China's ICBC Bank Now Bigger Than US Giants

A Chinese bank has been ranked as the world's largest, overtaking two American finance giants.

Industrial and Commercial Bank of China (ICBC) leapfrogged the US banks to top the global ranking of banks with the most capital.

The shock ranking has highlighted the growing size and importance of Chinese lenders.

ICBC topped The Banker magazine's annual list of the top 1,000 banks for the first time.

The magazine relegated the Bank of America to third from first, while JPMorgan Chase remained in second slot.

China's ICBC was ranked third last year by the magazine, which is owned by the Financial Times.

The rankings are based on Tier 1 capital as a measure of a bank's ability to lend on a large scale and endure shocks.

ICBC has for some time ranked as the top bank by market value.

Britain's HSBC, which gains much of its earnings from Asia, was fourth in The Banker's list, with China Construction Bank (CCB) ranked fifth.

China had four banks in the top 10 and 96 in the Top 1,000.

Its top four lenders - ICBC, CCB, Bank of China and Agricultural Bank of China - filled the top positions for profit in 2012.

ICBC's $49bn (£32bn) profit put it top of the profit table for a third successive year.

Total profit for the biggest 1,000 banks is now back close to levels achieved before the 2007/09 financial crisis, but the regional share has shifted significantly,

The Banker said that in 2006 European banks accounted for 46% of global profits and 58% of assets, but last year that had dropped to less than 2% of profits and 43% of assets.

Asia's banks have lifted their share of profits to 56% from 19% in the same time and increased their share of assets to 35% from 22%.

Spain's Bankia posted the biggest loss last year at £21bn , with six of the 10 biggest losses coming from Spain, the magazine estimated.

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Business Confidence 'Back At 2007 Level'

British business confidence has hit its highest level since 2007, in fresh evidence that the economy is recovering from the financial crisis.

The finding, in the British Chambers of Commerce's quarterly economic survey, was backed by a pick-up in exports and a strong rise in firms' domestic and overseas sales over the past three months, boding well for official data due later this month.

Other surveys have shown a similar pattern.

Markit's June manufacturing Purchasing Managers' Index (PMI) was the highest in more than two years, as was last week's GfK consumer confidence barometer.

"The UK economy is slowly strengthening," said David Kern, the BCC's chief economist.

"If recent progress can be sustained, there are realistic hopes that growth forecasts will be revised up further," he added.

Britain's recovery since the 2007-08 financial crisis has been the slowest since modern records began, and weaker than in any Group of Seven economy apart from Italy.

At the end of May the BCC forecast that the economy would grow 0.9% this year, but based in part on Tuesday's data, it now expects growth of 0.6% in the second quarter alone.

This compares to 0.3% growth in the first three months of the year.

The BCC survey showed that in the service sector, domestic sales and orders were growing at the fastest pace since the fourth quarter of 2007, while export sales had grown at the fastest rate since the survey began in 1989.

For manufacturers, domestic sales growth was the strongest in two years and export order growth the best in a year.

The data is seen as easing immediate pressure on new Bank of England governor Mark Carney to restart asset purchases through the bank's quantitative easing programme.

Separate data released on Tuesday backed that assessment as activity in the construction sector was found to have grown for the second month in a row.

The PMI for June was at its highest level since May 2012.

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Winklevoss Twins Launch Bitcoin-Tracking Stock

The Winklevoss twins, who famously alleged that Facebook founder Mark Zuckerberg stole their website idea, have revealed plans for a share offering to give investors exposure to the value of Bitcoins.

Winklevoss Bitcoin Trust, which is designed to operate like an exchange-traded fund, will initially sell $20m (£13m) worth of shares in the Initial Public Offering (IPO), with each share worth a fraction of the virtual currency.

The filing, with the US Securities and Exchange Commission, said the shares were aimed at investors "seeking a cost-effective and convenient means to gain exposure to Bitcoins with minimal credit risk".

But the prospectus also warned that: "As the sponsor and its management have no history of operating an investment vehicle like the Trust, their experience may be inadequate or unsuitable to manage the Trust."

