Governor of the Bank of England, Mervyn King, , in a landmark speech made on Tuesday night, reiterated his calls for the UK banks to be split into two separate entities, one handling utility and the other financing risk capital ventures. He emphasized his argument by stating that “a delusion” to think tougher regulation would prevent a future financial crisis that would be no less severe than the current one. His remarks strengthened the certainty that the economic crisis has prompted the UK government as well as countries across the world to re-evaluate their financial regulatory frameworks

King’s call for a break-up of banks comes from an ever-increasing theory that the UK banks had considered themselves to big to fail , and has made the Governor less than popular with the key figures in the move for domestic and international banking reform.

The Treasury and the Financial Services Authority have consistently rejected the theory of splitting up the banks whilst internationally, the proposals of the Group of 20 have been principally aimed at increasing both the quantity and quality of the banks’ working capital to ensure that the future of banking would be more stable.

In his speech, King raised a few eyebrows by his use of Churchill a style oratory, the speech was delivered at a meeting held in Edinburgh, intended to highlight and discuss the burden banks had placed on taxpayers. The Governor used the theme of one Churchill’s most famous speeches to deliver the message “Never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform.”

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Tags: Bank, Bank of England, Banking, British Economy, British Pound, capital venture, Credit Crunch, Currency, Economics, Economy, Financial News, Financial Services Authority, financing risk, Mervyn King, Money, Money Management, Recession, Taxpayers, Treasury, UK Banks, UK Economy, UK government, UK Recession

Chancellor Alistair Darling has recommended a pay freeze for 40,000 senior public servants in 2010/11. Darling has written to salary review bodies calling on them to freeze the pay of top level civil servants, such as judges, senior NHS managers as well as General Practitioners. It is expected that public spending priorities and cuts will be announced in this autumn’s pre-Budget report, as the chancellor revealed he would soon be calling ministers into the Treasury for “very robust” discussions.

If the Financial Services Authority (FSA) get their way UK banks and investment firms would have to increase their holdings of cash and government bonds by £110 billion as well as reducing their reliance on short-term funding by as much as 20 per cent in the first year. This series of tough liquidity standards put forward by the FSA on Monday shows a radical firming up of liquidity requirements than in previous years. In total banks and investment firms could be required to increase their holdings of easily redeemable assets by a total of £370 billion as well as reducing their reliance on short-term funding by 80 per cent from current levels

Chief executive of the HSBC bank, Michael Geoghegan, is less convinced than many others that the global financial recovery is well under way. He has in fact taken the standpoint that a second downturn is bound to happen in the coming months. In preparation, Geoghegan plans to freeze any expansion plans for the bank till the situation becomes clearer. Speaking after HSBC announced a shake-up of its governance 10 days ago, Mr. Geoghegan is now responsible for strategic issues that previously lay with the bank’s chairman, Stephen Green.

Taking a more conservative stance on salaries are the Lloyds Banking Group, who are reportedly in the early stages of reviewing pay packages for its top executives. Lloyds, who got themselves into hot water when they rescued struggling lender HBOS last year, pledged to review remuneration after the government backed takeover. The bank did issue a statement over the weekend that no decisions had yet been made on salaries and the bank was more focused on a number of other and more pressing issues, particularly whether they will enter the government’s asset protection scheme.

According to market analysts, many British retailers are facing a worse Christmas than last year, when 15 major chains failed, rising unemployment and fragile consumer confidence would result in many companies, many of them struggling to survive until the holiday season entering formal insolvency proceedings within a year. Market information shows that 125 retail companies encountered critical trading and cash problems in September, up 37 percent from August. Outdoor goods retailer Blacks Leisure showed how difficult it is to survive in the UK high street, by announcing plans to shut down 89 of their loss making stores as well as cutting jobs as part of an emergency recovery plan.

Bucking the retail trend is the department store chain TJ Hughes, who has based their success in specialising in discounted branded goods. The company has reported a 30 percent increase in underlying profits in the year to the end of January. Hughes, who operates in 50 locations across England, Scotland and Wales, announced pre-tax earnings that rose to £9.2 million. Since June 2008, TJ Hughes has undergone aggressive expansion and a 51st store is expected to open soon

The FTSE 100 limped back over the 5,000 points mark, rising 35.63 points to close on 5024.33. The FTSE 250 made its usual early in the week recovery rising 82.57 points to close on 8982.53.

The pound continued to find it difficult to rise above the $1.60 mark, while falling behind against the remaining principal currencies.

