Sunday newspaper round-up: IAG, Oil price collapse, Standard Chartered

The effects of the oil price collapse will be demonstrated by UK companies in the next two weeks, the Sunday Times reported. BP is expected to unveil a more than halving of profit, Royal Dutch Shell will slash spending and Centrica will face pressure to cut its dividend. BP’s results, due on February 3rd, are likely to show annual earnings of $9.3bn – 60% down on the previous year. Shell is forecast to cut between 5% and 10% from its 2015 spending plans, targeting US and Canadian onshore operations. Analysts at Berenberg expect Iain Conn, Centrica’s new Chief Executive, to cut the dividend by a fifth.

Standard Chartered’s two biggest shareholders have told the bank’s Chairman to find a new boss to replace Chief Executive Peter Sands, the Sunday Telegraph reported. Temasek and Aberdeen Asset Management have told John Peace to come up with a succession plan so that Sands can leave by the end of the year. Each of the investors, who own almost a third of the bank between them, have made their views known to Peace in recent weeks. There is no internal candidate acceptable to investors to replace Sands. If Peace does not act, investors could replace him with someone else to enact the succession.

Sky is preparing to break into the UK’s changing mobile phone market, the Sunday Times said. The satellite TV operator is close to establishing a partnership with O2 to rent capacity on its network, allowing it to offer O2 mobile phone services under the Sky banner. Sky has been talking to O2 and Vodafone about a deal for months. O2 is the favourite to get the contract, despite the announcement that it would be bought by the owner of rival network Three. The deal could strengthen Sky in its battle with BT to offer bundles of services to customers.

The US drugs watchdog has approved Shire’s Natpara treatment in a boost for the FTSE 100 pharmaceuticals company, the Sunday Times said. The Food and Drug Administration has authorised the drug, which treats hypoparathyroidism. An estimated 60,000 people in the US suffer from the rare disease, which affects the parathyroid gland. Natpara was developed by NPS Pharmaceuticals, which Shire bought this month. If the drug had FDA approval at the time of the deal, Shire would probably have had to pay more.

It will take three to five years to restore Morrisons to health, the supermarket group’s Chairman told the Sunday Times. Andrew Higginson said there would be no sacred cows in the revamp, which will require many small improvements, but that he is likely to keep Morrisons’ own farms and abattoirs. Higginson declined to discuss the future of Morrisons’ dividend but said the company would set out a “revised shareholder narrative” for the next two or three years in March. He has a shortlist of five candidates to take over as Chief Executive from Dalton Philips, who is leaving the group.

Creditors of Afren, the scandal-hit oil explorer, have enlisted Blackstone, the Wall Street firm, to advise them before an expected takeover bid for Afren from Seplat, according to the Sunday Times. The holders of $860m of bonds hired Blackstone on 23 January. Afren must make a $50m payment to its banks on 30 January but has asked for an extension. Afren’s share price has been battered by the falling oil price, big debts and the scandal over a deal that would have given £200m to its former Chief Executive and other top managers.

Mike Ashley is one of the retail names trying to buy Evans Cycles, according to the Sunday Telegraph. Ashley sees Evans, valued at about £100m, as a way into the cycling market for Sports Direct. Halfords and Wiggle, owned by buyout firm Bridgepoint, have also considered buying Evans. A source close to talks said Halfords had now ruled out a bid to concentrate on its own Cycle Republic brand. A deal with Ashley’s Sports Direct depends on major cycling brands continuing to supply Evans under Sports Direct’s ownership.

Philip Green has put BHS up for sale after receiving several approaches for the struggling chain in recent months, the Sunday Times said. BHS has been a cornerstone of Green’s privately held retail empire for almost 15 years but it has lost lots of money in the last few years as shopping habits have changed and competition has increased. Interested parties have included Associated British Food’s Primark chain, US hedge fund Apollo and HMV owner Hilco. Earlier approaches were too low but more recent offers have matched Green’s expectations.

The Chief Executive of Zoopla has told the Sunday Telegraph that rival site OnTheMarket.com will help rather than hinder his brand. Alex Chesterman said the site, launched on January 26th by a group of estate agents including Savills, will hit customers in the pocket and reduce transparency in the market, strengthening Zoopla’s appeal. “The only damage being done here is to the estate agent branches that have signed up with OTM,” Chesterman said. “They look silly and disingenuous.”

UK banks including Royal Bank of Scotland and Barclays could be sitting on billions of pounds of losses from the collapse in the oil price, the Sunday Telegraph reported. British banks have backed more than $50bn of leveraged loans to the oil and gas industry in the past four years. Many producers are likely to be driven out of business by the plunge in the oil price. Many oil and gas loans are changing hands for well below their face value. The biggest arrangers of loans to the industry are US and Canadian banks but debt arranged by UK institutions have more than doubled since 2011.

The Bank of England’s (BoE) Governor has warned of testing times in 2015 as the US tightens monetary policy and liquidity shrinks, the Sunday Telegraph reported. Mark Carney’s comments show the BoE is concerned about the effects of the rising dollar when the new financial system has not been tested fully. "This will test the resilience of that new financial system. It has a potential feedback and we have to be aware of that," Carney told central bankers at the World Economic Forum. "We are particularly concerned about an illusion of liquidity that has existed in a number of financial markets.”

Greek savers have withdrawn more than €10bn from the country’s banks before the January 25th general election, the Sunday Times reported. The rate of withdrawals has more than doubled from €3bn in December to €7bn so far in January. A Greek bank adviser said the European Central Bank has required Greece’s biggest four banks to provide daily updates on their capital positions. Ordinary Greeks are holding cash while rich citizens transfer funds to the UK, Switzerland and Luxembourg. Syriza, the anti-austerity group, is expected to be the biggest single party after the election.

UK economic growth has recovered to a level not recorded since the start of the financial crisis, official figures will show this week, according to the Sunday Times. The first estimate for the final three months of December is expected to show output 2.8% higher than a year earlier. The pace of quarterly economic growth slowed last year from 0.8% in the spring quarter to 0.7% in the summer and an expected 0.6% in the final quarter of 2015.

More than a quarter of Britain’s 100 biggest public companies published profit warnings last year, the Sunday Times reported. Despite Britain’s economic recovery, 27 FTSE 100 companies issued 38 profit warnings, up from 26 in 2008 when the financial crisis was at its peak. Accountants EY, which compiled the figures, said: “It’s a level of profit warnings more consistent with a period of low growth or global shock than an improving macro outlook. Many companies have faced increasing challenges in recent months from rising geopolitical concerns and falling oil prices.”

Hutchison Whampoa is ready to call for a full competition review of the UK communications industry if regulators scrutinise its plan to buy O2, the Sunday Telegraph said. The Hong Kong conglomerate’s Three UK mobile arm is in talks to buy O2 to create Britain’s biggest mobile operator. Its advisers will push for a wide-ranging review of the communications market in a move that could push BT’s acquisition of EE back by months. Hutchison is likely to be backed by Sky and Vodafone, which want a new approach to regulating BT.