Maiden Chinese 'Green Bond' To List In London

By Mark Kleinman, City Editor

An arm of the World Bank is to list the first 'green bond' denominated in China's currency in London in a move that will be hailed by ministers as a boost for the City's global status.

Sky News has learnt that the International Finance Corporation (IFC), which is the World Bank's private sector-focused investment arm, plans to raise about RMB 500m (£47m) to invest in climate-related projects.

Although modest in scale, it will represent a milestone as the first renminbi-denominated green bond issued by the IFC, and will see it listed on the London Stock Exchange.

An announcement about its completion is expected to be made by the Washington-based institution on Tuesday to coincide with the visit to the UK by Li Keqiang, the Chinese Premier, City sources said.

The news is expected to be hailed by David Cameron and George Osborne as a vital step in positioning London as the premier offshore centre for financing using the Chinese currency, they added.

That message is likely to be given particular emphasis because of the extent to which the UK's financial markets have come under scrutiny amid probes into manipulation of critical benchmarks such as foreign exchange and Libor.

The IFC is a major global development institution which taps financial markets to invest in projects across the developing world, and was influential in creating so-called Panda bonds in China and Dim Sum bonds in Hong Kong.

In March, it issued a RMB1bn (£94m) bond in London - also the first of its kind - which it said would support the internationalization of the Chinese currency.

At the time, the Chancellor said:

"Nearly two-thirds of all Renminbi activity outside of greater China takes place in London and IFC's decision to issue in London provides yet more evidence that the capital is the western hub for Renminbi.

"The Government will continue to work very closely with the private sector and the Chinese and Hong Kong authorities to build a thriving RMB market in London."

The proceeds of 'green bonds' are set aside to invest in renewable energy and energy-efficient projects, and are designed to help address the vast funding gap for such initiatives.

Sources familiar with the latest IFC deal said there had been significant interest from investors.

The IFC's RMB 'green bond' issue will form part of a package of City-focused deals designed to underpin its pre-eminence as a global financial centre.

China Construction Bank is to be designated as the first offshore clearing bank for the Chinese currency, while Industrial & Commercial Bank of China will be given permission to establish a wholesale branch in London.

UK-based companies are also expected to be given new assistance in financing China-focused transactions through a separate Government deal involving the Export Credit Guarantee Department, sources said.

Other trade and business deals announced during Premier Li's visit will include major projects and supply agreements involving BP and Shell, as Sky News revealed on Monday.

A Treasury spokesman declined to comment.

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Chinese Visit To Bring In Deals Worth £17bn

By Mark Stone, China Correspondent, in Beijing

A raft of commercial deals between the UK and China totalling more than £17bn will be agreed later in the first visit to Britain by a Chinese leader for over three years.

China's Premier Li Keqiang is accompanied by a delegation of more than 150 business leaders and top level Communist Party officials.

He is holding talks with David Cameron at a UK-China summit and a news conference will provide a rare opportunity to question the Chinese leadership.

Mr Li will also be given a guard of  honour and have an audience with the Queen at Windsor Castle in a move which has angered critics of China's record on Human Rights and political freedoms.

Campaign group Free Tibet has written to Buckingham Palace requesting the meeting with the Queen is cancelled.

"A meeting [between the Queen and] a leader of the world's largest authoritarian state at a time of increased repression inside its borders does not appear to be in the interests of the monarchy, the United Kingdom, or those resisting oppression across the world," the letter read.

Britain's Deputy Prime Minister used unusually direct language and risky timing to describe China's people as being "politically shackled to a doctrine which is a one party state, a communist state".

The visit is Li Keqiang's first to the UK since he became China's Premier

"Of course we can't agree on large scale and systematic human rights abuses which still continue in China to this day: the many journalists who are persecuted, the very widespread use of the death penalty," Nick Clegg said at his weekly press conference yesterday.

Mr Clegg added that despite these concerns, he hoped to have "very productive discussions" with the Chinese leadership.

The commercial deals, which Sky News understands have been under negotiation right up until the last minute, should cover trade and investment across a variety of sectors including energy, transport, finance, health and education.

China's sovereign wealth funds could help to finance major British infrastructure projects including the HS2 high speed rail link and the next generation of nuclear power stations. China is understood to be putting its largest share of European investment into the UK. 

