Current Account Exodus At Troubled Co-op Bank

The troubled Co-op Bank has revealed it lost almost 30,000 current account customers in the first half of its financial year.

The bank, which was forced to raise almost £2bn to plug a capital black hole last year, reported significantly lower losses of £75.8m for the period compared to the same time during 2013 and said its wider financial position was improving despite "deep-rooted" problems remaining.

It shed 13% of its permanent staff, closed 46 branches over the six month period and said it lost 28,199 current account holders, although its net customer number losses has since slowed, it said.

It blamed "negative publicity and significant competitor activity" for the near-2% fall.

Sky News reported on Thursday night that the bank was facing demands from some of its biggest shareholders to accelerate an overhaul of its operations and commercial strategy - as losses were expected to continue for two years.

But in its results statement, chief executive Niall Booker said Co-op Bank had made progress since its rescue from near-collapse - a deal that saw the supposedly ethical bank give up control to US hedge funds.

The bank said its capital position had been strengthened following a £400m capital-raising.

Mr Booker said: "Considering the scale of the challenge we faced a year ago, we are encouraged by the progress made to ensure the stability of the bank.

"The core bank continues to remain stable. In the first half of the year more people switched into the bank than in the second half of 2013.

"Although we have also seen an increase in the number of people switching out of the bank, the net numbers remain small relative to our total number of current account customers whose continuing loyalty is deeply appreciated.

"Recent trends suggest this net outflow of retail customers has slowed."

The bank's problems have been at the centre of a wider crisis for the Co-operative Group, which reported a £2.5bn loss for 2013 as its exposure to the bank hit earnings.

A report on the bank's near collapse and subsequent rescue, which saw the group's stake reduced to just 20%, pinned the blame on toxic loans inherited from its disastrous merger with the Britannia building society in 2009 amid a series of management and cultural failures.

In May, the Co-op Group's members backed radical plans by the former City minister Lord Myners to sweep away its existing 20-strong board and replace it with a more plc-style structure, staffed by professionally-trained directors.

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EDF Energy To Pay £3m Complaints Penalty

EDF Energy is the latest of the so-called "Big Six" suppliers to be slapped with a penalty for market failures.

The regulator Ofgem said it had agreed to pay £3m to benefit vulnerable customers after its investigation found that the company breached complaint handling rules.

The inquiry was prompted by an increase of more than 30% in the levels of complaints recorded by EDF as it introduced a new IT system in 2011.

Ofgem found that between May 2011 and January 2012, EDF did not have appropriate procedures in place to properly receive, record and process all customers' complaints in accordance with handling rules.

Its technical problems included unacceptably high call waiting times, with many customers deciding to hang up before getting through to a customer services operator.

The company acknowledged its customers were caused significant disruption - and has apologised.

Sarah Harrison, Ofgem's senior partner with responsibility for enforcement, said of EDF: "Their commitment to putting things right and paying £3m to the Citizens Advice 'Energy Best Deal Extra' scheme and the Plymouth Citizen Advice Bureau's Debt Helpline to benefit vulnerable customers is a step in the right direction to rebuilding consumer trust.

"It's now vital for EDF Energy and the industry as a whole to truly put customers first and put adequate resources in place to deal with complaints.

"Following our reforms, it has never been easier for consumers to switch supplier and therefore those unhappy with the service they receive are able to vote with their feet."

Beatrice Bigois, EDF's managing director of customers, said: "Despite our best efforts and extensive planning to manage this transition in 2011 without impacting our customers, we recognise that for a period of time the service to our customers was not up to the standards they deserve.

"We apologise to those customers who were impacted during this period.

"We have co-operated fully with Ofgem and have taken this matter very seriously.

"The £3m package that we are offering will ensure that thousands of vulnerable customers are provided with free, independent advice on debt, as well as information to help them manage their energy consumption and bills."

The penalty against EDF followed similar actions by the regulator which saw SSE and E.ON pay the biggest sums for past failures as a debate rages on whether consumers get a good deal from the wider market.

The Big Six firms, which also include British Gas, Scottish Power and nPower, denied accusations of profiteering after collective profits quadrupled to more than £1bn over three years.

In a bid to rebuild trust the Competition and Markets Authority (CMA) is carrying out a full investigation, which will include an examination of the relationship between the supply businesses and generation arms of the Big Six.

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Draghi: ECB Ready To Spur On Euro Economy

The boss of the European Central Bank (ECB) has revealed it is ready to do more to boost a shaky recovery in Europe.

But Mario Draghi warned EU member governments they must still join in efforts to reduce unemployment, which remains stubbornly high.

