TOUGH TARGETS FOR BENEFIT REFORMS
The Treasury has required Iain Duncan Smith, work and pensions secretary, to find about £5 of savings for every £1 he spends to simplify the benefits system, setting tight financial conditions on dramatic reforms. The fiscal parameters mark an uneasy truce in a cabinet row that gives Mr Duncan Smith some room to manoeuvre but leaves a tense final negotiation ahead.
RESURGENCE OF CONTROVERSIAL HEDGE FUND STRATEGY
Fixed-income relative value trading, the hedge fund strategy pioneered – and made notorious – by Long Term Capital Management is returning to prominence amid one of its most successful years, aided in large part by the massive issuance of bonds by the UK government and other sovereigns.
SANTANDER AND M&T REKINDLE US TALKS
Santander has rekindled talks in recent weeks with M&T Bank over a merger of the US operations of the Spanish lender with the regional bank based in Buffalo, New York. The talks about combining Santander’s US unit, known as Sovereign, with M&T had collapsed in May, within weeks of a planned announcement. Discussions faltered over which bank would control the enlarged business.
CHEYNE CAPITAL POISED TO SHAKE UP MORTGAGE FUND
Cheyne Capital, one of London’s most prominent credit hedge funds, is poised to reorganise its listed vehicle Queen’s Walk Investment, which was an early victim of the global housing slump when it hit in 2007. Losses at the fund, which specialised in investing in complex mortgage assets, presaged the collapse of Northern Rock and the spread of problems in the US subprime housing market to the UK.
BOA MAY REDUCE ITS HOLDING IN BLACKROCK
Bank of America is considering reducing its 34 per cent holding in BlackRock, the New York-based investment fund. The bank acquired its holding in the world’s largest asset manager last year through its acquisition of Merrill Lynch and has always regarded it as an investment, rather than a core asset.
INVESTORS SCORE AS SKS BETS ON THE POOR
SKS Microfinance gained as much as 18 per cent in its trading debut in Mumbai today as investors bet that tiny loans extended to some of the world’s poorest people can deliver huge profits. Shareholders in the Indian microlender backed by George Soros were handed a paper profit of as much as $288m.
The Daily Telegraph
COST OF WINDING UP LEHMAN BROTHERS NOW CLOSE TO $1BN
The cost of winding up failed US bank Lehman Brothers is close to hitting $1bn after advisers working on the bankruptcy clocked up another $44.5m in fees last month. Overall, Alvarez & Marshall, the restructuring specialists, have charged $326m in fees for “interim management”, according to recent figures filed with the Securities & Exchange Commission for 22 months’ work.
PETROL RETAILERS URGE COALITION GOVERNMENT TO TACKLE FUEL PRICES
Petrol retailers have fired a “warning shot” to the coalition Government to stick to pre-election pledges over rising road fuel prices. RMI Independent Petrol Retailers Association has written to the Prime Minister asking him to “urgently” set up a working party of Government and industry.
WALL STREET JOURNAL
INTEL TO BUY TI UNIT
Intel says it’s buying a Texas Instruments unit that makes cable modem chips, which it intends to combine with its own processors for smarter modems and cable set-top boxes. The companies did not reveal the terms of the deal in the announcement yesterday.
WEALTH MANAGERS TARGET SPORT STARS
The huge influx of money into professional sport has created a niche but growing market for private banks and wealth managers, keen to provide advice to athletes on how to preserve the wealth they create in often short careers. These specialist sports divisions of wealth managers aim to help their clients avoid the pitfalls of having too much money at too young an age — but they face increasingly tough competition.