Gordon Brown the Chancellor extended an olive branch to Downing Street over the euro yesterday by insisting that

Gordon Brown, the Chancellor, extended an olive branch to Downing Street over the euro yesterday by insisting that the Government could win a referendum “decisively” if his five economic tests were met. But in what pro-euro campaigners described as a “peace offering” to Downing Street, Mr Brown told the weekly meeting of the Parliamentary Labour Party a referendum could indeed be won.Mr Balls backed up the Chancellor’s message last night whenhe said that Mr Brown saw “great potential benefits” from membership of the euro.”The Chancellor has said that if we recommend that Britain should join the single currency on the basis of a comprehensive and rigorous assessment of the five tests, then we can win a referendum and win it decisively,” he said in the annual Cairncross lecture.But Mr Balls also used the speech to hammer home the primary importance of the five economic tests, which the Treasury has pledged to assess before June. “To do anything else would be a compromise of our national economic interests and we are confident the Chancellor will make the right decision for Britain.”. The business is now valued in Stagecoach’s books at £378m, meaning that nearly 70 per cent of the original investment has been written off.Despite the heavy write-down, a 19 per cent decline in underlying operating profits to £87m for the six months to the end of October and a 38 per cent dividend cut, Stagecoach shares rallied strongly on relief that it had drawn a line under its ill-fated US expansion. The shares rose 44 per cent to 27p, valuing Stagecoach at £357m.Stagecoach also quashed rumours that its founder and chief executive, Brian Souter, was lining up a bid to take the company private again. Mr Souter, who took over the reins at Stagecoach after the ousting of Keith Cochrane in July, has decided to remain as chief executive on a permanent basis.The company intends to dispose of at least 50 per cent of Coach USA and possibly as much as 75 per cent by selling its charter, taxi and leisure-related divisions and concentrating instead on its scheduled and contract bus operations, which are based mainly in the north-east of America.Bob Speirs, the Stagecoach chairman, defended the original purchase of Coach USA, saying the only regrets he had were with the benefit of hindsight.

“When we bought Coach USA the market was completely different,” he said “It appeared to be the right business at the right price. But what happened is that America went into recession and stayed there.”Mr Speirs confirmed that Mr Souter had been approached recently by a private equity group to sound him out about a takeover of Stagecoach. But he said: “The board never received any offer and Brian has assured me that he has no intention of making an offer to take the company private. That is the end of the story.”Underlying profits at South West Trains, the country’s biggest commuter network, fell by almost a half to £11.7m, excluding a one-off compensation payment of £7.2m because of problems with a fleet of new Class 458 trains.Martin Griffiths, the finance director, said that SWT, which carries 350,000 passengers a day and 142 million a year, had seen a 1.9 per cent decline in peak period revenues because of the decline in central London employment.Stagecoach has agreed a new four-year franchise for SWT under which subsidy payments are expected to rise substantially to help pay for the new £1.5bn fleet of trains being introduced.. Lloyds TSB, supposedly one of the steadiest high street banks, shocked the City yesterday as it added a warning about potential heavy losses on investments in Argentina and Brazil to its stinging charge for mis-selling endowments.

Lloyds’ shares fell 16.5p to 314p.Lloyds said its credit quality remained robust, but added it could not tell at this point whether it would have to increase its financial buffer against corporate failures and defaults by individuals in Latin America. Lloyds has a £2.4bn exposure to Brazil after the provisions for bad debts it has already made, emanating from a consumer finance business it owns. It has reduced the exposure from £2.8bn at the end of June by not replacing maturing government bonds.Lloyds also has a £250m exposure in Argentina from government loans. Lloyds has already increased its bad debt provision for Argentina by £20m at its half-year point in June to a total of £75m.The bank indicated the country was its main concern, saying “the outlook will remain uncertain at least until the new Argentine government takes office during 2003″.The City expects Lloyds to increase provisions again when it announces results for the full year.

Sarah Horder, an analyst at Teather & Greenwood, said: “I imagine we will see an increase in provisions for Argentina and possibly a bit more for Brazil.”Lloyds is forecast to see a drop in its profits in 2002 compared with 2001, when it recorded pre-exceptional pre-tax profits of £4.1bn. Even if there are more corporate failures and market turbulence, Lloyds is expected to escape more lightly than Barclays, Royal Bank of Scotland and HSBC because it has traditionally concentrated far more on domestic retail banking than corporate lending or investment banking.As well as announcing a £1m fine for misleading customers in the process of selling them endowments, Lloyds said it would make a £40m provision in 2002 for further compensation to be paid to customers for pensions mis-selling claims. The bank said the charge was chiefly due to the fall in the stock market, which has eroded its previous provision for redress. Peter Ellwood, the chief executive of Lloyds, cautioned that trading conditions were tough in Britain. “The economic outlook for the UK, as well as for all major world economies, remains uncertain,” Mr Ellwood said. Nevertheless, Lloyds said that it had continued to experience good market share gains in its main product areas in Britain. In mortgages, market share was up with net new lending in the third quarter at £1.7bn against £2bn for the first six months of the year, creating a 7.4 per cent share of new lending Lloyds has 9.5 per cent of outstanding mortgages.