Lloyds’ bosses could be sued over HBOS takeover by the bank’s own shareholders

By
Daily Mail Reporter
Last updated at 1:09 PM on 31st October 2009

Lloyds’ bosses could be sued by the banks own shareholders
Shareholders with money invested in Lloyds Banking Group were asked today to help fund a possible legal challenge against the bank.Investors, who mostly have shares in former LTSB, have been hit by falling share prices and a loss of dividend after the banks takeover of ailing HBOS, which dragged the new group billions into the red and forced government to take a 43% stake.Chairman of the Lloyds Action Group, Nick Shaw, told a meeting in central London that research was being carried out to see if compensation could be won from the bank‘s directors.He said: “They decided they would buy an unopened box with cash. Our cash.”He told the meeting it was worthless trying to take any action against government and he saw little prospect of the shares regaining their previous value.He said: “The alternative is pursuing directors who between them, it would appear, it is alleged to me by two separate people, that they have professional indemnity insurance of £200 million and knowing who they are, I find it difficult to believe they personally don’t have unsheltered wealth of £50 million.”Mr Shaw told the meeting at the QE II conference centre money was needed to fund the research into the viability of their claim.Initial discussions have already begun with legal firm PCB Litigation, but any legal action is likely to be lengthy and expensive.Although Chairman Sir Victor Blank has since stood down the deal to buy HBOS was backed by 96% of LTSB shareholders last November.An overwhelming majority of HBOS investors also supported the move amid warnings the bank could be nationalised if the deal fell through.Lloyds is set to unveil a £21 billion fund raising next week as it seeks to avoid putting £260 billion of toxic loans, mostly from HBOS, into a government backed insurance scheme which would raise the tax payers stake to 62%The bank will reportedly pay £2.5 billion as a break fee.

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Big shot of the week: Just as he thought BP was back . . .

This week Tony Hayward, the chief executive of BP, must have thought that he had finally moved out of the long shadow of Lord Browne of Madingley. Not only did BP’s third-quarter figures beat City forecasts, but the benefits of the restructuring programme he introduced on arrival two and a half years ago put paid to fears over BP’s dividend, one of the underpinnings of the London stock market.
But yesterday afternoon, a legacy of the Browne years reared up again. While Mr Hayward could have argued convincingly that the fire at a Texas refinery in 2005 happened on Lord Browne’s watch as chief executive, he was himself at the time in charge of exploration and production. Now the US authorities have criticised the actions BP took, while he was chief executive, to clear up after the disaster.
Mr Hayward, 52, has spent the period engaged in a hard balancing act, being careful not to criticise his predecessor while drawing a line under the Browne years that transformed BP.
Lord Browne courted publicity; Mr Hayward shuns it. Lord Browne, an engineer, came up the management route, through roles in finance, for example. Mr Hayward is a geologist and an oil man through and through, who proved himself drilling in various inhospitable parts of the world. Lord Browne is an aesthete who collects arcane Venetian manuscripts. His successor, “an ordinary guy you might meet in the pub”, says one who has had dealings with him, is blokeish and sporty, fond of West Ham and sailing.

