Thursday evening business bulletin

Sep 25 2008 By Andrew Mernin

The FTSE 100 Index posted its first winning session of the week today as renewed optimism over the Fed’s massive bail-out plan drove financial stocks higher.

Banks and insurers were enjoying some healthy rises - including Barclays up 7% - helping to power the index 2% higher as it surfed upwards on a strong opening for Wall Street.

The Footsie closed up 101.5 points at 5197, with even more impressive gains being held back as miners declined alongside metals prices.

President Bush’s pleas last night for urgent action on the 700 billion US dollar (£380bn) plan appeared to have renewed hope among investors that politicians may be closer to agreement.

Barclays was the Footsie’s best performing bank, up 24.5p to 370p, with Royal Bank of Scotland not far behind, up 10.5p to 220.5p.

HBOS gained 3.5p to 184p, and its acquirer Lloyds TSB was also in the black despite a downgrade from broker Deutsche Bank. Shares added 6.25p to 273.25p.

But second-tier stock Bradford & Bingley, which announced plans to cut 370 jobs today, fell amid concerns over rising interbank lending rates and fears it will not attract a buyer.

The owner of investment banking hub Canary Wharf today revealed half-year losses of £469.9m as it said it had suffered amid the ``rapidly unfolding financial crisis" hitting many of its tenants.

Songbird Estates rents space to a raft of banking giants - including Lehman Brothers, the US headquartered group which last week filed for bankruptcy protection in a dramatic turn of events.

Lehman employed around 4,000 staff at its Canary Wharf office, covering more than one million square feet.

Songbird today said it was unclear about the financial impact of the bank’s demise. But it sought to reassure that the rental income from Lehman Brothers was protected for four years under an arrangement with AIG, the insurance giant which itself came close to bankruptcy last week before a US Government bail-out.

And it is hoped that this week’s sale of Lehman’s European operations to Japanese bank Nomura would see some of the office space retained, although Nomura has said it is hoping to take on 2,500 staff from the group at most.

Union leaders reacted with anger today to news of potential multimillion-pound bonuses for bankers at Lehman Brothers’ European offices.

Nomura, the Japanese investment bank that took over Lehman’s European enterprise this week, confirmed it was negotiating remuneration packages to retain top staff at the bank.

The Japanese firm did not reveal details of the terms but said they were based on ``a per performance pay scale" at ``a level we feel appropriate for top talent".

General secretary of the GMB union Paul Kenny said: ``GMB members will be shocked and outraged by this news.

``It seems that in banking there always was a culture of being paid a bonus if you succeed, but now it seems you get a bonus if the bank goes bust.

``There is no reason for these bonuses to be paid. It is high time that the Government and the Financial Services Authority get their acts together to put a stop this."

The proposed bonuses come just four days after Barclays announced Lehman’s US staff would also receive 2.5 billion US dollars in bonus payouts at the end of the year.

The pound at 5pm was US$1.8411 compared to US$1.8506 at the previous close while the euro at 5pm was £0.7952  compared to £0.7924 at the previous close.