The Business: Monday 17 June 2013
Company news, markets and financial talking points, available from 8am Monday to Friday
The outgoing chief executive of the Royal Bank of Scotland, Stephen Hester, says it could take up to a decade for taxpayers to be paid back their £45bn stake in the bank. "My observation is that if the ultimately desired proceeds are £45bn, then there has never been a privatisation that raises that much in one go,” he told the Daily Telegraph. "So it is most likely that it would be, if you do it conventionally, four or five goes over 10 years.” Speaking of his abrupt exit from RBS, he said: "I haven't hidden from anyone that I am torn a bit at this juncture” but added: “I am comfortable with what has happened.”
The Co-operative Bank is set to unveil a “bail in” rescue plan to tackle the hole in its balance sheet, according to reports. The BBC says that much of the capital to be used to plug the £1.5bn hole will come through turning bonds into shares. It is unlikely that taxpayer money will be required or that savers will be affected, but the arrangement could affect up to 5,000 smaller investors, including pensioners. Holders of permanent interest bearing shares issued are expected to have their coupons cancelled, making them effectively worthless. Most of Co-op Bank's problems stem from bad loans associated with its takeover of Britannia Building Society in 2009.
Confidence among Britain’s small companies is at its highest since 2010, according to the Federation of Small Businesses. A survey of over 2,400 firms shows more businesses expect to grow their operations over the next year and increase staff numbers and exports, reports The Times. FSB chairman John Allan said: "After five consecutive quarters of year-on-year growth, confidence is moving in the right direction. Small firms want to employ more people and grow their business.” However, he called on the chancellor to build on the positive outlook by announcing initiatives in the spending review later this month to boost business. “This is all good news, but we must not be complacent,” he said.
George Osborne is to give his strongest hint yet that he wants to move Lloyds Banking Group back into private ownership by the 2015 general election, reports the Financial Times. In his annual Mansion House speech on Wednesday, the chancellor will say the government has moved from the “rescue” phase for the banks into a “transition phase”. Industry observers have noted that Lloyds shares have reached 61p, the average price at which the stake is booked in the state accounts, though it would need to rise to 73.6p to get back the full government injection. “We want to sell as soon as we can but only if we get value for taxpayers,” said one coalition official.
Average UK house prices have exceeded £250,000 for the first time, reports The Guardian. In news that will be seized upon by those who say coalition homebuyer schemes risk creating a new housing bubble, property website Rightmove said the national average asking price for a home had risen by 1.2% over the past month to reach £252,798. Average asking prices in London set a new record of £515,243 and Rightmove said it has identified "early evidence of a wider recovery" in other regions. The figures will fuel criticism of George Osborne's housing schemes, including the help to buy initiative, which many say risk artificially inflating prices and leaving young homebuyers crippled with debt.
The UK's original dotcom millionaire is to return to the public markets for the first time in more than a decade with the £170m flotation of e-commerce business Venda, reports the Sunday Telegraph. Dan Wagner, who infamously wore a Daffy Duck waistcoat for a media photocall ahead of his last flotation in 1994, has appointed stockbroker Peel Hunt to lead the new float. Venda, whose clients include Tesco, Jimmy Choo and the BBC, had revenues of £17m in the year to June 2012. Based on the float of e-commerce rival Demandware in the US last year, analysts suggest Venda could have a market capitalisation of up to £170m.
FTSE-100: up +0.06 to 6308.26
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US dollar: buys €0.75010 and £0.63710
Sterling: buys $1.56950 and €1.17730
Oil: Brent crude futures $105.85 up +0.9 percent