Britain's two biggest oil companies, BP and Shell, will unveil multibillion-pound deals, and an arm of the World Bank is to list the first "green bond" denominated in China's currency in London.

Britain has also announced a new streamlined visa service for Chinese travellers.

The UK is not part of the visa agreement which allow overseas visitors to travel to twenty six countries in Europe which means that 90% of Chinese tour operators say they leave the UK off their itinerary every year.

The visa application process will now be simplified, allowing tourists to apply using the same form as other European countries. Chinese visitors will also be able to use an Irish visa to travel to the UK. 

China's growing middle class and the rebalancing of its economy from export to domestic consumption also presents Britain with huge opportunities.

British fashion giant Burberry opened its largest Asian store in Shanghai in April. The company's China strategy has helped boost global revenues.

In the automotive sector, Jaguar Land Rover has seen staggering success across China with 130 dealerships in 90 cities. The company is now Indian-owned, but the cars are made in the UK.

"The thesis now is that the UK is entering a sweet spot. Chinese consumers increasingly recognise the UK's value as a brand," said Duncan Clark, an investment adviser with 20 years' experience in China.

"They are buying luxury goods, they're buying higher quality services as well including education and training - areas that the UK excels in."

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'Supermarket Price War' Helps Inflation Ease

The first annual fall in food prices since 2006 has helped the rate of inflation tumble to a four-and-a-half year low of 1.5%.

The Office for National Statistics (ONS) said the dramatic easing in the annual rate of price growth in May, which was not forecast by economists, was possibly explained by a supermarket price war.

The major 'big four' chains of Tesco, Asda, Sainsbury's and Morrisons are scrapping for market share in a bitterly contested fight for business that has seen heavy discounters like Aldi and Lidl gaining ground.

The ONS charted an annual 0.6% fall in food prices in May.

It said a broad range of goods including drinks and clothing also fell in value.

The body credited the effects of a late Easter on travel costs fading as well.

More follows...

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Energy Provider Switching Time Is Cut In Half

The energy regulator has confirmed the amount of time it takes to switch gas and electricity supplier is to be cut by half.

Ofgem says it has agreed with the industry that switching times will fall to three days plus a 14-day cooling off period from December 31.

The watchdog plans to impose next day switching from 2018 at the latest.

The move is aimed at making it easier for households to change energy supplier and save money.

Recent research showed that two-thirds of energy customers had never switched and many of the tariffs they held were often old and costing homes up to £200 extra annually.

Ofgem chief executive Dermot Nolan said: "Consumers can change their bank in seven days, their mobile phone in just a couple, but have to wait significantly longer to switch their energy supplier.

"We hope this will give consumers more confidence to get out there and start shopping around."

Currently switching takes around five weeks, which includes a statutory two-week cooling off period that came into force in June.

Ofgem said next day switching would only be possible when old IT systems were upgraded.

The reforms were welcomed by consumer groups and price comparison websites.

Ann Robinson, director of consumer policy at uSwitch.com, said: "Today's announcement is exactly the sort of game-changer that is needed to encourage consumers to engage with the energy market.

"By speeding up the time it takes to switch energy supplier, households will feel the benefits of moving to a new tariff even sooner.

"With half of households yet to switch their energy supplier, it is clear there are barriers that need to be broken down. For many of these, it will be a question of confidence and fear of the unknown."

The latest Government figures show that 1.3 million electricity customers and 866,000 gas customers changed supplier in the final quarter of 2013.

Ministers have been encouraging households to switch as a way of forcing competition on suppliers in a market dominated by six major firms.

However, smaller suppliers are starting to capture a greater share - thanks largely to a lower cost base which enables them to offer lower tariffs.

'Big six' firms - which came under renewed pressure last week to cut bills after steep falls in wholesale gas prices - insist their profits are fair as they must make money to invest in the country's generation and distribution infrastructure.

Energy Secretary Ed Davey said: "Energy companies have already confirmed they will meet my challenge to halve switching times by the end of the year, but I want to see them get to 24-hour switching as soon as possible.

"We are already seeing more people switching to get the best deal on their energy, and many are switching away from the 'big six' to smaller suppliers.

