Co-Op: US Hedge Funds Reassure Watchdog

By Mark Kleinman, City Editor

A group of American hedge funds is trying to reassure the Bank of England about their role in the restructuring of the Co-operative's troubled banking arm ahead of a formal deal to be announced on Monday.

Sky News has learnt that the LT2 Group, a coalition of funds which has forced Britain's most important mutual to cede majority ownership of its troubled lender, has held talks with regulators to reassure them that they do not intend to cross a crucial bank ownership threshold.

Under Prudential Regulation Authority (PRA) rules, any party owning more than 10% of the shares in a regulated bank must receive approval from the banking watchdog.

The stipulation is designed to prevent undue influence being exercised over important financial institutions by unregulated entities.

The rule also applies to a group of investors acting in concert, which hedge funds including Aurelius and Silver Point have been doing as they sought to win a better restructuring deal for bondholders from the Co-op Group.

Last week, it emerged that the bondholders would gain control of 70% of the Co-op Bank's shares as part of a debt-for-equity swap, leaving the Co-op Group still as the largest individual shareholder, although holding just a 30% stake.

Advisers to Aurelius, Silver Point and other bondholders have informed the PRA that none of them plans to individually hold a stake of 10% in the Co-op Bank, and that they should not be deemed to be acting collectively despite their months-long campaign to restructure the bank.

People close to the situation said on Friday the PRA was expected to be sympathetic to the hedge funds' argument, but that the issue was the subject of strict legal tests and would be closely monitored.

The funds are anxious to avoid having to be approved by the PRA because of the length of time the process can take.

The restructuring of the Co-op Bank will involve listing its shares on the London Stock Exchange next year, as it seeks to raise £1.5bn to fill a capital hole in its balance sheet.

Next Monday's financial restructuring is expected to be accompanied by the publication of a revised business plan for the Co-op Bank, which will entail significant cost cuts and job losses.

The news that the Co-op Bank would no longer be majority-owned by a mutual has sparked fury among many customers, prompting the bondholder group to acknowledge the lender's ethos.

"The Co-Operative Bank is unique for its ethics, mission and heritage which are an essential component of the Bank's differentiated approach," LT2 said in a statement last week.

"It is important to us that the Bank will maintain its unique characteristics and ethos.

"The Co-operative Group Ltd. will remain the Bank's largest shareholder by far and the Bank will benefit by this connection to the Co-operative movement."

Spokesmen for LT2 and the Co-op declined to comment.

16.02 | 0 komentar | Read More

RBS Confirms Plan For £38bn 'Bad Bank'

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) has confirmed plans to hive off nearly £40bn of toxic assets into a new division as part of an effort to accelerate its recovery that will be treated with scepticism by advocates of a more radical break-up.

Announcing a third-quarter pre-tax loss of £634m, RBS said £38bn of impaired loans would be placed into an 'internal bad bank' to be called RBS Capital Resolution Division.

The new arm of the bank is designed to provide a clearer distinction between the clean parts of the business and the tens of billions of pounds of legacy loans that critics say have hampered its ability to play a role in aiding the recovery of the UK economy.

Ross McEwan, RBS's new chief executive, conceded that quickening the run-off of these assets - with a target of up to £25bn of the £38bn being shed by the end of 2015 - would incur steeper losses.

The outcome of the four-month review commissioned by the Chancellor, George Osborne, and conducted by City firms BlackRock and Rothschild will see the rebranding of RBS's existing non-core wing, which has already offloaded hundreds of billions of pounds of toxic loans since the bank's £45.5bn bail-out by UK taxpayers in 2008.

Price correct at 09.43 GMT

Sky News exclusively revealed details of the internal bad bank plan and the broader restructuring of the bank, which is 81%-owned by taxpayers, last weekend.

Alongside the new bad bank, RBS will also bring forward the disposal of its US retail bank, Citizens; further shrink its investment banking business; resolve the issue of a dividend-blocking instrument that RBS will need to acquire from the Government; and target new cost-cutting measures that could lead to thousands more job cuts.

Mr Osborne said the reforms were part of a broader objective of "creating a banking system that works for Britain".

"Under this new direction RBS will deal decisively with the problems of the past by separating out the good from the bad, and putting the bad loans in a bad bank.

Stephen Hester left RBS amid his support for investment bank operations

"Our independent analysis shows that the bad bank should be an internal one, funded by RBS, rather than an external one funded by the taxpayer."

In a pointed remark highlighting divisions between the Treasury and Mr McEwan's predecessor, Stephen Hester, the Chancellor said that the new strategy was jointly-supported by RBS's management, the Government and the regulator.

The Bank of England said that it welcomed "the development of a more focused strategy for RBS and the commitments of the Board to specific actions that will bolster its capital position in the next three years".

"These actions should create a more resilient institution that is better able to support the real economy without any expectation of further Government support," it said.

"Given these developments, the Bank of England fully supports the conclusions of the review published today by HM Treasury."

While there was a consensus about the reforms within Government, Mr Osborne may have to brave a more hostile response from figures who wanted a more radical split of RBS.

Among their ranks were Lord Lawson, the former Chancellor; Lord  King, former Governor of the Bank of England; and Andrew Tyrie, chairman of the Parliamentary Commission on Banking Standards.

