A former chairman of the Federal Reserve has warned that regulation in the UK may have gone too far in its efforts to separate high-street banks from their high-risk investment arms. Paul Volcker claimed the UK's proposals to ringfence retail banks from their speculative trading divisions go even further than calls to re-introduce American laws established in the Great Depression, which he said would have been "probably not desirable". Speaking before giving a talk in Scotland this week, the 85-year-old, who acted as chairman of the Economic Recovery Advisory Board under President Barack Obama and also served under United States presidents Jimmy Carter and Ronald Reagan, rejected a return to the 1933 Glass-Steagall Act, The Scotsman reports.
The Chancellor officially began the search for a successor to Sir Mervyn King last week by advertising for the role for the first time in history. The chosen candidate is expected to be named around the time of the Autumn Statement on December 5. However, George Osborne's predecessor has urged the Government to strengthen the Bank's governance structures to reflect the new powers or leave the country at risk of individual failings. "What you end up with is this very large complex organisation responsible for critical decisions that will affect people's standards of living as well as the financial health of our system, basically it all comes back to a Governor," Mr Darling said. "I think a structure that is reminiscent of Louis XIV's court of the Sun King is wholly inappropriate for the 21st century," he added, The Sunday Telegraph explains.
Talks on a Eurozone banking union have run into serious disagreement, raising doubts over whether France, Germany and non-Eurozone countries can agree the blueprint for a single Eurozone bank supervisor by the end of the year. EU finance ministers meeting in Cyprus on Saturday aired differences over a Brussels proposal that would establish the type of supervision that would be a necessary first step to common bailouts for struggling Eurozone banks. Germany, Sweden, Poland and the Netherlands called for a more "realistic" negotiating timetable to resolve the problems, suggesting a talks will run into 2013. Anders Borg, Sweden's finance minister, said it was "undecidable and not acceptable" to aim for a deal by the end of the year, The Financial Times says.
For the merger between BAE and EADS to go ahead, countless parties will need to be convinced, not least the shareholders of both firms. Zafar Khan, defence analyst at Soc Gen, for example, thinks that BAE's share of the combined group should be closer to 35% rather than the proposed 40%and EADS's investors may agree. Nevertheless, as Boeing's boss, Jim McNerney, said on hearing of the proposal, it is likely to start a wave of consolidation in the defence industry. Guy Anderson of IHS Jane's, a defence and aviation consultancy, reckons that in particular the European firms left out of the deal, such as Thales of France and Finmeccanica of Italy, will be acutely worried about being left behind. A new age of military alliances looks in prospect, The Economist says.
The Ministry of Defence is demanding safeguards over the Trident nuclear weapons programme as a condition of the £30bn merger between BAE Systems and EADS, its Franco-German rival. Politicians in London, Paris, Berlin and Washington are poring over the national security risks of waving through a deal that would create the world's biggest aerospace and defence group by annual revenues. The top priority for ministers from the Ministry of Defence and Department for Business is to safeguard the Trident nuclear submarine programme, built by BAE at its yard in Barrow-in-Furness, Cumbria. BAE and EADS last week stunned the market with their nil-premium merger plan. The marriage would create a European version of Boeing, with a balanced portfolio of military and commercial aerospace interests, The Sunday Times reports.
South African police on Sunday blocked and dispersed a march by hundreds of protesting miners against a security crackdown, as the army was drafted in to help subdue further violence at Lonmin's nearby Marikana platinum mine. "The police have blocked us. They are dispersing us. Now we are telling our people to go back to where we came from" in order to avoid any conflict, Gaddhafi Mdoda, a workers' committee member at Anglo American Platinum, told AFP. Workers dispersed peacefully, and were not carrying their usual protest gear of machetes, spears and sticks a day after police moved into platinum giant Lonmin's strike-hit Marikana mine to raid worker residences and seize weapons. Hundreds of officers raided worker hostels and also used rubber bullets and tear gas Saturday, with clashes breaking out in a shantytown opposite the mine, according to The Sunday Telegraph.
