Plans for more than eight million sq ft of speculative office buildings, including the Cheesegrater skyscraper, could be shelved as the financial sector retrenches and cuts its demand for space in the City of London, according to The Times .
The impact of the credit crunch on financial institutions is blamed for the sudden drop in demand, the paper reports.
British Land confirmed yesterday that it would delay the so-called Cheesegrater, a 225 m (740 ft) high tower on Leadenhall Street, in the hope that its completion would coincide with the peak of the next commercial property cycle. Other developers are expected to delay projects scheduled to start in the next 18 months at least until they have found prelet tenants.
The UK may receive no corporation tax from Merrill Lynch for decades after the US bank declared its London operations had incurred $29bn (£15.6bn) of losses in the credit crunch.
According to The Financial Times, Merrill has booked almost two-thirds of its massive writedowns to its UK subsidiary. Under accounting law, the company can now offset UK tax against those losses, as long as it can prove its London arm owns the assets that have been written down.
According to the FT, the multibillion charge could live on almost indefinitely as an operating loss on the books of Merrill's UK operation, which paid $130m corporation tax in 2006. The bank is one of the biggest losers in the credit crunch having written off a total of $46bn, behind only Citigroup.
The BBC reports Morgan Stanley and JP Morgan Chase have agreed to buy back more than $7bn of securities and pay fines to settle allegations that they misled investors. The Wall Street banks were accused of marketing debt products, called auction-rate securities, as much safer than they were. Other financial firms are also being investigated for misstating the risk of these investments.
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