The Times

Banks to feel squeeze as bad loans rise in recession: Britains banks will have to write off the highest number of bad business loans since the Nineties this year as companies struggle to keep their heads above water, a leading economic think-tank is warning. In its latest health check of the banking and insurance sectors, the Ernst & Young ITEM Club says that 1.9% of corporate loans will be written of this year, against 1.6% last year, with the North East of England and Wales set to suffer the sharpest increases.

We are not at the end of the road yet, says Lotus Chief: Off the A11 in deepest Norfolk, you are already in the middle of nowhere approaching the back of beyond when, there it is, a sprawling automotive factory rising up from the thousands of acres of flat, arable land: the home of Lotus.

Stake sale on the radar as airlines raise value of Nats: A consortium of airlines has increased its valuation of a stake in Britains air traffic control system by 10%, delivering a much-needed boost to the Governments coffers. The latest accounts of the Airline Group value its 42% stake in Nats at 227 million, up from 206 million a year earlier and implying a valuation of 540 million for the partly state-owned company. This suggests that the Government would receive about 65 million more than analysts had estimated if it sold its 49% share in Nats.

Big Six are exploiting the poor and old: Elderly people and poorer families on expensive energy tariffs are subsidising internet-savvy neighbours who switch suppliers to the tune of 330 per year, according to a think-tank, which has demanded an end to so-called predatory pricing.

City veteran returns with FSA broadside: The serial City entrepreneur Sir John Beckwith has taken a swipe at financial regulators as he prepares to launch his latest venture, a foreign exchange boutique for big corporate and institutional clients.

Charity chooses Westfield to revive heart of Croydon: A charity set up more than four centuries ago has come out fighting in support of Westfields plan to build Londons next super mall in Croydon. The Whitgift Foundation said that if the Australian developer was not able to proceed quickly with plans to redevelop the Whitgift Shopping Centre the freehold of which is owned by the charity the people of Croydon would suffer.

The Independent

Insurer faces fat-cat storm over 4 million goodbye to Boss: One of Britains top insurers risks being dragged into the row over fat-cat pay after it emerged that its former Chief Executive is to receive a golden goodbye worth 4 million.

Green rating of British bus firms leaves Google and Apple behind: British bus companies have a better ethical record than new-tech giants Apple and Google, according to a global-sustainability league table published. FirstGroup, the U.K.s biggest bus operator, was named the second best in the world for social, environmental and governance, while the Go-Ahead Group was the 10th best globally.

Zara to open record fifth Oxford St Store: The fashion chain Zara plans to open a record fifth store on Londons Oxford Street, reinforcing the buoyant demand for prime retail property in the capital. Zara, owned by the Spanish giant Inditex, already has three shops there and has signed up for a fourth in the streets Park House development, which opens next year.

Jessops brings options into focus with adviser talks: The main lender to Jessops has held talks with advisers over recent weeks to explore its options for the chain over the next year. HSBC, the retailers biggest shareholder with nearly a 50% stake, has had discussions with accountancy firms, such as Zolfo Cooper, about helping Jessops with its financial planning and strategy for what is expected to be another tough year for consumer spending.

Property prices on the climb for a second month: House prices were up for the second month in a row in April, according to property website Hometrack. Overall, prices rose 0.1% in the month compared with a more robust 0.2% increase in March.

Goldmans ONeill tipped to join Bank Governor Race: In theory the post of next Governor of the Bank of England wont even be advertised for several months. In reality, the scheming and jostling for position are already in full flow. A new name in the frame is Jim ONeill, the affable Goldman Sachs economist now chairing the banks asset management division.

Financial Times

NBNK confident on Lloyds bank branch bid: NBNK says it is confident it can meet regulatory concerns over its bid for a portfolio of Lloyds Banking Groups branches as it confirmed it has been in talks with potential investors to help finance a deal.

Worldspreads may have misused funds: Worldspreads had moved 80% of its clients funds out of segregated accounts at the time of defunct spread betting operators failure, and may have routinely misused client money for as long as five years, according to its Chairman.

Companies look unaffected by bribery laws: In the run-up to the

implementation of new laws on bribery last summer, it looked as though

companies might be swapping hospitality for hair shirts. More

substantially, fears were widely expressed that the tougher provisions

would hinder the ability of U.K. companies to win contracts in some

parts of the world compared with businesses subject to lighter

anti-corruption regimes.

Princess Yachts puts ex-naval dockyard to use: In a West Country

dockyard once used to launch Royal Navy dreadnoughts, civilian craftsmen

are putting the finishing touches to a 16 million 40-metre motor yacht.

This is the first boat of its size to be built by Princess Yachts

International, the Plymouth boatbuilder that has been part of LVMH, the

French luxury goods company, since 2008.

NAB set to cut 1,400 jobs in U.K.: National Australia Bank is to cut

1,400 jobs in the U.K. and book almost 500 million in costs and

provisions as it looks to refocus its Yorkshire and Clydesdale banking

operations. Unveiling the results of its U.K. banking strategic review,

Cameron Clyne, Chief Executive, said the decision to close almost half

of its financial solutions centres and take a further provision against

commercial real estate loans reflected tough economic conditions.

Lex:

Spanish banks: pass the parcel: Spain is thinking about a bad bank

scheme, except that the government doesnt want to call it that or, much

more importantly, put up any money. Of course, moving bad property loans

off Spanish banks balance sheets without troubling taxpayers looks

superficially attractive. Madrids thinking on who the acquirer should be

is vague but seems to envisage a corporate entity financed either by

local deposit guarantee fund money or by the domestic banking sector

collectively. Unfortunately, the first solution would simply impinge

further on funds designed to protect depositors in the event of bank

failures. The latter would risk spreading the toxic asset problem to

even more banks, some of which are in better shape. Irelands bad bank,

the National Asset Management Agency, acquired its first loans at an

average 47% discount in February 2010. But by end-2011, residential

property prices had fallen another 24%. Nama has sold only 7 billion of

assets so far, mainly outside Ireland.

Chalco: bad medicine: Diversification is awkward for a company named

after the product it makes and the country it makes it in. But Aluminum

Corporation of China, or Chalco, has little choice. Rising costs and

poorly-integrated processing plants at home have hurt performance. Last

week, Chalco said it would pay $309 million for 30% of the equity in

Winsway, a Chinese supplier of Mongolian coking coal. Yet Chalco already

faces intense opposition to its plans to buy up to 60% of SouthGobi

Resources, a coking coal miner that is majority owned by Canadas Ivanhoe

Mines. Demand for aluminium is there but Chalcos scattered operations

mean that even with cost cutting it cannot keep pace with rising bauxite

and fuel costs. Chalcos 2% operating margin in 2011 was almost a sixth

of, say, Rusals in Russia. Further, Mr Xiongs hankering for coking coal

is consistent with Chinas love affair with the stuff. He wants to leave

a legacy of his own, rather as did Xiao Yaqing, his predecessor, when

Chinalco, Chalcos parent company, acquired a 10th of the equity of Rio

Tinto, the global miner.

Management excuses: storm warning: The one thing service sector firms

and manufacturers make equally well is an excuse. Last week, as during

every results season, excuses were produced in abundance. But which

ones, if any, should investors forgive Managers for? And which, on the

other hand, are warnings that a company is facing bigger problems than

executives care to admit? Consider the slowdown in Europe, one of the

most popular excuses for poor results at present. On Friday, as

examples, Ford announced that it had lost $149 million in the region

over the first quarter while Procter & Gamble blamed a contracting

European market for lower hair care volumes. Also last week, Deutsche

Bank and Barclays said a lack of confidence close to home was denting

revenues. PepsiCos results were perfectly fine in Europe during the

first quarter thank you very much, in part due to a 5% point increase in

net prices. To be sure, net interest margins are being hurt by

ultra-loose monetary policy. But the same policy is keeping many of the

banks retail and business clients afloat. What is more, with pay chewing

up as much as 50% of revenues, much of the prospect for banks return on

equity is in their own hands.

The Daily Telegraph

Spains woes to deepen as it double-dips into recession: Spain is set to

officially confirm that it fell back into recession in the first quarter

of the year, marking the beginning of what is expected to be another

rocky week for the ailing Eurozone economy.

