Tuesday paper round-up: Goldman Sachs, Greece, Volcanic ash

20th Apr 2010 06:27

Goldman Sachs has been drawn into a fresh controversy as lawyers demand to know whether it was partly responsible for triggering Lehman Brothers' downfall by shorting its rival's shares.Goldman has been subpoenaed to hand over documents to Lehman's Bryan Marsal, the man responsible for winding up the bank's affairs and repaying creditors. Goldman was named in the court filing along with four other firms, including hedge funds SAC Capital and Citadel. Goldman declined to comment on the Lehman case. In a further potential legal case, it emerged that AIG is considering suing Goldman over about $2bn (£1.3bn) of losses it incurred from past derivatives instruments, the Telegraph reports.The Times adds that Goldman Sachs was under pressure on four fronts last night as it fought to limit the fallout from the fraud charges laid by American regulators on Friday. Clients protested about the bank's behaviour, British and German regulators set up investigations into its activities and American lawyers tried to drum up investor interest in class actions. Goldman also faces the loss of lucrative British government work ? including a host of planned privatisations ? after the Prime Minister described the bank as morally bankrupt.German finance minister Wolfgang Schauble has pleaded with his country's citizens to back a joint EU-IMF bail out for Greece worth up to €45bn (£40bn), warning that failure to act risks a financial meltdown. "We cannot allow the bankruptcy of a euro member state like Greece to turn into a second Lehman Brothers," he told Der Spiegel. "Greece's debts are all in euros, but it isn't clear who holds how much of those debts. The consequences of a national bankruptcy would be incalculable. Greece is just as systemically important as a major bank," he said, the Telegraph reports.Hopes that the crisis that closed much of Europe's airspace for five days was finally showed signs of easing were dealt a blow late on Monday when a fresh ash cloud from Iceland was reported to be heading in the direction of the UK and Ireland. This news came as officials acknowledged flaws in the computer models that led them to ground thousands of flights after a volcanic eruption in Iceland, the FT reports.An unrepentant Dick Fuld, the former chief executive of Lehman Brothers, will on Tuesday portray the bank as the victim of the financial crisis and argue that a court-appointed examiner into its demise "distorted" the facts. At a congressional hearing that also puts the spotlight on Lehman's regulators, Mr Fuld will say that the other US banks would have joined Lehman in bankruptcy if they had not been given government support he was denied, the FT reports.Tesco has reaffirmed its commitment to growing its Homeplus standalone non-food format ahead of it unveiling expected record annual profits of more than £3bn today. Speculation has been mounting that Tesco had put on hold a further expansion of its Homeplus stores, which currently number 13, but yesterday the retail giant was forced to deny this was the case, the Independent reports.Mortgage lending was an estimated £11.5 billion in March, a 24%rise from £9.3bn in February, said the Council of Mortgage Lenders. Mortgage lending was an estimated £11.5bn in March, a 24pc rise from £9.3bn in February and a 3% rise from £11.2bn in March 2009, according to data published by the Council of Mortgage Lenders, the Telegraph reports.Royal Bank of Scotland shares have risen back above the price at which the Government made its £45.5bn investment, putting the taxpayer £180m in profit. It is the second time in the past year that RBS stock has bounced above the entry price but insiders were quick to pour cold water on a quick share sale to recover some of the state's 84pc investment. RBS shares closed up 2.1 at 50.4p, 0.2p above the average investment price of 50.2p, on talk that the bank might recover some of the $841m (£550m) lost on the alleged fraud at Goldman Sachs, the Telegraph reports.The race is on for one of the most prized jobs in professional services as Deloitte prepares to replace John Connolly after a decade in charge of the Big Four accountant. Mr Connolly, 59, will stand down in May next year after three terms as chief executive and senior partner. In that time he transformed Deloitte from an also-ran among the City's leading auditors into the most profitable, the Times reports.One of Britain's most successful hedge fund groups revealed yesterday that it had taken a £47 million bet that Prudential's share price would fall. Lansdowne Partners, which has $16bn (£10.5bn) of funds under management and a strong record in profiting from the ups and downs of bank shares, disclosed a 0.32% short position. The down bet comes only days before the life assurer is scheduled to disclose details of a $20 billion capital-raising to finance the $35.5bn acquisition of AIA, the Asian insurance division of AIG, the Times reports.