UK Oil Industry Suffers Worst Year Since '70s

The UK's offshore oil and gas industry needs Government support if its future is to be secured following its most costly year since the 1970s, a report says.

The study, conducted by the industry pressure group Oil & Gas UK, was said to have found "striking evidence" of how rising costs, taxes and "inadequate regulation" had taken their toll on international competitiveness.

The body's 2015 activity survey of exploration and production companies, operating mainly in the North Sea, found that revenues declined to just over £24bn last year, the lowest since 1998.

That, combined with rising costs, resulted in a negative cash flow of £5.3bn - the worst since the 1970s.

Investment in new projects over the next three years was last year forecast at £8.5bn, but this year's survey estimates it at around £3.5bn.

Video: Charting The Future Of Oil Prices

It can be partly put down to the collapse in world oil prices - falling by 60% at their weakest, below $50-per barrel - while raw gas costs are 30% down on 12 months ago.

Companies have reacted by scaling back exploration plans and cutting jobs and pay, particularly among sub-contractors.

Chancellor George Osborne has promised measures in next month's Budget to support the industry.

The report demanded urgent action to secure new investment and address a "collapse" in exploration that saw only 14 out of the expected 25 new wells drilled.

Oil & Gas UK's chief executive Malcolm Webb said: "This year's activity survey paints a bleak picture but also identifies this region's potential, emphasising the importance of government and industry now putting the right measures in place to secure its long-term future.

Video: Why BP Is Cutting British Jobs?

"This is crucial, not only for the energy security that domestic oil and gas production provides, but also for the hundreds of thousands of highly skilled jobs, advanced technology and billions of pounds of exports which the industry underpins.

"Without sustained investment in new and existing fields, critical infrastructure will disappear, taking with it important North Sea hubs, effectively sterilising areas of the basin and leaving oil and gas in the ground."

"Even at $110-per-barrel the ability of the industry to realise the full potential of the UK's oil and gas resource was hamstrung by escalating costs, an unsustainably heavy tax burden and inappropriate regulation.

"At current oil prices, we now see the consequences only too clearly.

"The industry recognises that its cost base is unsustainable. Cost and efficiency improvements of up to 40% are required to give this basin a viable future. This adjustment is now under way, but cost control alone is not the answer."

Video: Oil: The Winners And Losers

A Government spokesman said: "The Oil & Gas UK report underlines the need for a concerted and joined-up approach between the Government, the Oil and Gas Authority and industry to ensure investment and exploration in the UK North Sea continues and is able to get through this difficult period.

"The UK Government recognises how important the North Sea is, both in terms of the thousands jobs it supports and the benefit it brings to the UK economy.

"The package of fiscal changes and initiatives announced by the Treasury in early December shows the Government understands the challenges and is on the front foot in dealing with them."

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Payday Loans Face Online Shake-Up - Regulator

A regulator has published new rules for payday loan firms in a bid to boost price competition and help borrowers shop around.

In its final report on the controversial industry, following a 20-month investigation, the Competition and Markets Authority (CMA) said it was ordering online companies to publish details of their products on at least one price comparison website (PCW).

But it said the site must be authorised by the Financial Conduct Authority (FCA) and it admitted there was currently no commercial PCW with such approval on payday loans.

The CMA said lenders would be obliged to set up a site if one did not emerge but it added there would be an additional consultation before the ruling was implemented.

It said a 20-month investigation into the payday lending market had found that a lack of price competition between lenders has led to higher costs for borrowers and many did not shop around, partly because of the difficulties in accessing clear and comparable information.

The regulator also cited a lack of awareness of late fees and additional charges.

The CMA estimated the UK's 1.8 million payday borrowers could save themselves an average £60 annually by hunting down cheaper deals.

Payday lenders operating online and on the high street will also be ordered to provide existing customers with a summary of the cost of their borrowing.

Its action is part of a wider regulatory focus on the industry.

Politicians and consumer groups demanded action on the treatment of customers who fell foul of sky high interest rates for late payments.

