Sunday newspaper round-up: Euro crisis, Barclays, Punch Taverns...

28th Nov 2010 10:52

Europe's finance ministers meet in Brussels today to agree the final terms of an €85 billion bailout for Ireland and debate emergency measures to stop the spread of the eurozone debt crisis.George Osborne, who has pledged a £7bn loan to help Ireland, will join the euro group ministers, who fear that Portugal and Spain may be the next to fall. Banking sources said the summit would decide the interest rate that Ireland would pay on its rescue loans, which could be as high as 6.7%, rather than the mooted 5%, the Sunday Times reports.The European Union is to announce the effective nationalisation of Bank of Ireland within the next 48 hours after a weekend of crisis meetings between finance ministers and angry public demonstrations across Europe. Despite strong representations from the Irish government that Bank of Ireland was secure, the EU-brokered €85bn (£72bn) bail-out is likely to demand that billions more euros of capital are injected into the bank to take its key Tier 1 ratio up to 12%, higher than the demands of the Basel process, the Sunday Telegraph reports.A German coalition comprising a controversial playwright, the grandson of the first Chancellor of the post-war federal republic and a campaigning constitutional lawyer will challenge Ireland's 85bn Euro bailout this week. Professor Markus Kerber, a constitutional expert and Berlin-based academic, is acting for 50 clients on challenging any kind of bailout. He filed a challenge in Germany against the Greek bailout earlier this year, arguing that the move was unconstitutional. He has asked his 50 clients to approve plans to amend this to include Ireland, once a bailout package is agreed, the Sunday Independent reports.Jim O'Neill, one of Goldman Sachs' most senior partners, has said that the eurozone must embark on a significant round of fiscal and political harmonisation if the euro is to survive. The new chairman of Goldman's Asset Management division said that "very extreme outcomes" were possible if Europe's political leaders did not come together and "sing from the same hymn sheet". In an interview with The Sunday Telegraph, Mr O'Neill also revealed that the euro should carry a "risk premium" and that it was over-valued by at least 10%.The number of jobs forecast to be cut in the public sector - 490,000 - is set to be lowered by 90,000 after better than expected economic growth figures and higher tax returns. The Office for Budget Responsibility (OBR), an independent fiscal watchdog, is expected to upgrade its growth estimate for this year and stick close to its prediction for a healthy 2.3% rate in 2011, according to an Ernst & Young ITEM Club report to be published tomorrow, the Sunday Telegraph reports.Britain's bank bosses are planning to accept their bonuses for the first time in two years, whipping up a new storm of controversy over fat-cat pay deals. The chief executives of Barclays, HSBC, Lloyds Banking Group, Royal Bank of Scotland and Standard Chartered are estimated to be in line for bonuses totalling up to £15m. The controversial move follows a u-turn by George Osborne, the chancellor, over plans to force banks to reveal the number of staff paid more than £1m, the Sunday Times reports.Punch Taverns is drawing up radical plans to call time on nearly 6,000 pubs in a bid to slash its £3.1bn debt pile. Ian Dyson, the new chief executive, may hand the tenanted estate ? pubs it owns but leases to independent landlords ? to the group's bondholders. He wants to concentrate on the 800 pubs that Punch directly manages, including the Chef & Brewer chain. Dyson has appointed advisers from Goldman Sachs and Blackstone to prepare for a restructuring, the Sunday Times reports.Britain's largest care-home company is set to win an important vote of confidence from its banks after a potential buyer walked away from a takeover deal. Southern Cross Healthcare runs 750 homes, with 45,000 staff caring for 33,000 elderly or disabled people. Analysts say it has about 10% of the British market. Earlier this year it issued a profit warning after being hit by a "perfect storm" of rising rents, shrinking council budgets and the increasing cost of providing care, the Sunday Times reports.Bob Diamond, the incoming chief executive of Barclays, is considering selling large chunks of the group's business as part of an extensive strategic review. A four-man executive team has been formed to examine 50 to 60 of the bank's key businesses and measure the levels of return they can be expected to generate. Businesses in the retail banking arm, including mortgages and credit cards around the world, have to prove that they could generate returns of 13% to 15%. In Barclays Capital, the group's investment banking arm formerly run by Diamond, every product and service has to show it could generate returns of 15% to 20%, the Sunday Times reports.Listed companies will have to post detailed assessments of potential risks to their businesses at the start of their annual reports, under plans being developed by the Government. Business minister Ed Davey met with major corporates, such as Tesco and United Utilities, and lobby groups such as the CBI, Friends of the Earth and the World Wildlife Federation on 15 November to discuss the plans, the Sunday Independent reports.