Thursday newspaper round-up: BP, Mansion House speech, banks

17th Jun 2010 06:09

BP has suspended dividend payments for the rest of this year and moved to slash its capital expenditure bill after agreeing to finance a $20bn (£13.5bn) clean-up and compensation fund for the Gulf of Mexico oil spill, says the Telegraph.The decision, which comes after weeks of speculation over the fate of the annual $10.5bn payment, will hurt major pension funds as BP's payout accounts for roughly one sixth of their blue chip dividend flows in the UK. Investors had been expecting the first quarter dividend to be paid on June 21. The FT adds that BP's five investment banking advisers were on standby Wednesday night to assess the oil group's options to finance the $20bn escrow fund to pay claims from the Gulf of Mexico oil spill. Until now, Goldman Sachs, Morgan Stanley, Credit Suisse, UBS and Blackstone have been res­tricted in the scope of their advice because it has been impossible for them to know the extent of the liabilities. Mervyn King became the most powerful governor of the Bank of England in living memory today after George Osborne gave him sweeping powers to curb City excesses and prevent another financial crash. King emerged as the big winner from the chancellor's shakeup of supervision that will abolish the Financial Services Authority and do away with the tripartite system of regulation introduced by Gordon Brown in 1997, writes the Guardian.The Telegraph adds that Hector Sants, the City watchdog who quit amid proposals to abolish the Financial Services Authority, is to stay on to effect the biggest shake-up of financial regulation since 1997.US banks will foot a total bill of about $2bn (£1.35bn) in their second-quarter results to pay for the UK tax on bankers' bonuses - a charge that could significantly reduce earnings at financial groups such as Citigroup, JPMorgan Chase and Bank of America, reports the FT.Shareholder discontent over the Prudential's aborted bid for AIA is increasingly focusing on Harvey McGrath, chairman, as a rising number of investors think that he should quit the UK life assurer, according to the FT.European leaders meet in Brussels today amid growing fears that Spain, Europe's fifth-largest economy, is preparing to ask for a bailout which would dwarf the €110bn (£90bn) rescue plan for Greece, says the Independent.Sir Stelios Haji-Ioannou gave evidence at the High Court yesterday against easyJet, the airline he founded in the 1990s, accusing it of breaching branding rights over the use of the "Easy" name and of making poor management decisions, reports the Independent.The single price specialist 99p Stores has launched a new retail chain to capitalise on the flight to value among consumers and soft out-of-town property market. The team behind the retailer, where everything is sold for 99p, opened its first Family Bargains shop in Carmarthen, Wales, last Thursday. Faisal Lalani, the buying director at 99p Stores, said that Family Bargains sells a greater range of general merchandise, including toys and soft furnishings, and is not constrained by the 99p price tag, although most products will be under £10, says the Independent.