Bitcoins - a form of electronic money that is not managed by a single company or government - are "mined" by software running a set of algorithms and their release is tightly controlled, mimicking a central banking system's control over the minting of money.

They are seen by some as the future of money but critics point to extreme volatility in value - rising from $13 in January to a peak of $266 in April and back down to around $100 last week.

The US is studying the potential risk from online payment mechanisms, like Bitcoin and others, fearing virtual currency could be used by criminals or terrorists - possibly even vulnerable to hackers.

Regulators launched a money laundering probe last month against digital currency operator Liberty Reserve - based in Costa Rica.

But officials in the US have been at pains to point out that far from being unregulated, virtual currencies are under the close eye of financial watchdogs.

Cameron and Tyler Winklevoss reportedly hold approximately $11m (£7.2m) of Bitcoins.

It was their feud with Zuckerberg, portrayed in the fictional 2010 film The Social Network, which shot them to international prominence.

The identical twins settled their lawsuit with Facebook in 2008 for cash and stock, then valued at $65m.

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Carney Starts As Bank Of England Governor

Things We Learned About Mark Carney

Updated: 7:19pm UK, Thursday 07 February 2013

By Ed Conway, Economics Editor

Here's what we learned about the incoming Bank of England Governor Mark Carney in his testimony before MPs at the Treasury Select Committee, in more or less descending order of importance.

1. This is a man who wants a shake-up and, most notably, to have the Bank of England's remit to be reconsidered on a regular basis.

This is perhaps the first and most important takeaway: the Bank has had its inflation target and a more-or-less unchanged remit for more than two decades.

The 2% target may well be the best scheme under which it monitors and hence controls the economy, but there hasn't been a formal move to reconsider it. Mr Carney wants that to change.

2. He doesn't really want to adopt an NGDP target.

Mr Carney had talked so approvingly of this alternative to inflation-targeting - targeting the total amount of cash generated by the economy - that a lot of people thought he wanted to ditch the inflation target altogether.

However, Mr Carney said that while there are plenty of things to recommend nominal GDP as a guide for how much, on a long-term basis the Bank needs to stimulate the economy.

He added: "From what I know given the research I have seen, as I sit here today, then flexible inflation targeting, deployed in a different way would remain a superior alternative to a shift in framework."

3. "Flexible inflation targeting" could well involve a Fed-style employment target.

Mr Carney spoke approvingly of the Federal Reserve's new so-called threshold guidance - under which it has committed to carrying out more quantitative easing until (in its case) unemployment gets down beneath 6.5%.

He also made clear his support for giving long-term guidance on interest rates (for instance, committing to keeping interest rates at a particular level for an extended period of time). Both would represent a major shift in monetary policy in the UK.

4. He wants to distinguish himself from Sir Mervyn King, in terms of leadership style.

He talked repeatedly in his lengthy written submission to the committee about his consensual leadership style.

Although he was careful not to make the comparison himself, some will likely contrast this to the existing Governor's management style, which some have characterised as dictatorial.

Mr Carney told the committee he did not intend to be "an emperor" or a "super-governor" - he characterised himself as a "managing partner".

5. He is potentially in favour of more quantitative easing.

Now, Mr Carney himself didn't say anything as brazen as the above. He is, after all, a central banker who's well aware of the risks of publicly committing oneself to a particular policy.

However, he got about as close as one can get to doing so, saying that when he "comes to the table", if the UK economy remains as weak as it is today, "this will merit for a period of time considerable monetary policy stimulus."

6. He is young and charming.

This isn't an entirely shallow point. The Bank of England has been in dire need of some re-energising.

Its relationship with Parliament has suffered. Many economists are critical of its conduct during the crisis (well, specifically Sir Mervyn's conduct).

The sight of a young (well, by central bankers' standards), dynamic character like Mr Carney is a breath of fresh air.

For me, the most significant moment of the hearing came after it had finished and a number of the MPs rushed over to Mr Carney to congratulate him.

And the committee formally approved his appointment a few hours later. They aren't an easily-influenced bunch and, in short, he charmed the socks off them. The real question is how long the honeymoon will last.

