Tonight:
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HBOS boss spins his way out of trouble - for now
Evening Standard 1 Aug 2008
With the bank results reporting season in full swing, this year's sweet-talking-of-investors tactic is becoming clearer. Having written off billions through their own greed and stupidity, in piling in, lemming-like, into US subprime, the banks are linking arms, highlighting the tough market conditions for their problems.
So HBOS can sit back and reflect on a job well done yesterday as the City fell for its pleadings about difficult times, etc. The Halifax owner reported a 72% crash in profits and was rewarded with an 8% share price rise - because the profit drop was not as bad as had been feared. While chief executive Andy Hornby could allow himself a celebratory glass of shandy, the euphoria masked another £1.1 billion write-off on US mortgage investments. Hornby boasted of the bank's numbers being "resilient" and said the outlook is "clearly challenging" - but they would have been more resilient and less challenging if the bank had an extra £1.1 billion to play with.
Truly, these are strange times.
* Lloyds TSB's profits fall 70% and a reader of City Spy, with a business account at the Kensington branch, receives this letter: "We wanted to let you know that we have not been able to pay the following as it would have made your account overdrawn. Amount £26,500.27. If this had been paid the balance of your account would have been £25,019.93 Credit." Are the two related?
SEC exposes dodgy dealings
In an end-of-term report, America's Securities and Exchange Commission has written to compliance officers telling them of the "common deficiencies and weaknesses that SEC examiners have recently found during compliance examinations".
Personal Account trading is loosely supervised and the SEC suggests that customers' orders should be dealt with before the boys' own deals.
If that's not enough to cause strangled cries in the Square Mile, what about the "free lunch"? The SEC found that securities firms were taking old people out to lunch in ritzy venues and then hitting them with marketing material. Examiners discovered "indications of possible fraudulent practices in 13% of the examinations conducted". Sedated by the "free lunch" and the sales patter, "senior investors" were persuaded to consider financing a plunge into the market by mortgaging the homestead.
A chilling section in the SEC report says: "In recent years, some broker-dealers have recommended that their customers purchase securities, and, to finance the purchase of securities, the broker-dealer has recommended that the customer obtain a second-mortgage on their home through a bank affiliated with the broker-dealer...supervision and record-keeping relating to these activities appeared to be poor."
City Spy awaits with interest, the FSA equivalent study here...
* Irish billionaires Denis O'Brien and Sir Anthony O'Reilly are locked in grim battle. In a feature on O'Brien, Business Week reports O'Reilly's son, Gavin, as saying O'Brien is a "gnat" who needs a good "swat" and says he's just acting on a vendetta because of O'Reilly's Independent News & Media's coverage of him. The US magazine continues: "O'Brien says that charge is 'a load of shite' (Irish slang)." Don't you just love the bit in brackets? You can just picture the journal's legion of fact-checkers trying to find the word "shite" in their dictionaries and debating how to deal with it.
* Ralph Topping, the veteran Scots bookie who is now chief executive of William Hill, fancies himself as a bit of a stand-up. Of the firm's loss-making withdrawal from the Italian market, Topping says: "We did the veni, we did a helluva lot of vidi, but we didnae do a whole loada vici."
* "Our tables are still full but the City boys aren't ordering the £3000 bottles like they used to - they're going for much cheaper stuff" - a London club-owner on the sharp end of the downturn.
At last, Daddy's boy Dein has got his Reward
Gavin Dein is the creator of Reward, the loyalty points company, who is reporting 3000 High Street shops and 5000 retail websites have signed up to the scheme. Prior to beginning Reward, Dein used to work at Arsenal as "fan relationship manager". Presumably, while there he kept bumping into his dad, David Dein, then the football club's vice-chairman.
* Another rising star with a famous father is Michael Parnes, founder and chief executive of Old Park Lane Capital. The small-firms stockbroker raised the funds for Formjet, the £1.5 million AIM-listed software vendor company - - no mean feat in this tight market. Parnes is particularly pleased because some well-known City institutions dipped into their pockets and he promises Formjet will be the first of many such exercises. The name sounds familiar because Parnes is the son of Anthony Parnes, the stockbroker jailed for his part in the Guinness affair. After spells with stockbroking houses AJ Bekhor, Rowe Rudd and McNally, Parnes Snr became a half-commission man with Alexanders Laingand Cruickshank.
Hat's not the way to do it, Phil
More on British Gas boss Phil Bentley's slightly ridiculous appearance on news bulletins in a hard hat in front of British Gas's new power station in Devon.
Given the beating that he and his guv'nor Sam Laidlaw, chief executive of parent company Centrica, have had over the price rises, huge profits and big dividends, insiders are sniggering that hard hats are completely appropriate for the Centrica/British Gas board at present.
The plan, it now transpires, was for Bentley to come across as some form of Man of the People. Unfortunately, Bentley's hard hat was more Village People.
As British Gas cries crocodile tears over the effects of its price increases on "normal people", here's a question for the board: Why do you insist on charging significantly more for people on pre-paid meters - ie the less well-off - and continue to give discounts to the middle classes who take dual-fuel and pay by direct debit?