Barclays accused in mis-selling report: Barclays has been accused of

acting with reckless disregard when it sold a set of complex derivatives

to a care home operator that is suing the bank for 36 million.

Taxpayers stake in Royal Bank of Scotland could be sold before election:

The taxpayers stake in Royal Bank of Scotland could be sold off in as

little as two years, according to a senior executive at the bank. Brian

Hartzer, the outgoing Chief Executive of RBS Retail and Wealth, said

that a sale was probably just a couple of years away.

Record number of millionaires created by pound shop boom: The booming

pound shop industry has created a record number of millionaires,

according to figures which show Britains richest people have become

wealthier than ever, despite the recession.

Goals Soccer Centre strides closer to sale: The purchase of Goals Soccer

Centre by the Owners of Camelot, the National Lottery operator, will

take another stride forward. The countrys second biggest five-a-side

football company, which owns 43 sites across the U.K., was approached at

the start of April with a preliminary bid.

The Questor Column:

Barclays need to focus on shareholders - avoid: Following the Lehman

deal being struck, Barclays raised capital, mostly from Abu Dhabi and

Qatar, to shore-up its balance sheet and avoid using the U.K. government

rescue fund. Qatars sovereign wealth fund now has a 6.67% stake and

remains Barclays largest shareholder. Alison Carnwath said the balance

of rewards between shareholders and employees had to shift in favour of

investors. Executive pay and bonuses are perhaps the biggest issues for

shareholders, as returns in less well remunerated sectors are better.

Debt problems and sluggish growth are likely to make the sector

volatile. However, the average price target of City analysts is some 23%

above the current share price and the yield is 3.1%. Ultimately, the

sector should be rerated. Indeed, banking stocks were penny shares in

the 1970s crisis, before recovering substantially. Investors wishing to

play this should Buy and Hold as a speculative position. Barclays at

223.1p.Questor Says Avoid.

The Berendsen story is all about rising margins: Berendsen, which used

to be known as Davis Service Group, provides textiles cleaning services

in the U.K. and Nordic countries. Last weeks trading update confirmed

that the trends seen last year have continued. The group launched a

strategic review, after which it split its business into a growth unit

and one where the operations are being managed for value. Since its

final results announcement in February, consensus forecasts have risen.

Prior to that statement, earnings had been expected to fall by about 2%.

The current view is for a 4% rise in earnings per share. Questor noted

that a figure of 50p for this year looked more appropriate. Actual

consensus is now 50.56p. Importantly, profit after tax cash conversion

was at more than 100%. First tipped at 401.2p on 21 November 2010, the

shares are trading on a December 2010 multiple of 10.3 times, falling to

9.7 next year and yielding a chunky 4.7%, rising to 4.9%. Berendsen at

520p.Questor Says Buy.

The Guardian

Website lets public express anger at City pay: New service letting

savers email City institutions to demand action on executive pay follows

protest vote at Barclays. Building on the protest vote against

remuneration policies at Barclays on Friday, a new website will allow

savers to email the major City institutions that manage their

investments and demand they take action on executive pay.

Social unrest on the rise in Europe, says ILO report: Social unrest is

expected to grow in Europe as governments impose steep welfare cuts and

fail to implement policies to reduce unemployment, according to a report

by the International Labour Organisation.

House of Fraser says Kevin Stanford not welcome back in boardroom:

Department store group House of Fraser has given a frosty reception to

embattled retail tycoon Kevin Stanford, insisting his surprise return to

the companys boardroom was not welcome and had been grudgingly accepted

only because of a legal obligation.

Guy Hands Terra Firma poised to buy Four Seasons care homes: Guy Hands,

the tax exile and private-equity baron best known for his disastrous

debt-fuelled takeover of EMI, is poised to snap up Britains largest care

home chain after a massive write-down by the government on its share of

the business.

Daily Mail

Gloom expected for Morrisons as grocer feels pain of fierce competition:

e huge growth spurt at Morrisons looks to have slowed with the

supermarket giant expected to post its first fall in sales since 2004.

The Bradford-based grocer, which was previously one of the best

performing supermarkets, is likely to join Tesco in posting negative

underlying sales growth, which analysts expect to be -1% for the first

quarter.

HM Revenue & Customs Chairman Mike Clasper to step down: Former BAA Boss

Mike Clasper who took the helm at HM Revenue & Customs when it struck a

string of controversial deals with big firms is to be replaced. The tax

office has appointed headhunters to search for a new Chairman with

Clasper expected to stand down by the end of the year.

British Airways Owner IAG moves closer to stake in JAL airline: British

Airways Owner IAG has moved a step closer to making its next acquisition

a stake of up to 10% in state-backed Japanese carrier JAL.

Sir Nigel Rudd tipped to become new Prudential Chairman: The race to

take the helm at Britains biggest insurer is coming to an end as City

grandee Sir Nigel Rudd emerged as the favourite to become Chairman of

the Prudential.

Daily Express

Asia boosts U.K. sea trade to 513 billion: Booming sales of luxury

fashion, cars, pharmaceuticals and booze are poised to drive Britains

seaborne trade up by 37% to 700 billion by 2017.

Glaxos HGS offer too low: Glaxosmithklines $2.6 billion (1.6 billion)

bid for Human Genome Sciences was slammed by one of the U.S. groups

biggest shareholders. Mark Evans, a fund manager with Taube Hodson

Stonex, which owns 5.6% of the company, said Glaxo was trying to buy the

business on the cheap and its offer failed to reflect the potential

upside from existing and experimental medicines.

Associated British Foods maintain strong position: Associated British

Foods has substantial interests across five main business segments

incorporating more than 20 companies. The sugar segment produces a

million tonnes each year, mainly in the U.K., South Africa and China,

while the retail segment is better known as the Primark fashion

business.

The Scottish Herald

Harper Macleod in the frame for big growth: Harper Macleod expects to

report 14% uplift in fee income thanks to growth across all of its

practice areas. The law firm told The Herald it should post a rise in

turnover from 16.8 million to 19.1 million for the 12 months to 31

March, 2012, when its accounts are audited.

Nucleus takes 100,000 hit solving errors: Edinburgh-based financial

technology company Nucleus Financial, saw its pretax losses narrow to 1

million last year as the firm took a 100,000 hit from resolving historic

administration errors.

Ambicare Chief planning to drive sales up to 10 million: The new Chief

Executive of medical technology business Ambicare has revealed plans to

grow sales from 1 million to 10 million in the next four years.

NBNK seeking support in bid for branches: NBNK, the start-up bank backed

by former Scottish Secretary Lord Michael Forsyth, has held talks with

Middle Eastern wealth funds about backing its bid for 632 bank branches

being sold by Lloyds Banking Group, according to a weekend report.

Bailed-out banks set to reveal trading updates: The U.K.s bailed-out

banks, Lloyds Banking Group and Royal Bank Scotland, return to the

spotlight with first quarter trading updates.

56 million pay package under fire: Another row over City pay was brewing

after an investor body urged shareholders to vote down a report that

delivered 56 million to 13 top bankers at Standard Chartered.

The Scotsman

More firms look to private equity white knights for funding boost:

Lending to businesses in the U.K. wont recover to pre-crisis levels

until after 2016 as banks write off bad debts at their highest level

since the 1990s recession, according to Ernst & Youngs Item Club

think-tank.

Sir Tom Hunter building bridges to China with summit and MBA programme:

Sir Tom Hunter has launched a venture to bring British and Chinese

business leaders together at a three-day summit at the Cambridge Judge

Business School in the autumn.

Watchdog may act on whistleblowers KPMG complaint: KPMG, the former

auditor of failed bank HBOS, could face an inquiry after a whistleblower

submitted a complaint to the U.K.s accountancy watchdog. Paul Moore, the

former head of risk at HBOS, has complained to the Financial Reporting

Council (FRC) over a report prepared by the auditor that approved his

dismissal from HBOS in 2005.

Pensions group pushing for curb on executive pay: A campaign due to be

launched today will demand that pension funds and investment managers

rein in excessive pay packages at the U.K.s largest listed companies.

