There is a lot of speculation about that the Treasury has set the wheels in motion to reduce their stake in the Royal Bank of Scotland and Lloyds Banking Group, both of which are partially state-owned. The staged de-privitisation will be effected through the creation of "convertible gilts", or government bonds. These bonds could then be exchanged for Lloyds or RBS shares once certain price targets are achieved. This way the government might be able to slowly reduce the taxpayers’ stake in the banks, hopefully over the next five years.

On another vein, the Treasury has warned banks that investors could be given the powers to veto top salaries, even before they are paid. Current rules that allow shareholders to vote on remuneration reports detailing pay only for the previous year, meaning that anyone that votes against bonuses in particular or large and unjustified ones in particular are for the protocol only. The revised proposals were made in Budget documents issued by the Treasury, with a more detailed and final proposal unlikely to come before the election.

Telecoms Company Vodafone are reported to be in discussions with their US counterpart Verizon Communications over the future of Verizon Wireless, which is a US mobile phone joint venture between the two companies. Apparently the discussions are based around a full merger of the two groups, which could take the form of an all-stock combination with a value of more than £120 billion.

US consumer electronics retailer Best Buy have outline details of their expansion plans for the UK. Best Buy intends to open four stores across the UK in the spring. A fifth will open in south London in the autumn.

Ofcom has ruled that UK mobile phone companies will have to cut their charges by at least a billion pounds a year. The ruling comes after a review of the cost of connecting mobile phone calls from one network to another, with the move is expected to aid smaller operators as well as consumers, to cut losses through having to pay extra to connect customers to rival networks.

Toyota announced before the weekend that they are temporarily halting production at its factories in France and the UK. The stoppage, expected to last for a total of nine days, come as a result of falling sales that the company have partly attributed to its recent recall woes.

Toyota will put production on hold at its two factories in Britain for five working days sometime in May. In early June, Toyota also plans to halt one of its two assembly lines at its Burnaston plant for a further five working days. The stoppages come after Toyota recalled 8.5 million vehicles globally over braking problems in its Prius hybrid, sticky gas pedals and pedals that can get stuck under floor mats. Toyota’s sales in the 27-nation European Union sank 20 percent in February from a year earlier, even though overall EU car sales rose 3 percent.

News has been released that the Teeside Cast Products steelmaking site has been approached by a potential buyer, with the purchase offer being the first confirmed approach since Corus CSL announced last year it was to end production. The offer has come from Rutland Partners, a London-based mid-market firm specialises in turning round underperforming companies.

Operator of the National Lottery, Camelot have announced that they are to be sold to the Ontario Teachers’ Pension Plan (OTPP) for close to £400 million pounds. A representative of OTPP has stated that managed to defeat private equity group CVC’s bid, largely because as a pension fund they promises long-term stability for the lottery. The bid from OTPP is being underwritten by the Royal Bank of Canada.

The Times and Sunday Times newspapers will start charging to access their websites in June, owner News International (NI) has announced.

Users will be required to pay £1 for a single day’s access and £2 for a week’s subscription. The move looks likely to open a new front in the printed media/internet front and will be watched closely by the industry.

At long last the sale of the Independent and Independent on Sunday newspapers to Alexander Lebedev, owner of the London Evening Standard has been completed.

The Russian billionaire purchased the loss-making paper from Irish company Independent News & Media (INM) for £1, the cost of one daily edition of the newspaper.

The deal between the two parties has been under discussion for many months.

American businessman Stan Kroenke increased his stake in the Arsenal football club. His latest shares acquisition places him within 10 shares of the threshold that forces him to make a takeover bid of the English soccer power.

Kroenke now owns 29.9 percent after acquiring seven more shares ay at a cost of $12,650 each, the Premier League club announced before the weekend. If the Denver based Kroenke passes the 30 percent mark, he will be obliged to make an offer for the remaining shares in Arsenal Holdings.

Kroenke, who first bought a 9.99 percent stake in Arsenal in 2007

The Euro has strengthened against the dollar and the pound after eurozone leaders agreed a financial aid package to help debt-laden Greece.

