Finance Matters

• 24Aug

  Millions caught by mortgage gamble

  Mortgages No Comments

  From This is Money:

  Four out of ten households have taken out the mortgages, according to figures from the Financial Services Authority.
  Many expected that the increase in property prices would help them to pay off their loans.
  But with houses having lost almost a quarter of their value in the last two years, an estimated 4.2m homeowners have to confront the prospect that they may not be able to move for many years.
  Among the hardest hit will be those needing to move to take up a new job, or trade up to a larger house because their family has outgrown the current one.
  Banks and building societies will be unwilling to give them a new loan because they have had any deposit eaten away by falling prices and have never attempted to repay any of the capital on their previous loan.
  To compound the problems caused by falling property prices, the credit crunch has left thousands of white-collar workers unemployed and millions facing a pay freeze, so they have little chance of increasing their mortgage p…

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• 24Aug

  Be warned: Burglars enjoy a good break

  Insurance No Comments

  From This is Money:

  About 16% of households have been burgled while owners were away on holiday, with June and August the busiest time of year for crooks, says insurer Direct Line.
  Jewellery, watches, cash and small electrical items such as digital music players and mobile phones tend to be burglars’ favourites.
  Insurers warn householders to think about the security of their possessions before they go away and to update home contents policies, declaring valuable items. This could add to the premium, but the increase will probably be small and save heartache and financial pain should the worst happen.
  Most insurers ask for individual items to be specified if they are worth more than £1,500, with a maximum usually between £20,000 and £25,000, depending on the insurer.
  ‘Adding individual valuable items doesn’t have to be costly,’ says Rebecca Holmes at Aviva. ‘For example, adding a £2,000 engagement ring to a typical home contents policy would cost about an extra £10 a…

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• 24Aug

  Pace of HBOS decline ‘unexpected’

  Business No Comments

  From The BBC:

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  Lloyds chairman: HBOS bad loans were no surprise
  The pace of the decline at HBOS surprised Lloyds, Sir Victor Blank, the banking group’s chairman told the BBC.The government backed a Lloyds takeover of HBOS last September, bypassing normal competition rules to avoid the collapse of the Halifax owner. Sir Victor, who will step down by June 2010, said the group had expected there would be HBOS losses, but they came in at “the worst end of expectations”. “What surprised us was the speed at which these losses came in,” he said. The Lloyds Banking Group, which is 43% owned by the Treasury, revealed in February this year that HBOS, which it absorbed in January, had made a pre-tax loss of £10.8bn in 2008. Meanwhile, 2008 profits at Lloyds TSB – as it was called – also fell, by 80% to £807m. The two banks together are expected to be in loss this year. Sir Victor, who has faced criticism for the decision to buy HBOS, sa…

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• 24Aug

  Boss warns over airport strikes

  Business No Comments

  From The BBC:

  A union has been accused of trying to wreck thousands of people’s holidays after baggage handlers backed strikes at some of the UK’s biggest airports.Swissport workers at Stansted, Gatwick and Manchester, who are members of the Unite union, are in a dispute over pay. Swissport chief Mark Faulkner said the threats were a “cynical attempt to ruin the holiday plans of airport users”. The unions expected a 2.75% wage rise to be paid in April and have accused Swissport of reneging on the deal. Mr Faulkner said: “At this time of year more than 100,000 passengers travel through Gatwick each day, with a large proportion of them handled by Swissport. “We have reminded our staff that many of these passengers are themselves union members. ‘Militant behaviour'”Swissport cannot respond to this type of militant behaviour and believe that the actions of the union are not in the interests of their members.” Unite said it was seeking an urgent meeting with Swissport management in an attempt to settle t…

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• 24Aug

  GM delays decision on Opel future

  Business No Comments

  From The BBC:

  The board of US carmaker General Motors has postponed making a decision on who should buy its Opel division, which includes Vauxhall in the UK.The Detroit-based firm said directors had met on Friday to discuss the options but “no decision was taken”. An assessment on whether to start exclusive talks to buy German-based Opel had been expected at the weekend. The race to control Opel is between the Canadian component manufacturer Magna and Belgian financial group RHJ. The BBC understands that a number of stumbling blocks have emerged to delay the final decision. The German government – which has openly preferred the bid from Magna and has offered it bridging finance of 4.5bn euros ($6.4bn, £3.9bn) – is thought to have added further conditions to that support. Magna has publicly promised to cut fewer jobs in Germany, where 25,000 people are currently employed in the division. Buy-back optionGermany’s economy minister said he regretted the failure to make a decision. Karl-Theodor zu…

