Lloyds Sets Aside A Further £1bn For PPI

Lloyds Banking Group has set aside a further £1bn to cover costs relating to the mis-selling of payment protection insurance (PPI) - taking its total bill to £5.3bn.

The announcement came as the 40% taxpayer-owned bank said it made a pre-tax statutory loss of £583m in the nine months to the end of September.

This compares with a £3.8bn loss over the same period last year.

If the cost of PPI is stripped from the results, the group's underlying profit hit £1.9bn for the three quarters - compared with 2011's £768m.

Lloyds had already set aside £4.3bn to repay customers wrongly sold the insurance - much more than its rivals because it had the biggest share of the PPI market.

It said it had paid out 70% of its provision by the end of September, and that the volume of claims had fallen to £250m in the last three months. 

The bank's chief executive, Antonio Horta-Osorio, said the "ultimate cost" of the PPI scandal was "going to be huge" - and the bank would not know the full extent of the damage until at least March next year.

Mr Horta-Osorio, who has been charged with turning around the bank following its 2008 bailout, said it is making good progress with its cost-cutting.

Lloyds' bad debts are expected to fall to this year to around £6bn - some £1.2bn less than it expected at the start of 2012.

"We have made further significant progress this quarter, improving underlying performance in a challenging environment, while continuing to deliver returns above the cost of equity in the core business and strengthen our already robust balance sheet." Mr Horta-Osorio said.

On a conference call following the results, he insisted retail banking in the UK was competitive, and stressed that Lloyds was continuing to boost its lending to small and medium-sized businesses and provide mortgages to first buyers.

The group's share price rose 3.6% in early trading. 

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Comet Electricals Chain On Brink Of Collapse

By Alistair Bunkall, Business Correspondent

More than 6,000 jobs are under threat as the high street braces itself for another high profile casualty.

Comet, an electricals chain, will go into administration next week after struggling to stock up for Christmas.

Staff were informed of plans on Thursday morning and restructuring specialist Deloitte has been lined up to handle the administration.

Comet has been trading without credit insurance, which protects its suppliers should the business fail, amid a cash-flow shortfall.

If the credit insurers withdraw their support it tells suppliers that the company cannot be trusted to pay its bills.

The future of the business in question is then a fait accompli.

The potential collapse raises the prospect of a pre-Christmas rush for discounted stock such as TVs and PCs at its 235 stores if the administrator chooses to wind down supplies and raise cash for creditors.

It will also be a boost for rivals Currys, who often jostle for market share sited cheek to jowl on retail parks.

Comet has based its business model on edge of town superstores. This was once, not so long ago, very convenient.

Nowadays the most convenient way to shop is online making Comet's model out of date.

Comet is owned by OpCapita, which bought it for just £2 less than a year ago from Kesa Electricals as it struggled to compete against strong supermarket and online competition.

This has also accounted for the troubles experienced by the likes of Clinton Cards and Game.

Sky News reported last month how OpCapita had received a number of unsolicited approaches for Comet and was exploring the option of a sale as a result.

News of the chain's cash problems come only weeks after JJB Sports called in administrators, resulting in 2,000 job losses.

The Financial Times reported OpCapita was likely to face controversy as it had received a £50m cash dowry from Kesa, now known as Darty, to take it over.

Darty also retained Comet's pension liabilities.

OpCapita also negotiated a £130m dowry before it bought furniture chain MFI in 2006 which later collapsed.

According to the Local Data Company and PwC an average of 32 chain stores a day closed in July and August, underlining the challenges facing the wider high street.

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RBS Confirms £1.2bn Loss After PPI Hit

RBS has confirmed it made a loss before tax of £1.2bn in the third quarter, compared with a profit of £2bn for the same period last year.

As revealed by Sky's City Editor, the bank has set aside a further £400m for the mis-selling of payment protection insurance, meaning the scandal has cost it £1.7bn to date.

This provision took the total compensation bill for Britain's four largest lenders past the £10bn mark.

The 82%-taxpayer owned bank also said it had taken a further hit of £50m to cover costs relating to the summer's massive IT failure - which saw many RBS, NatWest and Ulster Bank customers locked out of their accounts.

It takes its bill for the meltdown to £175m.

And the bank expects to face "material fines" in relation to how Libor and other interest rates were set, it added.