7. He doesn't want a "helicopter drop".

There has been a lot of talk recently about whether central banks could go one step further than their current quantitative easing, and help finance a tax cut by printing money.

Milton Friedman likened this to dropping cash out of a helicopter, and it's something the FSA chairman Lord Turner raised in a speech on Wednesday night.

Well, Mr Carney's having none of it.

He said: "I do not envisage circumstance where I would support that."

8. He is already having an effect on the Bank of England.

Perhaps it's Sir Mervyn getting demob happy, perhaps the Bank sees the way the wind's blowing.

Either way, the Bank has already, subtly, started to change. And there was rather significant evidence of this even as Mr Carney gave his evidence.

In its monthly meeting, the Monetary Policy Committee voted to leave interest rates and asset purchases on hold.

Normally, unchanged monetary policy wouldn't merit a formal statement from the committee, but this time around the MPC issued a pretty lengthy explanation for its decision.

As I understand it, this was a conscious effort on the part of the Bank to improve how it communicates its decisions.

Hitherto we've had to wait a fortnight to get the full minutes of each month's meeting. This is a sign that there may be more instant explanation after each and every decision.

It's also worth dwelling, for a moment, on one particular sentence from the statement.

"Attempting to bring inflation back to target sooner by removing the current policy stimulus more quickly than currently anticipated by financial markets would risk derailing the recovery and undershooting the inflation target in the medium term."

This is a clear indication to financial markets ahead of the closely-watched Inflation Report next week: don't expect the Bank to want to start raising interest rates any time soon. You have been warned.

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MPs' Pay: Cameron Warns Against Big Rise

David Cameron has called for restraint on MPs' pay amid rumours they are in line for a bumper rise.

The Independent Parliamentary Standards Authority (Ipsa) is reported to be looking at an increase of around £7,500 or 15% which would take salaries to £75,000.

But the Prime Minister has insisted making Westminster more expensive to the taxpayer would be "unthinkable".

"Whatever Ipsa recommends, we can't see the cost of politics or Westminster going up. We should see the cost of Westminster go down," he said.

"Anything would be unthinkable unless the cost of politics was frozen and cut, so I'll wait and see what Ipsa have to say. What I said to Ipsa was that restraint is necessary."

Ipsa is due to announce the findings of a fundamental review into pay and perks later this month, although the main changes will not take effect until after the next general election.

David Cameron wants costs to go down

A survey released by the watchdog earlier this year found most MPs wanted to be paid £86,000, although some demanded more than £100,000.

Even the smaller rise of £7,500 would take their salaries to almost three times the national average of £26,500 and is likely to provoke public anger.

Taxpayers' salaries have risen by just 0.6% on average this year and many are struggling to cope with the rise in the cost of living.

The coalition has also enforced a major squeeze on public sector pay, with salary freezes and new measures in the Spending Review to scrap automatic rises.

Some argue that a significant increase is necessary to compensate for the clampdown on second-home expenses and to attract top quality people into Parliament.

But party leaders fear any such move would play very badly with the public, who are being hit by drastic austerity measures and meagre pay rises.

Matthew Sinclair, chief executive of the TaxPayers' Alliance, said: "MPs are already very well paid both in terms of European politicians and the average salary in this country.

"It would be particularly egregious for politicians to be handed a whopping great pay rise while hard-pressed taxpayers tighten their own belts.

"Ipsa must recognise that its own polling shows the public simply do not support an increase, nor would it be consistent for MPs to take a rise while rightly freezing pay elsewhere in the public sector."

Mr Cameron's comments came after sources close to Labour signalled leader Ed Miliband would make MPs accept a 1% pay rise if he won power in 2015.

However, the Government has little power to block the move because control of MPs' pay was handed to Ipsa after the expenses scandal.

Cabinet Office minister Francis Maude told Sky's Murnaghan programme on Sunday: "MPs' pay is a matter actually not even for Parliament these days.

"It's a matter for the Independent Parliamentary Standards Authority that was set up in the wake of the expenses scandal."

