Last checked at LONDON (Alliance News) - Royal Bank of Scotland Group and Lloyds Banking Group are among the worst performing stocks on the FTSE 100 Monday, after they both passed the European Central Bank's stress tests but the results suggested they will fare worse in the Bank of England's tougher tests in December.
Lloyds was the worst performer of the UK banks in the ECB's Asset Quality Review, passing the test, but with a capital ratio only marginally higher than the minimum required level when subject to the stressed scenario. On December 16 it will be subject to another round of testing from UK regulators, and the UK testing will be stricter, for example testing the banks' balance sheets against a 30% fall in house prices, compared with the 15% fall tested in the European model.
Lloyds and Royal Bank of Scotland are thought to be most at risk from the UK testing, given their stronger focus on the UK mortgage market. Jefferies has cut Lloyds to Underferform from Hold on the back of the stress test results.
Twenty-five eurozone banks failed the ECB stress test, and nearly half of those must raise EUR10 billion euros in the next nine months. Nine Italian banks failed the stress tests, according to the ECB, and five of these have already been recapitalized. One German institution, Munich Hypotheken eG, was among the 25 failing financial institutions, but it has also been recapitalized.
Although the test results gave a clean bill of health to the majority of Europe's lenders, commentators were quick to point out that doesn't mean the banks are healthy enough to quicken the pace of stagnant lending in the region, once of the key factor's blamed for the region's turgid economic performance.
Ophir Energy shares are also down after Salamander Energy confirmed Ophir is one of two parties that it is talking with about a potential takeover offer for the FTSE Small Cap-listed oil producer. Salamander confirmed press speculation that it has entered talks with both Ophir Energy and a consortium led by Spanish energy group Compañía Española de Petróleos, or CEPSA, and investment group Jynwel Capital.
Liberum Capital has said that, "at first sight, it is difficult to see where significant value could be added" for Ophir.
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Markets: UK stocks have given up early gains and are trading lower amid concerns over the health of the European economy, and as investors already look towards the Federal Reserve meeting later in the week, which is expected to bring an end to US quantitative easing.
US stock futures are pointing to a slightly lower start on Wall Street.
FTSE 100: down 0.03% at 6,386.57
FTSE 250: down 0.03% at 15,084.82
AIM ALL-SHARE: down 0.2% at 707.72
GBP-USD: flat at 1.6098
EUR-USD: down at 1.2675
GOLD: flat at USD1,230.58 an ounce
OIL (Brent): down at USD85.33 a barrel
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Other Top UK Corporate News
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Mining giant Anglo American said it has made the first delivery of ore on ship from its Minas-Rio iron ore project in Brazil, within the targeted budget. In a statement, the company said the first cargo of more than 80,000 tonnes of iron ore for the pellet feed market has been loaded onto a chartered vessel at the export terminal at the port of Açu in Rio de Janeiro state and the vessel is currently en route to customers in China.
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Miner BHP Billiton said it remains on track to meet all financial year production guidance for 2015. The company has initiated marketing its Fayetteville asset, but would pursue divestments only if full value can be realised for the owners. In an investor presentation, the firm said it is positioned for another year of record production, adding that it targets at least another USD3.5 billion of productivity-led gains from its core portfolio. BHP had announced a demerger proposal in August. CEO Andrew Mackenzie said: "We are confident that our productivity drive will be accelerated by the demerger proposal we announced in August. A simpler portfolio, focused on our 19 corEUR1 assets, will retain an optimal level of diversification while generating even stronger growth and margins."
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Smiths Group said Finance Director Peter Turner will step down to pursue other opportunities, although he will stay on for another six months while the company looks for a successor.
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Old Mutual's South African banking subsidiary Nedbank Group said it is on track to meet its full-year guidance, after reporting higher net interest and non-net interest income in the first nine months of the year. Nedbank said it remains well positioned to meet its full-year guidance for growth in organic diluted headline earnings per share of greater than nominal GDP growth in 2014.
