Former RSA Boss Makes Haste For TSB Chair

By Mark Kleinman, City Editor

Andy Haste, the former boss of RSA Insurance, is being lined up to take the helm of TSB as it prepares for a rebirth as an independent bank on Britain's high streets.

Sky News can reveal that Mr Haste has emerged as the preferred candidate to become chairman of TSB ahead of a planned flotation on the London Stock Exchange next year.

Mr Haste, who stepped down from RSA in 2011, has not yet formally agreed to take the role, and the approval of the Prudential Regulation Authority, the UK banking watchdog, would also be required.

That consent is unlikely to be withheld, however. Mr Haste is highly regarded from his time at RSA, where he steered the company from the brink of collapse, although it has endured a rockier period since his departure with two profit warnings in the last 10 days alone.

His appointment as TSB's chairman would give a boost to the prospects of a successful flotation of what will be the UK's seventh-largest lender.

Lloyds Banking Group, which is 33%-owned by taxpayers, has to sell TSB under the orders of the European Commission in return for the state aid it received when it was bailed out in 2008.

Lloyds had planned to sell the 632 branches to the Co-operative Group, a plan which was abandoned because of the financial crisis at the mutual.

TSB was relaunched in September and has pledged to restore local banking services to British communities.

The bank has a 4.3% share of the current account market and under the stewardship of Paul Pester, chief executive, wants to increase that to at least 6%.

It will also make a series of commitments next year about executive pay and transparency of lending decisions as it tries to distinguish itself from its high street rivals, many of whom remain tainted by mis-selling scandals which pre-date the financial crisis.

Mr Haste has taken on a portfolio of jobs since leaving RSA, including the deputy chairmanship of Lloyd's of London and an ad hoc role with Advent International, the private equity firm.

Taking on the TSB role would reunite him at least temporarily with George Culmer, the Lloyds Banking Group finance director, who joined the lender from RSA.

Among the other candidates interviewed for the TSB chairmanship was Dennis Holt, a former Lloyds TSB executive.

Lloyds has lined up Citi and JP Morgan, the investment banks, to work on the TSB flotation, which is pencilled in for the middle of 2014.

Lloyds declined to comment, while Mr Haste could not be reached for comment.

12.06 | 0 komentar | Read More

£11bn Olympics Benefit Target Met

A four-year target of raising £11bn worth of economic benefit from the London Olympics has been met in 12 months, the Government has said.

The country has benefited from new foreign investment, additional sales and firms winning contracts since last summer's events, according to a report.

The total includes £130m of contracts won by UK companies for next year's soccer World Cup in Brazil, and the next Olympic Games, in Rio in 2016

Trade and Investment Minister Lord Green said: "The delivery of London 2012 on time and on budget led to hosting nations turning to the UK to help deliver their own events with supply opportunities running into the billions.

"UK Trade & Investment has played a key role in helping British companies maximise these opportunities and the result is a #11.06 billion boost to the UK economy from the Games, reaching our four-year target in just over a year."

Secretary of State for Culture Media and Sport Maria Miller said: "Last year's Games put the UK in the global spotlight and showed the rest of the world that this country is open for business.

"The economic legacy of last year's Olympic and Paralympic Games is sometimes neglected but these figures show that the financial investment made into London 2012 has already been recouped."

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Barclays Bank 'To Axe 1,700 Branch Jobs'

Barclays is to slash 1,700 jobs from across its branch network, saying fewer staff are needed because more people are banking online.

The number of cashiers, personal bankers and managers employed by the bank is expected to be cut throughout 2014.

The trade union Unite described the decision as a "colossal mistake" and said it was challenging Barclays' claims that the way customers access their banking services is changing rapidly.

Dominic Hook, the union's national officer, said: "These employees deliver high levels of service that customers of the bank benefit from.

"Such a massive reduction will be very detrimental to the bank and will also be hugely challenging for the staff remaining."

Mr Hook said the union would be "pressing Barclays to reconsider" its proposal.

He said the bank had agreed to demands for a voluntary redundancy register, as well as training grants for anyone leaving Barclays and compensation for employees who reduce their working hours.

