City Republic: And then there were none

Any other remaining holders of demutualised new shares have seen it all disappear.

In the US the credit crunch has laid waste the venerable investment banking model, in the UK it's that of the mortgage bank.

B&B, which got into trouble by offering buy-to-let and self-certified mortgages and trying to finance them through the money markets is being broken up with the branch network and the deposits going to Spanish giant Santander (already the owner of Abbey and another failed mortgage bank Alliance and Leicester) for £600m with the Government taking on £40bn of rather iffy mortgages.

This leaves the UK mortgage market a carve-up between Santander, Lloyds-Halifax (or whatever it's called) and building society giant Nationwide.

This is hardly likely to mean more cheap deals on the market although the Government will argue that there's nothing to stop the big three (in terms of UK market capitalization) of HSBC, Barclays and Royal Bank of Scotland (which includes NatWest) growing their mortgage books should they so desire.

The trouble is, they probably won't.

Paulson finally gets his deal

US treasury secretary Hank Paulson looks like he's finally going to get his $700bn distressed assets bail-out deal but with a strings attached.

These will include the money being dribbled out, needy banks having to hand over shares so the taxpayer enjoys a potential upside, some form of independent oversight and maybe a curb on executive pay in the needy companies concerned.

The house of Representatives votes on the deal today and the Senate on Wednesday. Hank has learned the hard way that you can't take US politicians for granted, with both Republicans and Democrats ganging up on him.

He wasn't helped by President George Bush's faux folksiness in his address to the American public -- "This sucker might go down" is hardly clever rhetoric (or economics for that matter). Republican candidate John McCain's grandstanding didn't help either.

It's good that democracy has had its say, bad that the initial euphoria when the deal was mooted a week ago has evaporated, leaving people to fret that the deal might not be enough/do the trick.

Money markets remain gummed up. At least over here the Bank of England has pumped more money into the markets over a much longer period of three months.

Banks with a year end in December will still be reluctant to hold too much of this on their balance sheets so we may not see much improvement until the New Year.

WPP to move tax domicile to Ireland?

No jokes about leprechauns or pints of Guinness or indeed Sir Martin O'Sorrell in Farm Street please.

WPP is worried that it will end up paying tens of millions in extra tax as the Government tightens up on what it sees as tax avoidance by UK firms with many overseas subsidiaries.

WPP, among many others, says it pays tax in the areas where the profits are generated so why should it pay twice?

United Business Media has already moved to Ireland but WPP is a bigger fish.
WPP says it will make an announcement later this week and it's possible it could yet strike a deal with the Treasury so that it stays in the UK.

Sky waits for competition ruling

BSkyB should find out today the result of its appeal against the Competition Commission's decision that it should sell down its 17.9% stake in ITV.

The deal has so far cost it £616m as ITV shares have plummeted.

Apparently the deal was hatched over a hamburger lunch between Rupert Murdoch and key executives at a media conference in Barcelona (what's wrong with the paella)?

Let's say there were six of them, that comes in at around £100m a burger.
Enough to give anyone indigestion.  If the decision goes against it, BSkyB is certain to appeal.

Three countries bail out Fortis

Financial journalists now and then amuse themselves by wondering what RBS could buy today with the $70bn it spent, along with allies Santander and Belgian bank Fortis, on ABN Amro last year.

Most of Wall Street for example.

Now Fortis, which looked out of its depth from the start, has had to be bailed out to the tune of $16bn by the Belgian, Dutch and Luxembourg governments although there's still no guarantee the bank will survive.

This is more bad news for RBS chief Sir Fred Goodwin who will have to tell his shareholders whether he's been paid by Fortis yet for the bits of ABN it was supposed to take and, if not, what he's going to do about it.

Most analysts think Sir Fred was only kept on to "integrate" ABN. This latest development will not be good for his career prospects, at RBS anyway.

RBS shares led the FTSE 100 down this morning (Monday) following earlier falls in Tokyo and Hong Kong.

The markets now think there's no quick fix for banks and they're also worried by the falls in the price of everything from oil to container shipping rates.
While this is good for inflation it also indicates that global demand is weakening sharply with even China pulling its horns in after the Olympics spending splurge.

It's going to be another interesting week.

Stephen Foster is a former news editor of Campaign, former editor of Marketing Week and Evening Standard ad columnist. He is a partner in Editorial Partnership and writes the blog www.editco.net and Politics of the Media for Brand Republic.