Gulf Of Mexico Spill Costs BP More Than $38bn

The Gulf of Mexico oil disaster has cost BP more than $38bn (£23.7bn) to date, the company said, as it promised to raise its dividend.

The energy giant said its third quarter results included a charge of $59m (£36.8bn) related to the Deepwater Horizon disaster - which includes over $7bn (£4.3bn) paid out to individuals and businesses in legal claims.

This takes the total cost of the 2010 oil spill to the company to $38.1bn (£23.7bn).

But BP raised its quarterly dividend by 12.5% - its second hike in less than a year - after its results exceeded expectations.

Its replacement cost profit - which does not include the effects oil price movements - dropped to $4.69bn (£2.92bn) in the third quarter, compared with $5.27bn (£3.28bn) compared to the same period last year.

This slide in profits came as production of oil and gas fell 3% to 2.26 million barrels of oil a day.

But its oil refining business delivered a record profit because of higher fuel prices in the US and Europe.

"BP's performance and the strong progress we are making in transforming the company give us the confidence to increase distributions to our shareholders," the company's chief executive Bob Dudley said.

"We are on track with our strategy to 2014 and are laying the right foundations for sustainable growth during the coming decade," he added.

BP's shares rose 3.5% in early trading.

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UBS Cuts Thousands Of UK Jobs Amid Restructuring

UBS has confirmed it is cutting 10,000 jobs as it looks to drastically shrink its ailing investment bank which has a large presence in London.

Switzerland's biggest bank announced the plans as part of its third-quarter results which revealed a loss of 2.2 billion Swiss francs (£1.43bn) compared to a profit of 1.02 billion (£0.67bn) in the same period last year.

It said the result for the July-September period was damaged by a one-off charge of 3.1 billion Swiss francs (£2bn) linked to the restructuring of its investment banking division and a debt-related charge of 863 million (£574m).

Chief Executive Sergio Ermotti said the investment unit, which has been hit by a series of costly blunders in recent years, would "continue to be a significant global player in its core businesses" but there would be "a significant acceleration" in its transformation.

The move will see the lender and wealth manager focus on its private bank and a smaller investment bank, ditching much of the trading business that cost it $50bn (£30bn) in the financial crisis and which had been "rendered uneconomical by changes in regulation and market developments".

UBS wants to concentrate on its traditional strengths in advisory, research, equities, foreign exchange and precious metals.

Of the total job cuts, which represent 15% of the workforce, 2,500 positions would be lost in Switzerland while the rest would be felt in the UK and US.

A spokesperson for the bank's operation in London told Sky News there was currently no confirmed figure for UK losses but said it would be fair to assume it would be in the thousands.

Mr Ermotti said: "This decision has been a difficult one, particularly in a business such as ours that is all about its people.

"Some reductions will result from natural attrition and we will take whatever measures we can to mitigate the overall effect.

"Throughout the process we will ensure that our people will be supported and treated with care."

UBS shares were trading 6% higher in early trading in Zurich as investors welcomed the transformation plan.

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Royal Mail Delivers 1,000 New Parcel Jobs

Royal Mail is to create 1,000 new jobs as it looks to cash in on the boom in online retailing.

Royal Mail is planning a £75m investment programme in its UK express parcels business as packages become increasingly important to the company with letter numbers continuing to fall.

In the last reported financial year, its parcels businesses accounted for almost half of the group's revenues, excluding the Post Office, and online retailing is expected to continue to grow as stores place a greater emphasis in online sales.

High rents, other cost pressures and low consumer confidence have combined to hurt the high street since the financial crisis, prompting many retailers to invest heavily in online.

As a result, Royal Mail is to open a new parcel processing centre in Chorley, Lancashire next year.

In addition two new depots will be opened in Cornwall and Hampshire with a further nine existing depots expanded or moved to larger sites over the next four years.

Royal Mail Group's chief executive Moya Greene said: "Our investment is part of Royal Mail Group's strategy to grow its parcels businesses in the UK and overseas.

"Our strategy is to convert the rise in parcel volumes into profitable growth. That means becoming a much more customer-focused company being run on commercial lines and investing in new, vital technology."

The move has been welcomed by the Government.

Mark Hoban, minister for employment, said: "It is great news that 1,000 new jobs will be created across the country as a result of this investment.

"We've now got a record number of people in employment and these jobs will provide welcome opportunities for people who are looking for work."

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Report: Small Firms In Credit Drought Fear

Bank lending to corporate clients is set to drop to its lowest level for six years despite Government funding, a new study suggests.

According to the Ernst & Young ITEM Club, a funding gap for small and medium enterprises (SME) will remain even though Government funding has been announced.

The study said corporate lending is forecast to drop by £429bn at the end of 2012.

