Facebook Targeted In 'Zero-Day' Hack Attack

Facebook has revealed it was the victim of a sophisticated attack by an unknown hacking group last month.

The site's security was breached after a handful of Facebook employees unknowingly visited a website that had been compromised with malicious code.

When a suspicious file was discovered on the company's computers, a forensic investigation was launched and the origin of the file was traced to an employee's laptop.

A further search uncovered other infected computers, but Facebook insists there was no data breach and no passwords or user data were compromised.

The company said in a statement: "Facebook, like every significant Internet service, is frequently targeted by those who want to disrupt or access our data and infrastructure.

"Last month we discovered that our systems had been targeted in a sophisticated attack which occurred when a handful of employees visited a mobile developer website that was compromised.

The company has launched a major investigation into the breach

"After analysing the website we found it was using a 'zero-day' (previously unseen) exploit to bypass the Java sandbox (built-in protections) to install the malware.

"As soon as we discovered the presence of the malware, we remediated all infected machines, informed law enforcement, and began a significant investigation that continues to this day."

There have a number of cyber-attacks on prominent websites recently. Some 250,000 Twitter accounts were potentially compromised after attackers obtained access to their names and email addresses.

The websites of The New York Times, The Washington Post and The Wall Street Journal were also infiltrated by unknown hackers apparently targeting media those papers' media coverage of China.

Although Facebook claimed that no user data was compromised, the incident could raise privacy concerns about the vulnerability of personal data stored within the social network.

The company has experienced several privacy rows over the years for the way it handles user data, including a privacy investigation with regulators that was settled in 2011.

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Home Ownership '£1,440 Cheaper' Than Renting

The cost of buying a home has become £1,440 a year cheaper than renting, according to new research.

Halifax found the average monthly costs associated with buying a three-bedroomed house stood at £621 in December, which is £120 cheaper than the typical monthly rent of £741 on a similar property.

The latest figures are an about-turn from December 2008, when buying a home was £217 a month more expensive than renting.

In recent years the gap has widened amid house price falls and record low interest rates which have made borrowing cheaper for those who can get access to a mortgage.

Meanwhile, increased demand in the rental sector from those struggling to raise a deposit or meet lenders' borrowing criteria has pushed up rental costs.

Home buying costs have declined by one third (34%) over the past four years, while average monthly rents have been pushed up by 14%, the study found.

The gap between buying and renting has widened by £21 a month over the past year. At the end of 2011, the monthly cost of home buying was £99 lower than renting.

Buying was found to be more affordable than renting in every UK region.

Buying is most affordable compared with renting in London, where the monthly difference is £193, while in Yorkshire and the Humber buying is just £1 a month cheaper than renting, Halifax found.

Martin Ellis, housing economist at Halifax, said that while the "financial attractiveness" of buying a home has improved in recent years, the tough economy is still holding would-be home buyers back.

He said: "Concerns over job security and raising a deposit are the main obstacles to people buying their own home. However, it is worth noting that once home buyers are on the first rung of the ladder, their monthly costs are notably lower."

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Baked Beans Firm Heinz Sold For $28bn

The baked beans and ketchup maker HJ Heinz has agreed to a takeover worth $28bn (£18bn) in a move that could potentially effect thousands of UK workers.

An investment consortium, which includes billionaire investor Warren Buffett, is behind the deal.

The company said Heinz shareholders would receive $72.50 (£47) in cash for each share of common stock they own under the plans.

The takeover's value includes the assumption of Heinz's debt and the per share price represents a 20% premium to Heinz's closing price of $60.48 (£39) on Wednesday.

Berkshire Hathaway, which is Buffett's investment vehicle, and Burger King-owner 3G Capital say Heinz will remain headquartered in Pittsburgh under their plans.

Berkshire Hathaway is putting up to $13bn in cash toward the joint buyout.

"It's our kind of company," Mr Buffett said in an interview on CNBC, noting its signature ketchup had been around for more than a century. "I've sampled it many times," he said.

Mr Buffett also confirmed that Berkshire will still have room to make further acquisitions, noting that the firm's businesses continually replenish its cash supply.

He said: "Anytime we see a deal is attractive and it's our kind of business and we've got the money, I'm ready to go."

Given the saturated North American market, Heinz has increasingly looked to emerging markets for growth and the buyout should aid the pace of investment.

