RBS Shareholders Launch £4bn Lawsuit

By Poppy Trowbridge, Business and Economics Correspondent

A group of Royal Bank of Scotland (RBS) shareholders has launched proceedings against the bank and four directors, including former chief executive Fred Goodwin.

The RBOS Shareholder Action Group, which represents more than 12,000 investors, claimed they were misled by directors over its £12bn rights issue in April 2008.

The group said the final claim against the bank could be worth up to £4bn.

A spokesman for the Action Group said: "Today represents a giant step forward for the many thousands of ordinary people who lost money as the result of inexcusable actions taken by banks and their directors in the financial crisis.

"Now, for the first time, some of these directors will have to answer for their actions in a British court."

It named the bank, Mr Goodwin and former directors Tom McKillop, Johnny Cameron, and Guy Whittaker as defendants.

Fred Goodwin oversaw RBS' multi-billion pound deal to buy ABN Amro in 2007

As the financial crisis took hold in 2008, RBS announced new shares would be offered to investors to buy, in an effort to raise the £12bn and boost the bank's financial strength.

RBS also announced at the time that it would suffer write-downs of nearly £6bn because of its exposure to credit markets.

The shareholders claim the true purpose of the rights issue was not disclosed at the time and the directors in charge gave the false impression the bank was generally financially sound.

The bank has around a month to respond to the lawsuit by issuing their defence, or apply for extra time before replying. It has the option of settling the claims or going to court.

Patricia Mohammed, one of the shareholders involved in the claim, said investors trusted RBS to tell them the truth.

"It was a huge institution, it had a huge history behind it and people on enormous salaries running it - people that we trusted to do the right thing," Ms Mohammed told Sky News.

"If we get some compensation, that is very nice.

"But if it is brought to the Government's attention that there are people prepared to do something - that they are not happy - that is important."

In 2007, RBS beat rivals, including Barclays, to buy Dutch lender ABN Amro in 2007 for nearly £50bn.

But the deal left the bank dangerously overstretched, and the following year it was forced to take a multi-billion pound bailout by the British Government.

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PM's Case For Union With Defence Jobs Warning

By Alistair Bunkall, Defence Correspondent

David Cameron will travel to Scotland later to reinforce the importance of the defence industry to jobs and the wider Scottish economy.

"Defence matters and defence jobs matter," he will say in one of his regular PM Direct sessions that will be held at a defence manufacturer.

"Scotland has a world renowned and highly skilled defence sector that employs over 12,600 people and has annual sales in excess of £1.8bn.

"It plays a key role in equipping and supporting the UK Armed Forces, from iconic industries like shipbuilding on the Clyde and Rosyth to cutting-edge, high-tech manufacturing.

And in a direct reference to what Scotland might lose in the event of independence, he will warn: "Being part of the UK opens doors for the Scottish defence industry around the globe.

"When we sell Typhoons overseas, this benefits jobs and growth for companies making components in Scotland.

"Scotland counts for more on the world stage because it is part of the United Kingdom and Scottish defence jobs are more secure as part of the United Kingdom.

The recent re-basing announcement confirmed that three military sites in Scotland will be closed and sold off - Craigiehall Barracks and part of Redford Barracks in Edinburgh, and part of Forthside Barracks in Stirling.

But the overall number of military personnel based in the country will rise by 800.

As of January this year the total number of armed forces and MoD personnel in Scotland was 15,070.

Last month Defence Secretary Philip Hammond visited Scotland to make a similar speech.

It is an indication that the Government believes that the defence argument is a powerful one to make the case for the Union.

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Exclusive: Key Cameron Tech Adviser To Quit

By Mark Kleinman, City Editor

The Downing Street adviser who led the development of efforts to transform part of London into a rival to Silicon Valley is to quit for a role in the private sector.

I have learnt that Rohan Silva, a senior policy adviser to David Cameron, resigned last month and will leave in the summer.

The departure of Mr Silva, who is in his early 30s, will come as a blow to both Mr Cameron and George Osborne, the Chancellor, who have relied on him to formulate key areas of the Government's economic growth strategy.

