Elderly Tourist Prospects Grow For Greece


Business news and markets: as it happened

Stephen Hester is to step down as chief executive of state-backed Royal Bank
of Scotland later this year, giving a new boss time to prepare for the
lender’s privatisation process.

• Bond bubble ‘biggest threat to global financial

• Greece reclassified as ’emerging market’ by MSCI

• UK jobless claims fall to two-year low in May

• Money continues to flow out of emerging markets

• Global markets continue slide amid fears of
tapering QE

• Greeks
in shock after state broadcaster taken off air


19.32 On that note, we’re shutting up shop on the live blog for today.
Thank you for reading and commenting. For more on Stephen Hester’s
departure, follow Telegraph
Finance and visit;

story: Stephen Hester ousted as chief executive of RBS (LSE: RBS.Lnews)

Hester: the man with the toughest job in UK banking

chairman: RBS has gone through ‘profound changes’

could replace Stephen Hester at RBS?

19.28 According to Ladbrokes , Nathan Bostock, RBS’ head of
restructuring and risk, is odds-on favourite to replace Stephen Hester.
Here’s Ladbrokes (LSE: LAD.Lnews) ‘ latest betting on the new RBS chief:

Nathan Bostock 1/2

Richard Meddings 4/1

Rory Cullinan 4/1

Cameron Clyne 6/1

Ellen Alemany 10/1

Chris Sullivan 10/1

Bruce van Saun 14/1

Ross McEwan 20/1

Mark Catton 25/1

Rory Tapner 25/1

Jim Brown 33/1

Ron Teerlink 33/1

Sunil Lamlani 33/1

Rich Ricci 100/1

Bob Diamond 250/1

Sir Mervyn King 500/1

19.21 On those job cuts, the BBC’s Douglas Fraser tweets:

19.20 Sky also reports that there are more job cuts in the offing at
RBS , with 2,000 jobs set to go in the investment bank tomorrow. Hampton
said that RBS is continuing to reduce parts of its investment bank, but it
is smaller than it was.

19.18 Hampton admits on Sky News that it’s an unusual contract that
allows for Hester to be paid £1.6m despite the fact that it is – apparently
– a mutual decision that he will go. It was written in the particular
circumstances of the chaos at the bank, he adds.

Hampton says that Hester has done five extremely gruelling years at RBS and it
is probably time for a change for him. It is very much an orderly handover,
he says.

19.14 Philip Hampton is getting a grilling from Jeff Randall on Sky
News (NasdaqGS: NWSnews) at the moment. Rob Davies tweets:

19.09 And just yesterday, hedge fund manager Davide Serra was pictured
entering Downing Street with a presentation on RBS, entitled “the case
for improving viability”, which appeared to recommend that RBS
become more like a Canadian bank .

The front page of the briefing document stated that RBS, which is 81pc owned
by the taxpayer, was “very similar to the large Canadian banks” and appeared
to suggest a series of options for restructuring the business.

Mr Serra is known to be close to the Government and last month spoke at the UK
Trade and Investment conference in London that was attended by David
Cameron, as well as several senior European politicians.

Davide Serra, co-founder of Algebris Investments, was pictured
clutching a presentation on the Royal Bank of Scotland

19.04 Speculation over the future of RBS has been ratcheted up of late
as we await the imminent findings of the Parliamentary Commission on Banking
Standards’ final report.

Just last week, there were suggestions that the Government-appointed
commission could recommend that RBS
be split into a “good bank” and a “bad bank” .
The Commission is said to have investigated the potential of a separation of
the taxpayer-backed lender, which is 81pc owned by the state, as part of its
work on how to make Britain’s banking system safer and less prone to

18.56 Treasury sources have told ITV (LSE: ITV.Lnews) ‘s Business Editor Laura Kuenssberg
that a privatisation
of RBS is not imminent . Earlier this year, Stephen Hester was
slapped down by 10 Downing Street for suggesting
that the state-controlled bank could be sold off within two years .
In February, he said that the core bank was much closer to being in good
financial health and that the sale of the bank was “within reach”.
But hours later, the Prime Minister’s official spokesman said he wanted to
state “emphatically” that the Government was not working towards a float by
any specific date.

18.44 The Telegraph ‘s James Quinn has just published
his latest take on the departure of Stephen Hester. He writes:

Stephen Hester has been ousted as chief executive of the Royal Bank of

Mr Hester, who has run the bank since the height of the financial crisis in
November (Xetra: A0Z24Enews) 2008, has been asked to stand down by the state-owned bank’s board.

The board’s decision is a direct result of the Treasury, led by Chancellor
George Osborne, telling the bank it intends to privatise its 81pc stake in
RBS by the end of 2014.

Sir Philip Hampton, chairman of RBS, admitted the decision to ask Mr Hester
to step down by the end of 2013 followed discussions with the Treasury.

“The acceleration of considering succession for a CEO role arises
largely from the Treasury’s determination…where it can be returned to the
private sector by the end of 2014.

“We [the board] did agree that with there would be a significant
question mark over how many more years he [Mr Hester had to do.”

Sir Philip admitted that he had discussed the issue of succession with UK
Financial Investments, as he had with other investors.