• Pound/US dollar 1.597
• Pound/Euro 1.10863
• Pound/Japanese Yen 142.4066
• Pound/Swiss Franc 1.6421

A recent survey has shown the US services industry rising in September for the first time in a year. The services sector accounts for 80% of the US economy. Simultaneously, separate data released showed that the US jobs market also strengthened last month for the first time since January 2008. The data boosted US markets with the Dow Jones index and NASDAQ both rising

The Dow Jones index rose by 112.08 points at 9,599.75. The NASDAQ index rose by 20.04 points to finish the day’s trading on 2,068.15.

Hundreds of farmers have protested to European Union (EU) agriculture ministers at a meeting held in Brussels to discuss low milk prices. The urgently convened meeting came as a result weeks of protests across Europe, with farmers dumping milk stocks and withholding supplies at what they see as being sold at uneconomic prices. To the farmer’s considerable chagrin, the only decision reached at the meeting was to create a panel of experts to examine at the dairy sector. Recently prices of milk and dairy products have fallen sharply in Europe as supply exceeds demand.

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Tags: Alistair Darling, Banking, Blacks Leisure, British Economy, British Pound, British retailers, Credit Crunch, Currency, Dow Jones, Economy, European Union, farmers, Financial News, Financial Services Authority, FSA, FTSE, HBos, HSBC, Lloyds Banking Group, Michael Geoghegan, Money, Money Markets, NASDAQ, NHS, pre-Budget report, Recession, Stock Markets, Stocks and shares, TJ Hughes, UK Banks, UK Economy, UK government, UK Recession, Unemployment, US economy

The top five UK banks have unanimously accepted the bankers’ pay reforms agreed at the G20 conference held in Pittsburgh earlier in the month.

Barclays, HSBC, Lloyds, RBS, and Standard Chartered have all agreed to comply with the Financial Services Authority Rule on remuneration, due to come into force on 1 January 2010. The rule will entail the banks making enhancements to current remuneration requirements surrounding disclosure, deferral, and also the controversial bonus "clawback" regulation.

The City is looking into the revival of some of its traditional methods of doing business by setting up a regulatory committee which will vet the appointment of directors to Britain’s banks. Expected to be involved in the committee are such leading to the process, experienced bankers such as Sir Brian Pitman, the former chief executive of Lloyds, and Sir Peter Middleton, a former Barclays chairman, have been lined up by the Financial Services Authority to serve on the committee. The Financial Services Authority, who are in charge of the process, aim to have the new panel in operation by the end of the year. Instigation of the system follows a recommendation included in the recently published Walker review on banking procedures.,

Royal Bank of Scotland are expected today announce that they have completed the appointment of two non-executives to the board. They are expected to recruited Philip Scott, outgoing finance director at insurer Aviva, and Penny Hughes, who formerly was employed by Coca-Cola.

The fourth quarter began like a damp squib with the FTSE 100 losing 86.09 points to close on 5,047.89.

Meanwhile the FTSE 250 dropped below the 9,000 points barrier dropping 107.81 to 8,956.47.

The pound fell below the $1.60 mark on Thursday’s trading as well as against all the leading currencies.

• Pound/US dollar 1.5877
• Pound/Euro 1.10921
• Pound/Japanese Yen 141.9619
• Pound/Swiss Franc 1.6513

The US stock market had a bad yesterday on the release of manufacturing output data that were weaker than had been expected. Experts had predicted that the purchasing managers index, from the Institute for Supply Management would actually rise in September to 54, but they actually fell, albeit slightly to 52.6 in September after Augusts’ index was on 52.9.

The news caused the Dow Jones index to drop by 2%, its biggest day fall since 2 July, closing 203 points lower at 9,509. The NASDAQ index fared little better, falling 65 points to 2,057

There were some long faces at the three major US car manufacturers who suffered a decrease in sales in September, a hangover from the winding up of the "cash for clunkers" scrappage scheme.

General Motors reported a drop in sales of 45% from the corresponding month of last year. Chrysler did equally badly, while Ford had a drop in sales of just 5% from September 2008.

The United States’ largest cable TV provider, Comcast, is reportedly in talks to acquire a majority stake-holding NBC Universal, the television and film company. NBC Universal owners of the NBC television network, Universal Pictures, cable networks CNBC as well as the Universal Studios theme parks are currently owned by General Electric (GE) and France’s Vivendi. GE has an 80 percent holding and Vivendi the rest. Reliable sources have it that under the new arrangement Comcast will buy 51% of the company, leaving GE with the remaining 49%.