The FCA has already strengthened its rules under which payday lenders are allowed to operate and has placed limits on the amounts lenders are allowed to charge as well as the number of times that they can roll a loan over.

Simon Polito, Chair of the CMA's Payday Lending Investigation Group, said: "The payday lending market is undergoing substantial change as a result of FCA initiatives to eradicate unacceptable practices.

"Our actions complement the FCA's measures and are aimed at making the market more competitive and further driving down costs for borrowers."

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Greek Economic Reforms 'Valid Starting Point'

Hopes have been raised that Greece will secure its four-month bailout extension, with a European Commission source welcoming its planned economic reforms.

The list of measures, which has to be agreed by its creditors, was submitted just ahead of a midnight deadline last night.

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HSBC Boss Gulliver In £5m Swiss Account Claims

Stuart Gulliver, HSBC's chief executive, reportedly kept millions of his own money sheltered in the bank's private Swiss offshoot.

The Guardian says Mr Gulliver - due to announce the bank's full-year results this morning - kept $7.6m (£4.93m) via an account held by a Panamanian company.

Leaked files reportedly show that in 2007 he was the beneficial owner of an account held by Worcester Equities Inc.

It comes amid the ongoing scandal over claims HSBC's Swiss private banking arm helped wealthy clients evade and avoid tax, and provided services to criminals including arms dealers.

The Derby-born banking chief apologised for the behaviour of the Swiss division in national newspaper advertisements last week.

Video: Timeline Of Whistleblower's Claims

Mr Gulliver insisted it had been "completely overhauled" since 2007, when whistleblower Herve Falciani opened the door to the scandal, stealing company data and passing it to French authorities.

Swiss prosecutors have launched a criminal investigation into allegations of money laundering after raiding the bank's offices in Geneva.

The 55-year-old - believed to have raked in a £7.4m reward package last year - is legally domiciled in Hong Kong after working there for many years, despite now working in the UK.

Video: HSBC Whistleblower Speaks Out

Representatives for the banking boss told the Guardian he had paid his bonus payments into HSBC Suisse until 2003.

They said Hong Kong tax had been paid and that Mr Gulliver had also told the UK taxman about the account a "number of years" ago.

A representative said: "Full UK tax has been paid on the entirety of his worldwide earnings less a credit for tax paid additionally in Hong Kong…"

Video: Cameron And Miliband Clash On HSBC

But, according to the newspaper, they would not say why a Panamanian company had been used to hold the money when Swiss accounts already offer secrecy.

MPs are set to grill HMRC tax officials on Wednesday over accusations they failed to act properly on the leaked files and potential evidence of tax evasion by more than 3,000 Britons.

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UK Banks Slash Ranks Of Millionaire Pay Deals

By Mark Kleinman, City Editor

The UK's biggest banks slashed the number of employees earning at least £1m last year in a move they will argue demonstrates that they are heeding calls for greater pay restraint.

Sky News understands that Barclays, Lloyds Banking Group and Royal Bank of Scotland (RBS) will disclose alongside their annual results during the next eight days that the number of millionaires they created during 2014 fell sharply from the 583 a year earlier.

Insiders familiar with the figures said that the combined number of £1m-plus pay deals across the three banks would fall to approximately 450.

That decline partly reflects the fact that the bonus pool at each bank will be lower for 2014 than in the previous year despite the fact that City analysts expect them all to report stronger financial performances for the last 12 months.

Sky News revealed last week that the three banks were close to finalising bonus pools worth an aggregate £2.8bn, down from nearly £3.4bn in 2013.

However, the fall in the bonus pools can be partly explained by the fact that under new European rules, banks have shifted sums of money from senior employees' variable pay to their fixed remuneration.

This has led some critics to accuse the banks of sleight of hand in seeking to claim credit for reducing bonus payouts just weeks before the General Election campaign gets underway.