In its last quarter, the company said emerging markets made up 23% of sales.

Union officials representing thousands of UK workers employed by Heinz at five sites are seeking urgent talks for reassurance about their jobs.

Unite national officer Jennie Formby said: "Whilst we recognise the commitment given by Berkshire Hathaway that it will be business as usual following the surprise change of ownership announced today, the 3,000 Unite members who work for Heinz in the UK will want more detailed assurances that their jobs and sites will remain secure.

"Unite will be seeking an early meeting with senior management to allow us to explore in greater detail what impact, if any, this acquisition will have for the UK business."

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2e2 Rescue Deal: Oakley Capital To Buy Chunk

By Mark Kleinman, City Editor

Scores of jobs could be salvaged on Friday through a deal to rescue the data centre operations of 2e2, the collapsed IT services group.

I understand that Oakley Capital, a private equity firm headed by Peter Dubens, the technology entrepreneur, is likely to announce that it has struck a deal to acquire a chunk of 2e2's operations.

People close to the talks said that Oakley was on Thursday night poised to acquire the business and assets of the 2e2 Data Centre business owned by its parent, 2e2 Group, which fell into administration last month.

The takeover would be executed through a new special purpose vehicle called Daisy Data Centre Solutions Limited. Oakley will then appoint Daisy Group, the AIM-listed IT services provider, to manage the assets.

Oakley is a major shareholder in Daisy, which Mr Dubens also chairs.

The deal is being undertaken by the private equity firm because of the need to expedite a rapid takeover to prevent a further defection of customers.

If it does get completed, the transaction will double the amount of data centre capacity offered by Daisy.

2e2 collapsed under the weight of substantial debts and has been haemorrhaging customers in recent weeks. Hundreds of jobs have already been axed.

Daisy had walked away from talks to buy the 2e2 assets earlier in the administration process. It is unclear how much Oakley is paying for the data centres unit.

None of the parties could be reached for comment.

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Republic In Administration As Website Shuts

Fashion retailer Republic has gone into administration and closed its website, putting 2,500 jobs at risk.

The normal website was replaced with a headline saying "Site Unavailable", along with a message from the joint administrators. 

Customers vented their frustration on social media outlets.

So-called onesies were popular at Christmas

The firm, which operates 121 stores across the UK with a stronger presence in the north of the country, has appointed administrators Ernst & Young to sell the business while it attempts to trade.

It has already made 150 employees redundant at the head office in Leeds.

Speaking to Sky News about the Republic redundancies, Chancellor George Osborne said: "It is always very, very sad news when a retailer goes bust and people lose jobs.

"We are going to work hard to make sure they have jobs to go to."

Republic is owned by private equity firm TPG.

The investment firm's website still promotes Republic as "one of the United Kingdom's top young adult fashion retailers".

Staff tweeted a message after the move to administration.

It said: "Sadly #Republic is now in the hands of Administrators. We did all we could but it's simply too tough out there. Thanks for your support."

Republic was still promoted on owner TPG's website entering administration

On Tuesday, Sky News City Editor Mark Kleinman revealed the retailer was poised to enter administration.

But hours later it still promoted itself as a viable concern with a tweet about its all-in-one outfits.

The tweet said: "We are indeed your one stop Onesie shop. And if you play our #RepublicRomance game you can get 10% off."

Hunter Kelly, head of corporate restructuring team at Ernst & Young, said: "Republic suffered poor trading results in the autumn, and whilst sales picked up in December there has been a sudden and rapid decline in sales in late January.

"The impact on cash flows has resulted in the business being unable to continue to operate outside of an insolvency process."

Republic began as a men's denim retailer in 1986 under the Best Jeans brand, and sells brands including Diesel, Firetrap and G-Star Raw.

Republic's demise is the latest in a string of British high street casualties in the last six months.

Music and entertainment retailer HMV, DVD rental firm Blockbuster and camera specialist Jessops have all gone into administration this year.

In October, electricals chain Comet also called in administrators.

Mr Osborne is aware of the trend in retail of increasing web-based purchases and its affect on the retail sector.

He told Sky: "I think you are seeing changes on our high street, a lot of clothing is sold online now so we are seeing changes in the way people shop in this country."

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BP Director To Chair Rolls-Royce

By Mark Kleinman, City Editor

A former partner of McKinsey, the management consultancy, is poised to be named on Thursday as the next chairman of Rolls-Royce, the aircraft engine-maker.