"Making the process much quicker will encourage more to shop around, increasing competition and driving down energy bills."

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Hand Over The Dough! Domino's Pizza Hacked

Hackers who cracked the Domino's Pizza database say they have stolen the details of more than 600,000 customers – including their favourite toppings.

Later, a hacker known only as Rex Mundi said the full details would be released today unless the firm paid him or her €30,000.

Mundi said the "vulnerable" shared servers of Domino's Pizza in France and Belgium were compromised, with a range of customer details stolen.

The hacker than added that they even stole details of customers' favourite pizza toppings, "because why not?"

A threatening tweet posted on Sunday

But Domino's Pizza executive Andre ten Wolde said the ransom demand would not be paid, according to a Dutch newspaper, and a complaint had been filed with a court in Paris.

He stressed that financial data such as credit cards, had not been stolen.

"There are clear indications that something is broken on our server," he said.

In a message posted to an online clipboard, Mundi said: "Earlier this week, we hacked our way into the servers of Domino's Pizza France and Belgium, who happen to share the same vulnerable database.

"And boy, did we find some juicy stuff in there! We downloaded over 592,000 customer records (including passwords) from French customers and over 58,000 records from Belgian ones.

"That's over six hundred thousand records, which include the customers' full names, addresses, phone numbers, email addresses, passwords and delivery instructions. (Oh, and their favorite pizza topping as well, because why not)."

The hacker later posted a tweet saying: "If Domino's Pizza doesn't pay us (on Monday) and we publish your data, you have the right to sue them. Speak to your lawyer."

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Russia 'Restricts' Ukraine Gas On Unpaid Bill

Russia has reportedly stopped gas supplies to Ukraine after it missed a deadline imposed by Moscow to pay almost half its $4.5bn (£2.7bn) bill.

State-owned Gazprom said Ukraine's Naftogaz had failed to pay $1.9bn of its debt by its 0600 GMT (0700 BST) deadline and, as a result, the company would have to pay up front for its gas in future.

It also suggested deliveries for June remained uncovered.

Gazprom said: "Today, from 10:00 a.m. Moscow time, Gazprom, according to the existing contract, moved Naftogaz to prepayment for gas supplies.

"Starting today, the Ukrainian company will only get the Russian gas it has paid for," it said.

Major gas pipelines to Europe pass through Ukraine

A source at Gazprom was quoted by the news agency Reuters as saying that it had now "restricted" supplies while the company filed a lawsuit in Stockholm demanding immediate payment of the full amount.

It was unclear whether Ukraine was getting any supply from Russia but it was thought unlikely as Gazprom insisted that Kiev maintain Russian pipeline supplies to Europe and made no attempt to siphon gas to fuel its own infrastructure.

The developments follow the failure of EU-sponsored talks in Kiev aimed at reaching a settlement between Russia and Ukraine.

Naftogaz boss Andriy Kobolev has failed to agree terms with Russia

The European Commission said it was "convinced" a solution to the bitter dispute was possible, averting a deepening of the wider crisis over Ukraine's future that has seen East/West relations deteriorate to levels not seen since the Cold War.

It is understood that differences between Russia and Ukraine remain on future prices and on the amounts outstanding.

The EU had proposed a compromise package requiring Ukraine to pay $1bn immediately with the balance settled through six additional payments by the year's end.

More follows...

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Interest Rate Rise 'Signals End Of Crisis'

George Osborne Acts To Curb Housing Bubble

Updated: 1:25am UK, Friday 13 June 2014

By Jon Craig, Chief Political Correspondent

Barely a few minutes into his Mansion House speech, George Osborne said: "So while I know this is my fifth speech to you as Chancellor, I hope it is not my last."

I'll bet he does!

But whether he's back this time next year addressing the bankers and City money men and women, or listening to Ed Balls make it, could depend on the success or not of the measures he announced in this year's speech.

He wouldn't admit it. But the Chancellor now appears to accept that the threat of a "housing bubble" in London and some other parts of the country is a potential problem.

He doesn't want interest rates to rise before next year's general election to curb house price inflation. We know that from no lesser source than Her Majesty the Queen last week.

"To strengthen the economy and provide stability and security, my ministers will continue to reduce the country's deficit, helping to ensure that mortgage and interest rates remain low," she said right at the outset of her speech at the State Opening of Parliament.

