United Kingdom

The U.K.'s new financial regulator will focus on how to solve the problem of large banks taking on excessive risk because they are too important to be allowed to fail, a top official said Thursday, Dow Jones Daily Bankruptcy Review reported. Andrew Bailey, who will be deputy chief executive of the Prudential Regulation Authority, said the reliance of banks on public funds was "the most unacceptable aspect" of the financial crisis that erupted in 2007. Solving that problem "will be the objective" of the PRA, he said in a speech in Manchester, England. The U.K.

Embattled tycoon Vincent Tchenguiz's property management company, Peverel Group Ltd, has entered administration after failing to repay a loan, Reuters reported. Bank of America Merrill Lynch demanded repayment within 24 hours of a 124.6 million pounds loan plus 11.4 million pounds in accrued interest, another Vincent Tchenguiz company, Consensus Business Group (CBG), said in a statement.

Shares in Southern Cross Healthcare, the UK's biggest care homes operator, have plunged 60% on news that financial problems are mounting, the BBC reported. The firm has appointed KPMG to look at restructuring options after cuts in local authority spending worsened its trading outlook. Southern provides care to more than 31,000 people, with the bulk of funding coming from the NHS and councils. The company said that budget cuts meant its rent burden was "unsustainable".

More than half the market value of Southern Cross Healthcare was wiped out on Monday after the UK’s largest care home operator said it was seeking to renegotiate the rent paid to its landlords and admitted cuts by local authorities in the amounts paid for elderly care would force a breach in its banking covenants, the Financial Times reported.

A court has rejected a “mechanical” definition of balance sheet insolvency in a ruling that could deter creditors from using this route to push struggling companies into collapse, lawyers have claimed, the Financial Times reported. On Monday the Court of Appeal upheld a lower-court ruling against bondholders in a Lehman Brothers mortgage-backed securitisation deal known as Eurosail-UK 2007-3BL.

Struggling British sportswear retailer JJB Sports is offering its landlords a share of up to 7.5 million pounds ($12.25 million) if they back its rescue plan, Reuters reported. JJB Sports, in which America's richest man Bill Gates holds a 5.5 percent stake, on Thursday set out the details of its second company voluntary arrangement (CVA) in as many years. It needs creditors, including landlords, and shareholders to back the plan or it will likely go into administration, threatening 6,300 jobs.

Last month, a tough negotiation between banks and the British government seemed to yield a victory for bonus-bashing politicians: Employees of two partly nationalized banks would be limited to upfront cash bonuses of £2,000 ($3,265) this year, The Wall Street Journal reported. What the government didn't announce was that many employees of the two banks—Royal Bank of Scotland Group PLC and Lloyds Banking Group PLC—will have just a short wait for bigger bonus checks.

Troubled music and books retailer HMV saw its chairman resign and its share price hit a record low yesterday after warning it would miss profit targets for the second time this year, The Scotsman reported. The company, which owns Waterstone's as well as a string of live music venues including The Picture House in Edinburgh, said trading had not improved since its last update in January when it warned that poor Christmas sales would leave profits at the lower end of market expectations.

Lloyds Banking Group PLC posted a net loss for 2010 because of its exposure to bad Irish loans, and warned that a slower U.K. economy and higher funding costs will put a lid on growth in net interest margins this year, The Wall Street Journal reported. The British bank said Friday its net loss was £320 million ($516.4 million), compared with a £2.83 billion profit a year earlier when Lloyds benefited from an £11.2 billion "negative goodwill" gain from its takeover of mortgage lender HBOS at the height of the financial crisis. Pretax, precharge profit—a figure closely watched by U.K.

Residential property prices in the U.K. plunged in the wake of the global financial crisis, but an unexpected side effect may be drawing investors into the rental housing market, The Wall Street Journal reported. Traditionally, the British have been predominantly home owners. Early in their careers, people would save just enough to make a down payment on their first home. Similar to the pattern in the United States, home ownership increased as mortgages became easier to get. But that all changed when U.K. banks, stung by deep losses tied to U.S.