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Reckitt Benckiser is expected to send a circular to investors in November detailing plans to spin off its pharmaceutical division into a separately listed entity, The Daily Telegraph reported on Sunday. The FTSE 100 consumer goods group is expected to tell shareholders on November 17 that it will hand them shares in the new business in proportion to the shares they already hold in the company, the paper said. The listing will not be open to new investors, nor be used to raise new money, it added, citing sources.
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Vodafone Group said it has started an audit into potential VAT fraud at Grupo Corporativo Ono SA, the Spanish cable operator it acquired in July, Bloomberg reported on Sunday. "As soon as Vodafone became aware of the issue we instigated a forensic audit to investigate the facts relating to the alleged fraud," said Vodafone spokesman Ben Padovan, according to Bloomberg. The probe is understood to be focused on potential fraud in VAT and whether Ono inflated sales of international calling minutes prior to the acquisition by Vodafone, Bloomberg said, citing reports in Spanish newspaper El Pais.
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Randgold Resources said the remedial measures implemented to overcome the technical problems that have impacted the Tongon mine are starting to produce the desired results. The mine's performance is improving, said Randgold Resources Chief Executive Mark Bristow. Bristow said mill throughput and the recovery rate, the main challenges faced by the mine, were both being turned around by a determined effort on the part of the Tongon management team.
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Salamander Energy shares jumped after it confirmed that it is holding early talks with two potential suitors regarding a possible bid, though analysts were mixed on the rationale for the deal. Salamander confirmed press speculation that it has entered talks with both FTSE 250-listed Ophir Energy and a consortium led by Spanish energy group Compañía Española de Petróleos, or CEPSA, and investment group Jynwel Capital. The Asia-focused oil explorer and producer said it is seeking to clarify the terms of the Ophir bid and said it has not yet received any details on the CEPSA consortium's bid, nor any confirmation that an offer will be forthcoming.
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Separately, Ophir Energy entered a deal to buy seven deepwater production sharing contracts in Indonesia from Niko Resources, expanding its South East Asia presence. Under the deal, Ophir will pay USD31.3 million for interests in the seven contracts, six of which it will operate itself. It will pay the initial consideration in cash, with further payments dependent on exploration success.
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Petra Diamonds said its revenue grew by more than half in its fiscal first quarter, buoyed by higher production and the proceeds from the sale of an exceptional blue diamond. In a statement, Petra said revenue for the three months to end-September rose 55% to USD100.8 million, from USD65.1 million a year earlier, as production rose 2% to 833,744 carats, its highest ever quarterly production, and it sold an 85% interest in the 122 carat Cullinan blue diamond for USD23.5 million.
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Renishaw said it expects the revenue growth trend it experienced in the first quarter to continue through the second half of its financial year, extending the guidance it gave for the second quarter. On October 16, the company said its pretax profit for the three months to end-September, its fiscal first quarter, rose to GBP21.3 million, from GBP10.6 million a year earlier, even though exchange rate movements knocked GBP3.3 million off this year's figure. It had previously reported that first quarter revenue increased 28% to GBP101.4 million, from GBP79.0 million a year before, and said that it expected the revenue growth trend to continue in its fiscal second quarter.
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Haversham Holdings and Mortgage Advice Bureau (Holdings) added themselves to the AIM market initial public offering pipeline. Haversham has been created by Avril Palmer-Baunack and Marwyn, the specialist investment management company, with the support of institutional investors including Invesco, Artemis, Aviva and Schroders. Haversham is placing a total of GBP30million new shares to provide due diligence and operating capital prior to a subsequent acquisition. It is expected to list on AIM November 10. Mortgage Advice Bureau, meanwhile, said its IPO will involve the sale of existing shares by current shareholders, and it won't raise any new funds for the business. Its largest shareholder after the planned IPO will be Chief Executive Peter Brodnicki, while an unnamed former director and his spouse will sell their entire holding, and all the other existing shareholders will sell some of their holdings but retain more than 60% of their holdings.