Alongside the new measures aimed at boosting RBS's recovery, a report was published condemning the bank's attitude to lending to small and medium-sized businesses (SMEs).

Mr McEwan pledged to implement the recommendations, and said RBS would target becoming the best SME bank in the UK.

In response to today's announcements, Shadow Chancellor Ed Balls said: "After the firesales of Royal Mail and Northern Rock, we will scrutinise George Osborne's plans for the future of RBS very carefully.

"As we argued when, earlier this year, the Chancellor flirted with the idea of a quick sale of RBS to a political timetable, the taxpayer interest must come first.

"The tests for these changes at RBS are whether they see the taxpayer ultimately get its money back and whether they actually boost business lending and radically transform this bank to put an end to business as usual.

"On the banking system more widely, business and the public are right to be concerned that lending to business is still falling while the radical reforms we need are being watered down.

"For example, he is still refusing to implement the Parliamentary Commission's call for a backstop power that would allow for full separation of all the banks, not just one or two, if ring-fencing proves ineffective and does not deliver the cultural change we need."

16.02 | 0 komentar | Read More

Water Bills: Crackdown On Costs Expected

Water bills may be "rolled back" after the Government vowed to get tough on the rising cost of living.

David Cameron's spokesman indicated that an announcement on water bills would be made next week.

The spokesman said the Department for Environment, Food and Rural Affairs (Defra) would be making the announcement.

He said: "There will be some action next week from Defra with the intention of looking at water bills.

David Cameron says he wants to see household costs cut

"The Prime Minister takes household bills across the piece seriously and wants energy prices to be rolled back and wants various things done, whether it's council tax being frozen, the flex on rail fares being brought down, MoT costs being frozen, these sorts of measures to protect household bills."

He added: "The Prime Minister wants to see household costs across the piece being reduced as low as possible. The intention is to try to reduce the burdens on hard-pressed families."

Mr Cameron "wants regulators to look at the industry they regulate and make sure that they are robust and delivering what they need to deliver for consumers", the spokesman added.

Concerns have been raised that consumers are being ripped off

Labour leader Ed Miliband said the market needed to be scrutinised to ensure it was working for consumers.

At an event for regional newspaper journalists, Mr Miliband said: "I think we should be looking at all markets to make sure they are working properly - and that includes the water industry."

The Western Morning News quoted the Labour leader as saying: "Some people will say this is an anti-business agenda. I think it is a pro-business agenda that you have got to reform markets that are not working properly.

"I think the water industry is something that should be scrutinised to make sure it is working properly, and make sure it is working properly for the benefit of consumers, because I know concerns have been raised.

"I'm proud Labour is championing this agenda and I think it is consistent with believing what a market economy can do, and water is part of that."

MPs are set to consider the reform and infrastructure of the water industry on Tuesday next week after Tory Robert Buckland secured a backbench debate.

16.01 | 0 komentar | Read More

HS2: Rail Bill Passed Despite MPs' Rebellion

Seventeen Conservative MPs have rebelled in a House of Commons vote on plans to build a high-speed rail line linking London to the north of England.

MPs voted by 350 to 34 in favour of the High Speed Rail (Preparation) Bill, which will allow ministers to spend money planning the route and buying up property from residents and businesses.

It was a clear majority for the Bill at the third reading in the Commons late on Thursday, despite the rebellion from 17 Tory MPs.

Eleven Labour MPs also voted against the Bill, which will now go to the House of Lords for further scrutiny by peers.

There had been fears Labour could oppose the Bill, leading to the possibility that the project could be halted.

Outlining the Bill at third reading, Transport Secretary Patrick McLoughlin said: "This is the point when the debate starts moving from 'if' to 'when'.

"Just this week with the storms that hit the south and the east, we have seen how crucial our railways are to national life.

There were fears that Labour would oppose the Bill in the latest vote

"When trains are crowded and disrupted, life for hard-working people gets more difficult. That's why the new north-south line isn't some expensive luxury."

Tory MP Cheryl Gillan, who has campaigned against the rail line as it would go through her Chesham and Amersham constituency, angered Conservative colleagues when she compared the project to Concorde.

She said: "I still think that HS2 is an expensive toy. I remember we once had something else that went fast - it was called Concorde - and look what happened to that.

"It is still not flying these days, I am afraid and it lost out to the jumbo jet."

Sky's chief political correspondent Jon Craig said debate over the Bill "was pretty bitter and quite heated".

"The battle now moves on to another piece of legislation. This will be what's called a hybrid Bill ... and is all about authorising the construction of phase one of the route," he said.

"I think we might see bigger rebellions in the future ... The battle goes on. This project is still a long way off and both parties are split."

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Sugary Drinks Tax 'Could Raise Treasury £275m'

By Thomas Moore, Health and Science Correspondent

A tax on sugary drinks would reduce the number of obese adults in the UK by 180,000 and raise over £275m for the Treasury, according to doctors.

Researchers from Reading and Oxford universities say a standard 500ml bottle of some drinks contains as many as 14 teaspoons of sugar, or 210 calories; and they warn the drinks increase the risk of obesity, diabetes, cardiovascular disease and tooth decay.

Professor Richard Tiffin, Reading University: 'Taxing food is a big step'

In the most detailed study of its kind, the researchers calculated that a 20% tax on sugary drinks - adding roughly 12p to a can of fizzy pop - would reduce purchases by around 15%.