The banks are therefore likely to argue that the reduced number of millionaire pay deals - the figures for which include both fixed and discretionary pay - is illustrative of their determination to exhibit more restraint.

Last year, Barclays said it had paid 481 staff more than £1m, while at Lloyds the figure was 27 and at RBS, 75.

Collectively, bonuses at the three banks will be roughly 15% lower than the equivalent numbers for 2013.

Barclays, which is independent of the taxpayer and has by far the largest investment bank of the three institutions, will say that bonuses fell from almost £2.4bn in 2013 to below £2bn last year.

The fall will come amid a retrenchment at Barclays' investment bank, with thousands of jobs being shed under a revamped strategy announced last year by Antony Jenkins, the chief executive.

Analysts are forecasting an uptick in annual profits at Barclays, which is due to report its results on March 2.

The news on pay will mark a contrast with last year's situation at the lender, which provoked a row with some leading shareholders by increasing bonuses despite a fall in profits.

Barclays has also set aside £500m to pay fines related to control failings in its foreign exchange operations, although it has yet to reach a formal settlement with any regulators.

Lloyds and RBS will collectively pay out approximately £875m in bonuses for 2014, sources said on Thursday, compared to an equivalent figure of roughly £975m a year earlier.

The two banks, which report results towards the end of the week, are continuing negotiations over their bonus plans with UK Financial Investments (UKFI), which manages the taxpayer's stakes in them.

Sky News revealed on Friday that the chief executives of Barclays, Lloyds and HSBC would receive annual bonus awards for 2014 totalling more than £3m, although the payouts have been reduced because of fines imposed on them for mis-selling and market manipulation.

HSBC will kick off the reporting season on Monday, when it is expected to disclose that its bonus pot for 2014 was more than 5% lower than the previous year.

None of the banks would comment on their pay proposals.

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HSBC Annual Profits Fall 17% To £12.14bn

HSBC, the global bank currently at the centre of a tax scandal, has blamed a 17% fall in annual profits on the cost of past mistakes.

The London-listed group said reported profit before tax fell to $18.68bn (£12.14bn) in 2014 and it reflected "lower business disposal and reclassification gains and the negative effect, on both revenue and costs, of significant items including fines, settlements, UK customer redress and associated provisions".

The explanation reflected the continued cost on the industry of a number of scandals, including the mis-selling of payment protection insurance (PPI).

The results were announced just hours after HSBC's chief executive Stuart Gulliver, who has vowed to reform the bank in the wake of allegations of complicity in tax evasion at its Swiss arm,  was dragged into a tax row himself.

Mr Gulliver, who denies any wrong-doing in connection with his own Swiss-based account, said he was "disappointed" in the group's performance in 2014.

"Profits disappointed, although a tough fourth quarter masked some of the progress made over the preceding three quarters.

"Many of the challenging aspects of the fourth-quarter results were common to the industry as a whole."

Banks have not only been negotiating the effects of record-low interest rates but also uncertainty over the global economy.

In relation to the Swiss tax scandal, HSBC chairman Douglas Flint said the bank needed to reinforce controls and demonstrate their effectiveness.

He added: "We deeply regret and apologise for the conduct and compliance failures highlighted, which were in contravention of our own policies as well as expectations of us."

The bank was also the subject of a £216m fine from the Financial Conduct Authority relating to HSBC's failure to prevent the rigging of foreign exchange operations.

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Eurozone Agrees To Extend Greek Bailout

Eurozone finance ministers have agreed to extend Greece's rescue loans - although not by as long as the government wanted.

The deal, which will enable Athens to continue paying its bills, was reached at talks in Brussels which were delayed for four hours as ministers worked on a draft accord.

Jeroen Dijsselbloem, the eurozone's top official and the Dutch finance minister, said Athens had asked for a six-month extension but this was rejected.

"Four months is the appropriate delay in terms of financing and future challenges," he said.

The agreement was clinched just a week before Greece's €240bn (£178bn) bailout expires, leaving just enough time for some member country parliaments to endorse it.