Mr Draghi said: "I am confident that the package of measures we announced in June will indeed provide the intended boost to demand, and we stand ready to adjust our policy stance further."

So far the ECB has cut interest rates, offered cheap loans to banks and is weighing up asset purchases to help stimulate the 18-member eurozone.

The ECB has already pumped unprecedented amounts of liquidity into the banking system back in 2011 and 2012, but instead of lending the money on to businesses banks tended to park the cash with the ECB instead.

In June, the ECB created a negative interest rate to encourage banks to lend more.

Mr Draghi also said certain longstanding practices in some countries are helping to keep unemployment high.

He said freer wage adjustments and workforce levels would encourage companies to hire.

Mr Draghi made the comments as part of his speech at the US Federal Reserve conference in Jackson Hole, Wyoming.

Meanwhile, US shares eased on Friday after the Jackson Hole speech by Fed boss Janet Yellen left investors unsure on the possibility of a rate rise in coming months.

She said the financial crash complicated the Fed's ability to assess the US job market and made it harder to determine when to adjust interest rates.

Ms Yellen's remarks failed to offer strong signs that indicate she is moving away from the view of support through ultra-low interest rates.

The timing of a Fed rate increase remains unclear, though many economists foresee an increase by mid-2015.

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Current Account Exodus At Troubled Co-op Bank

The troubled Co-op Bank has revealed it lost almost 30,000 current account customers in the first half of its financial year.

The bank, which was forced to raise almost £2bn to plug a capital black hole last year, reported significantly lower losses of £75.8m for the period compared to the same time during 2013 and said its wider financial position was improving despite "deep-rooted" problems remaining.

The bank, which shed 13% of its permanent staff and closed 46 branches over the six months, said it lost 28,199 current account holders but its net customer number losses had since slowed.

It blamed "negative publicity and significant competitor activity" for the near-2% fall.

Sky News reported on Thursday night that the bank was facing demands from some of its biggest shareholders to accelerate an overhaul of its operations and commercial strategy - as losses were expected to continue for two years.

But in its results statement, chief executive Niall Booker said Co-op Bank had made progress since its rescue from near-collapse - a deal that saw the supposedly ethical bank give up control to US hedge funds.

The bank said its capital position had been strengthened following a £400m capital-raising.

Mr  Booker said: "Considering the scale of the challenge we faced a year ago, we are encouraged by the progress made to ensure the stability of the bank.

"The Core Bank continues to remain stable. In the first half of the year more people switched into the Bank than in the second half of 2013.

"Although we have also seen an increase in the number of people switching out of the Bank, the net numbers remain small relative to our total number of current account customers whose continuing loyalty is deeply appreciated.

"Recent trends suggest this net outflow of retail customers has slowed".

More follows...

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First-Time Buyers 'Getting A Shot At Long Last'

By Poppy Trowbridge, Consumer Affairs Correspondent

The number of first-time buyer sales has hit a seven-year high, according to new figures from LSL Property Services.

There were 30,000 first-time buyer sales in July, up by 25% on a year before and the highest number of monthly first-time buyers since August 2007.

At the same time, the data reveal average first-time buyer deposits are 10% lower than this time last year.

Down payments averaged £26,642 in June, a decrease from £29,609 12 months ago.

David Newnes, from LSL Property Services, said: "A whole generation of young buyers were trapped on the sidelines of the property market as the economy recovered from the recession, struggling to save for a deposit whilst inflation remained stubbornly high, savings rates were stuck at a historic low, and real wages fell.

"But the recent increase in high LTV (loan to value) lending options - enabled by Help to Buy - has allowed them a shot at getting on the ladder at long last."

Yet purchase prices are on the rise, and mortgage rates are climbing, meaning buyers could still struggle with debt and repayments.

First-time buyers paid 8% more over the last year, with the average price paid for a new home now £155,844, according to LSL Property Services.

Simultaneously, average mortgage rates climbed for the fourth consecutive month in July to 4.19%.

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EDF Energy To Pay £3m Complaints Penalty

EDF Energy is the latest of the so-called 'Big Six' suppliers to be slapped with a penalty for market failures.

The regulator Ofgem said it had agreed to pay £3m to benefit vulnerable customers after its investigation found that the company breached complaint handling rules.

The inquiry was prompted by an increase of more than 30% in the levels of complaints recorded by EDF as it introduced a new IT system in 2011.

Ofgem found that between May 2011 and January 2012, EDF did not have appropriate procedures in place to properly receive, record and process all customers' complaints in accordance with complaints handling rules.

Its technical problems included unacceptably high call waiting times, with many customers deciding to hang up before getting through to a customer services operator.