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Tags: Aviva, Bank, Banking, Barclays, British Economy, British Pound, Chrysler, CNBC, Coca-Cola, Comcast, Currency, Dow Jones, Economics, Economy, Financial News, Financial Services Authority, Ford, FTSE, G20, General Motors, HSBC, Institute for Supply Management, Lloyds, Money, Money Markets, NASDAQ, NBC Universal, Penny Hughes, Peter Middleton, RBS, Recession, Sir Brian Pitman, Standard Chartered, Stock Markets, Stocks and shares, UK Banks, UK Economy, UK government, UK Recession, Universal Studios, US stock market

The Financial Services Authority (FSI) recently announced that they will be taking a much closer look in the future at firms who provide financial services firms, In particular, they will be reviewing the methods used by these companies to market their payment protection insurance policies, (PPI) The FSI initiative is designed to curb continuing hard-sell tactics and miss-selling of the product.

PPI is designed to cover repayments on products bought on long term credit products, in the event that if the borrower is unable to do as a result of reduced earnings caused by accident, redundancy, sickness or to project the family in the event that the debtor passes away. Setting a precedent was the record £7 million pound imposed in October 2008 by the FSA on the Alliance & Leicester building society, for reported serious failings in procedures during recorded telephone conversations discussing PPI to prospective clients. .

The FSA are about to issue a series guidelines,- due to take effect by the end of the year that are designed to ensure that PPI sales will be handled properly and complaints will be at a minimum.

In addition, the FSA are liable to request that certain companies reassess 185,000 previously rejected customer complaints. The reason given is that the FSA complain that there are an excessively high number of complaints of rejected complaints by firms offering PPI. The average percentage level of rejected claims is around 60% with certain companies showing a reject rate of almost 100%.

Most PPI service providers, among them Lloyds Banking Group, the country’s biggest provider of PPI accounting for 40 percent of PPI contracts sold directly to borrowers have agreed to screen all such sales since July 2007.

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Tags: Bank, Banking, British Economy, Economy, Financial News, Financial Services Authority, FSI, Lloyds Banking Group, Money, Money Management, Mortgage, payment protection insurance policies, PPI, Recession, UK Economy, UK Recession

With the news that the UK Co-operative society is looking to increase exposure for their bank division, Coop banks are liable to become an increasingly common site on the UK high street within the coming years. Stage one to test the extent of in-house banking with coop stores, will be the opening of two pilot schemes situated in strategic points in the UK. As well as opening in-house outlets in a similar marketing mould as Tesco. Banking analysts see the Coops move into high street bank on a national scale as a logical extension of their acquisition of Britannia building society in early 2009. A move which increased their asset base considerably, while diluting their management costs. .

There have been Cooperative banks on UK high streets for almost forty years, although their numbers have always been limited. In the wake of the recent economic downturn, and with hopes of a return to economic normality around the corner, the stage is set for the appearance of new and clean faces in the high street. The Cooperative Bank many not be new face but it is certainly shiningly clean

UK politicians have made it no secret that they are keen to see medium sized players make greater inroads into retail banking to improve consumer choice with the Financial Services Authority (FSA) reportedly swamped with applications for banking licences

The Co-op Banking group is bound to be among the front runners, with a track record that shows prudent lending policies, and boasting an average equity to property value of close to 50 percent.

The stage is set for some interesting times in high street banking in the UK high street, with some surprising new faces entering the banking world. The Coop has been around for a long time, yet there new banking policy looks like cleaning up the high street.

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Tags: Bank, Banking, Britannia building society, British Economy, Coop Bank, Cooperative, Current Account, Economy, Employment, Financial News, Financial Services Authority, Money, Money Management, Savings, Tesco, UK Co-operative, UK Credit Cards, UK Economy, UK government, UK Recession

The Financial Services Authority has banned Royal Bank of Scotland from making repayments on bonds worth £920 million pounds next month. They are doing so as a result of concerns that the partly nationalised bank is too reliant on billions of pounds of taxpayer’s money to remain afloat. RBS is in advanced talks with the European Commission (EC) to decide the nature of fiscal restraints to be imposed on the bank in return for its government funding. Among other measures, the EC is likely to force the bank to cut its share in the small-business banking market.

