Spain's Bankia Shares Fall Below 1p Value

Shares in nationalised Spanish lender Bankia slumped on Monday after a rescue fund valued the stock at less than one penny each, before a planned injection of fresh capital.

The valuation wiped out investors in the country's fourth-biggest bank and was widely expected as the government tries to draw a line under Spain's biggest-ever bank failure and give Bankia a fresh start.

But the pain for investors, many of them small Spanish investors who bought into the lender's July 2011 initial public offering at 3.75 euros (£3.18) a share, is unlikely to end there.

Bankia is expected to dip far below the new bailout price in coming months as investors focus on the bank's weak state, a struggling Spanish economy and a new government plan to partially merge Bankia with two other troubled lenders.

Under Bankia's recapitalisation, hybrid debt and preference shares are due to be converted into discounted ordinary shares.

Analysts believe thousands of the bond and preference share owners will sell their new ordinary stock at the earliest opportunity to try to recoup some of their heavy losses, pulling the shares down further.

Bankia stock was at 0.155 euro (1.33p) by 2.45pm GMT on Monday, compared to its Friday close of 0.25 euro (2.1p).

Selling pressure was so great that trading in Bankia shares began more than an hour after the market opened.

Analysts expect Bankia shares to progressively adjust to the 1 euro cent valuation before the cash injection due in May, but say it could later fall as low as 0.004 euro.

The bank, formed in 2011 from the merger of seven savings banks, is showing tentative signs of recovery as it prepares to receive an injection of 10.7 billion euros (£8.7bn) in European bailout funds in May.

Spain's government requested 41 billion euros from its European partners to rescue Bankia and other lenders that had amassed bad debt from the country's 2008 property market crash.

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Cyprus Facing 30% Unemployment Amid Crisis

By Tom Parmenter, Sky Correspondent, In Nicosia

Cyprus is facing a recession so deep that 30% of people may find themselves unemployed.

The EU bailout means massive restructuring of the financial system, the inevitable loss of many investors and thousands of people seeing their jobs disappear.

Professor Hari Tsoukas, a business analyst, told Sky News: "Unemployment is likely to at least double from 14% to at least 25% and possibly up to 30%. Not so long ago it was just 5%.

"It is a huge challenge now facing the Cypriot people, we have been resilient before and we will need all that again," he added.

For a week now people have been rationed to how much they can withdraw from cashpoints.

Wages have not been paid, businesses have been unable to pay suppliers and the whole economy has seized up.

Banks have been closed since March 16 but Cyprus' president Nicos Anastasiades has said they will reopen on Thursday.

A woman and child beg for money in Nicosia

However, he added that the island will introduce some limits on transactions to prevent a huge outflow of money.

Politicians have been struggling to come up with a plan that would raise enough funds to qualify for an international bailout.

In a televised address to the country, the president said: "The central bank will implement capital controls on transactions. I want to assure you that this will be a very temporary measure that will gradually be relaxed."

He did not specify what limitations would be imposed on transactions.

He said he had taken "painful decisions to save the country from bankruptcy" and pledged Cyprus "would find its feet again".

It follows a bailout deal which reports suggest could see Bank of Cyprus savers with deposits above 100,000 euros (£85,000) hit with a levy of "around 30%".

In a smart fourth floor apartment Sky News met one Cypriot woman prepared to show us where she has been stashing her money.

Fearful of losing control of her cash by leaving it in the bank she now has a daily routine of hiding it in drawers or cupboards around her bedroom.

She didn't want to be identified but said: "You just want to know your money is safe, this is quite small scale but it is all I can do."

Her flat was burgled last year so she is taking no chances - every time before she leaves home for over an hour she collects together her growing stash of notes and takes it with her stuffed in her handbag.

She hates having to do it but while banks remain closed some people feel they have little option but to take control of their own money.

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UK Sells Off Helicopter Search And Rescue Ops

By Alistair Bunkall, Defence Correspondent

The UK search and rescue helicopter service is being sold off to a US-based company in a deal worth £1.6bn.

The sale ends 70 years of search-and-rescue operations by the RAF and Navy and also spells the end of the use of Sea King helicopters in that type of work.

The Bristow Group, which is based in Texas, will now run the service in Britain from 2015 to 2026.

The Department for Transport said the contract would deliver improved flying times and better coverage of high-risk areas.

