Facebook Shares Close At Opening Day Value

Facebook shares have closed at their highest level since their debut trading day 14 months ago.

Shares in the social media company rose 1.5% to $38.05 (£24.86) on Friday, a closing price not seen since the firm's initial public offering (IPO) on May 18 last year.

Facebook's IPO was one of the worst in a decade, and the stock fell to a low of $17.55 (£11.48) in September.

But its mobile advertising business is what appears to have helped the company to turn the corner.

At a technology conference in September 2012, CEO Mark Zuckerberg said: "Now we are a mobile company.

"We know that we're going to do well on that. There's a huge opportunity. Now the question is getting there."

Shareholders and advertisers appear to have been won over with its mobile strategy, which is predicted to generate more than $16bn (£10.47bn) in sales by 2017.

The rise increases the wealth Mr Zuckerberg, 29, who founded the company in 2004.

According to recent data he is now worth $18.4bn (£12.04bn).

It is understood that Mr Zuckerberg's next step is to sell TV-style commercials that marketers can broadcast into a user's news feed.

11.46 | 0 komentar | Read More

Ireland Digs Deep For Economic Recovery

By David Blevins, Ireland Correspondent, in County Mayo

Seismic surveys are to be carried out to ascertain if Ireland has enough oil and gas reserves to export fuel.

Shell is already building the longest gas tunnel in Europe (4.9km) to transport fuel from one field, 85km off the west coast.

If Russia ever turns off the supply, Ireland may soon be able to offer an alternative.

Michael Crothers, managing director of Shell Ireland, explained: "Because Ireland is beside a major market, and the UK is looking at decommissioning nuclear facilities, having to shut down coal-fired power plants because of greenhouse gas emissions, there's an enormous opportunity for Ireland, if gas can be found, to export into that ready market."

At the peak of its 20-year life, gas from the Corrib field will meet two thirds of Ireland's need. 

The ambitious project has created 1,400 construction jobs in County Mayo, a remote region previously blighted by unemployment and emigration.

Bernadette McManamon, a civil engineer, said: "Sixty percent of my class, if not more, have emigrated and most of them are in Malaysia or Australia and some in America so I definitely wouldn't be working in Ireland … if it wasn't for the Corrib gas project."

The exploration has not been without its opponents. In 2005, five local protesters - the so-called 'Rossport Five' - went to prison.

Civil engineers will carry out the seismic surveys

Lessons have been learned about the need for greater engagement with communities along the coastline before any prospecting takes place.

Gerry Coyle, a Fine Gael councillor, said: "You cannot come in and go telling them what to do. You have to explain in great detail.

"Sometimes, it's very difficult on communities. This community were cast into the middle of this. They didn't go looking for gas. Gas came to them."

Mr Crothers agreed: "I really think it depends upon how they are approached. Any project is a balance between the social, the environmental and the economic and getting that balance right is key."

The gas has brought an estimated 6bn euros (£5bn) for Ireland's GDP.

Tommy Talbot, who opened a local hotel during the recession, said: "You drive from here to Dublin and there's a lot of towns on the way out - Roscommon, Leitrim, there's nothing in them. They really are struggling.

"Down here, we really have been cushioned by the development."

To date, they have found one trillion cubic feet of gas in the Corrib field, boosting the country's energy security.

If the seismic surveys turn up enough fuel for export, Ireland could have found the solution to its economic problems.

11.46 | 0 komentar | Read More

RBS Thrashes Out Pay Deal For New Boss McEwan

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) is on the verge of agreeing a pay deal for its new chief executive that will be sharply lower than that of Stephen Hester, his predecessor.

Sky News understands that UK Financial Investments (UKFI), the agency which manages taxpayers' 82% shareholding in RBS, is poised to sign off on a remuneration package for Ross McEwan, who will be appointed later today to one of the toughest jobs in banking.

Mr McEwan is understood to be in line for a base salary of approximately £1m, less than Mr Hester's £1.2m annual pay, as well as bonus and long-term incentive plan (LTIP) entitlements that are also understood to be lower than those of the outgoing chief executive.