The annual rate of contraction is estimated at 4.6%, which is markedly slower than the 6.1% decline during 2011.

It said positive growth is forecast to resume from 2013, but corporate loans will not recover to 2008 levels  – the year of the global financial crisis - until 2016.

Item Club senior economic adviser Carl Astorri said: "The good news is that 2012 is likely to be the last year of such marked deleveraging in the UK - the bad news is that, once again, SMEs will bear the brunt of it.

"Government schemes to increase lending may help a lucky few but, as banks are encouraged by regulators to store up more capital and to look again at their forbearance policies and so-called bad-loan books, most small business are going to continue to feel the squeeze."

According to surveys from the Office for National Statistics (ONS) and Warwick Business School, the rejection rates for SME loan applications have trebled recently.

Rejection rates averaged around 11% between 2005 and 2008, whereas the rate in mid-2012 averaged around 38%, the Federation of Small Businesses and the SME Finance Monitor said.

The loan rejection rates provide an indication of the 'financing gap' facing SMEs over the coming year, experts believe.

Data from the Bank of England indicate that gross lending to SMEs amounted to £44.2bn in the 12 months to the first quarter of 2012.

If this lending data reflects a rejection rate for credit of 38%, then lowering the rejection rate to the pre-crisis level of 11% would imply the need for additional loan facilities worth around £19bn.

In September, Business Secretary Vince Cable announced the first steps of a Government-funded British business bank to help SMEs grow.

Mr Astorri said: "The figures suggest that the British business bank's lending capacity could be exhausted in less than a year.

The new bank's aim was to attract private sector funding so that when fully operational it could support up to £10bn of new and additional business lending.

"Its impact will also be reduced by competition with private sector lending activity - even if the Government aims to lend at market interest rates, it is unlikely to be able to avoid displacing existing lending activity," Mr Astorri said.

"Indeed, we expect the business bank will have to compete for projects that are commercially viable, and so we do not think the scheme will have a tangible impact on the economy."

The study also found that there was evidence that lower funding costs were being passed on to homeowners following implementation of the funding for lending scheme in July.

It also found that contraction in profits of the insurance industry would slow from 31% in 2011 to 9.5% this year, before a slow recover from 2013 onwards.

The Item Club said the combination of continued low interest rates, higher hedging costs, lower business volumes and more onerous capital requirements continues to create a challenging environment for UK insurers.

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Exclusive: Lords Unite In Newspaper Deal

By Mark Kleinman, City Editor

One of the City's most influential investors is to back an audacious attempt to consolidate Britain's flagging regional newspaper sector by merging the business interests of Lord Rothermere and Baron Iliffe.

I can reveal that Iliffe News & Media, owner of the Cambridge News and Hertfordshire Mercury, and Northcliffe Media, the regionals arm of Daily Mail & General Trust (DMGT), are in advanced talks to pool their assets into a new vehicle spearheaded by David Montgomery, the former editor of the News Of The World.

The deal will create a business with more than £250m of annual revenue and could spark a bidding war in the regional newspaper industry involving Trinity Mirror and Johnston Press, two of the three largest players.

I understand that Crispin Odey, whose hedge fund Odey Asset Management is among the most prominent names in the City, has agreed to support a deal that would combine Iliffe and Northcliffe.

They will be folded into a new vehicle called Local World plc that will be privately-owned. Mr Montgomery will own a stake in it, while Iliffe's parent group, Yattendon, and DMGT will between them own close to 50%.

The deal is also being backed by a syndicate of banks led by Bank of Ireland, HSBC and Lloyds Banking Group, which are on the verge of agreeing new borrowing facilities with the enlarged group.

A spokeswoman for Yattendon said: "I can confirm that Yattendon Group has held preliminary discussions with David Montgomery about becoming founder shareholders in a new local media company.

"We have a shared vision about the long term opportunities for local media but at this stage there is no certainty whether these discussions will lead to a satisfactory conclusion."

DMGT tried to sell Northcliffe in 2005 in a deal that would have valued the business at more than £1bn.

The proposed new transaction will value Northcliffe at little more than 10% of that price-tag, underlining the declining fortunes in the regional newspaper sector in recent years.

The industry has been hit by the waning economy as well as sharp declines in print advertising revenue and soaring print costs.

DMGT has subsequently cut hundreds of jobs at Northcliffe and switched some of its newspapers to digital-only titles to combat the slump.

Yattendon, which owns assets in agriculture, property and marine leisure as well as local media, will not take any cash out of the deal but will roll its entire newspaper investment into the new vehicle.

The group used to own titles including the Birmingham Post and the Coventry Telegraph before selling them.

The deal to create Local World has not yet been formally agreed but could be within weeks. If it does get completed, it would represent a significant step in the long-awaited consolidation of the regionals sector.