RBS is under investigation by US and UK authorities over the rate-rigging scandal and is expected to be one of the next banks to settle after Barclays was fined £290 in June.

"The group expects to enter into negotiations to settle some of these investigations in the near term and believes the probable outcome is that it will incur financial penalties," RBS said.

It added that it had dismissed "a number of employees for misconduct" after investigations into rate setting.

But the group's core banking operations - if the mis-selling and IT charges and stripped out - performed well, with operating profit for the three months hitting £1bn.

A decline in charges on bad debt helped boost performance at the bank, which said its restructuring would be complete in the next 18 months.

As part of this plan, the number of employees was down by 9,900 from a year earlier, resulting in a 5% fall in staff costs compared to the previous quarter.

But the bank did describe the collapse of the sale of 316 branches to Santander as "disappointing".

As a condition of RBS' state bailout, the European Union ordered it to offload the branches by the end of next year - and the bank said it did not expect this to change and so had restarted efforts to sell them.

The group's chief executive, Stephen Hester, said RBS needed to focus on improving its reputation. 

"The extraordinary challenges which RBS faced following the financial crisis are being worked through successfully," he said in a statement.

"The five year restructuring plan is now in its later stages with important work still to do, including an emphasis on dealing with reputational issues now that the bank's safety and soundness has advanced so well."

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JP Morgan UK Staff Hit By Offshore Tax Demand

JP Morgan workers have been ordered to pay tax - or face legal action - over allegations the firm transferred salary payments offshore, Sky News has learned.

HM Revenue and Customs (HMRC) deemed the money as "disguised remuneration" and not retirement benefits as claimed.

Workers and executives have been told they must agree to pay up to 40% backdated income tax, 1% National Insurance contributions and interest accrued by December 7.

JP Morgan Chase and Co has agreed to pay 12.8% NI contributions for those who accept the settlement terms.

Those who do not agree to the terms face the threat of legal action by the Tax Office.

Sky News understands the money since classified as earnings by HMRC was transferred to Jersey from 1998, with most transferred from the 2005/6 tax year onwards.

The specified amount paid by individuals to the Tax Office to avoid litigation will be determined ultimately by how many agree to the settlement terms on offer. The investment bank employs thousands of people in the UK.

The Tax Office has offered settlements to numerous trust beneficiaries

In a letter to the head of JP Morgan's tax department dated September 10, HMRC said: "As you are aware, the Government put in place legislation in 2011 to put beyond doubt the tax treatment of employee benefit trust arrangements.

"In addition, HMRC continues to robustly challenge the taxation treatment of such arrangements under previous legislation.

It adds: "In this context and where we are unable to agree a settlement HMRC will continue to formally progress its enquiries into the taxation treatment of the trusts."

Last year HMRC contacted more than 2,000 employers and offered settlements over disputed employee benefit trusts (EBTs).

Earlier this year action was taken by HMRC against UBS and Deutsche Bank over EBTs, which contested the Tax Office claims.

HMRC has estimated that up to £1.7bn of tax and NI contributions were at stake in EBTs, including the "dependent fund" plans operated by JP Morgan.

The investment bank's staff who were part of the employee benefit trusts of 1998, 2006, 2007 and 2008 and the 2010 executive retirement plan are affected by the HMRC action.

The ruling impacts both current and former UK-based staff, whether or not they are British citizens or foreign nationals.

The employees' Jersey tax haven funds have been managed by subsidiaries of the Royal Bank of Canada (RBC), which describe the island as "tax neutral".

RBC's wealth management section actively promotes the benefits of using the island for affluent individuals.

"The chief preoccupation of most ultra high net worth families is wealth preservation," RBC explains on its website.

"Only by structuring their affairs legitimately and with the advice of professionals, including lawyers, accountants, trust and tax experts, private clients will be able to protect their assets."

RBC Europe Ltd has offered JP Morgan workers collaterised bridging loans of more than £250,000 to fund the Tax Office demand.

Jersey is described as "tax neutral" by fund manager RBC

JP Morgan's private bank has also offered financing arrangements for those who need more than £300,000, or mortgage arrangements in excess of £1m, to facilitate the settlement payments.

Helplines have been set up for workers in regard to the Tax Office offer by JP Morgan, RBC and advisers KPMG.

