Sunday newspaper round-up: Barclays, Carillion-Balfour, Ofgem
Rona Fairhead, the former boss of the Financial Times, and Howard Davies, the ex-chief City regulator, are the two leading candidates to chair Barclays, the Sunday Times reported. Fairhead ran the FT for seven years and is a non-executive director at HSBC. Davies is the Government's favourite troubleshooter and heads a review of Britain's airport strategy. The bank is looking for a replacement for David Walker, who took over two years ago after Marcus Agius was ousted in the wake of the Libor scandal.
Carillion and Balfour Beatty have secretly restarted merger talks and Carillion has adjusted its offer proposal, the Sunday Times said. Discussions resumed last week and the basic deal remains the same. Carillion has increased its estimate for potential cost savings from the deal with analysts expecting synergies of up to £250m. Some analysts think Balfour will announce the sale of its Parsons Brinckerhoff consultancy business when it unveils interim results on August 13th though sources close to the company were cautious about the sale's progress.
A group of former energy regulators has said that Ofgem, the sector watchdog, may be to blame for high profits and prices, the Sunday Telegraph reported. In a submission to the Competition and Markets Authority's (CMA ) review of the energy market, ex-regulators including Callum McCarthy and Stephen Littlechild said Ofgem might have weakened competition with poorly designed regulation since 2008. They also expressed concern that Ofgem staff could be seconded to the CMA's investigation and that the watchdog's publications influenced the scope of the investigation.
The Bank of England is expected to slash its forecast for earnings growth on August 13th, signalling that pay will lag inflation, the Sunday Times reported. The August inflation report could dash hopes of a sustained rise in real wages, the paper said, citing City economists. Bank officials have been surprised by the weakness in wage growth and the figures are expected to show average weekly earnings fell 0.1% in the three months to May from a year before.
Short sellers are targeting Sainsbury's after the appointment of a new boss for Tesco increased fears of a full-scale supermarket price war, the Sunday Telegraph said. The share of Sainsbury's stock out on loan, a proxy for short-selling, has risen since Dave Lewis was announced as Tesco's Chief Executive and is near levels last seen eight years ago. Hedge funds including Lansdowne Partners, Marshall Wace and Odey Asset Management are betting against Sainsbury's.
Analysts expect further falls on global stock markets after the US intervention in Iraq, the Sunday Times reported. Most predict further volatility in August but the bigger crunch could come in the coming months when the US central bank starts to signal interest rate rises. Michael Hartnett, chief investment strategist at Bank of America Merrill Lynch, said: "Few can predict the geopolitics, but sentiment indicators suggest this is a 4%-8% type of correction rather than the big one."
China has paved the way for prosecutions from its investigation of GlaxoSmithKline (GSK), the Sunday Times said. Peter Humphrey, the corporate risk consultant, and his wife were convicted last week of breaking privacy laws when trying to find the source of allegations of bribery against GSK. The authorities are expected to proceed with a case against local GSK officials for allegedly conspiring to bribe health officials and doctors.
Ladbrokes' boss will have to face angry investors this week when the ailing bookmaker admits first-half earnings fell by about a third, according to the Sunday Times. A big shareholder in Ladbrokes said Chief Executive Richard Glynn needed to demonstrate that the plan to switch to digital betting was working even if the headline numbers were bad. The paper said Ladbrokes was understood to have done well during the Fifa World Cup because fancied nations such as Spain and Italy went out early and lots of matches went to extra time.
Almost three quarters of FTSE 100 chairmen reject Government plans to tighten the rules on foreign takeovers of UK companies, the Sunday Telegraph reported. A survey by recruiters Korn Perry found that 74% of chairmen supported the UK's liberal takeover regime and did not want extra safeguards to protect national assets. Business Secretary Vince Cable has proposed tighter scrutiny of promises made by overseas companies when they buy UK businesses.
Sellers will soon outnumber buyers in the UK property market, suggesting that house prices are about to peak, the Mail on Sunday reported. The Royal Institution of Chartered Surveyors (Rics) is expected to say its index of sellers versus buyers shows more supply than demand. Since the recession started in 2008 the Rics survey has tracked price moves a year ahead tightly.
Punch Taverns, the UK's second-biggest pub company, is set to launch its £2.3bn restructuring on August 11th, the Mail on Sunday and other papers said. Shareholders will reduce their stake to 15% after bondholders put new money in via a debt for equity swap. If successful, the refinancing will cut Punch's debt by £600m to £1.56bn.
SF