The company acknowledged its customers were caused significant disruption - and has apologised.

Sarah Harrison, Ofgem's senior partner with responsibility for enforcement said of EDF: "Their commitment to putting things right and paying £3m to the Citizens Advice 'Energy Best Deal Extra' scheme and the Plymouth Citizen Advice Bureau's Debt Helpline to benefit vulnerable customers is a step in the right direction to rebuilding consumer trust.

"It's now vital for EDF Energy and the industry as a whole to truly put customers first and put adequate resources in place to deal with complaints.

"Following our reforms, it has never been easier for consumers to switch supplier and therefore those unhappy with the service they receive are able to vote with their feet."

The penalty against EDF followed similar actions by the regulator which saw SSE and E.ON pay the biggest sums for past failures as a debate rages on whether consumers get a good deal from the wider market.

The Big Six firms, which also include British Gas, Scottish Power and nPower, denied accusations of profiteering after collective profits quadrupled to more than £1bn over three years.

In a bid to rebuild trust the Competition and Markets Authority (CMA) is carrying out a full investigation, which will include an examination of the relationship between the supply businesses and generation arms of the 'Big Six'.

More follows...

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Bank Of America Agrees Record $17bn Settlement

Bank of America has agreed to a record $17bn (£10.2bn) settlement over its sale of mortgage-backed securities in the lead up to the 2008 financial crisis.

The bank will pay $10bn in cash and provide consumer relief valued at $7bn, officials familiar with the deal told the AP news agency.

The settlement is the largest arising from the economic meltdown during which millions of Americans lost their homes to foreclosure.

It also marks the largest settlement in the history of corporate America.

An agreement in principle was reached earlier this month following a conversation between Attorney General Eric Holder and Bank of America CEO Brian Moynihan, the AP reported.

The settlement requires that the bank acknowledge that it made misrepresentations about the quality of its residential mortgage-backed securities, officials said.

It also requires that Bank of America acknowledge similar misrepresentations by Countrywide Financial and Merrill Lynch, which the bank acquired in 2008.

Bank of America and the Department of Justice have declined to comment.

A formal announcement is expected on Thursday.

According to public records, Bank of America, Countrywide and Merrill Lynch issued $965bn (£581bn) in mortgage-backed securities from 2004 to 2008.

The firms promoted the securities as safe investments despite the fact that they contained residential mortgages from borrowers who were unlikely to be able to repay their loans.

The poor quality of the loans led to huge losses for investors and a slew of foreclosures, kicking off the recession that began in late 2007.

The Securities and Exchange Commission last year charged Bank of America and its two subsidiaries with defrauding investors by failing to disclose key risks and misrepresenting facts about the underlying mortgages.

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Labour Pledge To Get Tough With Energy Firms

Energy companies' licences could be revoked by a new regulator to help protect the interests of the public under a Labour government, the party has announced.

Shadow energy and climate change secretary Caroline Flint said the Government had helped create a "broken energy market".

And she said Labour would give a tough new regulator the power to cancel energy firms' licences if they repeatedly commit the most "serious and deliberate breaches of their licence conditions which harm the interests of consumers".

Ms Flint is due to speak about the plans during a visit to the battleground seats of Reading East and Reading West.

Figures show energy companies have continued to "mistreat their customers" and face another 16 investigations into mis-selling, poor customer service and other bad practice.

This comes despite Ofgem issuing 30 fines, worth a total of more than £87m, since 2001.

Caroline Flint said the public were being treated unfairly

Ms Flint said Labour's reforms would see the regulator producing an annual scorecard for energy suppliers, reporting on the firm's performance and identifying areas of concern.

She claimed household energy bills had risen twice as fast as inflation and four times as fast as wages since 2010 - and that UK energy prices had risen faster than almost anywhere else in the developed world since Labour lost office.

"The public have a right to be treated fairly by energy companies," she said.

"Where firms fail to meet these standards, there must be tough and decisive action. Too often energy companies seem to view the regulator's fines as a cost of doing business - not as a warning to get their act together.

"Of course consumers must be compensated - but if energy companies persist in mistreating their customers they must know their licence could be on the line."

Labour says information disclosed by Ofgem under the Freedom of Information Act, shows it currently has 12 investigations ongoing and a further four at informal review stage.

Responding, a Conservative spokesman said: "We'll take no lectures from the party that brought Britain's economy to its knees.

"Labour left our country with a broken energy market and huge taxes on bills - meaning the number of people in fuel poverty nearly doubled in Labour's last five years.

"We're carrying out a full, independent inquiry to fix the broken market we inherited. And we're forcing energy companies to simplify bills so people can be sure they are getting the best deal."