Transport Secretary Patrick McLoughlin said: "Our search and rescue helicopter service plays a crucial role, saving lives and providing assistance to people in distress on both land and on sea.

"With 24 years of experience providing search and rescue helicopter services in the UK, the public can have great confidence in Bristow and their ability to deliver a first class service with state-of-the-art helicopters."

Under the new contract, 22 state of the art helicopters will operate from 10 locations around the UK with bases open 24 hours a day.

Ten Sikorsky S92s will be based, two per site, at Stornoway and Sumburgh, and at new bases at Newquay, Caernarfon and Humberside airports

Ten AgustaWestland AW189s will operate from Lee on Solent and a new hangar at Prestwick airport, and new bases which will be established at St Athan, Inverness and Manston airports.

It is understood that the technology they will introduce is so advanced that the US State Department had to give its approval for it to be used in the UK.

Half of the new fleet will be built in Yeovil, Somerset, and the contract will continue to be managed by the Maritime and Coastguard Agency.

The distinct yellow RAF Sea King helicopters and grey and red Navy versions were already due to retire from service in 2016.

Upkeep costs and the cost of extending their life has been deemed too expensive.

The move is also in keeping with a wider re-shaping of the military in the face of budget cuts and the 2014 withdrawal from Afganistan.

But the Sea King has been the work-horse of the skies, both in a combat and peacetime capacity and it will be missed by many.

Few other aircraft have so many memorable moments associated with them but the Sea King will long be remembered for its part in the Falklands conflict and the Fastnet race in 1979 when it helped rescue sailors from ferocious seas.

Bristow already provides transport services in the UK to ferry oil-rig workers to and from North Sea platforms.

The company has had a presence in Europe for more than 50 years and also operates in Australia, West Africa, Russia and Malaysia in addition to North America.

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Phone Giant Vodafone Considers US Withdrawal

Mobile phone giant Vodafone is reported to be mulling its exit from America in one of the largest corporate transactions of all time.

The Newbury-based company has recently been in talks with its US partner, Verizon Communications, over a sale of Vodafone's 45% stake in Verizon Wireless, which is America's largest mobile phone operator.

Options have included a merger of the two telecoms giants and the partial sale of Vodafone's stake but the UK company is now leaning towards making a clean break from America, according to the Sunday Times.

A deal could be struck as soon as this summer and be worth as much as $135bn (£88bn), which compares with AOL's record $164bn takeover of Time Warner in 2001.

Vodafone has a market capitalisation of £90bn, which means the bulk of its value is locked up in a business where it has no day-to-day control.

The company is likely to use the proceeds from any sale on a major European deal or a return of cash to shareholders.

However, chief executive Vittorio Colao is not thought to be in any hurry to quit America and may opt against selling the asset, the newspaper added.

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Fat Chance Of Pay-What-You-Weigh Airfares?

Airlines should make heavier passengers pay more for their plane tickets and lighter ones less, it has been suggested.

The controversial pay-as-you-weigh pricing scheme has been mooted by a Norwegian professor who argues that weight and space should be taken into account by airlines pricing their tickets.

Writing in this month's Journal of Revenue and Pricing Management, Dr Bharat P Bhatta has put forward three proposals.

:: Fare according to actual weight: Charging passengers according to how much they and their belongings weigh, fixing a rate for kilograms per passenger so that a person weighing 60kg (132lbs or nine stone 6lbs) pays half the airfare of a 120kg (264lbs or 18 stone 12lbs) person;

:: Base fare minus or plus an extra charge: This option involves charging a fixed base rate, with an additional charge for heavier passengers to cover the extra costs. Every passenger could have a different fare according to this option;

:: Same fare if the passenger has an average weight, but discounted/extra fare for low/excess weight below/above a certain limit. This option results in three types of fares: high fares, average fares and low fares.

Dr Bhatta, of the Sogn og Fjordane University College in Norway, thinks the third option is most suitable for implementation.

"Charging according to weight and space is a universally accepted principle, not only in transportation, but also in other services," he said.

"As weight and space are far more important in aviation than other modes of transport, airlines should take this into account when pricing their tickets."

Dr Ian Yeoman, editor of the Journal of Revenue and Pricing Management, threw his weight behind the suggestion.

"For airlines, every extra kilogram means more expensive jet fuel must be burned, which leads to CO2 emissions and financial cost," he said.

