RBS Chairman: Stephen Hester's Pay 'Modest'

Stephen Hester, the chief executive of Royal Bank of Scotland (RBS) is doing one of the toughest jobs in world business and is being paid a "modest" salary compared to his peers, MPs have been told.

Chairman of the bank, Sir Philip Hampton, said the chief executive was doing the most difficult job in the industry, and his pay was relatively small.

Mr Hester also mounted a robust defence of his performance, insisting he had managed to get the taxpayer "off the hook" for huge liabilities over the past four years.

The comments came as the bosses were questioned by the Parliamentary Commission on Banking Standards at the House of Commons.

Sir Philip told the panel: "I don't think it is hyperbole to say that Stephen is doing one of the most difficult and challenging, demanding jobs in world business ... because RBS was the biggest banking failure in the world and Stephen took it on at an exceptionally difficult time.

"He is also in his four years in charge being paid well below the market rate for a job in world banking."

He said Mr Hester's basic salary is around £1.2m a year, plus a pension contribution of around £400,000.

The CEO is also in line for an annual bonus of up to £2.4m and a long-term bonus of more than £4m - although Sir Philip stressed that the company had not performed well enough to trigger the full sum.

RBS was bailed out in 2008, and the Government now owns 82% of the bank

"These are very large amounts of money, none of which I hasten to add is triggered, so these are theoretical amounts which Stephen has not received anywhere remotely close," he said.

"So he has been doing one of the most challenging jobs and he has been one of the least well-paid.

"These are still very large amounts of money clearly by most standards - but relative to other people doing these jobs his pay has been modest, relatively."

The session came less than a week after the bank was fined £390m by regulators in the UK and US for its part in rigging the Libor inter-bank lending rate.

Around £300m of this penalty will be clawed back from the bonus pool at RBS, which is 82% owned by the taxpayer.

Some 21 staff have left or are going through disciplinary proceedings in the wake of the revelations.

John Hourican, the head of the bank's investment banking arm, who was brought in to rescue the business after it was bailed out in 2008, is to forfeit around £4m in share options awarded to him based on past performance.

However, he will leave the bank with 12 months' pay worth £775,000 as he resigns over its involvement in the Libor-rigging scandal.

In a memo to bank staff obtained by Sky News, he said he bore "some responsibility" for misconduct, despite having no involvement in, or knowledge of, efforts to rig Libor submissions by RBS staff.

Commission chairman Andrew Tyrie said Mr Hourican had "paid a high price" - and asked Mr Hester if he thought there was a case he too should pay with his bonus.

Mr Hester said his bonus should be assessed on a broad range of issues, not just Libor.

"I think that my bonus should be assessed on all of the things I do well and badly," he said.

"And judgement should be reached in the round. Obviously it's not me that makes a judgement - it is the chairman and board.

"If you look at the RBS that we took on four years ago or so, we have done huge things to rescue a situation for the company and for society and for its different stakeholders, which includes hundreds of billions of pounds of risk that the country was exposed to, that it isn't exposed to anymore.

"So I think it is entirely proper for me and the board and the management team to be assessed on the things that we have done and the things we have not done.

"I believe that this nation is off the hook of a lot of bad things, but not yet all the way off the hook.

"There was never any prospect we could have discovered everything immediately, or fixed everything immediately, but we must of course be accountable for the balance of what we discovered, what we fixed, and in what period."

Earlier, Mr Hourican told the cross-party commission: "I do accept responsibility for the behaviour of our staff and therefore I accept responsibility for the failings that we have found.

"It is important that we do not talk about accepting responsibility and then not do so in our actions. That is why I have resigned."

Head of RBS Group's markets division, Peter Nielsen, said he also contemplated quitting.

"Of course I contemplated resigning," he said. "Indeed John and I talked about it. We talked about myself going instead of him."