“The board has been thinking about succession for a while,” said
Sir Philip, who said the announcement of the decision followed a meeting of
RBS’s board in London this afternoon.

Mr Hester said: “The board want to put in place a fresh face for
privatisaiton. It’s an entirely logical thing for the board to want to do.”

He went on to say he was “co-operating amicably” and would “stick
around” as long as the bank needed him.

18.37 Given that Hester had arguably the toughest job in banking, The
Economist’s banking editor Jonathan Rosenthal is perplexed by his treatment:

18.35 Earlier this year, our banking editor Harry Wilson wrote
that Stephen
Hester was slowly turning the tanker around at RBS , despite
political critics doing their best to undermine the project.

Running a bank is a difficult job. Running a big bank is even tougher. And
running a big bank that is majority owned by your own government with an
economy bumping along at zero growth following the greatest financial crisis
in modern history could be the definition of impossible.

Almost from the moment he first stepped into the chief executive’s office
of Royal Bank of Scotland, following its multi-billion pound taxpayer
rescue, Stephen Hester has been under siege.

Indeed, it is likely had he known what he knows now, the former chief
executive of British Land (LSE: BLND.Lnews) might have carried on with his day’s shooting and
ignored Alastair Darling’s desperate call pleading with him to take the job
in mid-October 2008.

At the time Hester accepted, it must have seemed a relatively sure bet. In
and out in five years with a clear strategy to fix an utterly broken bank.
Politicians would surely welcome the fact that a leading chief executive had
taken on the poisoned chalice and was willing to do the hard yards getting
the institution back in shape.

18.31 More reaction is filtering through to Stephen Hester’s decision
to leave the helm of RBS. Lord Oakeshott, the former Liberal Democrat
Treasury spokesman, says:

Stephen Hester steadied the ship but it’s still full steam astern on
business lending. The Treasury must install a successor to get desperately
needed loans out to small business for investment and jobs, not flog the
shares off for a song.

18.28 Here, you
can watch a video interview with Stephen Hester about his decision
to step down from RBS.

18.24 Philip Hampton, RBS’ chairman, is just beginning his search for a
new chief executive. But here at Telegraph Towers, we’ve helped him along
with this gallery
of possible runners and riders for the top job at RBS.

Among those we’ve suggested are Brunce Van Saun, RBS finance director; Nathan
Bostock, RBS’ head of restructuring and risk; and Richard Meddings, Standard
Chartered finance director.

Philip Hampton, RBS chairman, is tasked with finding a new chief

18.21 Let’s get some Twitter reaction to that call with the RBS chief
executive and chairman.

18.15 Hampton and Hester have now finished taking questions.

18.13 Hester describes his time at RBS as a “qualified victory”,
adding the fact RBS is worth anything today is a function of the team
working there.

18.11 Hampton says one of Hester’s great achievements was to make the
challenge at RBS less complicated. The challenge of taking the bank back
into private sector is a challenge that will appeal to quite a few people,
he adds.

18.08 If Hester were to stay through privatisation, that would mean
being in job for nine or ten years – a tough ask, says Hampton.

18.07 Hester says plans to make sure handover as smooth as it can be.
Bank wants to make sure that profit in last quarter is a harbinger of things
to come and that ship is steady as he can make it for his successor. After
that, he’ll take a holiday.

18.06 Hampton says taking bank back into private sector is a challenge
that will attract high calibre candidates. He hopes that less political
scrutiny will be brought to bear on RBS once it moves back into the private
sector. He adds that RBS expects to pay Hester’s replacement on a commercial

18.04 Hester says he wants the bank to be successful and says it’s an
entirely legitimate moment to plan for a change. Hampton says they haven’t
started the search for a successor yet, but will start the search as of
today. He adds that Stephen’s contribution has been outstanding and will be
a difficult act to follow. The shortlist will be just that, he adds.

17.58 Has the decision been influenced by banking standards commission
views on RBS, they are asked. Hampton says they’ve been engaged with the
commission, but the two issues are completely unrelated.

17.57 Hester repeats that this has been a bruising and difficult job.

17.55 Hester says the decision was not foisted upon him. He wanted to
do what’s right for RBS. This is a board decision but am I comfortable with
rationale, yes I am, he says. Hampton says that there’s nothing unusual
about the financial arrangements around Hester’s departure; Hester is having
his contract honoured to the letter.

17.53 Hampton says the company’s got a desire to get back in private
markets and we do need to have a chief executive with a big period in front
of them rather than a big period behind them. That’s not to take away
Hester’s immense achievement, he adds, saying his performance in getting
bank up from wreckage at back end of 2008 was a remarkable management
achievement. They are in position to contemplate privatisation because of
what Hester has done, he says.

17.48 Philip Hampton is taking questions now about Stephen Hester’s
decision to step down. He is asked when the decision was made and when
was he informed?

The board has been thinking about succession for a while, Hampton says, and
thinking about in recent weeks in light of government desire to begin
privatisation process towards back end of next year. There was a board
meeting this afternoon.

Hester says his position is simple – that the board want to put in place a
fresh face for privatisation and this window of relative calm is a good time
to do it. He says he will stick around for as long as the board needs him
and that he wishes the company all the best.

