UK unemployment has risen to its highest level in 14 years despite all the indications that the recession has begun to recede

Recent reports indicate that in the second quarter through June, the number of people seeking work rose from 2.22 million to 2.44 million, an increase of 220,000 making for the highest level of unemployment since 1996. According to the Office for National Statistics, claims for jobless benefit climbed by 24,900 in July to 1.58 million.

A separate statement issued by the Bank of England predicted that unemployment will keep climbing even after the recession is recognized is over, which will hamper the pace of recovery. To soften the unemployment burden, BOE Governor Mervyn King announced that the bank will to expand its bond-buying program.

According to the International Labour Organization, overall UK unemployment rose to 7.8 percent between April and June, compared with 9.4 percent in the U.S. in July, 9.4 percent in the euro region in June and 5.4 percent in Japan.

According to the UK’s Financial Service Authority (FSA) an end to the practice of awarding non performance related bonuses appears to be in the offing at long last. From 2010, UK financial institutions will be disallowed for paying their staff guaranteed bonuses out with the current financial year. Exempt however are senior bank employees who can still have their bonuses spread over two or three years.

Lloyds TSB have announced that its Insight asset management business is to be sold off to the Bank of New York Mellon (BNY) for £235 million.

Analysts say the deal may mark the start of a phase of consolidation and disposals among mid-sized asset management groups facing increasing margin pressure.

BNY Mellon beat off several competitors in the auction for Insight, whose revenues in both 2006 and 2007 were around the £125 million. 2007.

The Lloyds group, 43.5 per cent taxpayer owned is known to be consolidating their activities, in anticipation of talks to be held with the European Commission about state aid approval. Lloyds surged 6.4 percent to 96.83 pence.

Also on the offload trail are RBS who are well into the process of selling or shutting down its businesses in two-thirds of the 54 countries where it has been operating, in the aftermath of suffering the largest trading loss incurred in British corporate history last year.

As part of their campaign, RBS have announced a £53 million deal to sell off 99.4 percent of the Banks branches in Pakistan to the privately owned Muslim Commercial Bank, the country’s biggest lender by market value. The deal is not yet official, requiring regulatory approval which, according to analysts will be a formality. Royal Bank of Scotland Group Plc, the biggest bank owned by the U.K. government, added 5.4 percent to 45.15 pence.

Independent Television Corporation (ITV) the hard pressed and profit starved UK commercial network broadcaster has received a long overdue boost in the shape of a positive recommendation of better times ahead to investors from their bankers. The news pushed their shares up towards its target price of 50 pence, for the first time in a long time.

The U.K.’s largest publicly traded residential landlord Grainger Plc were among the stars on the FTSE on Thursday as their shares shot up by 16 percent, (33.5 pence, to 243.5 ) on news that that they had succeeded in reducing their debt burden by £100 million pounds since March, through disposal of real estate.

The FTSE 100 to a new 10-month high on Thursday, making for an increase of more than a third since early March, as reports of a global economic recovery gains impetus.

The FTSE 100 continued to make up for losses earlier in the week, up 38.70 points to close on 4,755.46. Meanwhile the FTSE 250 took another giant step forward, rising 131.73 points to close on 8,483.66

Sterling has a mixed day on yesterday’s markets, ring slightly against all of the currencies, with the notable exception of the EURO.

• Pound/US dollar 1.6575
• Pound/Euro 1.1605
• Pound/Japanese Yen 158.3223
• Pound/Swiss Franc 1.7751

In the US retail sales fell in July, following two months of rises, as fears of job security appear to have put a block on consumer spending.

The figures proved to be an unpleasant surprise for analysts, who had been expecting a rise of 0.7% in overall sales last month.

On Wall Street, US stocks reached new highs for the year, with the Dow Jones index rising 36.58 points to close on 9398.19, while the NASDAQ again passed the 2,000 point mark, up 10.63 points to finish the day on 2009.35

The big news coming out of Europe was that both the French and German economies have announced an end to the year-long recessions in both of Europe’s strongest economies.

Stronger exports and consumer spending, as well as government stimulus packages, contributed to of 0.3% between April and June

However economic activity in the eurozone fell by 0.1%, a sign that the region is still in the throes of the recession.

