Wednesday newspaper round-up: Banks face new crackdown

24th Jun 2009 06:21

Ministers will announce a crackdown on Britain's biggest banks next week, putting pressure on them to reorganise or face a blitz of more onerous capital and liquidity rules.In a move that could push up their cost of capital or force them to accept worse terms from their trading counterparties, large banks will be encouraged to restructure themselves so that taxpayers do not foot the bill if their higher-risk investment banking divisions fail, the Times reports.Meanwhile, Lord Turner, the City regulator has warned Mervyn King, governor of the Bank of England, that his proposals for the Bank to take charge of financial supervision could damage stability and lead to pointless turf wars. Adair Turner, chairman of the Financial Services Authority, suggested on Tuesday that sharing the role of tackling systemwide risk in the banking industry with the Bank, working through a financial stability committee, the FT reports.And, frustration is growing at the highest levels of the Treasury over the Bank of England's failure to take swifter and more determined action to boost flows of lending to cash-strapped businesses across Britain. Treasury ministers and officials, including the Chancellor, are said to be increasingly exasperated over the Bank's tardiness in taking more urgent steps to ease credit conditions for business, especially for small firms and medium-sized companies, the Times reports.Boardroom tensions at Marks and Spencer have heightened over the timing of Sir Stuart Rose's departure with the group's deputy chairman putting himself forward as a candidate to replace Sir Stuart as chairman. Sir David Michels, deputy chairman and the senior independent director, has told investors he would like to chair the retailer, a move that could spur Sir Stuart to quit before his planned retirement by July 2011, the FT reports.Citigroup is revamping its compensation system - raising salaries and reducing bonuses for top bankers - in an effort to persuade its best performers to stay with the troubled bank. People close to the situation said Citi began informing staff on Tuesday of the new pay structure, which had been in the works for the past few months, telling some senior bankers their salaries could rise by up to 50% this year, the FT writes.South Africa's minister of resources believes a merger between Xstrata and Anglo American is "just unacceptable", arguing that the country would not promote the formation of a monopoly.Minister Susan Shabangu said the potential tie up would be unhealthy. "Definitely monopolies cannot be promoted in South Africa," she said, reports the Telegraph.Chroma Therapeutics, an Oxford-based company with just 45 staff, has secured a major boost for the embattled UK biotechnology industry by agreeing a deal with GlaxoSmithKline that could be worth more than $1bn (£612m), the Telegraph writes.Peugeot and Citroen's main distributor in Britain is threatening to cut UK operations employing 600 people in an escalating row over backdated business rates. France's Gefco, which delivers up to 350,000 Peugeot and Citroen cars a year in Britain, is furious it has been stung with a retrospective £3m rates bill for its Sheerness port business, the Telegraph reports.In a fresh warning shot at the Treasury over its soaring budget deficit, the European Commission classed Britain alongside the struggling Irish Republic and stricken Latvia as the European Union economies whose national finances had been most dangerously hit by the costs of the crisis. Alistair Darling was again urged to take more urgent and radical measures to bolster the UK's budgetary position, the Times reports.Theo Fennell - the jewellery designer once dubbed the "King of Bling" for his diamond-encrusted crucifixes and silver Marmite lids - is returning to rescue the company he founded from falling sales and a creative dead end, the Independent reports.Simon Cowell, one of the world's biggest TV stars, has joined forces with Sir Philip Green, the British retail billionaire, to form a global entertainment company that will create and own television content on both sides of the Atlantic. The two men, close friends for the past decade, have been working closely together in recent weeks, with Sir Philip travelling to Los Angeles to advise Mr Cowell on a new contract to appear on the Fox network's American Idol, the FT writes.