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Business - Need to Know

Morning Edition

Good morning. HSBC and Standard Chartered appear to be firmly in the Bank of England’s sights. Britain’s biggest banks will be told the terms of the latest stress tests by the BoE today and a slowdown in Asia, in particular China, where both HSBC and Standard Chartered have key businesses, are expected to be a key element.

Depending on the results of the tests, banks could be ordered to raise billions of pounds in new capital to ensure that they have adequate bulwarks against a financial crisis. The bank will publish the details of the tests at 10.30am. Harry Wilson, our City Editor, is there. For the latest follow him on Twitter - @harrynwilson.

The FTSE 100 is forecast to start the week on a positive note (see below), but traders will keep one eye on Greece today. Talks between Greece and its creditors on reforms to unlock loans continued through the weekend. Athens is upbeat, but its lenders said it could take several more days before a “proper list” of measures was ready.

Reuters reported last week that Greece will run out of money by April 20 if it does not secure funding from its European partners. For the latest on Greece and the wider markets log on to our Business Now live blog.

Vodafone customers will soon be able to use their mobile phone to pay for that skinny latte or tube journey. The telecoms giant has announced this morning that it has reached agreement with Visa and Carta Worldwide, that will allow bank card payments via Vodafone Wallet from the summer, using contactless technology. We’ll have a full story shortly on www.thetimes.co.uk/business.

Elsewhere, Rolls-Royce has announced this morning that Air China has selected its Trent 1000 engines to power 15 new Boeing 787-9 Dreamliner aircraft.

On the economics front we get mortgage approval data for February from the Bank of England at 9.30 this morning. The number of mortgage approvals is expected to rise a fraction to 61,500, up from 60,790.

Don’t forget you can follow me on Twitter for updates throughout - @fletcherr.

Richard Fletcher
Business Editor
The Times
richard.fletcher@thetimes.co.uk

Japan's industrial output fell in February at the fastest pace in eight months due to declines in production of machinery, cars and electronics according to data released overnight. The 3.4 per cent month-on-month decline in February was much worse than expected, at almost double the forecast 1.8 per cent fall.

The Treasury has criticised the Office for National Statistics, the government’s own statisticians, for a catalogue of sloppiness, including mistakes and slow responses with data.

“Just as Skype shrank the revenues that could be made from international phone calls, the challenger providers of financial services might well shrink the overall revenues to be made from banking,” Ian King on the threat peer-to-peer lenders and internet banks pose to traditional banks.

The most important billionaires you’ve never heard of. Cristiane Correa, author of Dream Big: A Glimpse Inside the Strategies and Tactics of 3G Capital, on the private equity group behind last week’s $100 billion (£67 billion) Heinz-Kraft merger.

In Tokyo the Nikkei 225 has started the week on a positive note and closed up 0.65 per cent at 19,411.40. The FTSE 100 is expected to open 33 points higher when trading begins shortly.

Having hit its highest-ever level, of 7,065.08, on Tuesday, the FTSE 100 ended the week on a muted note, closing 40.31 points lower at 6,855.02. That left London’s blue-chip stocks down 2.4 per cent on the week. The FTSE 250 was also out of favour, closing off 97.92 points at 17,162.64 on Friday, a drop of 0.57 per cent on the day and 2.1 per cent lower on the week.

On Wall Street, the question was whether the US economy was slowing down, after a week of weaker than expected data, capped by the outlook on consumer sentiment not being revised upwards as had been expected. The Dow Jones Industrial Average closed up 34.43 at 17,712.66, 0.19 per cent higher on the day but off 2.3 per cent for the week. The S&P 500 added 4.87, or 0.24 per cent, to 2,061.02, but that’s still 2.2 per cent lower than at the end of the previous week.

On the oil markets, prices remain depressed and Brent crude closed 7 cents lower at $56.41. In the US, benchmark crude lost a mighty $2.56, or 5 per cent, closing in New York at $48.87.

Sterling rose against the US dollar on Friday, after Mark Carney, Bank of England governor, said the next move in interest rates was likely to be upward, tempering speculation that rates could be lowered if inflation stays subdued. It was up 0.45 per cent against the euro at 72.98 pence.

The Times
The Treasury has criticised the government’s own statisticians for a catalogue of sloppiness, including mistakes and slow responses with data. It said: “While production of key statistics is largely conducted effectively, the website and a number of public errors, delays in publication, the apparent lack of any house style and too much running to catch up make ‘agreeing’ with ‘professionalism’ more finely balanced than it should be.”
read full update
The Daily Telegraph
Britain's biggest building society is planning a major investment in branches just as its banking rivals close hundreds of high-street locations. Nationwide intends to spend around £300m on its network over the next five years, it is understood, in an endorsement of its bricks and mortar operation.
read full update
Financial Times
Ed Miliband will today attempt to align Labour with a sceptical business community, insisting that only he can avert the “clear and present danger” posed to the economy by a Conservative referendum on Europe. On the day David Cameron travels to Buckingham Palace to confirm the dissolution of parliament more than five weeks before the general election, the Labour leader will accuse the prime minister of “playing fast and loose”with Britain’s EU membership.
read full update
City AM
A wave of mergers and acquisitions (M&A) is on the way this year, driving a hiring boom in the City and shaking up industries across the globe. A combination of ultra-low interest rates and increasing confidence in the economy has encouraged firms to buy up rivals.
read full update
Monday

Serco holds a general meeting for shareholders to vote on a proposed rights issue to raise gross proceeds of about £55 million to be used primarily to reduce the outsourcing company’s gross debt. If approved, dealings in new ordinary shares, nil paid, will commence on the London Stock Exchange tomorrow, while dealings in fully paid shares will commence on April 17.

