PRESS DIGEST - Financial Times - June 26

Financial Times

BANKING ACT WILL BEEF UP FSA'S ROLE

The new Banking Act is expected to give the Financial Services Authority responsibility for maintaining financial stability, making the body partly responsible for a function that is presently part of the Bank of England's remit. The move follows criticism that the Bank of England did not do enough to warn of the impending banking crisis and comes at a time when Bank Governor Mervyn King is asking to be granted new powers to ensure stability. It is suggested the changes, which will be revealed in the government's white paper on banking, could add to tension between King and the Chancellor of the Exchequer.

REVENUE OFFERS SECOND AMNESTY FOR OFFSHORE FUNDS

High Street banking customers are being offered another chance to come clean about undisclosed foreign accounts as HM Revenue & Customs is to offer a second amnesty on offshore funds. The amnesty will coincide with an influx of information triggered by a blanket disclosure notice affecting offshore accounts across the entire banking industry and those who come forward will receive reduced penalties.

BILLIONS LOST TO INTERNET CRIME

Whitehall officials have revealed the extent of the threat posed by cyber crime, with the cost to the UK economy said to be "billions of pounds a year". The announcement came as the government unveiled its new cyber strategy, including plans for a new Cyber Security Operations Centre. The new facility will be attached to GCHQ, which will liaise with its U.S. counterpart, the National Security Council, after America set up a similar defence body. The CBI has said the test for business would be "whether the new bodies result in a genuinely more coordinated approach".

BA STAFF VOLUNTEER TO WORK FOR NO PAY

In response to an appeal from chief executive Willie Walsh, nearly 7,000 British Airways (BAY.L) staff have volunteered to take pay cuts, with around 800 volunteering to work for no pay. The pay cuts would take the form of unpaid-leave or part-time work and it is estimated the temporary changes would save BA around ten million pounds this year. The Unite union has criticised BA, saying that unfair pressure was placed on staff. The airline, which posted a record 401 million pound pre-tax loss in the year to March, is already locked in negotiations with staff over permanent changes to working practices.

BP CHAIRMAN-ELECT KEEN TO KEEP GREEN ISSUES AT HEART OF AGENDA

Carl-Henric Svanberg, BP's (BP.L) chairman-designate, has said environmental concerns will continue to be at the forefront of the oil group's agenda. Noting the growing world population, he is quoted as saying: "If we continue to do things in the world in the same way as we do today, it will not be so easy for this planet to cope with that. So we have to find more intelligent solutions and the energy industry is in the centre of that." Although more active than many of its peers, BP has been criticised by green campaigners for failing to live up to its "beyond petroleum" slogan.

WILLIAM HILL CLOSER TO MOVING ONLINE TRADE OFFSHORE

William Hill (WMH.L) seems more likely to move its online and telephone gambling services offshore, after chief executive Ralph Topping told the FT that the bookmaker faced increased competition from foreign rivals enjoying less prohibitive tax regimes. The admission reflects growing concern in the racing industry that William Hill could lead an exodus of UK betting firms. The group has already closed 20 UK shops this year and Topping has previously referred to relocation as a "live issue". The Culture Department is said to be reviewing remote gambling regulations in a bid to level the playing field between UK firms and their foreign counterparts.

COSTAIN ORDER BOOK SURGES ON PUBLIC SECTOR WINS

Construction group Costain (COSG.L) has benefited from a 20 percent increase in its forward order book to 2.4 billion pounds after securing a series of public sector contracts. The company's deals since the beginning of the year include a 397 million pound contract with the Greater Manchester Waste Disposal Authority and a 200 million pound road maintenance contract for the Highways Agency. Costain said it continues to profit from its "strategic focus on targeted blue chip customers in chosen sectors". The public sector accounts for 80 percent of Costain's revenue.

U.S. ACQUISITION ALLSCRIPTS HELPS TO BOLSTER MISYS

Banking and healthcare software group Misys (MSY.L) has reported better-than-expected results at Allscripts, the U.S. group it acquired last October. A trading update highlighted strong performance at the combined Allscripts-Misys business, where fourth-quarter order intake for its licensed products totalled 76 million dollars, compared with 74 million dollars a year ago. Orders for its new service soared from eight million dollars to 27 million dollars. The purchase of Allscript pushed Misys further into debt, but chief executive Mike Lawrie's assertion that improved cash generation would fund the deal was borne out with a reduction in net debt in line with guidance.

DS SMITH TAKES CAUTIOUS STAND WITH DIVIDEND CUT

DS Smith (SMDS.L), the packaging and office products group, has cut its final dividend to 1.8 pence in an effort to shield its balance sheet from the effects of prolonged downturn. Chief executive Tony Thorne said trading had been in line with expectations, but warned that "the timing of a recovery remains uncertain". Revenues for the year climbed from 1.97 billion pounds to 2.1 billion pounds in the year to April 30, but profits dropped due to falling demand for packaging from industrial customers. Nevertheless, DS Smith spent 80 million pounds on the expansion of its paper plant in Kent.

LOCKHART'S HOPES DASHED AS CASH FAILS TO FLOW INTO NEW RIVER LAUNCH

Plans by property entrepreneur David Lockhart to raise 250 million pounds for a new retail property company have been abandoned after failing to attract enough investors to float. NewRiver Retail aimed to raise the funds to seek out bargains in the retail property market, but the minimum 100 million pounds required for a flotation was not reached on Wednesday evening. It is understood the situation will be reviewed in the autumn, but the company refused to comment beyond stating it was "reviewing options". NewRiver's flotation would have been London's biggest IPO so far this year.

CLINTON BUYS BACK 196 BIRTHDAYS STORES

Clinton Cards (CLCA.L) has paid 3.5 million pounds to acquire 196 Birthdays stores out of administration. The subsidiary of the greetings cards retailer was put into administration last month when Clinton decided to cut off its funding. Analysts expect the acquisition to contribute at least three million pounds in profits for the year to July, boosting its shares by 24 percent. Clinton will pay just 250,000 pounds for the stores, with the remainder accounted for by a reduction in the amount Birthdays owed its parent. Managing director Clinton Lewin said the deal had allowed it to strip out the loss-making stores, adding: "We've got a strong brand and we'll continue to develop it."

Prepared for Reuters by Durrants