I can reveal that Ian Davis, who sits on the board of BP, is to join the board of Rolls-Royce in the coming months. He is expected to replace Sir Simon Robertson as the chairman of Britain's most important manufacturing company following its annual meeting in May.

The appointment will end months of uncertainty about the leadership of Rolls-Royce after it became mired in corruption allegations relating to payments made by its subsidiaries in China and Indonesia.

Mr Davis's appointment is expected to be announced alongside a bumper set of full-year numbers from Rolls-Royce, which analysts say will have notched up about £1.4bn in annual profit last year.

Mr Davis is well-known to the Rolls-Royce board member who led the search for Sir Simon's successor. Iain Conn, the senior independent director at the aircraft engine-maker, is also the chief executive of BP's refining and marketing operation, and insiders said that Mr Davis had been in discussions with Rolls-Royce for several months about taking the job.

Sources said tonight that Rolls-Royce was unlikely to provide a detailed update on the progress of the corruption probes alongside its results.

Last month, it said it had appointed Lord Gold, the eminent City lawyer, "to lead a review of its compliance procedures, reporting to the Ethics Committee of the Board. This follows the previous announcement by Rolls-Royce that it has provided information to the Serious Fraud Office (SFO) relating to concerns about bribery and corruption involving intermediaries in overseas markets".

The corruption allegations have cast a shadow over Rolls-Royce, which has enjoyed a largely unblemished reputation even as its rapid expansion during the last decade saw it accelerate sales in fast-growing emerging markets in Asia.

Mr Davis will need to tackle the ongoing inquiries and build a strong relationship with John Rishton, the Rolls-Royce chief executive, who has only been in the job for about a year.

In addition to his role on the board of BP, Mr Davis sits on the board of Johnson & Johnson, the US pharmaceuticals group, and is a senior adviser to Apax Partners, the private equity firm. He is also a non-executive member of the board of the Cabinet Office.

Rolls-Royce today announced that it had struck a deal with the Ministry of Defence to supply nuclear propulsion technology to the military, a contract that it said would save the Government £200m and protect 2,000 British jobs.

The search for a new chairman was overseen by MWM Consulting, the boardroom headhunters.

Rolls-Royce declined to comment.

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Horsemeat Crisis To Widen, Findus Backer Says

By Mark Kleinman, City Editor

The management of Findus UK has been slow to react to the scandal over contaminated ready-meals and has dealt incompetently with the public relations aspects of the crisis, according to one of the company's main shareholders.

In an exclusive interview with Sky News, Lyndon Lea, a partner at the private equity firm Lion Capital, complained that he had learned of the contamination of Findus beef lasagne with horsemeat three days after the products had been withdrawn from supermarket shelves.

"We were notified by the chairman of the company as a shareholder on Wednesday February 6 and the information passed was that there was a labelling issue on some Findus beef products," he said.

"Later that afternoon it was disclosed that the labelling issue was in fact horsemeat. I found out the following day."

Mr Lea, a prominent investor in British companies and a former owner of Wagamama, the restaurant chain, and Weetabix, the breakfast cereal, questioned Findus's approach to the crisis.

"Within hours [of finding out] I sent an email to the chairman stating that Findus needed to step forward and accept responsibility, apologise to the consumer, restore trust in the brand and be very visible in managing this crisis," he said.

"Findus took advice from its public relations adviser, Burson Marsteller, who gave exactly the opposite advice and felt that this was an industry issue and not a Findus issue."

Lyndon Lea was a co-founder of Lion Capital in 2004

Lion Capital acquired Findus in 2008 in a deal worth £1.1bn but ceded control of the business as part of a financial restructuring last year.

JP Morgan, the Wall Street bank, and Highbridge, a hedge fund manager it controls, now own two-thirds of Findus between them.

Mr Lea, who does not sit on the Findus board, said the company had managed the technical elements of the horsemeat issue capably but said the chairman, Dale Morrison, had compounded the crisis by not handling the reputational aspects in the same way.

Although Lion now owns only one-third of Findus' shares, Mr Lea ruled out a fire-sale of his firm's stake.

"I am enormously frustrated, yes. In any Lion-controlled investment we would not have handled the PR in the manner it has been handled by Findus," he said.

