PRESS DIGEST - Financial Times - May 31

The Financial Times

BANKERS REJECT CRITICISM TO STAND FIRM ON WAY LIBOR IS CALCULATED

The British Bankers Association said it will not alter the way the London interbank offered rate (Libor) is set. Despite escalating criticism, the leading banking association said "there should be no changes to the way Libor is calculated" and that the foreign exchange and money markets committee would strengthen supervision of how the rate is arranged. Fidelio Tata, derivatives strategist at RBS Greenwich Capital, said the BBA "would rather do nothing rather than make a change and find out later it was the wrong change". On Friday, three-month Libor, which reflects the rate at which banks lend to each other, rose to 2.68 percent, up from 2.64 percent at the start of the week.

BANKS SHUT DOORS ON ONE MILLION POUND PLUS MORTGAGES

The banks' reduced new limits on the amount of their loans and the costly arrangement fees could lead to the extinction of multi-million pound mortgages from high street lenders, mortgages brokers warned. Gary Festa, director of wealth manager and mortgage planner HFM Columbus, said such deals "are becoming virtually extinct as lenders turn their back on the upper end of the market". According to HFM Columbus, Abbey (SAN.MC), which was willing to give loans of up to 7.5 million pounds, has slashed the amount to 550,000 pounds, while Nationwide [NAT.UL] and Chelsea now have a cut-off boundary of 500,000 pounds.

FUEL POVERTY RELIEF PLAN DRAWS FIRE

The government has unveiled a series of new plans aimed at helping the 2.5 million low income households with fuel bills. The measures include a proposal that gives the Department for Work and Pensions the ability to share benefits data with energy companies, allowing them to offer help in the form of such measures as "social tariffs" to those in bigger need. Pensions reform minister Mike O'Brien said the energy suppliers "must promise to use that data securely", Opposition parties and campaigners slammed the proposals as inadequate, with Alan Duncan, the Tory shadow business secretary, describing them as "little more than spin".

NEW STAR MANAGERS TO GET 35 MILLION NEW SHARES

New Star Asset Management NSAM.L said it would issue 35 million new shares by 2012 as part of a new incentive scheme for senior managers. The London-based company said the share issue could dilute investors' holding by up to 10 percent, assuming that the managers improved the group's profit and investment performance. The company, however, expects 60 percent of the shares to vest, leading to a lower dilution of about five percent if the shares hit 450 pence. About a 10th of the new shares are to be given to five of the company's executive directors, but neither chairman John Duffield nor chief executive Howard Covington will participate in the scheme as they both "consider themselves to be sufficiently incentivised through their current interests in New Star shares".

TNS-GFK MERGER DETAILS AWAITED

The details of the proposed merger between Taylor Nelson Sofres TNS.L and GfK (GFKG.DE) are likely to be announced early next week, in a move designed to discourage an undesired bid from advertising group WPP (WPP.L). Next week's takeover document is expected to emphasis the additional benefits from trading in areas where only one of the two companies operate and not on cost savings, as GfK has said dismissals were not planned. Analyst Georg Remshagen said the completion of the TNS and GfK merger depends heavily on the ability of the groups' boards to "provide convincing evidence of the strategic and financial advantages over a bid from WPP". So far, TNS's board has rejected two takeover offers from WPP.

MARWYN FUND TO FOCUS ON BUILDING MATERIALS

Industry veterans Peter Tom and Simon Vivian are to manage Marwyn Capital's latest cash shell focused on the international building materials industry, with a view to building a 500-million-pounds-plus business through acquisitions. Expanding on the reasons behind the decision of Marwyn to choose the sector, managing partner Jamie Corsellis said: "Aggregates is a very local business, with 80 percent of materials used within 30 miles of its source. Mixed with a long-term commitment to infrastructure spending in the UK, we see a healthy market that will prove resilient in the face of a downturn."

TRIBAL BULLISH ON PROSPECTS

Shares in the consulting and support services company Tribal Group (TRBG.L) gained 0.25 pence to 133 pence on Friday as the company said in a trading statement ahead of its annual meeting that it was confident its performance in the second half of the year would be good. Demonstrating the resilience of its public-sector focus, the firm said trading since the start of the year has been good and that it expects profits before tax and earnings per share for the first six months "to be significantly ahead of the corresponding period last year".

EDP TO PAY SPECIAL DIVIDEND

Shares in Electronic Data Processing (ELDA.L) climbed eight pence to 58.5 pence as the group said it would pay out a special dividend totalling 1.23 million pounds to shareholders. The payment comes following the sale of the group's head office in Sheffield in February for 1.35 million pounds. In the six months to March 31, turnover in the company, which provides IT services to the distribution industry, rose five percent to 3.47 million pounds. Including a gain of 668,000 pounds from the disposal of surplus property, pre-tax profits were ahead from 226,000 pounds to 1.2 million pounds. The interim dividend was held at 0.7 pence, excluding the one-off payment.

CARLYLE CONSIDERS FILTRONIC BID

After the U.S. private equity group Carlyle said it was considering a bid, shares in the microwave and radio frequency components manufacturer Filtronic (FTC.L) rose by 30 percent. Although it has yet to make an approach for the Yorkshire-based Filtronic group, Carlyle said it was studying its options. SVG Investment Management, which has a 9.4 percent stake in Filtronic, said the group would thrive the most under private ownership. "A price of up to 120 pence could be justified for this high margin, growing business," said head of research at SVG, Adam Steiner. Filtronic shares closed 12 pence ahead at 75.25 pence.

BREWIN DOLPHIN NUDGES AHEAD BUT SEES LITTLE CHEER IN IPO MARKET

In spite of delivering interim results that showed a decline of eight percent in assets under management to 23 billion pounds compared with last September, shares in the wealth manager and niche bank Brewin Dolphin (BRW.L) closed up 10.75 pence at 132.75 pence. Chairman Jamie Matheson said "it's tough times out there" and that it was "fanciful to expect much (initial public offering) activity in the second half". Expecting staff numbers of 1,750 to hold steady, Matheson suggested the group could potentially benefit from involvement in rights issues as companies look to shift financing from debt to equity. As total income improved by 6.2 percent to 104 million pounds in the six months to March 30, pre-tax profits climbed by five percent to 21.8 million pounds. An interim dividend of 3.55 pence, payable out of earnings per a share of 7.5 pence, was proposed by the company.

Prepared for Reuters by Durrants