An announcement from British Telecom (BT) that it would be cutting 15,000 jobs as well as reducing their final dividend payout to just six and a half pence per share caused no little upset yesterday, The company’s management team insisted that they had no option after their IT services division had a disastrous year. The dividend for 2008/9 was close to 60 percent less than the previous financial year.

According to the Pensions Regulator U.K. companies will be given some breathing space to repair their pension deficits over the long term, a move that will be warmly welcomed in the hard pressed business sector. This concession will allow companies to reduce their annual pension payment, relieving cash flow pressures. The fall in stock values, which thankfully is declining, has meant that billions in pounds of asset values have decreased, meaning companies that many companies have been faced with the prospect of dipping into cash reserves to meet pension commitments.

UK insurance giant Legal & General announced a rise in sales for the first-quarter, apparently aided by an increase in sales of pension schemes. L & G seemed optimistic that the worst of the financial crisis appeared to be behind them, whilst adding that 2009 could still be very difficult. In their first-quarter trading update published Wednesday, Legal & General announced that global sales had risen by three percent to 382 million pounds from 372 million a year ago, coming from a six percent increase in sales of savings products at its UK business and a 32 percent jump in overseas sales, and curtailed by a ten percent drop in sales from its UK Risk business.

The world’s sixth-biggest steel maker in terms of production capacity, Tata Steel Ltd., announced in the last few days their intention to request from their UK bankers reset the debt terms on the loan that the company took to purchase the Anglo-Dutch steel producer Corus Group PLC.

On the flight path, it was announced that a consortium led by Citi Infrastructure Investors have been removed from the list of final bidders take over London Gatwick, the UK’s second largest airport, as their bid was found to be too low.

The consortium, Lysander Gatwick Investment, made a bid of about £1.18billion to acquire the airport. It is unsure whether they will submit a better offer.
Meanwhile, the UK’s largest property company, Land Securities, have added weight their repeated warnings that a recovery in the battered real estate sector are premature. They hit their point home by revealing that their property portfolio had fallen in value by £4.7billion in the last financial year. Land Securities reported a pre-tax loss of £4.8bn, the largest ever in the UK property sector, against losses of only £988m in 2008. Understandably their shares fell in value by 13% on the day (60 pence to 468).

On the FTSE, banks and commodities have begun to slip backwards a little whilst the retail sector is doing better, with reports that sales in April were better than expected.
Shares in Tesco Plc and William Morrison Supermarkets Plc both rose on the days trading. Tesco, Britain’s largest retailer gained 3.7 percent to (14 pence to 352.5 pence). Morrison also, climbed 4.1 percent (10 pence to 245.75)

Dublin based C&C Group, brewers of Magners cider, had a simple explanation why their shares rose by 7.8 percent yesterday (14 cents to 1.94 Euros) they said that Ireland’s rugby team winning its first Grand Slam in 61 years and the resultant celebrations during unseasonal warm weather had pushed sales through the roof. .

U.K. stocks feel backwards overall, and for the second day in succession on Wednesday. The FTSE 100 Index fell 94.17 to close on 4,331.37, while the FTSE 250 dropped to 7,365.10.
The pound receded slightly against the dollar and rose strongly against the Euro on currency markets yesterday.

· Pound/US dollar 1.5149

· Pound/Euro 1.1128

· Pound/Japanese Yen 144.317

· Pound/Swiss Franc 1.67659

On Wall Street, stocks fell back from a high in early trading after data was released showing the U.S. trade deficit had risen only to $27.6 billion in March, yet shares later fell as hopes that the economy had stopped its decline were deflated by the news that April retail sales in the US fell a second month in a row. The Dow Jones closed down 184.22 points to 8284.89 while to NASDAQ share index fell by 51.73 to finish the day on 1664.19 Another sacred cow, electronics giant Sony reported that it had made its first loss in 14 years, after a 12.9%.drop in sales.

