'More help needed' for BAE staff

10 February 2012 Last updated at 14:26 GMT BAE Systems needs to attract other businesses to help workers facing redundancy at its East Yorkshire site, according to a new report by Civitas.

The think-tank group spent three months analysing the potential of the Brough plant.

BAE announced plans in September to cut nearly 900 posts at its Brough site to maintain its competitiveness.

The defence contractor welcomed the Civitas report and said it had "considered fully" its recommendations.

Last month the firm said 54 technical and engineering jobs would be saved.

Consultations are continuing over plans to cut 845 posts at Brough together with almost 1,400 at BAE sites in Warton and Samlesbury, Lancashire.

'Highly skilled'

In the report, Civitas suggested the redundancies at Brough could be mitigated if BAE was prepared to do more to attract other businesses to the site. But it warned that time was running out.

It described the workforce as "highly skilled" and an "asset to any company" wanting to set up production facilities.

Civitas said it had already had positive discussions with several engineering and aerospace companies about investing in the Brough factory, though nothing had been confirmed as definite.

This included early talks with Siemens, which is planning to build a turbine factory in Hull.

It said: "If at least one 'large corporate' can be secured, this would act as a magnet in encouraging other companies to follow."

The report also stated that BAE is co-operating with efforts to bring in investment.

However, decisions by the firm to move specialised equipment out of the factory and a proposal to sell some of the land for housing will not help to attract aerospace companies to the site, Civitas said.

'Unrestricted access'

According to Civitas, redundancies in Brough could start as soon as mid-2012 and as a result, there would be "a small window of opportunity for the proposals to be implemented".

In a statement, a BAE Systems spokesperson said: "We are pleased to have had the opportunity to work with Civitas on its research and have provided them with unrestricted access to our data and unlimited access to our people and facilities.

"BAE Systems welcomes Civitas's recognition of the skills of our Brough workforce.

"Civitas recognises that there is insufficient work to maintain manufacturing capability at our three factories. We would like to thank Civitas for its report which we have considered fully."

Barclays' profits fall to £5.9bn

10 February 2012 Last updated at 12:59 GMT Barclays Bank has announced a slight drop in its annual pre-tax profits - but still banked nearly £6 billion last year

Barclays has reported a 3% fall in profits to £5.9bn for last year, hit by a slowdown at its investment bank arm.

The bank also said the bonus pool at the investment banking division was down 32% to £1.5bn in 2011.

Chief executive Bob Diamond declined to discuss his own bonus during a news conference.

But senior executives will see bonuses cut about 48%, which BBC business editor Robert Peston says would give Mr Diamond about £3m.

Barclays' total bonus pot for the year will now be about £2.15bn, down 25%, with cash bonuses capped at £65,000.

The average bonus payout for a Barclays' employee fell 21% year-on-year to £15,200.

At a press conference, Mr Diamond avoided questions about his own bonus. "This [news conference] is about results today," he said.

Nor would he discuss critical comments from the Association of British Insurers', which lobbies on behalf of some of the UK's biggest investors, the pension funds.

Robert Talbut, chairman of the ABI's investment committee, said: "Whilst overall bonus levels at Barclays have been reduced, for Barclays Capital this reduction is only in line with the fall in profit before tax at BarCap.

Continue reading the main story

Apparently Mr Diamond would never say if he were to give the bonus to charity, because he likes to keep his charitable work secret”

End Quote Robert Peston Business editor, BBC News "This appears to be very close to business as usual. It is not the signal of the change required in order to improve the investment case," he said.

Barclays, the UK's fourth largest bank by market value, received no injection of state aid during the financial crisis and had previously indicated that it felt under no obligation to cut bonuses.

But its results come after weeks of conflict over bonuses, in which RBS chief Stephen Hester turned down £963,000 worth of shares, and Lloyds Banking Group head Antonio Horta-Osorio waived his own payout following a leave of absence.

'Challenging' environment

Income at investment bank arm Barclays Capital (BarCap) fell to £1.8bn in the fourth quarter of last year, down 19% on the previous three months. The eurozone debt crisis hit the division's bond trading activity.

Mr Diamond said in a statement: "Against a backdrop of challenging economic and market conditions, we maintained our focus."

