PRESS DIGEST - Financial Times - August 26

BAE'S TURNER SAYS DEFENCE KEY TO UK'S INTERNATIONAL STANDING

Mike Turner, the chief executive of BAE Systems (BAES.L), has suggested that Britain risks losing its influence abroad unless the government makes defence a bigger priority. He also warned that his company could be forced to consider leaving the UK if military spending declined below a "reasonable" level. The comments were made ahead of Mr. Turner's retirement from BAE this Friday after 42 years with the organisation. It is understood that the comments will strike a chord with those who have criticised the government for not prioritising military spending despite Britain's involvement in two sustained conflicts in Iraq and Afghanistan.

WOMEN STILL BEHIND IN THE BOARDROOM

Researchers at Exeter University have released a report claiming that female directors are earning smaller performance-related bonuses than their male counterparts, indicating the presence of sexist attitudes in the business sector. Male executive directors in the best performing companies were paid bonuses 263 per cent bigger than those working for the worst performers, while the difference for female directors is only four per cent. The study will be presented this month at the annual meeting of the U.S. Academy of Management. The statistics are based on a survey of female executive directors of UK listed companies between 1998 and 2004.

OVERDUE MORTGAGE PAYMENTS ON RISE, SAYS STUDY

A new report by Standard and Poor's has found that strains are growing among borrowers with patchy credit histories, with increasing numbers falling behind on their mortgage payments and fewer people able to refinance their higher interest rate loans. The report shows that the total delinquency rate for subprime mortgages increased to a record 23.31 per cent of the total pool as of June 30, up 22.17 per cent at the end of the first quarter. Serious delinquent loans rose to 12.12 per cent. However, the ratings agency said that rising delinquency rates do not necessarily translate into defaults, with one analyst claiming that "delinquencies are almost a way of life for subprime borrowers".

GLOOM WILL DRAG ON, SAYS BANK DEPUTY

Charlie Bean, the new deputy governor of the Bank of England, has said that there is no imminent end in sight to the current economic downturn, adding that the situation is as bad as the crash in the 1970s. In an interview with the BBC, he suggested that the financial malaise could drag on for a considerable time. However, despite the bad news, Mr. Bean holds out hope that inflation will start to fall next year, along with improved economic growth if oil prices and credit markets start to stabilise. He said: "This is just a transitory period of subdued growth and we will get through the other side and the growth will resume to more normal levels".

TRAVEL INDUSTRY SUFFERS AS PROBLEMS WIDEN

The CBI has released a survey suggesting that the British travel industry has endured a poor summer season, with both domestic and foreign holidaymakers reducing their spending. The CBI also found weaknesses in most sectors of the service industry, with business and professional services, as well as customer services, all facing steep falls in profitability. Travel services suffered their steepest decline in business for five years. The survey was conducted in late July and early August, and corroborates official data showing that economic growth came to a standstill in the second quarter.

DOWNTURN "SET TO TRIGGER BUILDING SOCIETY MERGERS"

KPMG, the financial services firm, has reported that the current housing downturn could trigger a wave of mergers among building societies as bad debts from mortgages rise and profits fall. The KPMG Building Society Database 2008 suggests that while the 59 remaining societies have so far managed to weather the economic storm, the second round of the credit crunch is now under way, thus posing further problems for the organisations. "It's inevitable there will be some more consolidation as market conditions worsen," said Richard Gabbertas, a KPMG partner.

GLANBIA BULKS UP WITH OPTIMUM

The Irish food production group Glanbia (GL9.I) has acquired Optimum Nutrition, an American manufacturer of fitness supplements. Glanbia is the largest producer of cheddar cheese in the U.S., and will pay 170 million pounds from its own resources to acquire the privately-owned, debt-free company. The acquisition is part of Glanbia's attempts to add muscle rejuvenation products to its existing cheese and animal feed range.

DEPARTURE IS FURTHER BLOW TO BP OVER VENTURE

BP (BP.L) has suffered another blow in its dealings with TNK-BP after one of its senior appointees, Anthony Considine, resigned. The vice-president for downstream operations leaves the organisation in light of the fierce and bitter struggle for control of TNK, with his resignation coming three weeks after the joint venture's chief financial officer also resigned. Meanwhile, Robert Dudley, the group's chief executive, is running the company from a secret location in central Europe after his Russian visa was suspended.

DEFINED BENEFIT PENSIONS FALL FURTHER

A biennial survey of 134 large private sector pension schemes carried out by consultants Watson Wyatt has suggested that a further large decline in final salary pension schemes is on the way. The study discovered an acceleration in the closure of schemes to existing members as companies attempt to get rid of their remaining liabilities within the next ten years. A consultant at the firm said that the findings do not yet sound the death knell of defined schemes, but they do suggest a more rapid decline than had been originally anticipated in 2004.

THRIVING GASTROPUBS BUCK BROADER MARKET TREND

Brockton Capital, the private equity fund manager, is set to this week announce that it doubling the size of its Realpubs Limited gastropub joint venture, taking the number of its sites in London from seven to 12. The expansion comes after Brockton signed a deal with an unnamed pub chain. The co-managing director of the company, David Marks, has said that people continue to want to go out to eat and drink for under 20 pounds a head, even during a consumer slowdown. Gastropubs appear to be bucking the trend as normal pubs close at an unprecedented rate across the UK.

Prepared for Reuters by Durrants