Mr Silva is understood to have held talks about taking up a role as an "entrepreneur-in-residence" at Index Ventures, the technology investment firm which has backed some of the world's most successful internet companies, including Facebook, Lovefilm and Net-a-Porter.

It is understood that any position that Mr Silva takes at Index would be temporary, and that he intends to launch a business in the digital education sector.

It is not clear whether that venture would receive financial backing from Index.

Mr Silva has been the driving force in Downing Street behind Tech City, a media and technology hub in London which marked its second anniversary in December.

He was also instrumental in persuading Joanne Shields, a senior Facebook executive, to join Tech City as its chief executive.

The project has met with some success, persuading companies such as IBM, KPMG and Microsoft to establish a presence at the London site, although it has been derided by critics as a vanity branding exercise for Mr Cameron that will deliver negligible benefit to the struggling British economy.

After joining the Treasury as a policy analyst from university, Mr Silva became an adviser to Mr Osborne while the Conservatives were still in Opposition. He has worked directly for Mr Cameron for the last two-and-a-half years.

In addition to Tech City, Mr Silva has also been involved in an initiative to create a new listings market in London for high-growth companies that will ultimately aim to rival Nasdaq.

A Downing Street spokesman said it did not "give a running commentary on staff changes" but a source close to Mr Cameron confirmed Mr Silva's resignation, saying: "Rohan is committed to entrepreneurship and has always said he wants to start his own business at some point. His departure is not imminent."

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Welfare Shake-Up 'Could Increase Fraud'

Osborne Defends Benefits Shake-Up

Updated: 5:14pm UK, Tuesday 02 April 2013

George Osborne has robustly defended the Government's controversial benefits shake-up - insisting Britain can no longer afford to reward people who do the "wrong thing".

Speaking at a supermarket distribution centre in Kent, the Chancellor condemned the old system as "fundamentally broken" and warned Labour that they were out of step with public opinion on the issue.

Mr Osborne insisted that nine out of 10 working households will be better off as a result of the welfare and tax changes.

He said people in Britain understood that the welfare system needed to change.

"In 2010 alone, payments to working age families cost £90bn," he said.

"That means about one in every £6 of tax that working people like you pay was going on working age benefits. To put that into perspective - that's more than we spend on our schools."

He pledged to make sure people were better off in work than out, thereby making the system much "fairer". Changes, such as cutting housing benefit for social housing tenants deemed to have a spare bedroom, were simply asking people on welfare to take the same choices as working families, he said.

The Chancellor told the Morrisons workers: "For too long, we've had a system where people who did the right thing - who get up in the morning and work hard - felt penalised for it, while people who did the wrong thing got rewarded for it.

"That's wrong ... This month we will make work pay.

"What this Government is trying to do is to put things right. We're trying to make the system fair on people like you, who get up, go to work, and expect your taxes to be spent wisely.

"And we're trying to restore hope in those communities who have been let down by generations of politicians, by getting them back into work."

Wider welfare and tax changes coming into force this month will also see council tax benefit funding cut, and working-age benefits and tax credit rises pegged at 1% - well below inflation - for three years.

Disability Living Allowance is being replaced by the Personal Independence Payment (Pip), while trials are due to begin in four London boroughs of a £500-a-week cap on household benefits, and of the new universal credit system.

Mr Osborne dismissed "depressingly predictable outrage" about the reforms, claiming they would help the most vulnerable and "give people a ladder out of poverty".

He said: "Because defending every line item of welfare spending isn't credible in the current economic environment.

"Because defending benefits that trap people in poverty and penalise work is defending the indefensible.

"The benefit system is broken. It penalises those who try to do the right thing and the British people badly want it fixed.

"We agree - and those who don't are on the wrong side of the British public."

But Shadow Chancellor Ed Balls told Sky News that "the truth" was that households were losing out because of the reforms.

Citing an independent study by the Institute for Fiscal Studies showing the average family would be £891 worse off this year as a result of all the coalition's changes since 2010, he added: "Working families are worse off and now the Government is cutting the top rate of income tax only for the richest people.

"A millionaires' tax cut paid for by millions of working people. That's not fair, that's not right."

