US Jobless Drops To Lowest Rate Since 2008

The jobless rate in the United States fell to 6.3% in April, its lowest level since September 2008.

A total of 288,000 new jobs were created last month, more than a third up on the figure forecast by economists.

The Labor Department said job creation was picking up after the country's long winter freeze.

It said the upsurge in jobs has sent the unemployment rate down to 6.3% from 6.7% previously.

But the drop occurred because the number of people working or seeking work fell sharply.

In the US, people not seeking work aren't counted as unemployed.

American employers also added more jobs during February and March than those previously estimated.

The job totals for those two months were revised upwards by a combined 36,000.

A number of sectors in the US economy have been affected over winter, including construction and retail.

But job creation is now accelerating.

Official data showed employers added an average of 238,000 jobs during the past three months.

The figure was up more than 40%, from 167,000 in the previous three months.

Job creation also appeared to be widely spread across various sectors.

Hirings last month were broad-based and included higher-paying jobs.

The Labor Department said manufacturing gained 12,000 positions, construction added 32,000 while professional roles including accounting, engineering and technical services, were boosted by 25,100.

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AstraZeneca Rejects New £63bn Pfizer Bid

Pfizer Letter To David Cameron Over Deal

Updated: 7:52am UK, Friday 02 May 2014

American drugs giant Pfizer has written a letter to David Cameron, in an attempt to take the political heat out of its bid for UK rival AstraZeneca. Here is the letter from Pfizer chief executive Ian Read:

Dear Prime Minister,

I am writing to you to address the concerns of the UK Government and science community and your desire to have firm and enduring assurances from us about our commitment to the UK and its life sciences agenda.

We would like to confirm that today, Pfizer made a non-binding cash and share proposal valuing each AstraZeneca share at £50 to the Board of AstraZeneca, as detailed in our accompanying public statement. We believe the industrial logic for a combination between Pfizer and AstraZeneca is compelling.

A combined company would bring together powerful and world leading research expertise in key therapeutic areas such as oncology, inflammation, and cardiovascular and metabolic disorders, in which the world class academic research resources in the "golden triangle" of Oxford, Cambridge and London would represent a vital component, along with the positive environment for inward investment that the UK Government has created.

Ultimately, establishing the world's largest research-based pharmaceutical company in the UK, together with the commitments made in this letter represent a strong indicator of the incentives that your Government has created to attract successful business to the UK.

We recognise that our approach may create uncertainty for the UK Government and scientific community given the strategic importance of life sciences to the Government's Industrial Strategy and the significance of the transaction.

We would therefore like to assure the Government of our long term commitment to the UK where Pfizer already employs a significant number of colleagues across research, commercial, and administrative roles.

To that end, therefore, subject to successful completion of our combination with AstraZeneca on the basis proposed by us, we will make the following series of significant and tangible commitments:

* Pfizer commits to establishing the combined company's corporate and tax residence in England.

* Pfizer commits to complete the construction of the currently planned AstraZeneca Cambridge campus, creating a substantial R&D innovation hub in Cambridge and the wider scientific community, which will include core research units, laboratory based scientific support lines and European clinical development and regulatory functions.

* Pfizer will base key scientific leadership in the UK who will lead all European and certain global R&D functions based in Cambridge.

* Pfizer commits to integrate the operations of the combined company so as to employ a minimum of 20% of the combined company's total R&D workforce in the UK going forward.

* Pfizer will actively look to locate manufacturing operations of the combined company in the UK, subject to the timing of the UK Patent Box proposals, and will retain substantial commercial manufacturing facilities in Macclesfield.

* Pfizer commits to base the combined company's European business HQ in the UK.

* Pfizer commits to base the combined company's EU Regulatory HQ in the UK.

* Pfizer commits to invite at least two AstraZeneca Board Members to join the Board of the new company.

* Pfizer commits to hold, as appropriate, board meetings in the UK and participate meaningfully in the UK commercial, economic and social community.

Clearly, predictability and stability in the local and global commercial environment, as well as the UK Government's efforts to maintain incentives for investment, are important factors to enable success.

We make these commitments for a minimum of five years, recognising our ability, consistent with our fiduciary duties, to adjust these obligations should circumstances significantly change.

Our board has endorsed these commitments in a formal Pfizer board resolution and will publish a statement describing these promises to the British public.

In reflection of the binding nature of these commitments, we are including this letter in our public announcement issued pursuant to the UK Takeover Code regarding the possible combination.

As mentioned above, we view our partnership with the UK Government as a critical part of this potential transaction. We look forward to continued discussions with you.

Yours sincerely,

Ian C. Read

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Samsung Told To Pay Apple $119m In Patent Row

Samsung has been ordered to pay $119.46m (£70m) in damages to Apple after the South Korean company was found guilty of violating two patents on smartphone features.

In the latest lawsuit involving the two tech giants, a jury in a federal court in San Jose, California, ruled that Samsung had copied key features of the iPhone in creating its own line of smartphones, including universal searching and slide to lock.

But the verdict was a far cry from the $2.2bn Apple sought and the $930m it won in a separate 2012 trial making similar patent infringement claims against Samsung products, most of which are no longer for sale in the US.

