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RBS Ditches Double-Salary Bonuses For Bankers

Written By Unknown on Sabtu, 26 April 2014 | 16.01

Taxpayer-backed Royal Bank of Scotland has ditched a proposal to give bankers bonuses of up to twice their salaries.

The bank had wanted to give workers lucrative and competitive bonuses, despite making a pre-tax loss of £8.2bn in 2013.

British taxpayers own 81% of the bank, which received the biggest bailout in history following the financial crisis.

UK Financial Investments, which manages the Government's stake, said it would not support the proposal.

As a result, RBS said a planned vote at the bank's annual general meeting (AGM) in June would not take place.

The Treasury rebuked the bonus plan and said "an increase to the bonus cap cannot be justified and the Government made clear it would not have supported such a proposal".

Last year the European Parliament agreed to cap bonuses for bankers at their fixed annual salary, or twice that sum if shareholders approve.

Mindful of London's importance in world finance, the Government remains opposed to the EU 2:1 bonus-to-salary cap.

A Treasury spokesman said: "The European bonus cap is not a well-thought out idea and will not support stronger and safer banks, which is why the Government is challenging it in the European Court.

"But while it exists, we will make sure it is applied fairly.

"Under the new strategy set out by RBS chief executive Ross McEwan, RBS is heading in the right direction, but it has not yet completed its restructuring and remains a majority publicly-owned bank."

RBS also said Mr McEwan and chief financial officer Nathan Bostock would not receive bonuses from 2014.

But it said they would still receive share-based "long-term incentive awards" that vest in five years.

The RBS bonus block comes just a day after a heated Barclays AGM saw jeering from shareholders and a partial rejection - reaching 24% of votes - of its remuneration proposals.

And on Friday, 38.5% of pharmaceutical firm AstraZeneca shareholders rejected a lucrative management remuneration plan.

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Starbucks Sales Fall For First Time In 16 Years

Starbucks' turnover dropped last year for the first time, in the wake of revelations about its corporate tax practices.

Sales for the year to September 29 were £399m, a decline of 3.4% compared to the previous year.

The company said the decline, the first since it started UK operations 16 years ago, was due to the closure of unprofitable outlets and not the result of other reasons.

It reduced its average UK workforce by 11.6% in the financial year to 7,726.

Starbucks was able to increase its gross profit by 13% to £79.7m, before deductions of £100.5m were taken into account.

Its pre-tax loss was £20.4m in the period, down from the £30.4m recorded in the 2011-12 financial year.

The company's tax liability in the period was £3.4m, but including deferred taxation was reduced to £2.25m.

A Starbucks spokesman told Sky News: "The UK business is moving in the right direction, but the turnaround will take time.

Protesters hold demonstrations at Starbucks stores

Protests outside Starbucks stores were held during this accounting period

"The continued loss is largely because the reforms we have introduced are yet to take full effect.

"Many of the expensive leases we have renegotiated occurred after our financial year started in October 2012. The benefits of this action will be shown in the accounts for this current year."

It said the £10m fall in the pre-tax loss was largely due to the rise in gross profits. Its staff costs dropped £13.5m in the tax year compared to the previous year.

In October and December 2012, key executives were grilled by MPs about multinational corporate (MNC) arrangements.

Revelations about royalty, licensing and transfer pricing structures used by MNCs to minimise UK tax burden became a focus for Westminster's Public Accounts Committee.

Seattle-based Starbucks was quizzed on why it remained a loss-making business for tax purposes while telling investors it was profitable.

Groups such as UK Uncut urged boycotts of Starbucks and organised store protests and the company's unmoderated website blog was flooded with hundreds of critical comments.

But the company said the latest sales drop was not related to the 2012 tax furore and says Britain is its star EU performer.

Amazon, Google and Starbucks chiefs at tax grilling

Executives from Amazon, Google and Starbucks were grilled by MPs in 2012

"The UK is our fastest growing market in Europe. We are on schedule to open 100 new stores this year and expect the business to continue to grow as economic growth picks up," the spokesman said.

However, the latest accounts filed with Companies House show that it is acutely aware of the impact certain issues may have on the company.

It said there was potentially a "significant risk" of "adverse impacts resulting from negative publicity regarding the company's business practices".

Responding to the widespread criticism in late 2012 it offered to pay a voluntary £20m in tax over two years, and has already given £15m of that to HM Revenue and Customs.

It also dropped total remuneration for its three directors by almost a fifth to £886,000, with the highest paid executive's salary falling by more than half to £268,582.

At the end of last September Starbucks had 549 company-operated stores in the UK, down 44 in the period.

It also had 125 licensed and 57 franchised operations. Although it has a planned franchise expansion, the company's website says it is not looking for new partners.

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Mortgage Lending Clampdown Comes Into Force

Homebuyers will face more scrutiny by mortgage lenders under new regulations which take effect today.

The industry-wide changes affect home buyers and people looking to re-mortgage and they will mean that lenders have to take a much stronger interest in people's spending habits and how their life plans could affect their ability to meet their repayments.

Mortgage applicants will need to sit through longer interviews, and provide more evidence that they can afford a home loan before being offered one.

Each lender will have their own interpretation of the new rules, but in general people are likely to be asked for more detail about regular outgoings such as childcare, food, household bills, loans, credit cards and leisure activities.

The changes also mean lenders will have to test whether homebuyers will be able to afford their mortgage payments if interest rates rise sharply, to 7% or above.

