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Thursday Papers: US banks face $100bn liquidity shortfall

Thursday Papers: US banks face $100bn liquidity shortfall

Top stories

  • Financial Times: The largest US banks have a $100 billion shortfall to make up in order to meet new liquidity rules designed to avert a future crisis, the Federal Reserve has warned; US regulators finalised details of the liquidity coverage ratio, which will require banks to hold a certain amount of assets that can be quickly turned into cash - to provide protection in the event of a future credit crunch.
  • The Daily Telegraph: Goldman Sachs has warned that the UK could fall into a eurozone-style crisis if Scotland votes for independence; the Wall Street bank said a "Yes" vote on 18 September, while looking unlikely, "could have severe consequences" for both the Scottish economy and the UK overall.
  • Financial Times: The UK’s FTSE 100 share index hit a 14-year high on Wednesday, as global central bank policy actions pushed equity prices higher - despite geopolitical tensions in Ukraine and the Middle East.
  • Financial Times: Virgin Atlantic is to increase flying on its core transatlantic routes, as Sir Richard Branson’s airline seeks to mount a stronger competitive threat to British Airways and return to profit.
  • The Guardian: Standard Life plans to return £1.75 billion of capital to shareholders – almost a fifth of its current market value – after agreeing a surprise sale of its 180-year-old Canadian business for £2.2 billion in cash.
  • The Independent: The economic downturn was less severe than previously thought, according to revised figures that include the proceeds from illegal drugs and prostitution; changes to methodology used by the Office for National Statistics (ONS) show gross domestic product (GDP) shrank by up to 6% in the depths of the recession – but this is lower than the previous “peak-to-trough” estimate of 7.2%.