Video: Greek Rescue Package Explained

As part of the deal Greece must provide a list of economic and other reforms based on the current bailout programme by Monday.

This will be reviewed on Tuesday by the European Central Bank, the International Monetary Fund and the European Commission.

If the three institutions do not believe the proposals go far enough, the list will be revised with a view to it being agreed by the end of April.

Greek Finance Minister Yanis Varoufakis said the deal would mark a new era for Athens and its relations with the European Union.

Video: Osborne Urges Eurozone Deal

"Today was a pivotal moment because Greece for five years now has been lonely, isolated in the Eurogroup. Today that isolation has broken," Mr Varoufakis said.

He said Greece had not used any threats or bluff to get the agreement and added it was a small step in a new direction for the country.

Markets reacted positively to the deal, with the Dow and S&P 500 surging to fresh records on Wall Street.

Mr Dijsselbloem said it was a "first step in this process of rebuilding trust" between Greece and its euro partners and allows for a strategy to get the country "back on track."

Video: Greece: Everything You Need To Know

"Trust leaves quicker than it comes," he said.

Mr Dijsselbloem worked flat out on Friday to secure an agreement as Germany insisted Greece stick with the austerity commitments included in its bailout programme.

The fraught discussions focused on a new package of concessions beyond those contained in the formal request for a loan extension submitted on Thursday.

Greece has ruled out another bailout like the existing one, saying the people who swept the anti-austerity Syriza party to power last month would not tolerate it.

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1. Gallery: Art War On The Streets Of Athens

   Athens has become a Mecca for street artists as anger grows over the impact of Greece's bailout deal with Europe

Wall paintings have sprung up all over the city reflecting the general frustration at rising unemployment and falling living standards

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New Look Fashions Plans For £2bn Flotation

By Mark Kleinman, City Editor

The high street fashion retailer New Look has recruited bankers to work on a stock market listing that could value it at as much as £2bn.

Sky News has learnt that the company this week appointed JP Morgan, the Wall Street investment bank, to work on options for a flotation.

The hiring will fuel expectations that New Look's owners are actively preparing to take it public five years after it aborted an identical move amid challenging markets.

JP Morgan is working alongside Goldman Sachs, which is working with New Look to identify other potential investors for the company.

The chain, which trades from more than 800 stores in 21 countries around the world, is the UK's second-biggest women's value clothing and accessories retailer, according to Kantar Worldpanel, a research firm.

New Look has been owned since 2004 by Apax and Permira, two private equity firms, along with Tom Singh, its founder.

According to third-quarter financial results released last week, New Look saw like-for-like sales in the UK declined by 1%, a dip that it attributed to unseasonably warm weather.

The company is continuing to expand internationally, as well as attempting to grow its menswear business.

It now has nearly 20 shops in China although it retreated from Russia and Ukraine because of continuing instability in the two countries.

Anders Kristiansen, its chief executive, described New Look's trading performance as "robust...against a challenging backdrop".

"It was a record online sales performance over the Christmas period with all channels well-prepared for peaks in demand around Black Friday, Cyber Monday and Boxing Day, whilst our high street presence came into its own as we handled a surge in demand for our Click & Collect and Order in Store offerings," he said.

Mr Kristiansen said last week that New Look was a company "ready to float" although he added that a decision to do so rested with the chain's owners.

New Look's examination of a stock market listing makes it one of several well-known companies looking at such a move.

Sky News revealed earlier this week that Center Parcs had hired bankers to work on a flotation which would value it at about £2.5bn.

New Look declined to comment.

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Greece Agreement 'Old Deal In New Clothing'

The clue came right at the start of Yanis Varoufakis' press conference.

Up until last night's bailout extension deal, the Greek finance minister spent most of his international media appearances addressing an international audience - speaking fluent, verbose English, taking questions from outlets from around the world.

Last night, in the small Greek briefing room in the Justus Lipsius building in Brussels, he was talking to someone else entirely.

