Tuesday newspaper round-up: OBR, Sibir Energy, BP
In a shock move the head of the Government's spending watchdog Sir Alan Budd is to step down after barely three months in the job.
The man tasked by George Osborne to lead the economic charge to bring public finances back in order has told the Chancellor he intends to step down at the end of this month, dealing a blow to the coalition. The surprise decision will leave the Office for Budget Responsibility (OBR) without a chairman before it has been fully set up and enshrined in British law, the Telegraph reports.
BP can meet the costs of its huge oil spill in the Gulf of Mexico without issuing new shares, the company said on Monday, rejecting recent speculation that it was seeking a bail-out from a strategic investor. The company has launched an appeal for support to Middle Eastern and other international investors, arguing that its shares are good value after their near-50% fall since the Deepwater Horizon disaster on April 20. However, it had “no plans” to issue new equity to bring in a “cornerstone” shareholder, in the way that Abu Dhabi and Qatar supported Barclays Bank in 2008, the FT reports.
The British Government is drawing up contingency plans for a possible collapse of BP amid mounting fears that the oil giant could be broken up or taken over in the wake of the Gulf of Mexico oil disaster, The Times has learnt. The talks, which are being led by officials at the Department for Business and the Treasury, reflect growing concern within Whitehall about the implications that a corporate failure of BP, formerly Britain’s biggest company, would have on UK interests domestically and around the world. BP, whose value has more than halved since the accident on April 20, has liabilities of up to $70bn, according to estimates by Goldman Sachs.
Libya's sovereign wealth fund should invest in beleaguered BP, the North African country's leading oil executive said yesterday, following reports over the weekend that several Middle-Eastern investors are also preparing to plough money into the group. BP refused to comment on remarks by Shokri Ghanem, the chairman of Libya's National Oil Company, the Independent reports.
The former chief executive of scandal-hit Sibir Energy has been fined £350,000 ($529,877) by the City watchdog for failing to disclose cash payments made by the company to one of its largest shareholders, the Russian tycoon Chalva Tchigirinski. The fine against Henry Cameron for market abuse, which will be announced on Tuesday by the Financial Services Authority, brings the curtain down on a corporate intrigue surrounding what was once the biggest company on London’s Aim alternative market with a value of £2.5bn, the FT reports.
RBS and other City institutions have warned that Europe’s stress tests for banks are almost useless and may further damage confidence if they fail to cover the risk of large losses on sovereign defaults by Greece and other Club Med states. “I don’t think it is going to work,” said Jacques Cailloux, Europe economist at RBS. “These stress tests are not rigorous enough. Investors are already pricing in a 50% “haircut” on some Greek bonds so this has to be included, and perhaps 30% for Spain, the Telegraph reports.
Shareholders in Bradford & Bingley, who lost their money when the bank was nationalised in 2008, were dealt a further blow on Monday when an independent valuer said they were not entitled to any compensation. A report by Peter Clokey, who was appointed by the Treasury to assess whether investors should receive any pay-out from the government in lieu of their holdings, found that the bank’s shares had no value immediately prior to nationalisation, the FT reports.
CVC is considering mounting a €12bn buyout of the Spanish infrastructure group that owns Cardiff and Belfast International airports. The British private equity group is understood to have held talks with the two largest shareholders in Abertis about joining forces to buy the Barcelona-based group, the Times reports.
BBC Worldwide, the broadcaster's commercial arm, hit record annual profits of £145.2m as programmes including Doctor Who proved hugely popular around the world last year. The business yesterday announced operating profits had risen 36.5% in the 12 months to the end of March. Revenues were up 7% to £1.07bn, the Independent reports.