Sunday newspaper round-up: Lloyds Banking, inflation, Alliance Trust

The Treasury is considering a retail offering of Lloyds Banking Group shares to complete the privatisation of the bailed-out bank early in the next parliament, the Sunday Times reported. The offer would be at a discount of 5% to 10% and would get the public involved to meet the aim of selling £9bn of shares, the paper was told. The retail offer could coincide with a sale of shares to a sovereign wealth fund and City funds. The discount and extra marketing costs of a retail sale would increase the chances of it creating a loss for the taxpayer.

The UK inflation rate is close to zero, putting the economy on track for its first bout of deflation in more than half a century, the Sunday Times and other papers reported. Official figures are expected to say on March 24th that the annual rate of consumer price inflation fell to 0.1% or 0.2% last month. Economists had thought the Bank of England's (BoE) next action on interest rates would be an increase, but the BoE's Chief Economist Andy Haldane moved markets when he said in a speech on March 19th that the next move was as likely to be down as up.

Alliance Trust's boss, Katherine Garrett-Cox, has hit back at Elliott Advisors, the US hedge fund that has attacked the investment trust's management and demanded a boardroom shake-up. Garrett-Cox told the Sunday Times the trust's performance had been consistently good and that Elliott's three board candidates were not fully independent. She said Alliance Trust would not be "bullied into doing something just because someone stands up and shouts at us". She has the support of 6% shareholder DC Thomson, which publishes the Beano comic. An Elliott source said her response showed the board was out of touch.

Royal Bank of Scotland is preparing to sell more shares in the US bank Citizens after the obligation to hold on to its remaining stake expires on March 23rd, the Sunday Telegraph said. RBS still holds almost three-quarters of the shares in Citizens, which it floated on the New York stock market in September 2014. The bank wants to sell some shares before the summer and more later in the year to take its stake below 50% by the end of 2015. Its remaining stake was locked up as part of Citizens flotation but RBS is now free to capitalise on the 18% increase in the bank's shares since then.

The Chief Executive of Legal & General, Nigel Wilson, has warned that the Chancellor risks pushing banks abroad if his levy on the industry keeps increasing, the Sunday Telegraph reported. L&G is one of the biggest investors in UK banks, and Wilson said the levy "risks forcing banks to relocate outside the UK". Encouraging banks and other companies to use their cash productively would be better than "repeatedly going back to the well to extract funds through the bank levy", Wilson said. George Osborne announced in his budget an extra £5.3bn charge on the banks in the next parliament.

US private equity firm Silver Lake Partners is one of a group of potential bidders for Tesco's Dunnhumby technology business, the Sunday Times reported. The buyout firm, which backed the $24bn takeover of Dell in the US, is trying to attract former Dunnhumby employees to back a potential £2bn bid for the business, which runs Tesco's Clubcard loyalty plan. Other US private equity firms interested in Dunnhumby include Warburg Pincus, TPG and Carlyle. WPP has declared its interest in bidding when the auction starts in April 2015.

Aldi plans to open more new shops in the UK in 2015 than Tesco, Sainsbury's and Morrisons combined, according to the Sunday Telegraph. The German discounter wants to open 1.02m square feet of shop space, or about 60 shops. The figures for rival grocers, calculated by commercial property research group IPD, are 450,000 square feet for Sainsbury's, 220,000 square feet for Morrisons and 170,000 square feet for Tesco. The numbers show how UK food retail has been turned on its head by the rise of discounters and the problems of the big supermarket chains.

Leo Quinn, the new boss of Balfour Beatty, is expected to announce big cost cuts and more write-downs on problem contracts, the Sunday Times said. Leo Quinn will report heavy losses for 2014 on March 25th and analysts think he will cut drastically or scrap Balfour's dividend. Analysts at Bank of America Merrill Lynch said Quinn will cut jobs and scrap loss-making divisions, but that if he goes too far he risks top employees leaving and undermining the share price.

Flybe will scrap flights between London City Airport and Dublin only seven months after beginning to operate on the route after rival airlines reacted aggressively, the Sunday Times said. Stopping Dublin flights will be Flybe's latest cutback at London City and will put extra pressure on Chief Executive Saad Hammad. British Airways launched five daily flights between the City and Dublin after Flybe started flying the route in October 2014. Passenger numbers are below expectations with no sign of improvement, Flybe said.

BT will start its assault on the mobile phone market by launching its own 4G network and undercutting competitors such as O2 and Vodafone, the Sunday Telegraph said. The service, to be announced midweek, will be called BT Mobile and will at first be offered to BT's 7.6m broadband customers. BT's offer will not be as cheap as competitors once feared. 4G packages will be cheaper than the biggest operators but not as cheap as the lowest prices offered by Three and Gifgaff. The service will offer a Sim-card, but not handsets because BT is buying EE which has its own retail network.

PureCircle, one of the biggest companies on AIM, has practically cornered the market in Stevia, the plant increasingly used as a low-calorie sweetener in food and drink, the Sunday Times said. It is the key ingredient in the latest version of Coca-Cola's cola drink - Coca-Cola Life - and is also in Heinz ketchup and Wrigley's gum. PureCircle bosses talk of the Stevia industry becoming worth $10bn or $15bn from $250m today. But William Mitchell, Finance Director, cautioned this was a long-term aim: "We're talking decades." The company has about 80% of the market, but it acknowledges that rival operators will take some of its share.