His eyes fixed down the barrel of the cameras, for a quarter of an hour he spoke only in Greek.

"We are now co-authors of our own destiny," he said.

Video: Greek Rescue Package Explained

"Negotiation means compromise. But this deal is a small step in the right direction.

"We are no longer following a script given to us by external agencies," he added.

Unusually for him, though, he was reading his speech rather than talking off the cuff.

It did not take a political genius to work out what was going on.

Syriza came to power in Greece last month promising not to do a deal with the shady characters in Brussels.

It promised not to sign up to a continuation of the unpopular bailout programme.

It promised not to have its domestic policies monitored and influenced by the so-called Troika of lenders (the International Monetary Fund, European Commission and European Central Bank).

Video: Greeks Win Loan Extension

But the deal it signed up to on Friday night involved, essentially, all of the above.

There were changes in some of the terminology.

The "programme" is now renamed the "contract"; the hated "memorandum of understanding" which entailed the reforms the country needed to make, is called the "Master Financial Assistance Facility Agreement"; the "Troika" is now referred to as "the institutions".

But, for the most part, the bailout extension Greece signed up to looks like precisely the thing Syriza and Varoufakis said they would not agree to.

True, there are some important changes: Greece will be given more leeway on its public finances this year; it will have the opportunity to curtail some of the tougher reforms, such as firesales of assets and changes in pension provisions - though these, too, will have to be approved by the Troika, sorry, institutions, in conversations starting on Monday.

Crucially, Syriza can rightly claim that its government has eased the conditions on the bailout a lot more than its predecessors.

However, this was hardly the revolution in economic policy that many Greeks will have hoped for.

Video: Greece: Everything You Need To Know

It does not represent a new deal - so much as an old deal in new clothing.

Then again, perhaps that is the best that could have been expected.

This is only a short-term extension to bide the country over.

Without it, there was a distinct chance it would have defaulted and left the euro - the latter of which the vast majority of Greeks are set against.

The country's financial system was looking perilously exposed.

Throughout the Eurogroup meeting, the ECB president Mario Draghi warned repeatedly that unless Greece and its euro counterparts came up with a deal soon, money could start escaping from Greek bank accounts rapidly that there might be a full-blown financial crisis as soon as Monday.

This was a difficult meeting for Mr Varoufakis.

Video: Anti-Austerity Party Wins In Greece

The former academic has taken the political world by storm in recent weeks, carrying out a whistlestop tour of European capitals to explain the Greek position.

However, so visible has he been in this period, so adamant that Greece will not water down its demands, that the events of the past 24 hours may prove tough to contextualise.

What made the job harder still is the fact that he and the finance ministry were marginalised towards the end of the negotiations.

Alexis Tsipras, the Prime Minister, stepped in and carried out some of the talks behind the scenes with his fellow leaders when things looked as if they were breaking down.

After the previous Eurogroup meeting on Monday descended into farce, amid a flood of leaks, the PM insisted that all press communications should be done through his office, rather than Mr Varoufakis'.

It was said that behind-the-scenes, the Germans were refusing to talk to Mr Varoufakis - that some Greek finance officials had been urged to get rid of their boss.

That would be a terrific mistake: their new finance minister is one of the biggest assets Greece has, particularly when it comes to explaining to an international audience why austerity has not worked, and why future deals might have to be different.

Video: Family Living Off Food Donations

And there will almost certainly need to be another deal once these four months have elapsed.

In the meantime, Mr Varoufakis and his colleagues have a tough job on their hands explaining why what was agreed in Brussels was a triumph rather than a defeat.

Their previous feat - overturning decades of two-party domination in Greece - may end up looking easy in comparison.

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UK Bank Bosses Land £3m In Annual Bonuses

By Mark Kleinman, City Editor

The chief executives of Britain's biggest high street banks will be handed more than £3m in annual bonuses for 2014 but will see their payouts curbed after another year in which their employers faced heavy regulatory fines.

