PRESS DIGEST - British business - June 14

The Sunday Times

LLOYDS TO TAKE 450 MILLION POUND HIT AS PUB VALUES FALL FLAT

Lloyds Banking Group (LLOY.L) will lose an estimated 450 million pounds on Admiral Taverns as a result of the steep fall in the estate value of the pubs group. Admiral had received a loan from the Bank of Scotland arm of Lloyds to the tune of 850 million pounds to finance a string of acquisitions. Admiral's estate is now thought to be worth less than 500 million pounds, and the bank is sounding out potential buyers.

G8 NOTE OF HOPE ON WORLD ECONOMY

At their meeting in Italy on Saturday, finance ministers from the G8 economies said there were "signs of stabilisation" in the global economy but that recovery prospects were uncertain. While so-called exit strategies from the unprecedented measures to prop-up banking systems and lift economies out of recession were discussed, no agreement was reached. Chancellor of the Exchequer Alistair Darling told the meeting the priority for coming months ought to be to ensure that any signs of recovery are nurtured. He reiterated his position that Britain's economy will begin to grow before the end of the year.

LOVEFILM OWNERS TO SELL OUT

The online DVD rental firm Lovefilm has hired the investment bank Jeffries to advise on a number of approaches it has received for the business and to work on a possible sale. With its 1.2 million members, Lovefilm has become the market leader in mail-order film rental, having bought out most of its rivals, including an agreement last year to acquire the European rentals operations of Amazon for 63 million pounds. Led by chief executive Simon Calver, Lovefilm's management owns a seven percent stake in the firm, with Amazon (AMZN.O) having a 32 percent shareholding, and the rest of the company being owned by venture capital firms and business angels.

The Sunday Telegraph

BP CLOSE TO ENDING LONG SEARCH FOR HEAVYWEIGHT CHAIRMAN

After what has at times been a torturous search for a new chairman, BP (BP.L) may be about to end it with an announcement made before the end of the month. It is understood directors of the oil giant have identified Paul Anderson, an American mining and energy executive, as a leading candidate to succeed Peter Sutherland, who has held the position since 1997. Institutional investors, who have urged BP to recruit a chairman with a detailed understanding of the challenges facing the company and the broader oil industry, are likely to be satisfied with the appointment of Anderson. He has a strong pedigree in the energy resources industry, having served as chief executive and managing director of the mining giant BHP Billiton, where he is currently a non-executive director.

INVESTORS TELL RBS: PAY THE CHIEF EXECUTIVE MORE

Sir Philip Hampton, chairman of the Royal Bank of Scotland (RBS.L), has had to overhaul a planned incentive package for the bank's chief executive, Stephen Hester, after institutional investors expressed concerns that the deal was not generous enough. Hampton is now in final discussions for clearances of the redesigned scheme with UK Financial Investments, the Treasury body that manages the state's 70 percent stake in RBS. The original incentive package would have been worth 6.23 million pounds to Hester and would have generated a 7.34 billion pound paper profit for the taxpayer on the state's 20 billion pound equity investment. Hester would have qualified for a full payout if certain total shareholder return targets were met and RBS shares recovered to 70 pence within three years. On Friday, the shares closed at 39.9 pence.

BT ATTACKS BROADBAND DEAL PLANS

BT (BT.L) has attacked government proposals to give mobile operators hundreds of millions of pounds worth of 3G licences in return for the provision of access to mobile broadband in rural areas. The move, expected to be an element in the government's Digital Britain report to be released this week, was described by BT as "anti-competitive" and an "uneconomical use of state assets". Communications Minister Lord Carter will announce plans on Tuesday for a "Universal Service Obligation" to make certain that by 2012 every household has access to 2 megabyte (Mbs) broadband, the speed fast enough to watch TV over the Internet.

The Observer

LACKLUSTRE GROWTH FOR TESCO AS RIVALS SURGE AHEAD

It is expected that next week Tesco (TSCO.L) will report a 4.3 percent like-for-like sales growth for the past three months. This growth is above that of the previous quarter but is only half that of rivals Morrisons and Asda which have unveiled growth of 8.2 percent and 8.4 percent respectively. Growth at Tesco has been hit by the introduction of cheaper brands aimed at stopping customers shopping at discounters such as Aldi and Lidl. The UK's biggest supermarket has also been hit by the higher proportion of its sales that come from non-food goods on which customers have reduced their spending.