The Volkswagen / Porsche takeover deal has finally been finalised. Volkswagen is to pay €3.3 billion for a 42% stake in Porsche’s main production division. Between the lines, the takeover was closer to a rescue for debt-laden Porsche, which will amount to a complete merger of VW and Porsche SE during 2011

Crude oil prices rose by more than $1 a barrel as commodity markets rallied after better-than expected economic data fuelled hopes that the eurozone’s recession was close to ending.

Gold rose 1 per cent to $956 a troy ounce, bolstered by dollar weakness

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Tags: Bank of England, Bank of New York, Banking, BNY Mellon, British Economy, British Pound, Crude oil, Currency, Dow Jones, Economics, Economy, Financial News, Financial Service Authority, FSA, FTSE, Gold, Grainger Plc, Independent Television Corporation, International Labour Organization, ITV, Lloyds TSB, Mervyn King, Money, Money Markets, NASDAQ, Office for National Statistics, Porsche, RBS, Recession, Royal Bank of Scotland, U.K. government, UK Banks, UK Recession, Unemployment, US retail, Volkswagen, 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

According to their recently released annual report, the Financial Services Authority (FSA) Britain’s financial regulator, whose role in life is to supervise UK banks and help them to reduce debt; themselves have shown a deficit of £23 million pounds for the year.

In order to ease cash flow problems, the FSA have had to take up £100 million-pound loan from Lloyds Banking Group Plc As the FSA raises its revenue through fees that financial-services companies must pay to be regulated, and this latest bombshell is bound to mean some moments of discomfort for them. The agency announced that they will be raising their fees for the coming financial year to cover unexpected overheads.

Pension scheme burdens at U.K. banks HSBC and Barclays are reported to have increased dramatically during the first half of the year, largely due to an ongoing collapse in corporate bond yields. The deficit in HSBC’s main U.K. pension scheme was reported to have increased almost ten-fold from $392 million at the turn of the year to $3.9 billion at June 30.

It was announced on Tuesday that Australia’s ANZ have agreed to buy part of Royal Bank of Scotland’s Asian banking assets for $550 million. ANZ will be acquiring RBS units in Taiwan, Singapore, and Indonesia as well as in Hong Kong, the Philippines and Vietnam. The sale goes through as RBS continue in their drive to curtail their international activities after posting the biggest loss in UK history last year.

It was announced that nearly 75 percent of British shoppers now choose supermarket own labels, compared to only 25 percent a year ago. According to a recent survey, the rise was attributed supermarkets increasingly expanding their own ranges as well as cost-conscious consumers arriving at the conclusion that the fact that own brand ranges despite being cheaper do not fall for the quality of the “brand” products. In response, certain some private label brands such as Heinz, and Reckitt Benckiser (recently reported resurgence in demand for their branded products

Data centre provider Telecity announced an outstanding increase of pre-tax profits of 80 per cent for the first half of 2009 as their expansion program continues.
In the six months to June 30, revenue increased 33 per cent to £82.2 million, Telecity, are halfway through a three-year new-build programme that will almost double in its capacity, measured in megawatts of power available to customers.

The company announced that internet usage continues to grow, maintaining demand among Telecity’s customers, including technology services companies such as Hewlett-Packard as well as large telecommunications groups such as BT and AT&T.

Aerospace and defence stocks were under pressure on Tuesday as the FTSE 100 slipped from its 2009 high.

Defence contractor Qinetiq dropped 4.7 per cent to 135 pence after their interim trading statement reiterated profit would be weighted towards the second half due to US defence budget delays. Also shares in Rolls-Royce were down 1.8 per cent to 412 pence after brokers announced that the decline in demand for the company’s products would continue for several years.

Standard Chartered was the sharpest faller in the insurance sector, losing 7.5 per cent to 1328 pence after launching a surprise share issue to raise £1 billion in a drive to fund growth. Legal & General saw their shares down 4.8 per cent to 62 pence after their first-half operating profit were lower than market expectations due to investment losses as well as damped speculation that it might sell its asset management arm.

Pharmaceutical giant GlaxoSmithKline closed 0.1 per cent weaker at 1147½ pence after it was once again mooted as a potential bidder for Allergan, the Californian maker of breast implants and Botox.

After the announcement that they had struck oil in Uganda, shares in Tullow Oil outperformed a weak commodity sector, rising 2.6 per cent to 1021 pence.

Dana Petroleum was down 1.3 per cent to 1402 pence after Tethys Oil, its partner in Morocco, said it had plugged an exploration well after gas levels proved non-commercial.

