As part of the tests, 91 of Europe’s largest banks were required to reveal how much government debt from European countries they held on their balance sheets. Regulators said the figures showed banks’ total holdings of that debt as of March 31.

At the time, worries about banks’ government-debt holdings were fanning fears about the health of Europe’s banking system as a whole. Release of the bank data was considered the main benefit of the stress tests, which were widely criticized as being lenient overall.

Excluding the bonds reduced Barclays’ portfolio of Italian sovereign debt—which the bank said was £787 million ($1.22 billion)—by about £4.7 billion, Barclays officials said. The bank’s holdings of Spanish government bonds, listed at £4.4 billion, shrank by about £1.6 billion.

Barclays said it excluded the holdings based on guidance from CEBS, which was communicated to the bank via the U.K.’s Financial Services Authority. “We’ve done exactly what CEBS told us,” a Barclays spokesman said.

We also mentioned the fact that BARC’s retail expansion was far from having been a success: although very profitable, Retail and ABSA should consume only 24% of capital by 2012E. Within Retail, countries like Spain and Italy, in which BARC has been present many years, should only generate 2% of Group profits by 2012, in our forecasts.

All in, we feel that the management changes at BARC are likely to make even more pronounced what we consider to be its main weakness: too much CIB, too little Retail.

Given the low returns that we expect from CIB (and the £2bn Head Office losses and minorities) we expect BARC to generate RoE below its CoE for at least the next 3 years (sust. RoE 2012E: 9.5%).

Bob Diamond has long been considered a contender for the Chief Executive role
and the topic has been the source of investor debate for a long time, with concern
that Bob Diamond would leave Barclays if he didn’t get the top job. News of
promotion to Group CEO does not, therefore, come as a surprise, though the
timing of Varley’s departure potentially may surprise some

Short term there may be question marks over Bob Diamond’s commitment to the
global Retail and Commercial Banking businesses and his ability, given his
investment baking focus, to steward this business effectively. We would be less
concerned about this given that Bob has sat on the Group’s Operating Committee
for the last 14 years and he will be well aware of the benefits of having Retail
deposits in part supporting the investment banking business.

i) Minimum Tier 1 ratio of 9.0%, including a “conservation buffer” of 3.0%. This means to us that there will be an absolute minimum Tier 1 ratio of 6.0%, with a capital “conservation buffer” of 3.0% added on top of this. If the bank is within the conservation buffer, then it will be restricted from paying dividends and bonuses in order to organically build capital until the Tier 1 ratio (including buffer) is above 9.0%.

v) The conservation buffer will be staggered between 2014 and 2018, so there is some leeway here for the banks at risk to retain more earnings to improve capital ratios further. There is no comment on when the anti-cyclical buffer will be implemented.

vi) There is confirmation that the proposals will come into force in 2013 (i.e. no change in time table).

RTRS-PORTUGUESE/GERMAN 10-YEAR GOVERNMENT BOND YIELD SPREAD HITS 353 BPS, WIDEST SINCE MAY 10, 17 BPS WIDER ON DAY

An announcement is expected tomorrow, I have learned.

Connaught, which employs 10,000 people, has £220m of debt, provided by half a dozen banks and a quartet of other creditors.

The lead bank is Royal Bank of Scotland, which recently provided Connaught with a further £15m in an attempt to keep the group going.

Connaught ran into serious difficulties over the past couple of months, after it emerged that a series of contracts would be lossmaking.

The management, under a new chairman, Sir Roy Gardner, the chairmen of Compass, the catering giant, has tried to put together a rescue plan.

However its bank creditors have decided instead to put the business in administration, under UK insolvency procedures.

In spite of the severity of the economic crisis that engulfed the UK in 2008, few listed businesses have collapsed. In that sense, Connaught, a FTSE 250 company which at one stage had a market value of well over £500m, is unusual.

The Board stopped shipment of any affected banknote paper as soon as it became aware of the irregularities. All production is now within specification and the Company is ready, subject to customer agreement, to resume supply of fully compliant paper. The Company remains confident that neither the physical security nor the security features in the paper have been compromised.

“Operationally this was another strong quarter for Ocado, with gross sales increasing by 29.5%. As a consequence both sales and EBITDA growth continued the trend observed in the first half of the year, with gross margins remaining stable.”

If you think not, as a short investor you may sleep well at night. If you think they might, we could be in for a short squeeze.

http://uk.finance.yahoo.com/q/bc?s=VOW.DE&t=5y&l=off&z=m&q=l&c=

If you are short in Ocado, you might consider covering. If you are short with lots of other people’s money, you may soon have to consider an alternative career. Personally, I have taken out an extra mortgage and have gone rather long in Ocado. Wonder why?

CEO Dalton Phillips will address the market for the first time. The basic
message will be “more of the same” as the strategy is working – so the focus will remain correctly on growing LFL sales, raising the operating margin and opening more stores in the South-East. There is unlikely to be any major strategic revelations, but news of an on-line “Click and Collect” trial is widely anticipated. Beyond this we expect nothing on format development or diversification – yet.

Market currently pricing in limited benefit for ATI and merger synergies
The International Airline Group has stated it will achieve €400m of synergies (€250m of cost and €150m of revenue) by year five. Based on stated merger synergies (€400m) and a conservative 1% of BA’s revenues for ATI synergies (c£88m) this provides a £1.71 per BA share future value uplift.

We continue to value BA and Iberia on mid cycle Top co 2013e EV/Ebitdar of 6.5x. Given that we factor in ATI synergies and an improved outlook our price target moves from £2.95 to £3.35. We continue to rate the shares a Buy and see the near term catalyst Q2 results and the Iberia board shortly making a final decision on the merger.

Detailed look at Primark — In this report, we examine Primark in detail and
benchmark it off its retail peers. We see significant growth opportunities in
continental Europe, where Primark could more than treble its overall space if it
were to expand in existing markets.

Primark’s margins could increase — We believe Primark has intentionally kept its
margins low by reinvesting all operational leverage back into the business. The fact
that margins in Spain are already double digit despite only having 17 stores
demonstrates that payback periods are short. Further growth should allow
operational leverage to come through.