Whitbread says Costa Coffee spin off making ‘good progress’

A Cappuccino stands on a table at a branch of Costa coffee in Manchester northern England, March 18, 2016. (Phil Noble/Reuters)
Updated 27 June 2018

Whitbread says Costa Coffee spin off making ‘good progress’

LONDON: Britain’s Whitbread said on Wednesday it had made “good progress” in Costa Coffee’s demerger as it reported a dip in first-quarter sales in its British stores.
Costa Coffee will be spun off after Whitbread yielded to pressure from hedge funds, including activist investor Elliott Investors, who argued it was being held back by being grouped with the Premier Inn hotel chain.
“Constructive early steps have been taken in preparation for the demerger and good progress continues to be made on the core infrastructure and efficiency work that was already underway,” the company said in a statement.
Whitbread said it expects to deliver full-year results in line with expectations, adding that it would provide an update on the demerger in October.
Total UK sales rose 3.5 percent but comparable sales at Costa Coffee fell 2 percent compared with a 1.1 percent rise last year.
Whitbread, which has a hotel business in Germany and a coffee chain in China, said its hotel chain Premier Inn saw a 0.9 fall in like-for-like sales due to a drop in visitors to London.
Costa, founded in London in 1971, has expanded rapidly since it was acquired by Whitbread in 1995.
However, over the last two years, the company has felt the pinch from higher inflation and low real wage growth in its home market.

SAMA to become Saudi Central Bank, with full independence

Updated 49 min 23 sec ago

SAMA to become Saudi Central Bank, with full independence

  • New central bank to be linked directly to king but its president independent of government
  • Bank’s core responsibilities to maintain monetary reserves, boost confidence, trust in financial sector

RIYADH: The Council of Ministers on Tuesday approved a new law which includes changing the name of the Saudi Arabian Monetary Authority (SAMA) to the Saudi Central Bank.

Under the legislation, the new Saudi Central Bank will be linked directly to the monarch and will enjoy full financial and managerial independence.

The Saudi Central Bank Law set out three core objectives for the new institution namely, to maintain cash stability, boost confidence and trust in the financial sector, and support economic growth.

The new legislation states that the central bank is responsible for setting and managing monetary policy and it outlines the relationship between the bank, the government, and other international important organizations and bodies. It also sets a framework to govern the bank’s operations and decisions.

Fadhel Al-Buainain, an economic expert and member of the Shoura Council, said one of the important aspects of the Saudi Central Bank Law was that it was linked directly to the king.

“This enhances its full independence with respect to setting the monetary policy and the bank’s relationship with the government and global organizations,” he added.

The law states that the abbreviation SAMA, which was established in 1952, would remain unchanged due to its historical importance domestically and internationally.

“The fact that the bank will keep the SAMA abbreviation unchanged is important and reflects a wise decision because the abbreviation is widely-known,” Al-Buainain said.

While the SAMA acronym will remain, Hassan Alwatban, an economic consultant, outlined the differences between the monetary authority and the central bank.

For the central bank to perform its duties properly, he said it needed to be fully independent when it came to decision-making, especially decisions related to managing state funds.

Another difference was that the president of the central bank would not be under the state’s authority and their nomination would be made by a legislative authority. The government or state could not appoint or remove the president except by the most supreme judiciary authority.

Thirdly, he added, a government agency could not interfere in the bank’s affairs because the bank enjoyed full monetary power.

Alwatban told Arab News: “Therefore, changing the monetary authority to a central bank is healthy for the national economy.

“The tasks of the Ministry of Finance, which is responsible for financial policies, will be set apart from the tasks of the central bank, which is responsible for setting the monetary policies. Before the change, the tasks of the Ministry of Finance and SAMA overlapped.

“Besides, the Ministry of Finance was in charge of the financial policy and the monetary policy at the same time, a fact that made SAMA focus on serving the banks’ interests more than focusing on serving the interests of citizens,” he added.