17.45 There’s been a flurry of reaction on Twitter to Stephen
Hester’s decision to step down . Here’s a taster:

17.40 The Chancellor adds that RBS is now safer, stronger and
better able to support its customers . He now wants the bank to focus on
providing greater support to the country’s economy.

17.37 Chancellor George Osborne has commented on Stephen
Hester’s decision to step down . He says that Mr Hester had made an
important contribution to Britain’s recovery from the financial crisis,
adding it is now time to move on from the “rescue phase” at RBS.

17.33 Here’s a little more about what RBS’ board had to say about
Stephen Hester’s time at the bank :

Stephen was appointed to the Board in October 2008 and to the position of
Group Chief Executive in November 2008. Since then he has led the rescue of
RBS, its recovery plan and one of the largest and most complex company
restructurings ever seen. Nearly five years into the strategic plan, RBS has
made huge progress in becoming a strong bank, with balance sheet and funding
transformed and the business fundamentally re-shaped. It is now beginning to
prepare for possible share sales by the UK Government. Accordingly, both the
Board and Stephen agreed this provided a window to begin a transition of

17.29 Stephen Hester has said that it is sensible for RBS to
look forward to privatisation with a “fresh face” able to commit
to many years. He adds that he would have liked to have stayed longer and
privatisation would have been a “fitting end” to his endeavours.
But he acknowledges: “It’s been a very bruising and difficult job so I
don’t have to be prised away reluctantly.”

17.25 The search for a successor to Stephen Hester at RBS will
begin immediately, led by the bank’s chairman. Mr Hester will continue to
lead the bank until December 2013 to ensure a smooth handover, unless a
successor is in post before then.

In line with his contractual arrangements, he will receive a payment in lieu
of notice of £1.6m, representing a year’s pay and benefits. He will not
receive a bonus for 2013, which is also in line with contract terms.

17.19 Here’s what Mr Hester had to say about his decision to step
down :

It has been nearly five years since I joined RBS after the bank was rescued
by the Government. In that time we have reduced the bank’s balance sheet by
nearly a trillion pounds, repaid hundreds of billions of taxpayer support,
and removed the imminent threat that this bank’s size and complexity posed
to the UK economy. All the while we supported 30 million customers every day
to help them manage their finances.

We are now in a position where the Government can begin to prepare for
privatising RBS. While leading that process would be the end of an
incredible chapter for me, ideally for the company it should be led by
someone at the beginning of their journey. I will therefore step down at the
end of this year to allow a new CEO to lead the Group in this next stage.
Over the coming months I will put all my effort into completing the final
recovery and continuing to build a strong customer focused culture. I thank
all of the people of RBS for their support and wish them all the best for
the future.

Meanwhile, Philip Hampton, chairman of RBS, said:

On behalf of the Board I would like to thank Stephen for his leadership and
dedication over the past five years. In the midst of a major crisis, he
accepted the challenge of stabilising the bank, turning it around, and
putting us in a position where we can begin to plan for returning the
organisation to the private sector. His achievements have been considerable.

We will continue Stephen’s work to remove the barriers to privatisation
over the next year and continue to do everything possible to support the
British economy. Stephen will be leaving RBS in a vastly improved position
that many would have thought impossible five years ago.

17.17 In the bank’s statement, it says Mr Hester is stepping down now
to allow an orderly succession process that will give a new chief executive
time to prepare for the privatisation process and lead the bank in the years
that follow.

“Stephen was unable to make that open-ended commitment following five
years in the job already,” said the bank.

Stephen Hester is stepping down as chief executive of RBS.

17.12 Hot off the wires. Stephen Hester will be stepping down as
chief executive of RBS later this year.

17.03 There’s a story doing the rounds today that Britain’s financial
watchdog is looking into reports that traders manipulated benchmark
foreign exchange rates that are widely used by companies and funds. Bloomberg
broke the story. It spoke to five dealers with knowledge of the practice and
said that traders at some of the world’s biggest banks had manipulated
foreign exchange rates.

A spokesman for the Financial Conduct Authority said that it was aware of the
allegations and had been speaking to the relevant parties.

it comes at a time of increased global scrutiny of financial benchmarks after
the discovery that some other rates, such as Libor, had been rigged.Trades
on the near $5 trillion a day forex market are not subject to the same
degree of regulation or oversight as instruments listed on exchanges.

16.48 Back in London, worries over the political situation in the
Greece have conspired to send the FTSE 100 (FTSE: ^FTSEnews) lower this afternoon.
Despite seeing early gains, the blue-chip index has closed down 40.63
points, or 0.6pc, at 6,299.45 and the mid-cap FTSE 250 (FTSE: ^FTMCnews) has finished
0.3pc lower at 13,771.79, a fall of 34.31 points.

16.31 Greece’s central bank governor has said today that the country’s
bank rescue fund will have as much as €7bn left over after the country’s
four big banks are recapitalised.

Greece’s four biggest banks need €27.5bn to plug capital holes after losses on
government debt writedowns and bad loans following the financial crisis. The
money will mostly come from the Hellenic Financial Stability Fund.