In a counter-claim, the jury found that Apple had infringed one of Samsung's patents in creating the iPhone 4 and 5.

The jury awarded Samsung $158,400 - a fraction of the $6m sought by Samsung.

Brian Love, assistant professor at Santa Clara University's school of law, said: "Though this verdict is large by normal standards, it is hard to view this outcome as much of a victory for Apple.

"This amount is less than 10% of the amount Apple requested, and probably doesn't surpass by too much the amount Apple spent litigating this case.

"Apple launched this litigation campaign years ago with aspirations of slowing the meteoric rise of Android phone manufacturers. It has so far failed to do so, and this case won't get it any closer."

Apple said the ruling reinforced its stance that "Samsung willfully stole our ideas and copied our products."

Samsung representatives were not immediately available for comment.

The verdict marks the latest intellectual property battle between the world's top two smartphone makers.

For over three years, Apple and Samsung have sued each other in courts and trade offices around the world.

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Channel 5 To Be Bought By MTV's Owner

It has been confirmed that Viacom, the owner of MTV, has agreed to buy Channel 5 for £450m.

The deal represents a £346m profit on what media tycoon Richard Desmond's Northern & Shell paid for the broadcaster in 2010, but the price tag fell short of the reported £700m he initially sought.

Viacom's successful bid is subject to regulatory approval but the agreement marks the first time a US broadcaster has taken control of one of the UK's five free-to-air channels.

MTV is Viacom's best-known brand

Its chief executive Philippe Dauman said: "The acquisition of Channel 5 accelerates Viacom's strategy in the UK, one of the world's most important and valuable media markets.

"Channel 5's momentum is indisputable, with impactful programming, increasing popularity and a growing digital platform.

"Channel 5's management and employees have done an outstanding job building their brand and we are pleased to welcome them to our team.

"Viacom's global resources, technology and expertise will help Channel 5 develop even more compelling programming and provide content to consumers in exciting new ways.

"In addition, we will introduce our popular content to new UK audiences and create a comprehensive offering for our commercial partners on-air and on-line."

Viacom, which is best-known in the UK for MTV, has more than 20 branded TV channels available in the country, including Nickelodeon and Comedy Central.

Channel 5's fortunes have been transformed since Northern & Shell, which also owns the Daily Express and Daily Star newspapers, bought it four years ago.

Mr Desmond was credited with bringing in viewers by snapping up Big Brother after it was ditched in favour of new projects by Channel 4.

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Pfizer Ups Bid For AstraZeneca By £3bn

Pfizer Letter To David Cameron Over Deal

Updated: 7:52am UK, Friday 02 May 2014

American drugs giant Pfizer has written a letter to David Cameron, in an attempt to take the political heat out of its bid for UK rival AstraZeneca. Here is the letter from Pfizer chief executive Ian Read:

Dear Prime Minister,

I am writing to you to address the concerns of the UK Government and science community and your desire to have firm and enduring assurances from us about our commitment to the UK and its life sciences agenda.

We would like to confirm that today, Pfizer made a non-binding cash and share proposal valuing each AstraZeneca share at £50 to the Board of AstraZeneca, as detailed in our accompanying public statement. We believe the industrial logic for a combination between Pfizer and AstraZeneca is compelling.

A combined company would bring together powerful and world leading research expertise in key therapeutic areas such as oncology, inflammation, and cardiovascular and metabolic disorders, in which the world class academic research resources in the "golden triangle" of Oxford, Cambridge and London would represent a vital component, along with the positive environment for inward investment that the UK Government has created.

Ultimately, establishing the world's largest research-based pharmaceutical company in the UK, together with the commitments made in this letter represent a strong indicator of the incentives that your Government has created to attract successful business to the UK.

We recognise that our approach may create uncertainty for the UK Government and scientific community given the strategic importance of life sciences to the Government's Industrial Strategy and the significance of the transaction.

We would therefore like to assure the Government of our long term commitment to the UK where Pfizer already employs a significant number of colleagues across research, commercial, and administrative roles.

To that end, therefore, subject to successful completion of our combination with AstraZeneca on the basis proposed by us, we will make the following series of significant and tangible commitments:

* Pfizer commits to establishing the combined company's corporate and tax residence in England.

* Pfizer commits to complete the construction of the currently planned AstraZeneca Cambridge campus, creating a substantial R&D innovation hub in Cambridge and the wider scientific community, which will include core research units, laboratory based scientific support lines and European clinical development and regulatory functions.

* Pfizer will base key scientific leadership in the UK who will lead all European and certain global R&D functions based in Cambridge.

* Pfizer commits to integrate the operations of the combined company so as to employ a minimum of 20% of the combined company's total R&D workforce in the UK going forward.

* Pfizer will actively look to locate manufacturing operations of the combined company in the UK, subject to the timing of the UK Patent Box proposals, and will retain substantial commercial manufacturing facilities in Macclesfield.

* Pfizer commits to base the combined company's European business HQ in the UK.

* Pfizer commits to base the combined company's EU Regulatory HQ in the UK.

* Pfizer commits to invite at least two AstraZeneca Board Members to join the Board of the new company.

