UK MIDDAY BRIEFING: Standard Chartered Management Get Backed

LONDON (Alliance News) - Standard Chartered's management team Monday received the backing of the bank's second-largest shareholder, Aberdeen Asset Management, whose Chief Executive Martin Gilbert called on his counterpart Peter Sands to "address the bank's current issues and deal with them now".

Gilbert's support eases the pressure on Standard Chartered CEO Sands and Chairman John Peace, who have endured a difficult year at the helm of the emerging markets focused bank. Just last week, Standard Chartered reported a 16% drop in third-quarter pretax profit and cut its guidance for the second half of the year.

"We don't believe there is anything fundamentally wrong with the bank and we are looking forward to hearing details of the turnaround plans at the investor conference in Hong Kong in two weeks' time," Gilbert said in a statement.

Gilbert's comments come after the Financial Times reported late last week that non-executive directors at Standard Chartered are intending to meet with the bank's chairman to discuss a succession plan to replace Sands this week. Some of the biggest shareholders in the bank have either told or plan to tell Peace that he should accelerate a plan to replace Sands, the FT said, citing two people familiar with the discussions.

The news comes as the UK's largest listed bank, HSBC Holdings, reported a rise in third-quarter pretax profit, despite a jump in operating expenses due to more than a billion pounds' worth of charges and provisions for matters including UK customer redress and UK regulators' investigations into alleged manipulation of the foreign exchange market.

It made a USD4.61 billion pretax profit in the quarter ended September 30, compared with USD4.53 billion in the corresponding period last year, despite booking USD701 million in provisions for UK customer redress, including a further USD589 million for possible mis-selling in previous years of payment protection insurance policies. It also booked a charge of USD378 million relating to the "estimated liability" in connection with the ongoing foreign exchange investigation by the UK Financial Conduct Authority, as well as a USD550 million charge under a September settlement with the US Federal Housing Finance Agency over the sale of residential mortgage-backed securities in the years leading up to the financial crisis.

Ryanair Holdings' shares have shot higher in London, after Europe's largest low-cost carrier raised its guidance for the current financial year, after reporting strong growth in profit and revenue in the first half, driven by higher passenger numbers, average fares and lower fuel costs.

The airline attributed some of the increase in passenger numbers to its recent decision to introduce a business traveller package and to improve its customer service. It had admitted that it was too tough and uncompromising with passengers previously and has set out to soften its stance.

"While partially due to the presence of Easter in the first quarter and a weak prior year comparable, we have also enjoyed a strong summer thanks to our strategy, of raising forward bookings and improving our customer experience which has delivered higher load factors and yields," it said.

The Ryanair update also gave rival easyJet a boost, with its shares the best-performing on the FTSE 100 Monday.

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Markets: UK stocks indices, along with major European markets, have slowly lost ground over the morning as disappointing PMI data from both China and across the eurozone have put an end to the rally sparked late last week when the Bank of Japan unexpectedly announced extra monetary stimulus. The FTSE 100 is outperforming its European counterparts, however, on the back of a more healthy UK manufacturing sector.

Futures indicate a slightly lower start on Wall Street, with the DJIA, S&P 500 and Nasdaq Composite all set to open down about 0.1%.