That would reduce the average calorie consumption by 28 calories a week, enough to reduce obesity by between 110,000 and 250,000, according to results published in the British Medical Journal.

Dr Adam Briggs of the British Heart Foundation Health Promotion Research Group at Oxford University, and one of the researchers, said: "Sugar sweetened drinks are known to be bad for health and our research indicates that a 20% tax could result in a meaningful reduction in the number of obese adults in the UK.

"Such a tax is not going to solve obesity by itself, but we have shown it could be an effective public health measure and should be considered alongside other measures to tackle obesity in the UK."

The researchers say the impact of the tax would be greatest on young people. On average people aged 16-29 drink around 300ml of sugary beverages a day.

But one of the researchers, economist Professor Richard Tiffin of the University of Reading, warned that the tax would not reduce obesity by enough to justify the hardship it could cause.

Researchers at Reading found some drinks contained 14 teaspoons of sugar

"Taxing food is a big step, especially when spiralling bills are already making households poorer, and will make very little difference if people are unable or unwilling to make healthier choices elsewhere in their lives," he said.

Professor Sir Stephen O'Rahilly from the Medical Research Council's Metabolic Diseases Unit in Cambridge agreed that sugary drinks are "part of the problem"' but he added that taxation was "politically undeliverable" in most democracies.

He said: "A workable alternative might be to encourage the major companies to switch to the aggressive promotion and marketing of less harmful versions of their products.

Soft drinks firms said there was evidence a tax would not curb obesity

"This could be achieved by balancing a 20% tax on sugared products with a 20% subsidy on artificially sweetened versions of the same beverages."

Gavin Partington of the British Soft Drinks Association said there was "ample" evidence that taxing soft drinks will not curb obesity.

"Trying to blame one set of products is misguided, particularly when they comprise a mere 2% of calories in the average diet."

16.01 | 0 komentar | Read More

RBS Confirms Plan For £38bn 'Bad Bank'

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) has confirmed plans to hive off nearly £40bn of toxic assets into a new division as part of an effort to accelerate its recovery that will be treated with scepticism by advocates of a more radical break-up.

Announcing a third-quarter pre-tax loss of £634m, RBS said £38bn of impaired loans would be placed into an 'internal bad bank' to be called RBS Capital Resolution Division.

The new arm of the bank is designed to provide a clearer distinction between the clean parts of the business and the tens of billions of pounds of legacy loans that critics say have hampered its ability to play a role in aiding the recovery of the UK economy.

Ross McEwan, RBS's new chief executive, conceded that quickening the run-off of these assets - with a target of up to £25bn of the £38bn being shed by the end of 2015 - would incur steeper losses.

The outcome of the four-month review commissioned by the Chancellor, George Osborne, and conducted by City firms BlackRock and Rothschild will see the rebranding of RBS's existing non-core wing, which has already offloaded hundreds of billions of pounds of toxic loans since the bank's £45.5bn bail-out by UK taxpayers in 2008.

Sky News exclusively revealed details of the internal bad bank plan and the broader restructuring of the bank, which is 81%-owned by taxpayers, last weekend.

Alongside the new bad bank, RBS will also bring forward the disposal of its US retail bank, Citizens; further shrink its investment banking business; resolve the issue of a dividend-blocking instrument that RBS will need to acquire from the Government; and target new cost-cutting measures that could lead to thousands more job cuts.

Mr Osborne said the reforms were part of a broader objective of "creating a banking system that works for Britain".

"Under this new direction RBS will deal decisively with the problems of the past by separating out the good from the bad, and putting the bad loans in a bad bank. Our independent analysis shows that the bad bank should be an internal one, funded by RBS, rather than an external one funded by the taxpayer.

In a pointed remark highlighting divisions between the Treasury and Mr McEwan's predecessor, Stephen Hester, the Chancellor said that the new strategy was jointly-supported by RBS's management, the Government and the regulator.

The Bank of England said that it welcomed "the development of a more focussed strategy for RBS and the commitments of the Board to specific actions that will bolster its capital position in the next three years.

"These actions should create a more resilient institution that is better able to support the real economy without any expectation of further Government support. Given these developments, the Bank of England fully supports the conclusions of the Review published today by HM Treasury."

While there was a consensus about the reforms within Government, Mr Osborne may have to brave a more hostile response from figures who wanted a more radical split of RBS.

Among their ranks were Lord Lawson, the former Chancellor; Sir Mervyn King, former Governor of the Bank of England; and Andrew Tyrie, chairman of the Parliamentary Commission on Banking Standards.

Alongside the new measures aimed at boosting RBS's recovery, a report was published condemning the bank's attitude to lending to small and medium-sized businesses (SMEs).

Mr McEwan pledged to implement the recommendations, and said RBS would target becoming the best SME bank in the UK.

16.01 | 0 komentar | Read More

House Prices Rise 1% But Are 7% Below Peak

House price growth accelerated in October amid continuing fears of a price bubble but the average cost of a home is still 7% below the record level measured in 2007.

The latest Nationwide House Price Index charted a 1% increase over the month following a 0.9% increase in September - with London and the South East continuing to drive the growth which has now lasted for six consecutive months on a UK-wide basis.

