UK banks allowed to cut their cash holdings

Bank of England governor Mark Carney arrives to attend the bank's quarterly inflation report news conference at the Bank of England in London August 7, 2013.

Credit: Reuters/Simon Dawson/POOL

By Huw Jones

LONDON | Wed Aug 28, 2013 6:26pm BST

LONDON (Reuters) - Britain's eight top lenders can cut their cash reserves by a collective 90 billion pounds and use the funds to support economic growth, the Bank of England's new governor Mark Carney said on Wednesday.

Britain's lenders were forced to build up buffers of cash and UK government bonds far earlier than required under a globally-agreed timetable.

The buffers help cushion them from short-term market shocks so they can keep operating for a month even if markets freeze, as they did during the 2007-09 financial crisis.

UK government bonds, known as gilts, fell after Carney's announcement as investors factored in the likelihood that the banks will sell off some of their holdings.

Carney, in his maiden speech as governor of the Bank of England, said it "will help to underpin the supply of credit, since every pound currently held in liquid assets is a pound that could be lent to the real economy".

In a separate statement, the central bank's Prudential Regulation Authority, which supervises UK lenders, said banks could scale back the liquidity buffers on condition they have a separate, minimum core capital ratio of 7 percent - a new requirement.

The watchdog has said it expects the lenders to meet this capital ratio by the end of the year after some had to take steps to find more capital.

The eight are: HSBC, Barclays, Co-op, Lloyds, RBS, Standard Chartered, Santander UK and Nationwide.

The PRA is implementing a policy that the BoE's Financial Policy Committee decided on in June. The policy would allow the four biggest banks to scale back their liquidity buffers to 80 percent of where they should be if in full compliance with the global Basel III accord, not due until 2018.

This would release 70 billion pounds but, by extending the change to the eight main lenders, a further 20 billion pounds can potentially be released.

The British Bankers' Association said banks would be re-assessing how much of the 90 billion pounds can be redeployed into lending to small and medium businesses and households, as they are committed to doing.

NO MISSION ACCOMPLISHED

The banks are under political pressure to increase lending to business following criticism that they are focusing on home mortgages and consumer credit rather than productive industry, encouraging a lop-sided economic recovery.

The banks argue that lending levels reflect the amount of demand.

Carney signalled that banks face having to hold more capital against mortgages if house price growth becomes unsustainable.

Like his predecessor Mervyn King, he insisted that well-capitalised banks are in a better position to lend, saying U.S. banks have rebuilt their capital bases and now lend far more than their British peers.

But Carney avoided some of King's harsh rhetoric towards the British banks, striking a more conciliatory tone that was welcomed by Philip Hampton, chairman of Royal Bank of Scotland, during a visit to Reuters.

"Most people like Mark Carney and they think they can do business sensibly with him," Hampton said.

Britain's banks will face further capital requirements because of their size or market dominance, but Carney said his task would be to manage this transition "in a gradual way that supports continued confidence in growth".

With a 7 percent core capital ratio, banks would be "adequately capitalised" to start that transition, he said.

"There is no mission accomplished banner that the banking system is fixed," Carney added.

Banks have been using cash and top-quality government bonds such as UK gilts in their liquidity buffers. The PRA said on Wednesday that up to 40 percent of the buffers could in future be in corporate bonds, shares and retail mortgage-backed securities, giving them greater flexibility.

(Reporting by Huw Jones; editing by Matt Scuffham and Tom Pfeiffer)

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UK banks allowed to cut their cash holdings

Bank of England governor Mark Carney arrives to attend the bank's quarterly inflation report news conference at the Bank of England in London August 7, 2013.

Credit: Reuters/Simon Dawson/POOL

By Huw Jones

LONDON | Wed Aug 28, 2013 6:26pm BST

LONDON (Reuters) - Britain's eight top lenders can cut their cash reserves by a collective 90 billion pounds and use the funds to support economic growth, the Bank of England's new governor Mark Carney said on Wednesday.

