February Update: Essential News

Zirp time?
The Bank of England cut Bank Rate by 0.5% to 1.5% on 8 January, saying that “the
world economy appears to be undergoing an unusually sharp and synchronised
downturn”. It added that sterling’s depreciation “may help to moderate the
impact on UK net exports of the slowdown in global growth.”

Citi split
Citigroup will split into two businesses, Citicorp and Citi Holdings, after
reporting a $8.2bn loss for Q4 2008 ­ and a full-year 2008 net loss of $18.7bn ­
on the back of heavy investment writedowns across its portfolios. Chairman Sir
Win Bischoff stepped down from the board on the news.

Obama sworn in
Barack Obama was sworn in as the 44th president of the United States of America
on 20 January, watched by a crowd of millions of spectators. In his speech,
president Obama said the state of the economy called for “action, bold and
swift” and said the government would create new jobs.

Not just any food cull
Marks & Spencer intends to close 25 of its food-only shops and two main
stores with the potential loss of as many as 270 jobs, after revealing that
group sales were down 1.2% in the three months to end-December. Like-for-like
food sales were down 5.2% for the period.

BAA gets runway
Airports operator BAA received government approval to build a third runway at
Heathrow, just days after Greenpeace said its anti-third runway coalition bought
some of the land it proposed to build on. BAA chief executive Colin Matthews
says the decision will help the UK “maintain the direct connections to the rest
of the world on which our prosperity depends.”

Evening Standardski
Daily Mail & General Trust division Associated Newspapers has sold its
Evening Standard newspaper to Russian businessman and former KGB agent Alexander
Lebedev for a reported £1. DMGT arm Associated Newspapers will take a 24.9% sta
ke in a new company established by Lebedev to hold the newspaper.

AIG ends Man Utd sponsorship
American International Group will end its contract as Manchester United Football
Club’s main sponsor, Bloomberg reports citing a statement it says AIG emailed
it. The recently nationalised insurer told Bloomberg that it had been in
“active discussions with the club” regarding its current contract, which it
signed in 2006 and is apparently worth $26.6m in total. The contract expires in
May 2010.

KMPG four-day week
Accounting giant KPMG is to offer its 11,000 UK staff a four-day week and
partially-paid sabbaticals of between four and 12 weeks, in its efforts to
control costs but avoid making redundancies amid recession. Other top accounting
firms such as Deloitte, Grant Thornton and PKF have said they will cut jobs.

TECHNICAL UPDATE
– Auditing
Big Four auditors met with the Treasury to discuss the possibility of bank
audits throwing up ‘going concern’ issues that could trigger a run as seen with
Northern Rock in 2007, Accountancy Age reported in mid-January. The Financial
Times subsequently reported that the FSA has had similar talks with major audit
firms regarding their opinions of banks’ accounts.
Eversheds
partner Robin Johnson said, “If a primary lender has qualified accounts, how can
a corporate not also qualify its accounts, as counterparty risk and liquidity
risk on the corporate’s finances is directly affected by the bank’s ability to
lend.”
www.accountancyage.com

– Tax
Livewire Telecom won a case in the High Court for repayment of VAT worth £2.4m,
after HM Revenue & Customs declined to refund the money in the wake of a
fraud perpetrated against the company, which was advised by
Vantis.

– SEC and IFRS
Incoming SEC chairman Mary Schapiro said she would not be bound by the
regulator’s recently-published IFRS ‘roadmap’ that is designed to see US
companies adopt international reporting standards. Schapiro was recently named
by Barack Obama to succeed Christopher Cox.
www.financialdirector.co.uk