Sony reported a loss of 98.9bn yen ($ £685million) for the year to the end of March, reversing a profit of 369.4bn yen the previous year.
Sony had previously announced it would be cutting 8,000 of its 185,000 workforce and closing some of its factories

On commodities, crude oil was up at around $59 a barrel while gold continued to rise steadily, up $4.40 an announce to $828.20. Copper closed down $4.65 at $204.35

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Tags: Accounts, Bank, Bank of England, British Economy, BT, Employment, Financial News, Recession, UK Banks

With all the talk of toxic banks, recessions, Bernard Madoff and negative inflation, it is no wonder that that intrepid sector of the UK population who actually have some savings are looking for a safe and steady haven to deposit their savings, having given up hope of earning any interest from the money over the next few years. And the answer could lie right under their nose, and it has been there for years; the friendly post office. Experts now agree that local post offices could well become the UK’s most high-profile bank, with a network of branches in every town and just about every community in the UK

A conclusion is rapidly being reached among leading financial experts that the UK Government, instead of rushing to close Post Office branches should be looking to strengthen them. Instead of ploughing billions into stoking up the coffers of the major banks, they should set aside the comparatively minor amount that would be required to promote the interest of the Post Office’s banking division.

Coming in the wake of the interim findings of a House of Commons committee, that shows that Government ministers continue to be positive and even enthusiastic on finding means to promote the interests of the Post Office and not only protect the remaining network but also find ways to expand it in the future.

The committee is expected to announce that although many of branches of the Post Office are lacking in proper management, operating using less than advanced technology and have suffered from a serious and long term investment program, the public at large seem to have retained trust and loyalty for their friendly post office and might well be more comfortable in depositing their savings there.

Issues such as the Royal Mail’s pension deficit of around £7billion pounds fades in comparison to the ” bottomless pit” that could run into the hundred million mark that the major banking groups will require to survive over the coming years.

Another problem that the Post Office banks are facing is that more than a half a million account holders have lost their savings cover, under the UK protection scheme. They were informed by mail that their savings were no longer covered by the Financial Services Compensation Scheme, with it instead being covered by the Irish Deposit Protection Scheme.

The Post Office’s financial products have worked in tandem the Bank of Ireland for a number of years, and with their nationalisation the cover can no longer be provide. It is expected that the UK Government may need to intervene to solve the problem.

A sign of the faith that the British public still retains in the Post Office as a whole is a recent statement from the Commission for Rural Communities stating: “There may be scope for enhancing banking services and credit availability by making more use of the Post Office - perhaps by the Government working directly with the Co-operative Bank as well as others to increase lending in rural areas.”

Is it back to the future for UK’s Post Office banking system?

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Tags: Accounts, Bank, Banking, British Economy, Credit Crunch, Economics, Finance, Financial News, Post Office, Savings, UK Banks, UK Recession

The Bank of England considered cutting rates to lower than 2%, minutes from the Monetary Policy Committee (MPC) show.

The MPC voted unanimously agreed nine votes to zero that the minimum cut should be from 3% to 2%.

A deeper rate cut was postponed on concerns that a deeper cut could lead to an “excessive” fall in the exchange rate and could undermine confidence in the economy.

US interest rates passed the final frontier and entered unknown territory as they were cut to just 0.25% – and financial strategy has nowhere else to go.

The US Federal Reserve – equivalent to the UK Bank of England – says the rate will stay at the current low rate “for some time” and the Reserve is looking at other ways to ease the recession.

Wall Street analysts like Holger Schmieding of the Bank of America say the rate is now effectively 0% with odd fraction of a per cent not making any real difference.

“The important factor is what policymakers plan to do now they can’t interest rates any further,” he said.

The Federal Reserve is planning to more ‘toxic’ mortgages and is considering buying long-term US government bonds to beef up the economy.

President-elect Barack Obama said in a speech on Tuesday that his administration would also be doing its bit to stimulate the economy because the central bank could no longer use its main tool to run the economy.

“We are running out of the traditional ammunition that is used in a recession, which is to lower interest rates,” he said. “That’s why the economic recovery plan is so absolutely critical.”

The markets reacted by climbing – the FTSE went up from 4227.6 to 4309.1 and the DOW from8565.65 to 8924.

The Pound had a slightly better day improving against the Euro – from 1.12 to 1.16 and the US dollar from $1.49 to $1.50.