The RBS board has agreed to Mr McEwan's appointment and is awaiting the approval of the Prudential Regulation Authority (PRA), but is expected to say tomorrow alongside half-year results that he is to replace Mr Hester.

It is likely that the new boss's pay deal will be disclosed alongside the news of his elevation to the top job.

Under the terms of his contract, Mr Hester was eligible for a bonus of twice his basic pay and an LTIP award of four times his salary, theoretically putting him on an annual £8m-plus package.

However, he rarely collected anything like that sum after waiving several annual bonuses under intense political pressure and failing to meet performance targets that would have triggered the release of long-term share awards.

Because he is not currently on the RBS board, Mr McEwan's remuneration is not disclosed in an identifiable way, although RBS did pay him roughly £3m in shares to buy him out of his contract with his previous employer in Australia.

People close to the situation said that no decision had been made on Thursday afternoon whether Mr McEwan's pay deal would replicate that of his Lloyds Banking Group counterpart, Antonio Horta-Osorio, whose annual bonus is partly dependent upon the price at which the Government sells a chunk of its 39% stake in the bank.

RBS's majority state ownership means that George Osborne, the Chancellor, will also need to approve Mr McEwan's pay package before it is announced.

Sky News revealed last week that Mr McEwan, a New Zealander who currently runs RBS's UK retail banking operation, was the frontrunner to take over from the departing chief executive.

RBS and UKFI declined to comment.

11.46 | 0 komentar | Read More

Half Of UK Nation 'Living On The Edge'

Around nine million more adults are struggling with money compared to seven years ago, a report into the health of the nation's finances has found.

More than half (52%) of those surveyed are living on the edge, equating to 26 million people across the UK, Government-backed body the Money Advice Service (MAS) said.

This is a sharp increase from 35% of people who were having difficulty keeping up with bills the last time similar research was carried out in 2006.

The service found that many people are suffering from poor financial skills and the squeeze on families following the economic downturn has encouraged a "live for now" culture which is dragging down people's ability to save enough for their future.

Income per hour has dropped by 6% in real terms since the previous research was carried out, making it harder for people to make ends meet.

More than 5,000 people took part in the latest financial capability survey and more than 70 families were followed over the course of a year for the Financial Capability Of The UK report, which found "a general feeling that people worry about their ability to make it to the next pay day".

It continued: "And because of this, people are focusing more on the here and now than on planning for the future, including for unforeseen emergencies."

One in five people surveyed said they would rather have £200 now than £400 in four months' time. Two-fifths also said they would have to think about how they could cover an unexpected £300 bill and one quarter said they prefer to live for today rather than plan for tomorrow.

Caroline Rookes, chief executive of the service, said: "In theory, money management is easy - spend less than you earn and consider your future - but the difficulty comes when applying this to the real world."

A Treasury spokesman said: "We recognise that times are still tough for families, but Britain is holding its nerve, we are sticking to our plan, and the British economy is on the mend.

"The Government has taken continued action to help households with the cost of living, including cutting tax for 25 million people by raising the personal allowance and freezing fuel duty."

MAS, an independent body set up by Government, has a statutory objective to raise public understanding and awareness about financial matters. It is due to publish a strategy on how people can be helped to improve their finances next year.

11.46 | 0 komentar | Read More

Banks Accused Of 'Despicable' Lack Of Lending

By Poppy Trowbridge, Business and Economics Correspondent

Britain's banks are ruining the country's fledgling businesses by withdrawing funding, according to the author of a scathing dossier.

Lawrence Tomlinson, entrepreneur in residence at the Department for Business, Innovation and Skills (BIS), has provided the Business Secretary with evidence of alleged misconduct towards companies by the lenders, including the government-backed Royal Bank of Scotland and Lloyds Banking Group.

"The behaviour we have uncovered has been pretty despicable really," he told Sky News.