Nationwide said it meant that national annual price growth rose to 5.8% from 5% the previous month - the strongest increase seen since July 2010 - raised the cost of the average property to £173,678.

Commenting on the figures, the lender's chief economist Robert Gardner said: "The UK housing market appears to be following the more resilient upward trend evident in the wider economy in recent quarters.

"The ability and willingness of potential buyers to transact has been steadily increasing.

There are concerns of unsustainable price increases because of low supply

"The ability to buy has been supported by continued gains in employment and policy measures such as the Help to Buy and Funding for Lending schemes, which have improved the availability and lowered the cost of credit.

"Mortgage rates are close to all time lows. The willingness of potential buyers to step into the market has also been increasing."

But he warned: "House price growth has accelerated as buyer demand has picked up more quickly than the supply of new homes.

"The risk is that if demand continues to strengthen while the supply of property remains constrained affordability could become stretched."

The launch of a new phase of the Government's flagship Help to Buy scheme offering state-backed mortgages to people with deposits as low as 5% was brought forward to this month, following expectations that the initiative would not start until January 2014.

Critics argue that rather than launching initiatives to unleash more aspiring buyers into the market, which will contribute to the upward pressure on house prices, the Government should instead be concentrating efforts on trying to address the lack of housing supply.

Ministers have consistently dismissed talk of price bubbles, suggesting the market recovery is only just beginning outside of London and the South East.

The property website Rightmove recently measured a 10% jump in house prices in the capital during October alone - prompting further debate on whether a boom and bust cycle loomed.

16.01 | 0 komentar | Read More

Facebook Shares Plummet Despite Profit Boost

Facebook saw some $18bn (£11.2bn) wiped off its share price in minutes after a top exec admitted the social network had seen a drop in teenage users.

The company's stock soared by around 18% to $57.98 (£36.16) in after-hours trading following the announcement of better-than-expected financial results.

But the shares slid back to $48.44 (£30.20) - slightly below the day's closing price of $49.01 (£30.56) - during a conference call between Facebook management and market analysts.

Investors may have been spooked by comments from finance chief David Ebersman, who said the social network had noted a decrease in daily use among the important demographic of younger teenagers.

He said: "Our best analysis of youth engagement in the US reveals that usage of Facebook among US teens overall was stable."

But he added: "We did see a decrease in daily users specifically among younger teens."

Mr Ebersman said the trend was of "questionable statistical significance" but that he wanted to share it as the company was often asked about it.

The statement comes after a survey by financial firm Piper Jaffray found earlier this month that Twitter had overtaken Facebook as the preferred social network for teenagers.

Facebook's finance chief David Ebersman revealed the drop in teen users

Facebook has dropped from being the top choice with 44% of young users a year ago to just 23% in the latest survey.

The share price fluctuation masked an impressive set of Q3 figures that surpassed Wall Street's expectations.

The company's revenue grew 60% to £2.02bn (£1.26bn) as its share of the mobile ad market continued to grow.

The world's largest social network said it had earned $425m (£265m) in the third quarter - up from a loss of $59m (£37m) in the same period a year ago.

Adjusted earnings were $621m (£387m) in the last quarter - better than analysts expected. 

Facebook's advertising revenue was $1.8bn (£1.12bn), up 66% from a year ago, with mobile ads accounting for 49% of the company's total ad revenue during the quarter.

CEO Mark Zuckerberg said: "The strong results we achieved this quarter show that we're prepared for the next phase of our company, as we work to bring the next five billion people online and into the knowledge economy." 

Facebook went public in May 2012 at $38 per share but initially saw its share price tumble.

It took the stock more than a year to surpass the launch price as the company worked to prove that it could grow mobile advertising revenue at a time when an increasing number of its users were accessing it on mobile phones and tablet computers.

16.01 | 0 komentar | Read More

Customers To Switch Energy Firms In 24 Hours

By Anushka Asthana, Political Correspondent

Consumers should not need to be "stock market analysts" to be able to switch energy firms simply, the Energy Secretary has said.

Ed Davey said he was preparing to introduce plans to make it simpler for "ordinary people" to be able to find the cheapest tariffs.

Speaking to Sky News, Mr Davey said that he was introducing a number of measures, which will be unveiled in his yearly review in the House of Commons later today, to help customers reduce their bills.

He said that people would be easily able to find out the cheapest tariff on offer from their current supplier and that bills would have QR (quick response) codes on them which people could scan with their mobile phones to enable them to switch to the cheapest provider.

He said that volunteers, including people from the Citizens Advice Bureau and Age UK, would be available in the community to help people face-to-face to work out what was the best thing for them.

Mr Davey said: "This is the way to make sure you don't have to be a stock market analyst to switch but ordinary people, people who wouldn't normally think of witching are given the support to switch."

He said that he had switched this year as part of a collective and saved £200 on his annual bill.

The big six energy firms are under fire over pricing

The Energy Secretary is expected to say later today that the Bix Six energy firms will be subject to rigorous checks in three key areas - competition, profit and customer engagement.

It follows a storm of controversy around energy prices after four of the big six companies raised prices by an average of 9.1%, causing customer bills to exceed £1,400 a year and leading to allegations of cartel behaviour.

The annual check is designed to drive up competition in the market, which is still heavily dominated by the big six.

