PRESS DIGEST - Financial Times - Dec 19

The Financial Times

STATE ROCK TAKEOVER WINS KING BLESSING

Bank of England Governor Mervyn King has given his blessing to a temporary nationalisation of Northern Rock NRK.L so as to prevent its reorganisation being blocked by its shareholders. King's comments came after the Treasury extended its 100 percent guarantee to a wider range of Northern Rock's wholesale creditors. King has also repeated his call for a new insolvency regime for banks which had been agreed by Ed Balls a year ago.

ECB'S 350 BILLION EURO MARKET INJECTION STUNS INVESTORS

The European Central Bank stunned investors on Tuesday by pumping a record 348.6 billion euros of funds into the markets. The move sent short-term interest rates in the eurozone plunging at their fastest rate for more than a decade. The move follows a pledge last week by the ECB to provide as much liquidity to banks as needed, as part of a coordinated attempt by Western central banks to ease pressures in the financial system. Separately, the Bank of England conducted the first of its long-term refinancing operations by auctioning 10 billion pounds in three-month funds at a minimum rate of 5.36 per cent.

BENIGN DATA WIDEN LEEWAY FOR RATES CUT

The Office for National Statistics revealed yesterday the consumer price index rose 0.3 percent in November, keeping the annual rate of inflation unchanged at 2.1 percent, which is slightly above the Bank of England's two percent target. The biggest upward effect on inflation last month came from petrol costs, while the biggest downward effect came from flat electricity and gas bills. The benign reading will reassure policy makers, who cut interest rates this month. George Buckley, economist at Deutsche Bank, said: "This encouraging news should help pave the way for further modest cuts in interest rates in early 2008."

BNFL AGREES SALE OF SERVICES UNIT

In a deal worth up to 75 million pounds, British Nuclear Fuels has agreed to sell its nuclear services business to the military focused support service and shipbuilding group VT Group (VTG.L). BNFL said VT Group has agreed to buy the Project Services division, which has nuclear contracts in Russia, Japan and the UK and employs about 750 technicians and scientists. The deal is the latest stage in the break-up of BNFL which has already sold Westinghouse and the division which manages the UK's 10 Magnox reactors.

CHARITY PLEA TO CITY HIGH-FLYERS

The centre-right think-tank Policy Exchange has compiled "the most comprehensive report into the state of British philanthropy" which reveals that charitable giving among City high-flyers has failed to keep pace with the growth in earnings in the financial services sector. Individual levels of giving in the UK are at around 0.73 percent of gross domestic product which compares to 1.67 percent in the United States. The report concludes that if workers in the financial services sector alone gave five percent of their income to charity then Britain would reach U.S. levels of charity giving. Lord Griffiths, vice-chairman of Goldman Sachs, said the main barrier to philanthropy is materialism.

T-MOBILE AND 3 JOIN FORCES TO EXTEND 3G COVERAGE

Mobile phone operators 3 and T-Mobile have unveiled an infrastructure sharing deal that may provide them with the largest high-speed wireless network in the UK. 3 and T-Mobile will share 13,000 mobile telecoms masts in a move that will cover 98 percent of the UK population by the end of 2009. The deal will generate savings in operating expenditure and capital worth two billion pounds between the two companies over 10 years. Both companies have said the deal should not be seen as a prelude to a merger.

BETFAIR SPREADS TO FINANCIALS

Online sports betting exchange Betfair is making its first move into the financial markets, investing 10 million pounds to launch a binaries trading exchange and traditional financial spread betting. Both products are the first offering of Tradefair, a company which has been developed by Betfair's venture capital arm and which is regulated by the Financial Services Authority. Tradefair will tap into the one million registered users of Betfair. The binaries exchange allows users to bet on the outcome of an event with odds changing as the event progresses and users being able to exit before the final outcome.

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