Loans and Finance

Loans and Finance


News and information about loans, money, debt, finance and business issues.

Thursday, October 23, 2014

Tesco Reports 92% Profit Collapse

The omnishambles of Tesco's profit forecast overstatement has at last claimed the head of the chairman (Sir Richard Broadbent). He will stand down as Tesco today has reported 92% fall in pre-tax profits.

In fact the £250M black hole was £263M!
Sir Richard will stand down once new chief executive Dave Lewis has established his strategy for the company, which is likely to be next year.

Monday, October 20, 2014

RTGS Back Online

The Bank of England says that the Real Time Gross Settlement Payment System (RTGS) system is back online, and that RTGS will remain open until 8pm today (four hours later than usual) to process the backlog of orders.

Friday, October 17, 2014

No Rate Rises Yet

I have been bucking against the perceived "wisdom" of the press and financial "experts" for sometime now, wrt when interest rates will rise.

Contrary to the perceived "wisdom" I have repeatedly stated that rates will not rise anytime soon, least of all before next May's election.

I am amused to see that Andy Haldane, who sits on the Monetary Policy Committee, also now agrees with my view.

He cites global growth fears, rising geo-political risks and a "weak pipeline" of inflationary pressures as the rational for the Bank of England keeping rates lower for longer.

Thursday, October 16, 2014

Markets Falling - So What?

The Telegraph reports that more than £46 billion was wiped off the stock market on Wednesday, as the FTSE 100 fell 181 points (2.8%) to 6212.

Other markets around the world are also falling, indeed at one point the Dow Jones fell by 3% overnight.

For why are the market falling?

Fear, greed, profit taking mixed with (according to the Telegraph) the following:

- fears over the stability of the Greek government and its bail-out plans. Hardly new news, and one that would have been factored into the markets many months ago.
- poor retail figures and a slowdown in manufacturing from the US.

- ebola

- the ongoing eurozone crisis


Basically fear and greed as per usual!

The markets will rise again, volatility and market upswings/downswings are how people make money.

Wednesday, October 15, 2014

Tesco Suspends Three More Directors

The fallout from the £250M profit forecast overstatement continues, as Tesco has suspended three more senior employees.

Tesco is quoted in The Guardian:
We have asked three employees to step aside to facilitate the investigation into the potential overstatement of profits in UK food for the first half of the year.” 
Although the staff are not named, they are understood to be category directors in charge of procuring whole sections of goods for Tesco stores. As per Sky News they are Dan Jago, Tesco’s UK and group wine director, Sean McCurley, director of convenience foods, and William Linnane, director of impulse purchases.

Their Twitter and LinkedIn accounts were deactivated on Tuesday.

Earlier this week Tesco’s company secretary, Jonathan Lloyd, said he would leave next March after serving his notice period. Audit committee chairman and non-executive director Ken Hanna is also expected to stand down when his six-year term ends later this year.

This is certainly one way to revamp the board. However, whilst these staff are suspended one might be forgiven for asking who exactly is/are covering their roles?

Tuesday, October 14, 2014

Sainsbury's Halves Nectar Points

The Grocer reports that Sainsbury's intends to halve the number of its Nectar points it awards on purchases as from April next year. Currently customers can earn 2 points for every £1 spent, as from April it will be 1 point for every £1 spent.

In an attempt to ameliorate vexed Nectar card holders, Sainsbury's claim that there will be bonus points schemes enabling people to earn more points in other ways.

Despite the PR hype, which included the much overused word "exciting", this is of course a means of Sainsbury's saving money; as it clearly would not do this otherwise.

Friday, October 10, 2014

The State Pension Ponzi Scheme

At last someone has spotted that the state pension is nothing more than a glorified Ponzi Scheme; wherein monies paid in by taxpayers are syphoned off for other purposes, and that pensions can only be paid if more people pay in ever increasing contributions year on year.

The Centre for Policy Studies has concluded that younger generations will receive a "derisory" state pension in retirement, because the cash reserves that fund payouts to the elderly will run dry next year.

It seems that there is a "serious flaw" in the national accounts that within 12 months will leave the Government short of money to pay pensioners.

Michael Johnson, an academic at the think tank, claimed in the Telegraph that senior Westminster sources had privately admitted that state pension funding was in a perilous state, having viewed his research.

Millions of taxpayers under the age of 45 faced steep tax increases and would have to wait longer to collect a state retirement income, he claimed, while the under-35s should prepare for the state pension to be scrapped.
"It doesn't matter which government is elected next year, the state pension age will have to go up much faster and sooner than anyone expects to cover the funding deficit.

