News round up: Lloyds Banking Group, Microsoft, International Monetary Fund, Sterling zone, New nuclear power stations.

Activist hedge fund manager The Children’s Investment Fund (TCI) has called on regulators to force Lloyds Banking Group plc (LON:LLOY) to bolster the bank’s capital reserves. Christopher Hohn, the fund’s chief executive, has written to the UK’s Financial Services Authority urging it to compel Lloyds to replace £10bn of contingent convertible debt – or cocos – with ordinary shares.

Hohn, whose TCI fund pushed for the sale of ABN Amro to Royal Bank of Scotland and helped derail a bid for the London Stock Exchange, would not comment on its holding in either Lloyds’ equity or debt. However, one person close to the situation said TCI owned about £1bn of Lloyds cocos and a rival fund manager said it had held the position for at least the past year. It is unclear whether TCI holds any equity in the bank.

The Lloyds cocos have performed poorly in the market in recent months, prompting hedge fund managers to speculate that TCI was pursuing the issue in an effort to inject investor interest back into very illiquid instruments. Bondholders who are bought out of the cocos ahead of their 2019 expiration date, and given cash or equity, would receive a windfall as the price would be likely to exceed the market value of the bonds, writes the Financial Times.

Microsoft

Microsoft will go head-to-head with Apple in the booming tablet computer market after the software company revealed plans to introduce a new product, the Surface. The device, which was unveiled at a much-hyped event in Los Angeles last night, has a 10.6in display and is under half an inch thick. It was designed specifically for Microsoft’s operating systems and features a case that turns into a keyboard, a built-in stand and USB port.

Its price will be announced closer to the launch date, which will be later this year. Microsoft has already made a move into the tablet sector having spent $300m to take a stake in the digital operations of Barnes & Noble, the world’s largest physical bookstore. B&N’s Nook tablet is expected to continue to be sold separately, with the retailer providing Microsoft’s e-book products, according to The Times.

International Monetary Fund

The UK has pledged a further 15bn dollars to the IMF, after Christine Lagarde revealed that member states had promised a total of 456bn dollars for its new crisis fund. China will contribute 43bn dollars, state news agency Xinhua confirmed on Tuesday morning. "With today's announcements by an additional 12 countries, a total of 37 IMF member countries (...) have joined this collective effort, demonstrating the broad commitment of the membership to ensure the IMF has access to adequate resources to carry out its mandate in the interests of global financial stability," Ms Lagarde, the IMF chief, said, according to The Telegraph.

Sterling zone

The SNP’S flagship plans for a "sterling zone" currency union after independence are likely to be rejected by the remaining UK countries, former Chancellor Alistair Darling will argue today. But he will be accused of peddling "myths" about independence by finance secretary John Swinney, who will say the last Labour government presided over an “unsustainable boom” which benefited the few, not the many.

Mr Darling, who will lead the pro-union campaign in the referendum campaign, says the fear of a Eurozone-style meltdown will thwart any hopes of a currency union with London built around the pound after Scottish independence. The alternative of Scotland simply using the pound would be more like “serfdom, than freedom”, Mr Darling will say, The Scotsman reports.

New nuclear power stations

The prospect of new nuclear power stations being built in the UK for the first time in 20 years has moved a significant step forward after EDF Energy awarded a £2bn contract to build a plant at Hinkley Point in Somerset. French company Bouygues and private British construction group Laing O’Rourke have been named as preferred bidders for a construction contract that is estimated to create 4,000 jobs.

EDF said the contract is subject to securing planning consent for the power station and the company making a "final investment decision" on whether to press ahead with the power station by the end of this year, The Telegraph writes.