Pressure on Glencore over its $65bn merger with Xstrata intensified yesterday after a third party was revealed to be potentially muddying the waters for the commodities trader. Norges Bank Investment Management (NBIM) has been steadily buying shares in Xstrata over the past few weeks and its most recent foray into the market triggered a regulatory announcement that showed that it now has just over 88 million shares. Combined with a small number of derivative instruments, the acquisition took NBIM’s stake in the mining company to the 3 per cent that forces an investor to show its hand. NBIM, which is responsible for Norway’s Government Pension Fund, said that it had a “general policy of not commenting on individual investments”, and Glencore was unable to comment. Xstrata was also unavailable for comment. Reports claimed yesterday that the Norwegian move was replicating the policy of Qatar Holding, which has increased its stake in the miner and also opposed the deal in an attempt to force better terms, The Times says.
Spain has suffered the worst hemorrhaging of bank deposits since the launch of the euro, losing funds equal to 7% of GDP in a single month. Data from the European Central Bank shows that outflows from Spanish commercial banks reached €74bn (£59bn) in July, twice the previous monthly record. This brings the total deposit loss over the past year to 10.9%, replicating the pattern seen in Greece as the crisis spread. The Bank of Spain said the fall is distorted by the July effect of tax payments and by the expiry of securitised funds. On the other hand, Julian Callow from Barclay’s Capital said the deposit loss is €65bn even when adjusted for the season: “This is highly significant. Deposit outflows are clearly picking up and the balance sheet of the Spanish banking system is contracting,” The Telegraph reports.
The Group of Seven nations last night said they “stand ready” to release emergency supplies of oil into the market, as Hurricane Isaac shuts down US oil production in the Gulf of Mexico. The extreme weather has intensified policy-makers’ concerns around the oil price, which has climbed more than 20 over the past three months as sanctions on Iran stifle supplies. Finance ministers from the G7 group, which includes the US, Britain, Germany and France, last night urged the world’s oil-producing nations to up their output and warned they were ready to sanction the release of strategic reserves to boost supplies, The Telegraph says.
Scotland’s first Alternative Investment Market (Aim) flotation of the year is to take place next week as an Aberdeen oil and gas group prepares to raise funds for a major acquisition. Shares in Eland Oil & Gas are due to begin trading on Aim next Monday and the group plans to use the £118m proceeds to buy a stake in an onshore mining lease in Nigeria. Eland began operations in May 2010 with the aim of identifying and acquiring interests in oil and gas assets in west Africa. Last April, the firm and its partner, Starcrest Nigeria Energy, successfully bid for a 45% stake in the Oil Mining Lease (OML) 40 licence following an auction by the Nigerian Agip Oil Company, Shell and Total E&P Nigeria. Canaccord Genuity has been appointed as the nominated adviser and broker. The shares are to debut at 100p. The move, first revealed by Scotland on Sunday in June, would see Eland valued at about £135m, The Scotsman says.
The embattled chief executive of G4S said he was still unable to provide answers about why the company’s Olympics security contract went so badly wrong as he revealed associated losses could run beyond £50m. Nick Buckles said he was taking “each week at a time” as he battles to save his job and repair the reputation in Britain of the FTSE 100 company after it failed to provide all 10,400 security guards it had agreed to under its contract with the Government. Commenting as G4S booked a £50m loss against the contract, he admitted the debacle could have a major impact on G4S’s ability to win future contracts from the Government. But Mr Buckles claimed he could not comment on what happened – despite the end of the Olympics – until PricewaterhouseCoopers (PwC) has completed a review on behalf of the company’s board, which is due in the second half of September, according to The Telegraph.
Nick Clegg has called for a new emergency “wealth tax” on richer Britons during the economic downturn. The Deputy Prime Minister said that “people of very considerable personal wealth have got to make a bit of an extra contribution” towards what he describes as the “national effort”. Mr.Clegg will outline plans for his new wealth tax – which he suggests is necessary to ensure that British society remains “cohesive” – at the Liberal Democrats’ party conference next month. The Coalition has already announced that the austerity program of public spending cuts, including pay freezes in the public sector, will last for at least another two years until 2017. The deputy Prime Minister says today that this is only fair if accompanied by higher taxes on the wealthy, The Telegraph reports.
Only 8% of Lonmin’s South African miners showed up for work yesterday, worried that they would be attacked by militant, striking colleagues if they clocked in. Miners attempting to go to work were physically threatened and in some cases searched by colleagues, who stole their clocking-in cards. Intimidation centered on the free buses that brings employees to work, several of which had been set alight in the run-up to this month’s violence. The company is losing production of 15,000 ounces of platinum a week during the shutdown and expects to breach the conditions of its bank loans next month. Lonmin is unlikely to reissue an ultimatum to workers that they face the sack if they do not return to work. Instead, the company plans to deploy its security guards on buses today in an attempt to thwart militant workers, The Times writes.
Efforts by HM Revenue & Customs to clamp down on alcohol tax fraud have been lambasted as inadequate by an influential House of Commons watchdog. The Public Accounts Committee, chaired by Margaret Hodge, the Labour MP for Barking, said that although alcohol fraud was costing as much as £1.2bn in uncollected duty, HMRC lacked reliable information on the most cost-effective ways of tackling the issue and seemed “reluctant to prosecute offenders”. In its conclusions, published today, the committee says that although alcohol fraud is “big business”, the strategy begun by HMRC in April 2010 to combat the fraud was “being seriously hampered by a lack of information,” according to The Times.
Greece is in talks with the European Commission to establish several special economic zones offering tax breaks to attract investors and help reinvigorate its economy after five years of recession, development minister Kostis Hatzidakis said on Tuesday. The proposal is one of 10 priorities, from accelerating EU-backed infrastructure projects to reducing bureaucracy for potential investors, aimed at creating jobs and putting the country on track for sustained growth from 2014 onwards. Antonis Samaras, the Greek premier, stressed during talks last week in Berlin and Paris with German and French leaders that Greece needs its partners’ support to lay the basis for future growth within the Eurozone, following an unprecedented fiscal consolidation, The Financial Times explains.
Nick Clegg rushed to the aid of embattled transport secretary Justine Greening on Tuesday, vowing the coalition would “stick to” its agreed policy of blocking a third runway at Heathrow. The deputy prime minister came out fighting after Tim Yeo, a senior Tory backbencher, mocked David Cameron for dithering over the expansion of the west London airport, asking whether the prime minister was “man or mouse,” The Financial Times says.