"We have seen peoples' businesses and peoples' livelihoods being destroyed, rather than being supported, by banks."

A spokesman for Vince Cable said he has "repeatedly made clear his concern"

Mr Tomlinson said he was aware of cases in which businesses were deterred from accessing finance before even being given the chance to apply.

Other cases documented how businesses were charged what he called "astronomical" fees and consequently put into financial distress.

Mr Tomlinson said his findings are backed up by ex-bankers who claim the issues occur at an institutional level.

Responding to the report, RBS, which is about 80% owned by the taxpayer, said it was the largest lender to small and medium-sized enterprises (SMEs) in the UK.

"We have established an independent review of our lending standards and practices to identify steps we can take to support even more SMEs and play our part in securing the economic recovery," it added.

Lloyds Banking Group, nearly 40% held by taxpayers, said it is growing lending to SMEs, adding: "Our net lending growth is 5% year-on-year, even though it has been falling by 3% across the banking industry. We are accepting eight out of 10 applications for finance."

Meanwhile, a BIS spokesman said Mr Cable had "repeatedly made clear his concern" about the level of support the banks are offering.

"He has seen the case studies Lawrence Tomlinson has compiled and finds them worrying, particularly the apparent reluctance amongst businesses to speak out," the spokesman said.

"A number of these cases involve RBS and the Secretary of State has asked (for them to) be considered under the independent review of lending practices that the bank has recently announced."

Since the financial crisis, banks have had to put more cash aside to meet tougher safety demands by regulators.

This has partly constrained the amount of capital they have been willing to lend to individuals and small and medium-sized firms.

However, latest figures suggest the lending squeeze may be lifting.

The Bank of England says lending to small businesses rose by £238m between May and June - the biggest monthly rise since the data was first recorded in 2011.

11.46 | 0 komentar | Read More

British Gas To Offer Free Power On Saturdays

British Gas owner Centrica is considering offering free power to customers on Saturdays to encourage energy use when overall demand is low.

As part of a shake-up in the way energy is used and paid for, free energy tariffs could be offered to those who have a 'smart meter' installed in their homes.

British Gas has fitted over a million of the devices, which detect how much power is used on each day, in UK properties so far.

The offer would apply to homes and not businesses and to electricity use, not gas.

The proposals mirror tariffs already available to US customers of Direct Energy, the sister company of British Gas in North America.

One million Centrica customers already have smart meters

A Centrica spokesman told Sky News: "In Texas, we had a product called 'free power Saturdays'. A fairly simple idea, free power on a Saturday.

"The thinking behind it is for customers to concentrate energy use when demand is low, to reduce demand in the week.

"We are looking to do that over here, we've been thinking about it for a while. A small trial is running at the moment."

He said the scheme would only work for homes that have a smart meter, which would allow Centrica to know when electricity is being used, including whether it is being used on a Saturday.

"This is in the very early stages. It could be in place by mid next year, hypothetically," he added.

The move comes amid political pressure to lower bills

The move is likely to be seen as a reaction to political pressure on the UK's 'Big Six' energy suppliers to cut bills and ensure customers are getting the best deals as Britons struggle to cope with the rising cost of living. 

Sam Laidlaw, chief executive of Centrica, told the Financial Times: "We need to get more smart meters in the UK, and if it (free power days) does come to the UK it will be at least six months."

The announcement came just hours after British Gas announced profits for its residential energy business in the six months to the end of June grew by 3.2% to £356m.

The company has insisted that it did not cash in on the bitterly cold start to the year, despite gas consumption rising by 13%. It defended the rise in profits, saying they were curtailed by "significantly higher environmental and commodity costs".

11.46 | 0 komentar | Read More

City Watchdog Rules Barclays Misled Investors

By Mark Kleinman, City Editor

The City watchdog has warned Barclays that it could impose financial penalties on the bank and some of its top executives as part of a probe into fundraisings that allowed the British lender to avoid taxpayers' clutches in 2008.

