London's world pre-eminence as a financial centre could be jeopardised by recent "frenzied borrowing" by investors if a global credit crunch were to hit financial markets, reports the Times .
Richard Lambert, director general of the CBI, yesterday argued the City could be particularly vulnerable in the event of a serious credit crunch because London does not have a large domestic economy, unlike the United States, says the paper.
Lambert threw his weight behind warnings from the Bank of England over the dangers fostered by a so-called “search for yield”, in which cheap money and low rates of return on many assets tempt investors to seek out higher returns from riskier strategies.
INSTITUTIONAL INVESTORS are entering the New Year with large amounts of cash to pour into booming stock markets and expect to see high numbers of company takeovers, according to Merrill Lynch, says the Guardian.
"We have a high level of liquidity," equity strategist Charles Cara said in a report. "That points to a continued good environment for mergers and acquisitions.”
The December poll of 210 fund managers across the world showed a net 53% of respondents expected the world economy to weaken next year but few believe that a recession is likely.
THE TWO leading Scottish banks have missed out on a stellar return on a private equity investment after handing it to a subsidiary of rival Lloyds TSB, reports the Daily Telegraph.
As a result, Lloyds Development Capital, the bank's venture capital arm, managed to turn £40.30 into £23.6m in just 10 months.
The deal was the Royal Bank of Scotland and Halifax Bank of Scotland's prior investment in ANC, the parcel delivery group which was sold to FedEx for £120m on Monday.
RBS and HBOS exited ANC in February, at which point LDC took on their £10m debt position and split the 50% equity stake held by the two banks between itself and ANC's management.
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