Campaigners from the Fair Pensions charity are launching a website to

help members of the public lobby pension providers and asset managers,

including those that operate stocks and shares individual savings

accounts (Isas).

Estate powers up hydro unit with bank funding: Ardlussa Estate on the

island of Jura has sealed a 565,000 deal with Clydesdale Bank to fund

the construction of a hydro-electric power scheme. The bank will lend

the money to landowners Andrew and Claire Fletcher, the fifth generation

of their family to live on the estate, so that they can create a new

source of income for their business.

Fresh financing round will help MiiCard expand: Private equity investors

IQ Capital, New Wave Ventures and Par Equity have pumped 1.6 million in

second-round funding into Edinburgh-based software firm MiiCard, which

has developed a digital passport for online shopping.

No takers for Clinton Cards: The turnaround plans of embattled gifts

retailer Clinton Cards have reportedly suffered a blow after it failed

to find a buyer for the business. The Chief Executive, Darcy

Willson-Rymer, has carried out a strategic review over the past six

months, which is understood to have included a search for a buyer for

all of the business or just its Birthdays chain.

Fly fishing lands boost from film: Women are falling hook, line and

sinker for fly fishing in Scotland, according to an industry expert, who

claims his company has landed a 60% jump in booking inquiries since the

big screen release of Salmon Fishing in the Yemen. The film, starring

Emily Blunt and Ewan McGregor, is based on the novel by Paul Torday.

City A.M.

Confidence up despite a new GDP downturn: Consumers are increasingly

confident and feel more secure in their jobs than they did three months

ago, according to a study out, despite the U.K. officially returning to

recession in the last quarter.

Hotel prices rocket on demand for Jubilee weekends in London: Hotel

prices are soaring in the run-up to the Jubilee in June, according to a

study out from Santander, with some rising by as much as 223%. The

survey found London hotel prices rising by an average of 54% over the

Jubilee weekend compared with the same length of stay in May.

Market problems push up bills: Inefficiencies in the energy market could

mean customers lose out on up to 1.9 billion in savings by 2020, the

Institute for public policy research (IPPR) warned.

The controversial Telco Boss on life after the C-suite: Talking about

art with John Pluthero is a bit like learning to ballroom dance with

Tony Hayward pleasant but slightly surreal. He is showing me around an

exhibition he helped to curate at the Kings Place Gallery in Islington.

ECB faces tricky choice on rates: Appropriately, the European Central

Bank holds its monthly policy-setting meeting in Barcelona this week.

Not that it can do much to ease the pain of Catalan football supporters

post Barcas Champions League exit and the loss of their coach but at

least theyll get a firsthand account of whats going on at the frontline

of Europes economic battleground.

The Times

Gilts: U.K. Government bonds eased after decent results from Wall Street enticed investors to pick up riskier assets such as shares. The June gilt future settled 36 ticks lower at 115.28, slightly better than German bunds after the U.K. officially fell back into recession. In the cash market, the yield on ten-year gilts rose four basis points to 2.14%.

Bet of the day: Spread-betters were nibbling on BP’s share price before results for the first three months of the year are released on Tuesday. Punters backed stubbornly dear oil and higher profits from refining to arrest the near-13% decline in the market value of the “supermajor” since the start of March.

Mover of the day: Forum Energy shares trebled before falling back to a more modest 138.3% improvement at 230p, after private investors belatedly woke up to an interpretation of a seismic survey that suggested the company may be sitting on a thumping great gasfield in the Philippines. Forum said that it would need to raise about $75 million to take things forward.

It’s back to the 1970s for Ford workers: The rising tide of industrial unrest has spread to Ford, where trade unions are threatening to take workers out on the first British strike at the motor giant since the 1970s. The threat of a walkout at Ford comes amid growing discontent at another of Britain’s big automotive employers, BMW Mini, where a dispute over pay and tea breaks has come after a big row over pensions.

We put clients first: Goldman Chief launches the fightback: Lloyd Blankfein ended a two-year media silence to launch a fightback against criticism of Goldman Sachs and its corporate culture. The Wall Street giant was rocked last month when the former head of Goldman’s U.S. equity derivatives business in Europe wrote an incendiary piece for The New York Times in which he claimed that the bank put its interests ahead of its clients’ and alleged that some executives routinely disparaged clients as “muppets”.

U.S. retail giant faces inquiry over Mexico permit bribes: Mexico’s anti-corruption agency is to investigate allegations that federal officials received bribes from Wal-Mart in order to speed up permits to open new stores. The Public Administration Department said that it would look at whether any federal permits were granted to the American retailer’s Mexican division, and take appropriate action if irregularities are found.

Bribery claims cast shadow over deal to buy helicopters: The Indian Defence Ministry said that it would investigate fresh allegations of corruption in the awarding of a contract to buy 12 helicopters from AgustaWestland. Officials in Delhi said that they were studying reports in the Italian press that Giuseppe Orsi was being investigated by Italian prosecutors over claims that the group had paid bribes to win the £457 million contract in 2010.

Apple stays on course to pass $1 trillion barrier as shares soar: Sales of the iPhone are expected to drop in the coming months but Wall Street’s analysts have not been discouraged from predicting that Apple will continue its growth towards a market value of $1 trillion.

Accountant cleared over dismissal of Manager: RSM Tenon has been cleared of unfairly dismissing a former Senior Manager who accused the professional services group of false accounting, The Times can reveal. Duncan Swift, a former Director at the Southampton office, claimed that he was dismissed for blowing the whistle on poor practices in Tenon’s recovery division.

Global builder fined $56 million for scam: The construction company that built the athletes’ village for the London Olympics has pleaded guilty to fraud by overcharging for work on some of New York’s most famous landmarks, including Citi Field, home of the Mets baseball team. Lend Lease, one of the world’s largest builders, will pay a $56 million (£35 million) penalty and the former Boss of its New York office could face up to 20 years in jail.

BP is out in the cold as Kremlin signs Arctic oil deal: Further misery was heaped on BP after Russia’s state oil company unexpectedly struck a second alliance to explore the country’s vast Arctic oil reserves. Rosneft will partner ENI, of Italy, to explore for oil in the Barents Sea and Black Sea. The area, covering about 50,000 sq kms, is thought to contain 36 billion barrels of oil.

The Independent

Johnston Press gives up more shares to banks in £393 million refinancing: Debt-laden newspaper publisher Johnston Press has suffered a fresh blow as it had to give up more of its shares to its banks in return for a crucial £393 million refinancing deal. The lenders, led by Royal Bank of Scotland and Lloyds, will now have the right to own 12.5% of Johnston’s equity through warrants, by converting debt for equity at a later date.

U.S. Fed keeps rates low amid signs recovery is slowing: The Federal Reserve reaffirmed its commitment to the ultra-loose monetary policy that has kept the U.S. economy out of a double-dip recession. The American central bank said again that it would keep official interest rates at rock-bottom levels late into 2014, even as it saw the fruits of its efforts boosting growth and lowering unemployment this year.

More woe for Mothercare as Finance Boss quits: The disarray at Mothercare took a new turn as the Finance Director resigned just weeks after the struggling retailer found a new Chief Executive. Neil Harrington, who has left after six years at the firm to join a private equity business, earned £265,400 last year.

O2 launches pay-by-mobile service: O2, Britain’s second-biggest mobile phone company, launched a pioneering mobile-payments service, called O2 Wallet, which allows users to pay for goods from their phone, transfer money and send any sum between £1 and £500 to a friend.

Financial Times

RBS unit in U.S. agrees to pay $137 million: Royal Bank of Scotland’s U.S. retail subsidiary agreed to pay $137.5 million to settle allegations it overcharged customers with excess overdraft fees. The settlement on Wednesday, which has to be approved by a judge, follows previous settlements on the issue between bank customers and groups including Bank of America and JPMorgan Chase.

F1 gears up for Singapore float: Formula One is stepping up preparations for a flotation on the Singapore stock exchange, lining up Peter Brabeck-Letmathe, Nestlé Chairman and Chief Executive, to chair the parent company of the motor racing series. CVC Capital Partners, the private equity group that holds F1’s commercial rights, last month said it planned to refinance its acquisition loan.

