Most city economists believe the quarter-point rise in interest rates on Thursday that is now seen as a certainty will end the present run of increases, despite persistent speculation over further pain to come for borrowers, reports The Times.
Fewer than a quarter of 61 economists polled by Reuters last week are forecasting that this week’s expected base rate rise, to a six-year high of 5.5 per cent, will be followed by another increase. Only 14 of the leading analysts questioned believe that Bank rate will be pushed still higher, to 5.75 per cent, while just one institution, ABN Amro, predicts rates will rise to 6 per cent by next spring.
In addition, 28 of the polled economists believe that interest rates will be falling again, and be back to their present level, 5.25 per cent, by this winter or next spring.
INVESTMENT BANKS COULD play an important role in deciding the regulatory fate of the proposed £8.8bn tie-up between Reuters and Thomson Corporation, amid concerns that combining two major financial data companies will be anti-competitive, reports The Guardian.
Reuters and Thomson control a combined 34% of the financial data market which provides information such as share prices and bond spreads to traders and investment managers at financial institutions. A combined group would be just ahead of the industry-leading Bloomberg, which has a 33% share. David Anderson, editor of Inside Market Data, said at least one big bank had expressed disquiet over the proposed combination of the second and third largest players.
THE DUTCH BANK ABN Amro has seemingly cleared the path for a takeover by Barclays and Bank of America, rejecting a £12.3bn offer by the Royal Bank of Scotland for its US arm LaSalle, on the grounds that it was subject to too many conditions, reports The Independent.
RBS, along with Fortis and Santander, attempted to trump the Bank of America and Barclays bids at the weekend, making a $24.5bn offer for LaSalle - some $3.5bn more than Bank of America's recommended bid for the US bank. However, the consortium's offer was conditional on ABN accepting a €72bn (£49bn) offer for the entire ABN Amro group.
In a statement issued yesterday, ABN said that the consortium had "expressly refused" to remove this condition from its offer. Furthermore, it said that the three banks had been unable to give it sufficient assurance that they would be capable of securing the necessary financing to complete the deal. As a result, the Dutch bank said it believed the Bank of America offer for LaSalle was still superior, leaving Barclays clear to complete its agreed acquisition of the remainder of the company.
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