The British Chambers of Commerce (BCC) has predicted that the UK economy should bounce back next year. They did hasten to add that the risk of the economy relapsing still remains high. The BCC announced in a recent statement that they expect the economy to grow 1.1% in 2010, almost double their previous forecast of 0.6% made as recently as June. According the report, unemployment will peak at around 3 million, fewer than the 3.2 million forecast previously.

At a weekend meeting of the G20 in London, finance ministers representing the world’s most powerful economies have reached agreement on a series of measures designed to regulate the global banking system.

The ministers are interested in implementing a system that will reward long-term performance rather than short-term risk-taking among the global banking community, without reaching agreement on specific limits on the amounts individual bankers get paid.

Britain, the US and Canada were reported to be against the proposal, which is due for further discussion at the summit of G20 leaders in Pittsburgh, Pennsylvania later this month.

The UK economy should bounce back next year but the risk of a relapse remains high, a business group has warned.

The British Chambers of Commerce expects the economy to grow 1.1% in 2010, almost double its previous forecast of 0.6% made in June.

It says unemployment will peak at just above 3 million, fewer than the 3.2 million forecast previously.

However, it said that sustaining the recovery would prove challenging given the UK’s debt burden.

Vodafone and O2 have both tabled bids of about £3.5 billion to buy T-Mobile UK from owner Deutsche Telecom, with a successful bid from either firm liable to make them the largest mobile phone operator in the UK.

High street retail chain, Wilkinsons have succeeded in filling a large part of the vacuum left when Woolworths closed their doors towards the end of 2008. The company reported annual sales up by 6.2 percent to 1.4 billion pounds in the year to the end of January, a record for the family-owned group. Wilkinsons have announced their plans for expansion, in which they will open 15 new outlets by 2009, as they drive to reach a target of at least 500 outlets by 2012.

The U.K.’s largest recruitment company Hays Plc retreated 3.7 percent to 96.1 pence on the announcement that their full-year profit had declined by 44 percent due to reduced hiring in the recession.

The U.K. developer of software for William Hill Plc’s Web-gambling site Playtech Ltd announced a 38% increase on pre-tax profits. Their shares rose in value by 13.25 pence to 346 on the news.

Shares in Premier Farnell Plc the U.K. electronic and industrial products distributor dropped 7.2 percent to 151.3 pence after they reported earnings and turnover and profit that fell behind analysts’ estimates.

The FTSE 100 index ended a further 54.95 points higher at 4,851.70. The index has now risen by 38 percent from its six-year low in early March, on hopes that the worst of the global recession is behind us in the UK.

Meanwhile the FTSE 250 rose again on Friday, up 141.05 points to close on 8,745.85.

The pound rose against the dollar, yen and Swiss franc, yet continued to falter against the Euro.

• Pound/US dollar 1.6398
• Pound/Euro 1.1449
• Pound/Japanese Yen 152.6881
• Pound/Swiss Franc 1.7361

The number of US workers claiming unemployment benefits has fallen last week but continued to be a cause for concern, with fears that unemployment figures will remain high even after the US moves out of recession.

New jobless claims fell by 4,000 to 570,000; however the number of workers continuing to claim unemployment benefits rose by 92,000 to 6.23 million.

Wall Street on Friday saw the markets continuing to rise, with the Dow Jones Industrial Average up 99.66 points to close on 9441.27 while the NASDAQ Composite index hurdled the 2,000 mark yet again, closing for the weekend on 2018.78.

The European Central Bank (ECB) remain cautious on the state of economy in the 16 nation Eurozone, forecasting that growth would be very gradual and is capable of being thrown into reverse again.

Evidence of the ECB’s continued wariness, was the news that they had left their main interest rate unchanged for the fourth consecutive month at 1 per cent, which is a record low.

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Tags: Bank, Banking, British Chambers of Commerce, British Economy, British Pound, Credit Crunch, Currency, Dow Jones, Economy, Employment, European Central Bank, European Commission, Financial News, Financial Services Authority, FSA, FTSE, Global Credit Crisis, Money Markets, NASDAQ, O2, Playtech Ltd, Premier Farnell Plc, RBS, Recession, Royal Bank of Scotland, Stock Markets, Stocks and shares, T-Mobile, UK Banks, UK Economy, UK government, UK Recession, Unemployment, Vodafone, Wall Street, Wilkinsons, William Hill, Woolworths

Prime Minister Gordon Brown has given his tacit approval without officially endorsing Lord Turner, chairman of the Financial Services Authority recent statements that the banking sector was "bloated and needs to be cut down to size." Brown, in a recent interview, did however pledge to take tough action to clamp down on excessive remuneration for bankers.

