Archive for June, 2011

New CEO targets leaner Lloyds with 15,000 job cuts

Thursday, June 30th, 2011 | Finance News

LONDON (Reuters) – Lloyds is to cut 15,000 jobs and halve its international presence under a radical overhaul by its new chief executive aimed at returning the part-nationalized British bank back to health.

Lloyds said on Thursday it will deliver 1.5 billion pounds ($2.4 billion) of annual savings by 2014, which would allow it to invest an extra 2 billion pounds in its core retail banking activities. The cost of the program will be 2.3 billion pounds.

The bank aims to cut its international presence to under 15 countries by 2014 from 30 now.

New Chief Executive Antonio Horta-Osorio, whom Lloyds poached from rival Santander UK, said his plan will create a more agile organization by cutting through middle management, centralizing control functions, and creating a simpler legal structure.

"We will unlock the potential in this franchise over time by creating a simpler, more agile and responsive organization, and by making substantial investments in better-value products and services for our customers, to deliver strong, stable and sustainable returns for our shareholders," Horta-Osorio said in a statement.

Lloyds, 41 percent owned by the UK government after needing to be bailed out during the financial crisis and with 30 million customers, said it will "revitalize" the bank, including the Halifax brand it inherited after its troubled 2008 takeover of HBOS.

Bancassurance will remain a core part of the group and it said it plans to restart a progressive dividend payments once it is allowed to do so.

Lloyds and Royal Bank of Scotland were bailed out and part-nationalized by the British government during the credit crisis. Britain ended up with a 40.6 percent stake in Lloyds and around 83 percent of RBS.

Lloyds shares closed up 1.1 percent at 44.66 pence on Wednesday.

($1=0.626 British Pounds)

(Reporting by Sudip Kar-Gupta and Steve Slater; Editing by Paul Hoskins and Mike Nesbit)


German retail sales mark four-year drop in May

Wednesday, June 29th, 2011 | Finance News

FRANKFURT (AFP) – German retail sales showed the sharpest drop for four years in May, provisional official data showed on Thursday, in the latest snapshot of Europe's biggest economy.

Fear generated by the outbreak of a killer strain of E. coli bacteria was a likely cause for the surprise drop, an analyst said.

Retail sales fell by 2.8 percent from the level in April, after a revised reading of no change for that month, the national statistics office said.

The figure for May represented the heaviest slump since a loss of 3.6 percent in May 2007, a Destatis spokesman said, just before the onset of the global financial crisis.

"The E.Coli (EHEC) outbreak is probably the largest single cause for the weakness in May. This can be inferred from food sales falling relatively to non-food," Berenberg Bank senior economist Christian Schulz said.

The figures were also an indication that the German economy is cooling following strong growth in 2010 and the first quarter of 2011.

Analysts polled by Dow Jones Newswires had forecast a monthly gain of 0.5 percent in May after an initial estimate by Destatis had suggested a gain of 0.6 percent in April.

The picture was somewhat brighter on an annual basis, with Destatis reporting a retail sales gain of 2.2 percent from May 2010, though that month had three fewer business days than this year.

Germany is counting on a pick-up in consumption to bolster the traditional economic boost provided by exports, but the Greek debt crisis has caused many households to look twice before splurging on non-essential items.

In the five months from January through May, retail sales were 1.5 percent higher than in the same period of 2010.

Schulz noted that the month-on-month figures "are frequently revised strongly and should be interpreted with caution."

On Tuesday, the GfK research institute said the mood among German consumers had improved, with its latest index of household sentiment rising to 5.7 points from 5.6 points in the previous survey.

And last week, the closely watched Ifo index, based on a survey of around 7,000 German firms across key sectors, suggested that business confidence had risen as well.

Early this month, the German central bank raised its growth forecast for this year to 3.1 percent, up from 2.5 percent previously.

For next year, the economy should grow by 1.8 percent, the Bundesbank added.

Schulz said that "with fundamentals and consumer confidence remaining firm in Germany, retail sales should rebound markedly in the months to come, if the Greek debt crisis can be contained and the global slowdown remains a soft patch."


Oil rebounds amid hopes for Greek debt resolution

Wednesday, June 29th, 2011 | Finance News

BANGKOK – Oil rose above $95 a barrel Thursday in Asia after Greece's approval of a harsh austerity plan eased concerns about a spreading financial crisis in Europe.

Benchmark oil for August delivery was up 54 cents to $95.31 a barrel at midday Bangkok time in electronic trading on the New York Mercantile Exchange. Crude gained $1.88 to settle at $94.77 on Wednesday.

In London, Brent crude for August delivery was up 21 cents to $112.61 on the ICE Futures exchange.

The dollar lost ground to the euro and other major currencies, which boosted oil as well. Oil, which is priced in dollars, tends to rise as the greenback falls and makes crude cheaper for investors holding other currencies.

Oil has recovered over the last two days from losses sustained since last Thursday, when the 28-nation International Energy Agency said it would make 60 million barrels of crude from emergency stocks available to help lower prices.

It got a boost as Greek lawmakers prepared for and passed financial reforms that were required for the country to receive the next installment of an international aid package. Without that money, the country risks defaulting on its debts.

Crude has dropped from near $115 early last month amid concerns about slowing demand from the U.S. and Europe.

In other Nymex trading in July contracts, heating oil added 1 cent to $2.94 a gallon while gasoline fell 7 cents at $2.82 a gallon. Natural gas futures lost 1 cent at $4.31 per 1,000 cubic feet.