Weakness among the banks and insurers led the FTSE 100 to close down 0.2 per cent, fading 11.09 points to 4,671.37.

Meanwhile the FTSE 250 continued to make considerable gains, climbing a further 84.4 points to close on 8,242.51

The pound has continued to gain against the dollar, rising as high as $1.7005 before falling back to $1.6938.

Pound/US dollar 1.6938
Pound/Euro 1.1763
Pound/Japanese Yen 160.6581
Pound/Swiss Franc 1.7985

US consumer spending climbed for the second consecutive month in June, despite growing unemployment and falling personal income.
Spending rose 0.4%, ahead of analysts’ estimates against 0.1% in May with rising food and fuel costs blamed.
Personal income fell 1.3% from the previous month – which had seen one-off stimulus payments from the government.
Consumer spending makes up about 70% of economic activity in the US.

Yesterday on Wall Street, the Dow Jones continued to climb up 33.63 points to 9320.19. The NASDAQ also crept up a little, 2.7 points to close on 2011.31.

The US House of Representatives has caused no little amount of consternation through inserting an amendment into their $33 billion spending bill that disallow any government money being spent on cars other than those made by the US “Big Three”, car manufacturing concerns. The proposed amendment has created considerable alarm from US trading partners in Europe and Japan, sparking claims of protectionism. A flurry of behind-the-scenes lobbying activity to make sure that the amendment is removed when the House bill is merged with a Senate version after Congress’s summer recess is already expected.

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Tags: AT&T, Bank, British Economy, BT, Economy, Financial News, Financial Services Authority, FSA, GlaxoSmithKline, HSBC, Legal & General, RBS, Retail, Rolls-Royce, Stocks and shares, Telecity, UK Banks

Based on the assumption that a new broom will always sweep clean, and the UK financial system is certainly in need of a very large broom, comes the announcement from Shadow Chancellor” George Osborne, who is also active as financial spokesman for the Conservative Party, that the first steps that they would take if and probably when the Conservatives get into power is to dismantle Britain’s system of financial regulation that proved to be highly unsuccessful and return power to the Bank of England, which they claim would avoid a repeat of the current banking crisis.

The Financial Services Authority was established only ten years ago by Gordon Brown when he was UK Chancellor of the Exchequer to act as supervisory role in handling the affairs of the major banks, building societies as well as other major UK financial institutions. It would be a brave man indeed who would say that the FSA covered them in glory during this period, and it would be understandable that David Cameron and George Osborne would like to see the Authority dispatched to the history books.

What Cameron and Osborne would like to see is a return to overall authority of the UK financial system by the "old lady of Threadneedle Street" otherwise known as the Bank of England? Bank Governor, Mervin King is reportedly acting a little coy on the suggestion, but the general impression is that he would be as pleased as anyone to see the FSA disappear of into the sunset.

According to a brief manifesto presented by Messrs. Cameron and Osborne at a Press Conference on Sunday, in addition to the BOE, a Consumer Protection Agency would be formed with the role of handling some of the day to day problems in establishing the new framework.

The Conservatives hope that a new and more powerful central bank would be more capable of monitoring the health of the financial system, as well as setting capital requirements and leverage limits for the banks, and prevent the risk taking, profit hunting and bonus scalping policies of the past that brought the UK banking system to its knees. Only time will tell.

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Tags: Bank of England, British Economy, Chancellor of the Exchequer, Conservative party, Conservatives, Credit Crunch, Financial Services Authority, FSA, George Osborne, Gordon Brown, Money, Recession, UK Banks, UK financial, UK Recession

UK house prices fell more quickly in the first three months of this year than even in the fourth quarter of 2008, a trend that looks set to dim Great Britain’s hopes for a more rapid economic recovery. A recent survey has shown that house prices in England and Wales were 12.7 per cent lower in the first quarter than in the same period in 2008.

Under new proposals to be set by the city regulator, penalties for financial wrongdoing will be tripled with fines for insider dealing and other market abuse set at a minimum of £100,000. The FSA also proposed that a company could be fined up to 20 per cent of its income from the product or business line related to the regulatory action. Individuals could lose up to 40 per cent of their pre-tax income, including bonuses, from a job related to non-market abuse cases. The proposals are part of the FSA’s new emphasis on credible deterrence.

