Finance Matters

• 25Aug

  RBS set to cut pension benefits

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  From The BBC:

  High Street bank RBS is set to scale back on the benefits to staff in its final-salary pension scheme.The bank said that it would cap any future increases in pensionable pay to 2% a year, or the rate of inflation, whichever was lower. This means that even if workers get a larger pay increase or promotion, only a maximum 2% rise would be used when calculating their eventual pension. The bank was criticised early in 2009 for the pension of its former boss. Sir Fred Goodwin initially took a pension of £703,000 when he left his position as chief executive at the bank, although he has since agreed to lower his pension income to £342,500 a year. ‘Pragmatic’RBS closed its final-salary scheme to new members in 2006, and like many other businesses has been looking at its provision for existing members.
  The bank said the move was “pragmatic and necessary” but the decision was condemned by the trade union Unite which said that it was a “body blow” to its 60,000 staff. It is a less dr…

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• 25Aug

  Bernanke named for new Fed term

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  From The BBC:

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  Obama: “We will pass the reforms necessary to protect consumers, investors, and the entire financial system”
  President Obama has confirmed that he has nominated Ben Bernanke for another term as chairman of the US central bank, the Federal Reserve.The president took a break from his summer holiday to make the announcement. Mr Bernanke has been praised for taking action to bail out failing banks, which Mr Obama believes has limited the effects of the economic crisis. Mr Bernanke’s initial four-year tenure is to come up for renewal in January. ‘Price stability’Mr Obama said Mr Bernanke had helped prevent a repeat of the Great Depression. “Ben approached a financial system on the verge of collapse with calm and wisdom, with bold action and outside-the-box thinking that has helped put the brakes on our economic free-fall,” the president said. “Our auto industry is showing signs of life. Business investment is showing signs of s…

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• 25Aug

  Uncertainty over GM sale of Opel

  Business No Comments

  From The BBC:

  US carmaker General Motors could be set to reverse its decision to sell its struggling European car firm Opel, according to media reports.Last week, the German government said it would lend Opel 4.5bn euros ($6.4bn; £3.9bn) if its favoured suitor, Magna, was chosen to take it over. The bid from the Canadian car parts maker is backed by Russia’s Sberbank. But reports in the UK and US say GM is trying to raise rescue funds for Opel from the US and European governments. At the weekend, GM postponed making a decision on who should buy the Opel division, which includes Vauxhall in the UK. As well as Magna, Belgian financial group RHJ has also been a suitor of Opel. However, Magna has publicly promised to cut fewer jobs in Germany, where 25,000 people are currently employed in the division. The German government said GM’s chief negotiator, John Smith, was due to have talks with deputy economy minister Jochen Homann and other members of the government’s “Opel task force” in Berlin on Tu…

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• 25Aug

  Weather effect on online shopping

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  From The BBC:

  Clothes sales were up but alcohol dipped in popularity among UK online shoppers in July owing to the mixed summer weather, a survey has said.Total online sales rose by 15.7% in July compared with June, increasing to £4.2bn, according to the retail research group IMRG Capgemini. The increase was led by clothing sales, but the wet summer meant alcohol demand was down as barbecues were cancelled. Heavy discounting and promotions also helped to drive sales. The figures signalled a rebound from the previous month, as sales in June had fallen by 1.3% compared with May. Conversion rateThe group said that online clothing retailers were getting better at converting the number of people browsing their websites into actual buyers. One in 15 visitors bought items, the poll found. “It is evident that online merchants are becoming more sophisticated in their marketing efforts and e-mail communications to their customers, the result of which can be seen in higher conversion rates, particularly…

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• 25Aug

  UK file-sharers to be ‘cut off’

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  From The BBC:

  The government has published new measures that could see people who illegally download films and music cut off from the net.The amendment to the Digital Britain report would see regulator Ofcom given greater powers to tackle pirates. The technical measures are likely to include suspending the net accounts of “hardcore copyright pirates”. It is believed that Business Secretary Lord Mandelson has intervened personally to beef up the policy. The Digital Britain report, published in June, gave Ofcom until 2012 to consider whether technical measures to catch pirates were necessary. However, according to a statement from the Department for Business, Innovation and Skills released on Tuesday, that timeframe is now considered “too long to wait”.
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  Rupert Goodwins, technology expert and editor of ZD Net in the BBC studio
  Stephen Timms, minister for Digital Britain, explained the change of heart. “We’ve been listening carefully to re…

