Investors enjoyed an 18 per cent leap in dividends paid by UK-quoted companies during the second three months of 2012. The amount paid was 22.6bn pounds – a second quarter record and taking the total for the year so far to 41.bn pounds. The figures were boosted by special dividends, including 1bn pounds from insurer Old Mutual, which sold off its Nordic business. GlaxoSmithKline and Antofagasta also made extra one-off payments. Capita Registrars estimates the full-year total will be 78.3bn pounds – an annual record – thanks to the faster growth rate of shareholder payouts: dividend payments have risen every quarter for the past 18 months. Many firms put the brakes on spending bumper cash piles on investment, be it capital expenditure or buying other firms, due to uncertainty caused by the weak global economic. Cash flow is still strong, yet corporate investment is very depressed,’ said Charles Cryer, chief executive of Capita Registrars. ‘Dividends are one destination for the large cash surpluses that companies have accumulated as a result,’ the Daily Mail reports.
British taxpayers will receive a further 538m pounds from Virgin Money after the bank that acquired Northern Rock last year agreed to increase the purchase price and bought a portfolio of government-owned mortgages. Virgin Money, the banking arm of Sir Richard Branson’s company, paid the Treasury an additional 73m pounds in cash on top of the 747m pound initial sale price for Northern Rock. The payment reflects a higher than expected calculation of the net asset value of Northern Rock when it was sold at the start of this year. At the time the deal was announced, UK Financial Investments, which manages the government’s stakes in banks and oversaw the sale of Northern Rock expected the additional payment to be about 50m pounds, The Financial Times says.
China has made a dramatic swoop on the North Sea oil industry, buying up assets that account for more than 8 per cent of the UK’s entire oil and gas production. Chinese state-controlled group CNOOC agreed a 15.1bn dollars (9.7bn pounds) offer to buy Canada’s Nexen, which is the second biggest oil producer in the UK North Sea. Its net UK production of both oil and gas is 114,000 barrels of oil equivalent per day (boepd). In a separate deal, China’s Sinopec splashed out 1.5bn dollars on a 49 per cent stake in the UK unit of Canada’s Talisman Energy, which produced an average of 71,500 barrels of oil equivalent per day last year. Talisman said its joint venture with Sinopec would “invest more in the UK than Talisman would have on its own”. Both Nexen and Talisman rank within the top 10 oil and gas producers in the UK North Sea, The Telegraph reports.
Italy’s financial outlook darkened on Monday amid warnings that 10 cities are at risk of bankruptcy and schools may not be able to open in the autumn because of drastic spending cuts. The cities at risk of running out of money include Naples, Palermo in Sicily and Reggio Calabria, on the toe of the Italian boot, according to the Italian press. “The situation is becoming worse by the day,” said Graziano Del Rio, the president of a national association of municipal councils. The warning came just days after Mario Monti, the prime minister, expressed fears that Sicily, which has a high degree of fiscal autonomy, was on the brink of a default. Cities and towns in southern Italy have for years been plagued by mismanagement, corruption, the wasteful use of EU funds and infiltration by the Mafia. But the “black list” of cities at risk also includes some in the north of Italy such as Alessandria, in the Piedmont region, The Telegraph says.
The number of out-of-work Britons struggling with payday loans has quadrupled over the past three years, the national debt charity said yesterday. A total of 1,243 unemployed people with an average payday loan of £918 contacted the Consumer Credit Counselling Service last year asking for help. At the height of the recession three years ago, the charity was approached by only 283 people in the same situation. Delroy Corinaldi, of the counselling service, said: “Unemployment is the biggest single driver of debt problems in the UK, and people who have lost their job after taking out extremely expensive payday loans are finding it particularly difficult to cope.” He said that payday lenders must recognise the problem, adding that when the industry announces its new codes of practice this week, the CCCS expects to see clear commitments to freeze interest and charges when borrowers experience a shock to their income that leaves them unable to repay, writes The Times.
Europe’s solar panel manufacturers are poised to launch a trade complaint against their Chinese rivals, marking a further escalation in trade tensions between China and the west over green technology. The anti-dumping complaint, led by Germany’s SolarWorld, will accuse Chinese manufacturers of selling photovoltaic cells in the EU below the cost of production, allowing them to dominate the market, according to people familiar with the matter. Under EU rules, the European Commission, the bloc’s executive arm, would have 45 days from the case’s filing to decide whether to open an investigation, The Financial Times reports.
The UK’s cost of borrowing plunged to an all-time low yesterday as panicking investors sought safe havens from the financial firestorm engulfing Spain. Investors piled into UK gilts as the embattled Eurozone member’s economic woes deepened and markets panicked over the latest threat to Madrid’s creaking finances from struggling regional governments. Global stock markets tumbled as Spain’s cost of borrowing hit a euro-era high of 7.44% – well into the territory which forced Greece, Ireland and Portugal to seek a bailout from the European Union and International Monetary Fund. In contrast, the UK’s cost of borrowing hit a record low 1.4% – well below the current 2.4% rate of inflation – as nervous dealers shunned returns on their cash and simply looked for shelter from the latest storm, writes The Independent.