JP Morgan still disputes the offshore payments as being salary but has agreed to the settlement to avoid litigation under the recently enacted Disguised Remuneration legislation.

A JP Morgan spokesman told Sky News: "Our employee trust has always been transparent to HMRC, and its independent trustee has consistently paid taxes in accordance with UK tax law.

"In addition to taxes paid by the trust, JP Morgan has paid, on average, more than £1bn of corporation and payroll taxes to HMRC annually over the past decade."

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Retail Chain 'Faces Threat Of Administration'

6,000 jobs are under threat amid fears of another high profile casualty among UK retailers.

Comet, the electrical chain, is on the verge of calling in administrators as early as Thursday morning after struggling to stock up for Christmas.

It has reportedly been trading without credit insurance, which protects its suppliers should the business fail.

The potential collapse raises the prospect of a pre-Christmas rush for discounted stock if an administrator looks to wind down supplies and raise cash for creditors.

Comet is owned by OpCapita, which snapped up the retailer for just £2 less than 12 months ago from Kesa Electricals as it struggled to compete against strong supermarket and online competition.

It is that threat that has accounted for the troubles experienced by the likes of Clinton Cards and Game and comes only weeks after JJB Sports called in administrators, resulting in 2,000 job losses.

The Financial Times (FT) reported that OpCapita was likely to face controversy as it had received a £50m cash dowry from Kesa, now known as Darty, to take it over.

Darty also retained Comet's pension liabilities.

OpCapita also negotiated a £130m dowry before it bought furniture chain MFI in 2006 which later collapsed.

According to the Local Data Company and PwC retail chain closures hit an average of 32 stores a day in July and August, underlining the challenges facing the high street.

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Lloyds Sets Aside A Further £1bn For PPI

Lloyds Banking Group has set aside a further £1bn to cover costs relating to the mis-selling of payment protection insurance (PPI) - taking its total bill to £5.3bn.

The announcement came as the 40% taxpayer-owned bank said it made a pre-tax statutory loss of £583m in the nine months to the end of September.

This compares with a £3.8bn loss over the same period last year.

If the cost of PPI is stripped from the results, the group's underlying profit hit £1.9bn for the three quarters - compared with 2011's £768m. 

Lloyds had already set aside £4.3bn to repay customers wrongly sold the insurance - much more than its rivals because it had the biggest share of the PPI market.

It said it had paid out 70% of its provision by the end of September, and that the volume of claims had fallen to £250m in the last three months. 

The bank's chief executive, Antonio Horta-Osorio, said the "ultimate cost" of the PPI scandal was "going to be huge" - and the bank would not know the full extent of the damage until at least March next year.

Mr Horta-Osorio has been charged with turning around the bank following its 2008 bailout and said it is making good progress on its cost-cutting plan.

Lloyds' bad debts are expected to fall to this year to around £6bn - some £1.2bn less than it expected at the start of 2012.

"We have made further significant progress this quarter, improving underlying performance in a challenging environment, while continuing to deliver returns above the cost of equity in the core business and strengthen our already robust balance sheet." he said.

On a conference call following the results, he insisted retail banking in the UK was competitive, and stressed that Lloyds was continuing to boost its lending to small and medium-sized businesses and provide mortgages to first buyers.

The group's share price rose 3.6% in early trading. 

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Star Wars Given New Hope In £2.5bn Disney Deal

Disney has agreed a deal to buy Lucasfilm from its founder George Lucas and says it will make a new series of Star Wars movies.

The US entertainment giant, which already owns brands such as Pixar, Marvel, ESPN and ABC, announced it is paying $4.05bn (£2.52bn) for the production company.

It also confirmed it is making Star Wars Episode 7, which is scheduled to be released in 2015.

Disney said the project would be the first in a new series of Star Wars films, with a new movie being released every two to three years.

The last Star Wars picture was Revenge Of The Sith in 2005, and Lucas had previously suggested there were no plans for any more.

The deal also includes the rights to the Indiana Jones franchise, although Disney did not reveal if it planned to revive the films featuring the action hero, played by Harrison Ford.

Kathleen Kennedy, the current co-chairman of Lucasfilm, will become its president and report to Walt Disney Studios chairman Alan Horn.