If there is any money left over, this could be used if there was any
deterioration in the country’s economic conditions.

15.47 Jens Weidman and Joerg Asmussen went head-to-head
again today at the German Constitutional Court hearing on the legality of
the ECB’s unlimited bond buying programme, OMT.

Asmussen , a member of the ECB’s innermost circle, insisted that the
Bank had not over-stepped its mandate because OMT was only meant as a tool
to ensure its monetary policy works, and not a means of bailing out

For his part, Weidmann argued that any purchases carried out under OMT
would spread the risk of losses to all eurozone taxpayers. He added that he
would favour limiting the ECB’s mandate to prevent it from posing any risks
to eurozone stability, but admitted that this would be difficult in

Bundesbank chief Jens Weidmann and ECB Board member Joerg Asmussen (R)
wait for the start of the hearing at the Constitutional Court in Karlsruhe
on Tuesday. Photo: Reuters

15.35 Lloyds bosses have been summoned by MPs to explain the
collapse of the bank’s deal to sell around 630 branches to the Co-operative
bank next week.

Chief executive Antonio Horta-Osorio and chairman Sir Win Bischoff have
been ordered to appear before the Treasury Select Committee next week as
part of an inquiry into the failure of the deal thought to be worth £750m.

15.27 Electronic cigarettes are to be subject to the same
regulatory standards as non-prescription medicines in Britain, after the
regulator found the current offerings are not good enough. The Medicines and
Healthcare products Regulatory Agency said it found contaminants in some
electronic cigarette products.

15.18 Bill Gross at bond giant Pimco doesn’t buy the line that
the Fed will taper asset purchases in the next few months

…but Steve Collins at London Capital Asset Management is
not convinced.

15.07 Michael Casey of MarketWatch has provided a helpful
analysis of the rout in emerging market currencies . He argues that
for most emerging markets, this is in fact a welcome development, as it will
help boost their exports in a time of slowing growth in China.

Except, that is, in the cases of Turkey, Brazil, India and South Africa (TIBS)
– where domestic political and economic problems make them more vulnerable
to outflows of money. This is why the central banks in these economies have
moved to shore up the currency, unlike in other emerging markets.

Read his piece here .

14.42 Think tank Open Europe has made some interesting
observations about the Greek government’s abrupt shut-down of the state
broadcaster ERT. In their own words:

• The decision to shut down ERT is clearly linked to Greece’s
commitment to firing 15,000 public sector workers by the end of next year
under its EU-IMF bailout deal, although it’s up to the Greek government to
choose where to cut. Therefore, it’s probably not entirely fair to blame the
Troika for this (admittedly pretty extraordinary) decision;

• The fact that the Greek government prefers shutting down ERT
altogether and then opening a brand-new company, instead of trimming the
existing company down, could be seen as further evidence of how difficult it
is to fire public sector workers in Greece – even in cases where
inefficiency and waste are evident (at least according to what the Greek
government spokesman said);

• On the domestic politics front, Greek Prime Minister Antonis
Samaras has decided to go ahead with the closure of ERT despite open
opposition from his coalition partners – PASOK and Democratic Left. The
latter now want to submit a draft bill to scrap the decision, meaning that
there is a risk of a coalition split – unless someone blinks.

ERT workers have occupied the broadcasting company’s headquarters in
protest. at its surprise closure. Thousands rushed to the broadcaster’s main
headquarters in a northern Athens suburb shortly after the announcement to
show their support. Photo: ETA

14.34 The Dow Jones Industrial Average has experienced a strong
start to trading, having advanced about 0.7pc in early deals in the US. That
positive move has been experienced on a more muted scale in London, with the FTSE
100 currently up some 0.2pc.

14.28 Mr Haldane also singled out cyber security as a major
risk to the financial system – saying that British banks fear a cyber
attack more than they do the euro crisis.

You can see why the financial sector would be a particularly good target
for someone wanting to wreak havoc through the cyber route.

14.12 Closer to home, the Bank of England’s Andrew
Haldane has told the Treasury Select Committee that the biggest risk to
financial stability would be a spike in bond yields should the bond bubble

If I were to single out what for me would be the biggest risk to global
financial stability right now, it would be a disorderly reversion in
government bond yields globally.

We’ve seen shades of that over the last two to three weeks.

We have intentionally blown the biggest government bond bubble in history.
We’ve been vigilant to the consequences of that bubble deflating more
quickly than we might otherwise have wanted. That’s a risk we as FPC need to
be very vigilant to.

Andrew Haldane, the Bank of England’s executive director for financial

13.56 Staying in Greece , there are reports that police have
entered the state broadcaster’s building, where some journalists are staging
a sit-in. The government has announced that it plans to slash the workforce
to 1,000, about a third of current staff.

