Lloyds Banking Group will price TSB at up to £1.44bn when it floats the new bank on the stock market - 10% below the new bank's book value, the Sunday Telegraph said. The valuation is designed to ensure a smooth reception for the initial public offering, making the bank priced "to go". Lloyds thinks selling the first 25% at below book value will help create demand for later tranches of the shares.
When TSB announces details of its stock market listing early this week, it will reveal that the bank is one of Britain's least profitable, the Sunday Times reported. Analysts think the bank, carved out of Lloyds Banking Group, makes low returns and could be forced to buy batches of loans from other banks to boost profits. TSB has a high ratio of deposits to loans, making it safe but less profitable than its peers.
Barclays is about to be hit by a £300m lawsuit from the dealmaker who helped negotiate the bank's bailout by Middle East investors at the height of the financial crisis, the Sunday Times reported. Amanda Staveley advised the Abu Dhabi government on its part in the Barclays equity injection. She is suing the bank because she believes her contract entitles her to the same fees Barclays paid to Qatari investors for their investment. The lawsuit, to be filed later in June, is linked to the UK Serious Fraud Office's investigation of the capital raising and the fees that were paid.
EE is ready to pull out of supplying Carphone Warehouse, threatening the merger between Carphone and Dixons, the Sunday Telegraph reported. Britain's biggest mobile operator is reviewing its retail strategy and a complete withdrawal from Carphone is the likely result. Such a decision would be a big blow for Carphone, which positions itself as an independent adviser to customers buying phones. European mobile operators want to cut out middlemen and sell straight to consumers. The paper did not give more details of how an EE pullout would threaten the merger of Carphone and Dixons.
William Hill is lining up its Operations Director, James Henderson, as the replacement for Chief Executive Ralph Topping. Henderson has spent almost three decades at the bookmaker, the Sunday Times reported, adding that no decision had been made on who would succeed Topping. William Hill hired headhunters in November to find a replacement for Topping, who will step down by the end of next year. Topping has talked about the need to keep star managers such as Henderson.
UK banks could be made to raise more capital to withstand a fall in house prices and consumers hit by rising interest rates, the Sunday Times said. Senior bankers think the Bank of England's Financial Policy Committee could sidestep direct intervention in the housing market in favour of a general increase in bank capital buffers to build up resilience in the financial system. Banks expect the BoE to increase their leverage ratio, though the decision could be made without a statement, reducing the risk of public alarm.
City fund managers are betting on share falls for some of Britain's top retailers including Sainsbury's, the Mail on Sunday reported. Odey Asset Management, Artemis Investment Management and Eton Park International are among funds that have gambled more than £1bn on shares
in Sainsbury's, WH Smith and Burberry falling. The retailers are in the top 15 companies short sold by investors as investors focus on companies with imminent or recent management changes.
Sainsbury's is expected to report a rare fall in sales when it posts a trading statement on June 12th, according to the Sunday Times. Analysts expect sales at stores open at least a year to have fallen by between 1% and 1.5% in the first quarter of the supermarket group's financial year, the second three-month period in which sales fell after nine years of gains. However, Sainsbury's is faring better than its rivals among the big four UK supermarkets.
Royal Dutch Shell has started looking for a new Chairman, the Sunday Times reported. Jorma Ollila is preparing to step down after eight years heading the board of the oil giant. Shell has enlisted headhunter Egon Zehnder to find a replacement for Ollila months after the Anglo-Dutch company posted its first profit warning in a decade. Chief Executive Ben van Beurden took over in January and announced a restructuring after profits halved.
The UK economy is up to £70bn bigger than previous calculations, the Sunday Times said. Adjustments to accounting rules mean GDP will be classed as between 4% and 5% bigger than before. On top of the previously announced £10bn contribution from drugs and prostitution, the Office for National Statistics will say at least £25bn of spending on research and development and arms will be counted as investment and not business costs. The paper did not list other increases in GDP as a result of the changes.