Watchdog plans to end unusual savings schemes: The U.K.’s financial regulators want to kill off the promotion of so-called “death bonds” and other unusual investment schemes offered to retail investors by brokers and advisers, as part of a more assertive stance.

Banks take provisions for PPI past £6 billion: Three of the U.K.’s biggest banks are braced to increase their provisions for mis-sold loan insurance by as much as a third following a sharp rise in the number of complaints received in recent weeks. Lenders have been battling to deal with a surge of compensation requests from customers with payment protection insurance (PPI), largely prompted by increased activity from claims management companies.

HSBC to axe 2,000 jobs in U.K.: HSBC will on Thursday unveil 2,000 job cuts in the U.K. as the bank moves to scale back its investment advisory arm and reduce costs in its back office operations. The reductions are part of a broader global restructuring plan revealed last year by Stuart Gulliver as he battles to drive up profitability in the wake of tougher regulatory demands.

Brussels opens its 18th Ryanair probe: Ryanair’s tempestuous battle with Brussels moved to a new front on Wednesday as Europe’s competition watchdog opened its 18th investigation into whether the carrier benefits from illegal state subsidies to airports.

Lex:

U.S. telecoms: strolling not Sprinting: The telecommunications company reported a smaller loss than expected in the first quarter. It sold 1.5 million iPhones in its second quarter of offering the device, and some 660,000 of those went to new customers. The stock spiked 7% in early trading. A slightly harder look reveals that growth remains dull at Sprint – which, combined with greyish first quarter results from AT&T and Verizon, paints a dreary picture of the U.S. telecoms industry. Sprint’s namesake wireless brand did add 263,000 postpaid customers in the first quarter. But that is an expansion of less than 1%. And if you add in Sprint’s rotting Nextel brand, postpaid subscribers fell by 192,000. Verizon and AT&T did a bit better, adding 500,000 and a bit under 200,000 respectively. But again, these are gains of less than 1%, and likely came mostly at the expense of Sprint and T-Mobile. The bright spot for Sprint is that average revenue per user, which rose by nearly $4 in the first quarter, to about $60, is much better than at AT&T or Verizon. Cash return on tangible assets at Verizon and AT&T is around 7.5%. At Sprint, which lacks scale and is investing in both the iPhone and a new network, it is 1%.

U.K.’s double-dip: The data are noisy and revision-prone, and the definition of “recession” – two consecutive quarters of contraction – is arbitrary and unhelpful. Forward-looking business confidence surveys, rather than backward-looking output data, suggest an improvement is under way. The big reason why U.K. gross domestic product recorded a marginal contraction in the first quarter, and not a marginal expansion, was disappointing growth in business services and finance. And any revisions will not alter the historical fact that this is the slowest recovery in a century. U.K. GDP remains 4.3% below its peak, four years ago. Even in the 1930s, the economy had made good all of its losses by this point. View this in combination with the latest figures for both headline and core inflation, which have ticked up without even reaching the upper band of the Bank of England’s target, and the U.K. economy appears barely less troubled than the Eurozone’s, despite the advantage of printing its own currency.

Credit Suisse: SFr44 million in the pocket is better than a kick in the teeth, especially when investors were braced for a first quarter loss. Credit Suisse’s near 100% year-on-year fall in reported profit in the three months when investment bank clients traditionally do the bulk of their business is mostly down to quirky accounting rules. But when SFr1.5 billion of accounting losses on its own debt, and a SFr530 million up front charge for deferred pay instruments depress return on equity to 0.5%, it is fair to expect a pep talk from Chief Executive Brady Dougan. The Swiss bank’s investors were instead offered take-your-pick results, ranging from worst (0.5% ROE), via “underlying” (12.4%), which excludes the own debt tweak, to “normalised” (16%), which also ignores the pay number. Like its U.S. rivals, revenue was mostly better than the dreadful final quarter of 2011, but worse than a year ago. Deleveraging explains part of the decline: Credit Suisse has slashed its investment bank’s risk-weighted assets by a third to $210 billion, $20 billion shy of its 2012 target. Overall, the division’s revenue fell 18% – compared with the more modest 11% fall at JPMorgan Chase, a reminder that U.S. banks are pulling away from their European counterparts.

Lombard:

Smith’s exit pins suspicion on lobbyists: The resignation of Adam Smith, namesake of a great Scottish economist and special adviser to embattled culture secretary Jeremy Hunt, has triggered sharp intakes of breath among Public Affairs Directors, the in-house lobbyists of corporate Britain. Emails written by News Corp’s own Public Affairs Director, Frédéric Michel, suggest Mr Hunt got too close to the company as he deliberated whether to wave through its £8.3 billion bid to buy the rest of BSkyB. Revelations of influence peddling foster a jaded view of the relationship between business and politicians. Big companies may threaten to quit the U.K. when proposed regulation rattles them – Barclays and Prudential are recent examples. Ironically, the coalition is accounted to be frostier in its relations with companies than Labour was when in power. This partly reflects David Cameron’s desire to distance the Tories from big business. Another reason is that Conservative Senior Ministers often have a Liberal Democrat junior keeping an eye on them.

Thick end of the wedge: Share consolidations, as planned by Royal Bank of Scotland, mark one of the areas in the financial markets where rationality peters out and voodoo begins. If every stockholder swaps their old shares for a smaller number of new ones at a fixed ratio, their claim on future dividends stays the same, as should the value of their holding. Despite this, a higher-priced share may subliminally feel more valuable, which is why the state-controlled bank is considering a 10-for-one stock swap. Investment Technology Group, a U.S. broker, has studied a consolidation executed by Citigroup, a bank which, like RBS, saw its shares tumble into the ranks of the penny stocks following the credit crunch. A greater number of small trades were executed on markets such as Nasdaq, suggesting retail investor appetite had increased. But at the same time professionals did more big trades anonymously on the markets known as “dark pools”.

The Daily Telegraph

Britain in double-dip recession as growth falls 0.2%: David Cameron has described any U-turn on Britain’s austerity drive as “absolute folly,” after official data showed that the U.K. tipped back into recession in the first three months of the year. The unexpected 0.2% contraction in U.K. growth followed a 0.3% fall in gross domestic product (GDP) in the fourth quarter of 2011, signalling a technical recession and Britain’s first double-dip since 1975.

French President Nicolas Sarkozy’s fiscal pact referendum deals a hammerblow to Angela Merkel’s austerity plan: Nicolas Sarkozy has promised to hold a referendum on Europe’s fiscal pact, dealing a hammerblow to Angela Merkel’s “non-negotiable” plans to impose austerity on the Eurozone.

U.S. taxpayers will not make profit from bailing out banks, says TARP inspector general Christy Romero: American taxpayers will not see a profit from the $700 billion (£433 billion) bail-out that Congress passed at the height of the financial crisis, a government watchdog has warned.

Bob Diamond’s £17.7 million package at Barclays is ‘out of order’, says IoD Chief Simon Walker: The multi-million pound remuneration package of Barclays Chief Executive Bob Diamond is “out of order”, according to the head of one of Britain’s largest business groups.

The Questor Column:

AB Foods issues sweet interims: Interim numbers beat consensus forecast by about 1%, with strength in the group sugar operation outweighing some weakness in its food ingredient business. In the six months to 3 March, revenues rose 11% to £5.77 billion, with pretax profits rising 3% to £329 million. The dividend per share was increased by 8% to 8.5p, payable on 6 July. The shares trade without the right to this payment on 6 June. In the first half, sugar profits grew 59%, Primark profits rose 2% but grocery tumbled 31%, although that was the result of restructuring costs at some of its businesses. Profits at sugar are expected to be “well ahead of last year” with “strong profit growth” at Primark in the second half. The shares are trading on a September 2012 earnings multiple of 14.5 times, falling to 13.5 next year. The prospective yield is 2.2% rising to 2.4%. The shares were last tipped as a “Buy” at £10.51 on 13 September, although that was cut to a hold in February. Since the last buy recommendation they are up 18% compared with a FTSE 100 up 10%. The figures were impressive and this year is likely to be one of significant progress for the group, particularly in sugar. Associated British Foods at £12.39 +24p. Questor Says “Hold”.