He has even, though officially denying this, seemed to want to move on from the “Beyond Petroleum” strategy associated with his predecessor, which seemed designed to draw a veil over BP’s involvement with messy hydrocarbons in favour of greener options.
In a speech to the Massachusetts Institute of Technology on Thursday, two days after delivering the BP figures, Mr Hayward ridiculed the idea that fossil fuels “can be switched off — like analogue TV”. Demand for energy was projected to rise by about 45 per cent by 2030 — “roughly equivalent to adding two more United States to the world’s consumption”.
From early on, Mr Hayward specialised in structural geology, which studies how rock formations are put together. This turned out to be useful, in career terms, as it was a discipline needed in areas where BP was expanding, such as South America, just as he began his ascent of one of the greasiest poles in UK corporate life.
It is not clear, to this day, if this fortunate career choice was a coincidence. One former colleague who worked with him as a junior geologist recalls: “He was very ambitious even in his first days with BP. I think he was always focused on getting ahead. He was a technically gifted structural geologist, and this was a stepping stone in his career development at BP.”
Mr Hayward joined the group from university, moving to Colombia after a decade and then taking over BP’s Venezuelan offshoot. He relocated to the UK in 1997 and was soon seen as a potential successor to Lord Browne, who had already fast-tracked him for promotion. The latter’s departure was accelerated by an unfortunate court case involving his private life, and when Mr Hayward took the helm in May 2007, BP was in a mess.
As well as the fallout from the Texas fire, its massive Prudhoe Bay oilfield in Alaska had been partly shut down and there were delays to a key platform in the Gulf of Mexico.
Furthermore, the big acquisitions made by Lord Browne during his 12-year tenure — Amoco, Arco and Burmah Castrol — may have kicked BP into oil’s premier league but they had also handed it a cumbersome, bureaucratic management structure.
Mr Hayward brought in consultants. What they found was “pretty ugly”, he admitted. Five months into the job, in a memo that was embarrassingly leaked, he described the oil company’s performance as “dreadful”.
That bloated management structure has been slimmed down — in all, 8,000 jobs will have gone by the end of this year — and Mr Hayward has simplified the supply chain and reformed how the company orders anything from oil rigs to food in the canteen. This week BP said that it could cut costs by another £1 billion this year, meaning the restructuring will eventually reduce overheads by £4 billion.
Sam Laidlaw, the chief executive of Centrica, said that Mr Hayward is “very capable and can connect the operational with the strategic. He doesn’t flap — he’s very calm … I think people enjoy working with him.”
He added: “John [Browne] grew the company when it really needed to. He got it out of some big strategic difficulties. Now, with lower commodity prices, it’s a case of getting the best returns out of the asset base they have got. I think Tony will be good at that.”
This week’s news was just what the analysts wanted to hear, and Mr Hayward must have thought the ructions of the past few years were behind him. The US authorities had other ideas.
CV
Born 1957, Surrey
Education PhD Geology, University of Edinburgh Career
1982 Joined BP as graduate
1992 Exploration manager, Colombia
1995 President, BP in Venezuela
1997 Director of BP exploration
1999 After merger of BP and Amoco, group vice-president and member of the upstream executive committee
2000 Group treasurer
2002 Executive vice-president, then chief executive, exploration and production
2007 Chief executive
Family Married, two children
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Nicola Horlick talks to Aberdeen about selling top contract

Nicola Horlick, the fund manager, has gone into talks with Aberdeen Asset Management about selling her company’s most valuable contract, The Times has learnt.
Aberdeen and Ms Horlick’s company, Bramdean Asset Management, have been discussing a possible sale of the contract to manage Bramdean Alternatives, the listed investment trust that was at the centre of a shareholder row last year. The talks are at an extremely sensitive stage and could still collapse.
When contacted by The Times last week, Ms Horlick did not deny that talks to sell the management contract had taken place, but she emphasised that no deal had been agreed.
She was at pains to stress that she would neither sell her fund management company nor cede control to an outside party “while my body still draws breath”.

A spokesman for Bramdean Asset Management was unavailable for comment last night. However, it is understood that Ms Horlick would be prepared to sell the contract at the right price.
The spat between Bramdean Alternatives, floated by Ms Horlick in 2007, and its largest shareholder gripped the City earlier this year. Bramdean Alternatives’ largest shareholder is Elsina, which is controlled by Vincent Tchenguiz, the property entrepreneur. It launched an ultimately successful coup to oust the board of Bramdean Alternatives and take control of the trust.
Although Ms Horlick did not sit on the board of Bramdean Alternatives, her fund manager was closely associated with the trust and had the contract to manage its assets.
Elsina has overseen installation of an independent board at Bramdean Alternatives, but Mr Tchenguiz is not on it.
Aberdeen is understood to be interested only in the contract to manage Bramdean Alternatives, and not in buying the company outright. The contract has two and a half years to run.
Bramdean was not available last night. Aberdeen declined to comment.
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New York agog at Galleon insider dealing allegations

The Galleon Group insider trading scandal continues to grip New York two weeks
after fraud and conspiracy charges were brought against Raj Rajaratnam,
co-founder and one of America’s richest men, and five others.