Sky News has learnt that the Financial Conduct Authority (FCA) has ruled that Barclays struck commercial arrangements on terms that were favourable to Qatari investors in the summer of 2009 which should have been disclosed to the stock market.

In a preliminary judgement handed to the bank late last month, the FCA expressed a view that the arrangements should have been disclosed to the stock market, according to people familiar with the discussions.

The FCA is understood to have told the bank, which on Tuesday announced plans to raise almost £8bn from investors through a combination of new shares and bonds, that it could seek to fine both Barclays and the executives involved, who include John Varley, its former chief executive.

In its half-year results statement on Tuesday, Barclays referred to the progress of the investigation without providing further details.

"The FCA and the Serious Fraud Office are both investigating certain commercial agreements between Barclays and Qatari interests and whether these may have related to Barclays' capital-raisings in June and November 2008.

The FCA investigation involves four current and former senior employees, including Chris Lucas, group finance director, as well as Barclays.

"The FCA enforcement investigation began in July 2012 and the SFO commenced its investigation in August 2012.

"The FCA provided its preliminary findings against Barclays on 27 June 2013 in respect of some of these commercial agreements. Barclays has responded on 25 July 2013 contesting the FCA's preliminary findings.

"Barclays expects further developments in the near term."

Barclays is understood to believe that the FCA's findings are without merit.

The authorities' inquiries centre on two fundraisings which handed Barclays more than £11bn, allowing it - unlike Lloyds Banking Group and Royal Bank of Scotland - to remain out of taxpayers' hands.

The new details come a day after reports that the SFO had requested an additional £2m in funding from the Treasury for its part of the investigation.

The probes pose a headache for Antony Jenkins, the Barclays chief executive, who is attempting to move Barclays on from the scandals of the recent past, which included a £290m fine for Libor-rigging last year.

Reporting half-year profits of roughly £3.6bn, down 17% owing to the cost of implementing Mr Jenkins' restructuring plan, the bank unveiled a deeply-discounted rights issue, which will involve issuing £5.8bn of new shares to investors.

Barclays and the FCA declined to comment further.

11.46 | 0 komentar | Read More

Nazi Gold Moved And Sold By Bank Of England

The role the Bank of England (BoE) played in moving and selling gold looted by the Nazis has been revealed in a previously unpublished file.

A record from the bank's archive shows it transferred £5.6m of gold from Czechoslovakia on behalf of Germany's Reichsbank, following the Nazi invasion in 1939.

The gold was moved from the National Bank of Czechoslovakia's account at the central Bank for International Settlements (BIS) to an account managed on behalf of the Reichsbank.

Some of the gold was later sold in London.

The 10-page document, published on the BoE's website, was produced following the Second World War amid fears the bank's position had "never been thoroughly appreciated" and that "their action at the time was widely misunderstood".

It states: "On March 21, 1939, the Chief Cashier received the request to transfer about £5.6m gold from the BIS No.2 Account to their No.17 Account.

"The bank, although it was no business of theirs, was fairly sure that the No.2 Account was a Czech National Bank Account and they believed, although they were not sure at the time, that No.17 was a Reichsbank.

"The amount was transferred on the same day and a small further amount on March 22.

"Between March 21 and 31, the gold received on the No.17 Account was disposed of, (with) about £4m going to the National Bank of Belgium and the Nederlandsche Bank and the remainder being sold in London."

The BoE document said its actions were "widely misunderstood"

The report also reveals the Governor of the Bank of England rejected a call from his French counterpart to prevent the transfer of Czech assets, believing such a move would be "wrong and dangerous for the future of the BIS".

Patrick Jenkins, banking editor of the Financial Times, told Sky's Jeff Randall: "There is some sense that this was being done without full disclosure to the UK Government.

"Clearly the UK Government was at the time on the brink of war and not keen to help the Nazis in any way politically or financially.

"It seems the Bank of England was undermining that position."

The report shows the Government was powerless to prevent the BoE obeying any instructions received from the BIS without violating its obligations under international law.

