Tuesday paper round-up: Royal Bank of Scotland, British Airways, BAE Systems

16th Mar 2010 06:31

Royal Bank of Scotland is planning a vast balance sheet restructuring in an attempt to boost its capital strength and its standing with bond investors.The move could involve at least £10bn (€11bn) of the bank's £28bn of debt being bought back at a bought back at a premium to current prices. This would echo similar moves at other banks, most obviously Lloyds TSB, which in December unveiled a £10bn deal as part of a £23.5bncapital restructuring, the FT reports.Petrol is due to hit a record of 120p a litre in a matter of days, even though the price of oil is little more than half the levels it was at its peak, the AA motoring group has warned. Senior MPs and motoring groups said that oil companies were "mugging motorists on the forecourt" and urged Alistair Darling, the Chancellor, to delay next month's planned increase in petrol duty as well as investigate why drivers were paying so much, the Telegraph reports.Investors are rushing to sell shares and property ahead of the Budget on March 24, in the apparently misguided belief that Alistair Darling is about to raise capital gains tax rates. By realising large gains before next Wednesday's Budget, taxpayers are hoping to lock in the current 18% capital gains tax rate and ensure they will not be hit by any rise, the FT reports.Ernst & Young is facing scrutiny by Britain's auditing watchdog for its advice to Lehman Brothers on an accounting gimmick that allowed the defunct investment bank to hide $50bn in bad loans from its balance sheet. The Financial Reporting Council said yesterday that it had asked Ernst & Young to explain its advice on the so-called "Repo 105" transactions, which were detailed last week in a damning report into the bank's collapse, the Times reports.UBS, one of the banks hit hardest by the financial crisis, was Barclays' preferred merger target only weeks before it acquired the US assets of a stricken Lehman Brothers, the Financial Times has learnt. Speculation over Barclays' interest in UBS and Lehman circulated in the early summer of 2008 but was not confirmed.Britain's biggest trade union offered on Monday night to suspend a British Airways strike that would hit 30,000 passengers a day from Saturday, saying it would look at calling off the walkout if the airline reinstated a settlement proposal withdrawn last week. Unite's offer raises the pressure on Willie Walsh, BA's tough-talking chief executive, who has warned cabin crew that a strike would not ground the carrier and has recruited 6,000 volunteers to ward off the impact of industrial action, the FT reports.Eurozone governments declared on Monday night that they stood ready to helpGreece tackle its debt crisis by establishing an emergency financial support facility for the first time since the euro's creation in 1999. But the ministers stopped short of promising specific sums for Greece, and gave few details of their plan except to signal that it was likely to be based on direct, bilateral loans from other eurozone governments, the FT reports.The world's five biggest AAA-rated states are all at risk of soaring debt costs and will have to implement austerity plans that threaten "social cohnesion", according to a report on sovereign debt by Moody's. The US rating agency said the US, the UK, Germany, France, and Spain are walking a tightrope as they try to bring public finances under control without nipping recovery in the bud. It warned of "substantial execution risk" in withdrawal of stimulus, the Telegraph reports.Gordon Brown's credibility will suffer another blow on Tuesday as the European Commission chides Britain for doing too little to bring its budget back to health. Early drafts of the EC's assessment of the UK's public finances show that Brussels will urge the Treasury to put together more ambitious debt reduction plans, the Telegraph reports.Meanwhile, conflict was brewing between Berlin and Paris yesterday over the crisis in the eurozone as the German Finance Minister called for countries that fail to clean up their finances to be thrown out of the single currency, the Times reports.BAE warned the Government last night that it could be forced to close its tank factory in Newcastle if a £4bn armoured vehicle contract goes to America. The Defence Ministry is hoping to order at least 750 Future Rapid Effect System (FRES) vehicles from General Dynamics in what would be the fourth contract to be awarded to an American company in as many months, the Times reports.A senior investment banker and his wife have been charged with insider dealing, in a case that sees the Financial Services Authority calling for the extradition of a suspect from abroad for the first time. This comes just days after Hector Sants, the outgoing chief executive of the City watchdog, said market abuse in the UK was still "unacceptably high". Christian Littlewood, a banker at Dresdner Kleinwort and later Shore Capital, and his wife, Angie Littlewood, a Singaporean national also known as Angie Lew and Siew Yoon Lew, were yesterday charged with 13 counts of insider dealing and one count of conspiracy to commit insider dealing, the Independent reports.