31st May 2016 10:20
LONDON (Alliance News) - The following is a summary of top news stories Tuesday.
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COMPANIES
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RIT Capital Partners said more "analysis and discussion" is required to determine whether a combination with Alliance Trust is in the best interests of shareholders. The Financial Times had reported over the weekend that RIT, the FTSE 250 investment trust chaired by Jacob Rothschild, had approached Alliance Trust about a tie-up. A deal would create a company with a value by market capitalisation of more than GBP5.0 billion. Under takeover rules, RIT must announce a firm intention to make an offer for Alliance Trust by 1700 BST on June 27 or walk away. In a separate statement, Alliance Trust confirmed that RIT had approached it with an "informal proposal" for a merger.
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3i Group, the FTSE 100 private equity firm, said it agreed to invest EUR181 million in Schlemmer, which develops and produces cable protection for automotive and industrial applications, teaming up with management to buy the company from German private equity firm Hannover Finanz and the Mackprang Holding.
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Royal Bank of Scotland Group is cutting at least 450 more jobs, the Financial Times reported on Sunday, meaning the state-backed bank will have axed more than 2,600 jobs in total over the past few months. About 200 roles have been cut from the bank’s services team across the UK, according to the FT. Those roles support several divisions. A total of 43 of the positions will be moved to India. RBS also is removing about 250 roles from its retail bank support team, the report said.
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Stuart Gulliver, the chief executive of HSBC Holdings, is the European bank chief executive who investors would most like to be replaced, the Financial Times reported, citing a poll by Autonomous Research. According to the report, the poll asked 74 institutional investors to each name three banks in Europe "most in need of a change in CEO".
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HSBC Finance Corp on Friday filed a document that showed it is set to enjoy an after-tax gain of approximately USD168 million, net of transaction costs, following a mortgage loan purchase agreement with DLJ Mortgage Capital Inc. HSBC Finance Corp, a US consumer finance company which is part of banking giant HSBC Holdings, said it completed the sale of a pool of real estate secured receivables under the agreement. The receivables sold had an unpaid principal balance of USD3.3 billion and an aggregate carrying value of USD2.9 billion at the time of sale. HSBC Finance Corp received USD3.2 billion in cash. The gain will be recorded in the second quarter of 2016.
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Dignity said it signed a conditional sale and purchase agreement to acquire five crematoria currently operated by Funeral Services, which trades as Co-op Funeralcare, for GBP43 million in cash. The London-listed funeral services provider said the crematoria are located in markets not served by existing Dignity crematoria. The acquisitions will be funded with existing cash resources. Dignity, which currently operates 39 crematoria throughout the UK, said it has extended the availability period of its GBP26.3 million debt facility with the Royal Bank of Scotland until December 31, even though the debt isn't required to fund the acquisition.
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IG Group Holdings, the online trading company, said it now expects its full-year earnings to be slightly ahead of previous expectations. In a trading update for the final quarter of the financial year ending Tuesday, IG said it performed "well" during what turned out to be a "relatively quiet" fourth quarter of the year in financial markets. All key operating and financial metrics remained strong, IG said.
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St Modwen Properties said it has experienced "a good start to the year", as its portfolio benefitted from strong investment activity made at the end of 2015. The FTSE 250-listed group, which focuses on regenerating brownfield sites and building residential developments, said in the six months to May 31, its annualised rent roll grew to GBP60.0 million, having been GBP58.4 million at its year-end on November 30. This "now covers the operating costs of the business which further underlines our strong financial base," the company said.
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MARKETS
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UK stock indices were starting a shortened week lower after the long holiday weekend in both the UK and US, on a light day in the UK corporate calendar. The euro was flat against the dollar after stable eurozone unemployment data and a slight drop in inflation in May. Wall Street was pointed to a higher open.
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FTSE 100: down 0.1% at 6,264.32
FTSE 250: down 0.1% at 17,222.83
AIM ALL-SHARE: down 0.1% at 735.31
GBP: down at USD1.4588 (USD1.4629)
EUR: flat at USD1.1135 (USD1.1130)
GOLD: down at USD1,211.13per ounce (USD1,212.68)
OIL (Brent): up at USD50.06 a barrel (USD49.36)
(changes since previous London equities close)
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ECONOMICS AND GENERAL
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US Federal Reserve Chair Janet Yellen indicated on Friday an interest rate hike is coming soon if economic data continues to show improvement in the US economy. The economy is continuing to improve, Yellen said, although she acknowledged weak annualized growth of under 1% early in 2016. Since the end of the first quarter in March however growth has picked up, she told an audience at Harvard University. "If that continues and if the labour market continues to improve, and I expect those things will occur," Yellen said, "it's appropriate...for the Fed to gradually and cautiously increase our overnight interest rate over time, and probably in the coming months such a move would be appropriate." The Federal Reserve's next opportunity to raise interest rates is on June 15, when the Fed's Open Market Committee holds a scheduled meeting.