It also states how, in May 1939, the governor of the BoE declined to tell the Chancellor whether it still held any of the Czech gold.

"The Governor ... did not answer the question but pointed out that the bank held gold from time to time for the BIS and had no knowledge whether it was their own property or that of their customers," the report says.

11.46 | 0 komentar | Read More

Pegatron: Second Apple Firm Slammed In China

Tech giant Apple is under renewed fire over workers' rights in China, according to a report issued by a human rights charity.

China Labor Watch (CLW) said it has documented violation of work laws, forced excessive overtime and underage employees at Pegatron, where Apple's iPads and iPhones are made.

The abuses are alleged to have taken place at facilities owned by the Taiwan-based manufacturer, which is subcontracted to make Apple gadgets.

New York-based CLW said workers' rights were violated at several of Pegatron's factories in Shanghai and Suzhou.

Apple boss Tim Cook visited a factory after earlier abuse claims in China

The report said many workers were students or teens, with some forced to work standing up for as long as 11 hours.

Up to 12 workers shared cramped dormitories with rudimentary facilities.

"The Pegatron factories are violating a great number of international and Chinese laws and standards as well as the standards of Apple's own social responsibility code of conduct," CLW said in the report.

Pegatron, which has market capitalisation of around £500m, said in a statement that it would investigate the matter and would take immediate action to correct any violations of Chinese labour laws and its own code of conduct.

"We strive to make each day at Pegatron better than the last for our employees. They are the heart of our business," Pegatron's CEO Jason Cheng said in the statement.

Apple supplier Foxconn has admitted using 14-year-old staff members

"That's why we take these allegations very seriously."

Pegatron posted revenues of around £4.2bn for the first quarter of 2013, up 30.9% on the same period last year, due primarily to tablet growth.

Apple, responding to the CLW report, said it had conducted 15 audits at Pegatron facilities since 2007 that covered more than 130,000 workers to ensure safe and fair working conditions throughout its supply chain.

It has been in touch with CLW for several months and has fixed some issues raised by the organisation, Apple said.

"Their latest report contains claims that are new to us and we will investigate them immediately," Apple said.

Staff anger grew so high at one Foxconn plant that a riot broke out

"If our audits find that workers have been underpaid or denied compensation for any time they've worked, we will require that Pegatron reimburse them in full."

CLW said it sent undercover investigators into three Pegatron factories and conducted nearly 200 interviews with workers outside the factories from March to July.

It said it discovered 86 violations at the three factories making Apple products.

Pegatron's factories in China now employ more than 70,000 workers after it stepped up production of Apple's products as part of the US technology giant's plans to diversify its contract manufacturing partners.

Foxconn Technology Group, which has also been criticised by labour groups for poor working conditions, suicide rates and underage staff, now makes most of Apple's top products through its flagship unit, Hon Hai Precision Industry.

11.46 | 0 komentar | Read More

ID Theft Insurer CPP Nears Financial Lifeline

By Mark Kleinman, City Editor

The struggling identity theft insurer CPP is closing in on a deal with its lenders that should secure its future beyond a £1bn-plus mis-selling payout to customers.

Sky News understands that CPP has finalised the details of a refinancing with a quartet of lending banks that will involve the company slashing its borrowings and agreeing to tough restrictions on its business activities for three years.

The agreement could be announced as soon as Tuesday, according to insiders.

An agreement with Barclays, HSBC, Royal Bank of Scotland and Santander UK will come as a relief to hundreds of CPP staff employed at its York headquarters who have faced an uncertain future during on-off talks about a takeover of the group.

CPP's founder, Hamish Ogston, walked away from a bid to take it private last month, but the new borrowing agreement with its banks should secure the company's medium-term future.

CPP, which calls itself an "international life assistance provider", operates across more than a dozen countries and expanded rapidly after listing on the London Stock Exchange in 2010.

It recently sold its US business in an attempt to raise funds following a £10.5m fine imposed by the City regulator last year for mis-selling.

