| | Monday 28 January 2013 THOUGHT FOR THE DAY  Something Funny's Going on Hello Share Movers,
There is something funny going on in Crazyland. Blighty's growth figure was expected by the City to be quite good. When it was announced on Friday faces fell. It was pretty abysmal. Of course, as soon as the rumours start flying that something good is going to happen, we all tend to think that it won't happen. And it didn't.
Now we might also have expected the Footsie to fall like a stone on the news. After all, when the rumour was circulating the day before, the big index went up in jolly anticipation. So if the news was actually bad, shouldn't shares have fallen?
The growth figures were shrugged off by the big traders. Now the funny thing I referred to earlier is the contradiction between the growth figures and other pointers in the UK economy.
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Paper Round easyJet, Bumi, LIBOR
Budget airline EasyJet will confirm to the stock exchange this morning that City grandee Sir Michael Rake is quitting as the firm's chairman this summer after three years of crossfire with major shareholder Sir Stelios Haji-Ioannou. However, it is understood that the EasyJet board will suggest the decision is unrelated to the chronic sniping but due to Rake being aware of looming corporate governance issues. The sharp increase in the airline's share price leaves it on the brink of ascending to membership of the blue-chip FTSE 100 index in March, and Rake is already chairman of another Footsie stalwart, telecoms giant BT. Best corporate governance practice is that individuals should not simultaneously chair two FTSE 100 companies. [The Scotsman]
Nat Rothschild has been dealt a personal blow by the refusal of two Bumi directors to back him should he succeed with his management coup at the embattled Indonesian coal miner. The billionaire financier reprieved non-executives Sir Graham Hearne and Steven Shapiro from his planned board cull when he called an EGM earlier this month to oust 12 of Bumi's 14 directors. But Bumi's circular to shareholders due to be published on Tuesday for the meeting on February 21 discloses that neither man would be willing to serve on the board proposed by the financier. [The Telegraph]
Banks could face a devastating escalation of the compensation bill for Libor-rigging if the businesses suing them rely on laws normally used in the sale of consumer goods such as fridges. Thousands of businesses that bought products linked to the Libor lending rate could base their case on Barclays and other banks having admitted in settlements with regulators that they attempted to manipulate Libor. Because the underlying Libor rate could have been false, the product linked to it was faulty, a leading analyst has argued. Sandy Chen, banking analyst at the stockbroker Cenkos Securities, has pointed out that a key argument of the banks is expected to be "burden of proof". Banks will hope that this approach will limit the compensation bill because it will be difficult for claimants to demonstrate that they lost a specific sum of money as a result of having taken out a product. [The Times]
Britain is facing a "crunch" period from 2017 as the rise in interest-only mortgages during the boom years raises the prospect of more people losing their homes, the financial watchdog will say in the next few weeks. However, the Financial Services Authority is preparing to rule that there has not been widespread abuse or misselling of interest-only mortgage products. It is likely to reject suggestions that the product was abused, as Payment Protection Insurance was. Nor is there any evidence of banks mistreating customers who are stuck with their interest-only mortgage and unable to transfer to another provider. [The Times]
One of the UK's top accountants has joined the business backlash against attacks on corporate tax avoidance by politicians, telling the authorities to change the law if they are unhappy with the ethics. Responding to calls for companies to "pay their fair share", Mark Otty, Ernst & Young's managing partner for Europe, Middle East and Africa, claimed a moral tax code would not work as companies had a duty to pay the lowest rate permitted. [The Telegraph]
Record Christmas takings have swollen Amazon's cash pile to as much as $9bn (£5.7bn), the online retailer is expected to declare on Tuesday in results that will inflame the debate over its tax contributions around the world. In just 13 weeks, Amazon's savings, which are held in cash and investments, have ballooned to between $7bn and $9bn, from $5.2bn in September, say analysts. The group's performance helped topple a number of its UK high street competitors, with the camera shop Jessops and music store HMV going into administration earlier this month. The UK generates an estimated 10% of Amazon's revenues, pushing the proportion of the cash pile collected in the British Isles to an estimated $900m. [The Guardian]
Bank of America has begun moving more than $50bn of derivatives business out of its Dublin-based operation and into its UK subsidiary, according to people close to the operation. The move, part of the group's global drive to rationalise its operations, has been encouraged by regulators but will also allow BofA to benefit from tax breaks stemming from the accumulated losses in its UK business. [Financial Times]
Final salary pension schemes closed their doors at a record rate last year as the Coalition's money printing programme hit their finances. Figures from the National Association of Pension Funds (NAPF) show that just 13 per cent of Britain's 6,000 final salary schemes remain open to new workers - a drop of one third from 19 per cent in 2011. These generous defined benefit schemes were also closed to existing members at a rapid rate last year, with the number being shut climbing to 31 per cent last year, compared to 23 per cent in 2011. [The Independent]
Guy Hands, founder of private equity firm Terra Firma, aims to bolster his plans to raise funds this year by returning €3bn to investors through disposals within the next 12 to 18 months. Mr Hands, whose firm lost a £1.75bn investment in EMI when the music label was seized by Citigroup in 2011, is pressing ahead with a €3bn fund to buy green energy infrastructure assets, people with knowledge of the matter said. This is less than the €5bn initially planned, after talks with China Development Bank on committing to the fund failed to reach fruition last year. [Financial Times]
Advertising and marketing agencies can expect to see a boom in mergers and acquisitions this year as big holding groups step up their acquisition efforts, especially in digital and social media. That's the verdict of a string of City firms, led by the corporate advisory boutique Clarity, which has found that the number of agency buyouts has soared. The "Big Six" marketing and communications groups, which include WPP, Publicis and Omnicom, bought at least 107 agencies globally in 2012 - sharply up from 54 in 2010 and 98 in 2011. [The Independent]
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