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Survey: Green Shoots Sprout In UK Industry

UK manufacturing has recorded its strongest growth in more than two years and new orders rose even faster in a fresh sign of momentum in the economy, a new survey suggests.

The Markit/CIPS Manufacturing Purchasing Managers' Index (PMI) for June jumped to 52.5 from an upwardly revised 51.5 in May, beating analysts' forecasts for a reading of 51.5.

The index is now at its highest level since May 2011, and the average level in the March-June period represented the strongest growth in manufacturing since the second quarter of 2011, when Britain's economy was expanding.

Rob Dobson, senior economist at Markit, said the survey suggests that factory output rose by around 0.5% in the second quarter.

After recent signs of strength in services and stabilisation in construction, it also points to overall quarterly economic growth of at least 0.5% compared with the January-March period, Mr Dobson said.

"The near-term outlook for output also remains on the upside," he added.

"It therefore seems increasingly unlikely that the Bank of England's policymakers will opt for further asset purchases at its meeting later this week."

Mark Carney, who starts as governor of the central bank today, will seek to speed up Britain's exit from almost two years of economic stagnation. However, no action is expected as at his first policy meeting, which ends on Thursday.

The manufacturing output and new business components of the PMI index were at their strongest since the first few months of 2011, as appetite for British goods grew at home and abroad, including in Europe. Some firms said better weather helped, too.

Stocks of finished goods shrank in June as companies raced to meet strengthening demand, pointing to likely further growth of production in coming months, Markit said.

Factories' clients also had something to cheer: Output prices fell for the first time since late 2009, driven down mainly by stiff competition.

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Facebook To Remove Adverts From Adult Pages

Facebook will stop advertisements appearing on pages containing sexual or violent content after a number of companies suspended their campaigns.

Marks and Spencer and BSkyB, the parent company of Sky News, were among those to pull their adverts from the social networking site because of concerns about placement.

It led Facebook to announce a tightening of its review process, preventing promotions from appearing on pages and groups which contain offensive content.

"Our goal is to both preserve the freedoms of sharing on Facebook but also protect people and brands from certain types of content," a spokesman said in a blog post.

"We know that marketers work hard to promote their brands and we take their objectives seriously.

"While we already have rigorous review and removal policies for content against our terms, we recognise we need to do more to prevent situations where ads are displayed alongside controversial pages and groups."

In the first three months of the year, 85% of Facebook's revenue came from advertising - up 43% on the same quarter in 2012.

Advertisers paid a total of $1.25bn (£820m) to promote their products and services to the website's reported 665 million daily active users.

The company is paid around 3% more per advert than it was 12 months ago.

Facebook said its advertising review process will be manual at first but an automated system is expected to launch within weeks.

The spokesman added: "Like any digital platform, we're not going to be perfect but we will be much better.

"We'll continue to work aggressively on this issue with advertisers.

"We're confident the immediate steps we're taking will result in a significantly improved approach to preventing these instances from occurring, and we're committed to making this process work for everyone who uses Facebook."

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The Sky News Business Look Ahead

Sky's Naomi Kerbel offers a look ahead to what's coming up in the week's business news.

:: Monday July 1

Bank of England - Mark Carney's five-year term begins

Croatia - European Union accession

:: Tuesday July 2

Ocado Group interim results

OECD Consumer Price Indices

:: Wednesday July 3

Bowie memorabilia auction at Bonhams

:: Thursday July 4

Monetary Policy Committee Meeting - interest rate decision

European Central Bank Governing Council - interest rate decision 

:: Friday July 5

MPs vote on the EU Referendum Bill

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Crown Post Office Staff Stage Strike Action

By Emma Birchley, East of England Correspondent

Post Office workers have gone on strike over plans to close 70 state-owned branches and a dispute over pay.

The closing Crown branches - which are currently directly managed by Post Office Ltd - would be franchised and put within retailers such as WH Smith, which has already happened in some towns.

Debbie Spiteri, who works at the Dagenham branch in Essex, has been employed by the Post Office for 32 years and said she thought she had a job for life.