An Ofgem spokesperson said: "Ofgem is always interested to work with government on any new powers or refinements to existing powers which would help to further protect consumers.

"Ofgem does currently have powers to revoke licences in certain specific circumstances including where companies have failed to comply with particular enforcement orders we have set requiring them to change or stop behaviours."

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UK Car Export Values 'Double In A Decade'

The resurgence of the UK's car industry has notched up another milestone - with export values more than doubling over the past decade.

Industry figures released on Thursday showed that the average car exported was worth over £20,600 today compared to £10,200 in 2004.

The Society of Motor Manufacturers and Traders (SMMT) reported a 2.9% increase in cars made for export last month, taking the export market for the period since 2010 to the five million mark.

Wider car manufacturing also accelerated last month, with 132,570 cars made in the UK in July - a 2.8% rise on the figure for July 2013.

Last month's total took the year-to-date figure to 923,884 - a 3.4% increase on the total for the first seven months of last year.

SMMT chief executive Mike Hawes said: "This is testament to the burgeoning reputation of UK automotive excellence and demand for British-made cars.

"Significantly, UK car export values have doubled over the past decade - reflecting the diversity of the products we make and proving the sector's worth as a global investment opportunity."

The country's car industry accounts for 10% of total UK export of goods and its contribution to the recovery in manufacturing output has been significant, given efforts to rebalance the UK's economy in the wake of the financial crisis.

Exports have been on the rise again this year following several years of falling demand in the euro area - with China among the countries taking in high-value vehicles from UK manufacturers.

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Inflation Drops More Than Expected In July

The two measures of UK inflation have dropped more than expected in July, prompted by discounting on the high street.

According to official data, the Retail Prices Index (RPI) stood at 2.5% and the Consumer Prices Index (CPI) was 1.6%.

Economists had expected a CPI rate of around 1.8%, after official figures showed a June rate of 1.9%.

CPI now appears to be headed back towards May's figure of 1.5%, which at the time was the lowest level for four-and-a-half years.

Inflation has been below the Bank of England (BoE) 2% target for seven straight months - the first time this has occurred since 2005.

The RPI, which unlike the other measure includes housing costs, was recorded in June at 2.6%.

The Office for National Statistics (ONS) said the biggest contributor to the slowing annual inflation rate was discounting on the high street for clothing and footwear.

This was because retailers held off on price cuts throughout June.

Food and non-alcoholic drinks also fell year-on-year, and the CPI was also eased by falling spirits and wine prices.

The ONS said the average house price in London is now £499,000

Liberal Democrat Chief Secretary to the Treasury Danny Alexander told Sky News: "The fact that inflation has been below the Bank of England target for seven consecutive months shows that subdued inflation is now becoming the norm as the economy recovers.

"Eliminating the deficit fairly, and repairing the UK economy remains central to the role of Liberal Democrats in Government.

"These encouraging inflation numbers should give businesses the confidence they need to deliver the investment required to boost productivity. Rising productivity is the only route to sustainable increases in living standards."

The data comes as commuters learned they would face a 3.5% increase in rail fares next year, which uses the RPI figure plus 1% to calculate increases.

The further drop to the CPI eases pressure on the BoE to hike the 0.5% base rate, which has been at its historic low for the last five years.

Meanwhile, the ONS said UK house prices increased by 10.2% in the year to June, reaching a new high average price of £265,000.

House prices in the capital, however, shot up by 19.3% in the year to June.

It calculated the average house price in London at £499,000, and said that "house prices are increasing strongly across most parts of the UK".

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Ministers Face New Royal Mail Sell-Off Row

By Mark Kleinman, City Editor

Ministers considered selling the Government's entire stake in Royal Mail when the shares were trading close to their post-privatisation peak earlier this year - but decided against doing so because it risked antagonising City investors.

Sky News has learnt that Vince Cable's Department for Business, Innovation and Skills (BIS) and the Shareholder Executive - which oversees state-owned assets - discussed the sale of taxpayers' remaining 30% stake in Royal Mail in March, five months after it listed on the stock market.

By deciding not to press ahead, ministers effectively forfeited a further £500m gain for the public purse.

The disclosure risks reigniting the row over Royal Mail's controversial sell-off, with Mr Cable accused by MPs on the BIS Select Committee and the National Audit Office of costing taxpayers £1bn by pricing the shares too cheaply last autumn.

At the time the sale of taxpayers' remaining 30% shareholding was discussed in mid-March, the postal operator's shares were trading at around 590p, meaning that a sale would have generated close to £1.8bn.