• Alliance & Leicester
• Barclays
• Capital One
• Child Trust Fund
• First Direct
• HSBC
• Post Office
• Tesco Savings

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Tags: Accounts, Bank, Bank of England, Banking, British Economy, British Pound, Credit, Debt, Economics, Financial News, Interest Rates, Recession, UK Banks

Profits have plunged at two more high street retailers – electrical outlet Comet and Carpetright, Britain’s biggest carpet retailer.

Both companies have slashed dividends and warned of “extremely difficult” trading conditions.

Comet, owned by Kesa, posted a massive 71% fall in first-half profits and halved its dividend to 1.75p. The company also owns French electrical retailer Darty.

Profits at Kesa were £13m for the six months to October 31 – down from £45.1m a year ago..

Carpetright ‘s annual profits will come in “significantly” below expectations. The company says first-half profits collapsed by 67% and cut dividends from 22p to 18p. Profits for the six months to November 1 were £8.8m from £27.2m last year.

Lord Harris, Carpetright’s chairman and chief executive, said: “As I have previously said, I expected my 51st year of selling carpets to be extremely challenging, and it has proved to be the case. Market conditions and consumer confidence have declined through the first half, leading to reduced profits year-on-year due to lower sales.”

He added: “Trading during November was below expectations and like all non-food retailers, we expect it will remain very difficult.

The government is helping first time buyers get a foot in the door with a scheme with 130 developers to sell 18,000 unsold homes.

The government has a loan kitty of £400m to help first-time buyers through a shared equity scheme. The loan is free of charge for five years and is proposed as a deposit to cover up to 30% of the purchase price.

A first–time buyer could purchase a house worth £180,000 for as little as £126,000, the government said.

The Pound lost more ground against the euro, slipping from 1.11 to 1.12 and strengthened slightly against the US dollar from, $1.48 to $1.49.

The FTSE and DOW hardly moved in advance of today’s interest rate announcement from the US Federal Reserve. The FTSE dropped just three points from 4280 to 4277 and the DOW fell 64 points from 8628 to 8564.

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Tags: Accounts, British Economy, Credit, Credit Crunch, Economics, FTSE, Stocks and shares

Inflation is still tumbling but is still way above the government’s 2% target.

The Consumer Prices Index (CPI) – the official measure of inflation – slipped 0.4% to 4.1% last month as fuel and food costs cheapened.

The CPI fell at its fastest rate for 16 years between September and November mainly pushed along by fuel prices falling by a third since their high in July. The rate stood at 5.2% in September – the highest for many years.

Despite the fall, management of inflation is still outside parameters set by the government and bank of England governor has had to write to the Prime Minister Gordon Brown to account for the situation.

Cash strapped customers at the Halifax who exceed current account borrowing limits may have to pay up to £2 bank charges.

The new Reward current account takes a carrot and stick approach to customers – offering them the same fees on for a £2,000 overdraft as slipping £20 in to the red accidentally.

“The idea of the account is to get rid of confusing interest rates,” said a Halifax spokesman.

Reward takes over from the standard current account and high interest current account from 9 February. Old fee and interest charges will be swept away and offers a £5 credit to customers paying in at least £1,000 a month.

Savers are piling cash to Tesco, which has the most competitive savings rates on the market.

In November, more new savings accounts were opened at the supermarket than in the whole of 2007.

The lure is 6% interest rate on deposits of less than £100,000 the Tesco Internet Saver account. This more than doubles the return of similar accounts from similar high street accounts.

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Tags: Accounts, Bank, Bank of England, Banking, Current Account, Financial News, Interest Rates, Savings, UK Banks

If you really want to save money, then possibly the best approach is to take a long hard look at your lifestyle, see where your hard-earned money is going and then see if you can make some savings.

And there are so many ways you can do this, but lets have a look at some of the best ways to make a difference.