The leaders agreed to provide €22 billion (£20 billion) should Greece run into difficulties borrowing money to service its high debt levels.

On Friday the euro rose by more than one cent to $1.3393 before falling back slightly. The pound also declined against the euro, paring a weekly advance, as a report showed U.K. business investment had the biggest annual drop on record in the fourth quarter, fueling concern the recovery has yet to take hold.

The pound headed for a second weekly loss versus the dollar.

The pound continues to be a problematic issue in the Forex markets. It closed on Friday y on $1.4877 while the Euro fell to €1.1113.

The FTSE 100 index dropped before close on Friday, finishing down 24.63 points to 5,703.02.

The White House announced on Friday that they will require lenders to lower the mortgage payments of some unemployed workers and encourage lenders to eliminate some principal debt of homeowners who owe more than their home is worth.

President Barack Obama’s plan comes after increasing political pressure to change his strategy for helping struggling homeowners and stem the tide of rising foreclosures. This is the second major housing initiative announced in as many months.

Delinquencies on U.S. mortgages rose to nearly 14 percent in late 2009, led by a sharp increase in seriously overdue home loans held by the most credit-worthy borrowers.

Obama’s $75 billion homeowner assistance program announced last year has been widely criticized as ineffective by both Democrats and Republicans on Capitol Hill.

The Dow Jones rose a little to complete a week of impressive gains closing on 10850.36. The NASDAQ dropped 2 points to 2395.41.

US economic growth has been revised down to an annualised rate of 5.6% for the fourth quarter of 2009 from 5.9%, in the US Commerce Department’s third estimate of fourth-quarter GDP.

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Tags: Alexander Lebedev, Bank, Banking, Best Buy, British Economy, Camelot, Corus, Dow Jones, Economics, Economy, Financial News, FTSE, Independent News & Media, Lloyds, Lloyds Banking Group, London Evening Standard, Money, NASDAQ, National Lottery, News International, Ofcom, RBS, Royal Bank of Canada, Royal Bank of Scotland, Rutland Partners, Stan Kroenke, Stocks and shares, Sunday Times, the Times, Toyota, Treasury, UK Banks, UK Economy, UK government, UK Recession, Verizon Communications, Verizon Wireless, Vodafone

The Treasury was "justified" in using taxpayers’ money to bail out banks to protect the wider financial system, according to an official report.

The National Audit Office (NAO) review said the cost to the UK public so far totalled £850 billion.

"It is difficult to imagine the scale of the consequences for the economy and society if major banks had been allowed to collapse," the NAO said.

It said that the final cost to the taxpayer will not be known for "years".

During the financial crisis, the UK government nationalized Northern Rock and took stakes in the Royal Bank of Scotland (RBS) and Lloyds Banking Group in return for bailing them out.

RBS also put £282 billion of its assets into a government insurance scheme for toxic assets.

Despite the fact that Royal Bank of Scotland has signaled that it will succumb to pressure to pay its high-flying investment bankers substantially less than rival institutions amid an escalating row with the government, it is feared that Alistair Darling may still be heading for a potentially disastrous showdown with the bank over their plans to pay £1.5 billion in bonuses to its staff.

RBS which is 70 per cent owned by taxpayers, is hoping to avoid the high-stakes showdown after it was forced to give the Treasury the final say over the total size of its bonus pool as a condition of signing up to a scheme that will insure £240 billion in toxic assets, with hints coming from the bank that pay-outs in its investment banking division would be “at the low, low end of the scale”. They also hastened to send out a veiled threat, that reduced pensions and bonuses could meant them losing experienced staff to competitors. The bank is confident of forging an agreement with the government after it emerged that RBS directors had sought legal advice about whether they would have to resign if the Treasury vetoed pay deals agreed by the board, Darling, who to be granted the right to veto bonus payments at the bank, is left with a dilemma of waving through potentially huge bonus pay-outs at RBS just months before a general election or plunging the bank, which has already received unprecedented support from taxpayers despite widespread fury over bonus levels, into further crisis.

