Lloyds blasted
'Reprehensible'
Bank of England governor Mark Carney hit out at Lloyds Banking Group this week as a fresh fine was handed down to the bank for rigging London Interbank lending rates. In a letter accompanying the fine, Mr Carney described the behaviour of Lloyds staff as "highly reprehensible", as they were found to have not only rigged Libor rates, but also used the rigged rates to reduce the interest payments it was required to pay to the Bank of England for access to liquidity lines which helped keep the bank afloat during the credit crunch. The fines totalled £226m and the action may not end there.
Cheap money
Borrowing low
Borrowing costs for governments are falling fast. After news that government bond yields in the troubled periphery of southern Europe have slipped to new lows, this week saw the yield on the German government's 10-year bonds fall to 1.12 per cent, its lowest level since the 1800s. Spanish government borrowing costs are at a 200-year low of less than 2.5 per cent, with French 10-year bonds yielding 1.52 per cent this week, a 250-year low. Meanwhile, the UK government this week issued £5bn-worth of 'linker' bonds, which are used as a protection against inflation, at a negative 'real yield' for the first time ever.
Mortgages revive
Slide over?
The number of mortgages approved in the UK in June returned to growth following five months of falls in what some interpreted as a sign that the disruption caused to the mortgage market by a tightening of lending criteria may have run its course. Despite signs that demand for house purchases in London may be abating after its growth has hugely outstripped the rest of the country, signs are that demand outside the capital could still be on the up. The number of mortgages approved in June topped 67,000, up 8 per cent on the previous month, although this remains well below the pre-2007 boom years when 100,000 mortgages a month were routinely approved. Meanwhile, the property revival was reflected in strong results this week from the likes of Rightmove and Taylor Wimpey.
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Aldi accession
Tesco tumbles
The discount supermarkets continue to make significant inroads into the UK market, according to the latest data from the sector. Aldi was the biggest winner, recording sales growth of 32.2 per cent in the 12 months to 20 July to take its total market share to 4.8 per cent, within a whisker of upmarket rival Waitrose, which has a 4.9 per cent share of the market. Discounter peer Lidl grew sales by 19.5 per cent to take its market share to 3.6 per cent, while Tesco took a beating, with sales down 3.8 per cent in the period and its market share reduced from 30.3 per cent to 28.9 per cent.
Pharma splits?
In flux
The mega cap global pharmaceuticals sector has long been characterised by consolidation, continuing right up to the present day with the recent tilt by Pfizer at AstraZeneca and AbbVie's recommended deal to buy Shire. But there were hints this week that the trend could reverse, in the short term at least. Press reports suggest that GlaxoSmithKline's chief executive Andrew Whitty is considering a spin off and sale of its consumer health division, which could be worth up to £6bn. Meanwhile, Reckitt Benckiser this week confirmed plans to spin off its RB Pharmaceuticals business at some point in the next year, preferably through an IPO. The business, which boasts heroin addiction treatment Suboxone as one of its main products, could be worth up to £3bn.
Banker bashing 2.0
Jail possible
The Bank of England is proposing ramping up the potential penalties for errant bankers in future. Just days after the latest Libor rigging allegations at Lloyds, the Bank's Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA) this week suggested that senior bankers should be made to wait up to seven years to receive all of their bonuses and that bonus claw back rules should also be able to extend for seven years. 'Senior managers' should also take more responsibility for a bank's actions, with the PRA and FCA reserving the right to bring legal proceedings against senior management, which could end up in custodial sentences.