Despite a number of new entrants to the market, British Gas, SSE, Powergen, EDF, E.ON and Scottish Power still provide gas and electricity to 99% of British homes.

The annual review will aim to crack down on practices seen as preventing new firms from entering the market.

One supposed method revealed earlier this week involved British Gas. The energy giant was said to have a dedicated team that contacted customers who had switched away and offered them lower rates to go back.

Stephen Fitzpatrick, managing director of Ovo Energy, made the claims at a select committee hearing in which companies faced MPs.

Sources told Sky News the review would also look at how to force companies to offer clearer information to customers who want to switch and to reduce the time it takes to change companies.

There are already plans to reduce the number of tariffs on offer so that customers can easily compare them.

And the review will be expected to push companies to be more transparent about their profits.

While companies say they only make margins of around 5% on their retail products, they enjoy much bigger percentages in power generation - and the profits made through trading are not disclosed.

The review will be carried out by three regulators - Ofgem, the Office of Fair Trading and the Competition Markets Authority.

A source said the plans were "very much about transparency and asking the (big six) to open their books".

Jonathan Reynolds, a shadow energy minister for Labour, said the problem was that the regulators ought to be doing that work anyway.

He argued that we know what the problem is - we just need to fix it.

"Hard-pressed energy customers struggling with the cost of living need action now, not the promise of another review in future by the same regulator that has let the energy companies get away with ripping people off," he said.

"Nothing less than a price freeze will do, because this is the only way we can deal with the energy companies overcharging."

16.01 | 0 komentar | Read More

Pensions: 'Rip-Off' Charges Targeted By Govt

Plans to stop "rip-off" pension charges could see people getting an extra £100,000 in their retirement savings pot.

The Government is to unveil plans that could include a ban on all charges above 0.75% a year as it rolls out landmark reforms to automatically place people into workplace pensions.

The industry has been working to improve transparency and the average charge on new pension schemes set up in 2012 is around 0.51%.

But the Office of Fair Trading (OFT) estimates there are more than 186,000 pension pots with £2.65bn worth of assets which are subject to an annual charge of above 1%.

Small variations in charges can make huge differences over time to the eventual size of the pension pot that someone ends up with.

The Government said that someone who saves £100 a month over a typical working lifetime of 46 years could lose almost £170,000 from their pension pot with a 1% charge and over £230,000 with a 1.5% charge.

A pension saver with a 0.75% annual charge on their pension pot could eventually end up £100,000 better off than if they had been charged a rate of 1.5%, the Government said.

Pensions Minister Steve Webb said: "The Government believes that enough is enough on charges.

"People need to know they are getting value for money when they save into a pension and not being ripped off by excessive charges."

Other options for caps being considered by the Government include a higher charge cap of 1% and a "two-tier" cap.

The two-tier cap would involve a standard cap of 0.75% and as well as a higher cap of 1% if employers explain to the Pensions Regulator why their scheme charges more than 0.75%.

Any final cap could lie somewhere between the two levels suggested, depending on the evidence received.

The Government wants to hear from the industry and the public on how it can best design a charging cap that can protect people's savings before putting its plans in place next year.

Otto Thoresen, director general of the Association of British Insurers (ABI), said: "The industry is committed to making pension reform a success and of course will engage fully with this consultation."

16.01 | 0 komentar | Read More

Barclays In Currency Probe As Profits Dive

Barclays has confirmed a 26% fall in quarterly pre-tax profits and admitted it is cooperating with regulators investigating the possible manipulation of currency trading by major banks.

The third quarter brought in £1.39bn, amid higher spending to achieve its transformation objectives and a halving in income at its investment banking operations - blamed on uncertainty about when the US Federal Reserve would start to slow its massive quantitative easing programme to support economic recovery.

Profits from its investment bank dropped 53% to £463m while profits from UK retail and business banking were 2% down at £351m.

Over the first nine months of the year, group pre-tax profits were down 20% to £4.97bn but Barclays did not increase its provisions for the cost of the payment protection insurance mis-selling scandal, unlike rival Lloyds on Tuesday.

Barclays confirmed it was reviewing its foreign exchange trading over several years to August 2013 amid a worldwide regulatory inquiry into the market.

While authorities have not named individual banks at the centre of the probe, UBS and Deutsche Bank said on Wednesday that they were under investigation.

Barclays said a number of regulatory and enforcement authorities were investigating foreign exchange trading, including attempts to manipulate benchmark exchange rates.

The Barclays statement said: "It is not possible at this stage for Barclays to predict the impact of these investigations on it." 

The bank has had to pay a string of penalties for the mistakes of its past - most recently a £291m fine for allegations relating to the rigging of the interbank lending rate, Libor.

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Supermarkets Announce New Petrol Price Cuts

By David Crabtree, Midlands Correspondent

The cost of fuel is being slashed at pumps across the UK in the latest phase of a supermarket petrol price war.

It was sparked by Asda, which is cutting prices to its lowest this year. Sainsbury's,Tesco and Morrisons have acted quickly to announce reductions.

Asda has launched a national cap on prices, saying drivers filling up at its forecourts will pay no more than 126.7p a litre for petrol or 133.7p for diesel.

Sainsbury's says it is cutting prices by up to 3p - their cheapest for two-and-a-half years.

Tesco will reduce prices by up to 2p. Morrisons will do the same "at the majority of its sites".

