt, chief executive of the SMMT, said he expected to see further improvement in the coming months, but ruled out any extension. "We must allow the scheme to take its course, but then it will be back to normal."

CINVEN APPOINTS LANGMUIR MANAGING PARTNER

Private equity group Cinven [CINV.UL] has appointed Hugh Langmuir as managing partner, replacing Robin Hall, who will take on the role of executive chairman. The move comes as the group prepares to raise its next fund amid setbacks with some of its investments. The development follows similar moves in recent weeks by rivals Permira, Candover, BC Partners and Terra Firma, as they react to the harsher economic climate. Langmuir, who joined Cinven from Bain & Company and Citigroup in 1991, has been involved in several Cinven deals, including the buy-out of airline booking system Amadeus and Camaieu, the French clothing retailer.

QATARIS CONVERT BARCLAYS BONDS

Qatari investors now dominate the Barclays (BARC.L) shareholder register after converting the mandatory convertible bonds issued last October into shares in the bank. The bank said the Qatar Investment Authority now has a 7.38 percent stake, while Challenger, a company representing Sheikh Hamad Bin Jassim Bin Jabr Al-Thani, chairman of Qatar Holding, holds 2.8 percent. The QiA also holds warrants that would give it a total diluted holding of 12.5 percent, which it can convert at any time up to 2013. A cash call in October sparked a backlash from some existing investors with some arguing that capital from the UK government should have been accepted.

JJB SHARES LOSE QUARTER OF VALUE ON NEWS OF POSSIBLE 50 MILLION POUNDS CASH CALL

Shares in JJB Sports (JJB.L) plummeted 25 percent lower on Monday after the retailer confirmed it may tap shareholders for funds just weeks after being rescued through a company voluntary agreement. The retailer's statement follows speculation it was considering a 50 million pound fund-raising in an effort to repay a 25 million pound loan to Barclays (BARC.L) due at the end of August. The group said it was examining various options, including the disposal of non-core assets, an extension of the maturity date of its working capital facility beyond September 2010, and a "possible equity raising by way of a placing and open offer".

CATTLES FAILS TO MEET PAYMENT DEADLINE

Struggling subprime lender Cattles (CTT.L) has defaulted on an interest payment due to its bond holders on Sunday. The group said in a statement holders of around 400 million pounds of a 7.125 percent bond due for repayment in 2017 had not received payment. Cattles, which has been in talks with its debt holders for some time, dismissed six senior executives and announced the departure of its chief executive following an independent review. The company's statement said it was still in "constructive discussions" with its finance providers and that an update on the situation was imminent.

ST MOWDEN AT "LOWEST EBB" AWAITING LAND VALUE RISE