A long-running Competition & Markets Authority (CMA) investigation into UK bond pricing in the aftermath of the 2008 financial crash has reached the provisional conclusion that five major banks – Morgan Stanley (US:MS), HSBC (HSBA), Citi (US:C), Royal Bank of Canada (CA:RY) and Deutsche Bank (DE:DBK) – all broke competition laws by sharing information on government bond prices when these came up for public auction. The episode is different from the Libor scandal which involved fixing the London interbank offered rate on assets held overnight.
In this case, small numbers of traders using Bloomberg terminal chat rooms were able to share information on prices and market strategies. The CMA found that, in effect, this meant that there wasn’t a completely open market for gilts, which would have affected the prices at which pensions funds, other banks and the public could have bought the bonds.
The scandal was initially whistled up by Deutsche Bank, which has admitted taking part in the scheme alongside Citi. The other institutions have not admitted wrongdoing. The CMA will issue fines, if deemed appropriate, alongside its eventual final report. JH
Housebuilder’s shares slide as house prices fall
Shares in the listed housebuilders dropped this morning after the latest ONS data revealed that house prices fell for the fourth consecutive month. The average UK house price slid by a further 1.16 per cent in March to £285,000 – a 2.58 per cent drop since house prices peaked last November.
The figures saw billions wiped off the value of the UK’s housebuilders in early trading with all of the FTSE 350 housebuilders down between 4 and 6 per cent. ML
Read more: Housebuilders struggle as off-plan sales plunge
LondonMetric to buy rival in £199mn deal
LondonMetric (LMP) is set to buy its smaller-capped rival in a £199mn deal. The all-share offer for CT Property Trust (CTPT), which like LondonMetric owns warehouses and retail parks, values CTPT at a 34.3 per cent premium to its closing price yesterday. This sent its shares up by 24 per cent in early trading.
The deal represents a 6.3 per cent discount on a net tangible asset basis, but LMP shareholders voiced their disapproval of the deal, as its shares fell by 6 per cent in early trading. Meanwhile, LondonMetric’s results, posted on the same day, recorded a £508mn pre-tax loss thanks to a £588mn valuation hit, although net rental income was up 10.3 per cent as occupancy also increased to 99.1 per cent. ML
