Financial Times Summary

Fri 5 Sep 2008

ECB
Bank stocks across Europe fell sharply and the risk of owning their debt leapt yesterday after the European Central Bank declared a crackdown on abuses of its bank liquidity operations. Jean-Claude Trichet, ECB President, used his regular interest rate conference to announce rule changes more radical than had been expected. These will affect financial groups that have developed too great a dependence on cheap funding from the bank.

Lloyds
The government must urgently reform Lloyd's tax regime for the 320-year old insurance market to retain its pre-eminence, Lord Levy of Portsoken, chairman of Lloyds warned last night. "The tax treatment of Lloyd's in the UK must be amended for us to stay on top," Lord Levene told guests at a Lloyd's City dinner. "We have discussed this with the treasury for a long time. They now tell us that they understand the force of our argument and hope to reach a decision soon. I fear, though, that 'soon' is a moveable feast, and we need a favourable decision now. Without this, Lloyds's supremacy "may slip from our grasp," he said.

Babcock & Brown
Babcock & Brown, the beleaguered Australian investment group, charged one of it's satellite funds A$106m in fees in its past financial year, a figure that exceeds that of the fund's current market value. The level of fee charged by B & B to Babcock & Brown Power was disclosed in a note from Sandra McCullaugh, a Credit Suisse analyst. The news comes as B & B attempts to trade its way out of trouble after a 90% fall in its share price in less than a year on concerns about it's business model.

Dresdner
China Development Bank's plan to bid for Dresdner Bank in Germany failed in large part because Chinese leaders refused to agree to the deal in time, in a sign of Beijing's increasingly cautious attitude to investments in western financial institutions.

UBS
UBS yesterday filled a key vacancy in the senior ranks of its troubled investment banking unit with the hiring of Carsten Kengeter from Goldman Sachs to be global head of fixed income, currencies and commodities. Mr Kengeter, a fixed income banker currently based in Hong Kong, is the latest outsider drafted in by the Swiss bank to help revamp it's investment banking division, which was largely responsible for the disastrous losses the bank has suffered on complex debt instruments linked to the US mortgage market.

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