* Pfizer commits to hold, as appropriate, board meetings in the UK and participate meaningfully in the UK commercial, economic and social community.

Clearly, predictability and stability in the local and global commercial environment, as well as the UK Government's efforts to maintain incentives for investment, are important factors to enable success.

We make these commitments for a minimum of five years, recognising our ability, consistent with our fiduciary duties, to adjust these obligations should circumstances significantly change.

Our board has endorsed these commitments in a formal Pfizer board resolution and will publish a statement describing these promises to the British public.

In reflection of the binding nature of these commitments, we are including this letter in our public announcement issued pursuant to the UK Takeover Code regarding the possible combination.

As mentioned above, we view our partnership with the UK Government as a critical part of this potential transaction. We look forward to continued discussions with you.

Yours sincerely,

Ian C. Read

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RBS Pre-Tax First Quarter Profit Hits £1.6bn

The taxpayer-backed Royal Bank of Scotland has seen a large rise in its first quarter profit, compared to the same period last year.

RBS said its pre-tax profit reached £1.64bn in the first three months of 2014, up 98% from £826m in 2013.

It said operating profit for the quarter was £1.5bn, up from £747m last year.

But the company, which is 81% owned by the UK taxpayer, said certain problems still require rectification.

Chief executive Ross McEwan said: "Just over two months ago, I set out our plan for making RBS the most trusted bank in the UK.

"Today's results show that in steady state, RBS will be a bank that does a great job for customers while delivering good returns for our shareholders.

"But we still have a lot of work to do and plenty of issues from the past to reckon with."

The profit boost came from no new write-offs for action over mis-selling payment protection insurance or toxic assets.

It also continued to reduce its costs.

However, it said: "The ongoing conduct and regulatory investigations and litigation continue to create challenges and uncertainties for RBS, as for other banks.

The timing and amounts of any further settlements or redress remain uncertain."

RBS said it had seen a small rise in lending volumes during the first three months of the year, both in UK retail and business banking.

The trading update is RBS' first since the group announced that it had suffered a £8.2bn loss in 2013, amid plans to cut costs by £5bn within three years.

It also said that as part of a plan to reduce IT glitches that have affected customers, it was separating computer systems between its RBS, NatWest and Ulster banks.

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Co-op Bank Review Sparks Pay Clawback Demand

The Main Findings Of The Co-op Bank Review

Updated: 10:38am UK, Wednesday 30 April 2014

The review by Sir Christopher Kelly into what went wrong at the Co-operative Bank is summarised below:

:: THE REVIEW

The independent review was commissioned in July 2013. It is based on more than 130 interviews of current and former employees, board members and others, as well as examinations of internal papers and external reports.

Its conclusions are scathing. In its own words it is a "sorry story of failings in management and governance".

The review states that contributory factors to the "debacle" include the economic environment and increasing capital requirements by regulators but Sir Christopher Kelly identifies two key areas of failing:

:: BRITANNIA MERGER

It says the Britannia merger of August 2009 "lies at the heart" of the problems at the bank. At the time of the merger, Britannia was the second largest building society in the UK with assets of £35bn, 2.8m customers and 254 branches, compared with Co-Op Bank's assets of £15bn, 500k customers and 90 branches.

Britannia had more exposure to sub-prime lending (loans to people who may struggle to repay them) than any other building society. The review found out Britannia would sometimes complete transactions that no other lender would take on.

It was put on a "watch list" by the city regulator, then-called the FSA, but it makes clear neither Britannia, nor the Co-op Bank were aware of this.

It calls the due diligence process preceding the merger "cursory" and "startling". Accountancy firm, KPMG was not given access to Britannia premises so could only perform high level checks on the information provided. But adviser JP Morgan Cazenove advised the Co-op that KPMG's due diligence "exceeded that normally undertaken for listed companies".

The Bank's board was not alerted to the deteriorating business case of Britannia as property prices plummeted. Something the review calls "a major error of judgement".

:: MANAGEMENT AND CULTURE

It says the executive team of the bank "failed to exercise sufficiently prudent and effective management of capital and risk" and that the board "failed" in its oversight of the executive. Combined it says "they badly let down the Group's members".

The bank's culture accepted mediocrity and "did too little to discourage wrong behaviours". It failed to address poor performance and tolerated under-performers – "something which might take a week in most banks would take months in the Co-operative Bank".

It advises that considering the Group still owns 30% of the bank, the Group board should take on an experienced banker. It notes that both Sainsbury's and Tesco, which are trading companies with banking subsidiaries smaller and less complex than the Co-op Bank, have experienced bankers on their main boards.

Other areas of note:

:: Payment Protection Insurance

In relation to PPI mis-selling it notes that in spite of the fact the Bank had an avowedly ethical policy, it "manifestly failed to treat its customers fairly". Total provisions for PPI compensation up to the end of 2013 were £347m.

:: PROJECT VERDE (LLOYDS BRANCHES)

Paul Flowers, the disgraced former chair of the Bank, is called in the report a "wholly unsuitable person to chair the Co-operative Bank board".