"The union will also be seeking firm assurances that there will be no compulsory redundancies following the completion of the voluntary exercise," Mr Hook said.

A spokesman for Barclays, which has more than 1,700 UK branches and employs about 140,000 people worldwide, said it was investing in new technology and improving customer service.

"This means training staff so they can provide that expert support but also reducing staffing levels in our branches where there is over capacity," he said.

"As a result of technological changes, we will be able to provide better service for our customers with fewer staff in our branches.

"Today we have outlined a voluntary redundancy scheme for those colleagues who are interested.

"We are committed to working with our impacted colleagues so that they are fully consulted and have access to the support and services they require."

Earlier this month, Barclays announced it was opening a number of seven-days-a-week branches in Asda supermarkets around the country.

On Wednesday, it announced its head of compliance Sir Hector Sants had resigned after he was placed on sick leave for stress and exhaustion.

12.06 | 0 komentar | Read More

Spain To Make Clean Exit From Bank Bailout

Spain's decision to make a clean exit from its bank bailout has been welcomed by Eurogroup, which is made up of finance ministers from euro-using countries.

It said it showed the effectiveness of steps to deal with excessive government debt.

Earlier, it was announced that Ireland's aid programme will end in December. Spain's wraps up in January.

Jeroen Dijsselbloem, who chairs Eurogroup, said: "These economies are back on the road to recovery."

In 2012 Spain tapped €41bn (£34.5bn) from the eurozone countries' bailout fund to recapitalise banks that faltered after a property boom collapsed.

EU Economy and Euro Commissioner Olli Rehn told a news conference that the Spanish financial market had stabilised, liquidity of banks had improved and deposits were rising.

He said the key now lay in the restructuring of Spain's local savings banks.

But the Eurogroup said Madrid still had work to do.

"We call on the Spanish authorities to rigorously continue the reform momentum to address any remaining challenges regarding the economic and fiscal situation, including the high unemployment rate and the vulnerabilities stemming from the still high private and external debt," the group said in a statement after talks in Brussels.

Greece, Portugal and Cyprus remain on bailout support as a result of  troubles with too much debt.

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Bank: UK Recovery Has Finally Taken Hold

Interest Rates To Rise As Handcuffs Come Off?

Updated: 6:14pm UK, Wednesday 13 November 2013

Let's start with the good news. The economy is recovering more convincingly than at any point since the financial crisis of 2008.

And while this is hardly new news (the figures have been pointing that way for a while), the Bank of England seemed to confirm it today as it raised its growth forecast for both this year and next year.

If its predictions are borne out, next year the economy will expand by 2.8% - the highest rate since 2007.

In fact, this isn't the end of the good news. Inflation is lower than expected; unemployment is also falling faster.

Almost any metric you care to look at suggests that this is turning into a benign and pretty solid recovery. Let's leave aside for the moment the question of why it's taken so long, and why that growth is uncomfortably reliant on consumer debt.

The big question, however, is what the Bank of England does next. Not only are interest rates down at 0.5% - the lowest level on record - the Bank's new Governor, Mark Carney, committed earlier this year not to raise them until unemployment dropped beneath 7%.

Forward guidance, as the bank calls it, is best regarded as a set of self-imposed handcuffs. Until the jobless rates drops beneath that magic number seven, the handcuffs stay on and rates don't go up.

And what we learned from the bank's Inflation Report today is that the handcuffs are likely to come off a lot sooner than had been expected.

Back in August, the bank didn't expect the unemployment rate to drop beneath 7% until at least the end of 2016.

Today it revealed it now believes unemployment will drop beneath this level at the end of 2014. That's a pretty big adjustment.

There are a few obvious implications. One is that the Bank's Monetary Policy Committee will be free to start voting on higher interest rates before the next election.

But taking the handcuffs off doesn't necessarily imply the captive will actually move his hands. Rates won't necessarily rise the moment forward guidance comes to an end.

