Superfast Broadband Roll-Out Running Late

The Government programme to roll out superfast broadband to 90% of the population is running late and lacks strong competition to protect public value, the National Audit Office has reported.

It has already announced that superfast broadband will reach 95% of the population by 2017, just two years after the original target of 90%.

Just nine out of 44 local projects are expected to reach the original target, according to the report, with the delay partly attributed to the EU State Aid process taking six months longer than expected.

The NAO said that competition among suppliers had been "limited", leaving BT as the only active participant and expected to win all 44 local projects.

It warned that the Department for Culture, Media and Sport (DCMS) had "secured only limited transparency" over the costs in BT's bids.

And it said the DCMS now expected BT to provide just 23% of the overall projected funding of £1.5bn - £207m less than expected.

Amyas Morse, head of the NAO, said: "The rural broadband project is moving forward late and without the benefit of strong competition to protect public value.

"For this we will have to rely on the department's active use of the controls it has negotiated and strong supervision by Ofcom."

Public Accounts Committee chairwoman Margaret Hodge said. "The DCMS has not had a good enough grip on its rural broadband programme."

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Rolls-Royce Accused Of Hiding Engine Defects

Two former Rolls-Royce employees have alleged the engine maker "cut corners on quality control requirements" and "lied to" customers.

Thomas McArtor and Keith Ramsey have also accused the company of hiding internal records of defects in engines it sold to commercial and military clients.

They claim that the company collated these alleged defects into a "secret set of books".

The ex-quality control officers in the United States are challenging a court order that prevents them from releasing information they say reveals potentially serious defects in its manufacturing processes, according to reports in The Financial Times and The Daily Telegraph.

Rolls-Royce has denied the claims and said the lawsuit is "without merit", adding that a US district judge had already thrown out two of the four claims before the "discovery" phase of the litigation had been entered.

"This lawsuit is entirely without merit," a Rolls-Royce spokesman said.

"Judge Lawrence did not find that Rolls-Royce engaged in any wrongdoing, failed to follow its quality system, concealed anything from the US government or even that a jury is entitled to hear the allegations.

"Rolls-Royce categorically rejects the other claims and will defend itself vigorously. Any and all facts of the case will be presented in court, where we are confident it will be found the lawsuit is without merit."

The lawsuit comes at a difficult time for the firm.

Last month an Australian safety regulator reported that Rolls-Royce had failed to identify a defect that caused one of its engines to explode on a Qantas Airways Ltd flight over Indonesia in November 2010.

In its final report on the incident, the Australian Safety Transport Bureau (ASTB) said the company missed multiple opportunities to detect a faulty component.

Rolls-Royce is also the subject of an investigation by the Serious Fraud Office (SFO) into claims that company representatives paid bribes to win airline engine contracts in China and Indonesia.

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Samsung Posts Disappointing Profits Forecast

Samsung has forecast weaker than expected profits for the last quarter, fuelling concerns about flagging demand for high-end smartphones.

The South Korean firm is predicting £5.5bn in operating profit for the period April to June.

That would be a record result for the electronics giant - but lower than the £6bn forecast by analysts.

Samsung shares dropped nearly 3% after the company issued the profit guidance on Friday.

Concerns about sales of Samsung's new phones and tablets have seen the electronic giant's share price drop almost 18% in the last month.

Mobile phones and IT account for 70% of the company's profits.

Despite robust sales of its Galaxy S4 in the first month, new rivals have emerged to eat away at its market share.

It has also become harder for the industry to impress buyers with new features in upgraded models as most smartphones offer similar functions.

Fewer wow factors in new smartphones mean people will not upgrade as quickly as they did when the devices were still a novelty, forcing device makers such as Samsung to spend more on splashy advertising and marketing.

Analysts say high marketing costs probably weighed on Samsung's mobile business despite sales of the S4 hitting the 10 million mark about 20 days faster than the previous model.

"Because of the marketing costs, the telecommunications business was probably weaker than expected," said CW Chung, an analyst at Nomura Financial Investment in Seoul.

Samsung will announce its net income and final quarterly financial results later this month.

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Miliband Summons Top Bankers For Reform Talks

By Mark Kleinman, City Editor

Ed Miliband held talks on Wednesday with senior bankers just days after the industry faced fresh criticism for lobbying senior politicans and regulators.