ITV FAVOURITE VOWS BOARD REVAMP

Tony Ball, frontrunner to take over from Michael Grade as chief executive of ITV (ITV.L), has said he will shake up the board if he assumes control of the broadcaster. Sources say Ball would like to bring in new non-executive directors to replace stalwarts such as Sir Adrian Russell and Sir James Crosby. Grade said earlier this year he would step aside after ITV revealed losses of 2.7 billion pounds and scrapped its dividend. As chief executive of BSkyB (BSY.L), Ball presided over a period of spectacular growth.

HOTELS HIT BY WORST TRADING CONDITIONS FOR DECADES

Research from PricewaterhouseCoopers reveals British hotels are struggling with the worst trading conditions for 30 years and that they are having to slash prices to attract customers. PwC has said some of the weaker hotel groups could go under as UK firms continue to cut their corporate hospitality budgets. PwC expects average room rates to drop by 10 percent in 2009 to just 78 pounds a night, but this figure disguises the fact that some sectors are facing far worse conditions. At airport hotels the figure is closer to 20 percent.

The Independent on Sunday

THOUSANDS OF WORKERS AWAIT FRIENDS PROVDENT'S DECISION

It is believed Friends Provident FP.L is considering consolidating its offices across the south of England. Trevor Matthews, Friends Provident's chief executive, is believed to have asked Tony Brown, managing director of people and change, to assess the viability of offices in Dorking, Exeter and Salisbury. Friends Provident has already scaled back its operation in Manchester and the insurer last year said it was cutting 600 jobs ahead of a strategic review by Matthews. Shares in Friends Provident closed at 73 pence on Friday, a drop from nearly 120 pence a year ago.

STOCKLEY PARK OWNERS PREPARE APPLICATION FOR EXPANSION

Stockley Park is to undergo a third phase of development adding a 500,000 square feet extension worth up to 400 million pounds. Stockley is considered to be the most famous office site of its type in the UK and includes tenants such as Marks & Spencer and BP. Owner Stockley Park Consortium will submit the planning application next month. The move defies the collapse of the commercial property market but may mean another battle with Hillingdon council which in 2008 opposed plans for a third phase, fearing the development could spoil green belt land.

LENDERS FORCED TO PAY HOMEOWNERS TO QUIT THEIR MORTGAGES

An increasing number of homeowners are receiving payoffs from mortgage lenders to refinance with other providers. With the securitisation market in effect closed, some lenders have hit the wall and others are being forced to run their lending book down. In order to encourage people to refinance, some lenders have been waiving early redemption charges, but in the last few months many have been forced to provide greater incentives to speed up any wind downs. In some instances payments to borrowers to quit their mortgages have run into hundreds of thousands of pounds.

The Mail on Sunday

BUILDERS BIDDING FOR CASH FUND SET TO BE DISAPPOINTED

The government is set to confirm its 400 million pound fund to kick-start stalled housing developments has been oversubscribed. Housebuilders such as Barratt (BDEV.L), Lovell and Taylor Wimpey (TW.L) have bid for large portions of the cash. Persimmon (PSN.L) is seeking 70 million pounds to be spread across 40 sites, and property consultancy Knight Frank has applied for 40 million pounds for developers across England. Bidding on the fund closed last Monday and developers need to be able to prove no work has taken place on sites since January 1.

UNION ASKS BA PILOTS TO TAKE PAY CUT

The British Airline Pilots' Association has recommended that pilots working for British Airways (BAY.L) agree to a 10 percent pay cut and accept 100 voluntary redundancies. BA pilots earn an average salary of 100,000 pounds. Negotiations with other unions representing cabin crew, ground staff and baggage handlers are continuing and Willie Walsh, BA's chief executive, has given management and unions until the end of June to come up with significant savings. Walsh has described BA as being in a fight for survival after posting in May record annual losses of 401 million pounds.

Prepared for Reuters by Durrants