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Heathrow 'Ticket Price Rise' Under £3bn Plans

Officials at Heathrow Airport have announced £3bn of investment in a move that is likely to leave passengers paying higher prices.

The proposals include the opening of the new Terminal 2 next year, improved check-in and baggage facilities, and more customer service training for staff.

The airport wants regulators to approve a five-year plan which will see the fees it charges airlines to use the airport rise over the period 2014 to 2019.

If approved, the charges would increase from the equivalent of £19.33 per passenger for 2012/13 to as much as £27.30 in 2018/19.

Heathrow accounts for 78% of all long-haul flights from the UK.

The charges, which need to be approved by the Civil Aviation Authority (CAA), will help pay for the investment.

Heathrow chief executive Colin Matthews said: "Heathrow is the UK's only hub airport and a strategically important national infrastructure asset. Heathrow faces stiff competition from other European hubs and we must continue to improve the service we offer passengers and airlines.

"We have invested billions of pounds in new facilities such as Terminal 5 in recent years and passengers say they have noticed the difference.

"Our plan for a further £3bn of private-sector investment will further improve the airport for passengers.The plan represents good value for money for airlines and passengers and comes at no cost to taxpayers."

British Airways is concerned about the price rises

He said the airport envisaged passenger numbers increasing from just under 70 million now to around 72.6 million by 2018/19.

Asked about the possibility of a third runway, Mr Matthews said that with all that would be need to be done in terms of political decisions and planning there was unlikely to be "any shovel going into the ground realistically for the period we are talking about (2014 to 2019)".

He said that the proportion of Heathrow passengers rating their journey as very good or excellent had increased from 48% in 2007 to 72% today.

While airlines have supported plans for better customer service they have concerns about the rise in charges.

British Airways said: "Heathrow Airport's charges have already tripled over the past 11 years. The charges must be reduced significantly over the coming years, especially when the airport is cutting investment by around 25% from next year onwards.

"We hope the regulator (the CAA) will give a fair ruling in the months ahead, which doesn't penalise customers and airlines."

Virgin Atlantic chief operating officer Steve Griffiths said: "We are totally committed to improving the passenger experience at Heathrow.

"However, we believe this can be done without a repeat of the incredibly steep price rises we have seen in airport charges in the last few years.

"Prices at Heathrow are triple the level they were 10 years ago. Clearly this is a concern for all passengers travelling through Heathrow, and all airlines operating there."

Heathrow's flight punctuality - the number of planes taking off or landing within 15 minutes of schedule - was only around 67% in 2007.

It has now gone up to 80% and the airport wants this figure to increase to 90% by the end of the decade.

Its chiefs said that while 4% of bags went missing in 2007, this figure is now down to 1.5%.

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Barclays Cuts 3,700 Jobs Despite Profit Hike

Barclays announces 3,700 job cuts amid plans to cut £1.7bn in annual costs and improve standards.

Of these job losses, 1,800 will be in its corporate and investment bank and 1,900 will be in European retail and business banking.

Sky News revealed on Monday that thousands of jobs would go outside its investment bank as part of a streamlining programme overseen by the company's new chief executive Antony Jenkins.

It comes as the bank - Britain's second largest - said adjusted pre-tax profit was £7.048bn over the 12 months to the end of December - up 26% on 2011.

Its staff bonus pool for 2012 was down 16%, with staff at its investment bank getting an average of £54,100 and other employees receiving £13,300.

Mr Jenkins, who become Barclay's chief executive five months ago, is due to announce the outcome of a strategic review this morning,

As part of the overhaul, the group's total cost base will be reduced by £1.7bn to £16.8bn in 2015.

The bank also confirmed that its controversial tax avoidance unit would close, as revealed by Sky's City Editor last week.

"We intend to change what Barclays does and how we do it and have set out clear commitments against which our progress can be measured," Mr Jenkins said in a statement.

"Our goal is to make Barclays the 'Go-To' bank for all our stakeholders.