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• 24Aug

  Fresh postal strikes due to start

  Business No Comments

  From The BBC:

  More postal strikes will hit England and Northern Ireland this weekend, as a part of a continuing dispute over job cuts and modernisation.Workers will walk out in Carrickfergus in County Antrim, Stockport in Cheshire, Boston in Lincolnshire and Hadfield in Derbyshire, for 24 hours. The Communication Workers Union says postal staff are “facing a beating on all aspects of their working lives”. Royal Mail urged the union to call off the strikes. Further walkouts by CWU members are planned next week in Skegness in Lincolnshire, Huntingdon in Cambridgeshire, and Rochdale in Lancashire, as well as in Birmingham, Coventry, London, Middlesbrough and the Isle of Wight. The union also says it is pressing ahead with plans to ballot all 130,000 postal workers across the country next month for a national strike. ‘Breaking point’Deputy general secretary Dave Ward said: “Never before have postal workers experienced so many attacks from all sides. “Whether it’s pay, job security, workload or dignity a…

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• 24Aug

  Markets rise on US recovery hopes

  Business No Comments

  From The BBC:

  World stock markets have risen after US central bank chief Ben Bernanke said the world’s biggest economy was nearing the start of a recovery.”The prospects for a return to growth in the near term appear good,” Mr Bernanke told a conference in Wyoming. On Wall Street, the Dow Jones index rose more than 1%, while European markets were also sent higher. But the Fed boss said unemployment, which is expected to top 10% in the US, would fall “only gradually”. However, European Central Bank president Jean-Claude Trichet expressed concern at what he saw as premature talk of a full recovery.
  “I am a little bit uneasy when I see that, because we have some green shoots here and there, we are already saying, ‘well, after all, we are close to back to normal’,” he said, speaking later at the conference. ‘Slow at first’Central bankers were speaking as data showed sales of existing US homes rose by more than 7% in July. That was the largest monthly increase in the 10 years that the National Associati…

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• 24Aug

  £41m fraud hits building society

  Business No Comments

  From The BBC:

  The Chelsea Building Society has revealed it has lost £41m ($67m) as a result of mortgage frauds involving some of its buy-to-let loans.The frauds are the main reason for the society staying in the red, with overall losses of £26m in the first half of the year. The frauds appear to have involved professionals colluding to inflate the value of buy-to-let properties. The society says the losses emerged after a review of all its loans. “The society has been through a difficult period and reporting a loss in the first half of the year is disappointing,” said Stuart Bernau, the Chelsea’s chairman and interim chief executive. “However, the underlying performance is strong, even though we have had to make provision for impairment and fraud losses.” Last year, the Chelsea lost £39m, the largest annual loss yet recorded by any building society. Its chief executive agreed to resign earlier this month. ExplanationThe Chelsea explained that the potentially fraudulent loans it had…

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• 24Aug

  Hong Kong bid for Birmingham City

  Business No Comments

  From The BBC:

  Hong Kong-based businessman Carson Yeung has made a £1-a-share cash offer for Birmingham City FC, which values the club at £81.51m ($134.6m).If the deal goes through it will mean that half of the clubs in the English Premier League are foreign-owned. Mr Yeung’s Grandtop International Holdings bought a 29.9% stake in the club in June 2007, but stopped short of buying the rest. Grandtop has now received acceptances that would take its holding to 80%. It made a £3m deposit for the English Premier League club on Thursday. In a statement to the London Stock Exchange, Grandtop said it planned to “develop the club by investing in and strengthening the squad and infrastructure of the club over time”. ‘Global fan base’Grandtop also said that the primary aim of ownership would be supporting the club to “help it retain its Premier League status”. It added that it planned to “significantly increase its global fan base”, especially in Hong Kong and mainland China.
  “It is intended…

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• 24Aug

  Airport staff in strike warning

  Business No Comments

  From The BBC:

  Baggage handlers and other workers at Gatwick and Stansted airports have voted to take strike action in a row over pay.The action taken by the workers has raised fears of disruption at the airports over the August bank holiday. Unions Unite and the GMB backed industrial action but have not revealed any strike dates. Staff expected a 2.75% pay increase under an agreement which was struck last year. The agreement prevented strike action last August but now unions have accused airport operators Swissport of going back on the two-year pay deal. Unite is seeking an urgent meeting with Swissport in an attempt to settle the dispute, while the GMB said it was holding further talks with its members. Unite’s national officer, Steve Turner, said: “Our members have demonstrated clearly that they are prepared to take part in industrial action and are willing to fight for fair pay. “These workers deserve recognition for their hard work and their continued commitment, instead Swissport has turned its…

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