"We believe in the investment, we believe it is a good business, and we wouldn't look to any quick sale of our stake. It does, though, give me pause for thought about ever putting myself in a minority [investment] position again."

The Lion Capital partner said he suspected that "criminal activity" was behind the horsemeat scandal and denied that cost-cutting related to the financial restructuring of Findus was to blame.

"I don't think that's the case at all. If that were the case then what we're seeing more broadly in the food chain we would not be seeing," he said.

"Clearly, Tesco is not a private equity-owned company, and they're also having the same issues. Where there is intent and criminal activity, it is very hard to legislate for that."

And Mr Lea insisted that he would be comfortable with members of his family eating Findus beef-based ready-meals.

"Absolutely, I think it's very important to draw a distinction here. There have been no food safety or health issues reported with the consumption of horsemeat," he said.

"It's not something I or many people in the UK would choose to consume but there are no health issues with it, so on that basis, yes."

Mr Lea, who rarely gives interviews, also said Lion had launched its own probe into the issue but cautioned that this was at an early stage.

"Comigel supplied to Findus product that was contaminated. Logic would say that liability resides with Comigel," he said.

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UK To Avoid Triple-Dip Recession, Says CBI

Despite cutting its growth forecast for this year, the CBI has said that it believes the UK is in the clear when it comes to a triple-dip recession.

However, the leading business body expects the UK economy will grow 1% in 2013, less than its previous estimate of 1.4%.

It warned of the potential for a new "flare-up" in eurozone tensions, which would hold back confidence and keep growth in check.

But, a rise in job vacancies and an improvement in business sentiment since its last forecast suggested the economy would avoid another recession and grow 0.3% in the first quarter of this year.

CBI's director-general John Cridland said: "We are beginning to see the return of organic growth, with clear signs that firms offering the right products into the right markets are growing sales and expanding.

"Recent business surveys also give grounds for cautious optimism about our forward prospects."

The CBI predicts that UK exports will be stronger this year.

Hopes that Britain will avoid another recession have also been boosted by recent surveys, which showed the services sector returned to growth and manufacturing output rose at its fastest pace since September 2011 in January.

The CBI is forecasting that inflation will edge higher until mid-2013, but will fall back in the second half of the year, and will be close to the Bank of England's 2% target throughout 2014.

On another positive note, UK exports will be stronger this year, with the global economy likely to grow faster as growth in China picks up and the US economy continues its "relatively solid, if unspectacular recovery".

But conditions will still be difficult for households in 2013, given weak growth in household spending power and unemployment at around 7.8%.

Unemployment levels are unlikely to change significantly over the forecast period, at 2.5 and 2.42 million in 2013 and 2014 respectively.

Next year, the CBI is expecting growth of 2%, unchanged from its November forecast, whilst quarter-on-quarter growth is expected to be modest at around 0.5-0.6%.

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RBS Chairman: Stephen Hester's Pay 'Modest'

Stephen Hester, the chief executive of Royal Bank of Scotland (RBS) is doing one of the toughest jobs in world business and is being paid a "modest" salary compared to his peers, MPs have been told.

Chairman of the bank, Sir Philip Hampton, said the chief executive was doing the most difficult job in the industry, and his pay was relatively small.

Mr Hester also mounted a robust defence of his performance, insisting he had managed to get the taxpayer "off the hook" for huge liabilities over the past four years.

The comments came as the bosses were questioned by the Parliamentary Commission on Banking Standards at the House of Commons.

Sir Philip told the panel: "I don't think it is hyperbole to say that Stephen is doing one of the most difficult and challenging, demanding jobs in world business ... because RBS was the biggest banking failure in the world and Stephen took it on at an exceptionally difficult time.

"He is also in his four years in charge being paid well below the market rate for a job in world banking."

He said Mr Hester's basic salary is around £1.2m a year, plus a pension contribution of around £400,000.

The CEO is also in line for an annual bonus of up to £2.4m and a long-term bonus of more than £4m - although Sir Philip stressed that the company had not performed well enough to trigger the full sum.

RBS was bailed out in 2008, and the Government now owns 82% of the bank

"These are very large amounts of money, none of which I hasten to add is triggered, so these are theoretical amounts which Stephen has not received anywhere remotely close," he said.

"So he has been doing one of the most challenging jobs and he has been one of the least well-paid.

