Mt Gox Bitcoin Exchange Files For Bankruptcy

One of the world's largest bitcoin exchanges has filed for bankruptcy protection as it admitted hackers may have stolen all of its digital currency.

Mt Gox has revealed 850,000 bitcoins worth about $480m (£286m) are unaccounted for following cyber attacks and said it has 127,000 creditors.

Chief executive Mark Karpeles blamed a weakness in the exchange's computer system for the massive loss, which included 750,000 users' bitcoins and 100,000 of its own.

Debts at the company of £38m dwarf its total assets of £22.5m.

Mr Karpeles gave a grovelling apology in Japanese for the company's collapse, bowing in contrition and wearing a suit instead of his customary T-shirt at a news conference.

"I am sorry for the troubles I have caused all the people," he said.

However, he predicted the currency would continue to grow, claiming the industry is "healthy".

Angry investors are demanding answers over what happened to their bitcoins

Angry investors are demanding answers over what happened to their holdings of cash and bitcoins on the Tokyo-based exchange.

The collapse of the company has shaken the virtual currency world and heaped renewed regulatory attention on the bitcoin.

Created in 2009 as a way to make transactions across borders without third parties such as banks, supporters previously claimed security encryption made the currency immune to theft or counterfeiting.

Mt Gox took down its website on Tuesday after freezing withdrawals earlier this month in the wake of a series of technical difficulties.

Mr Karpeles said the company wanted to file a criminal complaint against what he said was a hacking attack but had no actual means of doing so.

It came as the Japanese finance minister said the collapse of the virtual currency was inevitable and Vietnam banned its use overnight.

Despite the problems facing the currency, the world's first bitcoin retail store has opened in Hong Kong.

However, Ken Lo, the CEO of ANXBTC, the exchange behind the store, said he believes an actual store will help break down some of the barriers to people adopting the virtual currency.

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Branson's Virgin To Pilot New Cruises Venture

By Mark Kleinman, City Editor

Sir Richard Branson is drawing up plans for a secret assault on the international cruises sector which will involve raising hundreds of millions of pounds in funding from external investors.

Sky News can reveal that Virgin Group has appointed the US-based corporate advisory firm Allen & Co to oversee the development of a cruise operation that would eventually aim to compete with industry giants including Carnival Corporation.

Virgin has been working with Allen & Co on a range of potential opportunities across the wider leisure sector, including an investment in a four-star city centre concept called Virgin Hotels.

The development of Virgin Cruises, which is expected to be the name of the new venture, is at an early stage, people close to the project cautioned on Friday.

However, Virgin executives and their advisers have already held detailed talks with banks about raising an estimated $1bn (£598m) of debt to finance the acquisition of the company's first vessels.

They also want to raise in the region of $700m (£418m) of equity by selling stakes in Virgin Cruises to outside investors.

Sir Richard and Josh Bayliss, chief executive of Virgin Management, are understood to believe the global cruises sector possesses many of the same characteristics which have led Virgin to build a significant presence in sectors such as aviation, rail and mobile telecoms.

The cruise market is dominated by fewer than a handful of companies, such as the FTSE-100 group Carnival, Royal Caribbean and Norwegian. Between them, the three companies have a global market share of approximately 80%.

"Cruises is a classic Virgin market, dominated by two or three players and where the product needs to be refreshed," an insider said.

The industry is forecast by Cruise Market Watch, an industry research group, to grow from 21.5 million passengers this year to 22.2 million passengers carried worldwide in 2015.

Virgin Cruises is expected to be headquartered in the US, reflecting North America's status as the world's biggest cruise market, the source said.

Globally, the industry is likely to generate revenue of $37.1bn (£22.2bn) this year, a 2.3% increase on 2013.

The plans for the launch of Virgin Cruises emerge as Sir Richard targets a flotation of his domestic US airline, Virgin America.

The carrier, which recently undertook a debt restructuring covering roughly $300m (£179.8bn) of borrowing obligations, has hired investment banks to prepare the listing.

A successful flotation of Virgin America would echo the model used several times by Sir Richard to take some of his business ventures, such as Virgin Mobile, to the public markets.

He has also frequently sold stakes in his companies to outside investors, including the sale of shares in Virgin Money, his banking operation, to an entity in Abu Dhabi and Wilbur Ross, a prominent US investor.

Other plans involving Virgin companies this year include the opening of the first City Centre hotel in Chicago in the autumn, with other venues expected in US cities served by the group's airlines.

The plan to break into the cruises market comes weeks after the publication of a new biography of Sir Richard by the author Tom Bower.