The Bank of England’s financial policy committee is due to publish the scenario that it has been developing with the Prudential Regulation Authority’s board for this year’s stress-tests of the biggest British banks.

Finals Instem; Outsourcery; Plant Health Care; XLMedia; Globaltrans Investment; Central Asia Metals; Al Noor Hospitals AGM/EGM Turk Ekonomi Bankasi; Northern Investors Company Trading statement Compass Group Economics UK: Mortgage approvals (Feb); Net consumer credit (Feb); M4 money supply (Feb)

Tuesday

After Harriet Green’s abrupt exit as chief executive and a “game-changing” alliance with a Chinese investor, Thomas Cook’s second-quarter trading update is unlikely to cause too many fireworks. Analysts expect the mixed picture on bookings in the first quarter to have improved slightly, along similar lines to last week’s update from TUI Group. Véronique Laury, the new head of Kingfisher, will present her strategy at the full-year results after it emerged last week that the company’s £202 million buyout of Mr Bricolage, the French DIY chain, may be under threat.

Interims James Halstead; Inland Homes Finals Ocean Wilson Holdings; LiDCO; Kingfisher; Hydrodec; e-Therapeutics; Chesnara; Royal London AGM/EGM IRF European Finance Investments; Turkiye Garanti Bankasi; Hume Capital Securities** Trading statement** MITIE Group; Thomas Cook Economics UK: GfK consumer confidence (Mar); GDP (Q4, final); Services index (Jan)

Wednesday

The payment systems regulator becomes operational. Created as part of the Banking Reform Act (2013), it is an independent subsidiary of the Financial Conduct Authority and oversees an industry in which billions of transactions are made between businesses and consumers every year.

Interims Asos Finals Evraz Trading statement FirstGroup Economics UK: PMI manufacturing (Mar)

Thursday

A backlog of undelivered parcels at Marks & Spencer’s distribution centre upset the high street chain’s Christmas. Investors will be hoping for signs of a recovery as the retailer updates the City on trading for the three months to March. In recent years, the usual M&S pattern has been of healthy till receipts in the company’s food halls, but weak sales of fashion. Late last year, however, its clothes began to fare better, with a new womenswear range appealing to older and younger customers. Analysts at RBC Capital Markets expect like-for-like sales of food to be up 0.8 per cent, with general merchandise down by 1 per cent. M&S itself has been optimistic recently, forecasting that a reduction in operating costs will improve its margins. Profits for the year to March, to be reported at a later date, are expected to come in at about £640 million, an increase from £623 million.

The European Central Bank publishes accounts of its last monetary policy discussions, including an overview of final market, economic and monetary developments. The council decided at its March 5 meeting to maintain the ECB interest rate on the main its base rate at 0.05 per cent, the interest rate on the marginal lending facility at 0.30 per cent and the rate on the deposit facility at -0.20 per cent.

Finals Forbidden Technologies AGM/EGM Amino Technologies Trading statement Tate & Lyle; Booker Group; Dunelm; Marks & Spencer Economics UK: PMI Construction (Mar)

Friday

American financial markets, like those in Britain, are closed for Good Friday, but US employment statistics are released at 13.30. Last month's data revealed that the unemployment rate was 5.5 per cent in February, while total non-farm payroll employment increased by 295,000.

AGM/EGM Public Power Corp Economics 13.30 US: Non-farm payrolls (Mar); 13.30 US: Unemployment Rate

What the papers said

The Sunday Times

Greece: The country hopes to secure vital funds from creditors by submitting plans to raise an additional €3 billion a year for its public finances from a package of reforms. Greece’s s anti-austerity government says that it will increase VAT, privatise ports and airports and improve tax collection in return for a €10 billion cash injection from Brussels.

Cevian Capital: Europe’s biggest activist investor has doubled its holding in RSA to more than 13 per cent over the past year, putting pressure on Stephen Hester, right, the former head Royal Bank of Scotland, who overhauling the insurer after an accounting scandal and three profit warnings.

Goldman Sachs: Staff were handed an average pay and bonus package of £356,000 last year after bumper profits at the investment bank’s British division. Profits rose from $298 million to $2.1 billion last year after several floats and takeovers.

Network Rail: The track operator could be broken up or privatised under plans being formulated by civil servants. Whitehall officials are looking at a range of options for the state-owned operator of rail infrastructure, which is weighed down by debts.

The Sunday Telegraph

Employment: The British Bankers’ Association says that the North and Scotland have seen some of the biggest increases in banking jobs but warns that a £5.3 billion tax raid on lenders, announced in the budget, could hit jobs and lending.

Cory Environmental: The company behind the rubbish barges on the Thames could be taken over by its lenders in a move to tackle debts. The 146-year-old business is being manoeuvred into a debt-for-equity deal by SVP Global, a American hedge fund.

BHP Billiton: The miner is talking to investors about its £9 billion spin-off of unwanted assets. The first roadshow for the collection of the assets, called South32, began last week.

The Mail on Sunday

Next: The chain is likely to overtake Marks & Spencer’s clothing and home business in revenue for the first time after years of growth.

Business rates: The Office for Budget Responsibility forecasts an increase of 17 per cent to £32 billion over the next five years despite an overhaul of the tax promised by major parties.

Sports Direct: Mike Ashley will be called to account by MPs over “reprehensible” business practices, according to the head of the commons committee that the chain’s founder has so far avoided.

Alcohol: A clampdown by local authorities on strong drink could be putting retailers at risk of breaching competition law, MPs have warned.

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