The company sold more than four million policies to customers, many of which were the result of introductions by the major high street banks.

Barclays is expected to bear the scars of its involvement in the scandal when it unveils a sizeable provision for compensation in its half-year results on Tuesday.

The agreement with its lenders will mean that redress for mis-selling can be paid out through a mechanism known as a solvent scheme of arrangement, which comprises a ring-fenced pot of cash for compensation.

Some reports have suggested the total amount could reach £2bn although most observers believe it will be little more than half that sum.

The Financial Conduct Authority is keen for the scheme to get underway as soon as possible, and it is possible that it will launch within weeks depending on final agreement with the banks that will be contributing.

The new borrowing facility is understood to have been cut from the previous £80m to significantly less than half that amount, reflecting CPP's smaller ongoing business. A person familiar with the refinancing said the lenders had also extracted more advantageous fees "although the terms would not be penal (to CPP)".

Under a deal announced earlier this year, an extension to CPP's loans had given the company until September to find a longer-term solution, and this week's announcement is expected to provide it with breathing space until 2016.

CPP is one of several specialist insurers to have fallen foul of regulators in recent times. Homeserve, which provides insurance against household mishaps, was also the subject of mis-selling allegations in 2011.

Concerns about potential exposure to any future evidence of mis-selling at Domestic & General, the warranties supplier, have thrown an obstacle in the way of its sale to a major private equity firm.

A CPP spokesman declined to comment on Monday evening.

11.46 | 0 komentar | Read More

Omnicom Merger With Publicis Creates Ad Giant

Omnicom Group Inc. and Publicis Groupe SA plan to merge to create the world's largest advertising firm.

The new company, will be called Publicis Omnicom Group, will be worth more than $30 billion.

It will be traded in New York and Paris.

Omnicom Chief Executive John Wren and Publicis CEO Levy will jointly lead the new company for the first 30 months, then Mr Levy will become non-executive chairman and Mr Wren CEO.

The new company will have combined sales of nearly $23 billion and 130,000 employees, taking over the current London-based industry leader WPP PLC.

The transaction- presented as a "merger of equals" - brings together Publicis brands such as Saatchi & Saatchi and Leo Burnett with Omnicom's BBDO Worldwide and DDB Worldwide.

"This is a new company for a new world," Mr Levy said.

The combined group will employ 130,000 people

"It will be able to face the exponential development of new internet giants like Facebook and Google, changing consumer behaviour, the explosion of big data, as well as handle the blurring of roles of all the players in the market."

The two veteran CEOs chose the neutral territory of the Netherlands for the new holding company.

The move is aimed at bolstering the companies' focus on growing Asian and Latin American markets such as China and Brazil to offset weak growth in European markets.

However, the decrease in competition could present regulatory hurdles in the US and Europe.

Client conflicts also could be an issue, as rivals such as Coca-Cola Co., PepsiCo, McDonald's, Yum Brands' Taco Bell, Johnson & Johnson and Procter & Gamble now find themselves under the same umbrella.

The new group will have to get antitrust clearance from authorities in around 45 countries.

"We've looked at the antitrust issues very carefully and are not expecting anything that would prevent us from going forward," said Mr Wren.

11.46 | 0 komentar | Read More

Energy Watchdog 'Failing Consumers', Say MPs

By Tadhg Enright, Business Reporter

The energy watchdog, Ofgem, is failing consumers and undermining trust in the market, a group of MPs have said - urging it to "use its teeth a bit more".

A report by the Energy and Climate Change Select Committee has said there is a "lack of transparency" about profits made by the Big Six energy providers.

Committee member and Lib Dem MP Sir Robert Smith said: "At a time when many people are struggling with the rising costs of energy, consumers need reassurance that the profits being made by the Big Six are not excessive.

"Unfortunately, the complex vertically integrated structure of these companies means that working out exactly how their profits are made requires forensic accountants."

Labour MP John Robertson added: "Ofgem needs to use its teeth a bit more and force the energy companies to do everything they can to prove that they are squeaky clean when it comes to making and reporting their profits."