Mr Montgomery is likely to use the initial deal to pursue further mergers, potentially with Johnston or Trinity, according to insiders. Reports of his interest in Northcliffe have been circulating for the last few weeks.

A spokesman for DMGT said: "In response to media speculation, DMGT confirms that it is currently in talks regarding the future of Northcliffe Media.

"No deal or transaction has been agreed, but if these talks move to the point where agreement is reached, an announcement will be made to the market."

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Penguin Books Owner Pearson Confirms Merger

Modern Life Hits Kids' Reading

Updated: 9:05am UK, Friday 19 October 2012

TV, computer games and the demands of modern life are all shortening children's attention spans, according to a survey of teachers.

The result is that they are in danger of losing the joy of reading, says publisher Pearson, which commissioned the survey and is launching a campaign to encourage children to take an interest in books.

The study of 400 English teachers and 2,000 parents found children spend three times more of their time in "on-screen" activity at home than they do looking at books.

And, while nearly half of parents say they read to their child every day, 30% say they only read with or to their children once a week or less.

Pearson has now launched an "Enjoy Reading" campaign which will offer thousands of free books to children and provide online ideas to whet their appetites while they are on the computer.

Broadcaster, author and mother Mariella Frostrup is the face behind the campaign, which will be working with a number of authors.

"As parents we can encourage our children to develop a love of reading from an early age but it can be challenging when there are so many demands on all of our attention," Ms Frostrup said.

"Putting great books in the formats that children enjoy and helping parents and teachers find new ways to inspire a love of reading in children of all abilities is a vital job for the Enjoy Reading campaign."

Pearson's Rod Bristow said: "Study after study has shown that reading for pleasure is a key indicator of future success for children, but demands on children's attention and the difficulty of inspiring reluctant readers mean many are missing out."

Schools taking part in the campaign will be given the chance to win 100,000 online and hardback books.

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Tearful 'Rogue Trader' Tells Of UBS Losses

A trader accused of Britain's biggest fraud was allegedly trying to cover millions of pounds worth of losses incurred during the financial crisis for the bank he called his "family", a court has heard.

Kweku Adoboli, 32, is accused of gambling away £1.4bn while working as a trader for Swiss bank UBS.

At one point, he was at risk of causing the bank losses of $12bn (£7.5bn), jurors at Southwark Crown Court were told.

Adoboli wept as he gave evidence for the first time at his trial, in which he claimed his off-book trades were to cover $40m (£24.9m) annual losses of his portfolio of companies from 2008.

The court heard that by 2007 Adoboli, aged just 27, and more senior trader John Hughes, 25, were in charge of a portfolio of companies with assets of $50bn (£31.1bn).

"Our book was massive. A tiny mistake led to huge losses. We were these two kids trying to make it work," he said.

Mr Adoboli, wearing a dark suit and red tie, denied he was a "gambler" and said his knowledge of UBS's systems did not result in "fraudulent behaviour".

Fighting back tears, he said: "It's hard to find the words to describe the relationship I had with UBS as an organisation. It isn't about a bank. It was about what I thought was my family, considering how much (I) neglected my real friends and family.

"Every single bit of effort I put into that organisation was for the benefit of the bank, the people around me and the book I worked on.

"If I was not so proud to work for UBS, I would never put so much effort trying to convince them that we could achieve something at this bank."

He added: "To find yourself in Wandsworth Prison for nine months because all you did was work so hard for this bank..." before stopping as he broke down in tears.

Mr Adoboli is facing two counts of fraud and four counts of false accounting between October 2008 and September 2011, allegedly gambling away the money on high-risk illegal trades aimed at boosting his annual bonuses and job prospects.

The former public schoolboy worked for UBS's global synthetic equities division, buying and selling exchange traded funds (ETFs), which track different types of stocks, bonds or commodities such as metals.

Ghanaian-born Mr Adoboli enjoyed a rapid rise at UBS after completing an internship while a student at Nottingham University in 2002, the court heard.

Mr Adoboli told the court he feared UBS would not survive $52bn (£32.3bn) losses incurred in 2007-08 as the banking crisis took hold.

He said: "The effect on the organisation was incredible. There were times we thought there was no way the organisation would survive. I grew up with UBS. I felt very loyal to UBS.

"What could we do to help this organisation survive this incredible crisis?"

The trial continues.

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Exclusive: RBS Eyes Worldpay Payout

By Mark Kleinman, City Editor

The taxpayer-controlled Royal Bank of Scotland is in line for a substantial windfall from the sale of part of the payments processing business it was forced to offload as punishment for its £45bn bail-out four years ago.

I understand that Advent International and Bain Capital, the controlling shareholders in Worldpay, have appointed JP Morgan, the investment bank, to explore a sale of the company's US operation.