"As the airline industry is fraught with financial difficulties, marginally profitable and has seen exponential growth in the last decade, maybe they should be looking to introduce scales at the check-in."

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Cyprus Bailout Deal Wins Eurozone Approval

Cyprus has secured a 10bn euro (£8.5bn) bailout, saving the country from a banking system collapse and bankruptcy.

In return for the rescue funds, Cyprus must restructure its banking sector under an EU-IMF plan approved by eurozone ministers earlier today.

The country's second-largest bank, Popular Bank of Cyprus, known as Laiki, will effectively be shut down and split into a "good bank" and a "bad bank".

Deposits below 100,000 euros (£85,509) in Laiki will be safeguarded and transferred to the Bank of Cyprus, the so-called "good bank".

Christine Lagarde and the German finance minister at the Eurogroup

Deposits above 100,000 euros, which under EU law are not insured, will be frozen and will be used to resolve debt. It is not yet clear how severe the losses will be for these depositors.

The move will yield 4.2bn euros (£3.6bn) overall - the bulk of the 5.8bn euros (£4.9bn) Cyprus needed to raise as part of the bailout conditions.

The deal emerged hours before a deadline to avert a collapse of the banking system, which could have forced Cyprus to exit the euro.

It followed fraught negotiations between Cypriot President Nicos Anastasiades and the troika of creditors - the International Monetary Fund, European Commission and European Central Bank.

Banks have been closed this past week

"We've put an end to the uncertainty that has affected Cyprus and the euro area over the past week," said Jeroen Dijsselbloem, who chairs the meetings of the 17-nation eurozone's finance ministers.

"We believe that this will form a lasting, durable and fully financed solution," said Christine Lagarde, chief of the IMF.

After the eurozone's finance ministers' approval, several national parliaments, such as Germany's, must also approve the bailout deal, which might take another few weeks. EU officials said they expect the whole programme to be approved by mid-April.

Cyprus' finance minister Michalis Sarris said: "It's not that we won a battle, but we really have avoided a disastrous exit from the eurozone. A long period of uncertainty and insecurity surrounding the Cyprus economy has ended."

Cyprus' outsized banking sector was crippled by exposure to crisis-hit Greece.

In a vote on Tuesday, the country's 56-seat parliament dismissed a levy on depositors as "bank robbery".

The country's finance minister Michael Sarris then spent three fruitless days in Moscow trying to win help from Russia, whose citizens have billions of euros at stake.

Cypriots were outraged by the original proposal and have been queuing at cash machines ever since bank doors were closed last weekend on the orders of the government.

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Gas Stockpile Drain Prompts Price Rise Fears

Britain has drained its gas reserves so much after weeks of bad weather that fears have been raised of a looming spike in energy prices.

Households have been forced to increase their heating usage as the freezing weather continues, pushing the demand for gas to 20% higher than normal in March.

Gas stocks were reportedly just 10% full at Britain's largest storage facility on Thursday night, compared to 49% this time last year.

Energy prices will soar if Britain is forced to make up the shortfall by importing more liquefied natural gas from elsewhere, an energy expert has warned.

Graphical comparison year-on-year of gas in the UK (graph: Utilyx)

Andrew Horstead of the energy consultancy Utilyx told the Times: "There is immense pressure on the existing infrastructure.

"We are almost maxed out from imports through pipelines. The big concern is that there is very little flexibility left in the system."

He added that Britain would struggle to cope if a technical problem caused an unscheduled North Sea gas field to shut down.

Matt Osborne, risk manager at energy consultancy and brokerage firm Inenco, told Sky News that wholesale prices had spiked about 20% overnight, prompting the industry to respond quickly.

County Durham after the latest batch of snow

On Friday morning gas prices for within-day delivery then jumped more than 50% above Thursday's close following the closure of the pipeline linking Belgium to Britain after a pump failed at Bacton, Norfolk.

Downing Street said Prime Minister David Cameron is "confident" that the UK's gas needs will continue to be met.

A spokesman said:  "The absolute key thing on this is that supplies are not running out.

It was so warm last March people flocked to beaches and parks

"The gas market is how we source our supplies and that market continues to function well.

"The Prime Minister's key concern is that gas supplies continue. It is absolutely clear that supplies are not running out."

Asked if the Prime Minister was confident that this would remain the case, the spokesman replied: "Absolutely confident."