There has been long standing criticism of the UK energy market in which six major competitors show little evidence of competing with each other on price.

Rising prices for consumers in recent years has been blamed on higher wholesale prices for energy providers however the Committee notes in its report that many of Britain's major providers are generators of energy and therefore profit from higher wholesale prices too.

The Big Six have also been criticised for offering a confusing range of tariffs which give the impression of greater consumer choice but offer little in the way of discounts.

British Gas and EDF customer Mary Phillips told Sky News that in the winter she frequently has to choose between spending on food or fuel, and that competition in the energy market has done nothing to help.

She said: "I keep getting notes from all these different energy companies saying that they're making their bills much easier to understand. You're joking!

"Every single different supplier says that they're going to give me a much better deal than all the other suppliers. I don't believe it really. I think they might do it for about three months and then it will all go up suddenly."

As the industry's watchdog, Ofgem has the power to order an inquiry into competition in the energy market but has chosen not to do so.  Instead it hopes that the threat of such a forensic analysis of the Big Six's energy practices will encourage them to clean up their acts.

Ofgem's Rachel Fletcher said: "We share the committee's goal of restoring consumers' trust.

"We agree with the committee that suppliers have been poor at communicating with their customers.

"Ofgem has made energy companies produce yearly financial statements, which have been reviewed twice by independent accountants and found to be fit for purpose."

The report also criticises the Government for not doing enough to help millions of low-income families living in poorly insulated homes and who struggle with fuel poverty.

The MPs argue that programmes to help protect the most vulnerable should be funded through direct taxation rather than levies on the bills of those who can afford it.

Sir Robert said: "Fuel poverty is getting worse as energy prices rise making it all the more critical that the Government must respond to the Hills Review as a matter of urgency.

"Tax-funded public spending is a less regressive mechanism than levies on energy bills, which can hit some of the poorest hardest. Shifting the emphasis from levies to taxation would help protect vulnerable households."

11.46 | 0 komentar | Read More

Barclays Faces Fresh Customer Mis-Selling Bill

By Mark Kleinman, City Editor

Barclays will face up to mis-selling misdemeanours on three fronts next week when it sets aside hundreds of millions of pounds more for historical malpractice.

Sky News understands that the bank will make provisions for compensation for customers who were mis-sold payment protection insurance (PPI), interest rate derivatives and identity theft cover through the stricken credit card insurer CPP.

Insiders said this weekend that Barclays chief executive Antony Jenkins had been told by its regulators to be "conservative" in topping up its previous £2.6bn provision for PPI and an £850m bill for mis-selling swap products - designed to insure customers against sharp interest rate movements - to small businesses.

Barclays directors are also understood to have discussed taking its first hit for compensating CPP customers at a board meeting this week.

The final bill will be signed off by Mr Jenkins, Sir David Walker, the bank's chairman, and the soon-to-depart finance director Chris Lucas on Monday.

A Barclays spokesman declined to comment on the size of the new compensation figures but it is understood that they will take the amount it has set aside for swaps mis-selling to well over £1bn.

The scale of the new provisions will partly explain why Barclays is also planning to announce a major capital-raising comprising conventional shares and contingent convertible (or 'coco') bonds alongside its results.

That follows pressure from the Prudential Regulation Authority for Barclays to meet a target measuring the strength of its balance sheet, called the leverage ratio, by the end of next year.

The announcement will be made as part of Barclays' half-year results on Tuesday, and could undermine Mr Jenkins' efforts to overhaul the bank's reputation following last summer's Libor rate-rigging scandal.

Barclays was fined £290m for its role in the affair, leading to the departure of Mr Jenkins' predecessor, Bob Diamond.

It was also recently hit with a £300m penalty by a US energy regulator for attempting to manipulate electricity prices, although the bank is appealing against it.

Barclays will not be the only lender to add to its PPI mis-selling provisions during next week's results, with Lloyds Banking Group and others also expected to belie suggestions that the tidal wave of compensation claims had abated.