"The plan that we set out today is critical to delivering that goal."

In total, Barclays' employs around 140,000 people across the world.

More follows...

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Scotland: Independence Case Under Scrutiny

By James Matthews, Scotland Correspondent

The UK Government will today step up its campaign against Scottish independence by questioning the legal status of a separate Scotland.

It insists that while the remainder of the UK would inherit more than 14,000 international treaties, an independent Scotland would not.

In what it calls an "unusual step", Whitehall has published its legal advice on the international law aspects of Scottish independence. 

It claims that international precedent dictates that an independent Scotland would become a "new state" and what's left of the UK would be considered a "continuing state".

According to its legal opinion, only the remainder of the UK would automatically continue to exercise the same rights, obligations and powers under international law as the UK currently does, and would not have to renegotiate existing treaties of re-apply for membership of international organisations.

Currently, the UK is signed up to several thousand treaties and has membership of international organisations such as the United Nations, European Union, Nato, the International Monetary Fund and the World Trade Organisation.

The UK Government's legal opinion was written by Professor Alan Boyle, of Edinburgh University, and Professor James Crawford, of Cambridge University.

Alistair Darling believes Scottish independence will weaken the economy

Alistair Darling MP, former chancellor and leader of the pro-Union 'Better Together' campaign, told Sky News: "This is a formidable legal opinion from two internationally respected lawyers. Their opinions have to be taken very seriously and they just can't just be dismissed by the nationalists.

"Again, it begs the question where is the advantage to Scotland of breaking its links with the rest of the UK, losing influence as well as all the other economic advantages that come from being together?

"It's high time the nationalists told us the basis of their increasingly discredited claims."

Scottish Secretary Michael Moore will launch what Downing Street is describing as a series of 'Scotland Analysis Papers' in a speech in Edinburgh.

The event has drawn criticism from the SNP-controlled Scottish Government.

Scotland's Deputy First Minister Nicola Sturgeon told Sky News: "This is an act of breathtaking arrogance by this Tory-led UK Government, which completely shatters their claim that Scotland is an equal partner within the existing UK - it will only serve to boost support for an independent Scotland.

"The fact of the matter is that this is an opinion - no more, no less. Other constitutional and legal experts take a completely different view. For example, Professor David Scheffer, constitutional law expert and former US ambassador, said only recently that 'the break up would be viewed as two successor states of equal legitimacy - not size, wealth or power, but legitimacy' ... this means a continuation for both states."

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Minister's Fear Of Horsemeat Scandal Scale

How Horsemeat Scandal Unfolded

Updated: 9:29pm UK, Friday 08 February 2013

The horsemeat scandal has been unfolding for weeks and products have been flying off the shelves, although not in a good way. Where did it all begin?

January 16

The Food Safety Authority of Ireland says beefburgers with traces of equine DNA, including one product classed as 29% horse, are being supplied to supermarkets by Silvercrest Foods in Ireland and Dalepak Hambleton in Yorkshire, subsidiaries of the ABP Food Group.

Ten million suspect burgers are taken off the shelves, including by retailers Tesco, Lidl, Aldi, Iceland and Dunnes Stores.

A third company, Liffey meats, based in Co Cavan, Ireland, was also found to be supplying products to supermarkets with traces of horse DNA.

January 17

The ABP Food Group suspends work at its Silvercrest Foods plant in Co Monaghan, Ireland, until further notice.

Sainsbury's, Asda and the Co-op later withdrew some frozen products as a precaution but had not been found to be selling contaminated food.

January 23

Burger King, which is supplied burgers by ABP Food Group, switches to another supplier as a precautionary measure.

January 25

Waitrose removes a range of frozen burgers made by Dalepak but says its burgers have been tested and are 100% beef.

The Food Standards Agency said tests at a Dalepak plant in North Yorkshire had found no traces of meat contaminated with horse or pork DNA.

However, Aldi found traces of pig and horsemeat in samples taken from three lines of Dalepak burgers.

