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May 27, 2014

The Telegraph | Citybriefing -May 27, 2014-.

The Telegraph

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Hello investors, welcome back to TSB's IPO. Lloyds Banking Group has announced its intention to float a 25pc stake in its resurrected TSB subsidiary. The partial sale, which is expected to value Britain's seventh biggest bank at £1.5bn, has been set for next month with the prospectus due in mid-June. The float will be the culmination of a three-year effort by Lloyds to sell the 631 branches it was ordered to off-load by competition authorities in Brussels after it bought HBOS in 2008. Plan A was to sell the branches to the Co-Op Bank, but that was before the Co-Op discovered its £1.5bn blackhole. Instead the old TSB brand was dusted down and relaunched as a new bank. Paul Pester, chief executive of TSB, has declared a "significant milestone in our journey to create a new competitive force in UK banking." He wants to grow the bank's balance sheet by 40pc to 50pc through current accounts and mortgages. Still, there will be a degree of nervousness about the float after the apparent cooling of the IPO market. Last week Saga's IPO had a lukewarm response while the retailer Fat Face scrapped its plans to list admit lack of demand. Like Saga, TSB is ready to tempt investors by offering bonus shares to those who hold the stock for more than a year. Still, the company is not expected to pay dividends for three years which could put off some punters. We'll have the updates on our business website here.

In other company announcements, both Pfizer and AstraZeneca have released statements following the passing of the Takeover Panel deadline last night which officially killed the £63bn deal.  Ian Read, boss of Pfizer, has said: "We continue to believe that our final proposal was compelling and represented full value for AstraZeneca." Mr Read was more punchy when he talked to the Telegraph last night: he has hit out against the UK's "overly complicated and overly bureaucratic" Takeover Code. The pressure in on AstraZeneca to prove that he's wrong and they were right. Lief Johansson, chairman of AstraZeneca, has said the company "welcome the opportunity to continue building on the momentum we have already demonstrated as an independent company."

The soft drinks group AG Barr has reported a 5.2pc increase in revenues for the past 15 weeks in trading update ahead of its annual meeting in Glasgow today. The owner of Irn Bru has said its chairman Ronnie Hanna will announce his intention to retire after five years in the job. He will be replaced by John Nicolson, senior non-executive director. Directors are also likely to be quizzed on their views on the impact on the company of the Scottish independence referendum.

Armour Group has announced the departure of its finance director, John Harris. The company says the move follows the sale of its automotive division in March which "has resulted in a significant reduction in the size of the group." Johnston Press is holding a general meeting for shareholders to vote on its proposed £360m capital refinancing plan.

Europe continues to dominate the headlines. The European Parliamentary elections have dealt a bloody nose to mainstream political parties across Europe, but business leaders are alarmed after the weekend's "earthquake" too. Michael Hintze, the hedge fund boss of CQS, and Sir Rocco Forte, the hotel owner, are among a list of business signatories to a letter to The Telegraph this morning who have demanded a strong Government response to the rise of UKIP. They have called for "all parties to spell out their vision for a reformed EU".  David Cameron has spent the weekend promising to secure reform in Brussels before an in/out referendum. His work will start tonight at an informal dinner for EU heads of state in Brussels. The PM will join Angela Merkel, Francois Hollande and the European Council President, Herman van Rompoy at what promises to be a sombre affair. Official business includes discussing the process of proposing a candidate for the European Commission presidency but the talk will also be about the clear disillusionment with the entire European project. The question is, will anything actually change? Meanwhile, Ed Miliband is expected to make a speech on the aftermath of the local elections.

The CBI is launching its Services Sector survey, its quarterly report on accountancy, legla and market firms as well as the consumer service, such as travel, leisure and restaurants. At 930am the British Bankers Association is releasing its latest statistics on mortgage lending, personal deposits, and unsecured lending.

And the Government has claimed its crackdown on tax avoidance is working. HMRC has said it has raised an extra £23.9bn in additional tax in the year to March as a result of investigations. The figure is almost £1bn higher than the target set by George Osborne is his Autumn Statement last year. "The Government is determined to tackle the minority that seek to avoid paying the taxes they owe," said David Gauke, the Treasury minister.


The UK's takeover rules are overly complicated and  overly bureaucratic. They were put in place to be in the best interests of shareholders. I don’t necessarily believe they serve that function. 
Pfizer boss Ian Read says the UK's takeover rules are not fit for purpose as he threw in the towel in his pursuit of AstraZeneca


The estimated number of barrels of recoverable shale oil that Russia could access as it launches an 'action plan' to master fracking


Katherine Rushton and Denise Roland write that Pfizer's boss Ian Read has ended his battle for AstraZeneca with a parting shot at the British Government, and a call for sweeping reforms of drug pricing and takeover rules.

Louise Armitstead reports that the Government is preparing to force high street banks to refer small businesses to alternative lenders.

Andrew Cave writes that Prince Charles will join former US president Bill Clinton, the Bank of England governor Mark Carney and fund managers in a mission to try to solve capitalism’s current problems


The Times (£): The Bank of England has put Britain's lenders under formal surveillance to stop them issuing too many high-risk corporate loans.

The Financial Times (£): Apple is that would turn the iPhone into a remote control for lights, security systems and other household appliances.he Financial Times (£): readying a new software platform

The Guardian: Sir Stelios Haji-Ioannou's plan to extend the easy brand into food retailing has received a setback after a London council rejected his easyFoodstore launch plans.


The FTSE 100 last week fell 40.06 to 6815.75.  Markets will reopen today after the Spring Bank Holiday.
Last week in the US, the Dow Jones Industrial Average gained 114.96 points to 16,606.27 while the S&P 500 climbed 22.67 points to 1,900.53.  Wall Street will reopen today after yesterday's Memorial Day break.


Kathleen Brooks at currency trader says the bond markets will be worth watching today following the lurch to the right in Europe signaled by this weekend's election results:
It is worth watching how French yields perform in the coming days, and whether the big win for the Marine LePen's National Front triggers an increase in its risk premiums. If French yields creep higher, this could increase volatility, which could weigh on stocks and the EUR in the coming days.


Brent crude oil fell 0.16pc to $110.26 a barrel. Gold remained steady at $1,292 an ounce. More here.


Sterling fell 0.15 cents against the euro to €1.2340 and rose 0.04 cents against the dollar to $1.6846. More here.