Has the FSA gone too far regarding bank stress tests?
As we covered in one of our earlier articles, the Financial Services Authority (FSA) has issued a new set of guidelines regarding bank stress tests which will effectively force each and every financial institution in the UK to identify its own potential weaknesses. This is a rather bizarre way in which to protect the UK economy because all the regulators are doing is highlighting weak companies and making them susceptible to potential takeovers, mergers or limited financial backing.
If a company is forced identify a potential weakness in its own business model, then what is there to stop a predator approaching the company's shareholders and claiming that they could run the company better than its current board of directors. There are no industries in the world which force companies to do the homework of their potential predators and competitors and weaken their own reputation and financial strength in the eyes of investors. So why has the FSA decided to act now?
Even though the idea of "reverse stress tests" does appear to have some merit in the current economic climate it is absolutely crazy to ask a company to research its own weaknesses and then publish these for public consumption.
Oil refinery strike is finally over
The unofficial strike action at the Lindsay oil refinery is finally over today with news that Total has reached an amicable agreement with the unions and contractors on the site. As a consequence all sacked employees have returned to work and sympathetic strike action across the UK has now ended. The illegal and unofficial strike action has now cost Total in the region of â‚¬100 million which...Read More
How has the UK government lost control of European financial regulation?
As Michael Barnier, the Frenchman installed as the EU finance minister, comes to terms with his very influential position in the European Union, many people are wondering exactly how the UK government appears to have lost control of the City of London. The signs that the EU was looking to reduce the influence of London have been there for some time but for some reason the UK government had decided...Read More
National Express announces £360 million rights issue
As expected, National Express has today announced a £360 million rights issue which will be used to shore up the company's balance sheet. This comes in the midst of a very difficult period in the life of National Express which has been forced to give up one of its rail franchises, seen debt top £1 billion and been rebuffed by potential suitors for the business. So is the company finally escaping...Read More
Is fiscal policy more important than interest rate reductions?
There is a growing debate in economic circles as to whether the use of interest rates to control economies is as effective as the government's overall fiscal policy. Some leading financial experts have dismissed the 1.5% reduction in base rates as an irrelevance and suggested that the fiscal policy of the Labour government is more vital at this moment in time.
As rumours grow of a p...
Construction sector activity increases in September
On the face of it, today's Markit/Chartered Institute of Purchasing and Supply report would appear to be good news with an increase in activity throughout September. However, despite the fact that the index increased from 52.1% in August to 53.8% in September it seems that construction companies are now more downbeat about the immediate future than they have been for 18 months. It would appear...Read More