Alliance & Leicester admitted regret about its investments in risky assets yesterday as it scrapped its profit target and said it would not compete strongly for new mortgage customers this year, reports The Independent.
The bank's shares fell nearly 7% to their lowest since 2000 after it said £150m of extra funding costs would squeeze margins this year. At one point the shares were down 19% at an all-time low.
The former building society wrote down £185m of structured-credit assets held in its treasury operation, causing full-year profit to fall 30% to £399m.
Richard Banks, who heads A&L's treasury business, said: “I regret it [the investments] because we have a loss to the P&L of £185m and that has got to be regrettable.”
He said when the investments were made in 1999 the entire industry had assumed that there would always be a market for the assets.
ENERGY GROUP CENTRICA is set to face a barrage of criticism after its British Gas subsidiary revealed a big rise in profits last year, reports The Guardian.
The company reported its residential business, which is the biggest supplier of energy to homes in the UK with some 16 million customer accounts, had made an operating profit last year of £571m compared with £95m in 2006.
British Gas, which raised gas and electricity prices for residential customers by 15% last month, said the bulk of the profit had been made in the first half of the year and it had made a profit of less than £40m in the second half.
At the time it announced the price increases British Gas blamed higher wholesale energy prices and said that, without the rise, if wholesale prices stayed at the current level, it would make a loss on the residential operations in 2008. All but one of Britain's big six energy suppliers has raised prices for domestic customers.
PLANS TO NATIONALISE Northern Rock were thrown into confusion last night when it emerged that ministers are leaving £40bn of the bank's best mortgages in a private offshore trust, reports The Guardian.
As the government moved to push emergency legislation through parliament, it was revealed that the offshore firm Granite, which holds half of the bank's best secured mortgages, is not being nationalised as part of the rescue package.
The Granite issue is likely to be at the centre of an inquiry to be announced by the National Audit Office into the government's handling of the much-criticised rescue plan.
Treasury officials and ministers spent yesterday battling to explain the contractual relationship between Granite and Northern Rock.
Granite has been used as a vehicle to raise billions from the international capital markets, deploying the Rock's mortgage book as collateral.
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First mentioned in Cridland Report