Monday newspaper round-up: Europe agrees €750bn bail-out fund

10th May 2010 06:36

Global authorities have announced audacious coordinated action to combat escalating financial market tensions triggered by worldwide fears over public finances.The European Central Bank announced early Monday morning it would intervene in government bond markets and join the US Federal Reserve and other main central banks in reactivating extra US dollar liquidity facilities, the FT reports.European finance ministers have agreed a €750bn (£650bn) EU and International Monetary Fund bailout fund to help shore up troubled eurozone economies teetering in the European Union's growing financial crisis. After 11-hour marathon talks, ministers settled on the package they hoped would be big enough to prevent Greece's debt crisis from spreading. Under the three-year aid plan, the EU Commission will make €60bn (£52bn) available while countries from the 16-nation eurozone would promise bilateral backing for €440bn (£381bn). The IMF would contribute an additional sum of at least half of the EU's total contribution, or €250bn (£216bn), Spanish Finance Minister Elena Salgado said, the Times adds.Prudential will this week try to persuade shareholders to accept less attractive terms for its $35.5bn acquisition of AIA in Asia as the price for winning regulatory approval. The embattled insurer is understood to have presented the Financial Services Authority with a new plan to raise £3.4bn in "junior" rather than "senior" debt, which could cost hundreds of millions of pounds more in interest payments, and to tap investors for a potential £1bn extra for an "Armageddon fund", the Times reports.David Cameron moved closer to 10 Downing St on Sunday after senior Conservatives and Liberal Democrats held almost seven hours of "very positive" power-sharing negotiations, including proposals to cut the £163bn ($241bn) budget deficit. Both Mr Cameron and Nick Clegg, Liberal Democrat leader, want to strike a deal as early as Monday, to reassure both the public and the financial markets that a stable government can be formed quickly, the FT reports.A hung Parliament has left Britain at a huge disadvantage in negotiating the final wording of a controversial EU directive that will clamp down on hedge funds and private equity. Lisa Cawley, regulatory partner of law firm Kirkland & Ellis, said: "There is a real concern that the UK election result leaves a major part of our financial services industry without a voice at a critical point in the EU legislative process," the Times reports.The Bank of England's Monetary Policy Committee is today almost certain to welcome the new government of the UK with a move to leave interest rates on hold at 0.5 per cent for the 14th month running. The MPC will also leave its £200bn programme of quantitative easing unchanged, the Independent reports.Tony Hayward, the chief executive of BP, has admitted he will be "judged personally" on the quality of the company's clean-up in the Gulf of Mexico, amid reports that faulty cementing may have been to blame for the massive oil leak. Robert Bea, a University of California Berkeley engineering expert, who has seen transcripts of witness accounts believes that methane gas cracked cement that had recently sealed BP's oil well. He said that additional costly testing was not done to ensure the strength of the cement, the Telegraph reports.Goldman Sachs could end up paying a $1bn (£670m) fine to settle the case involving alleged fraud brought against the US investment bank by the Securities and Exchange Commission, according to well-placed US sources. Moves to reach a settlement to avoid a lengthy legal battle are at an early stage but all the signs point to the SEC demanding a high price to wind up the damaging case, the Telegraph reports.A proposed subsidy for green central heating will lead to a sharp rise in energy bills, threaten the manufacturing recovery and drive companies abroad, consumer watchdogs and business groups say. The renewable heat incentive, due to be introduced next April, will benefit anyone who installs renewable heating devices such as biomass boilers, solar-thermal water heaters or ground-source heat pumps. But such equipment is expensive and suitable only for owner-occupiers. However, the bills of all energy consumers will go up to pay for the subsidy, the Times reports.The leaders of Britain's biggest trade union will meet representatives of British Airways cabin crew today, flush with a fighting fund of £700,000 to support a strike that threatens to ground flights for three weeks, including the Whitsun Bank Holiday and school half-term. Tony Woodley and Derek Simpson, the joint general secretaries of Unite, are expected to endorse calls for a prolonged strike after meeting the two wings representing BA stewards, the Times reports.Harrods could become a global franchise as new owner Qatar Holding announces plans to "upgrade" the luxury retailer. Qatar Holding is expected to back an expansion programme into new areas including China. Managing director Michael Ward, who will retain his position, said: "There are a huge number of opportunities for the group. There are selective areas of the world in which we will develop," the Telegraph reports.