For Generation Y, aged between 25 and 34, the message from the Government ought to be that the state pension is not viable full stop. But, of course, no politician can say this publicly."

Mr Johnson said the amount of money in the National Insurance Fund was rapidly running out, as too little was flowing in.

As noted, the state pension scheme is nothing more than a Ponzi Scheme!

Wednesday, October 08, 2014

War On ISIS Boosts Defence Shares

As ever with markets, one person's misery is another's fat profit.

As such it should come as no surprise at all to learn that the war (that we now appear to be fighting) against ISIS, and the mess in Ukraine has boosted defence shares in the USA.

Bloomberg reports that Lockheed Martin and other U.S. defence companies are trading at record prices, as shareholders reap rewards from escalating military conflicts around the world. Cynics might wonder if it is in the interests of the military/industrial complex to push for conflict.

Therefore, despite the fact that many people are dying and are going to die, some people somewhere are doing very nicely out if this!

I dare say Ebola is making money for those in the relevant pharmaceutical and protective clothing industries as well.

Let us trust that those who are doing well out of this live long enough to enjoy the spoils of war, and never have the misfortune to be killed in a terrorist atrocity or via an Ebola outbreak.

Tuesday, October 07, 2014

Tesco Chairman Considers Resigning

The Wall Street Journal reports that Tesco Chairman Richard Broadbent, in the light of the profit and corporate jet debacle, is considering resigning after the investigation into company's accounting practices is complete.

Should that action not take place before the investigation is complete?

Monday, October 06, 2014

New £1 Coin

In an effort to reduce forgeries, the Royal Mint will be introducing a new £1 coin in 2017.

The coin, which the Mint claims will be the "most secure coin in the world", is based on the design of the old threepenny bit, a 12-sided coin in circulation between 1937 and 1971. This is ironic, as given that due to the ravages of inflation £1 can now buy not much more that 3d used to be able to.

A competition will be held to decide what image to put on the "tails" side of the coin.

Suffice to say, the introduction will give rise to costs eg machines that accept coins will have to be altered.

Saturday, October 04, 2014

Tesco Doesn't Give a Flying Fuck

Kudos to the board of Tesco for buying a $50M corporate jet.

I trust and assume the long suffering shareholders with have a few words to say about this!

Thursday, October 02, 2014

Wonga Writes Off 330K Debtors

Wonga has written off debts of £220M owed by more than 300,000 customers (in arrears by more than 30 days), the hit to the P&L account is £35M (as it already had provisions covering a large portion of the £220M).

Unsurprisingly, Wonga now intends to increase checks on potential debtors to make sure that they can pay back the money borrowed.

Andy Haste, who became executive chairman in the summer, is quoted by the Telegraph:

"During my review, it became clear to me that this has unfortunately not always been the case. I agreed with the concerns expressed by the FCA and as a consequence of our discussions we have committed to taking these actions.

It’s clear to me that the need for change at Wonga is real and urgent. Our regulator is determined to improve standards in consumer credit and I share that determination. There is much to do in order to make Wonga a sustainable and accepted business, and today’s announcement is a significant step forward in that process.” 
Wonga is aiming to transform itself into a respectable financial company. This is but one step forward in the long process, another in my view will be to change its name to something less "streetwise".

Wednesday, October 01, 2014

FCA To Investigate Tesco

Unsurprisingly Tesco is to be investigated by the Financial Conduct Authority (FCA) over the £250M profit shortfall in its accounts.

Additionally, the Serious Fraud Office has said it is also prepared to intervene if necessary.

Tesco is quoted by the Telegraph:
"Tesco will continue to co-operate fully with the FCA and other relevant authorities considering this matter."

Tuesday, September 30, 2014

Wonga Profts Fall 53%

Wonga has posted pre-tax profits of £39.7M for 2013, a fall of 53% from the previous year's profits of £84.5M.

The figures contain £19M of "remediation" costs, relating to systems issues and growing its overseas business. The results are chronologically before Wonga's £2.6M fine for sending thousands of letters to customers in arrears from fictional law companies.

Andy Haste, chairman, is quoted by the Telegraph:
"Wonga has the ability to be great once again.

We need to repair the reputation, regain trust and get an accepted seat at the table of financial services."
This will be an uphill struggle, as the FCA has proposed a.o. capping the fees and rates charged on payday loans at 0.8% a day.

Monday, September 29, 2014

Tesco Whistleblower Ignored For Months

According to the International Business Times, the Tesco whistleblower who alerted senior executives to the £250M shortfall in profits was allegedly ignored for months.

Seemingly the whistleblower alerted senior directors at Tesco in July of concerns but "failed to get traction".