Quentin Wilson, from the campaign group FairFuel UK, said: "Don't get excited, everybody, because this will not stay. We will see it go up again.

"But at least now we have a much faster reflection of wholesale prices at the pump. We don't have to wait two or three or four weeks for the fuel to come down in price when we know it goes up in a heartbeat, so I'm pleased, FairFuel is pleased."

There are words of caution from campaigners that lower prices may not last

The AA has welcomed the move, saying it reflects a fall in the wholesale price of fuel, but the continued uncertainty over Libyan oil production continues to leave the market unpredictable.

An AA spokesman said: "The average price of petrol in the UK has hovered around the 132p a litre mark since mid-October, making 126.7p a very good price."

At Asda in Leamington Spa, motorists greeted the news with delight.

Susan Cooper, who drives 50 miles a day, said: "This will save me a lot of money. It is about time we had some better news with gas and electricity going up."

Another customer, Martin Cavanagh, said: "It has to be good news. I know oil and everything is a complicated commodity and that's why we get the price jumping around. Let's hope it goes low and stays low."

Oil analyst Richard Mallison said it was significant that retailers were passing on the fall in wholesale oil prices to consumers on the forecourt.

He told Sky News: "The biggest reason for supermarkets being able to slash prices at the pump has been the change in the dollar-to-pound exchange rate.

"The dollar's weakened, that's brought down the cost of oil and wholesale fuel and that's now being passed on."

But he warned that low prices may not last for long.

He said: "We've seen the UK recovery stronger than expected, we've seen the troubles with the US shutdown and debt ceiling - both of those effects might fade in terms of the exchange rate, which would then mean petrol prices starting to go up again."

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HS2 Alternative 'Will Cause Years Of Gridlock'

By Anushka Asthana, Political Correspondent

Railway services between the north and south of England will be crippled by 14 years of weekend closures if HS2 is abandoned for an alternative, ministers will claim this week.

The warning will be part of a Coalition "business case" for the high-speed rail link published on Tuesday in a bid to fight off critics of the increasingly controversial project.

It will paint a picture of chaos for commuters if other investments are chosen instead of HS2.

The closest alternative would require 2,770 weekend closures - equivalent to 144,000 hours - on the East Coast Mainline, Midland Mainline and West Coast Mainline, the report will say.

That will increase a typical journey from London to Leeds by two hours and 10 minutes to more than four-and-a-half hours overall.

Map of the HS2 route

The Government has drawn the evidence from a study by Network Rail and transport consultant Atkins. It also finds that houses and businesses would have to be demolished.

A Government source said: "We need to do something because our railways are nearly full but the alternative to HS2 is a patch and mend job that would cause 14 years of gridlock, hellish journeys and rail replacement buses.

"The three main routes to the north would be crippled and the economy would be damaged."

The strong language is a response to heavy criticism of HS2 - including from the Labour Party which is no longer promising to support the project.

The party wants to introduce a "cancellation trigger" to the legislation, forcing the Government to reveal if total costs rise about £50bn. Ministers may support the amendment.

Labour's role is seen as key after David Cameron admitted that "multi-year, multi-parliament infrastructure projects … can't go ahead without all-party support".

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Airbus' Airline Appeal For Wider Plane Seats

Relief could be on the way for passengers crammed into narrow seats on planes.

Aircraft manufacturer Airbus is calling on the aviation industry to set a minimum seat width of 18 inches for long-haul aircraft.

The call comes after London-based research showed that sleep quality can improve substantially if seats are a little wider.

Airbus, whose planes' wings are made in the UK, already has an 18-inch minimum width in its long-haul economy cabins, with business and first-class passengers having wider seats.

The company said: "However, other manufacturers are eroding passenger comfort standards by going back to narrower seat widths from the 1950s in order to remain competitive."

Airbus released details of research conducted by Harley Street medical practice The London Sleep Centre.

Tests were done on a selection of passenger, which included monitoring brainwaves, and eye, abdominal, chest, hip and leg movement.

The tests revealed that a minimum seat width of 18 inches improved passenger sleep quality by 53% compared with the 1950s-style 17-inch standard.

Dr Irshaad Ebrahim, of The London Sleep Centre, said: "The difference was significant. All passengers experienced a deeper, less disturbed and longer night's sleep in the 18-inch seat."

Kevin Keniston, Airbus' head of passenger comfort, said: "If the aviation industry doesn't take a stand right now then we risk jeopardising passenger comfort into 2045 and beyond, especially if you take into account aircraft delivery timetables combined with expected years in service.

"Which means another generation of passengers will be consigned to seats which are based on outdated standards."

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Storm Causes Major Headache For Commuters

Transport services including trains, planes and ferries have been cancelled or are disrupted as a severe storm strikes the southern half of the UK.

Network Rail said it was aware of more than 100 trees on the line across the South East and said its engineers would be working to remove them "as soon as possible".

First Capital Connect told its passengers there would be "no services until further notice", while East Coast Trains said fallen power cables and flooding at the southern end of its network had caused delays and cancellations to services and urged passengers not to travel.

Other operators including Greater Anglia, East Midlands Trains and Stansted Express said services would be suspended until later this morning, while trains from London Victoria are not expected to run until at least 10am.