Lucas, who created the Star Wars fictional universe and with it one of the most lucrative box office draws of all time, will be creative consultant on the new films.

The deal could also spell a return for Harrison Ford's Han Solo

After the deal was announced he said: "It's now time for me to pass Star Wars on to a new generation of filmmakers.

"I've always believed that Star Wars could live beyond me and I thought it was important to set up the transition during my lifetime."

Lucas will become the second-largest individual holder of Disney shares, with a 2.2% stake.

Disney will pay about half the purchase price in cash and issue about 40 million shares to complete the deal.

Chief financial officer Jay Rasulo said the deal would lower Disney's earnings per share by a low single-digits percentage in 2013 and 2014.

He also said Disney would repurchase all of the issued shares on the open market within the next two years, on top of planned buybacks.

The deal marks the third time in less than seven years that Disney has signed a massive deal to take over iconic studios or characters, part of its strategy to acquire brands that can be stretched across TV, movies, theme parks and the internet.

In early 2006, Disney struck a deal to acquire Toy Story creator Pixar, and in the summer of 2009 it bought the comic book powerhouse Marvel Entertainment.

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Barclays Reports Loss After PPI Charges

Barclays has reported a pre-tax quarterly loss of £47m - compared with a £2.4bn profit over the same period last year.

The statutory loss in the three months to September was driven by increasing costs relating to the mis-selling of payment protection insurance (PPI) and a one-off £1bn charge against the value of the bank's own credit.

The bank had previously said it would set aside a further £700m to cover its costs after customer complaints over PPI continue, taking its total estimated bill to £2bn.

If this charge is not included, Barclays reported underlying pre-tax profits for the third quarter of £1.7bn, compared with £1.3bn last year.

Its investment bank more than doubled its quarterly underlying pre-tax profits to £937m, but its UK retail banking fell 19% year-on-year to £400m.

Barclays, which was rocked by the Libor rate-rigging scandal, also unveiled two new US regulatory investigations into its conduct.

The bank said the US Department of Justice and US Securities and Exchange Commission were investigating whether its relationships with third parties who help it win or retain business are compliant with the US Foreign Corrupt Practices Act.

It is also being investigated for past power trading in the West of the US.

Barclays' new chief executive, Anthony Jenkins, said the company would end 2012 in a "strong position".

"These results demonstrate that we continue to have good momentum in our businesses despite the difficulties we faced through this period," he said in a statement.

"While we have much to do to restore trust among stakeholders, our universal banking franchise remains strong and well positioned." 

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Heseltine Reveals Radical Plan For Growth

By Joey Jones, Deputy Political Editor

Former Cabinet minister Lord Heseltine has published a sweeping report aimed at stimulating growth, which is littered with criticism of Government inertia and delay.

The report, entitled No Stone Unturned, was commissioned by the Chancellor more than a year ago, but has been dogged by rumours that senior ministers have become increasingly doubtful about its viability.

Lord Heseltine advocates a major shift of power and money from Whitehall departments to Local Enterprise Partnerships (LEPs), the grassroots business organisations that have replaced Regional Development Agencies under the current Government.

His proposals would result in a massive expansion of LEP finance. Currently each LEP manages a budget running into millions of pounds, but Lord Heseltine suggests they should be empowered to bid for tens of billions of pounds currently administered by central Government.

The report earmarks £49bn of Government funding under the current spending period that would be better spent by LEPs, but suggests the bidding process should only begin in the run-up to the next spending review.

Lord Heseltine is harshly critical of Government departments' unwillingness to change, and argues that the current administration has been guilty of damaging delay in its approach to major projects including re-equipping the aviation network in the southeast of England.

The former president of the Board of Trade admits that many of the ideas contained in his report have been put forward in the past only to be kicked into the long grass.

He argues that there are grounds for optimism in that the current Government will act where others have sat on their hands.

The fact that the Chancellor and Prime Minister were eager for him to take on the job indicates, in his view, their appetite for controversial but productive reform.

Lord Heseltine also points out that some of his proposals "go with the grain" of the Government's localism agenda.

When asked how he would react in a year's time if his report ends up gathering dust like so many before it, Lord Heseltine was philosophical.

"I'll just get on running my garden," he told Sky News. "I've done my bit."

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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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