Sky News has learnt that the Labour leader met a delegation from the British Bankers' Association (BBA) including representatives of major high street lenders including HSBC and Lloyds Banking Group.

Sir Nigel Wicks, the BBA chairman, who was a former aide to Lady Thatcher, and Anthony Browne, the lobbying group's chief executive, were also present at the meeting.

The meeting, described by one person who attended as "lively", saw Mr Miliband reiterate Labour's support for the establishment of a network of local banks as well as a new British Investment bank.

Others who were at the summit included James Leigh-Pemberton, a senior executive at Credit Suisse's UK operations, and Colin Grassie, chief executive of Deutsche Bank's UK business. Chris Leslie, the shadow City minister, was also present.

Mr Miliband has been a consistent critic of the banking sector since he became Labour leader in 2010, but is keen to build more constructive relations with industry executives ahead of the next general election, according to one insider.

The meeting, however, came just days after MPs and regulators outlined criticisms of the banking industry for its intensive lobbying in an effort to slow the pace of reforms.

Andrew Bailey, chief executive of the Prudential Regulation Authority, said this week that rules defining appropriate lobbying were desirable, while Andrew Tyrie, chair of the Parliamentary Commission on Banking Standards and Treasury Select Committee, said the extent of their lobbying underlined the need for independent rules on issues such as capital and leverage ratios.

A BBA spokesman said: "It is important that there is a dialogue between industry and politicians of all parties, just as consumer groups and trade unions quite properly speak to elected representatives on a regular basis."

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Twitter To Show Users Tailor-Made Adverts

The social networking site says it will be experimenting with a way to make adverts on Twitter more useful.

It plans to display promoted content from brands and businesses a user has shown interest in.

According to a post on its blog, the company - which allows people to send public messages of up to 140 characters - said: "Users won't see more ads on Twitter, but they may see better ones".

It said the move - which technology experts say will bring Twitter in line with other social networking sites that tailor adverts - will be trialled in the US "soon".

A spokesman said: "The ad pilot is US-only and we don't have a timescale for roll-out more widely."

Twitter will tailor adverts to the individual user's browsing information - although their personal email addresses will be unreadable, Twitter said.

It also confirmed it will not receive browser-related information from its ad partners for tailoring adverts if users have DNT (Do Not Track) technology enabled.

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Stronger Economy 'Puts Brakes On Carney'

Evidence that the UK's economic recovery is gathering pace is widely expected to result in the Bank of England maintaining its support at current levels today.

The Monetary Policy Committee (MPC), which has been meeting for the first time under the leadership of new bank governor Mark Carney, announces its decisions on the base rate of interest and quantitative easing (QE) at midday.

While the base rate has not been changed since March 2009 - and will not be adjusted today - there has been a school of thought that Mr Carney may have favoured extending QE, also known as asset purchases, in the nearer term to help support growth efforts.

But recent economic data has suggested in unison that the speed of recovery has accelerated - with the British Chambers of Commerce the latest group to upgrade its growth expectations for the second quarter of the year and 2013 as a whole.

The closely-watched Purchasing Managers' Index surveys also pointed to growing output in manufacturing, construction and the crucial service sector - which recorded its fastest rise in activity in two years last month.

The slew of positive news is likely to have dispelled any immediate pressure for the bank to increase its QE programme beyond its £375bn level - allowing Mr Carney some breathing room.

Other members of the nine-strong MPC repeatedly thwarted his predecessor Sir Mervyn King's efforts to boost QE by £25bn during his final months, as five times he was defeated by a 6-3 majority.

Despite his aim to achieve "escape velocity" for the economy, it is thought that Mr Carney will not want to go out on a limb and face a defeat just four days into the job.

Sir Mervyn pointed out last week that while his Canadian successor may be more "persuasive", he only holds one vote on the MPC.

Some economists expect that Mr Carney will begin to take action to pull the UK out of the doldrums from August.

Vicky Redwood of Capital Economics said he was likely to introduce "forward guidance", which helps reassure markets that interest rates will remain low in the future while she predicted there was a 50% chance of QE also being resumed.

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RBS Orders Lending Review Over Untapped £20bn

Royal Bank of Scotland (RBS) is reviewing its small business lending practices and standards after uncovering £20bn in untapped cash.

The excess money, RBS said, was a result of having £20bn more in small business deposits than being loaned out to such firms.

