PRESS DIGEST - Financial Times - May 28

The Financial Times

INVESTMENT BANKS WARN ON PLANNED INSOLVENCY REFORMS

The government's proposals for a new insolvency regime to protect retail depositors in the event of a similar debacle to the Northern Rock (NRKx.L) collapse have drawn criticism from the investment banking industry. In its annual report, the London Investment Banking Association cautioned against the creation of a so-called special resolution regime, under which a failing bank's retail deposits could be transferred to another institution before arranging a nationalisation or liquidation. "This will be a major change to insolvency law," said Alan Yarrow, Liba's chairman. "It is vital that unintended consequences are avoided."

UTILITIES RISE IN POPULARITY STAKES

An annual survey of 200,000 people by industry magazine Marketing Week has found utilities companies are among the brands rising fastest in popularity. Companies including Scottish Power SPW.PZ, EDF (EDF.PA) and Powergen were in the top 10 brands increasing in favour with consumers, while online brands such as Friends Reunited, Virgin.net and Egg.co.uk all plummeted in the popularity stakes. Stuart Smith, the magazine's editor, said: "The rise of the utilities in the survey is something of a surprise." He said the decline of some Internet brands shows "that simply being new and different doesn't guarantee you any sort of lasting respect in consumers' minds".

NEW HOME MORTGAGE APPROVALS RISE SLIGHTLY

According to the latest lending data from the British Bankers' Association, mortgage approvals for new home purchases remain nearly 40 percent below the levels of a year ago despite picking up slightly in April. The BBA said the latest data showed a healthy market with 74,722 loans approved and strong remortgaging activity that was 20.3 percent above that in April 2007. But economists were unconvinced the data signalled a recovery. "Any talk that the rise in approvals from March to April is a sign of housing recovery or that the 'worst is past' would be misplaced," said Michael Saunders, economist at Citi.

FEES BOOST BEHIND LEAP AT LIONTRUST

Liontrust Asset Management (LIO.L) has reported a 40 percent increase in full-year profits before tax, crediting the boost to performance fees. The specialist fund manager, which is in takeover talks with an unidentified suitor, saw its funds under management rebound since the end of March from 4.7 billion to 5.2 billion pounds, having seen significant outflow in the year to March 31. Chief executive Nigel Legge said: "We performed really well. Our profit per head of 377,000 pounds was ahead of last year." The shares closed up 0.25 pence at 312.75 pence.

BAUGUR DECIDES AGAINST BID FOR MOSS BROS

Baugur, the Icelandic investment group, has withdrawn from a potential 40 million pound bid for Moss Bros (MOSB.L) in the wake of recent stakebuilding by Laura Ashley (ALY.L). Changes on the shareholder register meant the "execution risk" of the deal had "become unacceptable", Baugur said. Laura Ashley last week raised its stake by almost a third to 9.85 percent. Shares in Moss Bros tumbled 5.25 pence to 40.25 pence on Baugur's announcement.

FREEPLAY SELLS TO INDIAN PARTNER

Devinder Raj Narang, chairman of India's Narang Group, has bought part of the UK clean energy products maker Freeplay Energy FNRG.L for a total consideration of 14.5 million dollars (7.3 million pounds). The company fell victim to the credit crunch, announcing last month that interest costs on its debt for the year to December 31 had risen to 1.1 million dollars. "Given the difficult market conditions, coupled with the group's additional working capital requirements, the proposals from Mr Narang to purchase the Freeplay division are in the best interests of both the company and shareholders," said Rory Stear, group executive chairman.

PADDY POWER IN NORTHERN IRELAND MOVE

Paddy Power (PAP.I), the Irish bookmaker, has bought McGranaghan Racing, a privately-owned betting chain in Northern Ireland, for 19 million pounds. The move is Paddy Power's first step into the retail gambling market north of the border. Patrick Kennedy, the chief executive, said: "Acquisition is the necessary route into this interesting market and McGranaghan's is an ideal entry point for Paddy Power." The Northern Ireland company's eight betting shops in the Greater Belfast area add to Paddy Power's existing chain of 183 bookmakers in Ireland and 58 in London.

FLOMERICS TO ISSUE DEFENCE

Flomerics FLO.L, the engineering software group, is hoping to fight off a hostile cash bid from its larger U.S. rival Mentor (MENT.O), whose offer of 104 pence a share plus the 1.6 pence final dividend was rejected this month. Flomerics will release its defence document ahead of the company's annual general meeting on Wednesday. It is in early stage discussions with other parties about a possible rival bid. Its shares closed up 5.5 pence at 107.5 pence.

QUINLAN PROPERTY FUND EXCEEDS ITS INITIAL OBJECTIVES

Quinlan Private has completed the equity-raising for the Quinlan European Strategic Real Estate fund, its 2.5 billion euro (two billion pound) European property fund. The fund invests in higher growth regions of central and eastern Europe and in real estate across western Europe, targeting assets in most real estate sectors, including residential. The capital raised exceeded Quinlan's initial objectives -- with 400 million euros of equity from U.S. investors and 325 million euros coming from investors in Ireland and the UK. It showed a still-healthy appetite for property investment among institutions and wealthy individuals.

AVEVA HAS CASH TO FUND TAKEOVER ACTIVITY

Aveva (AVV.L) reported a 34 percent boost in revenues to 127.6 million pounds for the year to March 31. The company said buoyant markets in nuclear power, shipbuilding and commodities were behind the record performance. Net cash doubled to 82.8 million pounds, ahead of analyst forecasts. Richard Longdon, chief executive, indicated the cash could be used for acquisitions and revealed that deals had already been considered. "There were two or three things we looked at this year but it didn't happen," he said. The shares closed 22 pence ahead at 1284 pence.

Prepared for Reuters by Durrants