Comment & Analysis

Saturday October 31, 04:49 AM
Glance-PRESS DIGEST - British business - Oct 31

The Times HOUSEHOLD NAMES MAY HAVE TO GO AS PRICE RBS MUST PAY FOR USING TOXIC-ASSET PLAN Royal Bank of Scotland (LSE: RBS.L - news) may be forced to sell major assets and overseas operations as part of an agreement with the government for its use of the Asset Protection Scheme. The European Commission is also pushing for the bank to sell its insurance division, which includes Churchill, Green Flag and Direct Line. However, the good news for RBS is that it may be allowed to exit the APS early and avoid paying the 16 billion pound insurance premium upfront. Instead it will pay an agreed pay-as-you-go premium dependent on the size of toxic assets to be insured. THRESHERS GROUP'S COLLAPSE MAY MEAN 3,000 JOB LOSSES KPMG said the collapse of First Quench, the owner of Threshers, Wine Rack and The Local, and the closure of 600 outlets, will lead to the loss of 3,000 jobs. KPMG said it had received requests from potential buyers of the stores, with industry insiders identifying potential bidders as Costcutter and EFB Retail. Richard Fleming at KPMG said First Quench had very little debt, but was losing an estimated 20 million pounds a year. He said two-thirds of the stores were profitable but the company was the victim of over-expansion and supermarket competition. ROW BETWEEN BA AND CABIN CREW ESCALATES AS UNION SEEKS COURT ORDER TO PREVENT FORCED CHANGES Unite, the union, said it would seek an injunction to prevent British Airways (LSE: BAY.L - news) imposing working practice changes on 14,000 cabin crew from November (Frankfurt: A0Z24E - news) 16. The airline wants to reduce the number of cabin crew on the majority of long-haul flights as part of proposals to cut the cabin crew budget by 140 million pounds a year. Other proposals include a two-year pay freeze, a cap on allowances for long-haul travel, 1,000 voluntary redundancies and the movement of 3,000 workers to part-time positions. The union fears that once the changes are made, there will be little scope for future negotiation. The Daily Telegraph LUV IS IN THE AIR AT WPP AFTER IT CUTS 11,000 JOBS Advertising group WPP (LSE: WPP.L - news) announced it expects to make further job cuts, after having already cut 11,232 jobs in the first nine months of this year. The group reported an 8.7 percent fall in third quarter revenues on Friday and chief executive Martin Sorrell said there was 'further provision for severance in Q4'. Referring to the current economic downturn, Sorrell said he would declare victory 'when we get like-for-like growth'. Sorrell also added to the various descriptions of the current economic downturn, characterising the recovery as LUV shaped -- an L shaped recovery for Western Europe, U shaped for North America and V shaped for the BRICS and Next 11. SHIRE CHIEF HAILS DRUG FIGHTBACK Shire (LSE: GB00B0KQX869.L - news) reported a 14 percent fall in third quarter revenue on Friday, due in part to the patent protection on its hyperactivity disorder drug Adderall XR reaching an end. Although revenues fell to 667 million dollars, sales excluding Adderall rose 20 percent to 532 million dollars. Chief executive Angus Russell said he was 'immensely pleased' with the way the group had reacted to generic competition to Adderall. The group returned to the black in the third quarter, with a pre-tax profit of 89.6 million dollars. THE AGE OF FREE BANKING DRAWS TO A CLOSE New figures reveal almost half of high street banks' current accounts involve a fee for their use. According to personal finance research company Moneyfacts, in the past three years alone the number of current accounts that have an element of fee-charging attached has risen by 3.7 million. 'We appear to be at a tipping point where it is likely that some sort of charge for a current account is seen as normal,' says PricewaterhouseCoopers' Richard Kibble. 'The number of people who are paying fees of some form has risen quite significantly over the past decade.' The Independent LLOYDS POISED TO AGREE 2.5 BILLION POUND APS BREAK FEE Lloyds Banking Group (LSE: LLOY.L - news) is set to announce it will pay 2.5 billion pounds to avoid entering the government's Asset Protection Scheme. The bank may make the announcement as early as next week. An insider said that while talks with Alistair Darling were advanced, the Chancellor of the Exchequer had yet to agree to the deal. There was no official comment on the matter from either Lloyds or the Treasury. Before Darling agrees to the deal, he needs to be convinced a rights issue will help shore up Lloyds' balance sheet. HALLOWEEN GOES DOWN A TREAT AT JOHN LEWIS John Lewis reported an increase in total sales of 9.1 percent for the week to October 24, its sixth consecutive week of growth. The department store's new format home store opened in Poole on October 22, and in its first three days of trading achieved sales more than 30 percent higher than forecast. Waitrose's weekly sales were also up 15.1 percent, driven by a 31 percent increase in demand for pumpkins for Halloween. UK PIANO MAKER MOVES PRODUCTION TO JAPAN UK Piano manufacturer Kemble is to close its British factory after Yamaha Corporation (Frankfurt: 855314 - news) , which merged with the family firm in 1986, decided to move production to its factories in Indonesia and Japan. Workers at the British factory were give notice of redundancy in April of this year. The Guardian CREDIT CARD FIRM WINDS UP AND TELLS BORROWERS TO CLEAR DEBTS Sub-prime credit card operator Monument has closed down and told borrowers to repay their debts. At its peak, Monument had one million card-holders, most of whom had poor credit histories. The firm's director of card services, Mike Smith, said that it had not issued new cards for some time, and blamed the closure on 'the banking industry's approach to the credit crunch'. Monument's closure means that some of Britain's poorest households may now find it very difficult to access credit. COSMENS TURN ON NATIONAL EXPRESS BOARD IN MERGER ROW Spain's Cosmen family, which owns 18 percent of National Express and runs its Spanish operations, has urged the bus and rail operator to seek financial and legal advice because of 'serious concerns' over its future. The family issued a statement to the London Stock Exchange (LSE: LSE.L - news) accusing National Express (LSE: NEX.L - news) of having 'an absence of a well defined strategy' to address its issues. The Cosmens were part of a consortium which made a 765 million pound rescue takeover bid for the company, but the bid failed two weeks ago. Prepared for Reuters by Durrants Keywords: PRESS DIGEST British business Oct 31

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