FTSE 100: down 0.4% at 6,519.47
FTSE 250: flat at 15,498.15
AIM ALL-SHARE: down 0.3% at 718.27
GBP-USD: up at USD1.6002
EUR-USD: down at USD1.2496
GOLD: up at USD1,173.17 an ounce
OIL (Brent): up at USD85.89 a barrel
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Other Top UK Corporate News
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Diageo said it has agreed a deal to buy Don Julio tequila while selling Bushmills Irish whiskey, strengthening its presence in Mexico. Diageo is buying the tequila brand from Casa Cuervo, which will also end the production and distribution of Smirnoff vodka in Mexico. In return, Jose Cuervo Overseas is buying Bushmills. The transaction will yield USD408 million to Diageo when completed, expected in early 2015 subject to approval. The transaction is expected to break even after three years and Diageo said the proceeds will be used to reduce the company's debt. It expects a dilution in earnings per share of 0.6% in the year to end-June 2015.
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Denmark-based biotechnology company Genmab said that it has entered into an agreement with GlaxoSmithKline and Novartis Pharma to transfer the ofatumumab collaboration with Glaxo to Novartis. The transfer of the collaboration follows a deal in which Novartis agreed to acquire Glaxo's oncology products including ofatumumab.
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Former Xstrata chief Mick Davis has made another attempt to re-enter the industry, after tabling a multi-billion pound bid for a portion of Anglo American, The Sunday Times reported. The bid, understood to have been made in recent weeks, marks the second attempt by Davis to buy up assets from a mining major to form the centre of his new venture, X2 Resources Ltd, the paper said.
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Tesco has started considering plans to sell a stake in its banking arm as it accelerates plans to raise billions of pounds in new capital, The Daily Telegraph reported on Saturday. The supermarket group is understood to be holding talks about a potential partial float of Tesco Bank, which could raise between GBP500 million and GBP1 billion.
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The Royal Bank of Scotland Group has inked an agreement with the City of London Police to provide them with free training and advice on financial crime, the Financial Times reported. The company's expertise in equities and markets, financial instruments, international jurisdictions, foreign languages and cybertechnology could be of use to the law enforcers.
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Events marketing and communications services business UBM outlined a new strategy for its Events business, titled "Events First", which it hopes will lead to cost savings starting in 2016 that will build to GBP10 million per year. UBM said this strategy will drive "profitable growth by focusing its resources on its largest and most profitable shows, increasing its efficiency and effectiveness through the consistent use of standardised systems, and focusing on operational excellence." The company will rationalise its smaller Events, and exit from some of its "Other Marketing Services" activities that are "not well aligned" to its Events business, UBM said.
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Betfair Group said revenue rose in the second-quarter, boosted by an increase in customer numbers after a strong World Cup. The online bookmaker said revenue in the three months to October 31 rose 22% to GBP119 million, and revenue was up 13% when normalised for unusually high gross win margins. Following the World Cup in July, "the recent growth in customer activity has continued with the active customer base up 30%" in the second quarter, Betfair said, adding that it expects to meet full-year earnings expectations.
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Ophir Energy confirmed it is in talks with Salamander Energy about a possible all-share takeover deal for the South-Asia exploration and production company after an initial approach last month.
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Telecity Group reaffirmed its constant currency revenue growth and capital expenditure guidance for the year, after reporting strong organic revenue growth for the year so far and good gross order wins, but cut its revenue guidance at actual exchange rates. The data centre operator said revenue at constant currency rates are up 9.4% so far in 2014, while the earnings before interest, tax, depreciation and amortisation margin remains "strong" at 46.9%. It expects the margin, which was in line with the first half of the year, to stay at a similar level for the final quarter. However, its revenue guidance at actual exchange rates was between GBP355 million and GBP362 million, but is now between GBP343 million and GBP250 million based on at exchange rates on October 31.
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Hansteen Holdings has sold the Hansteen UK Industrial Property Unit Trust, a UK multi-let industrial property portfolio, in two transactions for a total of GBP146.1 million after the deduction of rental top-ups. Hansteen said the 41 assets in the unit trust have been acquired by a fund advised by Brockton Capital LLP in a partnership with Dunedin Property for GBP110.5 million. A separate 50/50 joint venture between Brockton Capital and Hansteen has acquired Saltley Business Park in Birmingham for a net price of GBP35.6 million and Hansteen will continue to manage the site.
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Just Eat said it remains confident about its full-year results after the strong momentum it reported at the half year continued through the third quarter. The online and mobile takeaway food ordering platform said total orders in the three months to September 30 rose 56% on the year, and were up 51% on a like-for-like basis which excludes the consolidation of the orders from its French business from July. "We are in an excellent position as we enter the important winter period and remain confident for the full year," Chief Executive David Buttress said in a statement.
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AIM Movers
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Forte Energy shares are up by two-thirds after it confirmed it has entered into a joint venture agreement with European Uranium to earn in on two uranium projects in the Slovak Republic. Rangers International Football Club is doing well after it appointed Mike Ashley's long-time friend and associate Derek Llambias as a non-executive director. Kodal Minerals is up after it found high-grade copper at the upper mine in the Grimeli prospect in Norway. Kea Petroleum is another gainer after its pretax loss narrowed significantly in its most recent financial year on the back of a jump in revenue and much lower writedowns on exploration assets. CloudBuy is doing well after it signed a three-year contract with an unnamed financial institution in Hong Kong, with the number of suppliers on the contract increased since the contract was first announced last month. Touchstone Gold is down after it said it is in late-stage talks over a possible investment in a technology company, which it will fund from existing cash resources. Touchstone did not provide any financial details on the potential deal, nor define the target. Dart Group is also down after it set aside GBP17 million in the current financial year to cover potential historical claims related to a claim for compensation after one of its Jet2.com aircraft was delayed by a technical hitch, and said it is facing costs of between GBP3 million and GBP5 million a year in future years. The news comes after the Supreme Court rejected Jet2.com's appeal of an earlier decision made by the Court of Appeal.
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Top Economics And General
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UK manufacturing sector growth quickened more than expected in October to its fastest pace in three months, survey results from Markit Economics and the Chartered Institute of Purchasing and Logistics, or CIPS, showed. The seasonally adjusted Markit/CIPS manufacturing purchasing managers' index, or PMI, rose to a three month high of 53.2 in October from the seventeen month low of 51.5 in September. Economists had expected the index to come in at 51.5. This marked the twentieth successive month of expansion in manufacturing activity. A reading above 50 signals expansion.
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The Eurozone manufacturing Purchasing Managers' Index rose slightly less than initially estimated in October, final data from Markit Economics showed. The final PMI rose to 50.6 in October from September's 14-month low of 50.3. The flash score was 50.7. The current sequence above the no-change level was extended to 16 months. The sector remained in a state of near-stagnation as weak demand continued to restrict growth of both output and employment across the currency union.
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China's non-manufacturing business activity expanded at a slower rate in October, data from the National Bureau of Statistics showed. The non-manufacturing business activity index decreased to 53.8 in October from 54 in September. This indicated a slower rate of growth.
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China's manufacturing sector continued to expand as expected in October, the results of a survey by Markit Economics and HSBC Bank showed. The HSBC manufacturing purchasing managers' index came in at 50.4 in October, confirming the flash estimate and the expectations of economists. This was slightly higher than 50.2 in September.
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Ireland's manufacturing sector growth gathered momentum in October, data from Markit Economics showed. The seasonally adjusted Investec Purchasing Managers' Index rose to 56.6 from 55.7 in September. The reading signalled substantial strengthening of business conditions. Manufacturing production increased at a faster pace with panellists attributing the latest growth in output to higher new orders and stock building efforts.
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Prime Minister David Cameron's pledge to curb the number of migrants entering Britain from the EU could lead German Chancellor Angela Merkel to drop her efforts to keep Britain in the bloc, a report said Sunday. Merkel warned Cameron on the sidelines of the EU summit in October that he was reaching a "point of no return" by persisting in his plan to introduce quotas for EU migrants, Der Spiegel magazine reported, citing anonymous government officials. Merkel reportedly told Cameron that if he follows through with the measure, "That's it."
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The leaders of the pro-Russian separatist movements in eastern Ukraine were declared the elected "heads" of the Donetsk People's Republic and the Luhansk People's Republic after winning disputed elections. Alexander Zakharchenko won 78.93% of 1.01 million votes cast in Donetsk, while Igor Plotnitsky received 63.8% of the almost 699,000 votes cast in neighbouring Luhansk, Interfax quoted local election chiefs as saying. The Ukrainian government in Kiev, the EU and the US have all called the elections illegal, with EU Foreign Policy Chief Federica Mogherini arguing in a statement that they "put a new obstacle on the path towards peace in Ukraine." The Russian Foreign Ministry, by contrast, said that it respects the result.
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At least 200 members of a pro-government Sunni tribe have been executed by the Islamic State militant group in the western Iraqi province of Anbar over the course of three days, security and local officials said on Sunday. Beginning Thursday, the executions took place in separate incidents and targeted tribesmen from the al-Bu Nimr tribe in Anbar, a security official told dpa.
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Israeli Prime Minister Benjamin Netanyahu on Sunday urged calm after weeks of unrest in Jerusalem and pledged to keep in place long-standing prayer divisions at a flashpoint Muslim-Jewish holy site in the disputed city. Tensions culminated last week after a Palestinian shot and critically wounded a far-right Jewish activist who had advocated that Jews be allowed to pray at the Temple Mount, known to Muslims as the Holy Sanctuary. Israeli police shot the Palestinian gunman dead in a shoot-out in East Jerusalem.
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Afternoon Watchlist (all times in GMT)

