PRESS DIGEST - Financial Times - Sept 27

The Financial Times

LONDON ACTS TO UNFREEZE MARKETS

The Bank of England said on Friday it would lend 40 billion pounds to banks until mid-January and that it was willing to accept a wider than usual range of collateral. The bank also joined the European Central Bank and Swiss National Bank in a modification of their U.S. dollar-lending operations, extending the terms of loans to cover the approaching end of the quarter. Icap economist Don Smith said the bank's liquidity injection was greeted with relief. The bank will now accept triple A rated UK and European mortgage-backed securities alongside government bonds and other asset-backed securities.

BROWN BLASTS "AGE OF IRRESPONSIBILITY"

Prime Minister Gordon Brown called on Friday for an end to "the age of irresponsibility" as he finished a two-day tour of the United States designed to show his credentials as an influential leader in the debate on tighter financial regulation. Brown discussed the turmoil in the banking sector with people such as President George W. Bush, Bill Gates and U.N. Secretary-General Ban Ki-moon. Brown and other national leaders want to impose greater transparency and caps on banks' remuneration and set up an early warning system. Brown also called for the introduction of 30 international "regulatory colleges" to monitor the world's 30 biggest financial services groups across borders.

BIG CITY EARNERS SEE BORROWING POWER SLASHED

As the financial crisis tightens its grip on the City, lenders are becoming increasingly concerned about the ability of banking industry workers to finance their debt. City workers often heavily rely on bonus incomes to obtain large mortgages but mortgage brokers say some banks are refusing to recognise expected bonus payouts when they calculate how much they will lend. Estate agents say the turmoil in the financial markets is already feeding through to the property market.

TOP-END SERVICES FEEL CHILL AS BOOM TIMES FADE

Companies that offer high-class services, often to City workers, are starting to feel the effect of the financial crisis. Interior designers, landscape gardeners, butler and nanny services are experiencing a fall in demand after years of growth. While many of the companies that serve the rich say demand has remained high, they are starting to report a decline in new business inquiries. Last year, the Financial Times reported on a "new servant class" that has clustered in London and was flourishing by offering the highest quality services. Some of these say the super rich are still spending freely but the wealthy classes that depend on City incomes are reining in budgets.

LOANS SUCCESS EXAGGERATED AT WORLD BANK

The Independent Evaluation Group of the World Bank has said in its annual review of development effectiveness that the management of the World Bank tended last year to inflate the reported successes of its lending to the poorest countries. The report said the bank also struggles to address the big global issues of climate change and communicable diseases when these conflict with the interests of the individual poor countries.

C&W BOARD SET TO CONSIDER TWO-WAY SPLIT

The board of Cable & Wireless (CW.L) will meet on Monday to consider a demerger of the company's UK and international divisions. The board is likely to consider a timetable towards separate Stock Exchange listing for the divisions and it is expected that the split will take place in the first half of 2009. Many investors have taken a bullish view of C&W's prospects since 2006 when new management outlined a turnaround plan. The company's shares have fallen eight percent in the past year, a much better performance than the FTSE All-Share or fixed-line telecoms indexes.

DUBAI VEHICLE TAKES IHG STAKE

Difaya World, part of Dubai World's Istithmar investment house, bought a 3.1 percent stake in InterContinental Hotels (IHG.L) on Tuesday and added a further slice on Wednesday, taking its holding to 4.23 per cent. IHG said it regarded the Dubai interest "as long-term investors". Istithmar has a hotels division which has stakes in Sol Kerzner's Atlantis resorts and the One and Only hotels group.

WISEMAN LIFTS MILK PRICES

Robert Wiseman Dairies (RWD.L) said it expects "a significant improvement in the second-half performance" after it notified supermarkets of an increase in milk prices. In July, the company told shareholders that an increase was necessary to cover rising costs. Its shares fell sharply in May after the company warned of "unparalleled" cost pressures, including the rising oil price. In a trading statement released on Friday, the company said results for the year to April 4 would be in line with expectations of between 30.5 million to 31 million pounds.

MINERVA PLUMMETS AFTER LIMITLESS WITHDRAWS OFFER

Shares in Minerva (MNR.L) fell by more than half on Friday after the development arm of the Dubai government withdrew its takeover offer. Limitless tabled a bid of 160 pence a share, but talks broke down on Thursday after an agreement could not be reached with Minerva's banks. The decision has raised questions about the future of the developer which is heavily exposed to the struggling City of London office market. A lack of income and a high level of debt has worried investors. Shares closed at 35 pence, down 45.5 pence.

INDIAN OUTSOUCERS VIE TO BUY AXON

Infosys (INFY.BO) and HCL Technologies (HCLT.BO) are vying to make the largest acquisition by an Indian outsourcing company as they bid against each other to buy Axon AXO.L. On Friday, HCL launched an all-cash offer, valuing the UK-based consultancy group at 441 million pounds. The offer beat an earlier 407 million pound bid by Infosys. HCL's offer values Axon at 650 pence a share, whereas Infosys's offer valued Axon at 600 pence a share. Axon's gross profit in 2007 was 29.5 million pounds, on revenue of 204.5 million pounds.

Prepared for Reuters by Durrants