Shares in sports retailer JJB Sports fell by more than 25 per cent after the company confirmed that they are liable to tap shareholders for funds. The news came just weeks after JJB Sports became the first listed UK Company to be saved from administration through a Company Voluntary Agreement.
.
A spokesman for the sports and leisure wear retailer said they were reviewing a number of options, including the disposal of non-core assets, an extension of the maturity date of its working capital facility beyond September 2010, and possibly raising equity capital by way of placing an open offer”

The company has already secured £17.6 million of the £33.9 million it expects to receive from the sale of 53 leases following the disposal of its Fitness Clubs business in March to Dave Whelan Sports, owned by JJB’s founder and former owner.

Supermarket chain, Wm Morrison saw their shares rise by 1.1 per cent to 243 pence on positive news from their broker. Industry forecasts are that sales in the croup will take a downturn after the summer heat wave. However Morrison will be well placed to continue to make profit due to improved margins.

The construction sector held firm on the FTSE yesterday.
Persimmon was up a handsome 7.4 percent to 390 percent after it was announced that their reservation rates had been showing consistent improvement since mid April. As part of a knock on Effect, Barratt Developments rose 7.2 percent to 156 pence, while shares in Bovis Homes rose by 4.3 percent to 406 pence.

The Footsie closed 7.91 points down at 4,187 with trading volumes about three-quarters of the daily average, while the FTSE 250, stood its ground, closing just 1.84 points down on 7,318, 51

Sterling had an indifferent day, retreating slightly against all the leading currencies.
Pound/US dollar 1.6132
Pound/Euro 1.1589
Pound/Japanese Yen 152.9046
Pound/Swiss Franc 1.7573

In the United Sates, figures revealed that the level of people falling behind with repaying their consumer loans hit a new high in the first quarter of 2009; The American Bankers Association who compiled the report suggested that rising unemployment in the US was a key figure behind people missing payments.

The percentages of payments that were more than 30 days overdue rose to 3.23 percent making for the highest delinquency levels the 1970s.
Credit card loan payment defaults were also on the rise, rising to 4.75% in first quarter 2009 from 4.52% in the last quarter of 2008.

On Wall Street, the Dow Jones index closed down 161.27 points to 8136.6. The NASDAQ closed again down for the day, this time by 41.23 points on 1746.17, more or less reversing its impressive gains of the last few weeks.

In a definite signal that a tougher approach is on its way, new trading curbs designed to clamp down on companies and individuals who speculate in oil and the other commodity markets are being examined by US regulators. The move will place further scrutiny on the role of financial investors in the commodities markets, with certain legislative bodies openly placing speculative demand as being among the principal causes for exaggerating price rises.

According to market analysts, the reason that oil prices have risen by more than 60 per cent since the start of March, is that speculators are looking to gain from any rebound in business activity.

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Tags: American Bankers Association, British Economy, Financial News, FSA, JJB Sports, Mortgage, Mortgages, Recession, UK Banks, UK house prices

Members of the G8, representing the World’s leading nations met over the weekend. They had a nice lunch and gave themselves a major pat on the back, by announcing that the largest economies are beginning to stabilise. However they hastened to add that there are significant risks around that could put a halt to recovery from the still global recession.

All the signs are in place that the recession has begin to unwind, with stock markets were rising, interest rates remaining stable, and consumer confidence begin to pick up.
However, US Treasury chief Tim Geithner put a damper on any premature celebrations by pointing out that it was still premature to crack out the champagne.

Reports from the National Institute of Economic and Social Research suggested that the U.K. economy had shrunk by a mere 0.9 percent in the quarter up to the end of May, encouraging news when compared with the 1.5 percent pace in the three months through April. Manufacturers in May were reported to be at their most optimistic for almost a year, a further sign that the industrial slump on record may be easing, according to a survey issued by the Confederation of British Industry.

Estate agents handling the prime housing market that was hardest hit by the downturn are reporting that of all the sectors the” top end” appears to be undergoing the fastest rates of recovery, with buyers returning to desirable parts of London and popular country markets. Mortgage brokers are reporting a considerable increase in inquiries from buyers seeking financing, for central London properties. According to unconfirmed reports a number of buyers have closed deals paying up to 3,000 pounds per square foot for properties in Chelsea and Knightsbridge, prices that bear a strong resemblance to those being paid during the peak of property prices in 2007.

