UK Indexes Drop 1.6%; Colfax Bids for Charter International

Arthi Gupta
12 Sep, 2011
New York City

The UK indexes declined on global economic woes. The Independent Commission on Banking proposed reforms to create a more stable and competitive UK banking system. Colfax offered to acquire Ireland-based Charter International for

[R]4:00 PM London – The UK indexes declined on global economic woes. The Independent Commission on Banking proposed reforms to create a more stable and competitive UK banking system. Colfax offered to acquire Ireland-based Charter International for £1.53 billion.[/R]

The Independent Commission on Banking published its final report on Monday aimed to create a more stable and competitive basis for UK banking in the longer term. The commission recommended to ring-fence retail banking from the riskier investment banking to protect taxpayers from any future bank failures.

The ICB recommends that the retail and other activities of large UK banking groups should both have primary loss-absorbing capacity of at least 17% to 20%.

The commission recommends that large UK retail banks should have equity capital of at least 10% of risk-weighted assets, 3% more than the new international Basel III minimum of 7%. The commission reiterated that this should however be completed at the latest by the Basel III date of the start of 2019.

The proposed reforms are expected to result in an annual pre-tax cost of £4 billion to £7 billion for Britain''s banks, with at least half of the costs arising from curtailing implicit government guarantee.

In London, FTSE 100 Index slumped 83.72 or 1.60% to 5,131.03 and the pound edged lower to $1.5853.

Colfax Offers to Acquire Charter International

Colfax Corp., the fluid handling products manufacturer agreed to acquire Irish engineering firm Charter International Plc for 910 pence or about $14.45 per share in cash and stock. The deal values Charter''s share capital at about £1.53 billion or about $2.43 billion.

The acquisition aims to accelerate Colfax''s growth strategy and move toward its vision of a multi-platform enterprise with a strong global footprint.

Gainers & Losers

Associated British Foods Plc fell 1.40% to 1,055 pence after the food retailer said for the 52-week full year, adjusted earnings will be flat with the 53-week last year.

Christie Group plc slumped 4.8% to 59.500 pence after the provider of consultancy services reported first-half revenues improved 8.3% to £27.3 million from £25.2 million a year ago. Profit before tax soared 100% to £0.6 million compared to £0.3 million in first-half 2010. Earnings per share surged to 1.30 pence per share from 0.82 pence per share.

Great Portland Estates Plc declined 1.46% to 351.10 pence after the property development and investment company said it has exchanged contracts to buy a 2.3 acre freehold site in the core of London''s West End between Rathbone Place, W1 and Newman Street, W1, 50 yards north of Oxford Street.

Kingfisher plc gained 0.78% to 233.90 pence after the home improvement retailer plans to invest £115 million to open nine new Castorama stores in Russia over the next two years.

Rolls-Royce Holdings plc dropped 2.41% to 607.50 pence after the turbine engine maker agreed to develop civil nuclear power in collaboration with Russia''s state-owned atomic energy corporation, Rosatom.

SABMiller Plc, the brewer fell 2.41% to 2,144 pence after Australia-based brewer Foster''s Group advised its shareholders not to take any action relating to the hostile takeover bid by SABMiller.