PRESS DIGEST - Financial Times - Dec 1

The Financial Times

PAYING BILLS WORRIES ONE IN FOUR BORROWERS

The annual "precious plastic" report conducted by YouGov for PwC has found that 27 percent of borrowers are concerned about their ability to pay bills in the future. Around 16 percent of those surveyed are already struggling to pay off debts amid mounting fears about the still growing 1,500 billion pounds personal debt pile. The study also found that personal insolvencies have increased by almost nine percent in the third quarter of this year from the previous quarter, with more than one hundred adults falling into bankruptcy, an individual voluntary arrangement or start a debt management plan every hour in the working day.

FSA TO STEP UP ITS SUPERVISORY ROLE

Hector Sants, chief executive of the Financial Services Authority, has revealed the regulator's plan to increase its supervisory role over the institutions it oversees, adopting a more intrusive approach to banking activity. In an interview with the Financial Times, Mr Sants conceded the City watchdog, which came under fire for its loose supervision of Northern Rock NRK.L, could have performed better: "We are acknowledging that we could have challenged those business models before they went into the downturn." The changes mean there will be more jobs on top of 218 new posts already announced, taking FSA's number of staff to more than 3,000 by 2010.

WARNING OF WORST DECLINE IN 20 YEARS

The EEF manufacturers' organisation has warned that the sector is to face the worst recession in 20 years, hit by the widespread withdrawal of credit from UK companies. The leading industry association, which warns on Monday that manufacturing will contract by five percent next year, followed by an additional decline of about one percent the year after, estimates 90,000 job losses in 2009 with an unspecified number of businesses going into liquidation. Analysts believe that the banks' delaying stance on the issue of lending is exacerbating the difficulties faced by the sector's groups.

BARCAP REBUILDS EQUITIES UNIT

Barclays (BARC.L) Capital has announced plans to return to the global equities market, which it had abandoned in 1997, by building on the platform it acquired as part of its takeover of the US operations of Lehman Brothers. Taking advantage of the economic crisis, the British bank is hiring research analysts and traders at knock-down rates, including former Lehman Brothers' employees. BarCap is aiming for a place in the top five equities players over the next three years but analysts believe it is entering the market at a difficult time and may face problems in building relationships with clients.

POTENTIAL BUYERS LINE UP POSSIBLE BIDS FOR WOOLWORTHS

Administrator Deloitte, which has been brought in to help the sale of Woolworths, said on Sunday that the failed chain could be sold within a week as potential buyers, including Theo Paphitis, owner of the Ryman brand, are preparing bids for the group. Other potential bidders include Endless, the Leeds-based turnround investor, Cerberus, Sun European Capital and Alchemy Partners. However, analysts played down Deloitte's optimism, arguing that Mr Paphitis, as well as the other interested parties, will withdraw his interest in the end. Like-for-like sales are posting a 20 percent rise on the day since Woolworths fell into administration.

JOHN LEWIS FEELS KNOCK-ON FROM RETAILER'S COLLAPSE

John Lewis [JLP.UL], the department store chain, has reported a 13 percent fall in sales in the week to Saturday compared to the same period last year, as the collapse of Woolworths and MFI plunged consumer confidence even further. Patrick Lewis, head of retail operations, said: "Confidence was relatively low already, and there's no doubt Woolies hit it again." Accompanying other struggling retailers, the company has been forced to offer large discounts in recent weeks. Mr Lewis underlined the importance of the following weeks for the retail sector: "We're concentrating on trading in the next month because we think that is what we can control. Beyond that, our crystal ball is as muddy as everyone else's."

LAST-DITCH MOVE TO BLOCK TAKEOVER

In a bid to challenge the planned Lloyds TSB (LLOY.L) takeover of Halifax Bank of Scotland HBOS.L, a group of Scottish entrepreneurs has called the Competition Appeal Tribunal to look at the government's decision to support the deal at the end of October without referring it to the Competition Commission. The Merger Action Group, which says it has the backing of customers, account holders and shareholders, claims the decision was unlawful. Shareholders in HBOS will meet to decide on the takeover on December 12 while the deal is scheduled to complete in mid-January.

LAND OF LEATHER POISED FOR STATEMENT ON UNSOLICITED BIDS