Changes that mean the rate for top-rate taxpayers has been reduced from 50% to 45% also come into effect this month.

Sky News Deputy Political Editor Joey Jones said Mr Osborne's speech was "combative" and "aggressive".

"He has not apologised for the stance he is taking," he said.

It came a day after Work and Pensions Secretary Iain Duncan Smith, the architect of the reforms, was facing a a growing backlash after suggesting that he could get by on £53 a week, rather than his current after-tax income of £1,600 a week.

In the wake of the comment in a radio interview, tens of thousands of people have signed a petition on the change.org website, calling for the minister to try surviving on that money for a year.

During his speech on Tuesday Mr Osborne refused to be drawn on whether he could manage on £53 a week. In response to a question, he said: "I don't think it's sensible to reduce this debate to one individual's state of circumstances.

"We have a welfare system where there are lots of benefits available to people on very low incomes. 

"This debate is not about any individual, it's about creating a welfare system that rewards work."

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Cyprus Bank Deposits 'To Lose 60% Of Value'

Savers with more than 100,000 euros in the Bank of Cyprus could lose up to 60% of their deposits, two senior officials have warned.

The Central Bank official and the Finance Ministry technocrat said sums held at the country's largest lender will  lose 37.5% of their value after being converted into bank shares.

And the pair said the deposits could lose up to 22.5% more in value, depending on an assessment by officials who will determine the exact figure aimed at restoring the troubled bank back to health.

Both figures were speaking to the Associated Press on condition of anonymity because they are not authorised to publicly discuss the issue.

Cyprus' President Nicos Anastasiades

It comes after Cyprus agreed on Monday to make depositors contribute to a financial rescue in order to secure 10 billion euros (£8.5 billion) in loans from the eurozone and the IMF.

Cypriot President Nicos Anastasiades defended the bailout deal, saying it had contained the risk of national bankruptcy.

"We have no intention of leaving the euro," the conservative leader told a conference of civil servants on Friday in the capital, Nicosia.

"In no way will we experiment with the future of our country," he said.

Cypriots have expressed anger at the price attached to the rescue - the winding down of the island's second-largest bank, Cyprus Popular Bank, also known as Laiki, and an unprecedented raid on deposits over 100,000 euros.

Under the terms of the deal, the assets of Laiki bank will be transferred to Bank of Cyprus.

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Bank Of England Powers Increase Amid Overhaul

The Bank of England is to become one of the world's most powerful central banks as the biggest overhaul of financial regulation for 16 years takes effect.

Sweeping changes are undoing the system set up by former Prime Minister Gordon Brown when he was Chancellor in 1997.

The Financial Services Authority (FSA) is being replaced by three new bodies - the Financial Policy Committee (FPC), the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).

The new system comes instead of the so-called Tripartite structure of the FSA, Treasury and Bank of England, which was blamed for being "asleep at the wheel" during the 2008 financial crisis.

George Osborne hopes the new system will fix financial regulation

With both the FPC and the PRA sitting within the BoE, it will take on vast new powers and responsibility not just for regulating lenders, but also spotting and preventing possible financial shocks.

It marks a return of regulatory powers to the central bank, which were taken away from it on gaining independence in 1997.

Chancellor George Osborne is hoping the shake-up will plug the gap that previously existed in the Tripartite system, with no one taking responsibility for monitoring risks to the financial system as a whole, such as the lending boom.

He has previously criticised the structure for being "incoherent" and "without clear lines of accountability".

This perceived lack of oversight was blamed for excessive lending that sparked a sub-prime mortgage crisis and in turn the credit crunch and banking meltdown.

The system brought in by ex-PM Gordon Brown will be swept away

The changes also hope to address the FSA's self-proclaimed "light touch" regulation, which saw the watchdog fail to rein in the banks.

It has since admitted mistakes were made in the run up to the collapse of Northern Rock, while it appeared woefully inept in preventing the banking scandals that have emerged in recent years - such as the Libor interbank rate-rigging affair and the mis-selling of payment protection insurance (PPI).

As the pillar of the incoming regime, the FPC will take the broadest overview of financial regulation.