Flowers has asserted the Treasury pressured the Bank into buying branches of Lloyds, in the deal known as Project Verde.

He declined to be interviewed by the review but the report has found "no compelling evidence of pressure from government ministers or anyone else".

:: CONCLUSION

The report concludes the circumstances that led to the lessons laid out by the report "must pain all who care about the co-operative movement".

:: CONTEXT

In the past few weeks both the Co-operative Group and the bank have announced major losses.

The group's losses were £2.5bn for 2013 - the worst results in the group's 150-year history, with £2.1bn of that coming from the Co-op Bank.

The Bank's figure contained a trading loss of £1.44bn for the year to December, when the group lost control of Co-op Bank to US hedge funds.

The interim chief executive of the group, Richard Pennycook, on April 17 called the past year a "disastrous year for the group" - the worst in its history.

:: AGM

On May 17 there will be an AGM for Co-operative members. It is expected the mutual's board will seek backing for Lord Myners' proposals to reform corporate governance.

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House Prices: Best Annual Rise 'Since 2007'

The latest snapshot of UK house prices points to an acceleration in growth, with the biggest annual rise since 2007 recorded in April.

The Nationwide House Price Index charts a 1.2% increase month-on-month and a 10.9% rise over the past 12 months - with the top end of the market in London and the South East leading the charge.

The performance took the average cost of a home in the UK to 183,577, Nationwide calculated.

Its monthly report was released as a study by the housing charity shelter and auditors KPMG warned that prices could quadruple in 20 years if more is not done to tackle the housing shortage, which is seeing 100,000 fewer homes than are needed being built each year.

High demand but poor supply of properties for sale has been a major factor behind the recovery in the housing market in the wake of the financial crisis - with schemes to help people secure a mortgage, such as Help to Buy, stoking the interest.

Robert Gardner, Nationwide's Chief Economist, said: "The introduction of Mortgage Market Review (MMR) measures could have an impact on activity levels in the months ahead as the new measures bed down.

"However, underlying demand is likely to remain robust, as mortgage rates remain close to all-time lows and as consumer confidence improves further on the back of stronger labour market conditions and the brighter economic outlook.

"Earnings growth is beginning to pick up, with wage increases finally outpacing the rise in the cost of living in February.

"Nevertheless, house price growth is outstripping income growth by a wide margin.

"The risk is that unless supply accelerates significantly, affordability will become stretched.

"The upturn in construction of new homes continues to lag far behind the upturn in demand, with the number of new homes being built in England still around 40% below pre-crisis levels (and this was already insufficient to keep up with the increase in the number of households being formed).

"MMR measures, which place a greater emphasis on affordability, should help to ensure that prices do not become detached from earnings.

The Nationwide report highlighted that higher priced properties in London and the South East accounted for a higher proportion of transactions during April - renewing fears of a price bubble.

Mr Gardner added: "In London, the proportion of housing transactions involving properties over £500,000 has increased from 13% in 2007 to around 25% in 2013.

"The share involving properties of over £1m has more than doubled from 3% to more than 6%."

More follows...

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Lloyds Quarterly Profits Rise 22% To £1.8bn

Lloyds Banking Group has reported a 22% rise in underlying profits to £1.8bn as its cost burden fell in the first quarter of its financial year.

The state-rescued lender, which is 25% owned by the taxpayer, confirmed it remained on track for a summer flotation of TSB and it was making no further provision for the costs associated with the Payment Protection Insurance mis-selling scandal.

However, on a statutory basis, pre-tax profits fell 32% on the same period last year but this reflected the sale of shares in asset manager St James's Place which bolstered profits in the same period last year.

Chief executive Antonio Horta-Osorio said: "We made good progress in the first quarter, benefiting from our simple, low cost and low risk, UK retail and commercial focused business model.

"We are supporting and benefiting from the UK economic recovery and are delivering better underlying profitability as well as improved returns for shareholders, from a stronger, lower risk balance sheet.

"And it was this strong performance which enabled the UK Government to further reduce its stake, returning an additional £4.2bn of taxpayers' money in the first quarter."

The results were seen as strengthening the bank's case for gaining permission to restart dividend payments in the second half of the year.

It cut its costs by 5% from a year ago to £2.3bn while it said it expected a stronger 2014 net interest margin of 2.4%.

The margin - which is a key driver of profits for the Group - improved to 2.32% in the first quarter, up from 1.96% a year ago.

The bank confirmed its intention to launch the Initial Public Offering (IPO) of TSB Bank by the end of June.

In a conference call with investors, the Group's finance director said it would look to offload a minimum 25% stake in TSB in the flotation and there would be a chunk available to retail investors.

TSB, which was spun out of Lloyds to satisfy state aid rules, has 631 branches.

More follows...

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WPP Boss Nets £29m After Share Payout

By Mark Kleinman, City Editor

Sir Martin Sorrell's status as one of Britain's best-paid businessmen will be cemented on Wednesday when the company he founded discloses that he earned close to £30m last year.

Sky News can reveal that Sir Martin, chief executive of WPP Group, the world's biggest marketing services supplier, saw his total remuneration reach a record high in 2013.