Firstly, where does your money go? You get paid and first with their hand out is the Government. Now, most people pay tax via the Pay As You Go scheme, meaning that your tax is calculated for the tax year and you pay per month. Not much you can do about that you might think, but when it comes to paying tax, have a quick look to ensure you are not paying too much. Employers and tax inspectors are known to make the odd mistake. Also, many people now claim tax benefits (such as working tax credits, child tax credits), so just make sure they’ve got you right and that you are claiming for all the benefits you can.

Right, where next does your money gravitate? Usually, it’s on the house in the forms of a mortgage, or rental payment. If it’s a mortgage, have a look at the rate you are paying. If you move it to another firm (and at the time of writing the re-mortgage market is a little sticky), then you could possibly reduce your payment by a significant amount. If you rent, are you paying a fair rent, especially, at the time of writing, the economy is heading from bad to worse. It may pay dividends to think of upping sticks and moving to another house, maybe close by, but with a more competitive rent. And even if you politely let your landlord know that you are considering this, it may well be that he re-negotiates your rent anyway.

So that’s tax and benefits and your property; now it’s the turn of the money spent on keeping yourself alive: utilities and food.

Your property is a fast consumer of money, so keep an eye on how much it takes to run it. Not much you can do about council tax, but when it comes to electricity, gas, or oil, you have two courses of action. Use less of the stuff and also think about switching suppliers and getting a better deal. If you’re on a water meter (and this is good if you are), then use less of it (fewer baths, more showers for example).

As to food, choose this time to go on a diet and eat less. And think about where you buy your food. Drop the up-market stores and supermarkets, and head for the bargain shops, which most probably have the same brands anyway, they just don’t have all the fuss, and you could save a fortune.

Next up is entertainment. Still going out on a regular basis to restaurants, the pub, or the cinema. Enjoying yourself in the U.K. is a costly business, so go out less and spend more time amusing yourself at home with food and drink from the supermarket, and a rented film.

Right, so that’s halfway, five things have been covered: 1. tax and benefits; 2. mortgage, or rent; 3. utilities; 4. food; and, 5. entertainment.

In the next five you can tunnel down into the specifics, starting with credit cards, but moving onto the telephone, the mobile, the insurances you have and finally, the creating money. 

Your credit card can be your best friend, or your worst enemy. Use with care. Start to pay it off and if you can, put it away in a drawer, or, more drastically, cut it up. You could always switch to a new card company for a better rate, but read the small print first. Don’t fall for the low, or no interest for six months and then, when you want to move again, find you can’t as things have got tougher.

Your landline telephone needs some respect. These things eat money like a London taxi cab. Look around for a better deal and don’t be so chatty on the phone unless, of course, someone has called you.

Mobiles have become indispensable, or so we think. Do you really have to tell the wife and kids that you’re on the train? Is the call, and the subsequent cost, really necessary? And if you are on a mobile contract, think about switching to pay-as-you-talk. You’ll be very pleasantly surprised how much money you’ll save.

Finally, look around the house. Can you raise some funds by say selling some of your unwanted possessions. Would a bit of trading on one of the online auction sites provide some cash. Also, look at some of the freelance work sites – could you at night do some extra work and earn some more money.

Okay, where’s there’s a will, there’s a way. If you really want to save money you can, you just have to exercise some self-discipline.

• Alliance & Leicester
• Barclays
• Capital One
• Child Trust Fund
• First Direct
• HSBC
• Post Office
• Tesco Savings

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Tags: Accounts, Credit Card, Mortgages, Savings, Tax, Tax Payer

If you are looking for ways to improve your chances of receiving a loan, the best option is to build your collateral in order to show the lender that you have a strong financial history and are a dedicated to repaying the loan.

In banking terms, collateral is used to indicate assets that secure a debt obligation. In the case of a house mortgage, for example, the house serves as the collateral for the mortgage loan. This way, the bank is completely secured against the risk of the borrower not being able to meet the interest payments – if you cannot make the payments, the bank will seize your home.

There are two different types of collateral that banks will consider. The first type of collateral is secured lending, otherwise known as asset-based lending. The other type of collateral refers to more ‘liquid’ assets such as cash or securities, often known as ‘margin’.

Depending on the needs of your lender, having a strong amount of collateral will likely help you secure a loan more easily, and may even allow you to negotiate lower interest rates.