News is that a number of Britain’s building societies are taking a close look at the example set by West Bromwich Building Society to extricate themselves from the jaws of extinction. The society, in an effort to strengthen their capital reserves, succeeded in converting outstanding debt into new subordinated debt, doing away with any need for a Government financed bailout.

A spokesman for the Financial Services Authority (FSA) confirmed that the new structure would be open to other societies, stating that “We believe this is a strategically important step for the sector as a whole to have access to good quality capital.”

FTSE Friday U.K. stocks fell, led by mining company led by Vedanta Resources Plc who announced a $1.25 billion convertible bond issue.

British residential services provider LSL Property Services enjoyed share gains of 8.3 percent after news of a management share-buy-out headed by group chief executive officer Simon Embley. Embley personally acquired 250,000 ordinary shares at 135 pence per shares.

Despite the high pollen count, shares in hay fever vaccine specialist Allergy Therapeutics took a tumble of almost 14 percent to 15.3 pence per share on the announcement that the company is looking to raise more than 22 million pounds through placing at 12 pence per share, making for a significant discount on Thursday’s closing of price of 17.25 pence. A representative of the company said the offer presents a 28 percent premium to the average share price for the last 90 days.

Another example that good (or profit) can come from bad is the news that shares in GlaxoSmithKline Plc jumped by 5.4 percent, to 1,115.5 with the World Health Organization official announcement that the Swine Flu outbreak has been classified as the first pandemic since 1968. As if by coincidence, Glaxo announced the advanced development of a vaccine against the pandemic flu strain to be go under the exciting and imaginative title of A (H1N1). I feel better already.

As the weekend drew nearer, the, FTSE 100 fell back just a little, down by 19.92 points to finish on 4,441. 95 while the FTSE 250 fared a lot worse, down 63.08 close on 7,691.36

Sterling took a drop against the dollar and Euro after reaching some new heights on Thursday.

Pound/US dollar 1.6377
Pound/Euro 1.1732
Pound/Japanese Yen 161.0319
Pound/Swiss Franc 1.7731

On Wall Street, shares in Columbia Banking System fell after the bank-holding company said it expects a second-quarter loss per share that is larger than analysts expected. The company said it expects to increase its loan-loss provision for the quarter.

The Dow Jones rose a further 28.34 to 8799.26, while the NASDAQ surprisingly dropped but by just 3.57 points to close on 1858.8
Shares of U.S. financial stocks lost ground on Friday as markets digested BlackRock’s huge acquisition in the asset management industry, and investors awaited the latest reading of consumer sentiment.

Asian stocks mostly declined on Monday’s trading, led by commodity companies, after metals and oil prices fell. Shares in Japanese automakers climbed as the weakening yen boosted earnings prospects.

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Tags: Bank, BlackRock, British Economy, Financial News, Financial Services Authority, FSA, G8, GlaxoSmithKline Plc, LSL Property Services, UK Banks, UK Recession, Vedanta Resources Plc

Who said that there were no jobs around? There are at the Financial Services Authority who apparently have hired and trained close to 200 people to carry out a very specific and important task. The task is to monitor the financial behaviour of firms who the FSA have pinpointed as posing a systemic risk, according to submissions to the Treasury Select Committee.

The reports garnered by the monitoring staff will be known as “stress tests” and those companies who are deemed at risk of collapse will be discussed during formal yet internal meetings to be held by the authority in a regular six months basis.

The results of these tests will remain classified as the FSA believe that publishing the results of individual stress tests could be damaging to the market stability of the individual companies.

The purpose of employing these monitoring staff, according to a recent repost issued by the FSA is to provide the authority’s senior management with increased input designed to provide an oversight of the “supervisory approach” required to guide UK companies who are struggling through the current recession.

According to the FSA statement it is the agency’s intention to increase the coverage of their monitoring tem, and in order to remain on track to meet their target , the authority will have hired and trained close to 300 extra staff by the end of July 2009. The thinking behind this comprehensive and nationwide monitoring scheme is to anticipate and possibly “nip in the bud” some of the more glaring regulatory failings that have become fairly commonplace since the start of the UK financial crisis. Whilst the first and probably best known gaff was the collapse of the Northern Rock building society, which took everyone by surprise, there have been a few others that have also caught the authority unprepared.

