PRESS DIGEST - Financial Times - June 6

BANKS FACE BAN OR PRICE CAPS ON LOAN INSURANCE

A stinging report from the Competition Commission on Thursday could see leading banks that offer loan insurance products suffer price caps or a total ban on selling. The report claimed they were making 39 pounds excess profit on every 100 pounds of business, and consumer groups have welcomed the findings as a long overdue assault on a rotten business. However, the banking industry warned that undermining the market could result in people without protection when they are unable to pay debts because of illness or unemployment.

HOUSE PRICES DOWN FOR FOURTH MONTH IN A ROW

A survey by HalifaxHBOS.L showed on Thursday that house prices fell for a fourth successive month in May, taking the annual rate of decline to levels last seen in the early 1990s property slump. The lender revealed its house price index dropped 2.4 per cent last month. The amount is almost double the change analysts had previously expected, and left house prices 3.8 per cent lower over the last quarter than they were a year earlier. Malcolm Barr, economist at JP Morgan, said: "The message is clear - the decline in prices is at risk of turning into a rout."

INDUSTRY RESIGNED, BUT BANK 'MUST NOT CLOSE DOOR' ON CUTS

Industry and economists largely acknowledged that intense inflationary pressures and bleak growth prospects left little room for manoeuvre and welcomed the Bank of England's decision to leave interest rates unchanged on Thursday. Graeme Leach, the Institute of Director's chief economist, said: "Any easing in monetary policy would have undermined the CPI outlook over the next two years - and, with it, the credibility of the MPC."

CITY PANEL TO OVERSEE BANK

On Thursday, Alistair Darling, the chancellor, revealed plans to introduce a panel of eminent City figures to be brought in to make the Bank of England more alert to looming financial trouble. The move is thought to help avoid a repeat of the Northern Rock fiasco, and Darling wants insiders to sit on the shoulder of the Bank's governor, Mervyn King, as part of an overhaul to put financial stability "right at the front" of its operations. There were also signs on Thursday night that the plans could be a quid pro quo for Mr King winning a related tussle with the Treasury over the choice of a new deputy governor for monetary policy.

VEHICLE EXCISE DUTY RISE 'TAXES LOW-PAID'

The Conservatives claimed on Thursday that more than one million people earning less than 15,000 pounds will be hit with an above inflation increase in vehicle excise duty. Alistair Darling has signalled a retreat on this autumn's proposed fuel duty rise, but the prospect of a full climbdown on VED looks less likely. Mr Darling said: "There's been a long term trend where people wish to move to encourage low polluting vehicles and wish to discourage people with new incentives for high-polluting vehicles."

M&S REPORT CLIPS SIR STUART'S BONUS HOPES

Sir Stuart Rose's chances of taking away a massive bonus next year look to have dwindled with the publication of Marks and Spencer's(MKS.L) annual report. The remuneration report shows that the retailer's directors would need to increase earnings per share next year by eight per cent from 43.6 pence to make the maximum pay-out under its performance share plan. The report said: "While the company's financial performance continued to improve in 2007-08 and we are confident in its long term growth prospects, the short-term economic outlook means that it is much more difficult to achieve such growth in the next few years."

HALFORDS TO EXPAND IN EASTERN EUROPE

Halfords (HFD.L) is set to launch its first Polish store and at least three new stores in the Czech Republic following its entry into the market a year ago. The group reported revenues in the year ended March 28 up 7.2 per cent to 797.4 million pounds. Pre-tax profits increased 11.5 per cent to 90.2 million pounds and group like-for-like sales rose 4.3 per cent over the year, compared with six per cent in 2007. Halfords now wants to take advantage of the fast-expanding Polish economy, and believes Poles tend to hold on to cars for longer than western Europeans, and claims the country has a high level of car ownership.

WHITTAKER LINK TO 260 MILLION POUND LAND SECURITIES STAKE

John Whittaker, the reclusive property billionaire, has emerged as the source of a 260 million pound stake-building in Land Securities(LAND.L) using a company called Albright Investments. The company has declared a stake of slightly more than four per cent in the UK's largest property group. Albright Securities is now one of the three biggest shareholders in Land Securities after Barclays(BARC.L) and Legal & General(LGEN.L). The move signals the first time Mr Whittaker is known to have taken a direct investment interest in the listed property market, although in the past he has built stakes in other companies that have property interests.

PREMIER FARNELL OUTLOOK BULLISH

A bullish outlook and better-than-expected profits lifted Premier Farnell(PFL.L) shares as it unveiled first-quarter figures to the end of January. The revenue component distributor revealed revenue growth of 8.5 per cent to 199.3 million pounds. However, this amount was aided by favourable exchange rate movements as well as progress in the group's expansion into China. A pre-tax profit of 24 million pounds was aided by a 3.6 million pound finance gain, but the underlining figure reflected a slight increase of the operating margin to 12.1 per cent.

HELICAL BAR CHIEF WARNS OF WORSE TO COME

The chief executive of Helical Bar, Mike Slade, warned that the worst was still to come for the property market as the company revealed a loss in its full-year results. Mr Slade said: "There is still a way to go. Things are generally slowing and we're going to see further drops in values." The veteran property developer predicted that values would not recover until 2010 and rental growth was unlikely until 2011. The group reported a pre-tax loss of 24.3 million pounds, compared with a profit of 60.1 million pounds last year.

Prepared for Reuters by Durrants.