His package was boosted by a £22.7m payout disclosed last month from a scheme linked to total shareholder returns during a five-year period in which WPP was the seventh-best performer in the FTSE-100.

Sir Martin's pay will be outlined in WPP's annual report, days after the company reported a strong set of results for the first quarter of 2014, with like-for-like revenues growing by 7%.

The document is expected to show that Sir Martin's overall pay for 2013 was in the region of £29m, 90% of which was performance-related, insiders said on Tuesday.

The £22.7m share payout was made under a scheme called LEAP, which was discontinued last year after feedback from institutional shareholders.

The remainder of Sir Martin's 2013 package is understood to consist of roughly £4m awarded under a short-term incentive plan, half of which is in shares deferred for two years.

He also received £1.15m in base salary last year, a lower figure than the previous year's £1.3m, and a reduced pension contribution.

WPP's status as the world's biggest supplier of marketing services, through advertising and media buying networks such as J Walter Thompson and MEC, has been under threat from the proposed merger of Omnicom of the US and France's Publicis.

However, that transatlantic alliance now looks to be in jeopardy, with tax authorities in the UK and the Netherlands resisting overtures to host a new holding company for the combined group.

Disagreements about the management line-up at the new Franco-US company are also said to be undermining the proposed merger.

Sir Martin said last week that the uncertainties about his rivals' deal was fuelling a surge in new business success at WPP, with recent major client wins including Marks & Spencer and Vodafone.

The WPP boss has been a staunch defender of his pay, frequently pointing to the risks he took to fund its growth during several precarious phases of the company's existence.

One ally of Sir Martin's pointed out that during the five-year period covered by the £22.7m share payout, there was a £12.35bn uplift in returns to all WPP's shareholders.

Reforms to WPP pay policies saw investor support for the company's remuneration report rebound to 80% last year from a meagre 40% in 2012.

Vince Cable, the Business Secretary, has forced an overhaul of the way companies report executive pay, and handed shareholders a binding vote on future compensation policies.

Votes on the previous year's pay deals, which saw bloody noses given to boards at Barclays and Pearson last week, remain non-binding.

A WPP spokesman said: "The vast majority of Sir Martin Sorrell's pay relates to the five-year LEAP scheme already disclosed and designed to link long-term shareholder value creation with executive rewards as prescribed in Vince Cable's recent communication with companies."

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Twitter Stock Down 10% As It Posts $132m Loss

Twitter shares fell almost 10% in after-hours trading in New York after the social network's latest results disappointed investors.

Shareholders were looking for stronger user growth than the company reported in its first quarter statement.

Twitter, which went public on the New York Stock Exchange last November, said it had 255 million monthly users at the end of March, up 25% on a year ago, though the figure was two million lower than Wall Street's consensus. 

The social network posted a deeper net loss of $132.4m (£79m) - which compares to $27m in the same period last year - blaming  stock compensation costs.

A sharp increase in advertising revenue helped numb the pain.

Total revenue more than doubled to $250m from $114m while Twitter's advertising revenue was $226m, about 80% of which came from mobile advertising.

But it was not enough to appease investors, with shares hitting $38.53 in after-hours trading - still above their flotation price of $26 but down significantly on the heights seen in December of $74.73.

Analysts said user numbers was a key metric for Twitter.

The company has said it is focusing on expanding its audience and encouraging people using short messaging service to use it more often.

By comparison, Facebook has 1.28 billion users and professional networking service LinkedIn had 277 million users at the end of 2013.

WhatsApp, the messaging app Facebook has agreed to buy for $19bn, recently passed the 500 million user milestone.

"We had a very strong first quarter. Revenue growth accelerated on a year over year basis fuelled by increased engagement and user growth," Twitter's chief executive Dick Costolo said in a statement.

Twitter gave a conservative revenue forecast for the current quarter and for all of 2014 - expecting revenue of up to $280m for the April-June period.

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Co-op Bank Review Charts "Sorry Failings"

The Main Findings Of The Co-op Bank Review

Updated: 7:16am UK, Wednesday 30 April 2014

The review by Sir Christopher Kelly into what went wrong at the Co-operative Bank is summarised below:

:: THE REVIEW

The independent review was commissioned in July 2013. It is based on more than 130 interviews of current and former employees, board members and others, as well as examinations of internal papers and external reports.

Its conclusions are scathing. In its own words it is a "sorry story of failings in management and governance".

The review states that contributory factors to the "debacle" include the economic environment and increasing capital requirements by regulators but Sir Christopher Kelly identifies two key areas of failing:

:: BRITANNIA MERGER

It says the Britannia merger of August 2009 "lies at the heart" of the problems at the bank. At the time of the merger, Brittania was the second largest building society in the UK with assets of £35bn, 2.8m customers and 254 branches, compared with Co-Op banks assets of £15bn, 500k customers and 90 branches.

Brittania had more exposure to sub-prime lending (loans to people who may struggle to repay them) than any other building society. The review found out that Brittania would sometimes complete transactions that no other lender would take on.

It was put on a "watch list" by the city regulator, then-called the FSA, but it makes clear neither Britannia, nor the Co-op bank were aware of this.