14:30 US Fed's Evans Speech
14:45 US Markit Manufacturing PMI
15:00 US Construction Spending
15:00 US ISM Manufacturing PMI
17:40 US Fed's Richard Fisher's speech
n/a US Total Vehicle Sales
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Tuesday's Key UK Corporate Events

Advanced Computer Software Group - Half Year Results
Associated British Foods - Full Year Results
Legal & General Group - Interim Management Statement
Glencore - Interim Management Statement
Weir Group - Interim Management Statement
Hilton Food Group - Interim Management Statement
Imperial Tobacco Group - Full Year Results
Jardine Lloyd Thompson Group - Interim Management Statement
Persimmon - Interim Management Statement
Unite Group - Interim Management Statement
OneSavings Bank - Interim Management Statement
888 Holdings - Trading Update
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Tuesday's Key Economic Events (all times in GMT)

All Day Russia Day of Unity
01:35 Japan Nomura/ JMMA Manufacturing Purchasing Manager Index
05:00 Japan Vehicle Sales
08:00 UK Halifax House Prices
09:30 UK PMI Construction
10:00 EU Producer Price Index
13:30 US Trade Balance
13:55 US Redbook index
14:45 US ISM New York index
15:00 US Factory Orders
15:00 US IBD/TIPP Economic Optimism
23:50 Japan Monetary Base
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