Thursday 10 September 2015

Thursday, September 10, 2015 Posted by Hari No comments Labels:
Posted by Hari on Thursday, September 10, 2015 with No comments | Labels:

What's the catch? Investment banks charged only £1 to “advise” on Lloyds and RBS sell-off
UK Financial Investments (UKFI) is the company established by the Treasury to hold the taxpayers’ stakes in RBS and Lloyds. It has been warned to remain “ultra-vigilant” after it was revealed some of the City’s biggest investment banks – including Goldman Sachs and UBS – are charging the government as little as a £1 fee for work that would normally cost tens of millions of pounds. Representatives of UKFI told the Treasury select committee it had paid just £15 for help and advice related to the sale of shares in Lloyds Banking Group and RBS which would normally have cost around £38m. Oliver Holbourn, head of market investments at UKFI, said some City firms had even offered to pay the government to work on its privatisations. The banks, however, eventually concluded that such arrangements could be an offence under the US foreign corrupt practices act. James Leigh-Pemberton, the boss of UKFI, said he assumed the banks worked for £1 because of the caché associated with such high-profile work. But Conservative MP, Chris Philp, warned UKFI to proceed with caution: “I’ve never encountered an outfit like Goldman Sachs or Morgan Stanley acting in a charitable manner,” he said. Steve Baker, another Conservative MP on the committee, said UKFI needed to give clear answers about where the investment banking advisers are making money, given the low fees. “I feel sure that many of my constituents would join me in regarding in the utmost astonishment that the same organisations that have been fined for repeat rapacious misconduct are now the jolly good chaps we imagine from the past and now charging just £1 for their services”. GUARDIAN

Housebuilder Barratt profits surge to £566m thanks to housing shortage and Help to Buy scheme
Britain’s largest homebuilder, Barratt Developments, has reported a 45% surge in profits, as a result of the acute mismatch between housing demand and supply, as well as the government’s help to buy scheme. Barratt said it had been “another year of excellent progress for the group” with pre-tax profits having risen to £566m, compared to £391m the previous year. Revenues were up by 19% to £3.8bn, in a year when Barratt completed the largest number of homes since 2008. The company, which is the UK’s largest housebuilder by volume, said its average selling price had risen 8.7% to £262,500, largely driven by house-price inflation.  The homebuilder has also been boosted by the greater availability of mortgage finance, as well as government support. The government’s Help to Buy scheme, which was unveiled in the 2013 budget, allows homebuyers with just 5% of a property’s price to buy a newbuild home with the help of an interest-free loan or an existing home with a government-guaranteed mortgage. The scheme has been extended to 2020. But very few first-time buyers have benefitted, partly because the scheme has helped to drive house prices out of their reach. However, the scheme has been a boon for housing companies, which have seen an upswing in profits against a backdrop of intense demand for housing and record-low interest rates. The previous chief executive of Barratt Developments, Mark Clare, cashed in £11.8m worth of shares when he stepped down in July, after nine years at the top. GUARDIAN

Britain is sitting on a new £173bn debt time bomb - and with rates set to rise it's ticking even louder
The startling rise in debt levels is due to people splashing out on new cars, TVs, conservatories and home improvements. But with a rise in interest rates imminent for the first time in more than eight years, fears are growing that many families will be left struggling with repayments. The total outstanding bill in consumer credit on the High Street is a staggering £84.4 billion — made up of the record £41.4 billion on credit cards, £6.7 billion on overdrafts and £36.3 billion on personal loans. A spokesman for MBNA, one of the largest credit card lenders, said: ‘We’re optimistic about the economy and its future. Are we fuelling debt? Well, after the credit crunch, governments asked lenders to help get people spending again.’ Of particular concern are car buyers with a history of bad debts, who are being offered loans with few financial checks for new or second-hand vehicles — a return of so-called sub-prime loans. Car financing debt now stands at £28.7bn. Analysis of debt levels shows the amount being taken out by homeowners remortgaging to pay for an extension hit £477 million between April and June — a five-year high. Bank of England governor Mark Carney has sent a letter to all fund managers asking for reassurance they are able to deal with an anticipated rush of investors making emergency cash withdrawals to cover their mortgages, should interest rates rise. DAILY MAIL