Mr Bower claimed the company's maiden flight of its space tourism venture was facing further delays, while Virgin insists it is on track to take off this year.

A Virgin spokesman declined to comment.

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Ofgem Demands Big Six Return Customer Cash

By Mark Kleinman, City Editor

Ofgem will on Friday intensify the pressure on the big six energy companies by demanding that they hand back hundreds of millions of pounds in surplus customer funds.

Sky News understands that the energy regulator will announce that it is pursuing a series of fresh actions against the likes of Npower, British Gas and SSE over an estimated £400m held in accounts which have been closed.

The broadside will represent Ofgem's latest salvo in an increasingly bitter row which has drawn in the leaders of the three main Westminster parties in recent months.

Andrew Wright, the interim chief executive of Ofgem, is understood to have written to the companies on Thursday to urge them "to do the right thing by customers" to tackle the issue of funds held in closed accounts.

Ofgem's demands will increase the pressue on the so-called big six firms

Insiders said the regulator wanted the big six to step up their efforts to reunite customers with their cash and would be assessing whether they had breached its rules.

It will also call on Friday for companies to find ways to use money that they cannot refund to customers to benefit consumers more widely and communicate what they will do with the unclaimed funds, according to the source close to the regulator.

Ofgem's announcement on Friday will be targeted at gas and electricity accounts which have closed, either because the customer has changed supplier or moved house.

The regulator is understood to believe that the total amounts to hundreds of millions of pounds across several million accounts during the last six years.

The big six energy companies have all raised prices in recent months

The major energy suppliers are expected to respond by pointing to the scope of existing efforts to return money to consumers and the difficulty they frequently face in contacting them.

Energy UK is also likely to argue that the amount of customers' money held excessively is only a fraction of the unpaid charges owed to the gas and electricity suppliers.

Ofgem has requested details of each of the big six's policies in this area, and has decided to act because its "analysis indicates wide variations in company practices and an unacceptably large amount of money being retained rather than returned to consumers", according to a person close to the regulator.

Mr Wright is understood to have said in his letter that the delay in returning cash to consumers risks undermining their faith in switching providers, a key plank of ministers' desire to bolster competition.

Ofgem has also targeted them over the release of excessive funds

The big six energy companies have all raised prices in recent months, but some have faced criticism for failing to pass onto consumers the benefit of a relaxation of green levies.

Ofgem has also targeted them over the release of excessive funds taken from customers by direct debit, which the suppliers have agreed to address.

This week, it said that energy companies would have to publish the prices for which they trade energy to allow better access to independent operators.

Mr Wright plans to meet with the chief executives of the energy companies and Energy UK in April to discuss their progress on the closed account issue.

None of the energy companies contacted by Sky News would comment, while Energy UK could not be reached for comment.

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Gamblers To Set Cash Caps On Slot Machines

New technology will allow gamblers to set limits on how much time and money they spend on gaming machines.

The technology is being installed on gaming machines in England and Wales as part of a code of conduct established by the Association of British Bookmakers (ABB).

The ABB says the code aims to "tackle problem gambling".

The technology will allow customers to set limits on gambling machines, and will also introduce mandatory alerts when a customer has spent £250 or played for 30 minutes.

Staff at a gambling venue will also be alerted when the limit is reached, and the machine will alert the customer and force a 30-second break in play.

The new technology to implement the measures is currently being installed on 33,000 machines across England and Wales.

The ABB said the code, which comes into effect today, has the "full support" of the gambling industry.

ABB chief executive Dirk Vennix said: "The code will help give players more control and encourage responsible gambling.

"It forms part of the industry's ongoing, proactive efforts to be socially responsible, to tackle problem gambling and to ensure a duty of care towards every customer.

"We recognise growing concerns that some customers are spending too much money or too much time on gaming machines. We want to take steps to protect them because one problem gambler is one too many.

"That is why we have put together the code, which introduces revolutionary new harm minimisation measures, the likes of which have yet to be seen anywhere in the world."

Dirk Hansen, chief executive of gambling advice service GamCare, said: "I welcome the ABB's move towards offering greater protections for players, encouraging responsible play and for raising awareness amongst betting shop customers about the help that is available for problem gambling.

"These new measures will not only educate players to the risks associated with gambling but also empower individuals to get support when they need it."

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RBS Slashes Costs As Markets Chief Bows Out

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) will unveil plans later to slash billions of pounds from its cost-base in an overhaul aimed at facilitating its eventual return to private sector ownership.

Sky News has learnt that Ross McEwan, RBS chief executive, is expected to outline a blueprint that will involve removing roughly 20% of its operating costs, which hit £13.8bn in 2012.