Indeed, today the Governor signalled that markets, which currently expect the bank to start lifting rates in early 2015 and to bring them up to 1.7% by the end of 2016, may be getting ahead of themselves. However, if not before the next election, rate rises are likely shortly afterwards.

With the end of forward guidance (eg the handcuff period) already on the horizon, some have construed this as evidence of the policy's failure.

After all, it only kicked in three months ago. What, they ask, was the point of it in the first place?

The bank's answer is that forward guidance has helped cement the economic recovery and that recovery has come along sooner than expected, so that it's right forward guidance will come to an end (well, in late 2014/early 2015).

To use a rather odd analogy, consider the male honeybee. It dies as soon as it fertilises the queen bee, but its death allows the rest of the colony to survive.

In the same way, forward guidance, having stimulated economic recovery, will inevitably need to expire for the rest of the economy to recover. It is, in economic terms, the supreme sacrifice.

Economists are likely to argue about the wisdom or otherwise of the policy for some time. What matters for most of us is that growth is returning to the UK and that interest rates are likely to rise a touch sooner than expected.

One final noteworthy aspect of today's Inflation Report press conference was the amount of time the Governor spent answering questions about the housing market.

There is growing concern about a bubble (or at the very least some regional bubbles) emerging in UK property prices.

Mr Carney is clearly sensitive to this - we shall have to wait until the next meeting of the Bank's Financial Policy Committee to see whether he's willing to take action on it.

12.07 | 0 komentar | Read More

British Gas Owner To Warn On Domestic Margins

By Mark Kleinman, City Editor

The owner of British Gas will warn on Thursday of stuttering margins in its residential gas and electricity supply business as the row over energy profits rages on.

Sky News has learned that Centrica is expected to say in a third-quarter trading update that British Gas' domestic supply margins are likely to come in significantly below 5% for the full year.

The news is likely to fuel the debate about energy company profits amid accusations by ministers that the 'Big Six' suppliers treat customers as "cash cows".

Centrica's announcement is unlikely to constitute a full-blown profit warning, with City analysts forecasting a broad spread of outcomes for the full year.

However, insiders said that Centrica was likely to "massage expectations" for the full year because of rising costs outside the company's control, with some downward revisions to forecasts the likely outcome of its guidance.

Analysts have pencilled in an average projection of adjusted operating profit of £2.95bn for the full financial year.

In line with its usual practice, Centrica will not provide detailed quarterly revenue or profit numbers in Thursday's announcement.

It is, however, expected to highlight challenging market conditions across many of its businesses, reflecting anxieties that have sent its shares into a prolonged decline in recent weeks.

"The company is braced for the shares to take another hammering after the trading update," said a City source close to Centrica.

In a note to clients, analysts at Credit Suisse said last week that they had concerns about weaker margins in its business energy supply operations and lower profitability in its upstream oil and gas production unit.

British Gas announced last month that it would raise gas and electricity prices by an average of 9.2% from November 23, becoming the third of the six firms that dominate the industry to do so.

Only German-owned Eon among the six companies has not yet announced a price hike.

The escalating conflagration about energy prices has cost Sam Laidlaw, the Centrica chief executive, an annual bonus potentially worth up to £2m.

Mr Laidlaw said at last week's annual CBI conference that he would waive the payout because of the political climate, although he will still be in line for a multimillion pound long-term share award for this year.

The Centrica boss has pledged that any reduction by ministers in the green levies that constitute a large chunk of consumers' bills would result in immediate price cuts.

George Osborne, the Chancellor, is expected to use next month's Autumn Statement to remove some of the environmental tariffs affecting energy costs although the exact mechanism for doing so is unclear.

On Tuesday, Ed Davey, the Energy Secretary, warned at an industry conference that companies were treating customers as "cash cows" and said they risked being compared to the venality of banks before the financial crisis.

The criticism prompted a furious response from the industry. SSE announced on Thursday that it made an operating loss of £115m for the half-year to September at its energy retailing business.

12.07 | 0 komentar | Read More

Gas Bills 'Could Rise' Due To Low Reserves

By Thomas Moore, Health and Science Correspondent

Gas prices could soar this winter if the national supply runs short during another cold snap, an energy expert has warned.

