Sunday newspaper round-up: Barclays, Italy, ECB, funds, G4S

"Investment banking revenues at Royal Bank of Scotland and Barclays have taken a significant dive during the third quarter, results this week are expected to show. Keith Bowman, banking specialist at broker Hargreaves Lansdown, believes figures from the two banks' investment banking divisions could be down by as much as 20-30 per cent as the market continues to feel the pinch from reduced corporate activity. Investment banking conditions, as the US banks have shown us, have been quite subdued and I would not be surprised to see 20 to 30 per cent falls in revenues in those divisions at Barclays and RBS," he said. There has been a relative lack of activity in equities and commodities. Fixed interest, in particular, has been a tough area and that will hurt RBS. Barclays kicks off the third quarter bank reporting season tomorrow, with RBS on Friday, followed by Lloyds and HSBC next week," writes Scotland on Sunday.Euroland is in its current predicament chiefly due to one reason, "because German politicians are convinced that without market pressure the euro zone's troubled economies will slacken their efforts at reform," writes The Economist in its latest weekly edition. That fear is indeed justified, it adds, "but Germany needs to concentrate on institutional ways of disciplining profligate governments, rather than starving the rescue package of funds". In any case, the magazine is of the opinion that, "as it is, this deal at best fails to solve the euro crisis; at worst it may even make it worse. As the shortcomings of each component become clear, investors' fears will surely return, bond yields will rise and banks' funding problems will worsen." What is the best option for a possible solution today? An ECB pledge of unlimited backing for solvent governments. Lastly, the article bemoans the fact that, "by the time Europe´s leaders settle on a solution that works, the costs will have risen still further.""The heads of the European Commission and European Council said that while they would "rigorously" implement the measures agreed in the new Greek rescue plan, more joint action was needed to "contribute to the swift resolution of the crisis. Whilst we in Europe will play our part, this cannot alone ensure global recovery and rebalanced growth. There is a continued need for joint action by all G20 partners in a spirit of common responsibility and common purpose," Mr Barroso and Mr Van Rompuy said in a joint statement on Sunday. The pair also outlined eight objectives for next week's Cannes summit, with the number one priority to "restor[e] growth and tackle global macroeconomic imbalances." The letter came as Jean-Claude Trichet, the outgoing president of the European Central Bank, said that the debt crisis that has crippled Europe in recent months was far from over," The Sunday Telegraph says."Some of Britain's worst polluters will tomorrow meet Greg Barker, the energy minister, to press their case for a £2bn exemption from green taxes they say will force tens of thousands of manufacturing jobs overseas. The meeting of the Energy Intensive Industries All-Party Parliamentary Group is part of a last-ditch effort by firms who say the government's climate change policies are in danger of strangling an already struggling sector. Big energy users ? steel makers, chemicals groups and cement companies ? are most worried about the carbon floor price, a Britain-only emissions tax that comes on top of the carbon permits polluters must buy for each tonne of carbon dioxide they emit. (...) The industrial lobby recently led a delegation, including the energy minister Barker, to Germany to highlight the measures the German government has taken to protect manufacturers. (...) Osborne has promised to announce mitigating measures in his autumn statement on November 29, reports The Sunday Times."A radical plan to create a multi-billion-pound sovereign wealth fund and wipe out the nation's pensions black hole is being examined in Whitehall. The scheme would see the creation of a state-backed investment agency that would rival those set up by Norway and many Middle East and Asian states to put government cash to work. Large-scale infrastructure projects ? road and rail links, power stations and affordable housing ? would be bankrolled by the fund, creating jobs and economic growth. The projects would be owned by Britain's pensioners and the assets would offset part of the black hole in Britain's public sector pension schemes, which stands at about £1.3tn. (...) Truell also wants to merge thousands of public sector pension schemes into bigger schemes, generating savings on administration costs and advisory fees. The LSE academics have estimated that this could save £34.5 billion over five years," reports The Sunday Times."The Germans are celebrating the discovery of a £48?bn 'bonus' lurking undetected in one of its bailed-out banks. The money, which would be enough to build nearly 10,000 British primary schools, had been lost in the accounts of FMS Wertmanagement after officials were left so confused by a set of complex financial instruments governing its financial obligations that they overstated the bank's debts. News of the windfall came as enthusiasm about the outcome of last week's European bailout summit was starting to fade, with analysts expressing growing doubt that the measures to write off part of Greece's debts and bolster the reserves of European banks would provide a long-term solution to the continent-wide financial crisis. Concerns are increasing about the strength of the Italian economy," reports the Financial Mail on Sunday."Whether or not Britain has tipped back into recession is a moot point: household spending already has, with retail sales volumes in decline and consumer confidence falling sharply. With only 55 days until Christmas, it's not feeling very festive. (...) It might be an irritating Americanism, but falling sales and profits are the "new normal", says veteran retail analyst Philip Dorgan. This makes a good Christmas more important than ever. For major retailers such as Argos, Dixons, HMV and Game, it is the "golden quarter" when they make the lion's share of their profits. They will be slugging it out with the supermarkets over this year's must-have gadgets and toys (...) Next is one of few retailers to have successfully defended its position since the downturn set in," The Guardian says."It was only a matter of time before China was heralded as Europe's escape route from its debt crisis (...) There is at least something different on offer now. In the past, investment in euro-zone debt has meant taking on as much risk, and sometimes more risk, than the Europeans themselves have been willing to absorb. No one could ever explain why the Chinese would want to do that. Now China will be able to choose to invest in euro-zone debt that is ensured by the European Financial Stability Fund (EFSF), or to buy senior tranches of the special-purpose vehicles (SPVs) that the EFSF will capitalise. China would explicitly be taking less risk than the Europeans. (...) A financial vehicle that saw the euro zone take most risk through equity, other governments a bit more through subordinated debt and private-sector investors the least through senior debt is still a long shot. But it is more realistic than expecting China to splash enough cash to save the euro," wrote The Economist yesterday."The world's leading security company faces a knife-edge vote this week on an audacious £5.2 billion plan to take over a Danish cleaning firm. G4S, the FTSE 100 group that runs Birmingham prison and provides electronic tagging, needs the backing of three quarters of its investors to buy ISS, which specialises in property services and catering. The vote on Wednesday is expected to be close. Several large institutions said they would abstain, while critics, such as Parvus Asset Management ? which owns 3.7% ? said they would vote against. Last night it was reported that two small shareholders, Artemis and Schroders, are expected to vote against the deal. The fund managers own 2% and 1.35% of G4S's shares," reports The Sunday Times.AB