Selling the shares at that point would have entailed breaking a lock-up agreement put in place at the time of the company's initial public offering (IPO) last October, under which the Government pledged not to sell any further shares for at least 180 days.

However, such lock-ups include scope for exemptions with the consent of the underwriting banks and are frequently broken by listed companies, meaning it would have been possible for ministers to sanction the early sale of the shares.

Critics argue that alienating institutional investors should not have been a preoccupation for ministers after some of the so-called 'priority investors' allocated shares during the privatisation sold them almost immediately, despite having been identified as long-term shareholders.

By the time the lock-up agreement expired on April 13, Royal Mail shares had fallen by approximately 20% from their mid-March level to around 490p.

With the shares having declined since then by a further 11%, ministers risk being accused of sacrificing a potential £500m gain by not having sold the 30% shareholding when it was under active consideration.

In a statement, a BIS spokesperson said: "Ministers receive regular advice on Government shareholdings of which Royal Mail is one.

"As is standard market practice, Government gave a commitment at the time of the IPO not to sell any further shares for 180 days post admission to the [London Stock Exchange] in order to provide the company with greater stability.

"The Secretary of State was never advised to break this lock-up period."

Chuka Umunna, the shadow business secretary, said the disclosure offered further evidence that the privatisation of Royal Mail had been "botched".

 "The handling of this since they bungled the IPO has been characterised by incompetence and attempted buck passing that will fool no-one," he said.

The sale of the Government's remaining Royal Mail shares is now considered unlikely before the General Election next May.

Sky News has also learnt that Labour is expected to include a commitment to retain the stake in its election manifesto.

The issue was discussed at the Party's recent National Policy Forum and will be debated at its autumn conference next month.

"The Tories have put the future of the postal service at risk. They pressed ahead with an unnecessary fire sale of Royal Mail, in the process short-changing taxpayers by hundreds of millions of pounds," a Labour spokesman said.

"As part of Labour's commitment to ensuring that the public interest in Royal Mail is upheld, the National Policy Forum discussed how Labour will commit to keeping the remaining stake in public ownership.

"These proposals will be discussed at Annual Conference as part of Labour's priority to safeguard the services consumers and businesses get from a privatised Royal Mail."

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Standard Chartered Hit $300m For Lax Controls

UK-based Standard Chartered bank is to pay $300m (£180m) to US regulators over its failure to improve anti-money laundering provisions and stop financial crime.

The agreement with New York's Department of Financial Services (DFS) follows the bank's agreement two years ago to improve compliance.

As a result, Standard Chartered will suspend dollar exchanges through its New York branch for high-risk retail business clients at its SCB Hong Kong subsidiary.

"If a bank fails to live up to its commitments, there should be consequences," DFS superintendent Benjamin Lawsky said.

Although based in London, the bank's primary areas of operation are in emerging markets in Asia, the Middle East and Africa.

The bank will now close accounts for some businesses in Dubai and the UAE

After the announcement the bank released a statement about the settlement.

"The group accepts responsibility for and regrets the deficiencies in the anti-money laundering transaction surveillance system at its New York branch," it said.

"The group has already begun extensive remediation efforts and is committed to completing these with utmost urgency.

"More broadly, the group is committed to enhancing its effectiveness in the fight against financial crime, and in this context, has committed substantial resources to a multi-year financial crime risk mitigation programme."

Officials said the independent surveillance system established in 2012 at its New York branch failed to detect many potentially high-risk transactions for closer analysis.

Iran was hit with sanctions over its suspect nuclear programme

They said a significant number originated from branches in the United Arab Emirates (UAE), which includes the commercial hub of Dubai.

In 2012 the bank was fined $667m (£400m) by US regulators for breaking sanctions on Iran by hiding transactions worth up to $250bn (£150bn).

It will now terminate client accounts with a number of small and medium-sized businesses in the UAE.

The bank said it is continuing to fix its compliance systems and will work with the small proportion of clients affected in Hong Kong and the UAE to minimise disruption.

It has agreed to extend surveillance of its New York branch and allow independent monitoring for another two years.

Just weeks ago the bank warned it was at risk of another US penalty, as it saw a profit drop of a fifth in its half-year profit.

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Gender Pay Gap Continues To Widen For Women

Women in management position still earn significantly less than their male counterparts, according to a new report.

The Chartered Management Institute (CMI) said the pay gap is widening and for women in their 40s earnings are more than a third less than men.

The CMI survey of 68,000 managers across the UK showed there was a £9,000 pay differential, equivalent to 23%, which increased as women got older.

It added that annual bonuses for female directors were also lower, by £11,000, at slightly below £42,000.

As a result of the disparity, a woman must work 14 years longer over a lifetime to earn the same amount of money, the report said.