Scrub fires near Newport in Wales last March

Britain is more vulnerable than other countries to gas shortages because of its limited storage capacity, which holds just 15 days' worth of energy supplies.

But a Department of Environment and Climate Change (DECC) spokesperson insisted that "gas supplies are not running out".

The Chancellor's Budget revealed further gas fracking support

The spokesperson said: "Storage levels are low at the moment - as you'd expect towards the end of winter - and the UK gas market is tight.

"But the market is responding as it is designed to do - gas prices are rising and supply is being maintained accordingly.

"Gas storage would never be the sole source of gas meeting our needs, so it is misleading to talk purely about how many days' supply is in storage."

However, the gas fears come as the head of the energy giant SSE warned of the "very real risk" of the lights going out in Britain.

Ian Marchant said the Government was underestimating the problem, as he announced plans to cut back on power generation at five sites because the stations are either uneconomic or coming to the end of their lives.

He said: "It appears the Government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out as a result."

He said the energy watchdog Ofgem had recently expressed real concern about the reduction of the UK's generation capacity margin that would follow expected plant closures in the next few years, predicting a 1-in-12 chance of the lights going out.

Mr Marchant added: "It is unlikely that the majority of the reductions in generation capacity and the delays to new investment we have announced today will have been included in this analysis.

"(This) highlights that the situation is likely to be even more critical than even they have predicted."

The DECC spokesperson added: "We are in close contact with National Grid, who are able to step into the market to source gas and increase incentives on gas suppliers if they think there is a risk of a supply shortfall."

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Thousands Of Jobs Saved As Blockbuster Bought

The troubled DVD and games rental chain Blockbuster has been bought, saving 2,000 jobs and 264 UK stores.

Administrators from accountants Deloitte said restructuring specialists Gordon Brothers Europe had purchased the company for an undisclosed sum.

Blockbuster collapsed in January amid competition from internet firms and the digital streaming of movies and games.

Joint Administrator Lee Manning, said: "Having identified a profitable core portfolio of stores we are pleased to have achieved this sale for creditors.

"Together with the previously announced store sales more than half of the original estate has been secured for ongoing use.

"This transaction provides Blockbuster a future in the UK and we owe a special vote of thanks to all the company's employees, suppliers and customers for helping us rescue the business."

Commenting on the acquisition, Frank Morton, the CEO of Gordon Brothers Europe, said: "We are delighted to announce the acquisition of Blockbuster.

"We acknowledge the industry is in transition; we know that we have a challenge ahead but there is still a market to be served.

"Blockbuster has a strong brand affinity and we believe that with the right mix of new product offering, new technologies, strategic management and marketing, we can bring new life to this high street staple.

"We look forward to working with employees, suppliers, landlords and other stakeholders to make this happen."

Blockbuster had struggled to adapt to the changing market amid rivalry from internet retailers including Netflix, Amazon's LoveFilm and iTunes, which now offers a movie rental service.

The devastating impact of the internet on Britain's high streets had already been laid bare by the demise of camera chain Jessops and electricals group Comet, which also cited competition from online players as a major reason for their decline.

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Cyprus Agrees 20% Tax On Bank Deposits

Politicians in Cyprus have reportedly agreed a new one-off levy on savers in order to secure a European bailout.

The measures, yet to be confirmed by the country's President, include a 20% tax on savers with deposits over 100,000 euros at the country's largest bank, the Bank of Cyprus.

A 4% tax on deposits over 100,000 euros would be levied at other banks, a senior Cypriot official told Reuters.

Cyprus has to raise 5.8bn euros by Monday or face being kicked out of the single currency.

Eurozone finance ministers are due to meet on Sunday evening to see if the numbers Cyprus has agreed with its international lenders add up.

Bank workers shout during a protest outside the presidential palace

Cypriot President Nicos Anastasiades tweeted: "We are undertaking great efforts. I hope we have a solution soon."

The conservative leader, barely a month into the job and wrestling with Cyprus's worst crisis since a 1974 invasion by Turkish forces split the island in two, was due to lead a delegation to Brussels, also on Sunday, to meet heads of the "troika" - the EU, the European Central Bank and International Monetary Fund - in a sign a deal might be near.

Government officials held talks throughout Saturday at the finance ministry with troika lenders. Angry demonstrators outside chanted "resign, resign!"

