Tesco faltering and RBS cutting as more gloom is piled on the UK economy

Two bits of bad news for our flaying economy this morning.

Tesco reporting that it did not have a good Xmas with results for the six weeks to the 7th January showing a 2.3 percent drop in sales, excluding fuel and VAT sales tax, at British stores open a year.

The firm gave a warning about its profitability into 2012 saying that it expected minimal trading profit growth in the year to February 2013 as cash-strapped Britons have been cutting back spending on non-essential goods.

Its shares have taken a battering on the stock markets this morning after the news with its price dropping 12 percent to a 32-month low at 339.5 pence,wiping 3.7 billion pounds off its value.

Meanwhile tax payer owned RBS is to axe over 3,500 jobs in investment banking and sell or shut equities and advisory business under its 3-year plan to focus more on domestic retail and corporate banking.

According to Reuters,RBS said it is adapting to "significant new pressures" on its wholesale banking business, and the changes will make it more conservatively funded, more focused on customers and better able to deliver stable returns.

Top British banks 'would fail safety tests'

Four British banks and 17 in total from the EuroZone would not pass a 'too-big-to-fail' test.

The Financial Stability Board identified 29 banks,including Royal Bank of Scotland, HSBC, Lloyds and Barclays, so important to the world's financial system that they require more capital and closer surveillance than rivals, plus a detailed plan to allow them to be wound up without taxpayer help if they hit trouble.

One of the things agreed at the G20 summit in Cannes was a core capital requirement surcharge starting at 1 percent of risk-weighted assets and rising to 2.5 percent for the biggest banks,which would be phased in over three years from 2016.

Banks likely to need a 2.5 percent capital surcharge are Citigroup, HSBC , JPMorgan, BNP Paribas and Royal Bank of Scotland , according to a preliminary assessment according to a bank industry source,whilst Bank of America , Barclays and Deutsche Bank will be in the 2 percent category.

The implications for the banks named are that they must carry out far-reaching changes to prove that they will not have to be supported by the state if they do near collapse.

The end for Myers?

The final nail in the coffin of Lord Myers may well have been delivered this afternoon in front of the Treasury committee.

Already under pressure over what he knew and did not know about Sir Fred Goodwin's termination package and allegations of interests in off shore banking companies,the minister now faces call for his head after a letter published by Sir Tom McKillon suggested that he was well aware of what was agreed with the former RBS chairman.

The letter said that

evidence given by Lord Myners to the committee needed "clarification" and insisted the minister was told last October that the pension pot would be increased as a result of Sir Fred's early retirement.

whereas Myers told the committee last month that he had no idea of the size of the pension pot.

EDM wants to strip Sir Fred meanwhile his former bank is politically vetting customers

Paul Waugh has just reported on his excellent blog that an early morning motion has been put down to strip Sir Fred Goodwin of his knighthood.

It has been put down by Martin Salter and reads as follows

That this House expresses its indignation at the continued refusal of Sir Fred Goodwin to reduce his pension; believes that in order to preserve the integrity of the honours system his knighthood should be forfeited; and accordingly calls for an early meeting of the Forfeiture Committee to consider his case.

Meanwhile on the subject of RBS,a very strange story coming from Fraser Nelson in the Spectator which suggests that the nationalised bank is politically vetting potential customers.

Geoff Robbins, a Cheshire-based computer consultant, recently approached RBS to ask for a credit-card processing facility for his business. After the usual bankers’ inquisition, he was asked a question that knocked him for six: did he have any political affiliation? Did he know any MPs, councillors or mayors? It was a new question, the lady explained to him, which had been introduced soon after the government took control of RBS. She said, in his paraphrase, that ‘political influences may be used for corrupt purposes’.

A little far fetched but Fraser checked it out by posing as a customer who was told that it was down to the high amount of fraud and that fraud seems to go habd in hand with certain political thinking

When the boot is on the other foot

Many will of heard or heard of John Prescott's ramblings on the Today programme this morning regarding Sir Fred's pension.

Essentially the former deputy PM said that the government should take it back off him and dare him to sue.

Well Guido has kindly reminded us of when the boot was on the other foot.

When he was sacked as Deputy PM, for generally being an embarrassing incompetent, he kept hold of his pension perks - including additional pension contributions from taxpayers even though he wasn't working for them. Blair even let him keep two grace-and-favour homes, while stripping him of his departmental responsibilities. At the time opposition politicians railed at Prezza's "rewards for failure".

And another string to Goodwin's bow

With all the furore over Sir Fred Good win this morning and did I like John Prescott on Today,I have just found out that he was courtesy of centre right

Chairman of the Low Pay Commission, whose website describes its purpose as "advising the government on the National Minimum Wage".