The biggest investor in Chemring, the British defence contractor, has thrown its weight behind a possible £900m takeover by a foreign private equity group. Invesco, which controls nearly 30% of Chemring's shares, is understood to have given tacit support for a bid from Carlyle, the American buyout giant. The fund manager's backing raises the possibility that Britain could lose another large defence group to foreign investors. Last week, BAE Systems revealed it was in £30bn merger talks with EADS, its Franco-German counterpart, a deal that would create the world's largest aerospace and defence group. Chemring, a Fareham-based military equipment and munitions specialist with 4,500 staff worldwide, announced last month that it had received a takeover approach from Carlyle. The announcement followed a 32% jump in its share price to 414p, The Sunday Times says.
The logic of a deal between Glencore and Xstrata is compelling. Scale is everything in mining and their close relationship (Xstrata was created in a spin-off of Glencore's coal mines in 2002) should make integration straightforward and cost savings plentiful by marketing all of Xstrata's output through Glencore. Thus, it was odd that the Qatari Investment Authority took such a hard line and risked the deal foundering. The fund planned to become a big investor in Glencore at its IPO but it wanted a discount, which neither Glencore nor stockmarket rules would allow. Most analysts reckon that the Qataris bought Xstrata's shares
as a way of getting a stake in Glencore cheaply when the deal, which it was now threatening, went through. But as commodity prices turned and Xstrata's shares fell by 30% in May and June, the Qatari fund found itself a long way out of pocket. Analysts suspect that this explains the sudden demand for more cash, The Economist explains.
The board of Xstrata is poised to recommend Glencore's higher £36bn offer after consultations with shareholders. The Sunday Telegraph understands that the board, chaired by Sir John Bond, is close to approving the offer, which values one Xstrata share at 3.05 Glencore shares. A meeting of Xstrata's independent non-executive directors was held on Friday, at which shareholder sentiment was discussed, but a final decision was not taken. However, the position of Xstrata's second-largest investor, Qatar Holding, which owns a 12% stake in the miner, remains unclear. Qatar, which is being advised by Lazard, has indicated it is unwilling to comment publicly on the improved deal until it learns of the Xstrata board's decision.
About 2,000 jobs are expected to be axed by JJB Sports this week as part of a deal that would see retail tycoon Mike Ashley take control of the stricken chain. Ashley, founder of the Sports Direct retail empire and owner of Newcastle United football club, plans to close at least half JJB's 180 stores, triggering the job losses. Sources close to the process said a deal could emerge tomorrow. It is understood Ashley will force JJB through a controversial "pre-pack" administration that will enable him to jettison loss-making stores and keep the most profitable ones. Ashley's move on one of Sports Direct's biggest rivals is likely to face scrutiny from competition authorities. If it is blocked, Dick's Sporting Goods of America and JD Sports could step in and buy JJB together, The Sunday Times says.
Thousands of British jobs will be slashed if BAE Systems' proposed £30bn merger with Airbus-owner EADS is not approved by the coalition, the defence giant has privately warned. It is understood that numerous reports conducted during the feasibility process, which took place in the summer, concentrated on jobs that could be saved as being part of a European aerospace and defence champion. The group would have a workforce of 220,000 and work in complimentary markets that would help both companies secure additional work even in a global downturn. Over the past five years, BAE has shed about 20,000 jobs, many of which have been in Britain, and former defence secretary Lord Reid pointed out on Friday that remaining a stand-alone company was likely to see this trend continue, The Sunday Independent says.
Inflation is expected to have held steady despite rises in the price of oil exerting -significant upward pressure, an economist has predicted. The Office for National Statistics releases figures on Tuesday, which are set to show that the consumer price -inflation rate remained at 2.6% in August after hitting a 31-month low of 2.4% in June. Chief economist for IHS Global Insight Howard Archer said while there was a marked rise in oil prices
from July, further pressure from a poor grain harvest in the United States had yet to show up as price rises in shops. Hard-pressed retailers were still also discounting heavily in an effort to create an increase in footfall. Archer said it will be interesting to see if the September minutes reveal any noticeable change in the dynamics within the committee following the replacement of arch-dove Adam Posen by Ian McCafferty, who took up the role on 1 0 September, The Scotsman on Sunday writes.