It withdrew Specially Selected Aberdeen Angus Quarter Pounder, Oakhurst Beef Quarter Pounders and Frozen Oakhurst Beefburgers from sale.

February 4

Production at a second meat supplier, Rangeland Foods in Co Monaghan, is suspended after 75% equine DNA is found in raw ingredients, The Department of Agriculture confirm.

February 5

Frozen meat at Freeza Meats company in Newry, Northern Ireland, is found to contain 80% horse meat, The Food Standards Agency Northern Ireland said. It is potentially linked to the Silvercrest factory in the Republic of Ireland.

Asda withdraws products supplied by Freeza Meats.

February 6

Tesco and Aldi take down frozen spaghetti and lasagne meals produced by French food supplier Comigel following concerns about its Findus beef lasagne.

The FSA reveals a second case of "gross contamination" after some Findus UK beef lasagnes were found to contain up to 100% horse meat. The products were made by French food supplier Comigel.

February 8

Aldi withdraws its Today's Special Frozen Beef Lasagne and Today's Special Frozen Spaghetti Bolognese after tests showed the products contained between 30% and 100% horsemeat.

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Business Optimism At All-Time Low - Survey

An index which predicts British business optimism has fallen to its lowest level since the report began 21 years ago, prompting fears of a 'triple-dip' recession occurring.

BDO's Optimism Index, which predicts business performance two quarters ahead, fell to 88.9 in January from a reading of 90.3 in December.

It is the eighth consecutive month that the Index has remained below 95.0, the mark which indicates growth.

This suggests the economy will struggle to grow in the first quarter of 2013, following the recently announced negative growth of Q4 2012.

As a result, there is an increased risk of a triple-dip recession taking hold.

Meanwhile the report's Output Index, which predicts short-run turnover expectations, also supports this, falling from 93.1 to 92.3 last month, further away from the 95.0 mark indicating growth.

BDO LLP partner Peter Hemington said: "In spite of a strengthening labour market, business confidence continues to weaken, and improved hiring intentions are not translating into growth plans.

"It seems the damaging effects on businesses of five years' zigzagging economic growth has left them wary of making concrete plans for expansion and resigned to the 'new normal' of economic stagnation."

However its complementary Employment Index rose to 95.1 in January from 93.0 in December, taking the Index above the 95.0 mark that indicates employment growth.

Last Friday the Recruitment and Employment Confederation, along with KPMG, released a report revealing a salary spike trend based on employers struggling to find enough qualified staff.

The BDO index has also showed hopeful signs amongst the UK's manufacturing sector of possible recovery.

But the report's author warned that coalition policy needs to drive greater economic expansion.

Mr Hemington said: "To end this cycle, it is imperative that the Government implements plans to expedite growth.

"Without growth incentives, we will continue to see UK businesses reluctant to invest and expand, which poses a grave threat to the UK's economic recovery."

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Exclusive: Barclays To Shut Tax Advice Unit

By Mark Kleinman, City Editor

Barclays is to close its controversial tax avoidance unit as part of a drive to distance the bank from the perceptions of a "casino" banking culture which flourished under Bob Diamond, its former chief executive.

Sky News can reveal that Antony Jenkins, Barclays' new boss, will announce on Tuesday that it will wind down and close the division which was responsible for generating hundreds of millions of pounds in profit for the bank.

He will say that while legal, the tax avoidance schemes devised by its structured capital markets business were toxic for Barclays' reputation.

Mr Jenkins will commit to avoiding transactions whose sole purpose is to access tax benefits, according to a senior source inside Barclays' investment bank who has been briefed on his plans.

I have also learnt that the Barclays boss will also unveil a set of binding tax principles that will dictate the mandates in which the bank's executives are permitted to be involved.

During his appearance this week in front of the Parliamentary Commission on Banking Standards, Mr Jenkins said that the structured capital markets operation would be "changed" but he did not say it would be closed altogether.

