Sunday newspaper round-up: StanChart, Food prices, Aviva

12th Aug 2012 17:01

Standard Chartered has embarked on a last-ditch push to secure a settlement with American prosecutors over money laundering allegations ahead of a crunch meeting on Wednesday. The British bank was last week accused by a New York state regulator of illegally processing $250bn (£160bn) of payments for Iran. Peter Sands, chief executive, has furiously denied the claims, insisting that almost all the payments were legal. A broad range of politicians and City figures have accused Benjamin Lawsky, the New York regulator who made the claims, of trying to damage London's reputation as a financial centre and win business for America. George Osborne has intervened, complaining to Tim Geithner, the US Treasury secretary, about unfair treatment of the bank. Sir Win Bischoff, chairman of Lloyds Banking Group, has led a concerted industry approach to Mark Hoban, the City minister, warning about America's aggressive attitude, The Sunday Times says.Food prices are set to surge as the cost of corn hit a record high yesterday and wheat prices rocketed. The rises come after the worst drought in the U.S. for half a century destroyed one-sixth of the country's expected corn crop over the past month. Demand for wheat has increased dramatically as a result, with prices rising by a third in London and Paris, according to the Grocer magazine. Consumers have been warned bakers will be forced to increase the price of a loaf to cover their increased supply costs. Michael Clarke, chief executive of Hovis baker Premier Foods, said: 'The sheer magnitude of the wheat price increases means that we will have to pass them on,' The Financial Mail on Sunday writes.The life insurance arm of Guggenheim Partners, the $160bn (£100bn) financial giant that traces its roots back to Solomon R. Guggenheim, is in pole position to buy some, or all, of Aviva USA. The Illinois-based company is believed to want to buy Aviva's US fixed-annuity business to complement its existing operations, delivering synergies from combining the two. The discussions are understood to value Aviva USA at £800m, some £200m less than earlier estimates. In its half-year results last Thursday, Aviva wrote down the value of its US business by £876m, leading to a £456m loss. The FTSE 100 insurer would be willing to take a further hit on the valuation, however, as selling it will release approximately £2bn of capital, bringing the company close to new executive chairman John McFarlane's stated capital aims, The Sunday Telegraph reports. Sir David Walker, the new chairman of Barclays, is to undertake a wholesale review of the way the bank operates and has admitted that he agrees "in principle" with customers paying to use current accounts and the end of the free banking model. In his first interview as chairman, Sir David told The Sunday Telegraph that he wanted to see significant change at Barclays and revealed that he was not committed to any of former chief executive Bob Diamond's business plan "except getting it right". Setting a 24-month deadline by which time he hopes the bank will be back on a firmer footing, Barclays's incoming chairman said his first priorities in the role would be the three Cs - a new chief executive, reformed compensation and a changed culture. He also wants to strengthen the board so it is better able to challenge the new chief executive.Switzerland's biggest private bank is close to buying Merrill Lynch's wealth management business from Bank of America for up to $2bn (£1.3bn). Julius Baer, a 122-year-old institution based in Zurich, has been in talks to take over the division since June. The deal could be announced this week. Merrill Lynch's non-American wealth management business runs $90bn of assets. It was put up for sale in April as part of a drive by Bank of America to shore up its capital base before tougher international rules take effect. Brian Moynihan, chief executive of Bank of America, has sold $50bn of peripheral businesses since taking over two years ago, including the Canadian and European credit card operations. The wealth management business was deemed too small to be profitable for Bank of America. It focuses on "mass affluent" clients ? those who measure their savings in hundreds of thousands rather than millions of dollars; the bank's American wealth management division is aimed at the super-rich, The Sunday Times says.British bankers risk being extradited to the United States as regulators crack down on the rogue activities of UK banks. The warning comes as executives of Standard Chartered face possible charges in the US over the alleged breach of sanctions against Iran. Tom Stocker, a partner at law firm Pinsent Masons, said the actions of New York's Department of Financial Services (DFS) against the bank marked what he expects will be a period of "heavy-handed" action by "overly aggressive" US regulators because of the perceived laxness of the UK authorities. Stocker said: "We are going to see a lot more US regulators going after British-headquartered banks and companies. It is partly driven by wanting to be seen to take enforcement action; that it is politically better to be seen to be taking action against overseas companies rather than their own US companies. It is driven to an extent by them considering UK and European regulators to be ineffective in the ¬action they take," he added. Stocker argues that UK enforcement needs to improve to ease pressure on institutions caught up in US regulation, Scotland on Sunday writes.Cinema operator Cineworld is pinning its hopes on a string of blockbuster films in the run-up to Christmas to make up for falling audience figures during the Olympics. The group - which has ?79 cinemas, including seven north of the Border - is expected to benefit from a strong release schedule including James Bond movie Skyfall, Lord Of The Rings prequel The Hobbit and ?science-fiction remake Total Recall. The chain has already reported a drop in admissions for the first six months of the year but was able to boost revenues by hiking prices. Pre-tax profits are forecast to have been boosted by 10% to £13.6m thanks to the price rises. But visitor numbers are expected to have continued to fall last month when the firm posts full details of its interim results on Thursday, Scotland on Sunday says. Philip Aiken, an Australian mining executive, has emerged as the early favourite to replace the billionaire chairman of Kazakhmys. Vladimir Kim, whose stake in the FTSE 100 mining group is worth £1.1 billion, announced in May that he planned to step down within a year. His departure will mark a big change at Kazakhmys. Kim led its 2005 listing, which paved the way for a raft of foreign resources groups to come to the London market. Spencer Stuart, the headhunter, is understood to have zeroed in on Aiken as a potential successor. The 63-year-old used to run the oil arm of BHP Billiton and is Kazakhmys' senior independent director. Investors may welcome his appointment due to his knowledge of Kazakh mining and a good working relationship with Kim. Some, though, will want an outsider. Aiken has been on the board since 2006, according to The Sunday Times.EasyJet is set to defeat an attempt by Sir Stelios Haji-Ioannou, the carrier's founder and biggest shareholder, to oust Sir Mike Rake as chairman. Stelios has called a shareholder meeting tomorrow to eject Rake, who is also deputy chairman of Barclays, in the wake of the Libor rate rigging scandal that engulfed the bank. It is the latest in a series of colourful bust-ups between the founder of the budget airline and its directors. Stelios, who with other members of his family controls 37.5% of Easyjet, lost a vote on executive pay at February's annual meeting. He urged investors to reject an incentive package for directors, but almost 56% of shareholders sided with the board. Sources believe Monday's vote to remove Rake will produce a similar result. Easyjet has urged investors to rebuff the proposal and called Stelios's actions a "significant distraction," writes The Sunday Times. Hosting the Olympic Games, which ends today in London, has boosted the British betting industry, bookmakers have said. Ladbrokes forecasts the sector will turn over close to £80m for the two-week period, compared with £4m from the Beijing Games four years ago, while research from Coral shows that 3m people planned to place their first ever bet on the London Olympics. Betfair is also seeing an increase in betting activity, with the total number of customers making bets doubling to just under 100,000. The biggest draw for the group was the men's 100-metre final, which saw 19,000 individual customers placing wagers on the outcome of the race, Betfair said, according to The Sunday Telegraph.AB