"These are still very large amounts of money clearly by most standards - but relative to other people doing these jobs his pay has been modest, relatively."

The session came less than a week after the bank was fined £390m by regulators in the UK and US for its part in rigging the Libor inter-bank lending rate.

Around £300m of this penalty will be clawed back from the bonus pool at RBS, which is 82% owned by the taxpayer.

Some 21 staff have left or are going through disciplinary proceedings in the wake of the revelations.

John Hourican, the head of the bank's investment banking arm, who was brought in to rescue the business after it was bailed out in 2008, is to forfeit around £4m in share options awarded to him based on past performance.

However, he will leave the bank with 12 months' pay worth £775,000 as he resigns over its involvement in the Libor-rigging scandal.

In a memo to bank staff obtained by Sky News, he said he bore "some responsibility" for misconduct, despite having no involvement in, or knowledge of, efforts to rig Libor submissions by RBS staff.

Commission chairman Andrew Tyrie said Mr Hourican had "paid a high price" - and asked Mr Hester if he thought there was a case he too should pay with his bonus.

Mr Hester said his bonus should be assessed on a broad range of issues, not just Libor.

"I think that my bonus should be assessed on all of the things I do well and badly," he said.

"And judgement should be reached in the round. Obviously it's not me that makes a judgement - it is the chairman and board.

"If you look at the RBS that we took on four years ago or so, we have done huge things to rescue a situation for the company and for society and for its different stakeholders, which includes hundreds of billions of pounds of risk that the country was exposed to, that it isn't exposed to anymore.

"So I think it is entirely proper for me and the board and the management team to be assessed on the things that we have done and the things we have not done.

"I believe that this nation is off the hook of a lot of bad things, but not yet all the way off the hook.

"There was never any prospect we could have discovered everything immediately, or fixed everything immediately, but we must of course be accountable for the balance of what we discovered, what we fixed, and in what period."

Earlier, Mr Hourican told the cross-party commission: "I do accept responsibility for the behaviour of our staff and therefore I accept responsibility for the failings that we have found.

"It is important that we do not talk about accepting responsibility and then not do so in our actions. That is why I have resigned."

Head of RBS Group's markets division, Peter Nielsen, said he also contemplated quitting.

"Of course I contemplated resigning," he said. "Indeed John and I talked about it. We talked about myself going instead of him."

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Barclays Boss Jenkins Sharpens Jobs Axe

By Mark Kleinman, City Editor

Barclays is to axe thousands of jobs outside its investment bank as part of a streamlining of Britain's second-biggest lender under its new chief executive.

The cull, which will come alongside roughly 2,000 previously-reported cuts inside Barclays' investment bank, will underline the scale of the transformation planned by Antony Jenkins, who took on the top job five months ago.

Details of the job cuts are expected to be announced later alongside a wider review of the bank's operations.

The precise number of cuts being planned by Mr Jenkins was unclear on Monday evening, but even 7,000 job losses across the group would represent just 5% of Barclays' 140,000-strong workforce.

Barclays Chief Executive Antony Jenkins

One insider said that the cuts would be "significant" and could reach "double-digit thousands over time", but refused to be specific.

Mr Jenkins has drawn up a series of plans aimed at rebuilding Barclays' reputation among both shareholders and customers.

His blueprint will include cutting Barclays' bonus pool to less than £2bn and forcing senior investment bankers to hold onto their awards for longer.

The new boss will also, as Sky News revealed on Saturday, take the axe to Barclays' structured capital markets unit, which made hundreds of millions of pounds for the bank through complex tax-led transactions.

Barclays will announce its annual results for 2012 this morning.

Despite a £290m fine for Libor-rigging and more than £1bn being set aside for mis-selling products to customers, the bank is expected to report substantial profits.

Barclays declined to comment.

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Sir Stelios Threatens EasyJet Showdown

EasyJet founder Sir Stelios Haji-Ioannou has stoked up his increasingly bitter feud with the airline by vowing to vote against the company at its annual meeting later this month.

The entrepreneur, who with his family holds 36% of easyJet's shares, will oppose the re-election of Sir Mike Rake as non-executive chairman and the board's remuneration report.

Last month he threatened to sell off his family's huge stake in the low-cost operator.

The meeting in Luton on February 21 will be another showdown in the long-running protest by Sir Stelios, who is unhappy at the company's plans to place a large order for a fleet of more fuel-efficient aircraft.