The prime minister explained that his policy for the future would be that remuneration and especially bonuses should be based on long term profits success not short-term speculative gains. Also those banks should have the framework installed that would allow them to recover bankers’ bonuses if performance and profits suffered in later years. He also suggested that regulators should be able to impose higher capital requirements on financial institutions.

U.K. Chancellor of the Exchequer Alistair Darling has strongly suggested to his counterparts in European governments to grant the International Monetary Fund (IMF) an increase in the funding previously pledged in order to provide increased support for the countries that have been hardest hit by the global financial crisis.

Four days before Darling is due to host a meeting in London for the Group of 20 financial ministers, Darling urged the 27 European Union nations to provide the IMF with $75 billion on top of the $100 billion previously committed.

Workers employed by the UK branch of Fujitsu Ltd. have decided to take strike action to oppose proposals made by the company to place a final-salary pension plan in mothballs as well as freeze pay, according to Unite trade union official representing the employees.

A spokesperson for Unite revealed that 87 percent of their members at the company voted for strike action, while 96 percent were also prepared to consider a less severe form of industrial action.

Fujitsu, Japan’s largest computer-services provider, employing 12,500 people in the UK, announced plans to cut as many as 1,200 jobs in the U.K. because of “lower than anticipated revenues

There was no action on the FTSE yesterday, due to the August bank holiday

Sterling made a minor recovery against the dollar, but continued to struggle against the Euro

• Pound/US dollar 1.628
• Pound/Euro 1.1351
• Pound/Japanese Yen 151.6273
• Pound/Swiss Franc 1.7232

On Wall Street, markets struggled largely due to uncertainty in the Chinese stock market, that fell by 5% on the day.. The Dow Jones Industrial Average fell 47.92 to close on 9496.28 while the NASDAQ Composite index dropped 19.71 points to close on 2,009.06

Entertainment giant Walt Disney announced that that they are to take over Marvel Entertainment and with it some of 5,000 Marvel characters, including Spider-Man and the X-Men.

In a shares and cash deal valued at £2.5 billion, Marvel shareholders will get $30 per share in cash plus 0.745 Disney shares for every Marvel share owned.

The boards of Disney and Marvel have both approved the deal, which now needs the backing of Marvel shareholders and competition authorities.

The annual rate of inflation for August in the Eurozone registered negative for the third consecutive month.

Prices in the 16-nation bloc have fallen by 0.2% in the past year, according to statistic issued by Eurostat , exacerbated by a record 0.7% fall in July.

Inflation in the eurozone has been dragged down by lower energy and food prices and by falling demand from both companies and households.

The Indian economy has grown by a remarkable 6.1% in the second three months of 2009, in comparison with the same period of last year, results that were marginally higher than predicted.

Although growth has slowed from last year, India’s economy is still expanding faster than most other countries.

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Tags: Alistair Darling, Banking, British Economy, British Pound, Dow Jones, Economy, Eurozone, Financial News, Financial Services Authority, FTSE, Fujitsu, Gordon Brown, IMF, International Monetary Fund, Lord Turner, Marvel Entertainment, Money Markets, NASDAQ, Recession, Spider-Man, UK government, Wall Street, Walt Disney, X-Men

Chairman of the Financial Services Authority (FSA) Lord Turner revealed during a recent interview that in order to prevent excessive bonus payments he consider imposing a tax on banks.

The FSA chairman also stated that the financial services sector had "grown beyond a socially reasonable size". Lord Turner did hasten to add however that it was not the role of the FSA to set out any new government policy and that taxation was a matter for the Treasury.

In the past, the FSA have been the subject of criticism regarding their regulations on bonuses. Lord Turner is apparently concerned about the return to “business as usual” syndrome in the banking sector, suggesting that new taxes may be necessary to curb excessive profits and pay in the financial sector.

Meanwhile, newly recruited bankers at the Royal Bank of Scotland are liable to be feeling the pinch when pension time comes around. They are set to become the guinea pigs of a pension’s cutbacks scheme proposed by the U.K. bank. The scheme will be based on a lower-bonus, higher-base-salary recruitment environment in the City of London.

According to a recent poll, UK business leaders are more upbeat about the prospects of economic recovery than at any time since the recession began,

the survey of leading businessmen found that 38% see signs of recovery in their sector, up from 33% last month and the highest figure since the "green shoots" index was launched.