Hurricane-force winds and heavy rain also caused disruption on the roads, with a number of major routes affected.

Both Severn estuary crossing were closed, as well as the Queen Elizabeth II Bridge and the Sheppey Crossing in Kent.

Countless local roads have also been shut by fallen trees.

Rough seas caused the Port of Dover to suspend all ferry crossings while Brittany Ferries cancelled services between Plymouth and Roscoff, Poole and Cherbourg and Portsmouth and Bilbao.

Among the services that will be affected by the storm are:

Trains

:: Southern Railway has announced that it is "highly unlikely" it will run any services before at least 9am on Monday.

:: Gatwick Express services finished at around 1am and will not resume until at least 9am.

:: South West Trains has warned people not to travel at all on Monday and will be running a "significantly reduced timetable".

:: Southeastern Railway is expecting to run a reduced service and most routes will not be operating until after 9am. 

:: East Coast Trains will operate an amended timetable for Monday due to speed restrictions that will be in force south of York Station.

:: Greater Anglia Trains has announced that services will be suspended on Monday until 9am and no alternatives to trains will be provided.

:: First Capital Connect trains are not expected to run until after 9am.

:: London Overground services will not be operating until after 9am on Monday.

:: East Midlands Trains - no services into or out of London St Pancras until at least 10am. No services between Nottingham, Ely, Peterborough and Norwich until around 9am.

:: C2C trains suspended until at least 9am.

:: Eurostar cross-channel services suspended until at least 7am to allow inspection of high speed lines.

Planes

:: Heathrow airport has cut capacity for all airlines on Monday, including a 20% reduction between 6am and 11am.

About 130 flights have been cancelled and the airport recommends all passengers contact their airline.

The cancellations are a combination of arrivals and departures.

:: British Airways' Heathrow cancellations are currently all from its European and domestic schedule. Passengers can rebook or get a refund.

:: Gatwick, Stansted, Luton and Bristol airports have not yet announced any cancellations but are telling passengers to check with their airline before travelling to the airport.

Ferries

:: Brittany Ferries' services has announced cancellations between Plymouth and Roscoff; Poole and Cherbourg; Portsmouth and Bilbao.

Ferries also cancelled between Penzance and the Isles of Scilly.

Roads

:: The Highways Agency has issued a severe weather alert for high-sided vehicles, caravans, motorbikes and other vulnerable vehicles.

:: Both crossings over the Severn estuary have been closed.

:: Queen Elizabeth II Bridge, the southbound Dartford Crossing, is closed. However, the tunnels will remain open and operate a contraflow system so that traffic can cross the Thames in both directions.

:: The Sheppey Crossing bridge in Kent is currently closed due to high winds.

:: The A14 Orwell Bridge near Ipswich has been shut

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JPMorgan To Pay £3.2bn In Mortgage Settlement

JPMorgan has agreed to pay $5.1bn (£3.2bn) to resolve claims it misled mortgage lenders before the housing crash.

The deal settles a lawsuit brought by American regulators over the quality of mortgages sold to US loan giants Fannie Mae and Freddie Mac between 2005 and 2007.

The Federal Housing Finance Agency accused America's biggest bank of causing "billions of dollars" in losses to the two mortgage finance companies.

The two settlements - one of $4bn and another of $1.1bn - is less than half the amount JPMorgan is expected to pay for mortgage-related violations.

The $4bn fine relates to $33.8bn in residential mortgage-backed securities sold by JPMorgan to Fannie and Freddie between 2005 and 2007.

The remaining $1.1bn concerns claims JPMorgan made about single-family mortgages it sold Fannie and Freddie between 2000 and 2008.

JPMorgan CEO Jamie Dimon has been in talks with the US Justice Department

JPMorgan "falsely" told Freddie and Fannie the mortgages met the two agencies' standards for quality.

In reality, the assets were much lower quality than claimed. Many loans that were billed as safe later defaulted or were foreclosed.

The FHFA said JPMorgan's conduct "constitutes negligent misrepresentation, common law fraud and aiding and abetting fraud".

The securities were sold to Fannie and Freddie by JPMorgan and also by Bear Stearns and Washington Mutual, which were bought by the bank in 2008.

FHFA Acting Director Edward J DeMarco said: "This is a significant step as the government and JPMorgan Chase move to address outstanding mortgage-related issues."

JPMorgan is expected to pay a total of $13bn for mis-selling mortgage-backed securities in the run up to the 2008 financial crisis, say US reports.

A tentative deal has reportedly been reached between JPMorgan and the US Justice Department.

If the deal is finalised, it would be the biggest settlement of its kind ever paid by a US company.

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JPMorgan Facing Record £8bn Fine: Reports

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McDonald's To Drop Heinz After CEO Change

McDonald's has announced it will end a 40-year relationship with Heinz as the sauce company is now led by the former chief of rival Burger King.

"As a result of recent management changes at Heinz, we have decided to transition our business to other suppliers over time," McDonald's said in a statement.

"We have spoken to Heinz and plan to work together to ensure a smooth and orderly transition."

The switch will be more apparent outside the United States, as McDonald's only serves Heinz sauce in Pittsburgh and Minneapolis.

Heinz has had a 40-year-old relationship with McDonald's

Heinz is now run by Bernardo Hees, former head of Burger King, 

Sauce packages handed out at McDonald's restaurants in the United States often say only "fancy ketchup". Most in-store sauce dispensers are not branded.