CMI chief executive Ann Francke said: "Lower levels of pay for women managers cannot be justified, yet our extensive data shows the pay gap persists, with many women hit by a mid-life pay crisis.

"Women and men should be paid on the basis of their performance in their particular roles, but this is clearly not yet the case for far too many.

"It's not right that women would have to work until almost 80 for the same pay rewards as men.

The CMI said it is not acceptable to use raising children or "time served" as excuses for the gap.

XpertHR head of salary surveys Mark Crail, who helped with the study, said: "The data shows that women begin to fall behind at the age when they are most likely to be starting a family, and it just gets worse from then on.

"It appears that employers often give up on women in mid-career and are missing out on a huge pool of untapped knowledge, experience and talent."

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Housebuilder Persimmon Profit Jumps 57%

Housebuilder Persimmon has seen its pre-tax profit jump by 57% in the first half of the year.

The company said underlying profit reached £212.9m in the six months to the end of June.

Revenue in the period was also up 33% to £1.2bn and it said sale completions in the six months were up 28%.

It sold 6,408 new homes with an average selling price up 4.3% at £186,970.

The results cover the months when there was a flurry of increased activity in the housing market.

It bought 14,251 building plots in the period, pushing its portfolio of consented land sites to 82,250.

Sharp price rises were only slowed late in the period, when the fear of rate rises and new mortgage affordability rules were brought in.

Group chief executive Jeff Fairburn told Sky News: "We see good confidence in the market so we are seeing good visitor levels.

"Certainly the mortgage market is very supportive at the moment and Help to Buy, as a message, is certainly bringing confidence to buyers - particularly first-time buyers - and enabling them to buy new homes.

"So we're pleased to see the additional demand and we're keen to step up our production to meet that."

The company said it has now built a cash stockpile of £326m, up from £48m in the same period last year.

The results come a day after Bovis Homes said its pre-tax profit for the first six months of the year was up 166%, to £49.4m, on the back of a record number of completions.

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Airlines Warned Over Iceland Volcano Eruption

The aviation industry has been warned about the possibility of flight disruptions caused by activity at Iceland's largest volcano system.

Intense seismic tremors have been recorded at Iceland's Bardarbunga volcano for the past three days, although there are no signs yet of an eruption.

The country's Met Office has raised the risk level to the aviation industry to orange - the fourth level on a five-level scale.

More than 10 million people were affected by the 2010 eruption

The Met Office said in a statement that the strongest earthquake in the region since 1996 was recorded early on Monday.

"As evidence of magma movement shallower than 10km (6.2 miles) implies increased potential of a volcanic eruption, the Bardarbunga aviation colour code has been changed to orange," the statement said.

"Presently there are no signs of eruption, but it cannot be excluded that the current activity will result in an explosive sub-glacial eruption, leading to an outburst flood and ash emission."

In 2010 an ash cloud caused by the eruption of Iceland's Eyjafjallajokull volcano shut down much of Europe's airspace for six days.

More than 10 million people were affected by the disruption.

Bardarbunga is Iceland's largest volcanic system. It is located under the ice cap of the Vatnajokull glacier, in the country's south-west.

Met Office seismologist Martin Hensch said the risk of any disruptive ash cloud similar to the one in 2010 would depend upon several factors, including how high any ash coming from the volcano would be thrown.

He added that the biggest risk in Iceland would be caused by flood waves from an eruption beneath the glacier.

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Lastminute Owner Eyes Sale Of UK Dotcom Icon

By Mark Kleinman, City Editor

Lastminute.com, one of the icons of the original dotcom boom, is being put up for sale nearly a decade after its takeover by an American technology giant.

Sky News has learnt that Sabre Holdings, which is listed in New York, is exploring plans to offload Lastminute.

Sabre has appointed bankers at Houlihan Lokey, an advisory firm, to oversee an auction, and has already begun sounding out potential buyers.

A sale of Lastminute could still be aborted if the terms of a deal are not sufficiently attractive to Sabre, but sources said on Saturday that the US company was prepared to accept a substantial loss on the roughly £600m it paid in 2005.

Prospective buyers could include private equity firms or rival online travel groups such as Expedia.

Sabre has itself listed on the public markets, floating on Nasdaq in April with a valuation of nearly $4bn.

It has four main divisions, with Lastminute operating as a subsidiary of Travelocity, Sabre's group of travel e-commerce businesses.

Lastminute was one of the darlings of the early UK internet industry, floating in 2000 two years after being founded by Brent Hoberman and Martha - now Baroness - Lane Fox.

However, Lastminute's performance has been underwhelming, despite it continuing to spend substantial sums on marketing and advertising.