However, the adjusted return on equity was 6.6% for the year, down from 6.8% in 2010 and well below its target of 13%.

Analyst Ralph Silva: "Barclays is doing much better than the vast majority of banks"

"We are not satisfied with the return on equity we delivered in 2011 and are committed to delivering steady improvement moving forwards," Mr Diamond said.

"We expect the economic and regulatory environment to continue to be challenging in 2012," he added.

Barclays said losses on bad loans fell by a third from 2010 to £3.8bn.

The bank said it had exceeded its targets on lending to UK businesses under the Project Merlin programme, with £43.6bn of gross new lending to businesses, including £14.7bn to small and medium size firms.

The bank also said it had strengthened its Tier 1 capital ratio - money held in reserve as a buffer against financial troubles - to 11%.

Analyst Richard Hunter, of head of equities at Hargreaves Lansdown Stockbrokers, gave a cautious welcome to the results.

"Barclays has dodged some, but not all, of the bullets which have come its way," he said.

"These are difficult times and the results mirror challenges already reported by other global banks of late.

"The significant drop in revenue at Barclays Capital was largely trailed but nonetheless dents overall progress."

Barclays, whose shares rose 4% in morning trading, is the first of the big UK banks to report its annual profits.

Meanwhile, Lloyds Banking Group said on Friday that it had also beaten the Project Merlin targets laid down by the government for lending to small businesses.

Lloyds, 40%-owned by the government, said it had lent £12.5bn to small-and-medium-sized enterprises in 2011, ahead of a £11.7bn target under the Merlin deal.

Shock loss for India's Tata Steel

10 February 2012 Last updated at 03:54 GMT Tata Steel is the world's tenth largest steelmaker and the biggest in India Tata Steel, the largest producer in India, unexpectedly reported a loss for the last three months of 2011, hit by weak demand.

The company saw a net loss of 6.03bn rupees ($122m; £77m) in the third quarter, Tata Steel said in a statement.

That compares with a net profit of 10bn rupees a year earlier.

Higher prices for raw materials as well as falling demand and prices in Europe contributed to the decline, Tata said.

Analysts were expecting a 3.4bn rupee net profit, according to Reuters news agency.

The company operates two thirds of its capacity in Europe, where the debt crisis is hitting demand.

The head of Tata's European operations said he did not expect demand to pick up this year.

"We are accelerating cash conservation in expectation of muted but stable demand in our core markets in 2012," he said in a statement.

Analysts said Tata Steel was being squeezed from both sides.

"There hasn't been a demand uptick that was expected, so prices have come down," said Ravindra Deshpande from Elara Securities in Mumbai.

"At the same time, none of their production costs are lower, so margins are under pressure."

Mr Deshpande added that he did not expect much better results in the next few quarters.

Bank's system 'risks house sales'

10 February 2012 Last updated at 14:25 GMT The Law Society has called for HSBC to suspend the new mortgage system Hundreds of house sales are at risk under a new mortgage system being used by a high street bank, legal experts have warned.

The Law Society of Scotland has called on HSBC to suspend its new conveyancing panel system, which limits the firms that carry out its legal work.

The society said the paperwork involved was not fit for purpose and was based on English, rather than Scots, law.

HSBC has offered to work with the society to relieve its concerns.

The bank said it "strongly believes" its conveyancing documentation is fit for purpose and has been drafted for use in Scotland.

The Law Society's warning came after a move last month by the bank to set up a restricted conveyancing panel.

Under the new system, only some law firms in Scotland are allowed to carry out security work on behalf of HSBC, and customers who wish to use their own lawyer face a charge.

Previously, any law firm in Scotland could carry out work for both the purchaser and mortgage lender.

The Law Society warned that documentation issued by HSBC's solicitors was based on English conveyancing.

The society said it required solicitors for both the buyer and seller to grant undertakings which may be difficult, if not impossible, to honour.

The body also said the purchaser's solicitor is being asked to carry out a lot of additional work, much of which would be avoided if they were acting directly for the lender.

The Law Society said it had been inundated with calls from concerned buyers and their solicitors over the past fortnight.

Ross MacKay, convener of the society's property law committee, said: "We pointed out that this new system was wrong in principle and a month on it is becoming clear that it is also wrong in practice. It is failing homebuyers who have chosen an HSBC mortgage.

