PRESS DIGEST - Financial Times - May 28

Financial Times

BANK LENDING POINTS TO 'SUBDUED' ECONOMY

High-street banks' lending to companies and consumers did not improve greatly during April, according to the British Bankers' Association. Non-financial companies repaid a net total of 2.3 billion pounds to big banks in April, up from 1.3 billion pounds in March. Although the BBA data does not factor in a surge in bond issuance, it provides "little indication that credit availability has improved to any marked degree", according to Simon Hayes, economist at Barclays Capital. Mortgage lending is still far below pre-credit crisis levels, and Capital Economics' Seema Shah commented that in spite of stabilisation in housing market activity, there could be "further house price falls in the coming months".

'WHITE VAN MAN' SUFFERS DECLINE IN SOCIAL STATUS

A report by the Trades Union Congress has declared that British median earners have experienced a relative decline in living standards compared to the rich. Over the last 30 years, middle earners have seen their average income rise by only 60 percent, compared with the mean national income, which has risen by 78 percent. A YouGov survey in the report has indicated the frustration of median earners at this inequality. The TUC report recommends the introduction of targets to reduce income inequality and the creation of a government "Inequality Commission".

SATELLITE INDUSTRY PREPARES TO TAKE OFF

Government plans for a universal broadband internet service are set to provoke considerable expansion in the UK satellite industry. Communications Minister Lord Carter is expected to say in the Digital Britain report next month that the provision of broadband internet to rural areas will have to be partly via satellite links. UK satellite company Avanti Communications (AVN.L) has said it will demand government underwriting to cover the investment required for its broadband-for-all plan. Avanti is also looking to open a modem manufacturing site in the UK in conjunction with European space company EADS Astrium (EAD.PA). Other companies set to offer satellite broadband connections are France's Eutelsat (ETL.PA) and Luxembourg's SES Astra SESFg.LU.

BT ABANDONS PLAN TO BOOST CHIEFS' BONUSES

BT (BT.L)'s annual report reveals that the group has cancelled plans to increase potential bonuses for executives following a year of underperformance from Global Services, its struggling IT division. However, it has emerged that François Barrault, the former head of the unit, received a 1.6 million termination fee following his resignation in November. The report also reveals that former BT chief executive Ben Verwaayen received a termination payment of 700,000 pounds when he stepped down in July, in addition to a bonus of 300,000 pounds.

NORTHERN FOODS MAKES DIVIDEND PLEDGE

Northern Foods (NFDS.L) has revealed a five per cent fall in pre-exceptional profits over the year to March 28. The producer of supermarket label foods also told investors not to expect an increase in profits in the face of the economic downturn, but did deliver a pledge not to cut its dividend. Chief Executive Stefan Barden described the group's performance as "resilient" and explained that the company board had decided to be prudent when considering the possibility of a dividend cut.

TOPPS HIT BY SLOWDOWN IN RENOVATIONS

Topps Tiles (TPT.L) has revealed an 18.9 per cent fall in like-for-like sales over the six months to March 28, as homeowners turned away from redecorating due to the economic downturn and a stagnant property market. Pre-tax profits were down from 15.8 million pounds in the same period in the previous year to 626,000 pounds, but still beat analysts' expectations. However, the tile retailer also said that sales in the following seven-week period had improved slightly, falling by 11.9 per cent. Chief executive Matthew Williams said that, while it was too early to describe the improvement as a recovery, it was "encouraging to see some stability in sales".

BLEAK PICTURE EMERGES AT DEBT-HIT JESSOPS

David Adams, executive chairman of camera retailer Jessops (JSP.L), has warned investors that company shares could soon become worthless as it looks to secure its survival. The company, which has 211 stores in the UK and Ireland, revealed that it is currently in talks with HSBC (HSBA.L) to restructure a 60 million pound debt facility. Jessops' profits have been hit by falling camera prices, the popularity of mobile phone cameras and cheaper online retailers. Mr Adams also blamed the problems on an expansion policy between 2003 and 2006, when Jessops bought up other regional camera retailers.

SPEEDY HIRE EYES EQUITY RAISING