Daily Finance Update

Thu 11 Jun 2009

Councils rapped over Iceland cash

An all-party group of MPs has criticised councils for not spotting warning signs that Icelandic banks were heading for collapse last October. When Landsbanki and other banks went under they took nearly £1bn of investments from over 100 authorities.
The Communities and Local Government Select Committee says complacency, lack of expertise and inaction all helped put taxpayers' money at risk.

Japan GDP shrinks at record pace

Japan's economy shrank less than previously thought in the first three months of the year, but still contracted at a record pace. Gross domestic product - the sum of the nation's goods and services - shrank by 3.8%, equivalent to 14.2% over a year.
Earlier it was estimated at 4%, but there have been brighter signs in recent weeks. Japan has been hit hard by the global downturn because it relied on consumers abroad to buy its cars and electronics

Lifeline hopes for building societies

Britain’s troubled building societies could be handed a lifeline by the Treasury, as Alistair Darling, chancellor, looks for new ways to allow them to raise capital without losing their mutual status.
Mr Darling wants to encourage the mutual model as a means of increasing diversity in Britain’s financial services market, but has been dismayed to see several building societies go to the wall or have to be rescued by rivals in recent months.

City fears EU regulatory onslaught

Leading City figures warned on Wednesday that the political turmoil surrounding Gordon Brown was threatening his government’s ability to defend them from tough new European rules that could make it harder for them to compete with rivals abroad.

A number of UK bankers and brokers have told the Financial Times they believe Mr Brown and his ministers are too weak and distracted by their domestic political travails to lobby effectively in Europe. Partly as a result, some banking and private equity groups are asking their counterparts elsewhere in Europe to lobby their home governments rather than rely on the UK to deal with the Continent, as they have in the past.

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