Barclays has, though, been particularly affected by the way interest is calculated on PPI compensation claims because of its liabilities dating back many years.

Mr Jenkins will also spell out the progress of his overhaul of the bank, called Transform, in which he will say that Barclays is exceeding cost-reduction targets announced in February.

Barclays declined to comment.

11.46 | 0 komentar | Read More

£2bn Lloyds Profit Triggers Stake Sale Talks

By Mark Kleinman, City Editor

The agency which manages taxpayers' £19bn stake in Lloyds Banking Group is expected to hold talks with City investors this week about a quick-fire sale of shares as Britain's biggest high street lender unveils a £2bn half-year profit.

Sky News understands that UK Financial Investments (UKFI) and the Treasury will discuss in the coming days the prospect of an accelerated placing of shares in Lloyds with major institutional investors on or around the day that Lloyds announces half-year results on Thursday.

Treasury sources said that the results would show a "stellar" first-half performance from the bank, which owns the Halifax brand and is in the process of spinning TSB off into a separately-listed company.

Lloyds, they said, would report a statutory profit of approximately £2bn - in line with the consensus forecast of analysts - and also provide further positive news in the form of better-than-expected cost reductions and a stronger-than-anticipated capital position.

The move into the black would contrast with a loss of more than £400m at the half-year stage in 2012.

"The stars are aligned for us to start selling shares now," said one Whitehall insider.

The Government is understood to believe that it has a window of a few days beginning on the day of Lloyds' results to place a chunk of stock before the markets slow down too far for the summer to make such a substantial transaction more difficult.

Lord Davies is assembling a consortium keen to buy part of Lloyds

If the discussions do not point to sufficient demand for an institutional placing of shares, the Government would postpone any attempt to begin selling its 39% stake in the bank until September at the earliest.

A Treasury spokesman said that no timetable for the sale of shares had been set and refused to comment on the prospect of a sale next week.

Earlier this month, UKFI hired JP Morgan Cazenove, the investment bank, to advise on its privatisation strategy for Lloyds and Royal Bank of Scotland, in which taxpayers hold an 82% stake.

The agency also appointed a roster of other banks to execute deals in the capital markets to sell down the shares in the two banks during the coming years.

One banker said on Saturday that a report suggesting that Lloyds was priming City investors for a sale was inaccurate, arguing that the deal would be orchestrated by UKFI rather than the bank itself.

The source added that it would be theoretically possible to brief a group of investors the night before the results announcement - making them insiders unable to trade in Lloyds shares - with the objective of announcing a deal alongside on Thursday.

Sky News revealed earlier this month that Lord Davies, the former trade minister, was assembling a consortium of investors keen to buy at least half of the Government's stake in Lloyds.

The half-year results are expected to include a modest new provision for payment protection insurance mis-selling, taking Lloyds' total bill so far to more than £7bn, one insider said.

However, unlike Barclays, the bank is not expected to have to set aside money to compensate small businesses for mis-selling interest rate swaps or customers of CPP, the identity theft insurer.

On Friday, Lloyds shares closed at 68.37p, which if sustained until after next week's results announcement would make a placing at or above 61p viable, banking sources said. Such a deal would be likely to take place at a discount to the prevailing share price.

The 61p figure is significant because Lloyds said in March that it had been notified by the Treasury that that was the average price at which taxpayers' support for Lloyds during the banking crisis had been recorded in the public finances.

Selling above that price would be significant for George Osborne, the Chancellor, because it would allow him to hail the return of funds injected by taxpayers into Lloyds after its initially disastrous merger with HBOS.

It would also be potentially meaningful for Antonio Horta-Osorio, Lloyds' chief executive, whose £1.48m deferred share bonus awarded in March will only vest under certain conditions, one of which is that at least one-third of the Government's shareholding is sold for at least 61p-per-share.

Lloyds declined to comment on Saturday.

11.46 | 0 komentar | Read More