PRESS DIGEST - Financial Times - March 21

Financial Times

BARCLAYS' CONCESSIONS BRING ABN DEAL CLOSER

In negotiations to acquire ABN Amro AAH.AS, Barclays (BARC.L) has agreed the head office for any merged group would be in Amsterdam and that the chairman would be chosen by the Dutch group. But the new group's primary listing would be on the LSE and Barclays CEO John Varley would be in charge. The Children's Investment Fund, which owns one percent of ABN Amro and has been calling for the group's sale or break-up, wants the Dutch bank to retain the right to consider bids from other businesses.

CHANCELLOR TO BOW OUT WITH "BIG BUDGET"

Treasury officials have indicated Chancellor Gordon Brown's budget, to be released on Wednesday, will have an eye on the long-term and be revenue neutral, with any tax reductions offset by rises elsewhere. Mindful of the threat of companies relocating to China and India, Brown told the Financial Times last week his would be a budget for business. The Conservatives are so confident the Chancellor plans to lower corporation tax they have pledged their own three pence in the pound cut to the levy.

BANKS HIT OUT AT PLANS FOR COMPENSATION SCHEME REFORM

Plans to extend the Financial Services Compensation Scheme have been received coldly by the British Bankers' Association. Chief executive designate Angela Knight said: "Our view is that you're in peer groups and each group should pay for its own failure." The scheme compensates customers of companies that cannot afford to meet claims made against them. The Financial Services Authority wants the scheme extended to its maximum size of 4.4 billion pounds, with a tiered system of funding pools spreading the cost of claims more widely.

INFLATION DATA PUSH UP ODDS ON RATES RISE

There is a greater likelihood of an increase in interest rates following the publication of the consumer price index by the Office of National Statistics. An increase in the cost of air travel was a factor in the 0.4 percent rise in consumer prices between January and February, and this brought the annual inflation rate up to 2.8 percent, a slight increase on January and the 10th consecutive month that the CPI has beaten the Bank of England's two percent target.

COST-CUTTING BLAMED FOR BP REFINERY EXPLOSION

The Chemical Safety and Hazard Investigation Board has found cutting maintenance costs, focusing on production targets and failing to recognise warning signs were instrumental in the explosion at BP's (BP.L) Texas refinery in March 2005 that killed 15. Reporting on its two-year inquiry, the CSB blamed "safety deficiencies at all levels of the BP corporation" and told the board to appoint a new member with a background in safety. The CSB also recommended the implementation of a better incident reporting programme with protection for whistleblowers and said regulators had failed to comprehensively examine the facility and notice its state of disrepair.

BSKYB FACES MORE SCRUTINY IN OFCOM PROBE OF PAY-TV

As Virgin Media (VMED.O), BT (BT.L), Setanta Sports and Top-Up TV file a joint submission to Ofcom, the regulator has announced a probe into the pay-television market which may result in a Competition Commission inquiry. Ofcom will be looking at control over content and ownership of distribution networks and subscribers, with the market position of British Sky Broadcasting (BSY.L) likely to come under scrutiny. BSkyB is the sole holder of rights to broadcast premium films by subscription, as well as controlling 80 percent of pay-TV sports rights broadcasts, according to its rivals.

MANAGEMENT BACKED BY TA TO BUY JUPITER

Private equity group TA Associates is backing a 680 million pound management buyout of Jupiter Asset Management from Commerzbank led by joint chief executives Edward Bonham Carter and Jonathan Carey and three of the group's leading fund managers, who will assume a majority stake in the region of 60 percent. The deal is unusual in that TA will assume a minority stake and has stated it has no plans to realise its investment within the usual three to five years.

BID RUMOURS PROPEL WHITBREAD

Rumours of a takeover led to shares in Premier Travel Inn owner Whitbread (WTB.L) making their biggest one-day gain in 15 years, closing at 19.34 pounds per a share. These shares put on 13 percent in early trading after rumours of a 23 pound-a-share bid, with Starwood Capital tipped as a group interested in Premier Travel Inn, and private equity groups CVC, Blackstone and Cinven also mentioned. Private equity investors have long held Whitbread in their sights on account of the group's large property portfolio.

HOCHSCHILD REINS IN COSTS AND BUCKS MINING TREND

Higher precious metal prices have caused a significant jump in maiden profit for Peruvian silver and gold producer Hochschild. Deputy chairman and former Peruvian prime minister Roberto Danino said the group had been able to keep costs under control at a time when the industry was under cost pressure because of its expertise in highly mechanised underground mining. Silver production in 2006 was up 10 percent while gold production fell 16 percent. Danino said future production increases would come from the expansion of existing operations, acquisitions, and the opening of new mines in Argentina, Mexico and Peru.

Prepared for Reuters by Durrants