Sunday newspaper round-up: ECB, stress tests, Morrison's, Woodford

Although growth has stabilised the eurozone is likely to receive a fresh wave of stimulus on Thursday, with at least £600bn pumped into the continent's economy, Sunday newspapers reported.

Analysts are confident, the Sunday Telegraph said, that the European Central Bank (ECB) will cut interest rates further into negative territory and pump further billions of euros into the economy via its quantitative easing scheme. Although the banking sector will suffer somewhat, the stubborn low levels of inflation demand another wave of stimulus. One option the ECB is considering could be the introduction of a “two-tiered” interest rate, similar to that used in Denmark, which would penalise lenders that deposit greater amounts at the central bank.

ECB president Mario Draghi's likely intervention, expanding his QE programme by €15bn a month to €75bn from January, will kick off what promises to be a historic month for markets, the Sunday Times said, with the US Federal Reserve also expected to raise interest rates for the first time in nearly a decade just two weeks after Draghi’s move. It would be the first time that monetary policy in America and Europe has diverged since the mid-1990s, with a possible result being the euro dropping to parity with the dollar for the first time since 2002.

Lloyds may have to cut its dividend if the Bank of England's latest stress tests result in the regulator forcing the lender to bolster its capital resources. The Sunday Telegraph said the results of the tests, based on an imagines global economic crash beginning in China, will be published on Tuesday and are forecast to see all seven of the UK's largest banks pass but could see them told to limit their dividend payouts to build up their buffers ahead of tougher stress tests in coming years. Lloyds is felt to be the most likely victim in the short term, with long-term payouts also at risk at Barclays and RBS.

Barclays and other banks in the City are expected to slash bonuses after another year of tumbling profits. The Sunday Times reported that Deutsche Bank is planning to cut its bonuses by 30%, while Credit Suisse could slash its pool by up to 60% and some Barclays bankers will see their bonuses slashed to zero. Loss-making fixed-income traders are expected to be hardest hit.

Shell will take another step closer to achieving its planned £55bn takeover of BG Group before the year-end, according to the Sunday Telegraph, with Chinese and Australian regulators the last to give their verdict on the tie-up before shareholders vote. Both China's Mofcom and the Australian Investment Review Board are expected to give the deal the thumbs up.

Investors will also be looking to the People's Republic as Chinese buyers are said to be circling InterContinental Hotels Group following the sale of Starwood Hotels & Resorts to Marriott earlier this month. The FTSE 100 hotel chain is thought to be a new target for a trio of Chinese investors that had shown interest in Starwood, sources told the Sunday Telegraph, though no approaches have yet been made.

Elsewhere in the travel and leisure sector, Richard Branson's Virgin Atlantic is plotting a new type of bond issue for the European market, where it will raise £200m secured against its take-off and landing slots at Heathrow airport. The Sunday Times said such a deal, which should be announced within weeks, would allow carriers to raise money on what is generally their most valuable asset, with Virgin setting up a new airline called Virgin Atlantic International as a back-up buyer of the slots should anything go wrong.

Star fund manager Neil Woodford has appointed a former FBI agent as he attempts to get to the bottom of worrying allegations about a US biotech company in which he has invested $95m. After recent allegations were made of financial impropriety at Northwest Biotherapeutics, Woodford has demanded he be allowed to make an appoint of former agent Elliott Leary to the Maryland company’s board.

At the larger end of the grocery scale, Morrison's could be knocked out of the FTSE 100 index after 14 years due to the damage done in the supermarket price war. The rise of German-owned discounters Lidl and Aldi has seen the Bradford-based group's share price halved in the past four years to put its market value outside the 100 largest in the London Stock Market, the Sunday Times noted ahead of next quarterly assessment of the benchmark index to be issued on Wednesday.

The retail sector is forecast to see a slew of profits warnings in the wake of the massive discounting of Black Friday and Cyber Monday, with investors troubled by shops cutting prices unnecessarily and too deeply at a time when many could be selling at full price. Retail consultancy Kurt Salmon said there could be a "Red Friday rather than a Black Friday", the Mail on Sunday reported, as deeper promotions and faster delivery options eat into profits and there could be some swift downgrades between now and the spring.

The government has infuriated smaller retailers and supporters of the diversity of British high streets with the Chancellor's attempt to save £417m by failing to extend a measure to provide business rate relief to 278,000 smaller shops. The government's former high street tsar Mary Portas pointed out to the Mail on Sunday that policy appeared to ignore global firms such as Amazon and Google which pay insignificant levels of tax on their massive sales, while former Wickes and Iceland boss Bill Grimsey said smaller shops, pubs and cafes on our high streets and in our towns needed the breaks in order to survive.

There were also some infuriated independent shopkeepers at the annual meeting of the mutually-owned NISA retail group, where a vote to bring in measure to protect against a possible takeover failed to get the necessary votes. This put the mutual in play, the Sunday Times wrote, at a time when the convenience industry is consolidating at a rapid pace.

Sports Direct has approached a number of major shareholders of Goals Soccer Centres with an offer to buy their shares, following the purchase of a 5% stake earlier this month. A source close to Sports Direct told the Sunday Times that Sports Direct owner Mike Ashley had no intention of making a full takeover bid, implying the move could be a curtain-raiser to open discussions over sponsorships or concessions within the business.

Anheuser-Busch InBev will put major beer brands Peroni and Grolsch on the block to help grease the wheels of its £177bn merger with SAB Miller. Looking to appease EU antitrust regulators, the sales are likely to attract acquisitive interest from Dublin-based C&C, owner of Bulmers and Magners, or giant rivals Heineken and Molson Coors, the suggested.

Venture capital firm Draper Esprit is planning to float in London market as soon as December, according to the Sunday Times. The firm, which is run by former 3i and Elderstreet partner Simon Cook with support from senior venture partner Tim Draper, aims to drum up between £120m and £150m to buy out investors from one of its venture capital funds.