One of the best ways to improve your collateral is to start making smart investments. These don’t have to be large; you can start small and build yourself up over time. In fact, most people build their collateral using the loan system – they use small loans to make smart investments and eventually they have a large amount of collateral to their name.

Easy Ways to Improve Your Image without Collateral

You don’t have to buy a home to improve your image in the eyes of a lender. Here are some simple ways to improve your financial image:

• Make bill payments on-time: avoid trying to wait until the last possible minute to pay your bills. Get on-top of the bill payment situation – and pay your bill as soon as it arrives in the mail
• Avoid maxing out your credit card: interest rates and payments can become very difficult to manage and can become easily out of control. Try to make more than the minimum payments each month
• You don’t have to carry a credit card balance: one of the many myths of building collateral is that you need a credit card balance. In fact, many credit scores don’t distinguish the fact if you carry a credit card or not
• Open a checking or savings account: although not critical, many lenders will look at your credit history and look favourably on the fact that you represent stability
• Obtain a secured credit card: these cards allow you to make a deposit with a lender – and the amount usually becomes your credit limit. The issuer takes on very little risk because if you don’t pay on time, it can go into your account to cover the bill
• Use a co-signer if possible: If it is feasible to obtain a co-signer for your first few credit accounts. In these circumstances the credit rating of the co-signer will be added to your own
• Make smart financial decisions: Make sure your credit is in place before you make large purchases

Building collateral is one of the most important things you can do in order to obtain a healthy financial situation. Start today, as the process does take time. However, the rewards for having good credit will far outweigh the problems associated with having no collateral.

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Tags: Accounts, Bank, Banking, Current Account, Money Management, Mortgages, negative equity, Savings

Do you need to open a new bank account? There are many reasons why a second, third, or even fourth account can be appealing; it can help with budgeting or managing different funds. Additional bank accounts are also often obtained when you have two sets of needs, each of which are best provided by two different banks.

When opening a new bank account you will likely experience a very daunting process of forms and application requirements. This can be time consuming and frustrating if you do not know what to expect and come unprepared. This article will provide you with some general information about the application process and a few strategies on how to make it run as smooth as possible.

Identification

The first thing to ensure, when going to apply for a new bank account, is that you bring all of the necessary identification and paperwork with you. Missing just one item from a bank’s required list will stop the process cold, so it is best to call ahead and ask exactly what they need. You can expect this list to include photo identification, proof of address, and possibly information about any other accounts that you have.

You may also be required to prove that you are registered to vote at your current address, that you do not have any outstanding debts, and that you have a regular monthly income. If any of these conditions are difficult for you to prove, then you may not be able to take advantage of the banks full account services, but you should not be discouraged. Speak to a representative at the bank and let them know what your situation is, as well as the type of banking product that you are looking for. They may be able to offer you a basic account that will store your money, but will not offer cheque guarantee or debt facilities.

Joint Accounts

If you are opening a joint account with your spouse or any other partner, then both of you will have to be present at the time of application. Additionally, both of you will have to provide complete identification and documentation, just as if you were opening accounts on your own.

Online Accounts

Online accounts have similar application processes, although they are often quicker at approving your status. There are a variety of ways that online accounts verify your identification. Although some do require copies of your documents, others will accept a proof by proxy, such as your registration with another bank or a government institution.

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Tags: Accounts, Bank, Banking, Current Account, Debt, Money Management, Savings, UK Credit Cards

Take Control of Your Security

Most online banks go to extraneous measures to protect your privacy and keep your information secure. There are limits to what they can do, however, and there are ways that you can help their efforts.

