Sunday newspaper round-up: Lloyds Banking, Barclays, Thames Water

19th Jul 2009 09:38

Lloyds Banking could shock the market with its first-half results by announcing that accounting trickery has helped it scrape into the black. Despite enormous bad-debt provisions - estimated at £13bn - the bank is likely to post a modest headline profit for the first six months of the year. Some of its most toxic sub-prime investments have clawed back billions of pounds of value in recent months. Other credit instruments will also have recorded paper gains for Lloyds, the Sunday Times reports. Barclays is to pay tens of millions of pounds to its investment bankers, who have made huge profits from trading in government debt, derivatives and foreign exchange. Some of the biggest payouts are expected to go to former Lehman Brothers traders hired by the British bank after it took over Lehman's US operations at a knockdown price in September, the Observer reports.Royal Bank of Scotland has lost more than 700 of its top investment bankers to rivals who are offering to pay guaranteed cash bonuses and higher salaries. The most profitable parts of the group's global banking and markets division have been hit by the poaching raids, including its teams in commodities, fixed income and credit derivatives. Traders are being offered at least one year's salary in cash as a signing-on fee, according to headhunters, the Sunday Times reports.Roger Jenkins, the executive who secured billions of pounds in overseas funding to help Barclays remain free from direct Government investment last year, is poised to leave the bank. Jenkins, who is understood to be Barclays' highest-paid employee, earning tens of millions of pounds a year, is in negotiations with senior colleagues over the terms and timing of his departure. It is understood that an announcement could be made as early as this week, the Sunday Telegraph reports.Ron Sandler, the chairman of Northern Rock, has emerged as a surprise candidate to replace Sir Victor Blank at the helm of Lloyds Banking Group. Sandler is on a shortlist of four names in contention for the Lloyds chairmanship, regarded after last year's takeover of HBOS as among the toughest jobs in British banking. Sir Win Bischoff, the former chairman of Citigroup, and Chris Gibson-Smith, chairman of the LSE, are also candidates for the job, the Sunday Telegraph reports. George Osborne, the shadow chancellor, will this week publish his "white paper" on banking regulation, pledging to scrap the existing triparite system and the Financial Services Authority and hand back supervision to the Bank of England. Osborne will float the idea of a separate markets regulator, similar to America's Securities and Exchange Commission, in addition to the Bank's new supervisory role and a new consumer regulator for the financial-services industry, though no firm decision has yet been taken on this, writes the Sunday Times.Thames Water will be told to reduce its planned price increases when the industry's regulator announces its five-year review this week. Thames, which supplies 13.6m customers in the South-east, has asked Ofwat to allow it to increase prices by 17.2% above inflation over the period to 2015, including a rise of about 10 % next year. Ofwat will publish its review of all public and private water companies on Thursday, the Sunday Independent reports. Offical data this week for Britain's second-quarter gross domestic product will confirm the worst of the recession is over. Second-quarter GDP figures, to be published on Friday, are expected to show the economy shrank only slightly after its record six-monthly fall in the fourth quarter of last year and the first quarter of this year, the Sunday Times reports.The Sunday Independent adds that the UK economy is forecast to shrink by 4.5% in 2009 - the biggest fall in a single year since 1945. This gloomy prognosis comes from leading forecaster the Ernst & Young Item Club, the only one to use the Treasury's own forecasting model, and paints a materially tougher outlook than the consensus.GlaxoSmithKline, is in talks with the governments of up to 30 countries about supplying them with the swine flu vaccine. The pharma giant is one of several international manufacturers working frantically to meet demand for the vaccine as the virus spreads around the globe. Last week, the National Health Service indicated it is prepared for the death of 65,000 people. So far, 429 have died from the virus worldwide, the Sunday Times reports.Porsche chief Wendelin Wiedeking is set to pick up a pay-off of at least €100m (£86m) when he leaves the debt-ridden company. It will be the biggest golden parachute ever given to an industry boss in Europe and dwarfs the record £50m paid to Jürgen Schrempp when he left Daimler in 2005, the Sunday Times reports.Lord Mandelson, the Business Secretary, has warned the owner of Jaguar Land Rover (JLR) to accept a revised proposal to guarantee hundreds of millions of pounds in short-term funding or risk seeing it taken off the table. The warning is understood to have been delivered by Lord Mandelson to Tata Motors in recent days following a fresh funding proposal that was made by the Government earlier this month, the Sunday Telegraph reports.Wall Street and City of London bank chiefs will be targeted this week at the launch of a new transatlantic campaign to reinstate historic usury laws restricting the interest rates charged by loan sharks and credit card companies. Hundreds of campaigners will demand a meeting with Royal Bank of Scotland chairman Sir Philip Hampton outside the firm's Liverpool Street headquarters on Wednesday, the Observer reports.