That target would mean slashing more than £2.75bn of the bank's costs, which over time will entail substantial job losses.

Mr McEwan is expected to acknowledge that some jobs will go but is unlikely to announce a figure on Thursday.

The measures being drawn up to revive RBS as it prepares to announce losses of around £8bn for last year include the likely departure of Suneel Kamlani, the co-chief executive of RBS's markets business, which houses the group's remaining investment banking activities.

Mr Kamlani, who joined in 2010 from UBS, is likely to leave in the coming months, according to a person close to the bank, although a final decision had not yet been taken, they said.

There will also be a stronger focus on lending to small and medium-sized business customers (SMEs), which will reflect the political pressure on Mr McEwan to ensure a greater flow of credit into the UK economy. Alison Rose, a senior investment banker at RBS, is expected to be appointed to oversee these efforts.

Alongside the losses for last year, RBS is expected to state that its newly-formed Capital Resolution Group has already made strong progressing in reducing the assets it oversees from £38bn last November to closer to £30bn.

RBS is also understood to have made further progress on negotiating the removal of the Dividend Access Share, for which it will have to pay well over £1bn, although an insider said there was unlikely to be formal news about this on Thursday.

Sky News revealed on Wednesday that RBS has reached a deal with UK Financial Investments (UKFI), the agency which manages taxpayers' 81% stake in the bank, to pay approximately £550m in bonuses for last year.

The figure will take the total sum paid by RBS in bonuses since its rescue in 2008 to roughly £6.3bn, while over the same period it has recorded attributable losses of more than £44bn.

The sum of around £550m will represent a fall on the 2012 bonus pot of £679m of just under 20%, which Chancellor George Osborne is expected to cite as evidence that RBS is exhibiting restraint on bonuses.

Last year's figure was further reduced by £72m to £607m because of the clawback of previous years' deferred bonuses, undertaken as a consequence of RBS's £390m fine for its role in the Libor-rigging scandal.

RBS is expected to have reduced the 2013 bonus pool by at least £25m under a commitment it gave 12 months ago to reduce bonuses in subsequent years.

It is unclear whether RBS will also announce a plan on Thursday to seek shareholder approval at its annual general meeting in May to allow it to pay bonuses worth double the value of senior employees' basic salaries.

Stoking the rhetoric ahead of RBS's announcement, Cathy Jamieson, the shadow financial secretary to the Treasury, said: "Taxpayers will be staggered if huge bonuses continue to be paid out at a time when significant losses are being made.

"George Osborne should make clear he will reject any request from RBS to increase the bank bonus cap so bonuses worth more than 100 per cent of salary can be paid.

"With bumper bonuses continuing this year across a number of banks, the Government should also be repeating Labour's successful tax on bank bonuses this year. This could fund a paid job for every young person out of work for 12 months or more, which they would have to take up or lose benefits."

The other measures proposed by Mr McEwan will include withdrawing from dozens of overseas markets, as well as running down some of the areas in which RBS Securities, its investment bank in the US, operates.

RBS declined to comment.

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Qantas To Axe 5,000 Jobs After £126m Loss

Australian airline Qantas has announced it will cut 5,000 jobs after posting a first-half net loss of £126m.

The airline, which is battling record fuel costs and fierce competition from subsidised rivals, is working to slash costs by £1.08bn over three years.

Part of the restructuring programme will see 5,000 full-time positions lost from its 32,000-strong workforce.

A wage freeze will also be applied across the whole company until the airline returns to a profit.

The airline also highlighted "significant changes" to its fleet plans and network and a reduction in capital expenditure of £500m over the next two financial years.

Chief executive Alan Joyce said: "We are facing some of the toughest conditions Qantas has ever seen.

"Hard decisions will be necessary to overcome the challenges we face and build a stronger business."

He added the Australia had been "hit by a giant wave of international airline capacity", with a 46% increase in competitor capacity since 2009.

Following a profit warning in December, ratings agencies Moody's and Standard & Poor's downgraded Qantas' credit rating to "junk" status, increasing the cost of financing for the airline.

Qantas has since been working on its finances to convince the government it deserves a debt guarantee and also lobbying the Australian government to relax the Qantas Sales Act, which limits foreign ownership in the airline to 49%.

The loss for the six months through December 2013 followed a £68m profit for the same period in 2012.

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Bitcoin Turmoil After Mt Gox Exchange 'Theft'

The Bitcoin exchange industry has moved to reassure holders of the virtual currency amid reports 6% of Bitcoins in circulation, worth roughly $375m (£225m), have been stolen.

The once-mighty Mt Gox exchange reportedly lost them in a cyber attack, with an apparent internal document suggesting more than 740,000 Bitcoins are missing.