13.37 Yields on Greek 10-year bonds have crept near 10pc as the
markets weigh up the slew of bad news coming out of Athens in the past 48

The government’s failed effort to sell off the state gas supplier Depa was
swiftly followed by the shock announcement that the state broadcaster would
be taken off the air with immediate effect last night. Then, to top it all
off, Greece was reclassified as an emerging market by equities index group

13.25 Rolls-Royce is investigating an engine problem which
caused an All Nippon Airways flight to be aborted. ANA was flying on of its
new fleet of Boeing Dreamliners, which use Rolls’ Trent (BSE: TRENT.BOnews) 1000 engines. Rebecca
Clancy has more details.

decided to stop a flight from Ube in west Japan to Tokyo after the right
engine of the Boeing (NYSE: BAnews) 787 failed to start. ANA’s Dreamliners are powered by
Rolls’ Trent 1000 engines.

“We are aware of this issue and are working closely with ANA to
understand it and support them,” a Rolls-Royce spokesman said.

The latest Dreamliner incident comes less than two weeks after Japanese
Airlines (JAL) was forced to use an alternative aircraft following
battery-related problems aboard a Boeing 787.

The problem was put down to Boeing’s faulty maintenance as two small holes
on the container – necessary for air ventilation to prevent overheating –
were mistakenly sealed when it repaired the battery system, said broadcaster
Kyodo, citing JAL, and occured just one day after it resumed full service of
the troubled 787 fleet.

13.16 Meanwhile Germany’s deputy finance minister Steffen Kampeter has
come out in defence of the ECB, saying that the merits of holding the
hearing were “highly doubtful” .

13.09 Joerg Asmussen , the senior ECB official who yesterday
testified to the German Constitutional Court in defence of the ECB’s
unlimited bond buying plan, has today warned against tinkering with the EU
Treaty by trying to give a legal definition of what is allowed under the
Bank’s bond buy plans.

We [in Germany] have a tendency towards rule-bound systems.

But if you want to discuss Article 123 of the EU Treaty, then there will be
a broad discussion what else could be changed, even in terms of the mandate
of the central ban

[The current mandate] is a good one.

13.05 Back in the FTSE 100 , BSkyB (LSE: BSY.Lnews) is up 2.8pc , one
of the biggest risers on the blue-chip index. Traders have driven the shares
higher on hopes the spin-out of News Corp’s newspaper division could lead to
a renewed takeover approach from Rupert Murdoch’s group.

13.03 Take a look at Szu Chan’s summary of today’s
jobs data in five nifty graphs .

12.26 It is widely believed that the troika forced the hand of the
Greek government to close down the state broadcaster , especially since
the move came a day after Athens’ efforts to sell off the state controlled
natural gas supplier failed to attract any bidders – a substantial set-back
to achieving its fund-raising targets.

But the EU Commission has insisted this was not the case, while the Greek
government maintains the decision was made a number of weeks ago.

Employees of the Greece state broadcaster ERT keep on reporting live
using the web at the television station’s headquarters after the government
announced ERT’s closure at midnight. Photo: ETA

12.22 And in more strike news, Greek unions have called a general
strike on Thursday to vent their fury at the shock shut-down of the
state broadcaster ERT. Civil servants and sailors have already pledged their

12.20 Strikes at airports have continued into their second day in
France, and flight cancellations have ramped up from around half to three in
four. Air traffic controllers called a three-day strike to protest EU plans
to liberalise European airspace.

12.13 Mr Sinn has never minced his words when it comes to the ECB’s
actions in the eurozone, which he
has argued amount to a “stealth bail-out” . Here are some
of the things he’s been saying this morning, courtesy of @OpenEurope
and @michaelsteen :

– OMT will set off a political chain reaction that will increase sovereign

– He does not think it is obvious that OMT is “factually limited”,
as Joerg Asmussen argued yesterday. Mr Asmussen said that since OMT focuses
on the shorter end of the yield curve – debt repayable in between one and
three years – that it is not really unlimited.

– Mr Sinn reckons the ECB could buy as much as 3tn in bonds under OMT, “inculding
France”, but, as Michael Steen points out, he hasn’t shown his working.

11.48 The crucial hearing on the legality of the ECB’s unlimited bond
buying programme, OMT, is underway for the second and final day. This
morning, the judges are hearing from Hans-Werner Sinn , the President
of the Ifo Institute for Economic Research, and a vocal critic of the ECB.

Ahead of today’s hearing, the European Parliament and International
Monetary Fund defended the ECB.

Speaking to German daily Sueddeutsche Zeitung , IMF chief Christine
Lagarde said :

Unusual circumstances require unusual measures.

The ECB’s decision to charge to the rescue changed everything.

OMT averted a catastrophe.

EU Parliament President Martin Schulz also chimed in with a defence on
German public radio Deutschlandfunk:

[Spain, Portugal, Italy and Greece] finally found themselves in the
position of being able to finance their debts again. That means the risks
[for German taxpayers] were actually reduced.

However, it is unlikely their praise will much influence the top judges at
Germany’s highest court. Yesterday, Andreas Vosskuhle , president of
the German Constitutional Court, said the success of OMT has nothing to do
with whether the programme is constitutional.

The FT’s Michael Steen is at the German Constitutional Court today-
here’s a picture he took before proceedings took off. Source: Twitter

11.27 Analyst Constantinos Zouzoulas says there could be a silver
lining to Greece’s reclassification as an emerging market . Speaking to Bloomberg ,
he said:

It is unclear yet what the weight of the MSCI Greece will be on emerging
markets, but in any case it will be significantly higher than that it has on
developed markets.