Caution is necessary as Capita issues new shares: Britain’s largest outsourcing group is to issue 40 million shares, equal to 6.5% of the current equity, in a placing to raise about £300 million. The funds will be used to make small acquisitions and shore up the company’s balance sheet. The market reaction to Capita’s fundraising was predictable, as more than £400 million was wiped off the company’s valuation. This is frustrating for private investors, who cannot buy into the share issue, while institutions can. The acquisitions have to be right and earnings-enhancing. But Capita is upbeat about potential purchases in the current market. The outsourcing group said first quarter turnover was up 17%, mainly due to the impact of acquisitions. So far this year, the company has won £900 million of new business, compared with £2 billion last year. Typically, the contracts are for white collar operations and on a long-term basis. The shares are 8% below this level compared with a FTSE 100 down 5%. Questor agrees part of the fall could be technical and the shares may recover, but remains cautious. Capita at 6821/2p -461/2p. Questor Says “Hold”.

The Guardian

GlaxoSmithKline shares slide after disappointing first quarter: Sales and profits at GlaxoSmithKline, Europe’s largest drug maker, have been hit by austerity measures in Europe and price cuts in some emerging markets, along with unrest in the Middle East. The group’s first quarter results missed analysts’ expectations, and sent its shares down 3.1%.

Sports Direct founder Mike Ashley in line for £23.4 million in shares: Sports Direct has upped the share bonus payout for its largest shareholder Mike Ashley by 30% as the billionaire looks to catch up with staff who stand to collect bumper payouts thanks to a turnaround in its performance.

Investors in Capital Shopping Centres complain over executive pay: Shareholders in Capital Shopping Centres (CSC) have registered a heavy protest against what they view as excessive executive pay at the property company, which holds big stakes in malls including Manchester’s Trafford Centre and the Metrocentre in Gateshead.

Daily Mail

Double-dip puts pressure on the Bank of England for further QE: Pressure was mounting on the Bank of England to restart the printing presses after it emerged that Britain suffered its first double-dip recession since the 1970s. Official figures showed the economy shrank 0.2% in the first quarter of 2012 following a 0.3% contraction in the final quarter of 2011.

Heathrow airport at 99% capacity but BAA profits soar: British airports operator BAA eked more growth out of a crammed Heathrow during the first quarter. BAA, owned by Spain’s Ferrovial, enjoyed a 15% hike in quarterly profits to £231 million with higher airline tariffs and retail income lifting revenues 11.5%.

Broker Views:

DiamondCorp: Northland Capital Partners Ltd initiated the stock with “Buy” rating and a target price of 15.00p

Findel: Oriel Securities Ltd initiated the stock with “Buy” rating and a target price of 5.00p

San Leon Energy: Macquarie maintained an “Outperform” rating on the stock, with a target price of 30.00p

Carillion: Liberum Capital Ltd upgraded the stock to “Hold” and increased the target price to 270.00p

Majestic Wine: Canaccord Genuity Corp downgraded the stock to “Hold” and decreased the target price to 505.00p

Sports Direct International: Seymour Pierce downgraded the stock to “Hold” and decreased the target price to 285.00p

Daily Express

RBS is set to launch share shake-up plan: Royal Bank of Scotland shares will have to hit 500p for the Government to make a profit on its 83% stake after the bank revealed plans to slash the number of shares available to drive the price up 10 times. Investors will vote on plans for the 10-for-one share swap at this year’s annual meeting in May in a move that would increase the company’s price 10 times to 232½p at the close of 231/4p, flat on the day.

Virgin sprints ahead with hand from Olympic star: Olympic champion sprinter Usain Bolt has helped telecoms and cable TV provider Virgin Media post record-beating first quarter sales. Virgin said its television advertising campaign, starring Bolt and Sir Richard Branson to promote the doubling of its broadband speeds, had tempted 21,200 new cable customers in the three months to 31 March.

Buy British to save jobs, says Premier Foods Boss Michael Clarke: The Boss of Premier Foods called on “patriotic” shoppers to save jobs by buying more British-made food this summer. Michael Clarke, Chief Executive of the Hovis Bread and Bisto group which sources 80% of its ingredients from the U.K., said people celebrating this summer’s Diamond Jubilee and London Olympics should “support British jobs, supply chains and farmers”.

The Scottish Herald

Number of firms going bust hits record levels: A record number of Scottish companies went bust in the first quarter, and manufacturers north of the Border have suffered a renewed slide in output, it has emerged.

Standard Life sales fall but beat City forecasts: Volatile financial markets are increasingly being accepted by investors as the “new norm”, Standard Life Finance Director Jackie Hunt said, as sales at the pensions and savings giant beat market expectations and assets at its investment arm hit record levels.

Marketing firm wins workplace title: Material Marketing and Communications scooped the top spot in Scotland’s Best Workplaces Awards for the second year running.

Schroders remains positive in face of toughening competition: The Chief Investment Officer at Schroders Private Banking has admitted competition is tough in the wealth management market, but he remains “positive” about finding good opportunities for clients.

Aggreko facility’s royal opening: Scottish temporary power company Aggreko, one of Scotland’s big international success stories, welcomed HRH the Princess Royal to perform the official opening of its £22 million manufacturing facility at Lomondgate in Dumbarton.

The Scotsman

Northern Irish firm wins £20 million deal for Scottish wind farm infrastructure: Utilities firm ScottishPower awarded a £20 million contract to build two wind farms in the west of Scotland to a Northern Ireland-based firm. Northstone, which is based in Belfast, won the contract for the construction of access roads, cable works and turbine foundations, at both the Harestanes wind farm in Dumfries and Galloway and the Middleton site in East Renfrewshire.

Energy Assets set for £3 million maiden profits: Scotland’s newest listed company remains on course to post profits of nearly £3 million when it delivers its maiden figures to the stock market in June, its Chief Executive said. Livingston-based Energy Assets, which installs and manages gas meters for commercial and industrial clients, expects its profit before tax and exceptional items for the year to 31 March to be between £2.7 million and £2.9 million.

Retail jobs bounce back in first quarter: The number of people employed by Britain’s retail sector grew modestly in the first quarter of the year, highlighting a fragile recovery on the high street, figures reveal. The statistics from the British Retail Consortium (BRC) and Bond Pearce show that retail employment rose by 0.4% compared with the same quarter a year earlier, the equivalent of 3,011 more full-time jobs.

Walkers invests £15.2 million in crisps”: Crisps maker Walkers is to create 110 jobs through a £15.2 million investment in its U.K. manufacturing sites. The investment will support the introduction of another production line at its Leicester site, making kettle-fried crisps such as the Red Sky and Walkers Extra Crunchy varieties.

Best is yet to come from North Sea oil says Alex Salmond: First Minister Alex Salmond asserted that “the best is yet to come” on the value of the North Sea oil industry to an independent Scotland, claiming it would bolster its credit rating in financial markets.

Muted response to double-dip news: Traders and analysts shrugged off news that the U.K. economy had fallen back into recession amid signs of an upturn in manufacturing activity in recent weeks. Experts claimed the underlying picture remained one of growth despite official figures revealing gross domestic product (GDP) had contracted for two consecutive quarters – triggering the second recession in three years.

Premier price for oil firm’s shares on news of Solan field approval: Shares in Premier Oil rose after U.K. authorities gave the go-ahead for development of the company’s Solan field to the west of Shetland, with production set to start in about two years’ time. The group, whose shares are listed on the London Stock Exchange, expects to start drilling the first of four sub-sea wells in the second quarter of next year, following approval from the U.K.’s Department of Energy and Climate Change (DECC).

£80 million ‘green bank’ cash in hands of fund managers: Business Secretary Vince Cable has handed out £80 million from the funds of the Green Investment Bank (GIB) to London-based fund managers. The funds come from the Department for Business, Innovation and Skills’ (BIS) U.K. Green Investments (UKGI) unit ahead of the GIB getting the green light from Europe.

City A.M.

FSA considers News Corp bid emails probe: the financial Services Authority could look into emails sent by Jeremy Hunt’s office to News Corp in relation to possible market abuse.

