BUSINESS LIVE: Japanese stocks rally; water companies fined £168m; Travis Perkins profits plummet

Societe Generale has sold its British and Swiss private banking divisions for £770m as managers continue to scale back the business.

France’s third-largest listed bank has sold SG Kleinwort Hambros and Société Générale Private Banking Suisse to Union Bancaire Privée (UBP).

The divisions have around £21 billion of assets under management.

Travis Perkins suffered a 33 percent drop in first-half profits after the building materials supplier’s bottom line was hit by subdued activity in the British home sales market and the construction sector.

Companies linked to the health of the property sector have been under pressure for more than a year as Britons delay home repair and improvement work due to wider economic problems.

Travis Perkins posted an adjusted operating profit of £75m for the six months ended 30 June and forecast full-year earnings of around £150m.

‘Trading conditions remained challenging throughout the first half of the year and we continue to prioritise delivery to our customers, whilst recognising that a persistently lower volume environment means we need to deliver a simpler and more efficient business.

‘While market conditions have impacted our profit margin, we have made good progress in managing our general expense base and generating cash.

‘With a new government rapidly setting out its plans to reform planning to deliver more housing and infrastructure, and the expectation of an easing of macroeconomic conditions, the Group is focused on ensuring it is well positioned to maximise the benefits of both a future recovery in demand and the longer-term requirement for the UK to expand and decarbonise its housing stock.’

Three of Britain’s biggest water companies face a combined fine of £168m under proposals from Ofwat, after the firms were found to have failed to manage their wastewater treatment works.

Following the regulator’s “biggest ever investigation”, Thames Water, Yorkshire Water and Northumbrian Water will not be able to recover money made through price increases to customers, Ofwat said.

Ofwat chief executive David Black said:

‘Ofwat has uncovered a catalogue of failings by Thames Water, Yorkshire Water and Northumbrian Water in the management of their sewerage plants, leading to excessive spills due to storm surge overflows.

‘Our investigation has shown how wastewater is routinely dumped into our rivers and seas, rather than ensuring this only happens in exceptional circumstances, as provided for by law.

‘The level of penalties we intend to impose reflects both the seriousness of the failings and our determination to take action to ensure that water companies do more to deliver cleaner rivers and seas.

“These companies must act quickly to correct their mistakes and meet their obligations to protect customers and the environment. They must also transform the way they care for the environment and focus on doing better in the future.”

The head of Serica Energy has warned that Labour’s policies on North Sea oil could lead to huge job losses and end up being “worse for the environment”.

David Latin criticised the government’s plans to remove a tax break for oil producers that allows them to offset taxes with reinvested cash.

This comes after the Labour Party last week confirmed an increase in energy profits tax from 3% to 38%, effective from 1 November.

Japanese stocks rallied strongly in early trading, recouping most of the double-digit losses suffered the previous day as fears of a U.S. recession gripped global stock markets.

The Nikkei’s rebound, after the market’s biggest single-day drop since the Black Monday sell-off in 1987, came as the yen reversed its gains, signaling that the carnage in yen-funded global carry trades was also easing.

The index was up 8 percent at 0530 GMT, after falling 12.4 percent on Monday. The index was up 2,623.1 points, having earlier risen more than 3,000 points to top its biggest intraday point gain on record.

The broader Topix index rose 7.5 percent to 2,394.33 points.

Investors were shaken by a plunge in global stock markets last week, recession risks in the United States and concerns that investments funded by a cheap yen were unravelling, triggering a sell-off in Japanese stocks on Monday.

Traders said they now appeared to be reconsidering the severity of their initial response, buying back shares as they fell.