The PRA will ensure banks and insurers have enough capital and liquidity, while the FCA will protect consumers by promoting effective competition and regulating all financial services firms.

PRA chief Andrew Bailey has already promised a more intrusive approach to regulation of the 1,700 financial institutions under his remit.

Incoming bank chief Mark Carney recently outlined his thinking for MPs

His counterpart at the FCA, Martin Wheatley, has also pledged to clean up the sector with new powers to suspend or ban products and issue fines.

But there are concerns the BoE will become too powerful, given that it also has responsibility for monetary policy in the UK.

In a stark warning, the former head of Germany's central bank said recently it risked impacting its independence.

Ex-Bundesbank boss Axel Weber, who currently chairs Swiss group UBS, said he "flatly refused" taking on a regulatory remit when he was head of the bank due to concerns over independence.

The man wielding the BoE's new powers will soon be Mark Carney, who is currently Canada's top central banker. He takes over from governor Sir Mervyn King in July.

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Cyprus Bank Deposits 'To Lose 60% Of Value'

Savers with more than 100,000 euros in the Bank of Cyprus could lose up to 60% of their deposits, two senior officials have warned.

The Central Bank official and the Finance Ministry technocrat said sums held at the country's largest lender will  lose 37.5% of their value after being converted into bank shares.

And the pair said the deposits could lose up to 22.5% more in value, depending on an assessment by officials who will determine the exact figure aimed at restoring the troubled bank back to health.

Both figures were speaking to the Associated Press on condition of anonymity because they are not authorised to publicly discuss the issue.

Cyprus' President Nicos Anastasiades

It comes after Cyprus agreed on Monday to make depositors contribute to a financial rescue in order to secure 10 billion euros (£8.5 billion) in loans from the eurozone and the IMF.

Cypriot President Nicos Anastasiades defended the bailout deal, saying it had contained the risk of national bankruptcy.

"We have no intention of leaving the euro," the conservative leader told a conference of civil servants on Friday in the capital, Nicosia.

"In no way will we experiment with the future of our country," he said.

Cypriots have expressed anger at the price attached to the rescue - the winding down of the island's second-largest bank, Cyprus Popular Bank, also known as Laiki, and an unprecedented raid on deposits over 100,000 euros.

Under the terms of the deal, the assets of Laiki bank will be transferred to Bank of Cyprus.

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George Osborne Banking Shake-Up Takes Effect

The Bank of England is becoming one of the world's most powerful central banks as the biggest overhaul of financial regulation for 16 years takes effect.

Sweeping changes are undoing the system set up by former Prime Minister Gordon Brown when he was Chancellor in 1997.

The Financial Services Authority (FSA) is being replaced by three new bodies - the Financial Policy Committee (FPC), the Prudential Regulation Authority (PRA) and the Financial Conduct Authority (FCA).

The new system replaces the so-called Tripartite structure of the FSA, Treasury and Bank of England, which was blamed for being "asleep at the wheel" during the financial crisis.

With both the FPC and the PRA sitting within the Bank, it will take on vast new powers and responsibility not just for regulating lenders, but also spotting and preventing possible financial shocks.

George Osborne hopes the new system will fix financial regulation

It marks a return of regulatory powers to the Bank, which were taken away from it on gaining independence in 1997.

Chancellor George Osborne is hoping the shake-up will plug the gap that previously existed in the Tripartite system, with no one taking responsibility to monitor risks to the financial system as a whole, such as the lending boom.

He has previously criticised the structure for being "incoherent" and "without clear lines of accountability".

This perceived lack of oversight was blamed for excessive lending that sparked a sub-prime mortgage crisis and in turn the credit crunch and banking meltdown.

The system brought in by ex-PM Gordon Brown will be swept away

The changes also hope to address the FSA's self-proclaimed "light tough" regulation, which saw the watchdog fail to rein in the banks.

It has since admitted mistakes were made in the run up to the collapse of Northern Rock, while it appeared woefully inept in preventing the banking scandals that have emerged in recent years - such as the Libor interbank rate-rigging affair and mis-selling of payment protection insurance (PPI).

As the pillar of the incoming regime, The FPC will take the broadest overview of financial regulation.

