It was a day for financial contemplation on Tuesday as the first anniversary of Lehman Brothers filing for Chapter 11 bankruptcy protection in the early hours of 15 September 2008 was marked, not quite by a minute’s silence but by many hours of contemplation of who the World’s financial systems almost went into meltdown.

Following the collapse of Lehman Brothers, once the fourth-largest US investment bank, the knock on effect caused meant that governments around the world had to pump trillions into their financial systems. The previously unimagined bank bail-outs, central bank actions and huge stimulus plans to save their biggest banks followed. Moves that are estimated to have cost every citizen of the developed world around $10,000 each..

On the day, Paul Myners, the minister who job it is to oversee London’s financial district, announced that he remains “very confident” that the UK’s multibillion-pound bailout of its troubled lenders will result in a profit for the country.

Last year the U.K. orchestrated a rescue package for banks including Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc. In the April annual budget the government submitted to Parliament it estimated that the bailout may cost taxpayers £50 billion

When asked to give his impressions when investments in the UK banking system would result in profit for members of the U.K. public, Myners replied by assessing that it will take “much less” time than a decade, and when it came it would add up to a “a nice little nest egg for the British taxpayer.”

Speaking of nest eggs or was it Easter eggs, Cadbury’s chief executive Todd Stitzer is due to be in the hot seat today, when he faces a group of the company’s’ top level investors since Kraft’s £10.2 billion unsolicited takeover proposal was rejected by the company. Stitzer as well as Andrew Bonfield, Cadbury’s chief financial officer are expected to be asked to outline the confectionery group’s long-term growth plans. The address was scheduled before Kraft approached Cadbury late last month.

UK oil and gas explorer, BG Group have announced another oil and gas discovery in a giant field off the coast of Brazil on Monday, making it the second in less than a week.

BG said further work was needed to evaluate the results before any concrete announcement can be made.

Hopes of a swift economic rebound and warned households and businesses of a “slow and protracted” recovery, according to Mervyn King, Bank of England governor.

King’s comments led to a sharp reassessment in financial markets of the likelihood and timing of any rise in interest rates.

The pound has taken a beating in the last few days, falling against all the major currencies for the last three months.

• Pound/US dollar 1.6477
• Pound/Euro 1.122
• Pound/Japanese Yen 148.8052
• Pound/Swiss Franc 1.7034

The FTSE 100 continued its upswing rising 60.31 points to finish on 5.102.44 while the FTSE 250 rose on Tuesday by 87.24 points to 9251.84/

The US recession is probably over but the economy will remain weak for some time due to unemployment, Federal Reserve chairman Ben Bernanke has said.

But he added that the economy would still feel "very weak" to Americans concerned about job security.

A year after Lehman Brothers collapsed, a think tank has warned the lessons of the crisis have not been learned.

The Institute for Public Policy Research (IPPR) says the rapid return to the City’s bonus culture shows that real reform has been "very limited".

The warnings echoed a speech by US President Barack Obama, who warned of complacency in the banking sector.

Despite President Obama’s and Bernanke’s comments , stocks on Wall Street rose on the day’s trading. The Dow Jones rose by 56.61 points to 9683.41, while the NASDAQ rose by 10.86 points to 2102.64.

Japan Airlines (JAL) plans to cut 6,800 jobs, as an airline trade body upped its projected losses for the global industry this year.

Media reports have said several US and European airlines are in the running to take a stake in the loss-making carrier.

The airline had already launched a programme of job cuts, plans for fuel-efficiency and a focus on business customers.

Reports this week have suggested that Delta Airlines and American Airlines are in talks to invest in JAL to expand into Asia via code-sharing agreements.

financial

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Tags: Andrew Bonfield, Bank of England, Banking, bankruptcy, Barack Obama, Ben Bernanke, BG Group, British Economy, British Pound, Budget, Cadbury, Credit Crunch, Currency, Dow Jones, Economy, Employment, Financial News, FTSE, Gordon Brown, Institute for Public Policy Research, Investment, IPPR, JAL, Japan Airlines, Kraft, Lehman Brothers, Lloyds, Mervyn King, Money, Money Markets, NASDAQ, Paul Myners, Recession, Retail, Royal Bank of Scotland, Stitzer, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, US President

According to Royal Bank of Scotland its chief executive, Stephen Hester UK Taxpayers will lose out if the bank unable to pay bonuses, in what some could construe as a veiled threat o what could happen if the intense public scrutiny faced by the bailed-out bank is not eased and bonus hungry staff continue to seek greener pastures.

When the bank released their half year profits, an uninspiring increase in profits of £15 million was offset by “poor” net attributable loss to shareholders of £1.1 million.
Hester, whose £9 million pay deal only delivers if the shares reach 70 pence within three years, said the bank had suffered a “damaging but not yet destructive” exodus of staff. He said some guaranteed bonuses were being paid, but that they complied with the demand by the Financial Services Authority of being for no longer than 12 months.