"There is a risk that house sales will fall through and buyers will be left homeless and sellers without payment.

"We are therefore calling on the bank to immediately suspend the new system until there has been a full review and consultation with us to ensure that the paperwork is legally correct and workable, and that the system does not penalise buyers and their agents."

Relieve concerns

HSBC said the move to the new system was driven by the need to reduce conveyancing fraud, with only the approved panel solicitors being allowed to carry out the banks' part of the legal work.

However, it said customers were still free to use another solicitor to carry out their part of the conveyancing.

It said that rather than facing an additional charge, the existing charges were just being spilt up.

A bank spokesman said: "HSBC strongly believes that its conveyancing documentation is fit for purpose and has been drafted for use in Scotland.

"However we are keen to relieve the Law Society of Scotland of its concerns and we have offered to work with them to agree documentation which both parties are comfortable with.

"We are continuing to complete mortgage transactions as normal, however if customers do have any questions we would encourage them to speak with their HSBC mortgage manager."

Airlines seek UN deal on EU tax

13 February 2012 Last updated at 03:07 GMT Airlines have said the emissions scheme will put more pressure on their costs The International Air Transport Association (IATA) has called for the United Nations to broker a deal between airlines and the European Union (EU) on the EU Emissions Trading Scheme.

It comes days after China banned its airlines from joining the scheme, which levies a charge on flights in EU airspace based on carbon emissions.

Other nations such as the US and Canada have also opposed the plan.

IATA said if not resolved quickly, the issue could hurt all parties involved.

"I very much hope of course that we are not seeing the beginning of a trade war on this issue and eventually wiser counsels will prevail," said Tony Tyler, Director General of IATA.

Japan economy worse than forecast

13 February 2012 Last updated at 01:14 GMT Japanese carmakers have been hit hard by natural disasters and a rising yen in the past year Japan's economy contracted more than expected in the last three months of 2011 as a rising yen and floods in Thailand hurt businesses.

Gross domestic product shrunk by 2.3% during the period from a year earlier, much worse than 1.4% contraction that analysts had forecast.

Compared with the previous three months, the economy shrank by 0.6%.

The numbers are a big blow to Japan's efforts to recover from the earthquake and tsunami last year.

"The economy is slowing down by more than what was expected," Martin Schulz of Fujitsu Research Institute told the BBC.

"The slowdown of exports is taking a heavy toll on industry."

Multiple factors

The data comes amid concerns of a slowdown in the global economy, not least due to the ongoing debt crisis in the eurozone.

The crisis has hurt confidence and dented consumer demand in Europe, which is a key market for Japanese goods.

Meanwhile the high rate of unemployment in the US, the world's largest economy, continues to be a concern despite encouraging economic data in recent weeks.

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Exports have fallen a lot because of a triple shock from Europe, the strong yen and floods in Thailand”

End Quote Hiroaki Muto Sumitomo Mitsui Asset Management At the same time, some of Asia's biggest economies such as China and India have also started to show signs of slowing growth.

To make matters worse, Japanese companies have had to deal with a strong yen. The Japanese currency has risen more than 7% against the US dollar since April last year.

A strengthening yen makes Japanese goods more expensive for foreign buyers and also hurts the profits of exporters when they repatriate their foreign earnings to Japan.

Production at some of the country's biggest firms was also hurt during the period as floods in Thailand caused disruptions to supply chains.

Analysts said all these factors were hurting Japan's economic growth.

"This is a contraction driven by external demand. Exports have fallen a lot because of a triple shock from Europe, the strong yen and floods in Thailand," said Hiroaki Muto of Sumitomo Mitsui Asset Management.

"Unfortunately we can't be as optimistic about exports, because Asian economies are slowing and it will take time for the US to recover."

Few options?

The data comes ahead of the Bank of Japan's (BOJ) meeting to decide on its monetary policy going ahead.

The bank has already kept its interest rate at a historic low of between zero to 0.1% for some time.

It has also intervened in the currency markets over the past year in a bid to stem the yen's rise against the dollar.

Analysts said while there is pressure on the Japanese central bank to take measures to boost growth, the BOJ's options were limited.

"Money supply is at peak levels already," said Fujitsu Research Institute's Mr Schulz.