EuropeanApr 22 2014

Morning papers: Barclays to sell commodities arm

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Barclays is to announce today that it is pulling out of commodities trading as its boss Antony Jenkins attempts to focus the investment banking arm on its most profitable and least controversial areas, according to The Guardian.

Just days before Jenkins faces a storm of protests about bonuses at the bank’s annual general meeting, The Guardian predicts Barclays will tell staff in its commodities arm that large parts of the operation are to be shut down or sold off.

The future of the commodities business – one of the world’s biggest – is likely to figure in questions at Thursday’s (24 April) AGM where much focus is expected to be on a decision to increase bonuses by 32 per cent after a year when profits fell 10 per cent and shareholders were asked to back a £5.8bn cash call.

European stocks higher after Easter break

The FTSE Eurofirst 300 is opening up 0.5 per cent after the Easter break as the pharmaceutical and biotechnology sector gains 2.3 per cent, sister newspaper the Financial Times reports.

US index futures show the S&P 500 easing 2 points to 1,870, potentially breaking a five day winning streak – its longest since October – that took the Wall Street benchmark to a little more than one per cent shy of its record closing high.

European “core” government debt is playing catch-up after US Treasuries lost ground on Monday following news the US index of leading indicators hit its highest since November – a sign the worst of the winter weather impact on the economy is over.

Ten-year UK and German yields are up 3 basis points and 1bp to 2.70 per cent and 1.53 per cent respectively.

The mortgage inquisition

Cheap, short-term, fixed-rate deals could be scrapped in a bid to ensure the irresponsible lending that contributed to the 2008 financial crisis is not repeated, the Daily Mail warns.

The reforms, ordered by the Financial Conduct Authority, are expected to slow the growth in property prices at a time when experts believe the market is in danger of overheating.

From Saturday anyone wishing to secure a mortgage will face ‘invasive’ questions about their finances and lifestyle, the Daily Mail reports Martin Wheatley, chief executive of the FCA, as saying.

UK Reits turn sellers as overseas demand booms

Britain’s biggest listed property companies are selling riskier assets and consolidating their borrowings, the Financial Times reports.

Amid rapidly rising property prices and enthusiastic demand from mainly overseas investors, the FT reveals Land Securities, Britain’s biggest real estate investment trust, has sold £542m of poorer-quality retail assets since 2011, more than half of those in the past year.

British Land, the second-largest Reit, became a net asset seller last year for the first time since 2010, although it also spent substantially on buying the Paddington Basin estate and, like its peers, is still investing in development and improvements.

It has raised £330m through asset sales in the past six months alone.