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AIM Movers
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Totally shares are doing well after its Totally Health subsidiary was awarded a contract by NHS Hartlepool and Stockton-on-Tees Clinical Commissioning Group to handle clinical health coaching programmes with a focus on long-term conditions. The initial 12-month contract is expected to be worth around GBP125,000. Physiomics is up after it signed an extension project with a "major global" pharmaceutical company for the Virtual Tumour project. Synectics is a big faller after it warned that it expects its underlying profit for the second half of its financial year to be "significantly" below market expectations of GBP5.0 million, after it was hit by contract award delays and extended delivery periods for contracts it had already won, the company's third profit warning of the year. Oilex is also down after saying it has started preparations on the production test on the Cambay-77H well. The company said an analysis undertaken by oil and gas consulting firm RISC showed the Y zone flow parameters for the well were within its expectations, but said that as the well is the first of its type in India, the duration required to complete flow back operations is unknown as there is no reference point for the reservoir.
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Top Economics And General
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German business confidence deteriorated for the sixth consecutive month in October, reports said citing a survey from the Ifo institute. The business confidence index fell more-than-expected to 103.2 in October from 104.7 in September. The score was forecast to drop to 104.5. The current assessment index dropped to 108.4 from 110.5. It was below the expected level of 110.
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Brazilian President Dilma Rousseff called for dialogue and unity Sunday after winning her bid for a second four-year term in the country's presidential election run-off. Dialogue will be a central concern of her new mandate, the 66-year-old told supporters in Brasilia, saying she doesn't believe Brazil has been divided by the just-concluded election campaign. She promised Brazilians she would ask for a referendum on political reform. "I want to be a much better president than I have been thus far," she said. She also assured Brazilians that she would conduct a decisive fight against corruption. The centre-left Workers' Party (PT) candidate narrowly defeated challenger Aecio Neves, official results showed. Rousseff received 51.45% to Neves' 48.55% with 98% of the votes counted.
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Russia said that it will recognise the parliamentary elections in Ukraine. "We are waiting for the official results while there is rather contradictory data. But it is already clear that, despite the rude and dirty campaigning, the elections took place," Russian Deputy Foreign Minister Grigory Karasin told the Interfax news agency. Ukraine and Russia have been locked into a deep conflict since the ouster of Ukraine's former President Viktor Yanukovych in what Moscow says was a Western-supported coup in February. Sunday's election saw a landslide victory of pro-European parties that Poroshenko said will make his country's pro-Western course irreversible.
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The last British military base in Afghanistan has closed and British combat operations in the 13-year campaign have ended, officials in London said Sunday. The Afghan National Security Forces have taken over Camp Bastion and British troops are to leave Helmand province in the coming days, the Ministry of Defence said in a statement. At the height of the conflict there were 10,000 British personnel in Helmand. Brigadier Rob Thomson, the most senior British soldier in Helmand, paid tribute to the 453 British lives lost and the 140,000 British troops who had fought in Afghanistan.
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Afternoon Watchlist (all times GMT)
13:45 US Markit Services PMI Preliminary
13:45 US Markit PMI Composite Preliminary
14:00 US Pending Home Sales
14:30 US Dallas Fed Manufacturing Business Index
23:50 Japan Retail Trade
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Tuesday's Key UK Corporate Events
UBM - Interim Management Statement
BP - Q3 Results
Lloyds Banking Group - Interim Management Statement
BG Group - Q3 Results
Utilitywise - Full Year Results
Standard Chartered - Interim Management Statement
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Tuesday's Key Economic Events (all times GMT)
n/a Germany Import Price Index
09:00 Italy Business Confidence
12:30 US Durable Goods Orders
12:55 US Redbook index
13:00 US S&P/Case-Shiller Home Price Indices
14:00 US Consumer Confidence
14:00 US Richmond Fed Manufacturing Index
23:50 Japan Industrial Production
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9 Apr 2024 12:20
PRESS: Barclays mounts challenge to UK car finance ruling - Sky
(Alliance News) - Barclays PLC has launched a legal challenge over a ruling that it unfairly paid commission to a car finance broker, Sky News reported late Monday.
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