Sky News can exclusively reveal that the boardroom pay committees at Barclays, HSBC and Lloyds Banking Group are finalising the bonus awards, which will be announced alongside the lenders' annual results during the next ten days.

News of the payouts, which will include a £1.3m bonus for Stuart Gulliver, the chief executive of HSBC, will come just weeks before the General Election campaign gets under way.

Insiders said that Mr Gulliver's bonus had been cut from last year's £1.83m, with a substantial proportion of the reduction attributable to the £216m fine from the City watchdog for control failings in HSBC's foreign exchange operations.

Mr Gulliver was paid a basic salary of £1.25m and a "role-based allowance" worth £1.7m introduced to mitigate the impact of new European pay rules in 2014.

Video: HSBC Tax Avoidance Row Continues

In total, he was awarded a remuneration package in 2014 of about £7.4m including pension contributions and other benefits, HSBC's annual report will disclose on Monday.

Mr Gulliver made a public apology last weekend over the re-emergence of a tax evasion scandal at HSBC's Swiss private banking arm and is focused on cleaning up the affair, which dates back a decade, according to one insider.

His annual bonus is expected to be the largest paid to a UK bank chief executive for 2014.

Sky News understands that the Barclays boss Antony Jenkins will receive an annual bonus of approximately £1m, roughly 50% of his maximum entitlement.

A bank insider pointed out that during 2014, Barclays improved its capital and leverage positions - both measures of its financial soundness - while removing £1.7bn from the bank's cost-base, sending sent its shares up by around a third over the last year.

Mr Jenkins is expected to accept the award, the first time he has done so since taking over as chief executive in 2012, taking his total pay for 2014 to in the region of £5m.

City analysts are forecasting that Barclays' profits will be higher than in 2013, while as Sky News reported earlier this week, the bank's overall bonus pool will fall from just under £2.4bn to less than £2bn.

At Lloyds, Antonio Horta-Osorio's annual bonus will be just under £1m, according to an insider.

The figure would have been higher based on Lloyds' performance but was cut to reflect the bank's £220m fine for its role in the Libor rate-rigging scandal, a source said.

Mr Horta-Osorio, who was recruited by the Treasury in 2011 to run bailed-out Lloyds, is also in line for a long-term share award dating back three years that would be worth around £7m.

Lloyds hopes to announce next week that it has gained permission to pay a dividend to shareholders for the first time since the banking crisis.

The chief executives' annual bonuses account for only part of their overall remuneration packages.

Under reforms introduced by the European Banking Authority (EBA) last year, material risk-takers in banks now have their variable pay capped at 100% of their fixed pay, or twice that sum if shareholders have explicitly approved the move.

Investors in Barclays, HSBC and Lloyds have all approved the higher threshold, while RBS fought an unsuccessful private battle with the Treasury which culminated with it only being able to pay out bonuses equivalent to an employee's salary.

The new rules have led to almost all major banks operating in Europe, including the big four UK institutions, introducing 'role-based allowances' to contend with the European cap.

These count towards fixed pay but can be adjusted on an annual or in some more cases more frequent basis, leading to a review by the EBA which may announce further restrictions on their payment in the coming weeks.

Mr Jenkins' allowance is £950,000, which gives him aggregate fixed pay of £2.05m, while  at Lloyds, Mr Horta-Osorio is paid a £900,000 allowance on top of his £1.061m salary.

The figures are clouded by the changing value of bank shares, which means that long-term awards made three years ago can be worth markedly more or less than they were at the point of their allocation.

The exception to the structure of the bank chiefs' pay deals will be Ross McEwan, who runs Royal Bank of Scotland (RBS).

He is paid a £1m salary and from this year will receive a £1m role-based allowance, but is not entitled to an annual bonus following a decision by the taxpayer-backed lender to cease making such payments in order to minimise the prospect of a yearly public row over his remuneration.

Mr McEwan is, however, eligible for long-term share awards equivalent to the sum of his fixed pay.

None of the banks would comment ahead of the publication of their financial results or remuneration figures.

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