- In the Financial Times, Brooke Masters (amongst others) reports on the joint paper from Paul Tucker and Martin Gruenberg, chairman of the US Federal Deposit Insurance Corporation, outlining how they’d deal with cross-border bank failures. Elsewhere, the FT says the approach is straightforward – either the US or the UK regulator would take control, fire the management, wipe out the shareholders and force bondholders to take equity: “All in all, pretty similar to a standard debt-for-equity swap”. While yesterday’s Evening Standard leader said these measures would help make banks behave more responsibly and deserve serious consideration from ministers, in an opinion piece in The Independent, James Moore wonders whether any of the new safeguards would really work if another mega-bank hit the wall. LEX agrees the approach isn’t perfect, highlighting three difficulties “all of which illustrate why banking is still in crisis”. First, by formalising the bondholder bail-in, the plan will raise banks’ cost of debt. Second, it is very well for the FDIC and the BoE to give their views on the matter, but there is no guarantee other regulators will follow. They may decide on an approach that is not compatible with how the FDIC and BoE see things. Finally, all this regulation should create an industry that is cheaper to fund and can happily lend into a growing economy. But that golden future is a long way off, and in the meantime the banks are faced with ever-changing rules that all make life more expensive. That is hardly the basis for the kind of lending that would help the economy.
- The Daily Mirror’s Graham Hiscott says E.ON will raise its tariffs next month, with customers getting both gas and electricity from the company hit with an 9% rise. The company didn’t mention that some customers will be affected more than others due to regional pricing, with power bills in parts of the South East going up by 11%. E.ON UK boss Tony Cocker blamed government ‘taxes’ among other rising costs for the higher tariffs.
RECRUITMENT & EMPLOYMENT
- In The Sun, Steve Hawkes reports that the MoD has confirmed a Royal Navy submarine deal, bringing joy to 3,000 BAE Systems workers at Barrow-in-Furness. The £2.7bn deal will see work continuing on four new submarines in a seven-sub programme. BAE had to show the affordability of the programme and that it could meet Navy requirements.
- While in his Editor’s Letter, City AM’s Alistair Heath compares buoyant prices in prime central London (where they are now an astonishing 30% higher than pre-recession in nominal terms, buoyed by foreign cash) to non-prime central London (where prices are just 5% above their previous peak) and Outer London (remain they were or are down), Ben Southwood points out that 39% of landlords surveyed by LSL Property Services expect rents to rise over the coming year, with just 1% predicting they would decline.