Prosecutors allege that the defendants generated more than $25 million in
illicit gains by exchanging privileged information about quarterly earnings
and takeover activities at a number of companies, including Hilton Hotels
and Google.

Since the arrests, the media has been fed further allegations on a daily basis
about America’s largest hedge fund insider dealing case. Recent twists
include insinuations that Galleon had paid hundreds of millions of dollars
to Wall Street banks in return for non-public company information.

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Lookers sales shift up a gear, driven ahead by scrappage

Lookers, the motor dealer, yesterday credited the Government’s scrappage
scheme with contributing to better than expected trading from July to
October.

The Manchester-based company, which operates 121 franchise outlets from 79
locations and sells 33 marques, said that its results from July 1 to last
Thursday were “significantly ahead” of both its budget and the same period
last year.

Lookers said that despite the UK market for new cars being down 15 per cent on
last year during the first nine months of 2009, its new car sales during the
period on a like-for-like basis — including only those dealerships which
have traded in the same format for more than a year — were up 11 per cent.

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We’ve had the bath-shaped recession, now Sorrell predicts the LUV-shaped recovery

Sir Martin Sorrell, the world’s most influential adman, yesterday offered a new expression to describe prospects for the world’s economy as he predicted a “LUV”-shaped recovery.
Sir Martin, who famously used the expression bath-shaped to predict a previous economic downturn, said that the world could expect a three-speed recovery in 2010.
He said the recovery would be L-shaped for Western Europe, U-shaped for North America and V-shaped for Brazil, Russia, India and China and the so-called Next 11 nations, which include Turkey, Indonesia and Vietnam.
He cheerfully admitted the LUV acronym — “the most acute description in the alphabet soup debate on the shape of the current economic cycle” — was not his own invention but had been coined recently by Stella Dawson, who blogs on economic matters for Thomson Reuters, the financial data and news provider.

Sir Martin, the founder and chief executive of WPP, the world’s biggest advertising and marketing group, told The Times: “There is a fair degree of confidence among chief executives and chief marketing officers — but, unfortunately, that hasn’t yet translated into spending.
“Whilst their hearts are stronger and their minds clearer, increased confidence is still not transferring to their cheque-writing hands.”
He was speaking as WPP reported revenues of £2.01 billion from July to September. This was up 6.7 per cent on the same months last year and reflected last year’s acquisition of Taylor Nelson Sofres, the market research firm, as well as the recent strength of the dollar and the euro against sterling. Like-for-like sales, which strip out the impact of currency movements and acquisitions and which are regarded as a more meaningful measure, were down 8.7 per cent, although this was a marked improvement on the 10.5 per cent fall suffered during the April to June quarter.
Like-for-like gross margins, which Sir Martin said was a better measure of competitive performance, were also better than the previous three months.
Sir Martin said that things were “less worse” from July to September than from April to June, adding: “You would expect that to be the case, given the massive fiscal and monetary stimuli pumped into the world’s economy. If that hadn’t worked, we would be in real trouble.”
Sir Martin cautioned against suggestions that major economies were now set fair for unblemished growth in 2010. “The big test is what happens when governments start to withdraw their stimulus packages. The ship is turning but I won’t declare victory until we see like-for-like growth.”
WPP won new business totalling £730 million during the quarter, including contracts in the United States with Microsoft — to promote Bing, its new search engine — and Mattel, the toymaker. Sir Martin said he had drawn some comfort from the fact that WPP’s US operation, where revenues were down 6.1 per cent, had enjoyed its best quarterly performance this year.
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Flight taxes are nothing to do with environment, they’ve been hiked to bail out banks, admits Darling