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A group of business leaders have signed a letter in support of Britain keeping its membership of the European Union, claiming leaving will reduce rather than boost prosperity for the UK. Signatories of the letter, including the bosses of Royal Dutch Shell, Rolls-Royce, Vodafone and Centrica said an unravelling of the single market would hit the UK, arguing both investment and job creation benefit from a united Europe. Elsewhere, the Britain Stronger in Europe campaign accused Leave leaders Michael Gove and Boris Johnson of "fantasy economics" after they claimed fuel bills would be cut by voting to leave the EU. Meanwhile, the Leave campaign benefited from a unique campaign idea. Pub chain JD Wetherspoon printed 200,000 Brexit beer mats for its pubs.
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UK Prime Minister David Cameron hailed the "extraordinary coalition" rallied behind Britain remaining in the European Union as he campaigned alongside Labour's Sadiq Khan. The Prime Minister shook hands with the London Mayor and hailed the election of the "proud Muslim and proud Brit" just weeks after being accused of racist slurs against him. They joined forces to launch a five-point "guarantee" card and a campaign battle bus as the PM sought to refocus attention away from increasingly public Tory dissent against his leadership.
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EU leaders will be asked at their June summit to recommit to controversial free trade negotiations being conducted with the US, the bloc's executive said. The EU and the US have held negotiations for almost three years on the so-called Transatlantic Trade and Investment Partnership, which would create the world's largest free trade area with 800 million people. Proponents of the free trade deal say that it will boost economic growth and jobs. But the plan also has many critics, who worry that it will water down consumer protection provisions and allow corporations to block undesirable regulation. The negotiators, who are trying to conclude the deal before the end of this year, are entering a "crucial phase," European Commission spokesman Daniel Rosario told journalists in Brussels.
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Top EU official Jean-Claude Juncker plans to travel to Russia next month to attend an economic forum despite enduring tensions over sanctions that the West has imposed on Moscow for its actions in Ukraine. "I think it is important that we try, at least on economic issues, to get closer to Russia again," the European Commission chief told dpa on Monday in Luxembourg. "But it will not come to any softening of European positions in St Petersburg," he added.
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The Eurozone jobless rate remained stable at the lowest level in more than four years in April, Eurostat reported. The unemployment rate came in at 10.2% in April, the same rate as seen in March, and in line with expectations. This was the lowest rate recorded in the euro area since August 2011.
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Eurozone consumer prices logged a marginal fall in May, flash estimate published by Eurostat showed. Consumer prices dropped 0.1% from last year as expected by economists after easing 0.2% in April. This was the second consecutive decline in prices. Core inflation that excludes energy, food, alcohol and tobacco slowed slightly to 0.8% in May from 0.7% a month ago.
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Germany's consumer prices rose slightly in May, reversing a similar size decline in the previous month, preliminary data from Destatis showed. The consumer price index edged up 0.1% year-on-year following a 0.1% fall in April. The increase was in line with economists' expectations. Compared to the previous month, the CPI climbed 0.3%, matching economists' expectations. In April, prices fell 0.4%.
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Germany's unemployment rate held steady in April, after falling slightly in the previous month, preliminary figures from Destatis showed. The adjusted jobless rate came in at 4.2% in April, the same rate as in the previous month. In the corresponding month last year, the unemployment rate was 4.7%.
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French Prime Minister Manuel Valls vowed there would be no withdrawal of controversial labour reforms in an interview published Saturday just hours before he began meeting representatives of the petroleum and transport industries. The meeting was convened by Interior Minister Bernard Cazeneuve and Secretary of Transport Alain Vidalies with industry representatives in order to take stock of the country's fuel supply. Strikes organized against the disputed reforms hit the French energy sector this week, with fuel shortages at the pump caused by refinery worker strikes and blockades at fuel depots. But the number of stations affected declined by the end of the week, as police cleared protesters blocking depots and released strategic reserves.
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By Arvind Bhunjun; [email protected]; @ArvindBhunjun
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