Lord Lawson, the former Chancellor and a member of the Commission, accused Barclays of engaging in "industrial scale tax avoidance".

Mr Jenkins' announcement will be made amid a robust debate about corporate tax avoidance and at a difficult time for the reputation of Barclays and the wider banking industry, mired as it is in mis-selling scandals and a multi-agency investigation into the manipulation of the benchmark interest rate, Libor.

It is unclear what impact the tax unit's closure will have on Barclays' profitability, but its lucrative nature has not deterred Mr Jenkins' decision.

The news will be disclosed alongside Mr Jenkins' broader vision for Barclays as it emerges from the most significant crisis in its recent history.

It is unclear whether executives who work in the tax advisory unit will be reassigned elsewhere within Barclays, or whether some will leave.

Mr Jenkins is cutting a substantial number of jobs in its investment bank, further details of which will be outlined on Tuesday.

I understand that among the other measures that Mr Jenkins will announce as part of his effort to rebuild Barclays' reputation, he will say that Barclays will reduce the proportion of revenue generated by its investment bank that is paid out to staff.

Historically, Barclays has been among the most generous payers in the City, paying out 45% or more of revenues to employees in salary, bonuses and benefits.

After it bought the US operations of Lehman Brothers in 2008, Mr Diamond oversaw an aggressive push to help the bank compete with the likes of Goldman Sachs and JP Morgan on Wall Street.

For 2012, Mr Jenkins is expected to say that the proportion of revenue paid to staff in Barclays' investment bank stood at approximately 38%, and he will pledge to reduce that in the coming years to a level much closer to 30%.

The new Barclays chief will also signal that he plans to re-balance the ratio between dividend and bonus payments following an outcry from shareholders last year.

The bank paid three times as much to employees as it did to investors in 2011, and although he will not make a specific pledge about how far that will change, he is expected to reassure shareholders that he acknowledges their concerns about the issue.

Mr Jenkins has already waived his own bonus for 2012, conceding that the bank's £290m Libor-rigging fine and multi-billion-pound bill for mis-selling payment protection insurance and interest rate hedging products made the decision inevitable.

"Barclays is fundamentally changing," one insider close to Mr Jenkins said on Saturday.

"Next week is about showing that he is reshaping the bank in a radical way."

Barclays will be the first of the big UK banks to announce annual results for 2012 next week.

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'Scotland Is Better Off In Britain' Says Cameron

David Cameron has launched a defence of the UK as his Government prepares to put the "facts" about Scottish independence to the public.

While people in Scotland will make the decision in autumn next year, the implications will have impacts across England, Wales and Northern Ireland, the Prime Minister said.

"Britain is admired around the world as a source of prosperity, power and security," he said.

"Those glorious Olympics last summer reminded us just what we were capable of when we pull together: Scottish, English, Welsh, Northern Irish, all in the same boat - sometimes literally.

"If you told many people watching those Olympics around the world that we were going to erect barriers between our people, they'd probably be baffled. Put simply: Britain works. Britain works well. Why break it?"

Addressing matters of the "heart and head", Mr Cameron spoke out one day before the British Government publishes the first in a series of analysis papers about Scotland's role in the union.

It comes one week after the Scottish Government published a "road map" from the referendum next year to full statehood in early 2016.

The Scottish Government has drawn up a 'road map' to independence

Mr Cameron said Britain has built up "world-renowned" institutions such as the NHS, and "fought for freedom" in two world wars, leaving "unbreakable bonds".

He said: "But the case for the UK is about head as well as heart - our future as well as our past.

"I have no time for those who say there is no way Scotland could go it alone. I know first-hand the contribution Scotland and Scots make to Britain's success - so for me there's no question about whether Scotland could be an independent nation.

"The real question is whether it should - whether Scotland is stronger, safer, richer and fairer within our United Kingdom or outside it. And here, I believe, the answer is clear."