Its biggest market shares are in the UK and France but it has struggled to make an impact elsewhere in Europe.

Analysts say that Travelocity failed to integrate Lastminute effectively or to build the network of hotels or other partners to which it has access during a period when some rivals have expanded aggressively.

Mr Hoberman has also criticised Sabre's exploitation of the Lastminute brand, calling it "an under-utilized asset" last year.

A Sabre spokeswoman said in a statement: "We are always reviewing options to make our technology company as successful, relevant and innovative as possible.

"If we have news to share, we commit to doing so quickly and transparently."

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Wall Street Giants Swoop On Sub-Prime Lender

By Mark Kleinman, City Editor

Two giants of Wall Street are in advanced talks to acquire Kensington, one of the UK's biggest sub-prime mortgage lenders.

Sky News has learnt that divisions of Blackstone and TPG, the US-based private equity groups, are close to securing a takeover of Kensington, which is owned by the Anglo-South African financial services provider Investec.

The sale of Kensington has not yet been finalised and could yet fall apart, but insiders said a deal was likely to be announced this week.

If completed, it will involve the business being taken over by Blackstone's Tactical Opportunities unit and TPG's TSSP special situations and credit platform.

Blackstone are thought to have seen off three other bidders

The two firms are understood to see significant opportunities to grow Kensington's business and are expected to make substantial amounts of capital available for it to do so.

They are said to have lined up a new management team to take the helm once the deal completes.

Investec's £283m takeover of Kensington in the summer of 2007 proved to be an ill-timed foray into the market for sub-prime mortgage lending, coming just as financial markets began to seize up.

Kensington was previously a publicly-listed company whose former chief executives include John Maltby, who is now leading an investment consortium which is buying a stake in 315 Royal Bank of Scotland branches.

Investec, which is the main sponsor of the England cricket team, signalled its intention to sell Kensington in February.

Blackstone and TPG are understood to have seen off competition from at least three other bidders for the business, one of which was said to be Lonestar, a specialist US property investor.

"With the ongoing recovery in mortgage lending and wholesale funding markets we believe that Kensington is now well placed to continue growing and that this growth potential may be better realised under different ownership," Stephen Koseff, chief executive of Investec, said at the start of the auction process.

Analysts say the bank should recoup the majority of its initial outlay, with Kensington's recent performance aided by the strength of the UK housing market.

The auction of Kensington, which is being handled by Fenchurch Advisory, comes amid increasing signs of an overheating housing market in London and the south-east.

Some of the UK's biggest banks have imposed fresh limits on mortgage lending in the capital in recent months.

Blackstone, TPG and Investec declined to comment.

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Nationwide Profit Rockets In Housing Surge

High street lender Nationwide has seen underlying profit more than double in the three months to the end of June.

First quarter profit for the building society reached £263m, up 117% on the same period last year.

Statutory profit was up 141%, to £253m in the quarter.

The mutual said its share of current accounts - against the four big high street banks - rose slightly to 6.4% from 6.2%.

And while deposits increased by £1.5bn to £132bn, gross mortgage lending fell to 9%, to £5.8bn from £6.4bn.

The results come as Bovis Homes said its pre-tax profit for the first six months of the year were up 166%, to £49.4m, on the back of a record number of completions.

The company has focused its construction areas in the south of England in recent years and said the average sale price was around £212,500.

Bovis said it now expects to see a significant increase in 2014 full-year profit, provided stability remained in the market.

Meanwhile the brakes are increasingly being applied to sellers' asking prices, according to a property website.

Rightmove said the fear of increasing loan rates and the new mortgage affordability tests imposed on lenders in late April have squeezed expectations.

It said prices this month have fallen 2.9% month-on-month to an average of £262,401 across England and Wales.

It was the biggest August dip in more than a decade of recording asking price results.

Rightmove director Miles Shipside said: "New seller asking prices are good lead indicators of the current mood of the market.

"And those who have put their property up for sale in the last month are obviously aware that potential buyers are thinner on the ground at this time of year and need to be tempted to act by cheaper prices."

London was the biggest faller, seeing asking prices drop 5.9% to an average of £552,783 compared to July.

The capital's asking prices were still 10.3% higher than they were in the same period last year, it said.

Asking prices in the North saw the only increase month-on-month, up 0.5% to an average of £149,354.

In Wales, prices eased 2% month-on-month, to a typical value of £173,176.

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New Rules To Boost Home-Based Businesses

Entrepreneurs will have more freedom to begin a business from home under new measures to be announced by the Government.

They include legislation which will make it simpler to run a company from a rented property and new guidance on business rates.