U.K. reforms to cost taxpayers up to £20 billion: The U.K.’S banking reforms will cost the taxpayer £10-20 billion in lost value on RBS’s shares, the bank’s Chief Executive Stephen Hester told a roomful of business students.

Credit Suisse in profit despite £1 billion debt fee: A return to profitability for its investment bank helped Credit Suisse to narrowly avoid a loss in its first quarter despite a SFr1.5 billion (£1 billion) accounting charge on its own debt.

Canopius finally gets the nod on a £164 million offer for Omega: Lloyds of London insurer Canopius said it had agreed to buy rival Lloyd’s insurer Omega after raising its offer to £164 million in a recommended cash deal, thereby putting to an end a near 16 month process. Canopius said it will pay 67p per share, increasing an offer it made earlier in April by 2p per share to secure the support of the board.

Bank of America Merrill Lynch fights back in talent stakes: Bank of America Merrill Lynch (BAML) took the first step towards replenishing talent for its European investment bank, poaching one of the City’s most Senior bankers to be President of Europe and Emerging Markets, and recruiting one of its former charges to co-head its U.K. corporate broking team. 

The Times

BMW pay deal faces collapse over right to spend a penny: Shorter tea breaks and

workers on the assembly line having to raise their hands to go to the loo are at the

heart of a dispute that could silence one of Britain‟s busiest car plants. Thousands of

workers at Mini Oxford have voted by a huge majority to move towards a strike

ballot after a breakdown in pay talks. Poorest lose out on millions to reduce

effects of fuel poverty: Thousands of England‟s poorest households have been

left in the cold after a government insulation scheme underspent its budget by £27

million last year, The Times has learnt. The funding, which enables low income

households to reduce their energy bills, will be handed back to the Treasury.

Aviva ‘open to offers’ for $1 billion U.S. sale: Aviva is believed to be considering the

sale of its American operations in a deal that could raise more than £1 billion. Andrew Moss, the Chief Executive, told a conference that the insurance group was open to offers. The business accounted for

about 8% of Aviva‟s £2.5 billion operating profit last year but needs to set aside large

amounts of capital due to its focus on selling fixed indexed annuities, which offer

customers guaranteed returns.

Bank sale leads to payout for executive:

The former Finance Director of Northern

Rock is to receive a £270,000 payout

following the sale of the nationalised bank to

Virgin Money. The payment to Jim

McConville, which is likely to be confirmed

in the bank‟s annual report due in June,

relates to a long-term incentive plan put in

place in April 2010.

Negative equity hits North-South divide:

The proportion of homeowners whose

properties are worth less than their

mortgages has soared in 18 months, with

those in the North of England suffering the

greatest difficulty, according to a new report.

The percentage of borrowers in negative

equity has risen from 3.6% to 5.6% between

2010 and 2011, while in the North lower

house prices have pushed the number from

6% to 8.5%, equivalent to one in twelve

households.

Tesco looks for new messenger to talk to

customers: It tempted you with the slogan

“Every Little Helps” and Prunella Scales,

Jane Horrocks et al polished the message

even further, but now Tesco, under

pressure as almost never before, is

overhauling its advertising strategy. The

group embarked on a “review of its brand

communications” and said that its

incumbent advertising agency would have

to pitch for the account with rivals.

Total solution for more petrol: J

Sainsbury has bought 18 Total petrol

stations as it continues to increase its share

of the fuel market. The supermarket group

confirmed that it had exchanged contracts

with Rontec Investments, a company

backed by Gerald Ronson.

Nokia’s ‘amazingly fast’ plunge from No

1: Nokia shares sunk to a 15-year low after

it reported its worst quarter for sales since

2006, robbing it of its prized position as

Finland‟s most valuable company. As hopes

that its management had got to grips with its

longstanding problems evaporated, Nokia

shares crashed 17% in Helsinki and by

14%, or 70 cents, to $4.34 in New York.

The Independent

Asian growth to be hit by weak Western

demand: Hopes that surging growth in Asia

would power the global economy through its

present troubles were dealt a blow when the

Asian Development Bank slashed its growth

forecast for the continent in 2012 from 7.5%

to 6.9%.

Carlyle plans New York float with a tag of

$8 billion: The private-equity giant Carlyle,

whose investments include the chemist

Alliance Boots, Dunkin‟ Donuts and the

health shop Holland & Barrett, is gunning for

a market valuation of between $7.5 billion

(£5 billion) and $8 billion when it floats in

New York this spring, insiders said.

Tullett Chief gets £7.5 million despite

profit fall: Terry Smith picked up £7.5

million in pay, bonuses and dividends last

year as the Chief Executive of the broking

giant Tullett Prebon. That was despite a 9%

fall in pretax profits to £136 million.

Barsky back with a £4.6 million stake in

Matra: Maxim Barsky, the Executive best

known for quitting BP‟s Russian joint

venture after missing out on the top job, is

making a comeback with a £4.6 million

investment in the Russia-focused company

Matra Petroleum.

Vitec snaps up Camera Corps: The

founder of a TV camera company whose

specialist equipment is used at everything

from top sporting events to the reality show

Big Brother is celebrating its £8 million sale.

Laurie Frost sold Camera Corps to the listed

photography and broadcasting group Vitec,

which said it was keen to buy the company

before the 2012 Olympics.

BHP Billiton set to invest £445 million in

Mad Dog extension: The mining giant BHP

Billiton is to invest $708 million (£445

million) to expand its Mad Dogjoint venture

with BP and Chevron in the Gulf of Mexico.

The new facility, an extension of the existing

development dubbed Mad Dog Phase 2, is

expected to produce about 130,000 barrels

of oil a day and be up and running in 2018.

Gieves & Hawkes bows to Chinese

buyer: The royal tailor Gieves & Hawkes

has been snapped up by a Chinese retail

giant. The Savile Row-based tailor with a

240-year history of clothing princes and

celebrities has been bought by a subsidiary

of Li & Fung for £32.5 million, plus

additional payments of up to £60 million

depending on sales in China.

Page profits halved by City hiring freeze:

A hiring freeze among struggling financial

services firms halved banking profits at the

recruiter Michael Page in the first three

months of the year. Financial services firms

– which account for about 8% of Page‟s

profit – axed thousands of jobs last year and

have not yet started hiring again.

Financial Times

G4S Chief’s pay cut after ISS debacle:

Nick Buckles took home £1.9 million in 2011

after costing the company £55 million in

fees following last year‟s aborted takeover

of rival ISS. But his total earnings fell

sharply from the previous year‟s £2.5 million

as the entire senior G4S leadership team

gave up their annual bonuses in penance

for the failed deal.

Melrose executives to get £126 million

payout: Melrose‟s top executives have

been awarded stock worth £126 million after

shareholders in the engineering turnround

specialist approved the crystallisation of its

five-year incentive scheme.

MP warns of Olympic chaos at Heathrow:

Heathrow is at risk of chaos during the

Olympics if the U.K. Border Agency does

not provide sufficient staffing for the high

volumes of visitors expected, the Chairman

of the Commons select committee on

culture, media and sport has warned. John

Whittingdale, MP, has written to Jeremy

Hunt, the culture secretary, about his

concerns that budget cuts will lead to long

queues at the U.K.‟s largest airport.

Vale looks to mega-ships commission:

Vale has signalled it is prepared to

commission more than 100 of its

controversial giant Valemax ships as the

biggest producer of iron ore battles with

Australia-based miners for the key Chinese

market. The Brazilian miner expects

Chinese appetite for iron ore to remain

strong despite the country‟s economic

slowdown, providing the demand to justify

the ships which rank as the world‟s largest

dry bulk carriers with decks the size of three

football pitches.

Fidelity fights to keep on course: There is

something swan-like about Fidelity

Worldwide Investment, the privately held

company that manages $212 billion of

savings and is one of the world‟s largest

Independent Investment Managers. Free

from quarterly disclosure requirements, it

appears to glide serenely on while its

publicly quoted rivals are tossed around by

stock market turmoil.

Rivals play catch-up with the Pru in

Indonesia: Prudential revealed some

startling figures about Indonesia in its

results last month. The world‟s fourth most

populous nation now produces more

revenues for the U.K. based insurer than its

entire Asian business did only four years

ago.