This could be positive news for the Greek market as it could attract more
interest, although there could be pressure in the short term.

Athens Stock Exchange. Photo: Reuters

11.25 More detail on MSCI (NYSE: MSCInews) ‘s downgrade of Greece to
an emerging market . In a statement the group said the downgrade

-Greece’s failure to have improved its market practices in line with
the expectations for developed markets. In particular the Athens stock
exchange is not up to standard on securities borrowing and lending
facilities, short selling and transferability.

– the Athens Stock Exchange’s diminishing value , which means that for
the last two years it has not met the developed market criterion for size
for the last two years. The ASX has declined by 83pc since 2007.

11.18 An update on the National Express (LSE: NEX.Lnews) stake sale : Elliott
Advisors are said to have sold 50.6m at 208p apiece, raising about £105m
from the disposal.

Photo: PA

Equity index group MSCI has had a bit of bad news for Greece ,
having cut the nation to emerging market status overnight. It’s the first
time a developed market has been lowered to the EM classification.

11.00 Returning to this morning’s jobs figures, Szu Chan notes
that one factor contributing to rising employment is a rise in the number of
pensioners remaining in the workforce.

Pensioners and working mothers helped UK employment touch a record high
between February and April, as the number of over-65s in work hit one
million for the first time.

Britain’s workforce grew by 24,000 to 29.76m from February to April
compared with the previous quarter, according to the Office for National
Statistics, the highest since records began in 1971.This was mainly due to a
rise in the number of pensioners seeking work or putting-off retirement.

The number of over-65s in work is now at the highest level since records
began in 1992, with almost one in 10 people in this age group now in work.

Wednesday’s data also showed that more stay-at-home mums were forced to
seek work during the quarter. While the number of men aged between 16 and 64
who dropped out of the workforce increased by 63,000, the number women in
this age group classed as “economically inactive” fell by 23,000,
with a continuing fall in the number of women who were looking after the
family or home.

10.47 Shares in Prudential (LSE: PRU.Lnews) have received support today from
analysts at Morgan Stanley (Xetra: 885836news) , who have argued that the sell-off
in emerging markets should not deter from buying the insurer, which
generates a large proportiion of earnings in Asia:

Although the situation is volatile not least because tapering of US QE as
yet to commence our initial thoughts are that the situation could provide
an attractive entry point into Prudential shares.

In the medium term, we believe Pru’s Asia franchise is very robust and
previous episodes of economic and market volatility have tended to drive at
worst modest cyclical weakness in single premium new business sales.

Prudential shares have edged up 0.9pc this morning.

10.40 Libor is set to become more transparent following last year’s
furore over rate-fixing at major banks. The British Bankers’ Association has
announced that banks must make their Libor submissions public with a three
month lag, as recommended in the Wheatley Review published last September.

Bob Diamond, ex-chief executive of Barclays (LSE: BARC.Lnews) was the first executive
casualty of the Libor scandal.

10.36 The ONS figures also showed that total pay rose 3.3pc in April,
but a number of economists point out that this is almost entrirely due to
bonus payments , and that underlying earnings growth remains extremely
low. So this uptick is unlikely to boost consumer spending.

10.28 Ross Walker at RBS notes that the jobs growth
mainly came from part-time and self-employed roles. He also points out that
the rate of inactivity – those who do not have jobs but are not actively
seeking work – rose.

The labour market has remained fairly resilient given the GDP figures but it’s
certainly weaker than what we saw through most of last year.

10.14 Howard Archer at IHS Global Insight sounds a cautious
note on the UK jobs figures , warning that unemployment could still edge
up, as the economy has not yet gained enough momentum to start driving
unemployment down.

The labour market may well benefit further in the near term from the recent
improvement in UK economic activity, but there is still a risk that
unemployment could trend slightly higher over the rest of 2013, and very
possibly early-2014. We suspect that growth will remain prone to losses of
momentum over the coming months and doubt that expansion will be strong
enough overall to prevent unemployment moving up moderately, especially as
public sector jobs will be pared further and the labour force is expanding.

Even if employment in the private sector rises moderately over the coming
months which it may very well do, it may not be enough to both offset job
cuts in the public sector and combat the increasing labour force. Latest
data shows that public sector jobs fell by 22,000 in the first quarter of

Consequently, we believe that unemployment could edge up gradually to stand
around 2.65 million in early-2014, giving an unemployment rate of 8.0%.
However, we have trimmed the expected peak in unemployment from 2.68 million
and an unemployment rate of 8.2pc due to the fact that we have modestly
upgraded our GDP growth forecasts for 2013 to 1.0pc (from 0.9pc) and 2014 to
1.6pc (from 1.4pc).

10.00 Sterling is on the rise this morning following the upbeat
jobless figures . The pound rose to a near four-month high against
the dollar, hitting the $1.56 mark, and a three-week high against the euro.

09.41 Back in Greece , where the state
broadcaster was suddenly taken off the air last night in a bid to
cut costs, the government has pledged a re-launch within weeks, after
furious protests by journalists, trade unions and the wider pubilc over the
shock closure.