He added: "This big question is for Scotland to decide. But the answer matters to all of our United Kingdom. Scotland is better off in Britain. We're all better off together and poorer apart."

Scotland has its own government and parliament in Edinburgh as part of the UK, allowing decisions to be taken that affect daily lives.

Devolved powers include health and education, while Scotland has maintained an independent legal system.

In the "road-map" publication last week, it was suggested that negotiations between Scottish ministers and the UK Government, European Union and international organisations could be concluded by March 2016, assuming a Yes vote in autumn 2014.

Nicola Sturgeon has accused PM of launching an 'entirely negative attack'

Mr Cameron criticised the Scottish National Party (SNP) for discussing the final transition to independence before all the facts have been aired.

But Scotland's Deputy First Minister Nicola Sturgeon defended the move, saying: "The Electoral Commission has called on both sides of the independence debate to provide more information to the people of Scotland and to work together to discuss what will happen in the wake of the referendum.

"We have agreed with the Electoral Commission and published information about the transition to independence following a Yes vote.

"The Prime Minister's remarks suggest he is ignoring the Electoral Commission's advice - despite the previous calls of the Westminster government for the Scottish Government to follow their advice.

"And instead of spelling out a positive case, David Cameron is simply continuing with an entirely negative attack."

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RBS Boss Hester Paid Bonus Despite Fine

The boss of the taxpayer-funded Royal Bank of Scotland will be paid a bonus of £780,000 just weeks after his bank was fined £391m for rate-rigging.

Chief executive Stephen Hester will be given the bonus in shares next month as part of a reward scheme for his performance in 2010.

The payout will undoubtedly anger critics of such schemes across the City, especially given its timing so soon after the Libor scandal rocked RBS.

Mr Hester will be handed the shares next month, and will be able to cash them 12 months later. The exact value will depend on the share price when he cashes them in.

Stephen Hester is to get the payout next month

Mr Hester said last week he would stay to "finish the job" at the bank despite damning evidence from US and UK authorities over its role in the Libor scandal, dating back to 2006 and continuing through to late 2010 - when investigations had already begun.

RBS, which is 81% owned by the Government, will recoup around £300m from its staff bonus pool and clawing back previous awards to pay for the fines.

RBS said 21 staff were involved in attempting to manipulate interbank lending rates - specifically Japanese Yen and Swiss Franc Libor submissions - from 2006 to as recently as November 2010.

Mr Hester's payout next month is the second tranche of two-part reward scheme that was announced in 2011.

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HMV's Boss Made Redundant: Sky Sources

HMV: The Stores To Close

Updated: 10:42am UK, Thursday 07 February 2013

The 66 stores identified for closure are:

Ashton-under-Lyne, Ballymena, Barnsley, Bayswater, Belfast Boucher Road, Belfast Forestside, Bexleyheath, Birkenhead, Birmingham Fort, Blackburn, Boston, Bournemouth Castlepoint, Bracknell, Burton-upon-Trent, Camberley, Chesterfield, Coleraine, Craigavon, Croydon Centrale, Derry, Dumfries, Durham, Edinburgh Fort, Edinburgh Gyle Centre, Edinburgh Ocean, Edinburgh Princes Street, Edinburgh St James, Falkirk, Fulham, Glasgow – Fort, Glasgow – Silverburn, Glasgow Braehead, Huddersfield, Kirkcaldy, Leamington Spa, Leeds White Rose, Lisburn, Loughborough, Luton, Manchester 90, Moorgate, Newry, Newtonabbey, Orpington, Rochdale, Scunthorpe, South Shields, Speke Park, St Albans, St Helens, Stockton-on-Tees, Tamworth, Teesside, Telford, Trocadero, Wakefield, Walsall, Walton-on-Thames, Wandsworth, Warrington, Watford, Wellingborough, Wigan, Wood Green, Workington, Wrexham.

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