FSA Shrugs off Doubts with Bold Plans
Hector Sants announced that the uncertainty over the future of the FSA posed the biggest challenge to recruiting the extra employees it needs to carry out its ambitious plans for the next 12 months.
The chief executive of the City watchdog announced that he planned to hire 460 employees over the next year, but that “institutional uncertainty” was not helpful for staff morale. Though performance bonuses have not been affected, staff morale may also be hit by the pay freeze imposed on salaries across the FSA from the next month.
Music Group EMI in Talk over its Back Catalogue
EMI is looking to pawn its back catalogue of music recordings in battle to improve its finances. The music group is giving rival labels the chance to manage its North American catalogue business, which includes tracks by the Beatles and Blondie star Debbie Harry, for five years.
It hopes to raise £400 million from the deal, which would be enough to stop it breaching covenants on its lender, Citigroup. It may mean its owner, private equity group Terra Firma, could abandon plans to raise £120 million from investors to solve the problem. EMI is understood to have started talks with Universal Music while Sony and Warner Music are thought to be in the frame.
The back catalogue generated 55% of EMI’s £293 million earnings last year. The company last month posted a £1.75 billion loss for the year to March 2009 after suffering more than £1.1 billion in one-off write-downs and restructuring charges.
Ethel Austin Stores Face Closure
Following the closure of 124 shops in February, the administrators to the Ethel Austin and Au Naturale retail chains will close a further 81 stores over the next three to four weeks. This move will result in cutting down 696 staffs.
Cash Windfall for Promethean Staff
Staff at newly-listed education group Promethean have made a £10 million cash windfall from the company’s flotation.
More than employees at the company, which is based in Lancashire, have received bonuses of up to £30000 with management being gifted share options of between 400 to 4400 shares. The company raised £186 million to get a £400 million valuation. It was formally listed on March 17th.
Pru Chief Risks IRE with SG Role
The chief executive of UK insurer Prudential has found time in his hectic schedule leading one of the largest foreign takeovers ever attempted by a UK company to accept a new directorship.
Tidjane Thiam, who is attempting to buy AIG’s Asian business in a deal of £23.2bn, has taken a non-executive directorship at French bank Societe Generale, risking the ire of shareholders who have been critical of the deal.
Top Banks to Stand Trial in Italy over Fraud Charge
A group of international banks, including Deutsche Bank and UBS, were ordered to stand trial for fraud in Italy over a complex derivatives deal involving bonds issued by the city of Milan.
Deutsche Bank, UBS, JPMorgan and Germany’s Depfa were ordered by a judge to stand a trial for aggravated fraud over an interest rate swap on a €1.68 bond issued by Milan. The judge also ordered 11 bankers from the four banks and two former Milan city employees to stand trial on the same charges arising from a 30-year bond issued in 2005, which was the biggest by an Italian city.
The trial is due to start on May 6th and will serve as a test case for hundreds of Italian local and national governemnts and other smaller bodies that took part in complex financial deals from the 1990s onwards.
An End to the Japanese Lesson
Japan’s economy has barely grown in nominal terms after two lost decades, and is again suffering from deflation. Where Japan was once bearing down on America, it now feels the hot breath of China on its neck. These days, the country’s chief claim to fame is having a gross governement debt burden approaching 200% of GDP.
For the Japanese this has all been deeply troubling. But in the past two years, the Western world has faced many of the same problems that Japan has been grappling with since 1989, Japan has offered some useful lessons on how governemnts should, and should not, tackle potentially systemic financial meltdowns.
Thaniks to the precedent set by Japan, many of these lessons were quickly put into practice. Acting far more swiftly than the Japanese authorities did, Western policymakers provided liquidity to their banks and forced them to rebuild capital, while pumping in generous doses of fiscal stimulus to offset the collapse in private-sector demand. And like the Bank of Japan, they slashed interest rates and took extraordinary measures to try to keep credit flowing. The efficacy of these steps has led to growing optimism about the world economy.
The Japanese lesson is no longer terribly helpful now. It is partly because the students are in a much worse pickle than the teacher ever was. The markets will lose faith in their creditworthiness. The most vulnerable countries, such as Greece, now face a risk that Japan never did.
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