PRESS DIGEST - Financial Times - June 16

The Financial Times

DARLING TO SIGNAL BIG REGULATORY SHAKE-UP

In his Mansion House speech on Wednesday night, Chancellor of the Exchequer Alistair Darling will confirm radical new reforms of the tripartite system, established by Gordon Brown in 1997. The current model divides responsibility among the Bank of England, the Financial Services Authority and Treasury for the aversion of a financial crisis. However, the chancellor will cite the recent collapse of Northern Rock (NRKx.L) and rapidly changing market conditions as indicators that changes to the system should go further than initially expected.

BUBBLE "CIRCUIT-BREAKERS" NEEDED

Paul Tucker, head of markets at the Bank of England, has called on regulators to design "credit-cycle circuit breakers" to slow the rate of lending from commercial banks when demand is too high. In remarks made to the Chatham House think-tank and released at the weekend, Tucker also pointed out that many financial institutions had been dealing with risks facing the markets by proceeding "on the basis that 'it couldn't happen' or indeed even after it began, 'wasn't happening'."

SMALL BUSINESSES FEAR JOB CUTS

A poll of 9,000 small companies by the Federation of Small Businesses shows almost 40 percent fear fuel prices will make it necessary to cut jobs over the next year. More than 80 percent said rising costs would make it more difficult for them to expand their businesses and hire more staff. John Wright, FSB chairman, said that while the issue was affecting every type of business in the UK, small companies were "reaching breaking point". He urged the government to use extra tax revenues from North Sea oil to fund a cut in fuel duty.

INSURERS STEP UP FLOOD COVER WARNING

The Association of British Insurers is to warn that unless there is better protection against flooding, half a million properties will be uninsurable and many new home owners will find it increasingly difficult to obtain cover. The ABI will also highlight the need for a long-term strategy for managing flood risk to guarantee widespread and affordable home insurance. The Environment Agency has identified 517,000 existing properties as being at a high risk of flooding, while some insurers are already considering excluding new homes and some businesses from an industry agreement to provide flood insurance.

GSK LEADS PACK IN AFFORDABLE DRUGS FOR THE POOR

The newly published Access to Medicines Index reveals that European pharmaceutical firms -- led by GlaxoSmithKline (GSK.L) -- outperform their American peers in the provision of affordable medicines to the poor. The Index is a measure of corporate responsibility, with rankings based on the independent assessment of company activity. The analysis rates GSK, with policies of price-cuts and researching drugs for use in the developing world, the highest. Merck (MRK.N), ranked third, is the only U.S. company among the top seven and there are no Japanese businesses present.

LIATAUD JOINS BALDERTON CAPITAL

The French founder of Business Objects has joined Balderton Capital, the London-based venture capital investor. Bernard Liataud, who sold Business Objects to SAP in January, will be appointed to the board of GDCM, a new venture whose software helps lower data centre consumption. He said: "I'm interested in building large companies, not just build start-ups fast and sell them to U.S. companies or large entities." Liataud appeared cautious over the emergence of Web 2.0 brands that have not yet found a successful business method. He said: "In general Web 2.0 companies suffer from getting to a scalable revenue model. Very few of them have found a formula."

FINAL INVESTMENT FOR 3i VENTURE ARM IN BONES

ApaTech, the synthetic specialist bone group, will raise on Monday 25 million dollars from 3i and a further 20 million dollars from U.S. firm Healthcor Partners, cashing-in on the fast-growing demand for its new silicon substance which encourages bone growth. Simon Cartmell, ApaTech's chief executive, praised the UK private equity group's final investment, saying that 3i has been the "driving force" behind his company and adding that he was confident of its continued backing. 3i is expected to strengthen Apatech's board by appointing Peter Chambre, former chief executive of Cambridge Antibody Technologies, as its non-executive chairman. Apatech's sales last year trebled to 15 million dollars while this year's are expected to double to about 35 million dollars.

WHEN KEEPING IT SIMPLE SHOWED OTHER BRANDS A CLEAN PAIR OF HEELS

New figures from data business IRI have shown the Simple brand, owned by Accantia, has outdone Nivea, taking the third place in the facial skincare market. Accantia, which has reduced the business to focus on skincare and toiletries, came first at the number of products sold and had 11.4 percent of the market by value in the 52 weeks to mid-May, according to IRI. It posted a 14 percent rise in earnings before interest, tax and amortisation to 19 million pounds in 2007, reaching 66 million pounds in sales. Chief executive Geoff Percy said: "An advantage of private equity ownership is that Accantia is agile and can produce products targeted squarely at UK retail and the UK consumer, rather than trying to sell a global solution."

SCS TRIES TO ASSUAGE NERVOUS INVESTORS

Struggling furniture group ScS Upholstery SUY.L said on Sunday it was "cash positive with no net debt," in a bid to calm investors after a disastrous week when the company's shares lost almost two thirds of their value. The sofa chain acknowledged it was trying to raise additional capital following a large credit insurer's cover withdrawal for its suppliers. Chief executive David Knight admitted the company could be led into shorter payment terms with its suppliers. "The game has changed. Our suppliers want their money faster, which is not the way our model is built," he said. Analysts estimate ScS will make a loss of three million pounds this year.

MIDLANDS ENGINEERS SHOW THEIR METTLE

Manufacturers in the Midlands seem to have escaped the worst aspects of the economic downturn that hit the banking and property sector by managing to pass on rising costs. David Grove, chairman of highways infrastructure specialist Hill & Smith (HILS.L), said: "Demand is high across our market. We have issues with rises in steel and energy prices, but we are being reasonably successful in passing those on." Analysts acknowledge that the immediate outlook looks good but fears over the performance of companies such as IMI (IMI.L) and GKN (GKN.L) make predictions for the next two to three months more uncertain. A survey by the EEF has shown confidence is high among manufacturers as orders remain generally strong in spite of U.S. softening.

Prepared for Reuters by Durrants