It calls the due diligence process preceding the merger "cursory" and "startling". Accountancy firm, KPMG was not given access to Brittania premises so could only perform high level checks on the information provided. But adviser JP Morgan Cazenove advised the Co-op that KPMG's due diligence "exceeded that normally undertaken for listed companies".

The bank's board was not alerted to the deteriorating business case of Britannia as property prices plummeted. Something the review calls "a major error of judgement".

:: MANAGEMENT AND CULTURE

It says the executive team of the bank "failed to exercise sufficiently prudent and effective management of capital and risk" and that the board "failed" in its oversight of the executive. Combined it says "they badly let down the Group's members".

The bank's culture accepted mediocrity and "did too little to discourage wrong behaviours". It failed to address poor performance and tolerated under-performers – "something which might take a week in most banks would take months in the Co-operative Bank".

It advises that considering the Group still owns 30% of the bank, the Group board should take on an experienced banker. It notes that both Sainsbury's and Tesco, which are trading companies with banking subsidiaries smaller and less complex than the Co-op Bank, have experienced bankers on their main boards.

Other areas of note:

:: Payment Protection Insurance

In relation to PPI mis-selling it notes that in spite of the fact the Bank had an avowedly ethical policy, it "manifestly failed to treat its customers fairly". Total provisions for PPI compensation up to the end of 2013 were £347m.

:: PROJECT VERDE (LLOYDS BRANCHES)

Paul Flowers, the disgraced former chair of the bank, is called in the report a "wholly unsuitable person to chair the Co-operative Bank board".

Flowers has asserted that the Treasury pressured the bank into buying branches of Lloyds, in the deal known as Project Verde.

Flowers declined to be interviewed by the review but Kelly has found "no compelling evidence of pressure from government ministers or anyone else".

:: CONCLUSION

The report concludes that the circumstances that led to the lessons laid out by the report "must pain all who care about the co-operative movement".

:: CONTEXT

In the past few weeks both the Co-operative Group and the bank have announced major losses.

The group's losses were £2.5bn for 2013 - the worst results in the group's 150-year history, with £2.1bn of that coming from the Co-op Bank.

The bank's figure contained a trading loss of £1.44bn for the year to December, when the group lost control of Co-op Bank to US hedge funds.

The interim chief executive of group, Richard Pennycook, on April 17th called the past year a "disastrous year for the group" - the worst in its history.

:: AGM

On the 17th May there will be an AGM for Co-operative Members. It is expected that the mutual's board will seek backing for Lord Myners' proposals to reform corporate governance.

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Samsung Suffers Mobile Phone Sales Decline

Samsung Electronics has reported another quarterly decline in operating profits after sales of its mobile phones slowed.

The South Korean firm made $8bn (£4.7bn) in its first quarter - down more than 3% on the same January to March period last year.

It comes after operating profits fell 6% in the fourth quarter of 2013.

The latest performance was largely blamed on smartphone sales easing back by 2.5% in the period, amid stiff competition from the likes of Apple, which enjoyed a sales resurgence over the same months after its handsets became more widely available in China.

Samsung, which is the world's largest smartphone maker, has a diverse product line ranging from memory chips to home appliances but more than half its profits are generated by mobile devices.

This month saw the global roll-out of the latest version of its flagship Galaxy series smartphone, the S5, the performance of which will be closely watched over the coming months.

While reviews have rated the S5 a top-class product, they note it offers little in the way of real innovation that would set it apart from previous versions and models offered by competitors such as Apple.

Samsung made margin concessions with the S5, launching it at a slightly lower price than its predecessor, the S4, and throwing in a premium software bundle.

The company has admitted it faces a tough road ahead, with mobile demand expected to remain sluggish in the second quarter.

However, it still expects sales of the Galaxy S5 to beat those of the S4.

The company's bottom line was boosted by a 22.8% surge in memory chip sales from the first quarter of 2013.

It helped overall net profits top market estimates at $7.5bn (£4.4bn).

Its Seoul-listed shares were down 1.6% in late trading.

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Costa Sales Help Drive Whitbread Profits Up

Solid sales growth at Whitbread's Premier Inn and Costa coffee brands has helped the company's annual pre-tax profit rise 1.1% to £347m.

The performance over the year to February 27 prompted the company to confirm a 19.9% increase in its dividend to 68.8p-per-share.

The results highlighted a 20% rise in total sales at Costa - with like for like sales at its own stores in the UK going up 5.7% in the period.

This contrasts with figures posted last week by rival Starbucks, which confirmed its first decline in UK sales for 16 years.

Total sales at Premier Inn rose 13.4%.

Whitbread, which is Britain's biggest hotel and coffee shop operator, said it had created 3,000 net new jobs over the period.

Chief executive Andy Harrison said: "We continue to invest in improving our customer propositions and international expansion.

"This includes the rollout of our "best ever bed" in Premier Inn, the launch of "hub by Premier Inn" and rejuvenating our restaurant brands.

"In Costa we are focussed on international growth in China and France and our rebranding in Poland, together with the continuing growth of Costa Express.

We had a strong finish to last year, with all our brands performing well, boosted by good Christmas and New Year campaigns and helpful weather comparatives.