Britain's lenders were forced to build up buffers of cash and UK government bonds far earlier than required under a globally-agreed timetable.

The buffers help cushion them from short-term market shocks so they can keep operating for a month even if markets freeze, as they did during the 2007-09 financial crisis.

UK government bonds, known as gilts, fell after Carney's announcement as investors factored in the likelihood that the banks will sell off some of their holdings.

Carney, in his maiden speech as governor of the Bank of England, said it "will help to underpin the supply of credit, since every pound currently held in liquid assets is a pound that could be lent to the real economy".

In a separate statement, the central bank's Prudential Regulation Authority, which supervises UK lenders, said banks could scale back the liquidity buffers on condition they have a separate, minimum core capital ratio of 7 percent - a new requirement.

The watchdog has said it expects the lenders to meet this capital ratio by the end of the year after some had to take steps to find more capital.

The eight are: HSBC, Barclays, Co-op, Lloyds, RBS, Standard Chartered, Santander UK and Nationwide.

The PRA is implementing a policy that the BoE's Financial Policy Committee decided on in June. The policy would allow the four biggest banks to scale back their liquidity buffers to 80 percent of where they should be if in full compliance with the global Basel III accord, not due until 2018.

This would release 70 billion pounds but, by extending the change to the eight main lenders, a further 20 billion pounds can potentially be released.

The British Bankers' Association said banks would be re-assessing how much of the 90 billion pounds can be redeployed into lending to small and medium businesses and households, as they are committed to doing.

NO MISSION ACCOMPLISHED

The banks are under political pressure to increase lending to business following criticism that they are focusing on home mortgages and consumer credit rather than productive industry, encouraging a lop-sided economic recovery.

The banks argue that lending levels reflect the amount of demand.

Carney signalled that banks face having to hold more capital against mortgages if house price growth becomes unsustainable.

Like his predecessor Mervyn King, he insisted that well-capitalised banks are in a better position to lend, saying U.S. banks have rebuilt their capital bases and now lend far more than their British peers.

But Carney avoided some of King's harsh rhetoric towards the British banks, striking a more conciliatory tone that was welcomed by Philip Hampton, chairman of Royal Bank of Scotland, during a visit to Reuters.

"Most people like Mark Carney and they think they can do business sensibly with him," Hampton said.

Britain's banks will face further capital requirements because of their size or market dominance, but Carney said his task would be to manage this transition "in a gradual way that supports continued confidence in growth".

With a 7 percent core capital ratio, banks would be "adequately capitalised" to start that transition, he said.

"There is no mission accomplished banner that the banking system is fixed," Carney added.

Banks have been using cash and top-quality government bonds such as UK gilts in their liquidity buffers. The PRA said on Wednesday that up to 40 percent of the buffers could in future be in corporate bonds, shares and retail mortgage-backed securities, giving them greater flexibility.

(Reporting by Huw Jones; editing by Matt Scuffham and Tom Pfeiffer)

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One Direction the billion dollar band: how their new film This Is Us will earn a pot of gold

By Alison Boshoff

PUBLISHED: 19:38 EST, 15 August 2013 | UPDATED: 02:13 EST, 16 August 2013

Nobody goes to Leicester Square for the peace and quiet, but unless you enjoy the sound of high-pitched screaming, you ought to give the area a pretty wide berth on Tuesday.

For that is the date when all of One Direction will gather on the red carpet for the premiere of their film This Is Us.

Given that Directioners gather in their hundreds on the rumour that their idols are in the building, and were queueing from 3.45am for a screening of the film in Los Angeles last week, an excitable crowd of up to 10,000 is expected.

The band are out to prove that they are 'Bigger than Bieber' whose film Never Say Never took ?63 million at the box office

And with a reception like that you may surmise the documentary, which cost around ?8?million, is likely to make the kind of profits that will have Sony’s accountants swooning in the aisles, too.

For, hatched at the very height of the band’s record-busting popularity, it is projected to take about ?120?million at the box office. ‘It is going to be gangbusters,’ says one Sony executive — meaning it’s going to be zealously successful.

