Royal Bank of Scotland is working on a plan to merge its troubled Ulster Bank arm with one of the Irish business's rivals, the Sunday Times reported. RBS is looking at merging Ulster Bank with banks such as Permanent TSB or the Irish arms of Danske Bank or KBC. Combining with one of these businesses could let Ulster Bank cut costs and challenge Ireland's big banks. RBS is in talks with some private equity firms about providing financial backing for the plan.
RBS's Chief Executive has said that free banking for retail customers will probably come to an end in the UK. Ross McEwan told the Sunday Telegraph that charges for current accounts are almost inevitable but he said he had no immediate plans to make the change himself. McEwan said last week that he would scrap "teaser rates" for new customers. Parliament's Treasury committee has criticised free banking for customers in credit for obscuring banks' charges and stifling competition.
Crispin Odey is one of the biggest investors in AO World, the online white goods retailer. The Sunday Times reported that Odey, one of Britain's top hedge fund managers, put in the single biggest order for AO shares
ahead of last week's flotation. He bought more when the shares started trading. The paper said it did not know whether Odey planned to be a long-term investor or to sell for a quick profit.
Johnston Press plans to raise at least £75m in a rights issue to reduce its debt, the Sunday Telegraph reported. The publisher, which owns the Scotsman, the Yorkshire Post and hundreds of other titles, will issue new shares to investors at a discount as soon as April. Chief Executive Ashley Highfield has cut costs to make the company profitable but most of its cash goes to pay off more than £300m of debt.
Warren Buffett cut his stake in Tesco by more than a quarter last year, the Sunday Telegraph said. In his annual letter to shareholders in his Berkshire Hathaway company, Buffett revealed he had sold nearly 115m shares in Tesco to reduce his holding to 3.7% from 5.2%. Filings in October showed that Buffett, the world's most successful investor, had already cut his stake below 4% and the latest disclosure indicates further disposals since then. Tesco remains one of Berkshire's biggest shareholdings outside the group.
Major shareholders in Standard Chartered want the bank's management to "put their capital position beyond doubt" at this week's annual results, the Sunday Telegraph reported. Concerns over earnings growth and a $1bn writeoff at its Korean arm have raised questions about the bank's future capital strength. Investors want the Asia-focused bank to put the question to rest with a detailed explanation on March 5th. A top-five shareholder told the paper: "They don't have a capital problem - but they need to explain their capital situation to the market."
Big fund managers are calling on the Financial Conduct Authority to require earlier publication of flotation prospectuses after questions were raised about the timetable for AO World's share offer, the Financial Times reported. Potential buyers of AO shares only had four days to consider the online electrical goods seller's prospectus. "The AO prospectus did come late, which does worry you as it makes you think the company wants to get away with as little scrutiny as possible," a head of European equities at a UK fund manager told the paper.
Standard Chartered will be the latest bank to announce plans to dodge the European Union's cap on bonuses, the Sunday Times said. The bank will say with its results on March 5th that it will use "allowances" to sidestep the EU's ban on bonuses of more than two times annual salary. It plans to pay bosses and top traders fixed amounts every quarter on top of their salary. The payments will not be paid according to performance, thus avoiding the cap.
Sales at Tesco's big out-of-town stores fell 3.1% over Christmas, the Sunday Times reported. Citing figures the supermarket giant released at last week's strategy update, the paper said the poor performance at Tesco's hypermarkets was responsible for Tesco's overall negative trading because they make up more than half its selling space.
Markets are preparing for further action to help the Eurozone economy with the European Central Bank expected to cut its inflation forecasts, the Sunday Times said. Citi expects the 2015 forecast to be cut to its lowest for two years at 1.1%. The odds on a rate cut lengthened last week after inflation for the bloc stayed at 0.8% compared with expectations of 0.7%. But many economists think the chance of deflation is still too high for comfort.