The move by McDonald's could benefit Heinz rivals Hunt's, owned by ConAgra Foods Inc., and Del Monte.

Warren Buffett's Berkshire Hathaway and an investment fund affiliated with 3G Capital bought Heinz for $28bn (£17bn) in June and immediately named Hees CEO.

Burger King went public in June 2012, less than two years after it was privatised by 3G Capital Management LLC, which retains a stake in the fast-food chain.

Burger King has been a Heinz customer for "decades" and uses its products in roughly 80% of markets around the world, spokesman Miguel Piedra said.

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Osborne To Stop Short Of Full RBS Break-Up

By By Mark Kleinman, City Editor

George Osborne will stop short of ordering a full break-up of Royal Bank of Scotland (RBS) following a review that will aim to redeploy billions of pounds of capital for lending into the British economy.

Sky News understands that the Chancellor and senior Treasury officials will next week finalise a blueprint for the future of RBS, in which UK taxpayers hold an 82% stake, which avoids the need for a formal vote by independent City shareholders.

The key recommendations of a four-month review led by Rothschild, the investment bank, and BlackRock, the world's largest asset manager, are understood to focus on "internal surgery" rather than a wholesale break-up of the RBS group.

They will include the creation of a more formal internal "bad bank", a further reduction in the size of RBS's investment banking operations, a more aggressive strategy to resolve the future of impaired loans, and a number of other asset sales.

An announcement about the outcome of the review, launched by the Chancellor in June, could be made as soon as next Friday, when RBS publishes its third-quarter results.

"He will want to present it as a break-up, but it won't quite be at the most radical end of the spectrum of options," said a source close to the situation.

Treasury and RBS officials cautioned that final decisions had not yet been taken and that the shape of the proposals could yet shift significantly.

The announcement of the restructuring is expected to be made by the bank itself, rather than Mr Osborne.

Under the currently-envisaged plans, the shake-up would involve in the region of £40bn of RBS's bad assets being held within a rebranded non-core asset division, or "bad bank". That figure is at the lower end of a range considered during the review, according to insiders, and roughly corresponds to the size of RBS's existing non-core unit.

It will not require the separation of those loans from RBS by injecting them into an independent taxpayer-owned vehicle, and so will not trigger a vote from which the Government would be excluded under stock market rules.

That will enable Mr Osborne to present decisions about RBS's future as a fait accompli - presuming that he has the agreement of RBS's negating the risk of an embarrassing defeat at the hands of institutional investors.

As Sky News revealed in June, many big RBS shareholders are opposed to a full break-up, arguing that it would be costly, time-consuming and further delay - possibly by years - the sale of the Government's shareholding in the bank.

The bad assets identified by the review largely comprise loans within RBS's Ulster Bank and property lending portfolios, and will be more aggressively run off in the coming months by the bank's executives.

The commitment to accelerate this process may trigger further writedowns to their value, with the bank raising additional capital by selling other assets.

Citizens, the US retail bank, is likely to be floated earlier than a previous target date of 2015, while the international arm of Coutts, the wealth manager owned by RBS, is also a candidate for sale.

It was unclear this weekend whether Rory Cullinan, the executive who has overseen the massive shrinkage of RBS's portfolio of bad assets during the five years since it was bailed out, will continue to run the unit.

One challenge facing Mr Osborne will be the scrutiny of Andrew Tyrie, the MP who chaired the Parliamentary Commission on Banking Standards. In its report earlier this year, it called for radical action to transform RBS into a bank that could support the UK economy.

The resolution of the dispute over the future of RBS, whose shares languish well below the level at which taxpayers injected £45.5bn of equity in the autumn of 2008, will bring relief to RBS managers tired of repeated conflicts between the Chancellor and Stephen Hester, who stepped down as RBS chief executive last month.

Mr Osborne said in June that he would only proceed with a major shake-up at RBS if it delivered clear benefits to taxpayers and the UK economy through increased lending capacity and appetite.

A Treasury official said on Saturday that the Chancellor had been keen to identify a "headline number" that would demonstrate that inflated capacity.

He added that the structural review would be linked to a separate piece of work led by Sir Andrew Large, former deputy governor of the Bank of England, which has been examining the flow of credit from RBS to small and medium-sized businesses (SMEs).

The views of UK Financial Investments (UKFI), which manages the taxpayer's stake in RBS, will also be important.

James Leigh-Pemberton, the investment banker who on Monday takes the helm of the Treasury agency, was asked by Mr Osborne last year to conduct a review of RBS's structure.

Mr Leigh-Pemberton argued in favour of a more radical break-up of RBS than the Chancellor is expected to favour.

Since becoming RBS's chief executive several weeks ago, Mr McEwan has been working with the management consultancy Bain & Co on a review of RBS's operations and an examination of core client services.

In a memo to staff earlier this month, he said that the location of RBS's bad assets was less important than the bank's need to focus on improving service to customers.

"The future of this company will not be about whether we operate in particular areas or where our problem assets sit," he wrote.

"The future of this company is about how good a job we do for our customers, including those who are having difficulty repaying their loans. And it will be about how well we live up to all our responsibilities, particularly those we have to the UK."

RBS and the Treasury declined to comment.

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