When and if it does go ‘gangbusters’, the band will have shown they are ‘Bigger than Bieber’ — the last challenge in their domination of popular culture.

For the big landmark when it comes to these kind of films is Justin Bieber’s Never Say Never. Released in 2011, the part-documentary and part-concert film took ?63?million at the box office.

In doing so, it changed the game. For even really big concert films never made much money until then — In Bed With Madonna took a modest ?9.7?million in America, for instance.

But the Bieber movie showed there was ‘real money’ to be made. Katy Perry was quick to jump on the bandwagon with Part Of Me, in 2012, which took a healthy ?20?million. (This Is It, the posthumous Michael Jackson tribute, took ?46?million, but clearly it was atypical.)

And, given that One Direction are signed to a division of Sony, which also has a movie arm, the graduation to the big screen was obvious.

The synergies are clear. The band is signed to Syco (a joint Sony-Simon Cowell venture), having found fame on The X Factor, a Syco show. They star in a film made by Syco’s parent company Sony and will no doubt plug their next Syco album on this year’s X Factor.

Paul Williams, head of business analysis at Music Week magazine, told me: ‘From the Fifties and Sixties onwards, it has been the case that when you get globally successful to a huge degree, you then get a film career of some kind.

‘Colonel Tom Parker put Elvis into movies, and The Beatles made A Hard Day’s Night within a few weeks of cracking America. There’s been nothing to touch that recently, but the Spice Girls did make a film as Simon Fuller saw the opportunity to make even more money.

‘One Direction are the most popular British pop band since the Spice Girls. They broke America with ease. Their popularity across the world is so immense that it is hard to see any reason why the film will not be a huge success.’

Hatched at the very height of the band?s record-busting popularity, the film is projected to take about ?120 million at the box office

As a self-sanctioned product, the film will of course be a flattering and warm portrayal of One Direction

Business Insider magazine prophesied they are on course to draw in $1?billion in revenue by the end of 2013. This is probably an underestimate, as the magazine did not add  in the band’s yet-to-be-announced third album.

However, music insiders believe it will be released in time for the crucial Christmas market, and is likely to propel them far past the $1?billion mark.

All good news for Simon Cowell to ponder, then. And the boys, who recent estimates suggest have each netted ?5.5?million so far. Not bad for a group of 19 to 21-year-olds.

So what is in the movie? As a self-sanctioned product, it will of course be a flattering and warm portrayal of One Direction. There won’t be any conflict on screen.

Fans will be glad to hear not a nanosecond is devoted to Harry Styles’ former girlfriend Taylor Swift. They split up just before the cameras started rolling in January.

The director of This Is Us, which is in 3D, is Morgan Spurlock, best known for the documentary Super Size Me, about the effects of eating only huge McDonald’s meals.

Spurlock seems to have been chosen to bring a certain credible, leftfield sensibility to the film, and to help to position the band less as a Monkees-style manufactured act and more as ‘real’ young men to whom the fans can relate. There is plenty about their families, the lives they lead, the jobs held by the boys before they became famous, and so on.

Trailers show the families of Harry Styles, Niall Horan, Liam Payne, Louis Tomlinson and Zayn Malik talking about them, and interviews with others such as Simon Cowell. The band have been filmed on tour in Japan, at home and making nostalgic trips. Harry is seen at the bakery in Holmes Chapel, Cheshire, where he used to have a Saturday job. The 19-year-old said he hoped the film would show fans a new side to them.

‘On Twitter, you only have 140 characters, and you can’t get personality across in ten-minute interviews,’ he says. ‘But the film is going to be a lot more of how we interact and how we’re chilled out in the dressing room. It will be nice to see us as we are.’

Niall,  who is the most popular of all of them in America, agreed: ‘It’s good in the movie because people can see what we’re like behind the scenes. It’s going to be access all areas. They’ve even been filming us in the toilet.’