The Mt Gox website is currently offline with trading suspended and withdrawals have been frozen.

The Tokyo-based exchange has not commented on the claims but its chief, Mark Karpeles, quit the board of the Bitcoin Foundation - an advocate for the virtual currency - on the eve of the shutdown.

He has not been seen in public since and his whereabouts remain unknown but in an email to the news agency Reuters he purportedly said: "We should have an official announcement ready soon-ish.

"We are currently at a turning point for the business. I can't tell much more for now as this also involves other parties."

Some 740,000 Bitcoins are reportedly missing from the exchange

The firm's Tokyo office is said by witnesses to be largely bare while a handful of angry investors are camped outside demanding news of their money and questioning whether the business remains solvent.

One of them, Bitcoin trader Kolin Burgess, said he had picketed the building since February 14 after flying in from London, hoping to get back $320,000 he had tied up in Bitcoins with Mt Gox.

"I may have lost all of my money. It hasn't shaken my trust in Bitcoin, but it has shaken my trust in Bitcoin exchanges."

The fate of his holding is unclear as Bitcoins are traded in an unregulated, decentralised marketplace.

But news of Mt Gox's apparent collapse prompted six other Bitcoin exchanges to release a joint statement distancing themselves from Mt Gox - insisting it should not be considered a reflection of the value of Bitcoin or the digital currency industry.

It said: "This tragic violation of the trust of users of Mt Gox was the result of one company's actions.

"As with any new industry, there are certain bad actors that need to be weeded out, and that is what we are seeing today.

"Mt Gox has confirmed its issues in private discussions with other members of the Bitcoin community.

"There are hundreds of trustworthy and responsible companies involved in Bitcoin.

"These companies will continue to build the future of money by making Bitcoin more secure and easy to use for consumers and merchants."

The signatories - Coinbase, Kraken, Bitstamp, BTC China, Blockchain and Circle - released their statement two days after the reported cyber attack on Mt Gox.

Bitcoin's value - which has fluctuated wildly in recent times - fell 20% amid the shutdown at Mt Gox and is about two thirds below its peak of $1,100 at just above $410.

At its height, analsyts say Mt. Gox accounted for 80% of Bitcoin trading but its dominance started to slip a year ago as rumours circulated about the strength of its security protocols.

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RBS Reaches Deal To Award £550m Bonus Pot

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) is to pay approximately £550m in staff bonuses for 2013 after securing the agreement of the Treasury agency that is its biggest shareholder.

Sky News has learnt that the taxpayer-backed bank will disclose the sum - which is higher than previous reports had suggested - alongside its annual results on Thursday.

The bonus pot for 2013 is certain to reignite a row over pay at RBS because it will also announce a loss for the year estimated at £8bn, the biggest since its bail-out by the Government in 2008.

UK Financial Investments (UKFI), the body which manages taxpayers' stake in the bank, is understood to have signed off on the payments in recent days.

The sum of around £550m will represent a fall on the 2012 bonus pot of £679m of just under 20%, which Chancellor George Osborne is expected to cite as evidence that RBS is exhibiting restraint on bonus payments.

Last year's figure was further reduced by £72m to £607m because of the clawback of previous years' deferred bonuses, undertaken as a consequence of RBS's £390m fine for its role in the Libor-rigging scandal.

RBS is expected to have reduced the 2013 bonus pool by at least £25m under a commitment it gave 12 months ago to reduce bonuses in subsequent years.

It is unclear whether RBS will also announce a plan on Thursday to seek shareholder approval at its annual general meeting in May to allow it to pay bonuses worth double the value of senior employees' basic salaries.

Other UK banks are planning to do so, but RBS found itself at the centre of another political row last month when Labour leader Ed Miliband urged David Cameron to use the Government's stake to block any such request.

At the World Economic Forum in Davos, Switzerland, Mr Cameron told Sky News: "With our particular responsibility for RBS, I can tell you that I don't only want to see the level of pay and bonuses come down overall, I want to see it come down per-person, per-capita as well."

The Prime Minister said last month that new European rules on bankers' pay, which the Government is challenging, could exacerbate the riskiness of banks.

He said: "This European directive... in some ways might make things worse, because you could see rates of pay go up.

"You can claw back a bonus, the taxpayer can get the money back. You can't claw back [basic] pay."

Thursday's bonus announcement will come as Ross McEwan, RBS's new chief executive, unveils a plan that will mean the bank's 120,000-strong workforce shrinking to barely two-thirds of that number following the sale and closure of several business units.

RBS and UKFI declined to comment.

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