Industry analyst Peter Hughes told Sky News that a "perfect storm" last March of extreme weather and the shutdown of two major pipelines caused prices to double.

And that could happen again because the Government has refused to support the storage of more gas.

"It foreshadows things to come," he said.

"The situation in terms of the risks will only get worse as North Sea production runs down and demand rises.

"That's the double whammy. And if you don't have more storage that translates into real vulnerability."

Britain currently stores enough gas for 13 days of supply. But Germany has reserves to last 69 days, in case there is a problem with the supply from countries such as Russia.

Storage companies buy up cheap gas in the summer, then release it over winter. The effect is to stop prices soaring.

A report by the Redpoint energy consultancy, commissioned by the Government, showed subsidies to encourage investment in more storage could save consumers almost £1bn over 10 years.

It examined four scenarios, three of which showed a net reduction in gas bills.

The UK stores gas in huge tanks - but Germany has five times more

But the Energy Minister Michael Fallon rejected subsidies based on the one scenario to show an increase in costs. He also ignored long term savings, making the costs look worse.

Speaking to Sky News he was unrepentant. "The money would...be put on consumers' bills now.

"I would have had to be persuaded that this was a subsidy worth paying. I don't think it is worth it."

Three projects to increase storage capacity have been shelved in the wake of the decision.

A plan to pump gas into caverns under the sea was shelved

Stag Energy had planned to pump gas into caverns under the Irish Sea, but said the scheme was now too expensive. Company boss George Grant said the Government had been shortsighted.

He said: "We view gas storage as an insurance policy for consumers.

"The Redpoint analysis shows there is a net benefit to consumers, but that's a point the Government glossed over."

12.06 | 0 komentar | Read More

Banks Do Battle In Cyber Warfare Exercise

By Ursula Errington, Business Reporter

Hundreds of staff from the UKs financial institutions will take part in a simulated cyber-attack today.

The exercise, the details of which have been kept top secret, will be overseen by officials from the Bank of England, Treasury and Financial Conduct Authority and will be monitored by the Government's cyber agencies.

It will concentrate on how investment banks would cope with a sustained attack on essential shared and company specific systems, such as clearing and risk management tools.

The cyber war game, called Waking Shark II, will be led by a team from Credit Suisse who have designed a scenario to be released to the participants in stages, as if the situation is unfolding in real time.

The test will take place in one room, with various companies and organisations sitting on different tables interacting as the situation gathers momentum. 

The aim is to help in-house IT security experts and fall-back operations planners to practice making swift decisions and communicate effectively with the regulator and industry partners to contain the problems thrown at them.

The last time such an extensive exercise was undertaken was in 2011, when institutions rehearsed how they would cope with a cyber-attack during the busiest period of the London Olympics.

From that, it became apparent that an investment banking-focused exercise would be useful to lay out communication protocols between banking institutions and governing bodies and to establish who would take the lead to co-ordinate a response in the event of such an attack.

According to David Emm, senior security researcher at internet security firm Kaspersky Lab, the right communication is vital in the aftermath of a cyber-attack.

He told Sky News: "Businesses must have a plan of action which includes all relevant stakeholders from both internal and external parties.

"Communication across other sectors can be important as the effects on one company can have far reaching consequences for many others.

"The UK Government is keen to pursue a joined-up approach to dealing with cyber-attacks which is good news, but more work still needs to be done to help all businesses adopt a more secure mindset; and exercises like this help contribute to this."

Results and recommendations from the exercise will be published by early next year.

12.06 | 0 komentar | Read More

Mobile Spending 'Could Be Worth £23bn' By 2018

By Poppy Trowbridge, Business and Economics Correspondent

This year has been dubbed 'The Mobile Christmas' and with 48% growth in mobile shopping, retailers are increasingly targeting shoppers through digital devices.

British retailers will spend nearly £400m on advertising during the last three months of 2013 and consumer spending via mobiles and tablets is worth about nearly £8bn a year, according to research firm Verdict.