Meanwhile Spanish bank, Santander has shown RBOS the meaning of profit, with an increase of 41 per cent in the first half of this year, totaling £790 million for their UK businesses.
Santander, who owns Abbey, Alliance & Leicester and part of Bradford & Bingley, reported revenues had also increased by 20 per cent, aided by increased cost savings, as also increased their deposits by 66 per cent, following the integration of Alliance & Leicester and Bradford & Bingley.

Santander’s gross mortgage lending through its UK brands totalled £10.8 billion in the first six months of the year, giving it a 16 per cent share of the market. António Horta-Osório, chief executive of Abbey, announced that the first half of the year has been a very good one for the bank.

Company liquidations and individual insolvencies in England and Wales soared to record levels in the second quarter as the economy was throttled by recession and the global credit crisis, data from the government’s Insolvency Service showed Friday.

There were 33,073 individual insolvencies in the second quarter on a non seasonally adjusted basis, the highest level since records began in 1960. That compared with 30,253 in the first quarter of this year

Company failures remained at a 16-year high in the second quarter, but figures on Friday revealed a marked slowdown in the rate of firms falling victim to recession. The Government’s Insolvency Service recorded a 39 percent rise in liquidations in England and Wales.

The Office of Fair Trading has approved Centrica’s bid to buy a 20 percent stake in British Energy from EDF. The £2.3 billion deal will allow Centrica a share in both electricity as well as future profits from four soon-to-be-built nuclear power plants, in addition to claiming 20 percent of British Energy’s un-contracted power output. The OFT granted the approval after concluding that a Centrica-EDF tie-up would be unlikely to create volatility in energy prices,

BAA Aviation has announced that they will be raising their annual cost cuts target by £14 million to £30 million as it continues to identify acquisition opportunities during the economic downturn. The aircraft-servicing company continued to outperform the market despite posting a two percent drop in half-year revenues to £550 million and a similar fall in pre-exceptional operating profits to £50.6 million.

Pre-tax profits declined from £46.7 million pounds to £25.8 million pounds after taking £12.6 million of exceptional charges into account, partly for restructuring. The company’s debt dropped from £554 million to 449 million, while the dividend remained static at 2.3 pence.

Health and beauty retailer Superdrug reported a pre-tax loss of £7.4 million pounds in 2008, compared with a profit of £21.6 million in 2008 For the year to December 27 2008, revenue at the AS Watson-owned group declined marginally by two percent to £1.07 billion.

Signet the jewellery group, has announced that its outlook on both sides of the Atlantic remains “uncertain” after it reported a four percent drop in total sales. The group said like-for-like sales in the UK declined by 4.2 percent in the six months to August 1, with H Samuel falling by 2.2 percent and Ernest Jones down 6.5 percent

Shares in Smith & Nephew edged 0.8 per cent higher at 474 pence on renewed speculation it might become a takeover candidate for US giant Biomet. The speculation follows a period of underperformance for S&N stock, which has slipped 14 per cent from its 2009 high as the weakening economy led patients to delay hip surgery.

Shares in sporting goods retailer, Sports Direct lost 2.5 per cent to close 89 pence on news that the Competition Commission are liable to examine its purchase of 31 stores from rival JJB Sports. If the commission arrives at the conclusion that competition was lessened by the sale. It could bar trading at five overlapping stores, or even place an embargo on the entire sale.

In the banking sector Royal Bank of Scotland fell for the first session in eight, losing 12.1 per cent to 47 pence after it provided a downbeat outlook statement with wider underlying losses than analysts had expected. Lloyds Banking Group, whose more optimistic view of 2010 led its stock to surge this week, took a minor retreat on Friday falling 2.6 per cent. However Barclays continued to remain supreme, gaining 3.1 per cent to close on 365 pence.

The UK’s FTSE 100 index finished for the weekend up 41 points, or 0.9%, at 4,731.56 – its highest close since early October. The FTSE 100 has rebounded 34 percent since March 3 Meanwhile the FTSE 250 continued to climb, rising on Friday by a further 43.91 points to close on 8,421.46

The pound continued to wobble against the other major currencies on Friday.
Pound/US dollar 1.6717
Pound/Euro 1.1761
Pound/Japanese Yen 162.2643
Pound/Swiss Franc 1.8033

Leading US and UK shares closed at their highest levels since last year after better-than-expected US jobless data boosted investor confidence. On the news, the Dow Jones index jumped 114 points, to close for the weekend at 9,370.07, its highest level since November of last year. The NASDAQ also did better, up 27.09 points to close at 2000.25

US President Barack Obama said over the weekend that the fact that the US economy lost only 247,000 jobs in July meant “the worst [of the recession] may be behind us”.
The unemployment rate fell to 9.4%, down from 9.5% in the previous month, the first drop since April 2008.

After reporting a rare loss in the first three months of the year, US financier Warren Buffett’s investment firm has reported a jump in profits.
Between April and June, Berkshire Hathaway made a profit of £2 billion up 15% on the same period a year ago, although revenues fell slightly too around £20.5 billion
In the first quarter, the company made a loss of around £1 billion.

