Business News Weekly Roundup, June 05 2015

Lloyds hit with record fines

Lloyds Banking Group has been fined £117m for mishandling payment protection insurance complaints by the City watchdog.

The bank has since cut £350,000 from the bonus of its boss António Horta-Osório. The fine comes just one month after Clydescale Bank was fined £20.7m for similar failings.

Lloyds was also hit with substantial fines of £218m last year by the Financial Conduct Authority and US regulators for rigging of international banking lending rates.

In an interview with the BBC, Mr Horta-Osorio said: "Whilst our intentions were right, we made mistakes in our handling of some PPI complaints. I am very sorry for this.

"We have been working hard with the FCA to ensure all customers receive appropriate redress. That process is now substantially complete. We remain fully committed to improving our operational procedures and ensuring we do the right thing for our customers."

Greece debt payment delayed

An extra month lenience has been granted to the Greece debt to pay US$300m debt repayments by the International Monetary Fund (IMF).

The Athens government will now have until 30 June to pay the debt and will bundle all four of its June debts together. The last country to bundle together payments to the IMF was Zambia in the 1980s. The decision to change the date shocked the IMF. Just three hours before the announcement, the fund’s managing director, Christine Lagarde, said she felt “confident” that the Greece debt would be paid by Friday.

The European Commission has defended Greece’s decision and told reporters that it was in line with IMF rules and has happened before.

Greek Prime Minister Alexi Tsipras has long argued Greece debt relief must be part of any new agreement to complete its current €172bn bailout.

Speaking to the New York Times, Simon Tilford, deputy director of the Center for European Reform, believes this to be a straight act of defiance: “What they’re saying to the creditors is, You’re going to have to blink, we’re not prepared to sign up to more of the same austerity and a continuation of what we’ve been going through for the last year.”

FTSE heads for worst week in six months

The FTSE 100 hit an intra-day low today (Friday June 6) of 6,785.15 points, the lowest level in two months. The index was down 2.7 percent so far, its poorest weekly showing since mid-December.

The top decliners included British food retailers including retailers Morrison and Tesco, which fell 2.3 percent and 0.8 percent respectively after Deutsche Bank cut its target price for both supermarkets.

"We've seen no improvement in UK grocery market growth since the tentative rebound experienced in December and January faded. We lower our calendar 2015 estimate for UK market growth from 1.5% to 1.0%," the bank commented.

Vodafone Group fell 2.3%, as the company put an end to speculation that a merger with Liberty Global was on the cards, and said it was considering only an exchange of selected assets.

The blue-chip FTSE 100 index was down 68.44 points, or 1% at 6,790.80 points by 10:52 GMT, in line with weaker European share indexes after Greece debt payment.