Such a disposal could fetch as much as $1bn (£620bn), bankers say, and insiders tell me that a large chunk of the proceeds is likely to be returned to Worldpay's investors.

For RBS, that would represent a rare piece of welcome financial news. When it sold Worldpay in 2010, it was allowed to retain a 19.99% stake in the business by the European Commission.

Although that stake has since been diluted to 18%, the bank could still reap a dividend worth tens, or even, hundreds of millions of pounds, depending upon the sale price and the proportion of the proceeds that is paid out to shareholders.

Worldpay, which is one of the world's largest electronic payments processing companies, operates in more than 40 countries.

It said this year that its US revenues fell by 3.6% in the first half of the year following a "strategic decision to withdraw from certain unprofitable market segments".

RBS sold Worldpay for about £1.7bn in a deal structured to provide the former owner with additional payments worth up to £200m if the business met unspecified performance thresholds.

RBS and Worldpay declined to comment.

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Victory For Man Who Took Cold Caller To Court

A businessman plagued by nuisance phone calls offering compensation for Payment Protection Insurance has secured £220 in an out-of-court settlement.

Richard Herman, 53, was so fed up with the unwanted calls arriving from India, he decided to take matters into his own hands.

He warned the company that, in future, he would invoice them £10 for every minute of his time they used.

When the calls continued he began recording them before finally invoicing the company £195 for their use of his "time, telephone and electricity".

Upon receipt of the invoice the marketing firm acting on behalf of UK-based PPI Claimline Ltd, denied making the calls. When Mr Herman revealed he had recorded evidence, they still refused to pay.

But when Mr Herman filed a claim in the small claims court for the unpaid invoice - plus £25 in costs - the company offered to settle the debt out of court and transferred £220 into his bank account.

Mr Herman filed in the small claims court when his invoice was not paid

Mr Herman said: "I kept being called, as we all do, and I thought the only way for them to stop would be for me to speak to them and say, 'For goodness sake, take me off your list!'

"Then it occurred to me to tell them that if they call again I'll charge for my time. When they continued calling I sent them an invoice for 19.5 minutes."

To encourage others to do the same Mr Herman has set up a website with examples of covering letters and invoices to send to nuisance callers.

Even though the validity of Mr Herman's original invoice was not tested in court, he believes anyone who warns cold-calling companies they will be charged if they call, have a right to invoice them.

"I did business studies at 17 and studied 'offer-and-acceptance' so I knew a verbal contract is just as valid as a written one but harder to prove.

"The recorded calls proved I did tell them I would charge for my time if they called again".

Mr Herman, who works in the telephone industry selling call-recording equipment, said his action was a last resort after asking the Information Commissioner and the Telephone Preference Service for help.

In a statment, PPI Claimline said: "We would like to stress that all our supplier relationships are subject to strict contractual provisions requiring full compliance with all relevant regulations, including those which relate to data protection and the telephone preference service.

"We would like to draw a clear line between the two calls to Mr Herman made on behalf of PPI Claimline and any other calls he received, which were nothing to do with PPI Claimline or its suppliers."

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EDF To Raise Gas And Electricity Prices

Energy giant EDF is to increase prices for householders by an average of 10.8%.

The rise, gas and electricity, around four times the rate of inflation, is set to be implemented on December 7.

EDF, which has 3.1 million customers and 5.5 million accounts overall, said its annual dual fuel bill was the lowest of the suppliers to have announced price rises so far.

Companies have blamed the changes on rising wholesale prices and increased running costs - especially for transporting gas and electricity to customers' homes - and the cost of energy efficiency programmes.

Martin Lawrence, EDF managing director of energy sourcing and customer supply, said: "We know that customers will not welcome this news and do not want to see prices going up.

"Our new prices will, however, be cheaper on average than those of all the other major suppliers which have announced standard price rises so far this autumn.

"We've taken extra measures to make sure the most vulnerable benefit from the best deals and we continue to help customers reduce their bills with energy efficiency measures."

Earlier this month Npower became the third of the so-called Big Six energy firms to confirm steep rises in its gas and electricity bills ahead of winter.

It said bills would increase by an average 8.8% for gas and 9.1% for electricity from November 26.

Just hours beforehand British Gas confirmed that its average dual fuel tariff would rise by 6% - or £80 annually - from November 16.

The Big Six - British Gas, EDF, E.On, NPower, Scottish Power and SSE - control 99% of the UK's domestic energy supplies.

E.ON is the only big supplier yet to announce price rises after it made a promise not to raise tariffs this year.

Last week the energy regulator Ofgem said it would make the market "simpler, clearer and fairer" for consumers.

The promise follows a call by the Prime Minister to energy giants to overhaul confusing tariff systems.

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