PRESS DIGEST - Financial Times - Feb 11

The Financial Times

SUBPRIME CREDIT LOSSES FORECAST TO REACH 400 BILLION POUNDS BY G7 LEADERS

The senior global policy-makers of the Group of Seven have raised projections for the size of subprime-related credit losses. Speaking after the G7 meeting, German Finance Minister Peer Steinbruck said write-offs by financial institutions of losses on securities linked to U.S. subprime mortgages could reach 400 billion U.S. dollars. The figure dwarfs the U.S. Federal Reserve's estimate for subprime losses last year of 100 to 150 billion dollars, and is far bigger than the 120 billion dollars of credit losses that Wall Street banks and other institutions have revealed in recent weeks. Steinbruck and other ministers said banks could help restore confidence by providing "prompt and full disclosure" of losses.

U.S. IN TAX CLASH WITH UK OVER NON-DOMS

The imminent tax clampdown on non-domiciled foreigners living in the UK has brought the government into a standoff with the United States. Due to the 30,000 pound annual levy not being "creditable" under U.S. tax law, meaning it could not be offset against U.S. tax rules on worldwide income, Americans would in effect have to pay the levy twice. The United States is lobbying hard for a transatlantic treaty designed to avoid double taxation. However, the Treasury is reluctant to give way on the issue. "Whether the tax charge can be credited against tax paid in the U.S. is a matter for the U.S. authorities," an official said.

BUY-OUT FIRMS BRACED FOR LOWER RETURNS

Changes to the rules on "non-doms" and capital gains tax will make the UK a less attractive location for private equity executives, according to nearly half the 700 buy-out firms in a new industry survey by Simmons & Simmons and Private Equity News. Nearly three-quarters expected substantially lower returns in 2008, while more than half saw a "higher tax burden" as a negative development. "To private equity firms the reduction in the availability of credit has been akin to having their air supply cut off," the survey says.

INVESTEC MORTGAGES TARGET CITY ELITE

At a time when finance companies have been reining back their mortgage lending because of difficulties funding loans in the capital markets, one private bank is offering affluent workers in the City jumbo mortgage loans of 500,000 pounds or more. Investec Private Bank said the loans targeted individuals who earn a large proportion of their incomes from bumper bonuses at the end of the year. Customers are able to make smaller payments in line with their basic salaries, and then make up the shortfall with one large payment when their bonus is paid.