BANKING & INSURANCERBS hit by Cazenove downgradeShares in Edinburgh banking giant Royal Bank of Scotland took a hit after Cazenove issued a bearish note on the bank. The note underscored the vulnerability of the
bank to a 1992-style economic slump and saw RBS trading below the price of last month's controversial rights issue. The stock closed at 201p, down 5.25p on the day, despite the FTSE gaining 1.9 per cent. The slump is being attributed to the 'underperform' note issued by Cazenove's Simon Pilkington which highlighted the size of the RBS loan book, which Pilkington claimed leaves the bank more exposed to an economic slowdown than its domestic competitors. The note read: "The two Scottish banks have been major lenders to the property and construction sectors for many years. At £60 billion, RBS's loan book is 70 per cent larger than HBOS or more than four times larger than Barclays'." He added: "We expect that over time RBS will experience a similar level of impairment as its peers consistent with history, and there proportionately it will see a greater rise in impairment as the economic slowdown feeds through."
(The Herald) Read all today's banking news from scotsman.comECONOMYManufacturing figures push economy closer to recessionNew Office of National Statistics figures have added to the gathering economic gloom with news UK manufacturing output is set to suffer a bigger decline than expected. The ONS data showed the sector's output falling by 0.5 per cent between April and May, while analysts had been predicting a fall in the region of 0.1 per cent. Capital Economics' UK economist Paul Dales claimed the new figures revealed the UK economy is 'perilously close to recession'. He added: "The lower pound should mean that the manufacturing sector is the UK's shining light, but with output no higher than eight months ago, it seems that the global and domestic slowdowns are having more of an impact." The ballooning cost of oil and higher metal and food prices are being blamed for the slump which is adding further fuel to the fears of a slowing economy. Chief UK economist at Global Insight, Howard Archer commented: "Sharply contracting industrial production heightens concern that the economic downturn is deepening." However, the slowdown is unlikely to prompt the Bank of England's Monetary Policy Committee to institute a cut in interest base rates. Archer added: "An interest rate cut this Thursday remains a remote possibility, given the Bank of England's concern over current elevated inflation levels and risks."
(The Herald)Chamber urges Bank not to raise interest ratesThe British Chambers of Commerce has urged the Bank of England's Monetary Policy Committee to shy away from increasing the base rate of interest amid claims Britain is months away from recession. The business group's latest economic survey indicates confidence levels have fallen sharply after a fall in the output of both the manufacturing and service sectors. BBC director general David Frost said: "This would be a catastrophe. I am sending Alistair Darling and Gordon Brown a strong message from the businesses I meet every day up and down the country: to put more pressure on business would not only restrict growth and hit the consumer hard, it would further crush what our economy is based on – confidence." Economic adviser to the BCC, David Kirn agreed, adding: "A major recession can still be avoided, but forceful measures are needed to improve confidence. The MPC must resist misguided calls for higher interest rates. Indeed, if wage pressures remain muted, the option of early interest rate cuts must be considered."
(The Scotsman) Read all today's economics news from scotsman.comENERGY & UTILITIESShell announces North Sea saleEight of Shell's oil and gas fields in the East Shetland basin of the North Sea re to be sold to a subsidiary of the Abu Dhabi national oil company. The deal comes as the oil giant attempts to extricate itself from North Sea operations and the sale will see hundreds of jobs transferred to the Abu Dhabi National Energy Company. A spokesman for Shell commented: "Shell UK and Exxon Mobil have each signed a sale and purchase agreement with UK-based Taqa Bratani Limited, a wholly owned subsidiary of Abu Dhabi National Energy Company, for the sale and transfer of their equity in the Tern, Kestrel, Eider, Pelican, Otter, Hudson, Cormorant North and South Cormorant fields and related infrastructure. The sale, which includes all equity, associated infrastructure and production licences, is subject to fulfilment of certain conditions, including government consent."
(The Scotsman) Read all today's energy and utilities news from scotsman.comMANAGEMENTCouncil faces job cutsTroubles Aberdeen City Council could be forced to cut up to 1000 jobs as it struggles to meet targets for budget cuts. The BBC has claimed consultants have advised the local authority that job losses may be 'unavoidable' if it is to meet the £27 million in savings it requires. Deputy leader of the council, Kevin Stewart commented: "The city council has been stating its policy publicly for more than a year that we need to move towards having a smaller, better paid and better motivated workforce. Most Scottish local authorities are putting out a similar message. The External Support Group of chief executives from other councils, who are currently advising the council, agree that this is the way to go. No figure has been put on the number of posts which will be shed and no particular sections of the workforce have been identified for job losses. This is something which the city council will be working through with the trade unions over the coming months."
(BBC Scotland Online) Read all today's management news from scotsman.comMEDIA & LEISURECommonwealth Games project goes out to tenderThe contract for the construction of the 2014 Commonwealth Games athletes village has been put out to tender by Glasgow City Council. The £200 million plan for the Dalmarnock village has been completed by architects RMJM and was used for the initial pitch made for the games last year. However, under European rules, RMJM must bid again for the contract to develop the masterplan and oversee the construction and reuse of the village. A spokeswoman for RMJM said: "We have worked with the council for a long time on it. We think we have got a good chance."
(The Scotsman) Read all today's media and leisure news from scotsman.comTECHNOLOGYOmega on the acquisitions trailClackmannanshire medical test manufacturer Omega Diagnostics is set to remain on the acquisitions trail after it returned to profit. The Alva-based firm completed the takeover of Cambridgeshire-based Genesis and Cambridge Nutritional Sciences in September of last year and has now booked a £123,708 profit for the 12 months to March 31. Finance director Kieron Harbison admitted the takeover had turned the firm round and commented: "It is mainly down to the acquisition." On the prospect of further acquisitions, chief executive Andrew Shepherd added: "There are enough acquisitions out there which fit into our focused strategy. We are going to add companies to the group that are going to positively enhance earnings."
(The Herald) Read all today's technology news from scotsman.com
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