• Select a complex password and keep it secret: Your password should be something that is easy for you to remember, but difficult for anyone else to guess. Birthdays, last names, and other common details of your life are not good candidates for passwords because they take little effort to figure out. Once you have selected a sufficiently complex code be sure to keep it secret. Do not share your code with anyone and if you suspect that someone know it, change it.
• Do not Get Hooked by a Phishing Expedition: Phishing is a strategy that thieves use to bait people into willingly passing over details about themselves and their accounts. Often phishing takes place in the form of an email that has been designed to look like a message from your bank. The email will ask you to confirm your security information and password, and may even direct you to a fake website that looks similar to that of your bank. By entering your information, you will be putting it directly in the hands of the thief. To keep yourself safe, do not ever respond to one of these emails without first calling your bank to confirm that they are the ones who sent it to you.
• Limit your use of public computers: banking and other sensitive online activities are best limited to your home computer. There are some technologies, such as keystroke recorders, that allow thieves to monitor what you are typing into a public keyboard. With the right motivation, this thief could then search for your passwords.

Your Computer is Your First Line of Defence

If you are banking online then it is likely that your computer is storing banking information. If accessed by the wrong people, this information could lead to identity theft. The first thing that you must do is ensure that your computer is secure and safe.

• Update your antivirus: Simply owning antivirus software is not enough. You must ensure that this software is up to date since new viruses and malware are developed daily. If your antivirus software does not update itself automatically, consider purchasing a new version that does. You should also ensure that your computer has been scanned recently and that it is clean from any viruses or malware that could already be present.
• Set up a firewall: A firewall works like a checkpoint between the internet and your computer. Essentially, it stands as a locked door, ensuring that no one obtains unauthorized admittance into your files. Without a firewall hackers from the internet can sneak in through backdoors and access your computer’s hard drive and, consequently, your banking information. If you already have a firewall, ensure that it has been set to monitor the flow of information in both directions. This means that the firewall will work to prevent unauthorized information from being sent as well. It is a scary thought, but some malware will work behind the scenes on your computer and send your files home, without your knowledge.
• Back up your information: In addition to the threat of others gaining access to your computer files, computer banking without back ups can also create a situation were information is lost when a hard drive collapses. Back up your information regularly and keep the disks separate from your computer so that one will be secure in the event of a fire or other destructive disaster.

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Tags: Accounts, Bank, Banking, Current Account, Money Management, Savings, UK Credit Cards

Every bank offers a different range of products, but at the very least, you are certain to find a set of basic products that are available through every institution.

Which Card?

Even the most basic account will usually offer a cash card. These cards are provided so that you can use cash machines and are often part of the process for banking online.

However, there are a variety of cards available. Do you need a simple cash card? Or, would a cheque guarantee card or a switch card better serve you? Most banks also offer a fourth type, which is a card that combines all three purposes in one.

How Convenient?

One of the most important factors to consider is whether the bank is convenient for you. Be sure to consider the bank’s physical location and its hours. Ask about the availability of the bank manager and even try to schedule an appointment with them to see how easy it is.

Think about what you require from the bank when you evaluate its convenience. If you are unlikely to visit the branch then its hours may not be as much of a concern; instead, evaluate the bank’s call centre and online services.

Lowest Fees?

In addition to considering the overall fees, be sure to look at them objectively from your unique perspective. Ask yourself which fees and penalties you will likely be subject too and evaluate the bank giving priority to those figures. For example, do not be put off by a bank that charges a high amount for sending out an extra statement if that is a service that you are unlikely to require.

One of the most important fee systems to look at is the bank’s overdraft policy. While some banks charge interest at a rate of 8%, others can go as high as 34%. Banks will also vary in their willingness to provide overdraft protection. For example, you may receive £500 automatically with your account or you may be subject to a lengthy application process.

Is Premium Right For You?

Many banks now offer premium accounts that cost a monthly fee, but provide several extra services not included in the basic accounts. Of course, the value of a premium account depends on how useful these extras are for you. For example, premium accounts can include cheaper borrowing rates, travel insurance, and roadside rescue. If these are services that you are likely to use, then the modest monthly fee may actually be a bargain for you.

Online or High Street?

Why would you want to bank online? For many it is simply because a good internet bank offers a wider variety of services and substantially higher interest rates. In fact, some internet banks offer up to 30 times more interest than the high street banks.

Online banking also provides the convenience of the internet. You are able to manage your accounts from the comfort of your home, at any time of the day or night.

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Tags: Accounts, Bank, Banking, Current Account, Debt, Money Management, Savings, UK Credit Cards