Justin Bieber's movie movie showed there was real money to be made. Until then, even big budget concert films hadn't had great success

Katy Perry's This Is It featured snippets from her personal life with Russell brand. One Direction fans will be pleased at the prospect of seeing a snippet of Harry styles' short-lived relationship with Taylor Swift

Louis insisted everything is genuine. He says: ‘Nothing at all was scripted. If we are asked the question, we just answer naturally.’

Producer Ben Winston explains: ‘The doc of what’s happened to them over the past few years is more exciting than any script writer could come up with.

‘You’ve already got a wonderful story to tell.’

The true story is of five young men who applied as solo candidates to The X Factor in 2010 but failed to make the grade in the boys’ category.

Judge Nicole Scherzinger suggested putting them together as a group, under the aegis of Simon Cowell. They finished third behind Rebecca Ferguson and Matt Cardle.

But, thanks to astute management by Cowell, who hired hitmaker Savan Kotecha to write for them, they became a global phenomenon.

If you aren’t a fan, of course, the movie will probably be best avoided — for all the guff about how real it is, the film will be chiefly a promotional vehicle.

However, One Direction seem unstoppably popular. They are  in the middle of the North American leg of a massive sold-out world tour. In America, the tour is heavily sponsored by Nabisco, who are plugging brands such as Oreo and Ritz.

And, as anyone who sat through the Teen Choice Awards this week will attest, 1D fever swept the board with them winning Choice Summer Tour, Choice Group, Choice Single (Live While We’re Young) and Choice Love Song (Little Things). Harry Styles won two individual awards for being Choice Hottie and Choice Smile.

There won’t be an Oscar, a Golden Globe or even a Bafta for This Is Us.

But a pot of gold? That seems pretty much a sure thing.

n?This Is Us is released in cinemas on August 29.

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One Direction the billion dollar band: how their new film This Is Us will earn a pot of gold

By Alison Boshoff

PUBLISHED: 00:38 GMT, 16 August 2013 | UPDATED: 07:13 GMT, 16 August 2013

Nobody goes to Leicester Square for the peace and quiet, but unless you enjoy the sound of high-pitched screaming, you ought to give the area a pretty wide berth on Tuesday.

For that is the date when all of One Direction will gather on the red carpet for the premiere of their film This Is Us.

Given that Directioners gather in their hundreds on the rumour that their idols are in the building, and were queueing from 3.45am for a screening of the film in Los Angeles last week, an excitable crowd of up to 10,000 is expected.

The band are out to prove that they are 'Bigger than Bieber' whose film Never Say Never took ?63 million at the box office

And with a reception like that you may surmise the documentary, which cost around ?8?million, is likely to make the kind of profits that will have Sony’s accountants swooning in the aisles, too.

For, hatched at the very height of the band’s record-busting popularity, it is projected to take about ?120?million at the box office. ‘It is going to be gangbusters,’ says one Sony executive — meaning it’s going to be zealously successful.

When and if it does go ‘gangbusters’, the band will have shown they are ‘Bigger than Bieber’ — the last challenge in their domination of popular culture.

For the big landmark when it comes to these kind of films is Justin Bieber’s Never Say Never. Released in 2011, the part-documentary and part-concert film took ?63?million at the box office.

In doing so, it changed the game. For even really big concert films never made much money until then — In Bed With Madonna took a modest ?9.7?million in America, for instance.

But the Bieber movie showed there was ‘real money’ to be made. Katy Perry was quick to jump on the bandwagon with Part Of Me, in 2012, which took a healthy ?20?million. (This Is It, the posthumous Michael Jackson tribute, took ?46?million, but clearly it was atypical.)

And, given that One Direction are signed to a division of Sony, which also has a movie arm, the graduation to the big screen was obvious.

The synergies are clear. The band is signed to Syco (a joint Sony-Simon Cowell venture), having found fame on The X Factor, a Syco show. They star in a film made by Syco’s parent company Sony and will no doubt plug their next Syco album on this year’s X Factor.

Paul Williams, head of business analysis at Music Week magazine, told me: ‘From the Fifties and Sixties onwards, it has been the case that when you get globally successful to a huge degree, you then get a film career of some kind.

