Monday lunchtime business bulletin

Sep 29 2008 By Andrew Mernin

The FTSE 100 Index slipped below the 5000 barrier today after another gruelling session for top flight banking shares.

Weaker oil and mining stocks added to the pressure as the Footsie reached mid-morning 149.3 points lower at 4940.2 a drop of 3%.

Royal Bank of Scotland was the hardest hit of the financial stocks - down 14% - after its ABN Amro takeover partner Fortis was rescued in a three-way Government bail-out.

As part of the deal it emerged that Fortis must sell its stake in ABN, bought as part of the RBS-led consortium’s takeover last year. The news unsettled RBS investors, with the stock down 14% or 29.9p to 178.1p.

The nationalisation of Bradford & Bingley added to the sector’s pain, particularly as Spain’s Santander will gain a greater presence in the UK market through the acquisition of B&B’s branches and savings book.

Merger partners HBOS and Lloyds TSB were both lower, down 19p at 154.3p and 36.5p to 214.5p respectively. Even the likely bail-out of the US financial sector failed to boost shares, with analysts wary of the conditions attached to the deal.

The Co-operative Bank today launched its most extensive ethical policy consultation for two decades.

Two million customers will be sent questionnaires asking for their views on the bank’s policy on a range of issues, including international development, ecology and social enterprise.

The Co-op wants to use the answers to update its ethical policy, which is due to be published next year. And with uncertainty stalking the financial sector, the bank claimed its ethical stance gave it a unique advantage over competitors.

Chief executive David Anderson said the business said: " In the current economic climate we believe it is more important than ever to take an ethical approach to business."

Shares in Jessops surged today after the under-pressure camera retailer unveiled a deal to provide crucial long-term funding.

The announcement of an agreement with lender HSBC came despite the chain reporting a fresh deterioration in sales at its stores.

The Leicester-based group said its existing banking facilities, set to expire at the end of this year, will now run to the end of December 2011 at "significantly reduced interest rates".

An existing £7m deferred financing fee due at the end of this year will be cut to £5m, with HSBC granted warrants over a further 5% of Jessops’ shares. In May, Jessops said its bank debt stood at £54.8m.

Shares in the retailer, which have plunged from 150p less than two years ago to less than 2p, jumped almost 50% as the lifeline eased worries over its financial position.

The pound at midday was US$1.8026 compared to US$1.8384 at the previous close, while the euro at midday was £0.7963 compared to £0.7933 at the previous close.