So instead, the Chancellor plans to give the Bank of England powers to curb big mortgages being offered to people who can't afford the repayments.

Excuse me, though. Aren't many of the big lenders doing that already? Some lenders are limiting loans to four times salary and scrapping loans of more than £500,000. There has been a clampdown on interest-only mortgages too.

But the price of an average house rose by £223 a day last month and by 16% over the past year. It's not as if Mr Osborne hasn't been warned.

For months, the Liberal Democrat Business Secretary Vince Cable has been warning about a "housing bubble". But until now he has been slapped down by the Tory Chancellor.

Not any more. Mr Osborne told his City audience: "If London prices were to continue growing at these rates that would be too fast for comfort."

In other words, the Chancellor now recognises what critics of his Help to Buy scheme have been telling him: there is a problem in the capital, particularly, and elsewhere.

It doesn't take a genius to work out why: demand massively outstrips supply. So Mr Osborne is proposing to relax planning laws on so-called "brownfield sites", while protecting the green belt in those Tory constituencies in the shires.

Relaxing planning laws? How many times have we heard that before from senior Conservative politicians? The "Nimbys" in the leafier parts of Britain have other ideas.

To tackle the supply and demand problem in the capital, the Chancellor is promising "new housing zones across London backed by new infrastructure". Thousands of new homes for London families is the promise. We've heard a lot about that before, too.

No wonder Ed Balls MP, Labour's Shadow Chancellor, said: "George Osborne is still failing to tackle the root cause of the housing crisis which is that we are not building enough homes to match rising demand.

"And the danger of the Chancellor's failure to act on housing supply is that we see a premature rise in interest rates to rein in the housing market which ends up hitting millions of families and businesses."

A rise in interest rates before the election? No chance, Mr Balls.

But despite Mr Osborne's attempts to cool the housing market to avoid a rate rise before voters go to the polls in May 2015, I predict the so-called "housing bubble" will lead to interest rates going up after the election.

Whoever it is delivering the Mansion House speech this time next year.

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Carney Boosts Lloyds Plan For £1.3bn TSB Float

By Mark Kleinman, City Editor

The state-backed Lloyds Banking Group is this weekend considering increasing the price at which it sells shares in TSB, its high street subsidiary, amid strong demand from investors.

Sky News has learnt that Lloyds could announce early next week that it is revising the 220p-290p range for the flotation of TSB by raising the bottom end to approximately 240p.

Investment banking sources said Lloyds would make a decision after consulting its advisers during the next couple of days.

One insider said that the Mansion House address by Mark Carney, Governor of the Bank of England, had bolstered sentiment among City investors for TSB shares, with further interest registered on Friday.

Mr Carney said it was conceivable that interest rates would rise from their historic low of 0.5% sooner than markets expected, implying that a rate hike could come before the end of this year.

That would potentially benefit TSB, the profitability of which is geared to interest rates to a greater degree than most of its high street rivals.

One insider said the City's assumptions about TSB's profitability, outlined in its prospectus last week, might need to be revised given the boost to margins on mortgages and current accounts which could result from an early rate rise.

At the 255p mid-point of the 220p-290p range announced last Monday, TSB would be valued at £1.275bn, roughly 15% below its book value of just over £1.5bn.

The expectation that shares in the UK's seventh-largest lender will be sold for less than its book value disappointed some City analysts.

Yet even at that level, Lloyds would still attract a price for TSB that is significantly higher than the £750m which the Co-operative Group planned to pay for the 631-branch network before a deal collapsed last year.

The prospectus revealed that TSB made an after-tax profit of £172m last year on revenue of £798m, although the earnings figure included a £105m tax gain.

Banking sources also said that approximately 60,000 retail investors had applied for shares, lured by the offer of free bonus stock.

That figure could increase significantly by Tuesday, when the window for retail applications closes.

Lloyds is selling between 25% and 27.5% of TSB in the flotation.

It is required to offload the remainder by the end of next year under a state aid deal agreed with Brussels following the bank's taxpayer bail-out in 2008.

Lloyds, which is being advised by Citi, JP Morgan, UBS, Investec, Royal Bank of Canada and Rothschild, declined to comment.