The PRA will ensure banks and insurers have enough capital and liquidity, while the FCA will protect consumers by promoting effective competition and regulating all financial services firms.

Incoming bank chief Mark Carney recently outlined his thinking for MPs

PRA chief Andrew Bailey has already promised a more intrusive approach to regulation of the 1,700 financial institutions under his remit.

His counterpart at the FCA, Martin Wheatley, has also pledged to clean up the sector with new powers to suspend or ban products and issue fines.

But there are concerns the Bank will become too powerful, given that it also has responsibility for monetary policy in the UK.

In a stark warning, the former head of Germany's central bank said recently it risked impacting its independence.

Ex-Bundesbank boss Axel Weber, who currently chairs Swiss group UBS, said he "flatly refused" taking on a regulatory remit when he was head of the bank due to concerns over independence.

The man wielding the Bank's new powers will soon be Canada's top central banker Mark Carney, who takes over from governor Sir Mervyn King in July.

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Cyprus Bank Deposits 'To Lose 60% Of Value'

Savers with more than 100,000 euros in the Bank of Cyprus could lose up to 60% of their deposits, two senior officials have warned.

The Central Bank official and the Finance Ministry technocrat said sums held at the country's largest lender will  lose 37.5% of their value after being converted into bank shares.

And the pair said the deposits could lose up to 22.5% more in value, depending on an assessment by officials who will determine the exact figure aimed at restoring the troubled bank back to health.

Both figures were speaking to the Associated Press on condition of anonymity because they are not authorised to publicly discuss the issue.

Cyprus' President Nicos Anastasiades

It comes after Cyprus agreed on Monday to make depositors contribute to a financial rescue in order to secure 10 billion euros (£8.5 billion) in loans from the eurozone and the IMF.

Cypriot President Nicos Anastasiades defended the bailout deal, saying it had contained the risk of national bankruptcy.

"We have no intention of leaving the euro," the conservative leader told a conference of civil servants on Friday in the capital, Nicosia.

"In no way will we experiment with the future of our country," he said.

Cypriots have expressed anger at the price attached to the rescue - the winding down of the island's second-largest bank, Cyprus Popular Bank, also known as Laiki, and an unprecedented raid on deposits over 100,000 euros.

Under the terms of the deal, the assets of Laiki bank will be transferred to Bank of Cyprus.

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Cyber Currency Surge Amid Eurozone Crisis

By Siobhan Robbins, Sky News Reporter

As the eurozone is rocked by the crisis in Cyprus, a cyber currency called Bitcoin has seen a surge in popularity from people looking for an alternative place to invest their money.

Bitcoins are basically virtual money which can be earned or bought. They were created four years ago by a hacker who remains anonymous.

There are no banks to control them, people just exchange them directly with each other over the internet. That makes them difficult to tax, trace or freeze.

In the last month, the Bitcoin has more than doubled in value.

It is claimed the surge is partly down to people in cash-strapped countries including Spain and Greece turning to Bitcoins in the hope of protecting their money.

Amir Taaki has helped develop the Bitcoin since it was created by a hacker

Amir Taaki, who has helped to develop it in the UK, told Sky News he believes it is a purer alternative to traditional banks.

"There are so many things that are wrong and broken with banks. Primarily, the biggest problem is I have to trust them and I have no other option.

"Bitcoin is a basic system where I can choose how much trust I put in other people.

"There is no central bank or central authority controlling it. Everyone that participates in the network is upholding the network and it's not a theoretical concept but a billion dollar market with charts and graphs and people are using it.

"Because it's decentralised and runs off a mathematical algorithm it means it can't be corrupted."

The premises where the digital currency is being developed

The huge spike in value makes it an attractive investment for some, but currency experts like Simon Smith from FxPro warns against that.

"It's totally unsafe. They might as well burn their money in a pile as far as I'm concerned. Yes, Bitcoin has doubled in value over the last month but it has every sign of being a bubble."

Bitcoin has reached an all-time high, trading at almost £60. Its market value is now more than £500m.

Some restaurants and shops already accept Bitcoin as payment and its supporters claim that in the future it will be dispensed from ATMs like pounds and euros.

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