Lloyds trader, fired over Libor rigging, sues for unfair dismissal
Andrew Reed, who inputted the bank’s submissions to the yen London interbank offered rate, will have his case heard at a London employment tribunal on Sept. 16, according to the court schedule. He was fired a year ago after Lloyds was fined about 226 million pounds ($345 million) by U.S. and U.K. regulators. The case is one of a spate of unfair-dismissal lawsuits to reach London courts in recent weeks following investigations at the world’s biggest banks into the rigging of foreign-exchange markets and benchmarks related to Libor. Four former Citigroup Inc. currency traders, Carly McWilliams, Perry Stimpson, David Madaras and Robert Hoodless have all filed claims in a London employment tribunal. Former HSBC Holdings Plc foreign-exchange trader Serge Sarramegna sued the bank after he was dismissed. At least 30 traders at a number of banks have been fired, suspended or put on leave in the last two years after it emerged the world’s biggest lenders had attempted to collude to rig currency benchmarks. Banks have paid out more than $10 billion in fines over the scandal, with criminal investigations in the U.S. and the U.K. still active. BLOOMBERG

Number of households struggling with problem debt climbs 28% in three years as economic recovery fails to reach vulnerable
A new report by the TUC and Unison, ‘Britain In The Red’, reveals that half – around 1.6 million - of those with problem debt spend 40 per cent of their gross income on unsecured debt repayments. Lower-income households account for two-thirds of that number: young people, the self-employed and low-income families. Union leaders warn that the financial difficulties facing vulnerable people reveal how economic growth has failed to reduce the burden of debt repayments for many and that wage stagnation has left an increasing proportion of households having to borrow more than they can afford just to get through each month. While wages might finally be picking up for those in the private sector, anyone working in health, education, local government and our other public services still has many more years of pay restraint to survive. The unions also pointed out that the soon-to-be-introduced cuts to tax credits will push many low-income families deeper into debt. TUC general secretary Frances O’Grady said: “People raiding their piggy banks and borrowing more than they can afford is what helped drive the last financial crash”. INDEPENDENT

£18,600 immigration income threshold has created thousands of 'Skype kids'
At least 15,000 children, all with a British parent, are growing up as “Skype kids” because an immigration income threshold does not allow the non-British parent the right to live in Britain. Anne Longfield, the children’s commissioner for England, said there was a wealth of evidence indicating that children were far more likely to thrive when raised by parents in a warm, stable and loving family environment. “I am therefore very concerned that the immigration rules introduced in July 2012 actively drive families apart, and leave British children able to communicate with one parent only via Skype,” said Longfield. Most of the children – 79% in the survey – affected by the changes are themselves British citizens. The research, by the Joint Council for the Welfare of Immigrants (JCWI) and Middlesex University, shows that thousands of British families have been affected by a Home Office minimum income threshold of £18,600 a year for sponsoring a foreign spouse to live in the UK, which was introduced in 2012. The research points out that the £18,600 minimum income threshold would not be met by almost half of the adult UK population, were they to be in the same position. A Home Office spokeswoman said those who wished to make a life in the UK with their family, work hard and make a contribution were welcomed, “But family life must not be established here at the taxpayer’s expense”. GUARDIAN

Charities back 'strengthened' fundraising code to stop vulnerable donors being exploited
17 charity bosses said they would support the creation of a new regulator which could investigate and use "strong penalties" for any charity breaking the rules. No-one should be "pressured into giving", the charity leaders wrote. They are also expected to back an "opt-in" system, banning donors' details being passed on without permission. The 17 chief executives represent charities including Cancer Research UK, Oxfam, the Royal British Legion and Save the Children. The Information Commissioner's Office is currently looking into claims that an 87-year-old man's personal details were sold or passed on by charities up to 200 times. Dementia sufferer Samuel Rae lost £35,000 after his information ended up with scammers. Information was passed to charities after he filled in a survey but omitted to tick a box stating that he did not want his personal details shared. It is the latest in a series of cases where charities have allegedly contacted vulnerable people. BBC NEWS


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