Lex:

Nokia’s sea of troubles: The mobile

maker‟s re-entry into the U.S. market this

week with the Lumia 900, a rival to Apple‟s

iPhone and Google‟s Android phones, was

marred by a software glitch. That was

followed by another profit warning, a carbon

copy of one last summer that revealed the

depth of the Finnish company‟s structural

challenges. The smartphone is being

launched with Microsoft and AT&T; all three

need it to succeed – and not just because,

coming so late after the iPhone and the

Android, there are many industry observers

who wonder why they are even bothering.

The device costs $99, but Nokia has been

forced to offer a $100 credit on phone bills

as compensation to anyone buying it before

21 April, in effect giving the product away.

Last year Nokia said operating margins in

its devices and services division would be

zero in 2012; now it says they will be minus

3% because of intense competition for its

mobiles and smartphones in emerging

markets from Android-based rivals. The

Lumia range has been on the market only

since November and sales of 2 million in the

first quarter of 2012 look healthy enough.

But the average selling price was just €220,

compared with an expected €300.

Private equity IPOs: Companies made

stuff you could comprehend and sought new

capital because they needed to expand.

Adding pain to this riddle, the IPOs of

Blackstone, Fortress and Apollo have all

been unmitigated disasters for outside

shareholders. Investors should consider two

big questions. The first is whether it is

comforting that – looking at Carlyle‟s results

last year, say – about $2 billion of its $2.8

billion in revenues comes from management

and performance fees related in part to its

own estimates of asset values. Even so, in

both cases employees are paid well before

the true return for investors (and

shareholders) can be known. Compensation

at Carlyle equalled 40% of performance fee

income last year. Ultimately, though, all

investments are realised and there is

nowhere to hide. So private equity firms are

as exposed to economic and market

fluctuations as anyone else. The second big

question, therefore, is what is going to

happen to returns from here.

Alcoa: The Company‟s first quarter profit of

$94 million announced this week was twothirds

lower than a year ago, though still a

good deal better than expected. Investors

who blithely treat these results as an

indicator of world economic health may

regret it. Demand – industrial and financial –

is there. But, for Alcoa, the pricing is all

wrong: at $1.12 a pound, it was flat quarter

on quarter. So, at $6 billion, was Alcoa‟s

revenue. That is just as well: costs keep

creeping up and are now $1.11/lb. Yet

Alcoa remains bullish, projecting 7% growth

in primary demand this year (down from last

year‟s 10%), and a small supply deficit.

People still drink from aluminium cans and

China is restocking as construction and

transportation consumption rises. Demand

is also returning in the European and U.S.

aerospace industries. More than 3% of

global capacity has been cut since June.

Alcoa plans to axe 530,000 tonnes, a sixth

of the total reduction predicted by Rusal in

December. Cost pressures and weak prices

all too easily spell rising debt for metals and

mining companies. Alcoa‟s net debt

sneaked up 8% in the quarter.

Lombard:

U.S. disposal would bolster Aviva: City

grouches can be expected to tell the ex-

ANZ trouble-shooter that Mr Moss has been

too slow to reshape Aviva, whose shares

trade at a discount to swankier rivals. The

timing, as highlighted in a note from UBS

analyst James Pearce, could be better. U.S.

life companies trade at a 10% discount to

their GAAP book value. So Aviva, which

bought its stateside offshoot for £2 billion

including debt in 2006, might have to absorb

a loss unless a synergy-enriched bidder

came forward. European acquirers might

meanwhile sit out the auction because new

rules look set to impose higher solvency

standards on their U.S. insurance

subsidiaries than U.S. owned competitors. A

sale would have two advantages. First, the

proceeds would bolster Aviva‟s own

regulatory capital. This shrank by one-third

in the third quarter of 2011, panicking some

investors, before recovering in parallel with

bond prices by the year end. Second,

dumping the low-margin, sub-scale U.S.

business would represent greater progress

towards Aviva‟s goal of becoming a focused

European composite insurer than, for

example, deeming its Czech outpost noncore.

Golden oldie: After half a century of mostly

middling performance, Oxford University‟s

first science spinout has become a glamour

business. Oxford Instruments has

celebrated a fourfold increase in its value

over two years by advising that full year

profits will hit top-end forecasts. With

underlying earnings of around £40 million in

the bag for 2011-12, analysts are optimistic

that the company will achieve its aims of

raising margins to 14% by 2014-15 and

sales by 14% in each of the intervening

financial years. Stock market investors, for

their part, have a weakness for buzzwords.

Oxford is a big manufacturer of equipment

used in nanotechnology, the much-vaunted

science of tiny structures. But it is more

prosaically exposed to pressured western

science budgets and Asian markets where

access can be patchy.

The Daily Telegraph

Argentina ‘satisfied’ by BP’s Falklands

rejection letter: Argentina has claimed a

bizarre victory in its bid to stop British

companies exploring for oil off the Falkland

Islands, proclaiming “Satisfaction” that BP

had written to say it had no plans to enter

the region.

Bank of America Merrill Lynch

downgrades BSkyB over on-demand

threat: BSkyB is facing a fresh setback

after Bank of America Merrill Lynch (BoA)

put an “Underperform” rating on the pay-TV

business and slashed its long-term revenue

forecasts by a fifth.

Thomas Cook shares drop amid credit

insurance fears: Insurance giant Euler

Hermes sparked a sell-off in Thomas Cook

shares after it decided to withdraw crucial

protection for some of the holiday operator‟s

suppliers in the U.K. Thomas Cook was

forced to reassure its customers after it

emerged that Euler Hermes planned to pull

credit insurance cover for third-party

suppliers to the 170-year-old holiday

company.

Costa Concordia: Carnival still a

‘powerful brand’, says Vice-Chairman

Howard Frank: Cruise giant Carnival said

bookings in Europe have shown signs of

returning to healthier levels in recent weeks

as the company looks to recover from

January‟s Costa Concordia disaster.

Johnson & Johnson fined $1.1 billion for

misleading doctors over anti-psychotic

drug Risperdal: Johnson & Johnson has

been ordered to pay a $1.1 billion (£691

million) fine by a U.S. court after a jury

found the pharmaceutical company misled

doctors over the risks associated with a best

-selling anti-psychotic medicine.

The Questor Column:

Vedanta’s roller coaster ride could be

poised for a climb: Indian commodities

giant Vedanta Resources had a tough time

in London trading on Tuesday, despite

releasing record quarterly production figures

for its lead, silver, alumina and power arms.

Mining has been halted since August by the

Indian courts over possible environmental

breaches by companies including Sesa

Goa, which is a Vedanta unit. A particular

headache for management has been the

negative headlines Vedanta has faced over

a proposed bauxite mine on holy lands in

the Indian state of Orissa. The Indian

authorities rejected the plans and that saga

is still to be resolved, with a key hearing

having being postponed on Monday and

now expected to take place in late May or

early June. Vedanta‟s shares are trading on

a current year earnings multiple of 5.1 and

yielding around 3%. Questor does not

advise a buying spree – but nor does it think

now is the time to sell, particularly with the

mining sector currently under something of

a cloud because of worries about Chinese

growth. Vedanta at £11.55 -80p. Questor

Says “Hold”.

Cobham’s future is up in the air: Cobham

began life in 1934 by developing air-to-air

refuelling technology. However, it has

gradually moved into communications and

electronics, leading to the renewed £270

million bid for Danish satellite

communications group Thrane & Thrane on

Tuesday. The potential deal is a sign of

defence and aerospace manufacturer

Cobham‟s ambitions to grow in commercial

markets in the face of spending cuts in the

U.S. defence industry, which accounts for

roughly 45% of revenues. Cobham wants to

build on this progress by combining its

satellite communications business with

Thrane & Thrane, which designs products

for Inmarsat‟s network, to create what it

describes as a “technology advantage and

scale in maritime, land and airborne satcom

systems”. However, while Questor

understands Cobham‟s strategy, it does not

believe now is the time to invest in the

company. Following its post-results bounce,

Cobham shares are trading on a forecast

price-earnings ratio of 11 and a dividend

yield of 3.5%. In an era of economic

uncertainty, and when Chairman John

Devaney is yet to appoint a new Chief

Executive, Cobham looks pricey. Cobham

at 229.1p -0.9. Questor Says “Avoid”.

