City regulators raised concerns with Barclays’s board in February about a breakdown of trust with the bank over incidents including a £7.5bn Cayman Islands scheme known as Protium to transfer toxic assets off its balance sheet. Andrew Tyrie, the chairman of the Treasury Select Committee, yesterday questioned ex-Barclays boss Bob Diamond over the Financial Services Authority’s worries about Protium and the boardroom culture more broadly. Referring to the board meeting, Tyrie asked: ‘Did they tell you that trust had broken down between the FSA and Barclays and they didn’t have confidence in senior management?’ Diamond replied: ‘No sir,’ The Daily Mail reports.
The European Central Bank (ECB) is expected to cut interest rates today in a bid to boost progress made by EU leaders in fighting the crisis at a summit last week. The ECB, which will hold its regular monthly policy meeting at 12.45 (UK time), will trim eurozone borrowing costs by a quarter of a percentage point to a new record low of 0.75%, analysts have predicted. The move is designed to help strengthen the relatively positive sentiment in financial markets since the EU summit in Brussels. “The ECB has the chance to calm financial markets at least for a few months if it complements the summit decisions with a serious effort to stimulate the economy,” said Berenberg Bank economist Christian Schulz. “We expect the ECB to cut its main interest rate by 25 basis points to 0.75%,” he added, The Telegraph writes.
After a bruising European Union summit, Italy sought yesterday to reassure the German Government — and, above all, the German taxpayer — that it will not need a bailout like Portugal, Ireland or Greece. Mario Monti, the Prime Minister, meeting Angela Merkel near Rome less than a week after his veto threat forced concessions from the German Chancellor, reiterated that Italy was not asking for European rescue funds to support Italian bonds — the key mechanism to which Mrs Merkel agreed in Brussels. Italy, he said, “is not in the same situation as Greece, Ireland and Portugal”. Rather, he argued that the bond-buying mechanism would make it more possible for virtuous governments to pursue painful reform. Aware of the backlash in Germany against Mrs Merkel’s concessions in Brussels, he said that he and Mrs Merkel shared a commitment to competitiveness and admitted he was very influenced by German economic thought, says The Times.
China has started stockpiling rare earths for strategic reserves, a state-backed newspaper said, in a move which may raise more worries over Beijing’s control of the coveted resources. China has already started the purchase – using state funds – and storage of rare earths for strategic reserves, the China Securities Journal said, but did not say exactly when the initiative was launched. The country produces more than 90% of the world’s rare earths, which are used in hi-tech equipment ranging from iPods to missiles, and it has set production caps and export quotas on them. Major trading partners last month asked the World Trade Organization (WTO) to form a panel to resolve a dispute over China’s export limits on rare earths after earlier consultations through the global trade body failed, The Telegraph explains.
The Bank of England’s quantitative easing (QE) policy has eroded pensioners’ incomes and left new retirees thousands of pounds worse off, experts warned today. With the Bank’s policymakers expected to sanction more money-printing tomorrow, Tom McPhail, head of pensions research at Hargreaves Lansdown stockbrokers, said the UK’s pension annuity rates have been in ‘meltdown’ for the past four years. He said that a man with £100,000 in July 2008 would have been able to secure an income of £7,855 whereas his younger brother, who hits pension age today, would only be able to secure an income of £5,743 – a drop of 27%, The Daily Mail reports.
Approximately 200,000 Britons own second homes in areas such as the Dordogne and other parts of France, particularly those serviced by budget airlines. Now, however, holiday home owners find themselves in the sights of President François Hollande as he seeks to tax the better-off to reduce France’s large budget deficit. On Wednesday (July 4th), the French government announced it was to increase taxes on foreign-owned second homes. Tax on rental income would rise from 20% to 35.5%, and capital gains tax on property sales would rise from 19% to 34.5%. The extra in each case is being labelled a “social charge,” The Telegraph says.