‘Colonel Tom Parker put Elvis into movies, and The Beatles made A Hard Day’s Night within a few weeks of cracking America. There’s been nothing to touch that recently, but the Spice Girls did make a film as Simon Fuller saw the opportunity to make even more money.

‘One Direction are the most popular British pop band since the Spice Girls. They broke America with ease. Their popularity across the world is so immense that it is hard to see any reason why the film will not be a huge success.’

Hatched at the very height of the band?s record-busting popularity, the film is projected to take about ?120 million at the box office

As a self-sanctioned product, the film will of course be a flattering and warm portrayal of One Direction

Business Insider magazine prophesied they are on course to draw in $1?billion in revenue by the end of 2013. This is probably an underestimate, as the magazine did not add  in the band’s yet-to-be-announced third album.

However, music insiders believe it will be released in time for the crucial Christmas market, and is likely to propel them far past the $1?billion mark.

All good news for Simon Cowell to ponder, then. And the boys, who recent estimates suggest have each netted ?5.5?million so far. Not bad for a group of 19 to 21-year-olds.

So what is in the movie? As a self-sanctioned product, it will of course be a flattering and warm portrayal of One Direction. There won’t be any conflict on screen.

Fans will be glad to hear not a nanosecond is devoted to Harry Styles’ former girlfriend Taylor Swift. They split up just before the cameras started rolling in January.

The director of This Is Us, which is in 3D, is Morgan Spurlock, best known for the documentary Super Size Me, about the effects of eating only huge McDonald’s meals.

Spurlock seems to have been chosen to bring a certain credible, leftfield sensibility to the film, and to help to position the band less as a Monkees-style manufactured act and more as ‘real’ young men to whom the fans can relate. There is plenty about their families, the lives they lead, the jobs held by the boys before they became famous, and so on.

Trailers show the families of Harry Styles, Niall Horan, Liam Payne, Louis Tomlinson and Zayn Malik talking about them, and interviews with others such as Simon Cowell. The band have been filmed on tour in Japan, at home and making nostalgic trips. Harry is seen at the bakery in Holmes Chapel, Cheshire, where he used to have a Saturday job. The 19-year-old said he hoped the film would show fans a new side to them.

‘On Twitter, you only have 140 characters, and you can’t get personality across in ten-minute interviews,’ he says. ‘But the film is going to be a lot more of how we interact and how we’re chilled out in the dressing room. It will be nice to see us as we are.’

Niall,  who is the most popular of all of them in America, agreed: ‘It’s good in the movie because people can see what we’re like behind the scenes. It’s going to be access all areas. They’ve even been filming us in the toilet.’

Justin Bieber's movie movie showed there was real money to be made. Until then, even big budget concert films hadn't had great success

Katy Perry's This Is It featured snippets from her personal life with Russell brand. One Direction fans will be pleased at the prospect of seeing a snippet of Harry styles' short-lived relationship with Taylor Swift

Louis insisted everything is genuine. He says: ‘Nothing at all was scripted. If we are asked the question, we just answer naturally.’

Producer Ben Winston explains: ‘The doc of what’s happened to them over the past few years is more exciting than any script writer could come up with.

‘You’ve already got a wonderful story to tell.’

The true story is of five young men who applied as solo candidates to The X Factor in 2010 but failed to make the grade in the boys’ category.

Judge Nicole Scherzinger suggested putting them together as a group, under the aegis of Simon Cowell. They finished third behind Rebecca Ferguson and Matt Cardle.

But, thanks to astute management by Cowell, who hired hitmaker Savan Kotecha to write for them, they became a global phenomenon.

If you aren’t a fan, of course, the movie will probably be best avoided — for all the guff about how real it is, the film will be chiefly a promotional vehicle.

However, One Direction seem unstoppably popular. They are  in the middle of the North American leg of a massive sold-out world tour. In America, the tour is heavily sponsored by Nabisco, who are plugging brands such as Oreo and Ritz.