"I thought I would be here until I retired in my 60s, but now it looks like I may be made redundant, looking for another job and at my age I didn't want to be doing that," she said.

"I feel sorry for the local people. A lot are elderly and if they have to go somewhere else, they won't. They won't go into a shop to do their business because to them they want the personal touch."

The Post Office insists staff will be transferred to a new employer or offered voluntary redundancy, but the Communication Workers Union predicts 800 jobs will be lost.

Roger Gale, general manager of the Post Office's Crown and WH Smith network, said the changes are needed.

"It's absolutely not a programme of closing post offices," he said.

"We want to retain post office services on the high street but we have to do it in a way that doesn't lose tax-payers' money.

"What we're trying to do is get the Crown Network to a point where it breaks even. It currently loses £37m a year of tax-payers' money and what we're trying to do is to remove that loss."

The 373 Crown offices, which are usually the larger ones, represent just 3% of the total post office network.

But the CWU says its staff deal with a fifth of all customers and handle 40% of financial transactions involving things like banking and credit cards.

Clive Tickner, the CWU's representative for the Dagenham area, questions the timing as the Post Office launches its new current account.

"Ironically, if they close down Crown offices there will be less outlets to transact the current account so I'm very, very concerned that they are eroding away at the Post Office so that there will be nothing left in a few years' time," he said.

There is also concern about the impact on the high street.

Deborah Satchell works at Heathway Dry Cleaners in Dagenham.

She said: "It will affect the local shops because people will go elsewhere to do what they have got to do and it will take the business away from the local community."

The strikes are the seventh round of action in the current dispute and will only affect the Crown branches.

Staff are also calling for a pay rise of 3.5% for 2012/13 and a further rise this financial year, but the Post Office says that is not possible when it is making losses.

Instead, it is offering a series of cash payments totalling up to £3,400 before April 2015.

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Post Office Staff Due To Stage Strike Action

Post office workers are due to go on strike over plans to close 70 state-owned branches and a dispute over pay.

The idea is to franchise the closing Crown branches - which are currently directly managed by Post Office Ltd - and put them within retailers such as WH Smith, which has already happened in some towns.

Debbie Spiteri, who works at the Dagenham branch in Essex, has been employed by the Post Office for 32 years and said she thought she had a job for life.

"I thought I would be here until I retired in my 60s, but now it looks like I may be made redundant, looking for another job and at my age I didn't want to be doing that," she said.

"I feel sorry for the local people. A lot are elderly and if they have to go somewhere else, they won't. They won't go into a shop to do their business because to them they want the personal touch."

The Post Office insists staff will be transferred to a new employer or offered voluntary redundancy, but the Communication Workers Union predicts 800 jobs will be lost.

Roger Gale, General Manager of the Post Office's Crown and WH Smith Network, said the changes are needed.

"It's absolutely not a programme of closing post offices," he said.

"We want to retain post office services on the high street but we have to do it in a way that doesn't lose tax-payers' money.

"What we're trying to do is get the Crown Network to a point where it breaks even. It currently loses £37m a year of tax-payers' money and what we're trying to do is to remove that loss."

The 373 Crown offices, which are usually the larger ones, represent just 3% of the total post office network.

But the CWU says its staff deal with a fifth of all customers and handle 40% of financial transactions involving things like banking and credit cards.

Clive Tickner, the CWU's representative for the Dagenham area, questions the timing as the Post Office launches its new current account.

"Ironically, if they close down Crown offices there will be less outlets to transact the current account so I'm very, very concerned that they are eroding away at the Post Office so that there will be nothing left in a few years' time," he said.

There is also concern about the impact on the high street.

Deborah Satchell works at Heathway Dry Cleaners in Dagenham.

She said: "It will affect the local shops because people will go elsewhere to do what they have got to do and it will take the business away from the local community."

The strikes will be the seventh round of action in the current dispute and will only affect the Crown branches.

Staff are also calling for a pay rise of 3.5% for 2012/13 and a further rise this financial year, but the Post Office says that is not possible when it is making losses.

Instead, it is offering a series of cash payments totalling up to £3,400 before April 2015.

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