The bad news for hard pressed PM Gordon Brown was that the survey found only 18% of business leaders are confident in his ability, while 19% were impressed by Chancellor Alistair Darling’s efforts to date. Tory leader David Cameron got the thumbs up from 53% of the participants with shadow chancellor George Osborne polling 41%.

A group of distressed debt investors, which bought debt claims against the Yorkshire power station, have exercised an option to take control of one of Britain’s biggest coal-fired plants, at Eggborough, one of EDF Energy’s power stations which could eventually be sold on for up to £1 billion.

Japanese computer maker Fujitsu Ltd. said Wednesday it plans to axe 1,200 jobs in its British IT services unit because of lower than expected revenues.

Fujitsu, who employs around 12,500 workers in the UK, explained that the cuts were necessary to ensure the company remained competitive during the current downturn.

Following the 2005 restructuring of British Energy, creditors have the right to take ownership of the plant in March 2010 with the option only being exercisable till the end of this month.

Shares in the world’s largest advertising company WPP Plc fell 1.4 percent, to 512.5 pence after the company reported a 48 percent drop in first-half profit to £108.4 million blaming the pounds rise against the dollar and increased finance costs.

The FTSE 100 moved lower on Thursday following a weaker opening on Wall Street, falling 21.23 points to finish the day on 4,869.35, while the FTSE 250 continued to reverse, dropping a further 81.88 points to close on 8,701.33

As short-term UK government bond yields fell to record lows, Sterling dropped to a six-week low against the dollar and a 10-week low against the Euro.

• Pound/US dollar 1.6239
• Pound/Euro 1.1351
• Pound/Japanese Yen 151.8974
• Pound/Swiss Franc 1.7173

On Wall Street, markets continued to drift, with the Dow Jones Industrial Average closing up 23.5 points while the NASDAQ lost 3.55 points to close on 2,020.88.

Angela Merkel, German chancellor, has thrown her considerable (political) weight behind calls from French president Nicolas Sarkozy for tougher international curbs on bankers’ bonuses, in anticipation of next month’s G20 summit to be held in Pittsburgh, USA.

Ms Merkel, who said large bonuses encouraged excessive risk-taking, will meet Mr. Sarkozy to discuss the French plans, which Mr. Sarkozy presented to bankers on Tuesday. Plans that include deferring at least half of a year’s bonus and paying it over the three subsequent years, subject to performance criteria

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Tags: Alistair Darling, Banking, British Economy, British Energy, Currency, David Cameron, Economy, Employment, Financial News, Financial Services Authority, FSA, FTSE, Fujitsu, George Osborne, Gordon Brown, Lord Turner, Money Markets, NASDAQ, Nicolas Sarkozy, Recession, Royal Bank of Scotland, Stock Markets, UK Banks, UK business, UK Economy, UK Recession, Wall Street

It now seems likely that the Financial Services Authority, the Government appointed body appointed to control the UK banking system seem to have become a little weak at the knees, with the announcement that their remuneration code, due to be released today, does not fully focus on requiring bank boards and management to link remuneration and especially bonuses more closely to risk

Their reaction appears to come after the CEO of the largely state owned RBOS Stephen Hester announced that if leading bank executives are not offered bonuses and salaries in keeping with their market value, they will leave the industry.

According to FSA chief executive Hector Sants, the FSA’s new guidelines are designed to ensure that boards prevent management from introducing compensation policies that, in effect, subordinate the interests of capital providers to those of employees.

But the final version will step back from the March draft’s specific recommendations that two-thirds of each bonus should be deferred and that individual rewards take into account the overall performance of a firm rather than just that of the individual or division, people familiar with the code say.

No more free holidays to Lichtenstein and a visit to the safety deposit box seem likely to happen for UK tax dodgers as the HM Revenue & Customs agree a deal geared to recover lost tax income. Up to £3 billion of taxable income is believed to have been secreted away by more than 5,000 British investors to be held in the vaults in this tiny land –locked European principality. With the exchange of information now guaranteed, these naughty investors will be offered the chance to volunteer details of their deposits in return for penalties, which will arrive at no more than the 10% of tax evaded on the money deposited over the past 10 years. As part of the reciprocal agreement the three Lichtenstein investors holding money in UK bank accounts will be presented with a free "kiss me quickly" hat by Chancellor Alistair Darling.

Europe’s largest defence contractor BAE Systems announced that they have been awarded five-year contract from the US army that will be worth around £1.32 billion. The contract is to supply sensors designed to allow all weather and night sight operation. All in all, yesterday was a big day for BAE Systems, with the announcement that their portable laser target locator had also been selected by the US Army for a separate five-year rolling contract that will be worth up to £250 million, while in the UK BAE Systems secured a 10-year partnership deal worth £369.5 million to support navy and air force torpedoes.