"The first two months of the new financial year have started positively, with good trading again helped by relatively soft comparatives which will become tougher as we move into the second half of this year".

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BP Profits Rise 15% But Take Russia Hit

BP has reported a 14.8% increase in quarterly profits that were hit by a falling contribution from its stake in Russia's Rosneft amid the crisis in Ukraine.

The British oil firm posted underlying replacement cost profit of $3.2bn (£1.9bn) in the first quarter - up from $2.8m in the previous quarter but down from the $4.2bn in the same period a year ago.

The company said it was raising its quarterly dividend by 8.3% to 9.75 cents on the back of the performance, which came in ahead of expectations despite a number of headwinds.

A weaker refining environment and lower production - a result of the company's asset sale to raise funds to cover the cost of the Gulf of Mexico disaster - all hit earnings.

The Deepwater Horizon disaster in 2010 seriously damaged BP

But it was the company's 20% stake in Russia's majority state-owned Rosneft which was firmly in the spotlight as western sanctions hit Russian firms in response to the crisis in Ukraine.

BP has said repeatedly that it will stand by its investments in Russia. 

Russian production was responsible for about a third of BP's output in the first quarter.

BP said on Monday it was considering what sanctions against the head of the Russian energy company, Igor Sechin, would mean for its business.

The share of profits BP generated from Rosneft, which last quarter accounted for about a quarter of its total, shrunk significantly due to the weakening rouble as Russia's economy comes under pressure from the tense standoff with the West.

BP reported an estimated underlying pre-tax replacement cost profit for Rosneft of $271m (£161m) for the same quarter.

Chief executive Bob Dudley said the company was delivering on its targets and that the focus was on returning cash - with $7.6bn of its $8bn share repurchasing operation now completed.

Bob Dudley reported a "solid start to 2014" in the results statement

"As well as progressive growth in the dividend per share, we expect to use surplus cash to support further distributions through share buy-backs or other mechanisms," Mr Dudley said.

The company said its legal battles in the US linked to the massive oil spill of 2010 were continuing and provisions to cover the clean-up, fines, compensation and legal costs had not risen in the quarter and remained at $42.7bn.

Its ban on exploring for oil in the Gulf of Mexico and winning US government contracts was lifted last month - nearly four years after the Deepwater Horizon disaster.

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Unemployed Face Work Scheme Or Sanctions

The long-term unemployed will only receive their benefits if they sign on at a jobcentre every day or commit to a six-month stint of voluntary work under the Government's new Help to Work scheme.

Prime Minister David Cameron says the scheme is designed to ensure "that everyone who can work is in work".

Ministers claim there are more than 600,000 vacancies in the economy at any one time, saying the new measures are intended to help unemployed people fill them.

The voluntary work could include gardening projects, running community cafes or restoring historical sites and war memorials.

The placements will be for up to six months for 30 hours a week and will be backed up by at least four hours of supported job searching each week.

Mr Cameron said: "A key part of our long-term economic plan is to move to full employment, making sure that everyone who can work is in work.

"We are seeing record levels of employment in Britain, as more and more people find a job, but we need to look at those who are persistently stuck on benefits.

"This scheme will provide more help than ever before, getting people into work and on the road to a more secure future."

Mr Duncan Smith says many people were written off under the previous system

Work and Pensions Secretary Iain Duncan Smith said: "Everyone with the ability to work should be given the support and opportunity to do so.

"The previous system wrote too many people off, which was a huge waste of potential for those individuals as well as for their families and the country as a whole. We are now seeing record numbers of people in jobs and the largest fall in long-term unemployment since 1998."

Unite assistant general secretary Steve Turner said there was no evidence that such "workfare programmes" get people into paid work in the long-term.

"We are against this scheme wherever ministers want to implement it - in the private sector, local government and in the voluntary sector," he said.

"It is outrageous that the Government is trying to stigmatise job seekers by making them work for nothing, otherwise they will have their benefits docked."

Shadow employment minister Stephen Timms said: "Under David Cameron's government nearly one in 10 people claiming Jobseeker's Allowance lack basic literacy skills and many more are unable to do simple maths or send an email.

"Yet this Government allows jobseekers to spend up to three years claiming benefits before they get literacy and numeracy training.

"A Labour government will introduce a Basic Skills Test to assess all new claimants for Jobseeker's Allowance within six weeks of claiming benefits."

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HS2 Rail Link: MPs Set For Heated Debate

By David Crabtree, Midlands Correspondent

Legislation paving the way for the construction of the controversial HS2 rail link will be debated by MPs in the House of Commons today.

The second reading of the HS2 Hybrid Bill will see MPs discuss the principle of the high speed rail bill and take a vote.

But there will be many more legal, political and environmental hurdles before a final decision is made on whether the £50m link will be built.

Construction of the 250-mile-per-hour London-West Midland stage could begin around 2017 and be opened by 2026.

The second phase to Manchester and Leeds may be completed by 2032.

Today's debate comes after Michael Fabricant, a Conservative MP and former Government whip, told Sky News up to 100 of his colleagues have "really serious doubts" about HS2.

