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Bank bailout unfair, says BSA

The Building Societies Association says the recent Government bailout of several big high street banks is unfair on mutuals and their members.

At the BSA’s annual lunch chairman John Goodfellow said it was unfair that the sector had been forced to pay for failed banks.

In regard the sector’s FSCS levy as a result of the Bradford and Bingley and the Icelandic banks, he said: “What is notable is that there has been no requirement for any Government bailout of the building society sector; rather difficulties have been dealt with within the sector.

“At the same time, however, societies have been called upon to pay a significant share of the cost of bailing out failed institutions in the banking sector.

“In the light of building society performance, it is essential that we examine the future funding of the FSCS, at the very least we need to examine the
pros and cons of risk related funding of the scheme so that
those institutions that act in a prudent manner are appropriately

Goodfellow also addressed public concerns regarding the lack of affordable mortgages in the market. He said: “There has been a political and media chorus for all institutions to ‘pass on’ the Bank of England base rate reduction
announced last week. But for all societies there are a range
of issues to be considered when looking at the structure of interest
rates – these factors will affect each society differently.”


Rates of exchange

Accused of being behind the curve in countering the downside risk caused by the turmoil in the financial markets, the monetary policy committee took the bold decision to cut beyond expectations last week and invite speculation as to the true extent of the problems in the UK economy.

Apple: a stellar technology story

By Ali Unwin, head of technology sector research

Apple recently announced the highest-ever recorded quarterly net profit ($18bn), with the sale of 74.4 million iPhones helping the company deliver $74.6bn of revenue for the quarter ending December 2014. These sales were largely driven by strong demand for the new iPhone 6 and iPhone 6 Plus. Highlights included Chinese iPhone sales doubling year-on-year and unit growth of 44% in the US — supposedly a well-penetrated market. Apple ended the quarter with $178bn in cash on its balance sheet, having generated a staggering $30bn in free cash flow during the quarter.

At Neptune, we have been long-term believers in the Apple story, and continue to hold the stock in a number of our portfolios based on the company’s long-term growth prospects. This is predicated on our belief that Apple has proved thus far that it can — unusually for a consumer electronics company — maintain high margins for a sustained period of time, even as adoption of new technology slows down and competitors produce similar-specification products.


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