The value of UK commercial real estate debt in default or in breach of key lending agreements more than doubled to about £30 billion in the first six months of the year, adding pressure on the banking sector, a survey has revealed. Banks have also extended or refinanced an extra £16 billion in the first-half of the year, rolling over maturing debt that could not be paid back by cash-strapped borrowers or restructuring loans when breaches were threatened owing to the steep fall in values. This strategy has been dubbed “extend and pretend”, with some banks even refusing to test loan covenants, given a reluctance to crystallize losses by selling the property asset or the debt attached to it. De Montfort University, which compiles the most comprehensive study of the sector, announced that banks are beginning to deal with the massive £224 billion of outstanding debt to the real estate sector.

Lord Mandelson, business secretary, on Friday issued a blunt warning to Kraft and hedge fund investors that they will face “huge opposition” from the British government if a takeover of Cadbury is used as a means to make “a fast buck” The comments represent a government intervention that is unprecedented in recent years, extending the business minister’s policy of “industrial activism” into a live bidding situation. Meanwhile a strategy appears to be emerging to fend off a hostile takeover from Kraft. The Cadbury strategy emphasizes the value of its brand image and its emerging markets footprint as well as highlighting the progress made on during their restructuring program

Kingfisher, the owner of B&Q DIY stores, has cut net debt by 90 per cent since the start of 2008 and on Thursday confirmed its debt burden at the end of the financial year will be lighter than previously forecast. Net debt fell to £200 million in the third quarter and Kingfisher forecasts net debt of about £300 million at its year end in January, an improvement on previous guidance, which was for £800 million.

The pound continued to lose value strongly against the dollar and the Euro before the weekend.

• Pound/US dollar 1.471
• Pound/Euro 1.1086

U.K. stocks climbed, with the FTSE 100 Index extending this week’s advance, after a government report showed the U.S. rate of unemployment declined in November.

The FTSE 100 climbed 9.36 points to 5,322.36, bringing this week’s gain to 1.5 percent. The measure has rebounded 52 percent from its low on March 3 as governments committed about $12 trillion and central banks cut interest rates to record lows to end the global recession and revive credit markets.

US labor Department figures show that unemployment rate fell in November to 10% from 10.2% in October, meaning that 11,000 jobs went over the month, a figure far lower than expected by most analysts.

On Friday’s trading, the Dow Jones Industrial Average gained 0.2 per cent to 10,388.22 and the NASDAQ was up 1 per cent to 2,194.35.

The price of gold price has taken a surprise slump after surprisingly positive US unemployment data sent the US dollar higher, making gold a less attractive investment.

Gold fell more than $65, or 5%, to $1,161.4 an ounce, down from a record high of $1,226.56 in early trading.

After the release of figures showing that the US jobless rate was on the decrease, the dollar gained 2% on the Japanese yen and 1.3% on the euro.

As the dollar weakened due to low interest rates in the US, gold has hit a number of record highs in recent weeks

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Tags: Alistair Darling, B&Q DIY, Bank, Banking, British Economy, Cadbury, Currency, De Montfort University, Dow Jones, Economics, Economy, Employment, Financial News, FTSE, Global Credit Crisis, Gold, Kingfisher, Kraft, Lloyds Banking Group, Lord Mandelson, Money, Money Markets, NAO, NASDAQ, National Audit Office, Northern Rock, Recession, Retail, Royal Bank of Scotland, Stock Markets, Stocks and shares, taxpayer, Treasury, UK Banks, UK Economy, UK government, UK Recession, US labor Department

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

One of the most painful aspects of the long drawn out economic slump is the effects that it has had on UK tax revenues. In June, Britain reported its highest budget deficit for a month for sixteen years, a massive 13 billion pounds, which was an increase of almost 50% from the same month in 2008.

To support these shortfalls, the Treasury has no option but to borrow, and this they have been doing, and in some style. In the first quarter of the UK financial year, which started in April, public sector borrowing reached £41.2 billion, the highest quarterly figure since records began in 1946.