According to official figures, German exports have risen by 7% in June, the fastest pace in nearly three years. In the latest sign of recovery in Europe’s economy, exports for the period totalled 67.4 billion Euros (£57.8 billion) which, while imports of 56.4 billion Euros, brought the country’s trade surplus to 11 billion Euros. These figures are the latest positive signal from the export-focused economy. At the same time, France reported that its trade deficit widened to 4 billion Euros in June, from 3.137 billion Euros for May.

Joining the ever increasing chorus that recovery is just around the corner were the European based Organisation for Economic Co-operation and Development,

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Tags: Abbey, Alliance and Leicester, BAA, Bank, Banking, Barack Obama, Barclays, Bradford & Bingley, Centrica, EdF, Financial News, Financial Services Authority, JJB Sports, Royal Bank of Scotland, Smith & Nephew, Superdrug, UK Banks

It was difficult to dispel the feelings of despondency in UK financial circles yesterday as more and more eyes were being cast on America and today’s inauguration ceremonies for new President Barack Obama. It was difficult to dispel the feelings of despondency in UK financial circles yesterday as more and more eyes were being cast on America and today’s inauguration ceremonies for new President Barack Obama. One help but get the feeling that if was down to Gordon Brown, President Obama should skip the ceremonies and celebrations that follow the swearing in and get right down to help solve the global financial crisis.

The feeling that there is a shortage of good ideas about in the UK to stop the banks from sliding into nationalisation was very obvious as Brown and Darling’s latest plan to kickstart the banks seemed to get off to a very flat start.

The announcement of phase two of the bank’s recovery plan did provide some short lived optimism. However hope for a rapid financial turnaround were quickly dashed as reports of share collapse for all the leading banking groups, especially RBOS began to flow in. However UK government officials hastened to chip in by saying that the plan to boost business confidence and free money for lending by the banks was for the good of the business community and not just the banks.

PM Gordon Brown was said to be losing patience with the banks and especially upset with RBOS and their irresponsible and excessive lending. The prime minister expressed his feelings in no uncertain terms, by announcing: “I am not going to stand idly by and let people go to the wall because of irresponsible mistakes of a few bankers.” City experts said that the latest financial package could cost the taxpayer hundreds of billions of pounds.

The benchmark FTSE 100 slipped 38.59 points to 4,108.47, as the pressure to sell mounted, wiping out any trace of Friday’s 25.95- point gain. The loss means that the index has closed down in eight out of the past nine sessions.

Volume on the FTSE 100 were at record highs, with 1.87 billion shares trading hands, although the index dig succeed in slipping 38,59 points to 4,108.47. There were obvious signs of pressure to sell and Friday’s 25.95 point gain was soon eaten up on a wave of selling. When the FTSE 100 index shut up shop for the day, it was eight day out nine that it had closed on a downer.

Responsible as ever was the banking section, with the unwilling star of the show being RBOS that fell by an astounding 66.57 per cent (23.1p at 11.6p) Lloyds LSB did better, down a mere 33.94 per cent (33.4p at 65p), with Barclays fairing the best of the bunch falling only 10.2 per cent (10p at 88p)..

Elsewhere, Wolseley the construction materials group lost 9.06 per cent of their share value ( 31.25p to 313.5p) The fall was brought about by press reports that the group was trying to raise as much around 500million pounds in rescue capital.

The FTSE 250 closed at 6,215.49, down 34.11 points. Leisure and entertainment groups were key contributors to the downturn. Enterprise Inns fell 21.14 per cent (9.25p to 34.5p). Reasons given were that the bank’s tight lending policy is due to have a major effect in the group’s liquidity in the short term.

Punch Taverns, also reckoned to be chronically undercapitalized, also took a tumble, down 16.67 per cent (6.5p to 32.5p).

Private sector building group Taylor Wimpey saw their share value lose 16.88 per cent (3.25p to 16p). Losses were in the light of warnings that the 2009 credit outlook for the western European construction and homebuilding companies continued to look increasingly.

Trade was muted worldwide as markets felt the effects of the lack of trading on Wall Street due to the Martin Luther King Jr. national holiday in the U.S, although futures suggested that Wall Street would trade higher after the holiday. Dow futures rose 52 points, or 0.6 percent, to 8,295 and S&P500 futures gained 6.5 points, or 0.8 percent, to 855.10.

Sterling was mixed against other major currencies early Tuesday with rates as follows:

pound/US dollar 1.39167
Pound/Euro 1.07596 EUR
Pound/Japanese Yen 125.901

Oil prices continued to languish with light sweet crude for February delivery down 36 cents at $36.15 a barrel in electronic trading on the New York Mercantile exchange by early afternoon in Singapore.

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Tags: Alastair Darling, Bank, Bank of England, Banking, Barack Obama, British Pound, Economics, Economy, Finance, Financial News, FTSE, Global Credit Crisis, Gordon Brown, Money, Money Markets, Recession, UK Banks, UK Recession