British taxpayers could suffer a 2bn pound loss on Northern Rock but it should be seen as the cost of securing financial stability, according to the National Audit Office. The Government’s spending watchdog said the Coalition was correct to seek an early sale of the nationalised lender, which resulted in the sale last year of Northern Rock’s so-called “good bank” to Sir Richard Branson’s Virgin Money for an initial sum of 747m pounds. The NAO expects the taxpayer to lose 480m pounds of its original 1.4bn pound investment in Northern Rock, but said the figure could rise to as much 2bn pounds in real terms by the time the assets are fully wound down, The Telegraph reports.
One of Britain’s leading high street banks has been downgraded by the ratings agency Moody’s. Santander UK, which has more than 25 million customers and more than 1,400 branches had its credit rating downgraded together with 16 Spanish banks. The agency said that the Spanish government’s ability to provide support to the institutions had been reduced. In cutting the long-term debt and deposit ratings by “one to three notches”, Moody’s cited Spain’s soaring unemployment, which stands at 24%, the possibility that property loans will not be repaid in full and concerns that the banks may find it more difficult to raise money in the market due to the debt crisis, according to The Telegraph.
Hewlett-Packard is reported to be planning cuts of up to 25,000 jobs, as the world’s largest PC maker grapples with declining demand. Some cuts being considered will come from HP’s information services business, according to Bloomberg. Meg Whitman, the former boss of eBay who took over as HP’s chief executive last September, faces the challenge of finding new sources of revenue for HP as consumers increasingly favour tablet devices such as the iPad over the traditional desktop computers that HP built its fortune on. Besides lifting revenues at the Californian company, Ms Whitman is also under pressure from Wall Street to cut costs at the company, which employs more than 300,000 people globally, The Telegraph says.
Commercial property developers are backing David Cameron’s call to get Britain building again, according to a new report. The construction of new offices in London has increased by 44% compared with last year, aided by lower build costs, and is now three times greater than its lowest level three years ago. The rise in construction has been identified in the latest crane survey by property services group Drivers Jonas Deloitte, which measures the amount of space under construction through the number of cranes on the skyline. The Coalition sees construction and investment in infrastructure as a key path to economic growth for the UK, The Telegraph reports.
HSBC has raised the prospect of selling its British high street banking operation if new regulations prove too demanding. Stuart Gulliver, chief executive of the global banking group, told City analysts yesterday that the British retail bank would have to meet strict internal targets when the new rules came in — and if it did not, it would be sold.The warning banks in Britain, with 16 million customers, 50,000 staff and and 1,240 branches, coming under new ownership. Severing ties with its British retail banking operation would also give HSBC another reason to relocate its head office away from Britain, an option it is already considering because of the cost of the bank levy, writes The Times.
David Cameron has told Europe’s power brokers to take “decisive action” to save the euro or risk a messy break-up that threatens livelihoods across the continent. The Prime Minister used a video conference call to tell Angela Merkel that Germany must do more — and quickly — to stop the single currency unravelling. Mr Cameron’s lecture on the woes of the eurozone risks souring relations as world leaders gather today at Camp David outside Washington for the annual G8 summit of world leaders. But he insisted that, with Britain’s economy in the firing line if the eurozone splintered, he had to put aside diplomatic niceties and speak out, according to The Times.