Swiss bank's head rolls
UBS wasn’t joking when it announced on April Fools’ Day sub-prime related losses of $19bn in the first quarter of the year, taking the Swiss bank’s total credit crunch losses to around $37bn – the biggest yet from the financial sector. A $15bn rights issue and chairman Marcel Ospel’s head on a plate were the solutions provided by UBS, selecting general counsel Peter Kurer to succeed Ospel. Ousted UBS president Luqman Arnold – a senior non-executive at UBS and chairman of investment outfit Olivant which has a 0.7% stake in UBS – wrote to the bank criticising Kurer’s elevation as he was not independent. Arnold also suggested the bank spun off its asset management business to raise cash and split its investment bank from its private bank – an idea supported by several key shareholders. Arnold wrote that the losses were “a source of particular shock, given UBS’s historic reputation for strong risk management and the strategic imperative to protect its core wealth management businesses.”

Gilty pleasure
The Bank of England is said to be close to agreeing a deal that would allow beleaguered banks to swap their mortgage-backed assets for government bonds, which they could use as security for loans from other banks. It is not yet known how the taxpayer will be protected, nor what the implications are for Libor if interbank loans are effectively supported by gilts, rather than the banks’ own balance sheets.

Sporting chance
JJB Sports will close one-fifth of its stores after the retailer’s pre-tax profits fell by a staggering 72% to £10.8m on sales of £811.8m. The company took a £25m hit for its restructuring programme, but will open more combined fitness club/superstores.

Beijing buyer
BP has confirmed that a Chinese state-owned entity now owns just under 1% of its shares, but said it could not confirm which entity – widely reported in the press as the State Administration of Foreign Exchange – because it was unclear from covenants relating to the deal. It added that the stake had been built up over the last six months.

No rocky II
Bradford & Bingley said it was not planning a rights issue after reporting a credit crunch-related halving of pre-tax profits to £126m in 2007, from £247m the previous year, which stirred fears of another Northern Rock. B&B said its capital base was strong and that its business was fully funded to 2009.

New BoE cut
The Bank of England cut the official Bank rate by one-quarter of a percentage point to 5.0% to try to meet the 2% target for inflation on the consumer price index, which rose to 2.5% in March.

UK downgrade
Alistair Darling has played down the significance of April’s downgrade of UK growth prospects by the International Monetary Fund to 1.6% in 2008. The Chancellor said he was sticking to his existing forecast of 1.75%-2.25% for this year, adding that there was ground for optimism amid forecasts of serious economic downturn.

TECHNICAL UPDATE
Pensions
The Pensions Regulator is to be given tough new powers under proposals released by the government. It will have the ability to “pierce the corporate veil” and reallocate liability for funding a defined benefit scheme without the need to show intent or lack of good faith. “This is a major lowering of the threshold for the Regulator to use its powers,” said Clive Pugh, a partner with law firm Burges Salmon.
www.burges-salmon.com

Tax
FTSE-100 biotechnology group Shire Pharmaceuticals announced that it is moving to Ireland for tax purposes, via a scheme of arrangement. The CBI expressed c oncern that “an uncompetitive tax system is spoiling the UK’s attractiveness as a place to do business, and that other internationally-mobile firms will follow Shire’s path.”
www.shire.com
www.cbi.org.uk

Auditing
The International Auditing and Assurance Standards Board has issued rules that require management to provide auditors with a clear written statement that they have provided them with all the information they need.
www.iaasb.org