Business and economics

  • Financial Times: A shift from higher to lower paying industries has helped to push UK earnings growth to a record low, research for the Trades Union Congress has found.
  • Financial Times: Activity in the services industry, as measured by the Markit/CIPS purchasing managers’ survey, accelerated in August at its fastest pace in 10 months, in sharp contrast to this week’s weaker than expected manufacturing survey, but echoing the good performance in construction.
  • Financial Times: Britain’s fiscal watchdog has successfully reduced perceptions of bias in official economic forecasts but is still susceptible to threats from a change in government or senior staff, a review has concluded.
  • Financial Times: Hugh Savill, director of regulation at the Association of British Insurers, said BoE officials were “raising capital levels by any means available” – taking requirements beyond the minimum standards under the EU’s Solvency II regulatory regime, due to come into force in 2016.
  • Financial Times: The presidents of Ukraine and Russia signalled on Wednesday they had agreed steps towards a ceasefire in the conflict in eastern Ukraine. But even before the day was out, questions were emerging over whether the steps were workable – and how much agreement there really was.
  • Financial Times: Chinese investigators have visited the Shanghai offices of Morgan Stanley’s joint venture as part of their investigation into a former senior official who was detained last month on suspicion of taking bribes.
  • Financial Times: Further cuts in real wages in countries whose labour markets have been hardest hit by the economic crisis would risk creating deflation and deepening poverty, the Organisation for Economic Co-operation and Development has warned.
  • Financial Times: Hargreaves Lansdown, the UK’s leading retail investment management group, said it was getting increased calls from clients concerned about the potential impact of Scottish independence on their personal finances in the run-up to the referendum.
  • Financial Times: ECI Partners, the UK private equity group, has amassed £500 million, the largest fund in its 38-year history, in a sign of investors’ willingness to bank on a few managers to find deals in a market that has shrunk since the financial crisis.
  • Financial Times: In the coming weeks Genel Energy and its co-investors will reveal whether an exploration well being drilled at the Nour prospect in the Atlantic waters off Morocco has struck oil or not.
  • Financial Times: Bank of America Merrill Lynch and UBS that sponsored the Hong Kong flotation of Tianhe Chemicals have suspended analyst coverage of the company after it was accused of fraud by a group claiming links to cyber-hacking collective Anonymous.
  • Financial Times: Share trading in Safilo, an Italian eyewear company, was suspended on Wednesday after it was announced that its licence with Gucci would end two years early.
  • Financial Times: Home Depot, the largest DIY chain in the US, sought to reassure consumers as it investigated reports of a mass theft of customers’ payment data.
  • Financial Times: The number of passengers flying with Ryanair has reached new heights, with 9.4 million people travelling with the no-frills carrier in August; in past 12 months, it has flown 83.4 million passengers, up 4%.
  • Financial Times: Google has hired one of the world’s leading quantum computing researchers as it ramps up efforts to develop artificial intelligence and vastly increase the processing power of computers.
  • Financial Times: Arrowgrass Capital, the $5 billion London hedge fund, is planning to develop an electronic invoicing service in the latest move into disruptive financial services businesses by alternative investors.
  • Financial Times: Strong demand for its pick-up trucks and Jeep sports utility vehicles helped Chrysler, the US arm of Italy’s Fiat Chrysler, to report a 20% year-on-year sales gain in the US for August, outperforming the wider industry.
  • Financial Times: Centerview Partners has hired one of the key architects of the UK’s bank bailout regime in a move by the US boutique investment bank to beef up its European operations.
  • Financial Times: Pernod Ricard, producer of Absolut vodka and Chivas Regal whisky, is ramping up exports of its brands to Russia in anticipation of possible retaliation by Moscow against Western sanctions.
  • Financial Times: British tool hire company Ashtead has pushed up full-year earnings guidance after the rising tide of US and UK construction lifted first-quarter income by a third.
  • Financial Times: Brussels has imposed a €138 million cartel fine on groups including Samsung and Philips for rigging the European market for smart card chips.
  • Financial Times: With the launch of Apple’s iPhone 6 only days away, rivals in the US and Asia have revealed their plans of how they intend to revitalise their ranges of smartphones and wearable devices in the hope of standing up to the impending Cupertino-led publicity storm.
  • Financial Times: The head of the US Department of Justice’s team pursuing traders who allegedly manipulated Libor and foreign-exchange benchmarks is joining a law firm in the latest hire of enforcement officials into private practice.
  • Daily Express: A strong performance by the US team in the World Cup helped boost the performance of five-a-side business Goals Soccer Centres; the firm, which runs 44 centres in the UK, said the performance of the Jurgen Klinsmann’s men - including goalkeeping hero Tim Howard - has given it the confidence to expand in the US.
  • Daily Mail: Two of fashion’s biggest beasts have called off a four-year ‘handbags at dawn’ battle after reaching a truce; Hermès had been sparring with Louis Vuitton owner’s LVMH after it built up a 23.2% stake in the handbag maker; now Bernard Arnault, boss of LVMH and France’s richest man, will wind down his holding after the two struck a peace deal.
  • The Guardian: Energy firm npower has been given the go ahead to continue making telesales calls after it revealed it had cleared enough late customer bills to hit a target set by the regulator.
  • The Guardian: US August auto sales were unexpectedly strong, led by Ford, Chrysler and Nissan, which easily beat analysts’ estimates as the industry is seen reaching volumes not seen since before the recession.
  • The Guardian: The number of long-term unemployed in the world's major economies has increased by 85% since the financial crash, according to the latest employment monitor by the Organisation of Economic Cooperation & Development (OECD).
  • The Independent: A rising tide of protectionism across the globe is threatening to de-rail the global economic recovery, the chairman of Lloyd’s of London warned last night.
  • The Daily Telegraph: Eurozone recovery in question as two-speed divide emerged; a new intra-eurozone gap between the stronger economies of Germany and Spain, and the nations of France and Italy, has become apparent.
  • The Daily Telegraph: British Army places £3.5 billion order for new tanks; British arm of US group wins order for Scout vehicles that will support 1,300 jobs.

Share tips, comment and bids

  • Financial Times: Germany is on track for close to record equity issuance - and record high debt issuance - by corporates this year, according to figures from Dealogic; while 2013 saw €14 billion in equity and €75 billion in debt in total raised by non-financial German companies, this year has already seen €13 billion and €57 billion raised respectively.
  • Financial Times: German internet access provider United Internet said on Wednesday it had agreed to acquire private equity group KKR’s 74.9% stake in cable group Versatel for about €586 million in cash, giving it control of Germany’s second-largest fibre optic network.
  • Financial Times: Delivery Hero, a Berlin-based online takeaway marketplace, is the latest to attract new investment, raising $350 million to fund its global expansion and prepare for an initial public offering in less than 12 months.
  • Financial Times: Reed Elsevier has announced its biggest acquisition in three years with a €150 million offer for FircoSoft, a French company whose software helps banks spot terrorists and people on sanctions watchlists.
  • Financial Times: Balfour Beatty has reached a deal to sell Parsons Brinckerhoff, the US design consultancy that became the stumbling block for its abortive £3 billion merger with construction rival Carillion.
  • Financial Times: Spirit Pub Company will next month detail plans to add 400 pubs to its portfolio, after announcing the first tranche of acquisitions to its managed estate.
  • Financial Times (Lex): US banks: thirsty regulators.
  • Financial Times (Lex): European ABS: going mezzanine.
  • Financial Times (Lex): Renesas: semi free.
  • Financial Times (Lex): LVMH and Hermès: best of friends.
  • Financial Times (Lex): China shares: joined up thinking.

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