By
Jason Groves
Last updated at 7:44 AM on 31st October 2009

Cat out the bag: Chancellor Alistair Darling says that higher air passenger duty, introduced tomorrow, was needed to plug gaps in the national finances
Flight taxes are being raised to help bail out the banks, Alistair Darling admitted yesterday. In an extraordinary intervention, the Chancellor said the higher air passenger duty being introduced tomorrow was needed to plug gaps in the national finances. He made no attempt to justify the move  -  which will add £340 to the ticket for a family of four flying long haul - on environmental grounds, the official reason for the tax. Airlines warned yesterday that the tax would cost thousands of jobs and do nothing to combat global warming. Addressing journalists in Newcastle, home of the failed bank Northern Rock, Mr Darling said: ‘I am quite blunt about it, we need to raise money to pay for some of the things we have done. ‘If unemployment goes up there is a cost obviously to the family, there is cost in increased benefits, Northern Rock has cost a lot of money. What we are doing is putting a pound on to your average ticket, which about three quarters of people travel on. ‘And you consider the cost of an air ticket, I don’t think a pound is that unreasonable. ‘In the North East, we have spent billions on a bank for very good reasons. ‘We could have stood back and said “There you are, tough luck”. We didn’t because that was the wrong approach.’ Michelle Di Leo, director of the aviation lobbying group Flying Matters, said Mr Darling had ‘let the cat out of the bag on this flying stealth tax’. She added: ‘Just when the economy needs all the help it can get, he is imposing a tax which undermines job creation in the tourism sector, prices ordinary families out of flying and all for absolutely no environmental benefit.
Not on board: British Airways has condemned the raised taxes
‘When people realise how much this stealth tax will cost them and how much damage it is doing to the economy, any politician who commits to scrapping it will get an electoral boost.’ The cost of air tickets will rise from tomorrow when the first of two increases in air passenger duty takes effect. The hike, which will particularly hit long-haul passengers travelling in business and first class cabins, was condemned yesterday by British Airways BA said the effect of the two increases would mean the cost of a flight for a family of four to Australia for travel after November 1 next year would rise by at least £340. A poll for World Travel Market, a London-based exhibition event, showed 52 per cent of 1,030 people surveyed - all of whom holidayed this summer - said they would reduce their overseas holidays due to tomorrow’s hike. And 13 per cent said they would stop overseas holidays altogether. Tomorrow’s increase will see duty for short-haul economy flights to Europe rise from £10 to £11. On longer journeys the levy rises by as much as £30. In November next year the duty increases will see economy-class passengers on the shortest flights paying £12. But for premium-class passengers on the longest flights - more than 6,000 miles - the levy will soar from the November 2009 figure of £110 to as high as £170. Silla Maizey, BA’s customer services director, said: ‘These huge tax hikes are very bad news for holidaymakers - and completely unjustified. ‘The Government says the tax is environmental, but its own figures show that aviation already meets its environmental costs without any increase in passenger duty.’ 

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House prices show first annual rise since slump

By
Daily Mail Reporter
Last updated at 11:47 PM on 30th October 2009

House prices jumped out of their slump as the year-onyear rate of growth increased for the first time in 19 months.
The average UK property price in October was £162,038, an
increase of 2 per cent on a year earlier, reported Britain’s biggest
building society, Nationwide. Not since March 2008 have property prices risen over the course of a year.

House prices rose 0.4 per cent in October, taking overall values into the black for the first time since March 2008
But economists have warned of trouble ahead. Nationwide’s Martin
Gahbauer said summer price rises were caused by a lack of houses for
sale combined with a sudden surge in home-moving, and were unlikely to
continue. Nationwide also reported a fall in the rate at which prices
were increasing. In September they grew by 0.9 per cent, but this month
the increase was just 0.4 per cent.