Hundreds of demonstrators gather outside the North Greek public
television and radio broadcaster ERT 3 in Thessaloniki, after Greece’s
government announced on Tuesday the immediate closure of ERT in a move that
reportedly affects about 2,700 jobs. Hundreds rushed to the the building of
ERT 3 to show their support, shortly after the announcement made by
government spokesman Simos Kedikoglou. Photo: AFP/Getty Images

09.31 More good news for the British economy –
the number of people claiming unemployment benefits fell to a two-year
low in May , according to latest figures from the ONS. The number of
claimants fell 8,600 last month, its seventh consecutive monthly drop.
Claimant numbers now stand at 1.5m.

On a separate measure by the International Labour Organisation, the number of
unemployed in Britain edged down 5,000 in the three months to April to stand
at around 2.511m – close to a one-and-a-half year low of 2.49 in the three
months to November 2012.

The unemployment rate on the ILO measure remained at 7.8pc in the three months
to April. It had risen to 7.9pc in the three months to February from 7.7pc
in the three months to November.

Employment rose by 24,000 in the three months to May to hit 29.756m .

09.22 It’s worth noting that Vodafone (LSE: VOD.Lnews) shares are trading
ex-dividend today, which explains part of its fall, but the shares are stil
underwater on news of the approach to Kabel Deutschland (Other OTC: KBDHYnews) when the investor
payout is accounted for.

09.15 Emerging market currencies and stocks remain
under pressure this morning, led by Indonesia and Thailand .

Speaking to Bloomberg, Fadlul Imansyah , a fund manager at PT
CIMB-Principal Asset Management, said:

There’s no place to hide. The increasing concerns over the possibility of the
Fed scaling back have prompted foreign investors to leave emerging markets.

08.56 Despite sliding at the open, the FTSE 100 appears to have
steadied somewhat and is now down just 3 points at 6,336. The mid-cap FTSE
250 is up 5 points in early deals

08.45 Vodafone has made a €10bn offer to buy German cable
giant Kabel Deutschland . It would be Vodafone’s biggest deal since it
entered India in 2007 and mark a change in strategy for the group that has
long has owned largely mobile operations in continental Europe and relied on
renting broadband lines from competitors.

08.31 Ofgem has outlined proposals to make it easier for small
energy suppliers to compete with the “big six” firms . The
regulator wants to create a “more level playing field”, and
proposed reforms include forcing big suppliers to announce the prices at
which they buy and sell electricity up to two years in advance. They will
also be obliged to trade at these prices.

08.28 It’s out with the old and in with the new at Glencore Xstrata (Other OTC: GLCNFnews) .
Just a month after all former Xstrata directors were dumped from the board
at its annual meeting, John J. Mack, the former CEO of Morgan Stanley and
Peter Grauer, chairman of Bloomberg, have joined as non-executive directors .

The former head of Xstrata’s coal business, Peter Coates, has been appointed
as an executive director.

The Glencore-Xstrata mega-merger created the fourth-largest miner in
the world. Photo: Alamy

08.26 Zara owner Inditex has posted its weakest
quarterly profit in four years as cold weather across Europe froze
earnings at the world’s largest clothing retailer. Inditex, which also owns
Bershka and Massimo Dutti, reported a 1.4pc rise in net profit to €438m
(£372.1m) in the quarter to June 7.

08.25 J
Sainsbury (LSE: SBRY.Lnews) has outperformed its main rival Tesco (Other OTC: TSCDYnews) over the last three
months despite sales growth sliding to the slowest pace in eight years,
reports Graham Ruddick .

The retailer said that like-for-like sales rose by 0.8pc excluding fuel in
the 12 weeks to June 8.

This compares to the 1pc drop in sales reported by Tesco last week.

The increase in Sainsbury’s sales is the 34 consecutive quarter that the
supermarket chain has grown.

However, sales growth has slowed to the lowest level since Sainsbury’s last
reported a fall in sales in January 2005. Justin King, chief executive, said
this was due to comparisons with the Diamond Jubilee bank holiday last year,
which boosted sales, and said the performance of the company had been “solid”.

08.17 Severn Trent (Other OTC: STRNYnews) shares are under pressure and have dropped
9pc after the LongRiver consortium abandoned its bid for the water
group. Vodafone has also fallen 6.1pc after confirming it has made a
takeover approach to Germany’s Kabel Deutschland, a potentially expensive

08.15 Sir Roger Carr has been formally named as the new chairman of
defence giant BAE Systems (LSE: BA.Lnews) .

The appointment, which was widely anticipated across the City, required
clearance from the Ministry of Defence , which has the power to veto
an appointment through the Government’s special share in the company.

Sir Roger Carr stepped down as president of the CBI lobby group
earlier this week. Photo: Jane Mingay

08.03 After sliding 0.9pc on Tuesday, the FTSE 100 has dipped
again this morning and is off 0.3pc, or about 20 points, at 6,321 amid
continuing worries over central bank stimulus measures. Shares in National
Express (NYSE: EXPRnews) are up 2.2pc and will be one to watch today: Activist investor
Elliott International is offloading its stake in the company – some 50.6m
shares – at a range of 206.2p to 208p apiece.