Despite the global tightening of defence budgets, BAE has continued to take a growing share of the market, with sales increasing by 28 per cent to £9.9 billion for the year.

An overwhelming increasing demand to generate energy from waste has encouraged the New Earth Group Company to float a rights issue intended to raise £15 million to fund expansion.

The New Earth Group plans to use the funds to develop new power plants to recover energy from waste that will operate alongside its existing waste treatment and composting business.

The company management’s conviction that there will be a demand for energy generation from waste comes as government regulations force businesses to find alternatives to landfill, and as the quest to cut greenhouse gas emissions intensifies.

The first stage looks likely to be a large new waste treatment facility based in Avonmouth, scheduled to begin operation pen in 2011.

Hanson, the heavy building materials company have announced that they will be putting their building products companies up for sale as the malaise haunting the UK construction industry continues. Hanson have been the dominant operators in the UK’s brick and cinderblock market for many years and consequently have been hard hit by the downturn in building starts.

A spokesman for Hanson UK announced that the company hoped to complete most of the sell-offs by the end of 2009.

The FTSE 100 continues to decrease in value, yesterday down 50.86 points to close on 4,671.34.

Meanwhile the FTSE 250 was losing ground after a run of gains. On Tuesday it dropped like a stone, down 118.35 on 8,302.66 at the end of the day.

Sterling fell for a fourth-consecutive session as data continued to point to inflationary trends.

• Pound/US dollar 1.6506
• Pound/Euro 1.1652
• Pound/Japanese Yen 158.0089
• Pound/Swiss Franc 1.7834

In the US, reports from Department of Labour show that in the second quarter of 2009 productivity rose at its fastest annual pace six 2003. The figures show that the average workers’ hourly output rose at an annual rate of 6.4% in the period from April to June. However, the figure for the first quarter of 2009 was revised downwards, to an increase of 0.3% from an initial estimate of 1.6% growth, while labour costs fell 5.8% on an annual basis during the same period.

Financial stocks led the way for the worst day in Wall Street since early July, amid some signs that the financial crisis is still around. Suffering particularly were the US Banks d after the Congressional Oversight Panel hinted that the US Treasury had not done enough to relieve them of toxic assets.

On Tuesday’s trading, the Dow Jones index continued to lose some of its value down a considerable 96.5 points, to 9241.45. The NASDAQ also continued to drop well below the 2,000 mark, down 22.51 points to close on 1969.73.

Crude oil prices have fallen again, on OPEC’s announcement that they anticipate demand to decline further than predicted next year, with renewed forecasts of 27.97 million barrels per day for 2010.

On the news, US light crude dropped $1.15 a barrel to $69.45, while London Brent finished $1.04 lower at $72.46.

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Tags: Alastair Darling, Alistair Darling, BAE Systems, Banking, British Economy, Credit Crunch, Currency, Dow Jones, Economy, Employment, Financial News, Financial Services Authority, FSA, FTSE, Hanson UK, HM Revenue & Customs, Money Markets, New Earth Group, RBOS, Stephen Hester, UK Bank Accounts, UK Banks, UK government, US Banks, US Treasury, Wall Street

Last week’s announcement of Lloyds Banking Group’s intentions mount a rights issue planned to raise up to £20 billion in a rights issue has caused no uncertain amount to Chancellor Alasdair Darling and his team as well as those private sector investors who have seen fit to buy some of the bank’s shares. .

In an understandable nut possibly ill timed attempt to reduce the reliance on the UK government, Lloyds’ management began to test the water on the concept that the terms of its participation in the government’s asset protection scheme (APS) might be open to re-negotiation after their second-quarter results were much more positive than analysts anticipated.

However it does appear that the bank will not be met with too many friendly faces when they set about convincing Darling to take a second look at the basic terms of the scheme after several months of highly complex negotiations have been put to bed. ..

Chancellor Darling’s long held standpoint on the APS as the international model for cleaning up toxic assets is believed to be untouchable. In addition, government officials are reported to be of the opinion that raising Lloyd’s ability to raise sufficient capital is questionable, and any attempts to sidestep the scheme would be not only be unwise, infeasible or sufficient to satisfy regulators.

