Spanish stocks plunged to a nine-year-low and its borrowing costs rose as traders refused to believe Mariano Rajoy’s claim that Madrid could salvage its banks without a bail-out. At a press conference designed to reassure markets after the 19bn euro nationalisation of Bankia, the prime minister admitted that Spain was “finding it very difficult to finance itself”. But Mr Rajoy blamed the soaring borrowing costs on advancing debt crisis across the Eurozone, and tried to dismiss fears that Madrid will be crushed by the debts of its banks. Shares in Bankia, which were suspended on Friday as the government unveiled its largest ever recapitalisation plan, plunged 27 per cent before recovering, The Telegraph writes.
The Bank of England is poised to cut interest rates or launch another round of quantitative easing if the euro collapses, it emerged on Monday. A senior official for the Bank said the measures would “again play [their] part in mitigating the impact” of Greece or other countries leaving the single currency. The comments come after the head of the IMF suggested last week that British interest rates may have to be cut to zero if the economic situation deteriorates. The Bank has already completed a quantitative easing programme, effectively printing more money worth £325bn and this may be extended again. Yesterday, David Cameron hosted a meeting with Sir Mervyn King, Governor of the Bank; Lord Turner, the chairman of the Financial Services Authority; and the Chancellor, to discuss contingency plans to deal with the collapse of the euro, according to The Telegraph.
The fault-lines that have riven BP’s Russian joint venture reopened yesterday after Mikhail Fridman resigned as chief executive. A person close to the Russian consortium that owns half of TNK-BP said that Mr Fridman had left amid a loss of faith in BP as a partner and that the two sides were heading “towards some kind of disengagement”. The move triggered suggestions that the Russian partners, led by Mr Fridman, were trying to reopen a route to breaking up the venture after a $32bn sale of their interest to BP and Rosneft collapsed last year, says The Times.
The UK’s largest independent oil refinery will stop processing crude oil from next week, PricewaterhouseCoopers, the administrators said. And the entire site in Essex is likely to be closed in 90 days unless a buyer is found. The future of 500 staff and 350 contractors looks bleak, according to union officials. PwC said the decision was necessary after it failed to raise the £625m needed to turn around the business. Petroplus, Coryton’s owner, went into administration at the start of this year, The Telegraph reports.
First Group chairman Martin Gilbert was yesterday urged to “hit the phones” and talk to shareholders as some key investors raised concerns about his position at the helm of the transport giant. Gilbert, who has been chairman of the Aberdeen-based group since 1995, is also chief executive of Aberdeen Asset Management, and one unnamed major shareholder was reported to be seeking talks with him “over whether it is appropriate for him to hold two big jobs”. One analyst, who did not want to be identified, told The Scotsman: “He’s been at FirstGroup for a long, long time. The business has got too big and a number of issues have arisen in the last few years that might not have happened with tighter management and a business that wasn’t such a juggernaut.
Former trade minister Sir Richard Needham has quit the board of Lonrho on the eve of tomorrow’s AGM after a blistering row over pay and corporate governance at the Africa-focused group. Sir Richard resigned his non-executive post after a bust-up with executive chairman David Lenigas over a proposed hike in his annual salary from £500,000 to £750,000. In his resignation letter, he said that under Mr Lenigas’s leadership the company risked again being “dubbed an unacceptable face of capitalism”. Sir Richard said that he had only been told of the planned salary increase at a board meeting in April and informed by Mr Lenigas that he was expected to approve it immediately because “the accounts are going to the printers in three hours,” The Telegraph explains.
Banks will be required to display notices in branch and on websites that tell customers how much of their savings are protected if the bank goes bust, the Financial Services Authority (FSA) said today. The plans – outlined in December – will also apply to building societies and credit unions. They will see stickers and posters displayed prominently in branches to draw attention to savings protection limits. UK savers’ deposits are protected up to £85,000 under the savings safety net – the Financial Services Compensation Scheme (FSCS). Foreign banks with branches in the UK which are not covered by the scheme will need to make this clear while stating which national scheme is providing protection, according to The Daily Mail.