07.58 What’s weighing on markets? A key factor is the Bank of
Japan’s decision to sit tight on monetary policy , which has
disappointed those looking for more stimulus.

Investors had also expected the Bank of Japan to extend the length of cut-rate
loans to banks to calm volatility in the Japanese bond markets.

Bank of Japan. Photo: Bloomberg/Kiyoshi Ota

07.47 Asian markets fell overnight to extend a
global sell-off that saw around $400m wiped off the value of global equities
yesterday. World bond yields also continued to rise overnight.

The Nikkei fell 0.21pc after paring back deeperl osses thanks to a
pick-up in the dollar thruogh the day.

Sydney fell 0.69pc and Seoul slid 0.56pc . However
many exchanges in the region, including Hong Kong, Shanghai, Taipei and
Manila, were closed today due to public holidays.

07.30 In Greece , the country is waking up
with quite a bit less news that normal. That’s because yesterday evening,
the state broadcaster, ERT, was shut down last night despite huge public

The shock announcement came yesterday afternoon, when a government spokesman
said Athens was temporarily closing the state broadcaster while it worked on
slashing the costs at the organisation.

Government spokesman Simos Kedikoglou said

At a time when the Greek people are enduring sacrifices, there is no room for
delay, hesitation or tolerance for sacred cows.

ERT is a case of an exceptional lack of transparency and incredible
extravagance. This ends now.

07.15 The Telegraph’s business pages lead with news that the
UK is losing out to Europe for business from high-spending Chinese tourists .
The country’s biggest travel agency, China International Travel Services,
told the Telegraph it brings fewer than 10,000 tourists to Britain from a
total customer base of 3.23m, as it is easier for them to go to EU countries
covered by the single Schengen visa.

The board of Severn Trent was under pressure last night from investors after a
Borealis-led consortium abandoned a £5.3bn bid approach following an alleged
lack of communication between the two sides, reports James Quinn.

Harriet Dennys reports that as
the six-week High Court battle over the assets of fraudster Bernie Madoff
opens today, judges will hear allegations that the financier used his UK
Company, Madoff Securities International Limited, as a vehicle for
funelling payments to himself and his family in America.

Britain’s credit
unions will be allowed to increase the interest they charge on loans in a
bid to stop people turning to payday lenders , reports, Steve
Hawkes .

07.05 On this mornings business pages…

Yesterday’s sell-off
in emerging market assets over fears the Fed could soon taper its aggressive
asset-buying programme QE3 , led the Financial Times this
morning. The South African rand and the Brazilian real fell to four-year
lows against the dollar, while the Indian rupee fell to a record low.

The Independent reports that Dwell,
the upmarket furniture retailer, is teetering on the brink of administration .
The paper says an announcement could be made as soon as today.

The Bank of England’s Paul
Fisher has warned that Britain’s recovery is trailing behind America’s and
that loose monetary policy will probably have to continue for longer ,
reports The Times . Mr Fisher, who is head of markets at the
Bank, said the spike in gilt yields seen in recent weeks was “totally
driven by the international scene” rather than UK-specific factors.

The Guardian reports that former
HBOS boss James Crosby has had his knighthood formally revoked . Mr
Crosby had asked for the honour to be removed after April’s damning report
by the parliamentary commission on banking standards said he should take
primary responsibility for the near-collapse of the bank.

The Bank of England’s Paul Fisher played down talk of a recovery in
the UK, saying looser monetary policy was set to continue. Photo: Jane Mingay

07.00 Good morning and welcome to our daily business and markets live
blog, your one stop shop for all the breaking business stories of the day.

European Broadcast Union urges Greece to reopen ERT

ERT employees secure a protest banner  ERT ran three domestic TV channels, four national radio stations, as well regional radio stations and an external service, Voice of Greece.

The European Broadcasting Union (EBU) has called on the Greek government to reopen public broadcaster ERT, after it was shut down suddenly on Tuesday.

EBU president Jean-Paul Philippot is to hand over a petition in Athens signed by 51 European directors general, including the BBC’s Tony Hall.

The EBU called the government’s action “anti-democratic” and “unprofessional.”

The Greek government said the closure was an essential measure to help meet the country’s debt bailout obligations.

Viewers watching the news on the main TV channel saw the screens go to black late on Tuesday evening.

Journalists however refused to leave the building and online and satellite broadcasts are being maintained with the help of the EBU website.

The Greek government called ERT a “haven of waste” and said they would relaunch it as a smaller, independent public broadcaster.

“ERT is a case of an exceptional lack of transparency and incredible extravagance. This ends now,” said government spokesman Simos Kedikoglou.

ERT, which began broadcasting in 1938, is funded by a direct payment of 4.30 Euros (£3.80) added monthly to electricity bills.

It ran three domestic TV channels, four national radio stations, as well regional radio stations and an external service, Voice of Greece.

Since its sudden closure, nearly 2,700 workers have lost their jobs, but they will be able to apply to work for the new corporation.

Employees have protested outside the building since Tuesday and it has also sparked a 24-hour general strike in the country.

The Greek government has pledged to cut thousands of public-sector jobs in order to receive billions of euros in rescue loans from the European Union and International Monetary Fund.