The Guardian

Financial stability under threat from lack

of safe assets, IMF warns: International

Monetary Fund predicts drop in number of

countries whose sovereign debt is

considered safe could remove $9 trillion

from supply of safe assets by 2016. The

International Monetary Fund has warned

that the “scramble” for a diminishing pool of

safe assets poses a fresh risk to global

financial stability.

Gold price ‘could peak above $2,000’: A

record high gold price above $2,000 an

ounce next year could mark the peak of the

precious metal‟s more-than-decade-long

bull run as monetary policy in key

economies starts to normalise, the

Chairman of metals consultancy GFMS said

on Wednesday.

Arctic oil rush will ruin ecosystem,

warns Lloyd’s of London: Insurance

market joins environmentalists in

highlighting risks of drilling in fragile region

as $100 billion investment is predicted.

Lloyd‟s of London, the world‟s biggest

insurance market, has become the first

major business organisation to raise its

voice about huge potential environmental

damage from oil drilling in the Arctic.

Bob Diamond and the question of tax

equalisation: Barclays shareholders have a

fortnight to decide whether the £5.7 million

tax bill was a price worth paying to bring

Diamond back to the U.K. It is there in black

and white for anyone who takes the time to

read the terms under which Bob Diamond

was appointed Chief Executive of Barclays

bank.

Occupy storms AIB’s Dublin HQ: The

Occupy Movement stormed the corporate

headquarters of the Allied Irish Bank in

Dublin on Wednesday evening just hours

after it emerged that €1.5 billion (£1.27

billion) of Irish taxpayers‟ money was

transferred to senior bondholders with the

bank.

Daily Mail

Financial Services Authority plans are

‘gift to the swindlers’: Rogue Bosses of

failed firms could be entitled to

compensation under controversial plans

being drawn up by the City watchdog. The

proposals, dubbed a „fraudster‟s charter‟,

come as part of a radical shake-up of the

Financial Services Compensation Scheme,

the safety net which protects savers and

investors.

Back with a vengeance, the single

currency debt storm sweeping

Eurozone: European bond markets

endured another rollercoaster ride as the

debt storm in the single currency bloc

returned with a vengeance. Italian

borrowing costs soared in an auction of

short-term debt amid mounting fears that

Spain will be the next Eurozone country to

implode – plunging the entire region back

into crisis.

Passenger numbers lift BAA but

company plays down new £326 million

contract unveiled by David Cameron:

Heathrow-Owner BAA has played down the

importance of a new £326 million contract

unveiled by David Cameron as it saw a

record 70 million passengers pass through

the U.K.‟s busiest airport in March.

Clinton Cards considers deal with

creditors that would allow it to cast off

underperforming stores: Struggling

retailer Clinton Cards is considering a

controversial deal with creditors that would

allow it to cast off underperforming stores.

Broker Views:

Copper Development Corp: Fox-Davies

Capital maintained a “Buy” rating on the

stock, with a target price of 116.00p

Borders & Southern Petroleum: Merchant

Securities maintained a “Buy” rating on the

stock, with a target price of 218.90p

H&T Group: Charles Stanley Securities

upgraded the stock to “Buy” and increased

the target price to 360.00p

Premier Oil: HSBC upgraded the stock to

“Overweight” and increased the target price

to 455.00p

Barclays: Investec upgraded the stock to

“Buy” and increased the target price to

240.00p

Namakwa Diamonds Ltd: Charles Stanley

Securities downgraded the stock to “Hold”

and decreased the target price to 5.00p

Daily Express

Airbus’s jet boost with £1.5 billion

aircraft order: Britain‟s aerospace industry

was given a boost when Indonesia‟s

national airline placed a £1.5 billion order for

11 Airbus passenger jets powered by Rolls-

Royce engines. The deal was signed during

a visit by Prime Minister David Cameron as

part of an Asian tour to drum up export

orders and investment for the U.K.

Slick move sees former BP man buy into

oil firm: A high-flying oil executive who quit

BP‟s Russian joint venture when he missed

out on the top job has bought into a small

London-listed explorer with plans to turn it

into a multi-billion pound business. Maxim

Barsky was Deputy Chief at TNK-BP but

quit in October after BP and its Russian

oligarch partners declined to promote him.

Markets rise as ECB hints at buying up

Spanish bonds: Pressure eased on sinking

stock markets and struggling Eurozone

countries‟ borrowing costs amid suggestions

the European Central Bank could prop up

Spain by purchasing more of its government

bonds. Spain‟s 10-year borrowing costs

nudged down towards 5.8% from the near

6% reached on Tuesday as a leading ECB

official argued the market pressure on the

country was not justified.

Strong Dunelm gains: Homewares retailer

Dunelm reported a sales lift despite warm

weather and higher petrol prices forcing

more shoppers to stay at home in recent

weeks, writes David Craik. The company,

founded in 1979 from a market stall in

Leicester, said its value-for-money offerings

such as curtains had proved popular,

sending third quarter total sales 10.7%

higher to £154.1 million.

The Scottish Herald

Economic recovery as firms turn the

corner: Business activity picked up in

Scotland in the first quarter, according to a

key survey that will boost hopes the

economic recovery is gathering pace. The

Scottish Chambers of Commerce said the

results of its latest quarterly survey showed

businesses made a better start to 2012 than

they did to 2011, with firms in manufacturing

and tourism leading the way.

ShareSoc hopes to derail Lees Foods

buyout move: Small investor group

ShareSoc is poised to launch a campaign

against the attempted management buy-out

of macaroon house Lees Foods for £5.6

million.

TWMA opens new manufacturing plant in

Houston: A Scottish firm that helps oil and

gas firms deal with the waste produced

when they drill wells has opened a factory in

the U.S. as it looks to accelerate growth

overseas.

Optos Finance Director Soden stepping

down: Christine Soden, one of the few

female Executives in the Scottish corporate

world, has stepped aside as Finance

Director of ambitious Scottish retinal

imaging company Optos to be replaced by

Financial Times Group Finance Chief

Louisa Burdett.

£190 million investment for Highlands is

unveiled: Highlands and Islands Enterprise

(HIE) will spend £190 million over the next

three years to help create “a highly

successful region in which increasing

numbers of people choose to live, work,

study and invest”.

The Scotsman

Scottish confidence on a high as

recession concerns begin to ease:

Confidence is growing among Scottish

companies amid further evidence that a

recession can be avoided, according to

figures published. The Scottish Chambers

of Commerce (SCC), representing

thousands of firms across all sectors of the

economy, said businesses had made a

much better start to 2012 than last year,

even though the recovery remains “tentative

and uncertain”.

BMW global sales record marred by

strike threat: BMW announced bumper

sales figures as workers at the German

group‟s Mini car plant near Oxford

threatened strike action in a row over pay.

The firm, which also owns the luxury Rolls-

Royce marque, said worldwide sales soared

to a new record for the first quarter, fuelled

by rising deliveries in China and the United

States.

John Menzies Directors cash in on £7

million windfall: Directors of John Menzies

enjoyed a bumper year of share awards,

bonuses and incentive plan payouts last

year. In addition to one-off share awards

totalling more than £7 million, Directors Paul

Dollman and Craig Smyth enjoyed

increases in salary and benefits.

RHASS looks to further growth as

turnover climbs to £6.39 million: Despite

the challenging economic climate, the Royal

Highland and Agricultural Society of

Scotland has repeated its positive financial

performance of recent years. Turnover was

£6.39 million, up from £6.35 million in 2010,

and operating surplus increasing by 7.5% to

£1.11 million from £1.03 million in the year

to 30 November, 2011.

Red tape keeps Scottish rent rises to

15%: A survey of farm rental increases last

year throughout England, Scotland and

Wales has shown an average rise of 25%,

but when only those in Scotland are

considered, the rise has been in the order of

15%. The survey carried out by land agents

Smiths Gore covers the 12 months to 31

October, 2011, and includes 36 rent reviews

in Scotland over 17,000 acres.