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Retailers Set Goals On World Cup Success

By Emma Birchley, Sky News Correspondent

England fans are not the only ones hoping the players can find the back of the net as their World Cup campaign finally gets under way.

Retailers too are banking on success.

The Centre for Retail Research has estimated that every time England scores - shops, restaurants and pubs will benefit to the tune of almost £200m.

At Sainsbury's, designers started working on the merchandise more than a year ago.

Corporate affairs director Alex Cole said: "The longer England stays in the tournament, the more excuse we have got for parties as a nation.

"But also the sun is really important so the sunnier it is the more likely we are to say, yes, we will have a BBQ and get some people round to watch the match with us."

The further in the competition England progress, the better for retailers

But it is not just sales of sausages and beer that soar. TVs are selling well. So too are souvenirs and sportswear.

Takeaway pizzas are expected to sell in their millions but many people will head straight from work to bars or restaurants to watch the matches.

Phil Collinson, manager at Rileys Sports Bar in central London, is expecting 30,000 fans to come through the doors during the tournament.

"It's our responsibility to make sure everyone from all the different nations has the chance to see the matches," he said. "It will be an incredible atmosphere and great to be part of."

Reaching the final 16 is expected to see the takings by retailers, bars and restaurants rise by more than £1.3bn while a place in the final would be worth almost £2.6bn to the economy.

Michael Jarman says success equals spending

With England taking on Italy in their first game, it can mean split loyalties if you are running an Italian business in the heart of London.

But while there is no surprise who Lorenzo Mariotti, manager of the restaurant Little Italy in Soho, wants to win, he knows the importance of the home nation staying in the competition.

"We really need both teams to play well and go (as) far as they can and hopefully meet in the semi-final or final," he said. "It will be the most great game of the World Cup."

Former footballer and city trader Michael Jarman says success in the tournament will see football fans out spending.

"You find the general morale and momentum of the UK consumer is going to be more upbeat, a bit more optimistic," he said.

"You then have the new football season starting. Naturally there will be a better feel-good factor."

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Carney Boosts Lloyds Plan For £1.3bn TSB Float

By Mark Kleinman, City Editor

The state-backed Lloyds Banking Group is this weekend considering increasing the price at which it sells shares in TSB, its high street subsidiary, amid strong demand from investors.

Sky News has learnt that Lloyds could announce early next week that it is revising the 220p-290p range for the flotation of TSB by raising the bottom end to approximately 240p.

Investment banking sources said Lloyds would make a decision after consulting its advisers during the next couple of days.

One insider said that the Mansion House address by Mark Carney, Governor of the Bank of England, had bolstered sentiment among City investors for TSB shares, with further interest registered on Friday.

Mr Carney said it was conceivable that interest rates would rise from their historic low of 0.5% sooner than markets expected, implying that a rate hike could come before the end of this year.

That would potentially benefit TSB, the profitability of which is geared to interest rates to a greater degree than most of its high street rivals.

One insider said the City's assumptions about TSB's profitability, outlined in its prospectus last week, might need to be revised given the boost to margins on mortgages and current accounts which could result from an early rate rise.

At the 255p mid-point of the 220p-290p range announced last Monday, TSB would be valued at £1.275bn, roughly 15% below its book value of just over £1.5bn.

The expectation that shares in the UK's seventh-largest lender will be sold for less than its book value disappointed some City analysts.

Yet even at that level, Lloyds would still attract a price for TSB that is significantly higher than the £750m which the Co-operative Group planned to pay for the 631-branch network before a deal collapsed last year.

The prospectus revealed that TSB made an after-tax profit of £172m last year on revenue of £798m, although the earnings figure included a £105m tax gain.

Banking sources also said that approximately 60,000 retail investors had applied for shares, lured by the offer of free bonus stock.

That figure could increase significantly by Tuesday, when the window for retail applications closes.

Lloyds is selling between 25% and 27.5% of TSB in the flotation.

It is required to offload the remainder by the end of next year under a state aid deal agreed with Brussels following the bank's taxpayer bail-out in 2008.

Lloyds, which is being advised by Citi, JP Morgan, UBS, Investec, Royal Bank of Canada and Rothschild, declined to comment.

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