The Mortgage Market Review (MMR) rules aim to ensure there is no return to any irresponsible lending practices of the past, but there are some concerns that it could slow down the housing market.

The changes come amid growing consternation about rising house prices

Paul Broadhead, head of mortgage policy for the Building Societies Association, said: "The Mortgage Market Review was introduced in order to ensure that a common sense approach to mortgage lending is applied by all lenders and that people are not borrowing more than they can afford to pay.

"A number of building societies implemented the process early and have been lending this way, without problems, for a number of weeks."

Andrew Montlake, a director at broker Coreco, said that for people considering applying for a mortgage: "It's important for people to prepare a lot earlier, potentially six months before you apply. Start looking through your documentation and go through a budget."

He said most lenders will want to know whether mortgage applicants are planning to increase their spending for any reason in the near future and if they are expecting a change in their income.

Martin Wheatley, chief executive of the Financial Conduct Authority was asked this week about reports that some people are being asked if they are planning to have children.

He told the Daily Mail: "If you are eight months pregnant, that is a reasonable question. But most of the time that is probably too invasive - and that is not committed expenditure. People have a right to a certain degree of privacy.

"People should be expected to talk about known costs, such as school fees and car loans, but planning for future unknown events is a much more difficult space."

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Barclays Board Face Angry Shareholders At AGM

Written By Unknown on Jumat, 25 April 2014 | 16.01

Senior management of Barclays bank have faced angry shareholders at the bank's annual general meeting, with its chairman forced to defend its bonus payments.

Sir David Walker told shareholders there would have been an exodus of top executives if it did not raise bonus levels.

The meeting, held at London's Royal Festival Hall and attended by 840 people, was the scene of successive hostile questions and jeering from the audience.

Laughter erupted after one angry investor told the board of directors: "We're paying for Manchester United but we are getting Colchester United."

Outside the venue, protesters took potshots at the board over bonuses and alleged tax haven support.

In 2012 Sir David Walker told MPs that banking culture must change

Despite the criticism, the proposals to pay £2.4bn in bonuses in 2013 were rejected by just 24% of shareholders who voted while a resolution to pay bonuses of 200% salary in future was overwhelmingly supported.

Standard Life - with a 1.9% stake in the bank - went public ahead of the vote and said it would not support the remuneration committee's proposals.

Standard Life governance and stewardship director Alison Kennedy said its remuneration report recommendations had harmed the bank's brand.

"We are unconvinced that the amount of the 2013 bonus pool was in the best interests of shareholders," she said.

"Particularly when we consider how the bank's profits are divided amongst employees, shareholders and ongoing investment in the business."

CEO Antony Jenkins did not take a bonus last year over the pay furore

On Tuesday, Sky News City Editor Mark Kleinman revealed the board would receive a mixed response from its powerful institutional investors.

The chairman told the AGM the bank was losing staff to US rivals as they paid up to 15% more.

He said the resignation rate for senior Barclays employees in the US almost doubled in 2013, amid increasing rejection of job offers at his bank.

Sir David said: "The challenge was the need for damage limitation and franchise protection... Despite all the reservations that have been expressed, I remain confident in my view that we took the right decision."

Chief executive Antony Jenkins also faced the hostile shareholders.

He has come under increasing criticism for bonus awards approved under his tenure.

Mr Jenkins is reviewing the future of the group's investment bank and will unveil the details on May 8.

As previously revealed by Kleinman, the CEO is expected to axe thousands of jobs to cut costs and help improve returns.

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PM Rules Out Further Onshore Wind Farms

David Cameron has told Sky News the country does not need any more onshore wind farms as he defended Tory plans to scrap subsidies for future schemes.

The Prime Minister also said there would be measures in the planning system to ensure local people's views were not "overridden" if the Conservatives win next year's general election.

But the pledge by Tories to ditch subsidies for newly-planned onshore turbines and give councils power to block new schemes was branded "disastrous for business and jobs" by Ed Davey, the Lib Dem Energy Secretary.

Conservative insiders said the proposals, which would be implemented within six months of a Tory win, would "effectively curtail further large-scale onshore wind developments".

Ed Davey says the Tory plans would be "disastrous for business and jobs"

Speaking to Sky News, Mr Cameron said: "Onshore wind has an important role to play in generating electricity in our country. We want a varied supply of electricity.

"We're going to have a decent number of onshore wind turbines but the fact is we don't need any more than what we've got in the planning system."

He added: "A future Conservative government would no longer subsidise onshore wind and would have proper safeguards in the planning system so that local views are paramount and not overridden by national imperatives.

"It's not the end of onshore wind and it will make an important contribution to our country's electricity, but you won't see lots of new large-scale wind farm developments."

However, Mr Davey said: "Putting the brakes on onshore wind would be disastrous for business and jobs in our growing green economy.

"Onshore wind is one of the cheapest forms of green energy, so cutting it could lead to higher bills.

"You can't trust the Conservatives on their own to build a fairer society. Only with Liberal Democrats in Government can we build a stronger economy and a fairer society."

Environmental campaigners have also criticised the Conservative policy, warning it would increase bills and damage efforts to tackle climate change.

According to figures from the Department for Energy and Climate Change, wind farms with a combined capacity of 13.8GW have already been built, are under construction or have planning permission.

It said the figure is enough to meet targets of 11-13GW, even if some projects fail through a lack of finance or other problems.

Onshore wind farms already have enough electricity to power up to four million homes, with this figure forecast to rise to seven million by 2020 under the coalition's plans.