The financial implications of Lloyds opting out of the APS could be fundamental, with the bank having to rise between £30 billion and £40 billion in capital to satisfy the regulator’s stress test. In addition, the UK government could be entitled to demand compensation for carrying £575 billion of the banks liabilities since March of this year.

The Financial Services Authority reported yesterday that the number of new financial companies seeking UK regulatory authorisation have risen by ten per cent during the second quarter, making for the first increase since early 2008.

Independent financial advisers, including those who offer life assurance and other retail ¬products were reported to comprise the single largest group.

Next in line were financial advisory services, private equity shops and corporate finance boutiques. Cottage financial service industries that have been established by ex-city financiers who fled the mainstream banks during the recent turmoil in the financial sector.

The number of firms cancelling their authorisation with the FSA also slowed by 18 per cent in the three months to June, according to another recent study.

On the FTSE yesterday, shares in the BT Group were very much in demand after positive analyst reports.

The reports stated that BT’s broadband business looked set to benefit from Tiscali’s exit from the UK and Vodafone’s failure to capture a share of the market. Shares in BT rose 2 per cent to 134 pence.

Banks led the fallers amid the growing debate about whether Lloyds Banking Group should pursue their controversial rights issue scheme.

Lloyds fell 4 per cent to 98 pence, while shares in Royal Bank of Scotland dropped 3.6 per cent to 45 pence and Barclays also lost 1.8 per cent to close on 358½ pence,

Enterprise Inns slid 1.9 per cent to 172 pence after two of the company’s senior directors took advantage of their share’s rebound.

Ted Tuppen, group chief executive, raised more than £500,000 after selling 300,000 shares at 167 pence each, while CEO Simon Townsend cashed in 67,500 shares for 173 pence. Enterprise share values have jumped by more than three times since December, when both directors increased their shareholdings.

Shares in IT services group Logica were up 1.3 per cent to 113 pence after claims that the company was a potential bid target for BAE Systems.

BAE, 1.5 per cent higher at 325½ pence have been known to be actively on the lookout for acquisitions in an attempt to expand their security operations currently focused on the defence sector, making Logica’s public service operations a credible target..

There was unexplainably strong volume in instrument maker Spectris, whose shares closed 2 per cent higher at 576 pence.

The FTSE 100 drifted from its high of the year, losing 9.36 points, or 0.2 per cent, to 4,722.2.

Meanwhile the FTSE 250 closed just half a point down on 8,421.46

The pound stepped backwards against the other major currencies.

• Pound/US dollar 1.6483
• Pound/Euro 1.1654
• Pound/Japanese Yen 159.6125
• Pound/Swiss Franc 1.7853

The news that the US banks stand to collect a record $38.5 billion in overdraft fees this year has left a bitter taste in the mouths of many. Even more so when considering that the bulk of the revenue will come out of the pockets of already financially stretched consumers, struggling to keep their heads above water during the current financial downturn.

Overdraft fees have almost doubled during the last decade, and seem inappropriate when considering the political pressure applied to banks to ease the burden on after being bailed out by taxpayers.

The Federal Reserve is working on rules on overdraft fees, and rules on customer charges could be a priority of the Obama administration’s proposed Consumer Protection Agency if approved by Congress.

US stocks drifted from last week’s highs on Monday, with investors looking to bank profits even as several experts gave a relatively bullish analysis for equities.

However sellers far outnumbered buyers on Monday’s trading

On trading Monday, the Dow Jones index eroded a little down 32.12 points, to close on 9,337.95. The NASDAQ also dropped below the 2,000 mark again, down 8.01 points to close at 1992.24.

Latest reports prior to President Obama’s visit are that Mexico has moved into its deepest recession of modern times.

Figures to be announced on gross domestic product in the second quarter is expected to report a 10.4 per cent fall, following a first-quarter drop of 8.2 per cent, according to the finance ministry.

The International Monetary Fund predicts that, for the full year, the economy will fall by 7.3 per cent, the worst performance in Latin America.

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Tags: Alasdair Darling, BAE Systems, Bank, Banking, British Economy, British Pound, BT Group, Credit Crunch, Currency, Dow Jones, Economics, Economy, Federal Reserve, Financial News, Financial Services Authority, FTSE, International Monetary Fund, Lloyds, Lloyds Banking Group, Logica, Money, Money Markets, NASDAQ, Obama administration, Recession, Royal Bank of Scotland, Simon Townsend, Stocks and shares, Ted Tuppen, Tiscali, UK Banks, UK government, UK Recession, US Banks, Vodafone, Whitehall