PRESS DIGEST - Financial Times - May 19

Financial Times

KING STIRS ROW OVER TEETERING BANKS

Mervyn King, governor of the Bank of England, and Sir John Parker, chairman of the Bank's non-executive directors, said in Monday's annual report that the Bank should have greater powers to intervene in the event of systemic failure in the banking sector. Current legislation deems that the Financial Services Authority has primary responsibility for triggering use of the Special Resolution Regime for failing banks. Parker wrote: "There remain some concerns that the legislation may not go as far as necessary in terms of the Bank's influence in triggering (SRR)." King said the Bank had not been given powers to deal with banks before they fail.

UK INSURERS DELAY REPORTING REFORMS

Top UK life assurers including Legal & General (LGEN.L), Prudential (PRU.L) and Standard Life (SL.L) will be up to three years behind market peers in adopting market consistent embedded value financial reporting standards when the rules become mandatory in 2011. The stricter rules were due to become mandatory for the 2009 financial year for all leading insurers that are members of the CFO Forum, but a number of companies pushed for a two-year reprieve for inconsistencies to be ironed out. Aviva (AV.L) finance director and CFO Forum chairman Philip Scott said he was optimistic the companies currently lagging behind would adopt the standard before 2011.

TALKS BEGIN ON SELLING STAKES IN UK BANKS

In kick-starting talks with sovereign wealth funds and other investors, UK Financial Investments, which manages the UK government's 43.5 percent stake in Lloyds Banking Group (LLOY.L) and 70 percent stake in Royal Bank of Scotland (RBS.L), could start selling tranches in both banks within a year. A source close to the situation said: "A lot of people around the world think once you get through the losses the earning power of these banks will be formidable." On Monday, Lloyds launched an open offer to replace four billion pounds of government-held preference shares with new ordinary shares.

ALLIANCE BOOTS BUYS BACK 400 MILLION POUND OF DEBT

Retailer Alliance Boots [ABN.UL] has bought back more than 400 million pounds of sharply discounted debt from distressed sellers. Finance director George Fairweather said the company had bought 191 million pounds of debt in the year to March 31, and had bought another 227 million pounds of debt since, with the buybacks funded by Alliance Boots' holding company. Meanwhile, more than 100 senior managers at the group are forgoing salary increases this year in order to boost the pay of shop workers while the company examines whether its final salary pension scheme may be closed to existing employees.

BAA APPEALS AGAINST ORDER TO SELL AIRPORTS

BAA FER.MC, the controller of Heathrow, Gatwick and Stansted airports, said on Monday it is applying to the Competition Appeal Tribunal to review the Competition Commission order forcing it to sell three of its seven airports within two years. Two months ago, the Commission ordered BAA to sell Gatwick, Stansted and either Glasgow or Edinburgh airports in order to open up the UK airports market to competition. BAA said the Commission's report failed to take account of the current economic climate and also highlighted links "between a member of the Competition Commission panel and an organisation interested in acquiring the airports that BAA is required to sell".

MITIE CLEANS UP AS CLIENTS LOOK TO OUTSOURCE

The buildings management group Mitie (MTO.L) announced an increase in pre-tax profits from 67.9 million pounds to 75.9 million pounds in the company's preliminary results. Mitie chief executive Ruby McGregor-Smith said financial pressures were leading many of the company's clients to look to consolidate their contracts in order to cut costs, leading them to sign larger, longer-term contracts. Diluted earnings per share increased 17 percent from 14.1 pence to 16.5 pence, while the group's total dividend increased from 6 pence to 6.9 pence.

DEMAND FOR PORK HELPS TO LIFT CRANSWICK'S BOTTOM LINE

The Yorkshire-based pork producer Cranswick (CWK.L) has reported a strong demand from customers despite a 30 percent increase in the cost of pig meat during the last 12 months. Turnover at the firm increased to 606.8 million pounds for the year to March 31 from 559.2 million pounds the previous year. Pre-tax profits from continuing operations also rose five percent to 34.7 million pounds from 33 million pounds. Cranswick chairman Martin Davey attributed the increase in sales to customers trading down to pork from more expensive meats such as beef and lamb. "In today's economic environment, pork is a very competitively priced protein," he said.

SOMERSET DAIRY HELPS WISEMAN BEAT FORECASTS

Robert Wiseman Dairies (RWD.L), the UK dairy produce supplier, said it has narrowly beaten profit expectations for the year to April 4. Operating profits increased from 32 million pounds to 35 million pounds, but higher finance costs saw pre-tax profits increase less steeply from 29 million pounds to 31 million pounds. Wiseman increased its total dividend from 14 pence to 15 pence after holding its final pay-out at 10 pence. Following the announcement, the broker Investec raised its current year forecasts for Robert Wiseman from 31.5 million pounds to 33.5 million pounds.

AEGIS TO CUT COSTS AFTER FALL IN SALES

The marketing and communications firm Aegis Group (AEGS.L) said it would maintain margins this year despite an 11.6 percent organic decline in first quarter sales. Aeigis Group chairman and interim chief executive John Napier said cost reductions -- including the shedding of 780 jobs or five percent of the company's workforce -- were "on track" and that Aegis would maintain underlying operating profit margins over the full year. Aegis said net new business of 1.05 billion dollars in the quarter -- including new business from Kellogg's, Vodafone and Credit Agricole -- offset the losses during the rest of the year.

PROPERTY GROUPS PREPARE WAR CHESTS

The self storage group Big Yellow (BYG.L) raised 32.9 million pounds through a rights issue on Monday. The company placed a total of 11.5 million ordinary shares at 285 pence each, generating slightly less than 10 percent of its previous share capital. The company also released full-year results, reporting a 71.5 million pound pre-tax loss for the year to the end of March, compared with pre-tax profits of 102.6 million pounds the year before. Big Yellow's executive chairman Nick Vetch said: "The placing proceeds provide us with the financial firepower to build out our existing development pipeline over the next two to five years."

Prepared for Reuters by Durrants