China Investment Corp, (CIC) China’s sovereign wealth fund has acquired 1.1 per cent of the Diageo drinks group for £221million, which makes the fund the UK-based groups’ ninth-largest investor. Shares in Diageo were up 2.4 per cent to 906p after the announcement

CIC manages $200 billion of the country’s $2,132bn held in foreign exchange reserves also holds a 0.5 per cent stake in Tesco, Britain’s largest retailer.

Domino’s Pizza reported a double-digit increase in sales and profits for the six months to the end of June and raised its interim dividend by almost a third.

Continuing to be one of the few consumer-facing companies to defy the recession, the Domino’s Pizza chain, the UK’s largest pizza delivery service with more than 500 outlets, said it expected to beat full-year profit forecasts thanks to unrelenting demand for their takeaways. Domino’s Pizza U.K. & Ireland advanced 7.2 percent to 235.25 pence.

On the FTSE U.K. pub owner and brewer of Old Speckled Hen ale Greene King Plc, added 3.1 percent to close on 432.75 pence.

Food retailers were also among the rising stars shares in Wm Morrison Supermarkets up 8.2 per cent to 274pence after the announcement that they expected full-year profit to exceed current guidance as it reported strong volume growth over the first half.

Sainsbury also added 3.1 per cent to 326p, while Tesco climbed 1.4 per cent to 375p.

The retail sector showed mixed results with fashion retailer Next despite raising their profit forecast for the first half, retained a cautious outlook. On the news shares in Next fell by 1.6 per cent to 1618 pence.

Shares in the Home Retail Group, owners of Argos and Homebase, gained 1.3 per cent to close on 293 pence

London equity markets overcame an early bout of profit taking on Tuesday to extend their winning run to seven sessions.

The benchmark FTSE 100 was up 38 points to 4,481.17, while the FTSE 250 gained 75.95 points to 7,742.58.

The pound lost ground on Tuesday as concerns grew over the health of the UK government’s finances.

• Pound/US dollar 1.6422
• Pound/Euro 1.1578
• Pound/Japanese Yen 153.8127
• Pound/Swiss Franc 1.7553

Testifying before the House Financial Committee in his twice-yearly report on monetary policy, chairman of the US Federal Reserve, Ben Bernanke announced that US interest rates are likely to remain "exceptionally low" for some time. He went on to explain that low interest rates and a stimulus plan had buoyed the economy.

US stocks lost some of its Monday’s impressive gains on Tuesday, after rising during the morning, but then falling back as Ben Bernanke, addressed Congress about the future of US Federal Reserve policy.

On Wall Street , the Dow Jones continued its steady rise, rising 45.05 points to 8893.2 while the NASDAQ rose 3.55 points to 1912.84.

Sharply falling tax revenues are also beginning to have their effects across the US. Of the 50 states45 reported budget shortfalls and overall tax collections dropped by 11.7 per cent, the largest fall on record.

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Tags: Argos, Bank, Banking, Ben Bernanke, Britain, British Economy, British Pound, China Investment Corp, Credit Crunch, Diageo, Domino's Pizza, Dow Jones, Economics, Economy, Financial News, FTSE, Global Credit Crisis, Greene King Plc, Homebase, House Financial Committee, Money, Money Management, Money Markets, Morrison Supermarkets, NASDAQ, Old Speckled Hen, Recession, Sainsbury, Tax, tax revenue, Tesco, Treasury, US Federal Reserve, Wall Street

In an unprecedented move, the Department of Health and the Treasury have invited companies in the private sector to submit tenders to take over and run a large National Health Service (NHS) hospital. The contract will be all inclusive, taking in the accident and emergency as well as the maternity wards. The Hinchingbrooke Hospital, in Huntingdonshire comes under the auspices of the East of England strategic health authority who anticipate bids from the NHS as well as the private sector.

Investors are rushing to capitalise on the hedge funds industry’s resurgence resulting in a huge increase in investment in the second quarter. It is reported that more than $142.5 billion has been allocated to hedge funds over the past three months, making for one of the industry’s most significant inflows of client money to date, according to a recent report.