Sir Stelios, who last year failed in two attempts to oust Sir Mike, insists the new planes are not necessary and will be acquired at the detriment of shareholders.

He is also unhappy that Sir Mike is standing for re-election, when he has already announced he will leave the company in the summer because easyJet's expected promotion to the FTSE 100 Index will conflict with his role as chairman of another blue-chip company, BT Group.

EasyJet among Europe's most successful airlines

Sir Stelios said: "We do not believe directors who have resigned should be allowed to commit any company to a major programme of capital expenditure that will burden the company for five to seven years after their departure."

The tycoon, who claims he has no favourites about who the next chairman should be, believes Sir Mike's other roles, including as deputy chairman of Barclays, mean he is too busy to do justice to all the jobs.

However, easyJet has said it is encouraged that advisory service ISS has urged shareholders to vote in favour of all resolutions at the AGM.

It has said: "Our institutional shareholders have strongly supported the board at recent general meetings and we are confident that they will continue to do so at easyJet's forthcoming AGM."

The airline is currently the 83rd biggest public company in UK and with a market capitalisation of £3.9bn is on track to enter FTSE 100 when the index's next reshuffle takes place in March.

Its shares are currently at an all-time high and have already climed by 25% this year. The airline posted better-than-expected results last month.

Sir Stelios founded easyJet in 1995 and resigned as chairman 10 years ago.

He remained as a director until 2010, when he quit the board following a row over strategy.

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Minister's Fear Of Horsemeat Scandal Scale

How Horsemeat Scandal Unfolded

Updated: 9:29pm UK, Friday 08 February 2013

The horsemeat scandal has been unfolding for weeks and products have been flying off the shelves, although not in a good way. Where did it all begin?

January 16

The Food Safety Authority of Ireland says beefburgers with traces of equine DNA, including one product classed as 29% horse, are being supplied to supermarkets by Silvercrest Foods in Ireland and Dalepak Hambleton in Yorkshire, subsidiaries of the ABP Food Group.

Ten million suspect burgers are taken off the shelves, including by retailers Tesco, Lidl, Aldi, Iceland and Dunnes Stores.

A third company, Liffey meats, based in Co Cavan, Ireland, was also found to be supplying products to supermarkets with traces of horse DNA.

January 17

The ABP Food Group suspends work at its Silvercrest Foods plant in Co Monaghan, Ireland, until further notice.

Sainsbury's, Asda and the Co-op later withdrew some frozen products as a precaution but had not been found to be selling contaminated food.

January 23

Burger King, which is supplied burgers by ABP Food Group, switches to another supplier as a precautionary measure.

January 25

Waitrose removes a range of frozen burgers made by Dalepak but says its burgers have been tested and are 100% beef.

The Food Standards Agency said tests at a Dalepak plant in North Yorkshire had found no traces of meat contaminated with horse or pork DNA.

However, Aldi found traces of pig and horsemeat in samples taken from three lines of Dalepak burgers.

It withdrew Specially Selected Aberdeen Angus Quarter Pounder, Oakhurst Beef Quarter Pounders and Frozen Oakhurst Beefburgers from sale.

February 4

Production at a second meat supplier, Rangeland Foods in Co Monaghan, is suspended after 75% equine DNA is found in raw ingredients, The Department of Agriculture confirm.

February 5

Frozen meat at Freeza Meats company in Newry, Northern Ireland, is found to contain 80% horse meat, The Food Standards Agency Northern Ireland said. It is potentially linked to the Silvercrest factory in the Republic of Ireland.

Asda withdraws products supplied by Freeza Meats.

February 6

Tesco and Aldi take down frozen spaghetti and lasagne meals produced by French food supplier Comigel following concerns about its Findus beef lasagne.

The FSA reveals a second case of "gross contamination" after some Findus UK beef lasagnes were found to contain up to 100% horse meat. The products were made by French food supplier Comigel.

February 8

Aldi withdraws its Today's Special Frozen Beef Lasagne and Today's Special Frozen Spaghetti Bolognese after tests showed the products contained between 30% and 100% horsemeat.

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Exclusive: Barclays To Shut Tax Advice Unit

By Mark Kleinman, City Editor

Barclays is to close its controversial tax avoidance unit as part of a drive to distance the bank from the perceptions of a "casino" banking culture which flourished under Bob Diamond, its former chief executive.

