Monday morning business bulletin

Jun 16 2008 By Andrew Mernin

Banking giant Barclays today fuelled speculation that it is to seek a £4bn cash injection from overseas investors.

The group said the issue of equity to new and existing investors was under ``active consideration" after weekend press reports that it was holding talks with six potential so-called sovereign wealth fund investors.

Barclays also sought to reassure over trading, stressing that profits before tax in May were ``well ahead" of last year’s monthly run rate.

Its retail and commercial banking divisions were delivering ``strong growth in profits", while investment banking profits were in line, added Barclays.

News of a possible capital-raising exercise by Barclays follows major rights issues from the Royal Bank of Scotland - which raised £12bn - and Halifax Bank of Scotland, whose shareholders are being asked for £4bn.

Soaring costs and falling consumer confidence could herald a near-20% rise in business failures during the next two years, a leading accountant warned today.

The number of companies going under in 2009 could be the highest since the dotcom bubble burst in 2002, according to BDO Stoy Hayward’s latest forecasts.

It predicts an 18% rise in business insolvencies to 19,124 next year, compared with 16,168 in 2007.

Pressure from sky-high oil costs - which hit a record of almost 140 US dollars a barrel earlier this month - as well as banks tightening up on lending following the credit crunch is also set to hit firms, BDO says.

Sentiment has been damaged by falling house prices and the accountant believes the outlook for businesses has worsened as inflation risks reduce the chances of interest rate cuts. Some City traders are even betting on rising rates this year.

Wine warehouse chain Majestic Wine today said trading had bounced back after a slowdown in April caused by a sharp hike in alcohol duty.

The group said a rush to buy alcohol in March before the Budget changes came into effect hit trading in April, leaving growth in like-for-like sales in the 10 weeks to June 9 at 0.8%.

But comparable sales since April had grown by a ``significantly stronger" 4.4%, according to Majestic.

News of the group’s recent trading came as it posted a 3.4% rise in full-year pre-tax profits, to £16.7m for the 12 months to the end of March.

The pound at 9am was US$1.9522 compared to US$1.9499 at the previous close while the euro at 9am was £0.7879  compared to £0.7884 at the previous close.