But over the next five years, the spread of smartphones and tablets will see our spending on these devices triple to £23bn.

Spending via mobiles and tablets is expected to triple over five years

Two thirds of that shopping is done at home, as buyers often wait until they are logged in to a secure network before purchasing items.

Matthew Rubin, retail analyst with Verdict Research, said: "While we are expecting growth in successive years, we are expecting this year to be the highest level of growth. Retailers really need to invest in their mobile websites now."

John Lewis announced its £7m Christmas television advertising campaign on Friday. The ad is set to a cover of Keane's 2004 hit Somewhere Only We Know sung by Lily Allen.

Supermarket chain Morrisons launched its Christmas TV advertising campaign during the prime-time slot of ITV's Coronation Street.

Some 20% of home shopping business at Asda is done via mobile or tablet

Asda says 20% of its home shopping business is done via a mobile or tablet, and that figure is growing by 1% each month.

The living room is becoming a key location for retailers to target consumers, as 67.2% of all online shoppers making a purchase from their home do so in their living room.

Wealthy young shoppers currently dominate mobile and tablet expenditure, but with increased access to cheaper, high-specification devices, older shoppers will have a much bigger impact over the next five years, Verdict research shows.

Still, window shopping hasn't entirely given way to digital methods yet.

Around 38% of online shoppers still research goods by viewing them in a store before purchasing them online.

12.07 | 0 komentar | Read More

PM Targets Overseas Funds With New Trade Body

By Mark Kleinman, City Editor

Ministers are preparing to back the launch of an inward investment body that will target key British trading partners with the aim of raising billions of pounds from overseas to fund urban regeneration projects.

Sky News has learned that the Government is to unveil plans for the Regeneration Investment Organisation (RIO), a new 'one-stop shop' for foreign direct investors in the UK, within days.

RIO would, according to people familiar with its brief, be set up to attract inward investment into urban regeneration projects in the UK at a time when foreign investors have demonstrated a continuing appetite to pour money into infrastructure assets such as airports and utilities.

The new body has been developed under the auspices of UK Trade and Investment (UKTI), the Government's principal trade promotion organisation.

Its remit has been borne out of a frustration expressed by many major overseas investors about the bureaucracy and complexity of finalising major deals in the UK, according to one insider.

RIO has already begun appointing a senior management team, including Nahid Majid, an experienced urban planner who has worked for the Mayor's Fund for London, who will be RIO's chief operating officer.

According to details posted on LinkedIn, the professional networking website, Ms Majid's role is to work with sovereign wealth funds, pension funds, developers and international governments and UK embassies.

RIO's objective, it says, is to to develop "a pipeline of credible UK large-scale regeneration investment opportunities to market to overseas investors on ministerial and key overseas visits".

"This includes prioritising and promoting high quality opportunities; assessing the commercial viability (and) due diligence of projects and their suitability for promotion to overseas investors; analysing them against investor appetite and Ministerial priorities."

It will also involve "communicating and negotiating in resolving barriers to UK project delivery with UK government/ developers, and resolving investment barriers with international investors in the developed markets, Asia, Asia Pacific and the Middle East working with our network of UK global embassies," according to the website.

Employment adverts also accessible on the internet indicate that the RIO will aim to deliver £1.5bn of inward investment to the UK, although insiders said its ultimate ambition would be to achieve much higher figures.

The launch of the RIO could be announced as soon as this week, with David Cameron, the Prime Minister, due to make a key foreign policy speech at the Lord Mayor's Banquet on Monday.

Downing Street sources declined to comment on whether the new inward investment organisation would feature in his remarks at the event.

Mr Cameron is expected to visit China next month on a trade mission that will mark a continuing thaw in relations between the two countries following his meeting with the Dalai Lama last year.

George Osborne, the Chancellor, and Boris Johnson, the Mayor of London, were in China last month on separate efforts to drum up trade, although both trips were relatively light on specific deal announcements.