Sky News can reveal that Antony Jenkins, Barclays' new boss, will announce on Tuesday that it will wind down and close the division which was responsible for generating hundreds of millions of pounds in profit for the bank.

He will say that while legal, the tax avoidance schemes devised by its structured capital markets business were toxic for Barclays' reputation.

Mr Jenkins will commit to avoiding transactions whose sole purpose is to access tax benefits, according to a senior source inside Barclays' investment bank who has been briefed on his plans.

I have also learnt that the Barclays boss will also unveil a set of binding tax principles that will dictate the mandates in which the bank's executives are permitted to be involved.

During his appearance this week in front of the Parliamentary Commission on Banking Standards, Mr Jenkins said that the structured capital markets operation would be "changed" but he did not say it would be closed altogether.

Lord Lawson, the former Chancellor and a member of the Commission, accused Barclays of engaging in "industrial scale tax avoidance".

Mr Jenkins' announcement will be made amid a robust debate about corporate tax avoidance and at a difficult time for the reputation of Barclays and the wider banking industry, mired as it is in mis-selling scandals and a multi-agency investigation into the manipulation of the benchmark interest rate, Libor.

It is unclear what impact the tax unit's closure will have on Barclays' profitability, but its lucrative nature has not deterred Mr Jenkins' decision.

The news will be disclosed alongside Mr Jenkins' broader vision for Barclays as it emerges from the most significant crisis in its recent history.

It is unclear whether executives who work in the tax advisory unit will be reassigned elsewhere within Barclays, or whether some will leave.

Mr Jenkins is cutting a substantial number of jobs in its investment bank, further details of which will be outlined on Tuesday.

I understand that among the other measures that Mr Jenkins will announce as part of his effort to rebuild Barclays' reputation, he will say that Barclays will reduce the proportion of revenue generated by its investment bank that is paid out to staff.

Historically, Barclays has been among the most generous payers in the City, paying out 45% or more of revenues to employees in salary, bonuses and benefits.

After it bought the US operations of Lehman Brothers in 2008, Mr Diamond oversaw an aggressive push to help the bank compete with the likes of Goldman Sachs and JP Morgan on Wall Street.

For 2012, Mr Jenkins is expected to say that the proportion of revenue paid to staff in Barclays' investment bank stood at approximately 38%, and he will pledge to reduce that in the coming years to a level much closer to 30%.

The new Barclays chief will also signal that he plans to re-balance the ratio between dividend and bonus payments following an outcry from shareholders last year.

The bank paid three times as much to employees as it did to investors in 2011, and although he will not make a specific pledge about how far that will change, he is expected to reassure shareholders that he acknowledges their concerns about the issue.

Mr Jenkins has already waived his own bonus for 2012, conceding that the bank's £290m Libor-rigging fine and multi-billion-pound bill for mis-selling payment protection insurance and interest rate hedging products made the decision inevitable.

"Barclays is fundamentally changing," one insider close to Mr Jenkins said on Saturday.

"Next week is about showing that he is reshaping the bank in a radical way."

Barclays will be the first of the big UK banks to announce annual results for 2012 next week.

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RBS Boss Hester Paid Bonus Despite Fine

The boss of the taxpayer-funded Royal Bank of Scotland will be paid a bonus of £780,000 just weeks after his bank was fined £39m for rate-rigging.

Chief executive Stephen Hester will be given the bonus in shares next month as part of a reward scheme for his performance in 2010.

The payout will undoubtedly anger critics of such schemes across the City, especially given its timing so soon after the Libor scandal rocked RBS.

Mr Hester will be handed the shares next month, and will be able to cash them 12 months later. The exact value will depend on the share price when he cashes them in.

Stephen Hester is to get the payout next month

Mr Hester said last week he would stay to "finish the job" at the bank despite damning evidence from US and UK authorities over its role in the Libor scandal, dating back to 2006 and continuing through to late 2010 - when investigations had already begun.

RBS, which is 81% owned by the Government, will recoup around £300m from its staff bonus pool and clawing back previous awards to pay for the fines.

RBS said 21 staff were involved in attempting to manipulate interbank lending rates - specifically Japanese Yen and Swiss Franc Libor submissions - from 2006 to as recently as November 2010.

Mr Hester's payout next month is the second tranche of two-part reward scheme that was announced in 2011.

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