In transport and tourism, signs are afoot of long hard winter ahead, Ryanair, Europe’s largest low-cost people carrier, have announced that they will be cutting their services at their largest bases London Stansted and Dublin. Ryanair are making the cuts as it attempts to cut back on routes that are making losses as well as to benefit from reduced airport charges.

Michael O’Leary, the group’s chief executive, has blamed the cuts on planned increases in air passenger taxes in the UK and Ireland. “Sadly, UK traffic and tourism continue to collapse while Ryanair continues to grow traffic rapidly in those countries that welcome tourists instead of taxing them.” Announced O’Leary.

Despite he recent bout of warm weather and the thirst that it brings, the pace of pub closures in Britain continues to grow. Recent statistics show that closures have risen by a third during the first six months of 2009. In terms of figures, that means that more than 50 UK pubs are pulling their last pint every week.

Local family owned pubs appear to be the most vulnerable , closing their doors at a rate of 40 a week. There are now only 53,466 pubs left trading in the UK compared with 58,600 three years ago.

On the FTSE on Wednesday, tobacco stocks were leading the way, with Imperial Tobacco gaining 2.6 per cent to £16.74.

Europe’s largest drug maker GlaxoSmithKline announced their eagerly anticipated half-year results which turned out better than expected, pushing their share value marginally up by 0.3 per cent to 1163.

Commodities fell after a strong run of the last few days, largely due to profit taking.

In the banking sector, profit warnings from US banking groups Wells Fargo and Morgan Stanley disappointed investors, contributing to losses on the major US exchanges.

Barclays shares fell by 3 per cent to 300p as investors began to shy from its aggressive push towards financial independence, while the other banks also weakened. Lloyds Banking Group lost 3.1 per cent to 71.2p, while Royal Bank of Scotland dipped 0.1 per cent to 39.8p.

Overall shares in London recovered from early losses on Wednesday. The late recovery was attributed to the surprise announcement that US house prices has risen during May.

The FTSE 100 rose 13.13 points to 4,494.30, while the FTSE 250 continued its steady increase, gaining 42.23 points to 7,784.81.

Early falls in sterling following a press report that two UK banks require additional funding were arrested with the announcement that the Bank of England had decided to maintain its asset purchase programme.

• Pound/US dollar 1.6422
• Pound/Euro 1.1578
• Pound/Japanese Yen 154.0592
• Pound/Swiss Franc 1.7528

On Wall Street, there was a flat atmosphere on the announcement that Morgan Stanley had made a loss of $159m (£97m) for the second quarter, a significant setback when compared to the $698m profit the Wall Street bank made in the same period of 2008. Not only was it the third consecutive loss for Morgan Stanley, but it was also much worse than analysts had feared.

Morgan Stanley attributed the loss to the heavy cost of repaying government funding and comes after a number of other major US banks reported significant rises in profits.

The poor results at Morgan Stanley caused a knock on effect , with shares in Bank of America, JP Morgan Chase and Morgan Stanley on the decline.

On Wall Street , the Dow Jones dropped by 34.68 points to 8881.26 while the NASDAQ limped forward a mere 10.18 point to close on 1926.28..

Public sector workers in California were out in protest at the billions of dollars of spending cuts that form the basis of the state’s controversial budget deal.

The cuts, including $6billion in education spending, were reached as part of an agreement to reduce California’s record $26.3billion ,( £16bn) deficit.

Arnold Schwarzenegger, the state’s governor has been forced to write promissory notes to their creditors after running out of money. Public employees have had to take unpaid leave and the state’s credit rating has been slashed to near junk status, giving it the worst rating in the US.

Ahead of the latest US weekly inventories oil prices fell while d gold consolidated below the $950 an ounce level

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Tags: Bank, Banking, Barclays, British Economy, Commodities, Credit Crunch, Currency, Department of Health, Economics, Economy, Financial News, FTSE, GlaxoSmithKline, Hinchingbrooke Hospital, Lloyds, Money, Money Markets, Morgan Stanley, NHS, pub closures, Recession, Ryanair, Stock Markets, Stocks and shares, transport and tourism, Treasury, UK Banks, UK hospitals, UK Recession, Wells Fargo