PRESS DIGEST – Financial Times – June 16

Wednesday June 16 2010

Financial Times

BANK LEVY SEEN AS THREAT TO CITY JOBS RECOVERY

Bankers and recruiters are warning that a potential levy on
banks, coupled with eurozone debt, could hold back the recovery
in the City’s jobs market. According to City recruitment
specialist Morgan McKinley, new job opportunities soared 82
percent last month compared to a year ago. However, the climb
could be upset by the prospect of a bank levy and tighter
regulations in some areas of financial services, which are
creating renewed uncertainty. A survey of 422 bankers by
eFinancialCareers.com, a jobs website, showed a quarter believe
they would be forced overseas to find work or change sector if
direct taxes on banks cut the size of the profit pool.

WATCHDOG LOSES ITS FIGHT TO SET PAY

The Audit Commission has agreed to suspend its search for a
new chief executive after losing its battle with Eric Pickles,
the communities secretary, who vetoed a 240,000 pound ($371,200)
pay package. However, the commission is still spending more than
200,000 pounds a year on interim chief executive Eugene
Sullivan, who is likely to stay in his post until at least the
autumn. Pickles’ veto was part of a far-reaching clampdown by
the coalition government against high salaries for public
servants.

ERNST & YOUNG FACES UK INQUIRY OVER AUDIT OF LEHMAN BROTHERS

Ernst & Young is being investigated by the Accountancy and
Actuarial Disciplinary Board, which regulates auditing in
Britain, about whether the group properly audited Lehman
Brothers’ accounts in the months leading up to the investment
bank’s collapse. The probe will look into E&Y’s accounting
treatment of controversial transactions known as Repo 105s,
which were regularly used by Lehman in its quarter-end balance
sheets. E&Y confirmed it will “cooperate fully” with the
investigation.

JUPITER TO FLOAT NEAR BOTTOM OF PRICE RANGE

On Wednesday, Jupiter Asset Management is set to reveal that
shares in its London listing have been sold near the bottom of
the price range. The announcement will be a further indication
of the lacklustre appetite of the UK market for flotations.
According to people close to the situation, the fund manager’s
advisers have set a final price for the new shares at 165 pence.
The figure is close to the company’s 150 pence lower limit, far
from the company’s hopes of 210 pence each. Jupiter’s
moderately-priced return to the market follows several large
London listings that have struggled as market turbulence rattled
investor confidence.

JADWA STEPS UP UK INVESTMENT

Jadwa Investment, which is part-owned by the Saudi royal
family and European property investor CIT, has acquired the
King’s Reach Tower on London’s south bank for 60 million pounds.
The company plans to invest a further 500 million pounds in UK’s
real estate market. King’s Reach Tower is Jadwa-CIT’s fourth
joint acquisition. Fadi Tabbara, Jadwa’s investment officer,
said: “The pound exchange rate is low, which makes investment in
the UK inviting, and the legal structure is simple and
transparent.”

EASYJET WARNS OVER BRAND CASE INTERPRETATION

Easyjet (EZJ.L: ), the budget airline, told a High Court on
Tuesday that its brand licence agreement with founder Sir
Stelios Haji-Ioannou should not be interpreted as simply
“putting a passenger’s bottom on a seat in the aircraft”. The
carrier is being sued by Sir Stelios, who accuses the group of
overstepping limits set in 2000 over what it can make from
ancillary services. Sir Stelios is due to go into the witness
box on Wednesday. Easyjet’s shares increased 5.4 pence to reach
431.5 pence.

AUDITORS PRESSED TO BROADEN ROLE

According to John Griffith-Jones, co-head of accountancy
firm KPMG Europe, auditors must expand their role beyond a
narrow focus on financial statements. On Wednesday,
Griffith-Jones is due to warn that a system not fit for modern
purposes could be created by the current “fort by fort” fixing
of the regulatory “Maginot line”, which failed during the
crisis. He will urge auditors to work more closely with relevant
parts of the system, including credit ratings agencies and bank
supervisors.

HIGH-COST LENDERS ESCAPE PRICE CAPS

The Office of Fair Trading, the competition watchdog, has
said it will not impose price caps on expensive forms of
lending. The regulator’s decision follows a year-long
investigation into the market, which found that such an action
risked cutting off the supply of credit for low earners.
According to the OFT, formal price controls could lead to less
choice for those who cannot access other forms of lending, such
as credit cards or bank loans.

SPICE TURNS UP HEAT ON CINVEN’S 316 MILLION POUND BID

Spice (SPI.L: ) has rejected what the utility services company
described as an “opportunistic” 316 million pound takeover
approach from Cinven, one of the largest buyout houses in
Europe. Cinven disclosed on Tuesday that it had proposed an
offer of 56 pence a share, valuing Spice’s equity at 197 million
pounds. Spice, which has seen its share price fall by two-thirds
in six months, had a net debt of 119 million pounds at the end
of April. Cinven’s indicative offer represented a 51.4 percent
premium to its target’s closing share price the day before the
approach was made. The shares have since rallied to 51 pence,
making Cinven’s offer a premium of less than ten percent. “It
would take at least 75 pence in our view to get serious talks
under way,” said Arden Partners analyst Geoff Allum.

CUSTOMERS RETURN TO TED BAKER

Ted Baker (TBK.L: ), the fashion retailer, has seen its
revenue boost by 18 percent following renewed demand for luxury
goods. In the 19 weeks to June 12, retail sales were up 20.4
percent against the same period last year. Shop space jumped
more than 10 percent, suggesting a like-for-like sales rise of
roughly ten per cent. Wholesale sales increased 8.2 percent,
with gross margins in line with expectations, causing some
analysts to upgrade full-year forecasts. Ted Baker’s shares rose
four pence to 510 pence.

Stock Market Research

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PRESS DIGEST – Financial Times – June 16