Its outsized banking sector crippled by exposure to crisis-hit Greece, Cyprus needs to raise the 5.8bn euros in exchange for a 10bn euro EU lifeline to keep the country's economy afloat.

But in a vote on Tuesday, Cyprus's 56-seat parliament rejected a levy on depositors, big and small, as "bank robbery", and the country's finance minister Michael Sarris spent three fruitless days in Moscow trying to win help from Russia, whose citizens have billions of euros at stake in Cypriot banks.

Rebuffed by the Kremlin, Mr Sarris said earlier on Saturday that talks with the troika were centred on a possibly levy of up to 25% on savings over and above 100,000 euros at failing Bank of Cyprus.

However, the situation remains fluid and other options, including a "voluntary haircut" in exchange for equity that would not require parliamentary approval, are said to still be on the table.

Ordinary Cypriots were outraged by the original proposal, and have been besieging cash machines ever since bank doors were closed last weekend on the orders of the government to avert a massive flight of capital.

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Gas Stockpile Drain Prompts Price Rise Fears

Britain has drained its gas reserves so much after weeks of bad weather that fears have been raised of a looming spike in energy prices.

Households have been forced to increase their heating usage as the freezing weather continues, pushing the demand for gas to 20% higher than normal in March.

Gas stocks were reportedly just 10% full at Britain's largest storage facility on Thursday night, compared to 49% this time last year.

Energy prices will soar if Britain is forced to make up the shortfall by importing more liquefied natural gas from elsewhere, an energy expert has warned.

Graphical comparison year-on-year of gas in the UK (graph: Utilyx)

Andrew Horstead of the energy consultancy Utilyx told the Times: "There is immense pressure on the existing infrastructure.

"We are almost maxed out from imports through pipelines. The big concern is that there is very little flexibility left in the system."

He added that Britain would struggle to cope if a technical problem caused an unscheduled North Sea gas field to shut down.

Matt Osborne, risk manager at energy consultancy and brokerage firm Inenco, told Sky News that wholesale prices had spiked about 20% overnight, prompting the industry to respond quickly.

County Durham after the latest batch of snow

On Friday morning gas prices for within-day delivery then jumped more than 50% above Thursday's close following the closure of the pipeline linking Belgium to Britain after a pump failed at Bacton, Norfolk.

Downing Street said Prime Minister David Cameron is "confident" that the UK's gas needs will continue to be met.

A spokesman said:  "The absolute key thing on this is that supplies are not running out.

It was so warm last March people flocked to beaches and parks

"The gas market is how we source our supplies and that market continues to function well.

"The Prime Minister's key concern is that gas supplies continue. It is absolutely clear that supplies are not running out."

Asked if the Prime Minister was confident that this would remain the case, the spokesman replied: "Absolutely confident."

Scrub fires near Newport in Wales last March

Britain is more vulnerable than other countries to gas shortages because of its limited storage capacity, which holds just 15 days' worth of energy supplies.

But a Department of Environment and Climate Change (DECC) spokesperson insisted that "gas supplies are not running out".

The Chancellor's Budget revealed further gas fracking support

The spokesperson said: "Storage levels are low at the moment - as you'd expect towards the end of winter - and the UK gas market is tight.

"But the market is responding as it is designed to do - gas prices are rising and supply is being maintained accordingly.

"Gas storage would never be the sole source of gas meeting our needs, so it is misleading to talk purely about how many days' supply is in storage."

However, the gas fears come as the head of the energy giant SSE warned of the "very real risk" of the lights going out in Britain.

Ian Marchant said the Government was underestimating the problem, as he announced plans to cut back on power generation at five sites because the stations are either uneconomic or coming to the end of their lives.

He said: "It appears the Government is significantly underestimating the scale of the capacity crunch facing the UK in the next three years and there is a very real risk of the lights going out as a result."

He said the energy watchdog Ofgem had recently expressed real concern about the reduction of the UK's generation capacity margin that would follow expected plant closures in the next few years, predicting a 1-in-12 chance of the lights going out.

Mr Marchant added: "It is unlikely that the majority of the reductions in generation capacity and the delays to new investment we have announced today will have been included in this analysis.

"(This) highlights that the situation is likely to be even more critical than even they have predicted."

The DECC spokesperson added: "We are in close contact with National Grid, who are able to step into the market to source gas and increase incentives on gas suppliers if they think there is a risk of a supply shortfall."

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