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Tags: Bank, Banking, British Economy, Financial News, Financial Services Authority, FSA, Northern Rock, Recession

Rules designed to prevent a repeat of the financial crisis are set to be revealed by the Financial Services Authority (FSA). Lord Turner, chairman of the Authority plans to unveil a whole new sate of proposals regarding lending as well as measures to restrict banks’ ability to take excessive risks in search or dubious profits and inflated bonuses for those who are liable to cause such a situation to exist in the future.

The basis of the FSA’s proposal will be to disallow banks for passing agreed lending limits during falsely titled ” boom years”, therefore pushing borrowing levels up and at the same time prices, especially in the property market. Instead banks may be required to build up cash reserves in the event of a dramatic downturn, such as the one that the UK and indeed the entire World is experiencing at present

In addition Lord Turner is also expected to stipulate that banks be much more transparent than they were, especially in the year or two before the current credit crunch began. They will require making public clearer information on status of their accounts as well as the percentage of low equity debts that they are carrying. In simpler terms, banks will no longer be allowed to have such a free reign on their lending, and that the management is allowed to pay themselves healthy bonuses on false profits.

Lord Turner has already said his plans will amount to “a revolution”.

A shake-up in the relationship between the FSA, the Bank of England and the Treasury is also set to be proposed.

In February, Lord Turner admitted to committee appointed by the Treasury that the FSA’s failure to anticipate the banking crisis and it severity due in part to the style of regulation that tended to favour a “leave well alone” approach that rapidly unraveled.

A sign that the bonus boom is over for UK bankers, is the announcement from investment bankers, Collins Stewart that they intend to overhauling their bonus payout policy to ensure that a greater link to the overall performance of the company rather than to individual workers. Last year the Bank admitted that they had paid out substantial bonuses to employees in departments that had made profits, despite the company making a pre-tax loss of close to £23million. The broker said it would pay a proportion of bonuses in stock, and defer 20 percent of the cash award until the fourth quarter.

Sir Fred Goodwin, the former chief executive of Royal Bank of Scotland now know by many as the worst banker in UK history who led the bank to a UK record loss of £20 billion is steadfastly refusing to return his bonus and pension package for the meantime.

On the other side of the Atlantic, however public and political pressure is being applied on wobbly insurance giant AIG to demand that their workers return the bonuses they were awarded even though the company had made massive losses and had to be bailed out by public money. The signs are that this pressure is beginning to bear fruit, as at least some of the bonus hungry executives are at least offering to return half of their bonuses.

In the midst of this financial circus, is it any wonder that the man in the street is scratching his head while asking “How much would they have earned if they had made a profit?

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If you have money to spare out of your wages after paying your bills, consider saving some as a cushion for unexpected bills, like repairs to your house or car.

Savings accounts come in lots of packages. The main ones are:

· Bank and building society accounts
· National Savings and Investments
· Credit union accounts
· Individual Savings Accounts (ISAs)
· Christmas club and hamper accounts

Money in a savings account generally earns a higher rate of interest than excess cash in a current account.
Points to watch

Savings accounts are a good way of earning interest on any small cash surplus in the short term – say up to five years.

Also consider inflation may eat in to the buying power of your savings.

If you want longer-term savings, then look at alternative investments like a pension or unit trust. The best way to do this is to talk to an independent financial advisor.
Also beware of some potential pitfalls to savings accounts:

Regulation and compensation
The Financial Services Authority (FSA) regulates banks, building societies and credit unions. This means your money is safer if the account provider collapses because the FSA operates a compensation scheme for savers with less than £35,000 on deposit with any single lender.

Risks
Christmas clubs set up by companies or individuals do not pay interest on your savings and are not protected with a compensation scheme if they fail. Savers in these schemes are often limited to spending their money with the shop or hamper running the savings account.

Tax
Income tax is deducted at source on savings at 20% – but some accounts, like ISAs and National Savings are tax-free. If you pay tax at a higher rate (40%) you may have to complete a tax return and pay additional income tax.

Penalties
Some savings accounts may offer a higher rate of interest than others, but to get this rate you may have to tie up a minimum amount of cash in your investment or pay a fee if you take your money out.
Despite these points, savings accounts are low risk investments, provided you steer away from unregulated providers who can go bust and leave you with no way to claim any money back.

Opening an account
Don’t forget many savings accounts offer better rates if you deposit money by post or over the internet.
Many money comparison web sites show the current best deals to make shopping around easier.

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