Sunday newspaper round-up: Bank ring-fence, Standard Chartered, interest rates

(ShareCast News) - The looming ring-fence plan to separate bank's investment and retail arms may be watered down as part of the government's attempts to re-engage with the City. The Sunday Times has been told by senior City and Treasury sources that behind-the-scenes talks with the Bank of England have begun to try and tone down the ring-fence scheme so that both retail and investment banks can come under the control of a single board, rather than the two stipulated by the post-crisis plan drawn up by economist Sir John Vickers. Elsewhere in banking, Standard Chartered is poised to announce a key boardroom rejig this week. The FTSE 100 bank's deputy chief executive, Mike Rees, is to be sidelined, with seven divisional heads who previously reported to him now coming under the direct control of new chief executive Bill Winters, according to City sources cited by the Sunday Times. Investors are braced for a rights issue of between £5bn to £10bn to boost the bank's capital cushion, though Winters is not expected to unveil that this week.There is no danger that the Bank of England will raise interest rates later this year, according to Peter Spencer, chief economic adviser to the respected EY Item Club thinktank. Fears of a 2015 interest rates are 'ludicrous', Spencer told the Mail on Sunday, with even a February 2016 rate rise unlikely. The Item Club's quarterly forecast, to be published on Monday, is expected to predict that interest rates will not increase until the autumn of next year.The thinktank is also expected to criticise Chancellor George Osborne for being too reliant on the private sector for growth in wages, productivity and exports. Osborne has created a "risky strategy" that will "only be party successful", according to a preview given to the Sunday Times.One fast-growing private sector area showing signs of a bubble that is in dangerof bursting is crowdfunding,with private investors in the peer-to-peer space said to be taking similar risks to those that led to the banking crash. The Mail on Sunday quoted David Postings, chief executive of lender Bibby Financial Services, who said there was "potential overheating" in the small business market after stats emerged showing a record £507m of loans were made via crowdsourcing platforms to consumers and small firms in the three months to the end of June. Postings argued that some new funding methods could lead private investors to 'come unstuck' by lending to small firms.A group of larger private investors who own Gala Coral are poised for a successful exit for their investment, when Ladbrokes settles on a deal to takeover its rival this coming week. After weeks of talks, Ladbrokes, valued at £1.2bn, is expected to announce the issue of new shares to buy Gala, the Sunday Times said. The combined company is expected to have a value of about £3.5bn and, with about 4,000 shops, would become the biggest high street bookmaker, ahead of William Hill.After media regulator Ofcom last week proposed breaking up BT Group, the chief executive of the company has threatened to respond by cutting all investment in its Opeanreach infrastructure arm and taking the matter to court. In an interview with the Sunday Telegraph, Gavin Patterson said: "This is a commercial enterprise and if there's uncertainty we will defend the rights of our shareholders, undoubtedly," he said. "It puts that investment very much at risk. At the end of it, and if we're meant to be looking at the next 10 years, what do you want to look back on? Do you want to look back at 10 years of litigation and arguments?"BT is also under threat from another angle, with Ofcom worried about its proposed £12.5bn takeover of the EE mobile network could damage competition in the market. The Sunday Times noted that the regulator has raised concerns that the acquisition could tempt BT to deliver inferior service to mobile competitors using its fixed-line network, as rivals all rent capacity from the incumbent operator. If competition regulators give a green light to the deal, BT would have "incentives to discriminate" between EE and rival operators. "This is one of the potential concerns arising from the proposed merger," said Ofcom.Sainsbury chief executive Mike Coupe has laid out plans on how he intends to "reinvent the superstore" as he battles to reverse the retailer's falling sales. Coupe said he was looking to make the overall shopping experience simpler, quicker and bring it up-to-date with the habits of the modern customer. "Our challenge is to reinvent the superstore for the next generation, for the future," he told the Sunday Telegraph.UK defence group BAE Systems, which supplies the UK and US governments among many others, has started looking for its next chief executive. Two replacements for current boss Ian King have already been approached, the Sunday Times reported.Aeroplane maker Airbus has knocked months of speculation on the head by confirming a new version of its superjumbo, the A380, is planned and should be commercially ready in five years. Airbus chief Fabrice Brégier told the Sunday Times that the A380neo, with 'neo' standing for New Engine Option, that the model will be needed "between 2020 and 2025" and that just one engine supplier will be chosen. Analysts believe the choice is between Rolls-Royce and US rival General Electric.Will the A380neo take off from a third runway at Heathrow? A group of 270 business leaders, including the chairmen of FTSE 100 engineering giant Babcock International, British Land and the AA, have signed a letter urging the Prime Minister to move quickly in giving the go-ahead to the controversial third runway at Heathrow. The open letter sent to David Cameron, the Sunday Telegraph reported, aimed to put further pressure to approve the measure after the government-appointed Airports Commission earlier this month made a "clear and unanimous" recommendation for a new runway at the site. The PM has promised a decision before 2016, but "now is the time for government decision and action," the letter says.Marks and Spencer spent four days trying to persuade womenswear boss John Dixon to stay before finally accepting his resignation, the Mail on Sunday reported. Dixon, whose departure was announced on Friday, gave his notice on Monday after being offered a chief executive role at another company. But the paper reported that M&S chairman Robert Swannell declined to accept Dixon's resignation when it was initially offered.