There will also be updates to planning guidance to make it clear that planning permission will not normally be required to run a home-based business.

Business minister Matthew Hancock said: "It's this spirit of personal endeavour and self-determination that is driving our economic recovery.

"But home businesses don't just fire up the economic engines and create jobs, they turn dormitory towns into living communities, they keep our streets safer, and by driving down car emissions, cleaner too.

"We'll give people the confidence they need to run a business from a rented home, making sure that the majority of home businesses are exempt from business rates and our aspiring entrepreneurs have the information they need to start up and grow."

Under the measures a new model tenancy agreement will be made available to landlords.

The law will also be changed so landlords can be confident that agreeing to a business within their property will not undermine their tenancy agreement.

Liz Peace, chief executive of the British Property Federation, said it firmly supported the removal of "unnecessary barriers" to setting up at home.

"At least some of the kitchen table businesses of today will expand and become the commercial property space-seekers of tomorrow," she said.

"We therefore have an interest in ensuring that the law and our sector is adapting to modern business practice and supporting UK entrepreneurs at every stage of their business development."

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UK Growth Hits Fastest Annual Pace Since 2007

The annual rate of UK economic growth has been revised upwards to 3.2% - its fastest pace since the end of 2007.

The announcement was made by the Office for National Statistics (ONS) as it confirmed GDP growth of 0.8% in the second quarter of the year.

While that figure represented no change on its original estimate, the ONS said it had measured a stronger performance in the construction sector than previously calculated in its wider revisions.

It confirmed that the service sector - which makes up more than 75% of GDP - remained the main driver of Britain's economy between April and June, expanding by 1%.

Much of this has been attributed to consumer spending despite huge pressure on budgets because of weak wage growth - a situation that had been tipped to ease during 2014 but has worsened again in recent months.

The ONS confirmed on Wednesday that wages shrank at an annual rate of 0.2% in the second quarter while the main measure of inflation rose to 1.9%, meaning the gap between wages and price rises was widening further.

The Bank of England has now made the weak pay issue a core factor in its discussions over the timing of an interest rate rise.

The UK's resilient GDP growth is in sharp contrast to economic fortunes in the euro area.

It was confirmed on Thursday that Germany's GDP was in decline and French growth was stagnating.

Chief UK economist at Citigroup, Michael Saunders, told Sky News he was not overly concerned that the woes being experienced by the country's biggest trading partners would damage the UK's recovery.

He said the suro had been "in economic terms, something of a zombie for a number of years now" and backed calls from France for the European Central Bank (ECB) to provide stimulus.

"The ECB will eventually get around to QE (quantitative easing) - five years too late - I think they're going to do it in the next couple of quarters and that will give some boost but it really is a sad story of multiple policy failures in the euro area," he said.

"Even if it gets a bit better I don't think it will get a lot better in the euro area."

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Lastminute Owner Eyes Sale Of UK Dotcom Icon

By Mark Kleinman, City Editor

Lastminute.com, one of the icons of the original dotcom boom, is being put up for sale nearly a decade after its takeover by an American technology giant.

Sky News has learnt that Sabre Holdings, which is listed in New York, is exploring plans to offload Lastminute.

Sabre has appointed bankers at Houlihan Lokey, an advisory firm, to oversee an auction, and has already begun sounding out potential buyers.

A sale of Lastminute could still be aborted if the terms of a deal are not sufficiently attractive to Sabre, but sources said on Saturday that the US company was prepared to accept a substantial loss on the roughly £600m it paid in 2005.

Prospective buyers could include private equity firms or rival online travel groups such as Expedia.

Sabre has itself listed on the public markets, floating on Nasdaq in April with a valuation of nearly $4bn.

It has four main divisions, with Lastminute operating as a subsidiary of Travelocity, Sabre's group of travel e-commerce businesses.

Lastminute was one of the darlings of the early UK internet industry, floating in 2000 two years after being founded by Brent Hoberman and Martha - now Baroness - Lane Fox.

However, Lastminute's performance has been underwhelming, despite it continuing to spend substantial sums on marketing and advertising.

Its biggest market shares are in the UK and France but it has struggled to make an impact elsewhere in Europe.

Analysts say that Travelocity failed to integrate Lastminute effectively or to build the network of hotels or other partners to which it has access during a period when some rivals have expanded aggressively.

Mr Hoberman has also criticised Sabre's exploitation of the Lastminute brand, calling it "an under-utilized asset" last year.

A Sabre spokeswoman said in a statement: "We are always reviewing options to make our technology company as successful, relevant and innovative as possible.

"If we have news to share, we commit to doing so quickly and transparently."

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