And, as anyone who sat through the Teen Choice Awards this week will attest, 1D fever swept the board with them winning Choice Summer Tour, Choice Group, Choice Single (Live While We’re Young) and Choice Love Song (Little Things). Harry Styles won two individual awards for being Choice Hottie and Choice Smile.

There won’t be an Oscar, a Golden Globe or even a Bafta for This Is Us.

But a pot of gold? That seems pretty much a sure thing.

n?This Is Us is released in cinemas on August 29.

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EU, China resolve solar dispute - their biggest trade row by far

By Robin Emmott and Ben Blanchard

BRUSSELS/BEIJING (Reuters) - China and the European Union defused their biggest trade dispute by far on Saturday with a deal to regulate Chinese solar panel imports and avoid a wider war in goods from wine to steel.

After six weeks of talks, the EU's trade chief and his Chinese counterpart sealed the deal over the telephone, setting a minimum price for panels from China near spot market prices.

European solar panel makers accuse China of benefitting from huge state subsidies, allowing them to dump about 21 billion euros ($28 billion) worth of below-cost solar panels in Europe last year, putting European firms out of business.

Other European industries that have accused China of dumping have faced imports of about 1 billion euros a year.

Europe planned to impose hefty tariffs from August 6 but, wary of offending China's leaders and losing business in the world's No. 2 economy, a majority of EU governments - led by Germany - opposed the plan, which led to the compromise deal.

"We found an amicable solution," EU Trade Commissioner Karel De Gucht said. "I am satisfied with the offer of a price undertaking submitted by China's solar panel exporters," he said, referring to the minimum price for China's imports.

Chinese Commerce Ministry Spokesman Shen Danyang welcomed the deal, hailing a "positive and highly constructive outcome".

An EU diplomatic source said that in the solar agreement, the agreed price was 0.56 euro cents per watt, near the spot price for Chinese solar panels in July in Europe, according to solar exchange pvXchange.

Under the terms of the deal, China will also be allowed to meet about half Europe's solar panel demand, if taken at last year's levels. EU consumption was about 15 gigawatts in 2012, and China will be able to provide 7 gigawatts without being subject to tariffs under the deal, the EU source said.

COURT CHALLENGE

That did not satisfy some EU solar manufacturers who said the minimum import price agreed still constitutes dumping and accused the European Commission of breaking EU law by failing to protect European industry.

European solar panel manufacturer association EU ProSun said it will go to the European Court of Justice in Luxembourg to challenge the deal.

"Even the biggest EU trade conflict ever must still be resolved on the basis of the applicable law," said EU ProSun's president, Milan Nitzschke.

However, China has sold solar panels for as little as 0.38 cents a watt, according to the European Commission, which handles trade issues for EU states, and tariffs would also hurt EU panel installers, who benefit from cheaper Chinese panels.

Chinese manufacturers such as U.S.-listed Trina Solar , Yingli Green Energy and Suntech Power Holdings are among those exporting to Europe.

Chinese solar panel production quadrupled between 2009 and 2011 to more than the world's entire demand as it took advantage of a growing market for renewable energy in the face of concerns about climate change.

But the global financial crisis and ensuing euro zone crisis have forced European governments to withdraw generous subsidies for solar energy. That, along with Chinese imports pushing down prices, have sent many European solar companies into bankruptcy.

German group Conergy filed for insolvency this month.

Still, those concerns have become secondary to the much larger EU-China trade relationship at stake over the panels dispute.

Europe is China's most important trading partner, while for the EU, China is second only to the United States. Chinese exports of goods to the bloc totaled 290 billion euros last year, with 144 billion going the other way.

Responding to the EU's move to impose duties, China launched an anti-dumping inquiry into European wine sales, which may have led to exporters in France, as well as Spain and Italy, being hit with retaliatory duties.

EU and Chinese diplomats now expect that case to be dropped as a goodwill gesture, although officials declined to comment on Saturday.

(Additional reporting by Martin Santa in Brussels; Editing by Louise Ireland)

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