12.07 | 0 komentar | Read More

Mobile Spending 'Could Be Worth £23bn' By 2018

By Poppy Trowbridge, Business and Economics Correspondent

This year has been dubbed 'The Mobile Christmas' and with 48% growth in mobile shopping, retailers are increasingly targeting shoppers through digital devices.

British retailers will spend nearly £400m on advertising during the last three months of 2013 and consumer spending via mobiles and tablets is worth about nearly £8bn a year, according to research firm Verdict.

But over the next five years, the spread of smartphones and tablets will see our spending on these devices triple to £23bn.

Spending via mobiles and tablets is expected to triple over five years

Two thirds of that shopping is done at home, as buyers often wait until they are logged in to a secure network before purchasing items.

Matthew Rubin, retail analyst with Verdict Research, said: "While we are expecting growth in successive years, we are expecting this year to be the highest level of growth. Retailers really need to invest in their mobile websites now."

John Lewis announced its £7m Christmas television advertising campaign on Friday. The ad is set to a cover of Keane's 2004 hit Somewhere Only We Know sung by Lily Allen.

Supermarket chain Morrisons launched its Christmas TV advertising campaign during the prime-time slot of ITV's Coronation Street.

Some 20% of home shopping business at Asda is done via mobile or tablet

Asda says 20% of its home shopping business is done via a mobile or tablet, and that figure is growing by 1% each month.

The living room is becoming a key location for retailers to target consumers, as 67.2% of all online shoppers making a purchase from their home do so in their living room.

Wealthy young shoppers currently dominate mobile and tablet expenditure, but with increased access to cheaper, high-specification devices, older shoppers will have a much bigger impact over the next five years, Verdict research shows.

Still, window shopping hasn't entirely given way to digital methods yet.

Around 38% of online shoppers still research goods by viewing them in a store before purchasing them online.

12.07 | 0 komentar | Read More

Miliband Slams Payday Lenders' Kids Ads

Payday loans companies should be banned from advertising during children's TV shows, Labour leader Ed Miliband has said.

Mr Miliband used a piece in the Sun on Sunday newspaper to claim youngsters are targeted by firms keen to exploit "pester power".

Calling for them to be treated the same as gambling and junk food promotions, he said that, if the Advertising Standards Authority failed to act, a Labour government would legislate.

Accusing the companies of using "cartoon characters, trendy puppets or cute plasticine figures" to attract children, he writes: "We all know kids learn about values of family and friendship from what they watch.

Payday loan firms such as Wonga are accused of preying on children

"We also know how easily they can be influenced. That's why I really worry when payday lenders target our kids and young people.

"And that's what the evidence suggests they are doing. How else do we explain hundreds of thousands of pounds being spent by pay day lenders for adverts during children's TV programmes.

"And why else are they using cartoon characters, trendy puppets or cute plasticine figures in some of their ads?

"They aren't simply doing it to appeal directly to parents. They want to use pester power to get kids and teenagers to put pressure on their parents."

He cited a recent survey that showed more than one in three people with youngsters under 10 said their children had repeated payday loan ad slogans to them.

Father-of-two Mr Miliband is concerned about the influence of ads on kids

"The next Labour government will ask the Advertising Standards Authority to prevent irresponsible advertising by pay day lenders that targets or exploits children and young people," he said.

"This is not just about content but also the time of day when such adverts are shown. There is no justification for ever selling pay day loans during children's TV."

Martin Lewis, the founder of MoneySavingExpert.com, backed Mr Miliband's views - having previously told a Commons committee the companies' behaviour amounted to "grooming".

Bosses from the industry - which is under investigation by the Competition Commission - defended their practices when they appeared before MPs.

Henry Raine, head of regulatory and public affairs at Wonga, told the committee: "Wonga's business is aiming to lend to people who can pay us back, that's how we make money.

"The vast majority of people pay us back on time. We freeze interest after 60 days and 25% of people pay us back early."

Mr Raine said around 3% of loans, equating to around 40,000 of Wonga's 1.25 million customers, go to the 60-day period.

He said Wonga's record compared favourably with the rest of the loan industry, including credit card companies and banks.

12.07 | 0 komentar | Read More