He added that if Labour opposed the scheme, any potential Tory revolt against HS2 would be much bigger.

"It'd be double the amount of rebellion that we've got now. People are saying, 'Well, if it's going to go through anyway, why use up our stocks with the whips?'," he said.

The rail link is expected to cost around £50bn

The huge project has split opinion across the UK.

The Institute of Directors have called it a "grand folly", and say a recent survey suggests that businesses are simply not convinced by the economic case for HS2.

The Confederation of British Industry believe it offers an opportunity to regenerate local economies, provide jobs and boost growth.

Greenpeace support the project in principle, saying it has enormous potential to reduce carbon emissions by getting people away from short-haul flights.

The Woodland Trust says it should not be built at the expense of Britain's natural heritage. They claim it will destroy at least 40 ancient woods, with a similar number put at significant risk.

In Birmingham it is planned to link an HS2 hub to one of the biggest urban regeneration schemes in Britain.

It will be focused around a new city centre station at Curzon Street with the promise of 14,000 new jobs, 2,000 new homes and a boost to the city's economy of £1.3 billion a year.

Birmingham businessman David Smeeton says: "This would be a game-changer for Birmingham - just what it needs for growth, investment and regeneration."

But HS2 Action Alliance, which opposes the scheme, claim more than 70% of the forecast new jobs linked to regeneration in stage one will be based in London.

The protest group also maintains that capacity arguments do not stack up.

"Even the most aggressive forecasts for future demand can be met by improving existing lines," it says.

Compensation packages have recently been announced. Under the proposals the state would buy properties within 60m (197ft)  of the line at full market value plus 10%.

Those up to 120m (394ft) away, who prefer not to move, would be eligible for 10% of the home's value.

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Pfizer Confirms Takeover Bid For AstraZeneca

American drugs giant Pfizer is to make a takeover bid for British rival AstraZeneca, it has been confirmed.

It would be one of the biggest pharmaceuticals deals ever, creating a new company that would be listed on the New York Stock Exchange.

The move would also be likely to mark the most expensive foreign takeover of a UK business in history.

In early morning Monday trades, AstraZeneca's shares were up more than 14%, at £46.90.

Manhattan-based Pfizer said if the deal was approved, management for the UK-arm would remain in Britain.

Last year, AstraZeneca cut hundreds of jobs in a reorganisation of its local operations.

Pfizer said initial talks in January had been rebuffed, along with a further approach last weekend.

Its initial offer valued AstraZeneca's shares at more than £46, including a premium of 30%.

The American company said the new approach would also include a premium for shareholders.

Approached by Sky News, AstraZeneca said it had no comment to make and was reviewing the statement released by Pfizer.

The pharmaceutical industry has seen a wave of large-scale mergers and acquisitions recently.

Last week, GlaxoSmithKline said it would sell its oncology business to rival Novartis for £8.5bn and in return buy the Swiss company's vaccines division.

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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.

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.

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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Cable Drawn Into Row Over 'Russian' Oil Bid

By By Mark Kleinman, City Editor

Vince Cable, the Business Secretary, has been drawn into a row about the controversial takeover of a London-listed oil group that is reliant on funds from one of Russia's largest banks.

Sky News has seen a letter sent by the Association of British Insurers (ABI) to Mr Cable warning him that the Stanlow refinery, which produces 15% of the UK's transport fuel, is being used as collateral in a bid for Essar Energy.

Robert Hingley, an ABI director, said in the letter to Mr Cable that Essar Global, the vehicle of the billionaire Ruia brothers who want to buy the company, had failed to provide any indication of its plans for the Stanlow site in north-west England.

By highlighting the Russian provenance of the financing for the offer, the ABI's intervention will escalate tensions over the cut-price bid by Essar Global for the 22% of Essar Energy shares it does not already own.

The Ruias listed Essar Energy in London by selling shares less than four years ago priced at six times the price they are now offering.

The cut-price offer has sparked fury from big City institutions, including Standard Life Investments, which in February described it as "cynical opportunism" and "a calculated attempt to deprive minority shareholders of the substantial future upside in Essar Energy's valuation".

Under stock exchange rules, because the Ruias already control a majority of the shares, they can declare their offer unconditional even if no other shareholders accept their bid.

Doing so would enable them to delist the company without a vote, which would either force investors to accept just 70p-a-share or to remain shareholders in a more highly-indebted and unlisted company where they possess no influence.

The ABI special committee, which represents major City shareholders including Standard Life and Henderson, has urged Essar Global to commit to a delisting only if a majority of the independent investors accept its offer.

The Financial Conduct Authority is changing its rules relating to delistings but has irritated the ABI by not applying that rule-change to takeover situations.

It is unclear what power Mr Cable has to intervene in the situation, although question marks over the future of the Stanlow refinery and the involvement of Russian funds are likely to put the issue on the political agenda.

Investors believe that while the right to make an offer for the company was detailed in a relationship agreement drawn up when Essar Energy floated, its terms were not made clear in the shareholder prospectus, which could provide the ABI with another legal avenue to explore.

Skadden Arps Slate Meagher & Flom, a law firm, is advising the ABI committee.

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