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• 25Aug

  Centrica wins battle over Venture

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  From The BBC:

  Centrica, which owns British Gas and Scottish Gas, has won its battle to buy oil and gas firm Venture Production.Venture has told its shareholders to accept Centrica’s £1.3bn ($2.1bn) offer, after Centrica acquired a majority shareholding in the company. But Venture said it “continues to believe that Centrica’s final offer substantially undervalues Venture”. The Aberdeen-based firm said shareholders risked being a minority in a delisted company if they held out. Centrica on Monday said it had bought shares in Venture that gave it control of 58.7% of the company. Centrica’s £1.3bn takeover offer for the company has been approved by the EU. At the end of 2008, Venture produced 45,000 barrels of oil per day and it predicts its output will increase over the next three years….

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• 25Aug

  Lloyds to cut a further 200 jobs

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  From The BBC:

  Lloyds Banking Group is to cut a further 200 jobs, taking the total job losses to 7,500 this year.The cuts will come in the general insurance arm of Lloyds, which is 43%-owned by the government. The announcement came week after the bank said it was reviewing its decision to close its Cheltenham & Gloucester subsidiary, possibly saving 833 jobs. “We have no confidence in this bank’s confused strategy,” said Rob MacGregor of the union Unite. Philip Loney, managing director of Lloyds General Insurance unit said, “We recognise that this is difficult news for our affected colleagues.” “We are committed to working through these changes with our colleagues carefully and sensitively and will seek to use natural turnover and redeployment wherever possible.” ‘Soul destroying’The cuts will come in the insurance unit’s offices in Newport, South Wales and West Yorkshire. “This steady stream of announcements and cuts is soul destroying for the workforce at this state-owned bank and it must end,”…

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• 25Aug

  Steady rise in mortgage approvals

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  From The BBC:

  The number of mortgages approved for house purchases by the major High Street banks has risen to a 17-month high, figures show.The British Bankers’ Association (BBA) said approvals in July stood at 38,181, a rise of 7.4% compared with June and 77% higher than a year ago. The data suggests the rise in activity and prices could stretch into autumn. However, the BBA warned that new lending was below seasonal expectations despite greater demand from borrowers. Changing pictureThe number of loans approved for people buying a home in July was at its highest since February 2008.
  Banks had been more forthcoming in mortgages available to potential buyers, with the average amount borrowed at £139,700 in July. However, the BBA’s statistics director David Dooks said that banks were still being “more realistic” about how they should lend to compared with when the property boom was at its peak. He said the ability of potential buyers to pay a deposit and long-term sustainability were key issu…

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• 25Aug

  Oil falls back below $74 a barrel

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  From The BBC:

  Oil prices have fallen back below $74 a barrel after reaching a ten-month-high of almost $75 on Monday.The price drop was linked to falls in the Asian stockmarkets and anticipation of weaker demand following the end of the summer driving season in the US. US light sweet crude futures fell 54 cents to $73.83 a barrel in early trading, while London Brent crude fell 57 cents to $73.69. A 5% fall in the China stockmarkets is said to have renewed economic concerns. “The drop is probably due to the decline in equities markets today,” said fund manager Tetsu Emori from Tokyo-based Astmax Co Ltd. Low demandSeasonal demand is another factor that influences oil prices. Although China announced a 3.5% increase in demand for oil in July on Monday, global demand around September is traditionally lower. “Oil at the $70 plus level remains potentially vulnerable because there is little constructive fundamental support, inventories are high and global demand remains weak,” said energy analyst Victor Sh…

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• 24Aug

  Home loan debt that rolled up to a disaster

  Mortgages No Comments

  From This is Money:

  Aged 60 and with no savings or income bar Pension Credit, John spends most of his days in the public library composing faxes to his lawyer.
  He sleeps in a hostel. He has now been told he must appoint a nominee to retrieve his possessions from the house in Epperstone, Nottinghamshire, which is sealed with steel grilles and being prepared for sale.
  John’s tragic story is complex. Much of the financial detail is unclear and disputed. But at the heart of the problem is a £64,000 equity release loan that John’s mother Bertha signed up to in January 1990 when she was 71. She died in 2005, aged 86.
  West Brom has refused to answer many questions, claiming data laws prevent it discussing Bertha Perry’s loan. And the fact that John is estranged from his brother, the administrator of his mother’s estate, is a further issue.
  But when John’s MP, Paddy Tipping, became involved, some light was shed on matters.
  In a letter to the Labour member for Sherwood dated June 29, four days bef…

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