Seema Shah, property economist at Capital Economics, said:
‘The upturn in house prices already appears to be losing momentum. There are tentative signs that the shortage of property for sale, which
has been driving up prices in recent months, is beginning to ease.’ A further fear is that the end of a stamp duty holiday will
cause a slump in property sales. Until December 31 homes worth up to
£175,000 are exempt from this tax. But from the New Year buyers will
have to pay stamp duty on homes worth more than £125,000. There is also still a shortage of cheap mortgages for buyers who only have a small deposit.

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Town hall stealth taxes cost the average family £180 a year

By
Steve Doughty
Last updated at 11:14 PM on 30th October 2009

Town halls have pushed up their charges for car parking, school dinners, swimming baths and meals on wheels by nearly £1billion over two years, figures revealed yesterday. While council chiefs have been protesting in public that their incomes are falling, in fact local authorities have been raking in extra cash from their everyday fees and charges. An average family is likely to be paying £180 a year extra to meet the cost of what is in effect a stealth tax. 
From parking to schools: Councils have been ‘ripping off taxpayers by pushing up already sky-high charges on everything’, says The Tax Payers’ Alliance Pressure Group
Hikes in charges for services from sports centres and school buses to
rat-catching have been pushed up by 9 per cent over two years and by
5.5 per cent last year alone, according to the accounts. The increases, imposed during the depths of the recession, come at a time when inflation is flat and, on one measure, falling. The
scale of fees and charges - which include the bills sent to the elderly
for meals on wheels and home help - is now running up faster than
council tax, which rose by just 2.6 per cent this year.

Charges have more than doubled since 1997 and raised a total for local authorities last year of  £11.7billion, more than half of everything they collected in council tax. That is up from £10.8billion in the year that ended in March 2007. A family of four on a middle income is now likely to be paying around £1,300 a year in council fees and charges, a figure which compares with an average council tax bill this year of  £1,175. The increases were revealed in accounts slipped out by the Department of Communities and Local Government. Town hall chiefs have claimed that their takings from fees have been falling during the recession. ‘Feeding their own addiction to waste’Yesterday they said receipts from planning and building charges and parking are going down during this financial year, but added: ‘We have to keep council tax as low as possible.’ The increases were condemned by Tory politicians and the TaxPayers’ Alliance pressure group. Susie Squire of the Tax-Payers’ Alliance said: ‘It’s bad enough that councils have been ripping off taxpayers and constantly pushing up already sky-high charges on everything from parking to schools, but it adds insult to injury that they have all the time been bleating about lack of revenue due to the recession. ‘Taxpayers know they have been paying over the odds and are not getting value for money, and when they find out they have been lied to on top of all this they will be rightly angry and frustrated.’ She added: ‘If anything, charges should come down in a recession when money is tight, but instead too many local authorities have carried on regardless to feed their own addiction to self-aggrandisement and waste.’ Tory communities spokesman Caroline Spelman said: ‘Not content with doubling the level of council tax, Labour ministers have pressured town halls into hiking parking charges too.’ A spokesman for the Local Government Association, the umbrella body for councils, said: ‘Councils have to charge for some services and they have to keep council taxes low. If people don’t like the charges that are levied they can vote the council out.’ He added that in the current financial year councils expect to drop some of the fees and charges they collect, with big falls in planning and building control charges collected, and a small fall in receipts from car park, parking permit and parking meter fees.

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Does Sir Martin have another motive for peddling his alphabet soup?

By Alistair Osborne, Business Editor

Published: 9:45PM GMT 30 Oct 2009

Step forward WPP boss, Sir Martin Sorrell, a man who fits in a job in
advertising when he’s not playing the role of economics guru. Over the
years, Sorrell has given us a “bath-shaped” economy, replaced that
with a “shower” (as you do) and, only in August, predicted that
any bounce-back from the current economic soaking would form “an L
shape, and an italicised L”.

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