The group - which is 81% owned by the taxpayer - said it wanted to put this surplus to use by supporting small and medium-sized companies and playing its part in "securing the recovery".

The investigation - to be led by former Bank of England deputy governor Sir Andrew Large and management consultancy Oliver Wyman - will take in both RBS and Natwest and follows widespread criticism that the lenders are not doing enough to support economic recovery.

The banking sector is subject to a separate probe by the Office of Fair Trading into small business lending.

It was demanded by the Parliamentary Commission on Banking Standards which found that a lack of competition was leaving firms with little or no choice in accessing finance.

The bank's net lending fell by £1.6bn in the first quarter of 2013, despite tapping the State's Funding for Lending Scheme (FLS) for £750m worth of cheap finance.

Sir Andrew said: "There is a disconnect between what the bank says it is doing on lending, and what many businesses say they experience on the ground.

"That is why we have been asked to conduct an independent review to establish what is going on, and what steps can be taken."

Banks have been arguing that small business lending levels have continued to shrink due to low demand, but it is thought that firms are struggling to secure reasonable terms and cheaper rates in spite of the boost from the FLS.

Chris Sullivan, head of UK corporate banking at RBS, said: "Demand for lending remains a challenge, but we want to do more than just wait for demand to materialise.

A dedicated website will be set up for the duration of the RBS inquiry through which small business customers can provide their perspectives and experiences on the group's lending.

The review's recommendations are due to be published in the autumn.

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Electricity Theft: Ofgem Urges Crackdown

The energy regulator could force electricity suppliers to tackle power theft because of the growing cost to households.

Ofgem estimates that 25,000 cases of electricity theft annually cost law-abiding consumers £200m - or £7 per household - with a third of the loss blamed on cannabis farms.

The watchdog said its proposals would require energy suppliers to bring in measures to detect, investigate and prevent cases of theft - with fines for those companies which fail to comply.

A code of practice would be compiled, Ofgem said, through companies sharing information on investigations between themselves and agencies including the police, while a 24 hour public hotline is also planned to help identify offenders.

Andrew Wright, Ofgem's chief executive, said: "Ofgem wants to make sure that consumers are paying no more than they need to for their electricity, and lives are not put at risk.

"It's critical that suppliers do all they can to clamp down on electricity theft.

"The reforms build on similar obligations we introduced at the start of this year for suppliers to address gas theft more vigorously."

Energy UK, the trade association of the energy industry which represents more than 80 companies, welcomed the proposals.

A spokesman said: "Electricity theft is dangerous and illegal. Contact with live electricity cables can kill and tampered meters cause fires.

"Electricity theft also costs honest customers money which is why energy companies take this - and gas theft - very seriously."

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Markets Fall Amid Portugal Political 'Crisis'

European stock markets have taken a tumble as the survival of Portugal's coalition government is thrown into doubt.

Portuguese share prices plummeted 6% in early trading on Wednesday and other major bourses, including the FTSE 100, fell sharply amid growing uncertainty that the recession-hit country's bailout reform agenda can remain on track.

Foreign Minister Paulo Portas resigned on Tuesday night, a day after the shock departure of Finance Minister Vitor Gaspar.

Values correct at 09:24 BST

Prime Minister Pedro Passos Coelho has defied calls to follow suit but the resignations at the top of the government have left investors digesting concerns over not only the coalition but Portugal's ability to pursue the austerity measures demanded by creditors.

Portugal is implementing the savings in return for continued support on its 78 billion euros (£66bn) international bailout but there has been a fierce public backlash against the austerity drive in what is one of the poorest countries that uses the euro.

The yield on Portugal's benchmark 10-year bond spiked well above 7% - another sign of unease - with a 10-year borrowing rate of about 8% widely considered unsustainable.

Spanish and Italian yields jumped too while nervousness over the state of Greece's next tranche of bailout money also caused jitters.

"With disorder and uncertainty over the political situation in Egypt threatening stability in the Middle East, and a Greek deadline looming to prove it can action its bailout conditions before receiving the next tranche of aid, volatility is likely to be high," Mark Ward, head of trading at Sanlam Securities, said.

It came after Asian stock markets had dropped overnight as official figures showed that growth in China's services sector sagged to its weakest pace in nine months in June, adding to signs of a slowdown in the world's second-largest economy.

More follows...

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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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