Water Bills: Minister Urges Firms To Rethink

The Environment Secretary has urged water companies to "look closely" at whether price increases are necessary and urged them to introduce special tariffs for hard-pressed households.

In a letter to suppliers, Owen Paterson MP said they should recognise the financial strain that people were under.

The intervention came with Ofwat expected later this week to reject an application from Thames Water to increase bills by £29 in 2014-2015.

The regulator has questioned the profits being made by firms, and suggested its next Price Review could ease the upward pressure on bills by up to £750m after 2015.

Owen Paterson has urged water companies to reconsider price hikes

Mr Paterson said: "We know that household budgets are under pressure, and keeping water bills affordable is a crucial way we can help hardworking people.

"That is why we are pressing hard to make sure customers get a fair deal, by encouraging water companies to look closely at any price increases, introduce social tariffs for vulnerable customers and crack down on bad debt."

Water bills have risen by more than 60% in the last decade and the average household bill is now £388.

Since 2009, average increases in water and sewerage bills have been in line with inflation, but this has still outstripped increases in household income.

Water companies have blamed the price increases on the costs of environmental improvements including replacing ageing Victoria water pipes.

It comes after the cost of living has become increasingly important on the political agenda after Labour leader Ed Miliband pledged to freeze energy prices if his party wins the 2015 General Election.

Mr Miliband will accuse the coalition Government of "shrugging their shoulders" about low wages and rising prices this week and will challenge Conservative and Lib Dem MPs to back his policy of freezing energy bills in a Commons vote on Wednesday.

During a speech at Battersea Power Station, he will say: "The cost of living crisis isn't just an issue for the lowest paid, it affects the squeezed middle just as much.

"This is not just an issue facing Britain. It is the issue facing Britain. It is about who our country is run for."

Prime Minister David Cameron last week said he wanted to "roll back" environmental taxes that bump up energy bills, and promised more details in Chancellor George Osborne's Autumn Statement on December 4.

:: Read the full letter here

14.47 | 0 komentar | Read More

Wonga Chief Defends Company Practices

The chief operating officer of payday loan company Wonga has defended its practices as it released a film telling the stories of 12 of its customers.

Niall Wass told Sky News that Wonga decided to make 12 Portraits to dispel the "negative" image of the company, as MPs prepare to grill three payday loan companies as part of a crackdown on the short-term lending sector.

The film was made by an independent director who picked 12 customers from the company database and followed their decision to take a loan from Wonga.

He said: "We felt the need to release it because we felt that the voice of the customer, really the silent majority of people using our service, was not being heard.

Wonga will appear with two other lenders in front of MPs later on Tuesday

"Generally you hear a lot of criticism about our service out in the media and actually the super positive stories that we see every day from our customer feedback are not being heard, so we wanted to redress that balance and allow their voice to come out.

"We didn't think it was fair the characterisation of some of our customers, so we want people to reconsider, judge for themselves have a look at our site have a look at those videos and see what you think."

Representatives from Wonga, QuickQuid and Mr Lender - three of the largest payday lending firms - will appear before the Business, Innovation and Skills Select Committee on Tuesday.

MPs are expected to follow up on a damning report by the Office of Fair Trading (OFT) that found "deep-rooted" problems in the way payday loans attract and treat customers.

Lenders have come under intense scrutiny from the Competition Commission and the Financial Conduct Authority (FCA) since the report was published in September.

New curbs proposed by the FCA in October will force lenders to place "risk warnings" on promotions and advertising, urging customers to "think" before taking out a payday loan.

Representatives from Which? and the Citizens Advice Bureau will also address the committee.

14.47 | 0 komentar | Read More

M&S: Ninth Quarterly Clothing Sales Decline

Marks & Spencer insists it is seeing early signs of improvement in its crucial Womenswear collection after lower first half sales of general merchandise.

Like-for-like clothing and homeware sales fell 1.5% during the first six months of its financial year, 1.3% during its latest July to September quarter.

Profits were 8.9% lower at £261.1m during the six months to the end of September.

Chief executive Marc Bolland has brought in fresh blood to boost womenswear and while the new Autumn/Winter collection won critical acclaim, its popularity among shoppers was a major test of Mr Bolland's turnaround plan.

Mr Bolland said: "In September we launched our first new collection with new advertising and improved store formats.

"Although only in store for three weeks of the half year, our Autumn/Winter collection has been well received by customers, and we have seen some early signs of improvement."

More follows...

14.47 | 0 komentar | Read More

Twitter Could Float On Stock Market This Week

Microblogging site Twitter could launch its flotation on the New York Stock Exchange as early as this week with analysts expecting high demand for shares.

In the most anticipated stock market debut since Facebook, the firm may announce its initial public offering (IPO) price on Wednesday with trading the following day.

No official date has been set but Twitter appears to be on a fast track for its flotation, according to reports.

The company will trade under the "TWTR" symbol and will not follow the path of a large number of  technology companies by trading on the Nasdaq.

Twitter will seek to raise up to $1.6bn - one tenth the value of the Facebook IPO - by offering 70 million shares in a price range of $17 to $20 each.

That is a relatively small chunk of Twitter's capital, and implies a market value between $9.3bn and $11.1bn - a conservative figure compared with some of the private market trades in Twitter so far.

The firm appears to have learned a lesson from Facebook's problematic IPO in May 2012, that was marked by trading glitches, accusations about secret information and a plunge in the share value for months afterwards.

Last month, Twitter had "test run" of its flotation to try to avoid a similar flop.

Lou Kerner, founder of the Social Internet Fund, said: "The Facebook situation last year was a perfect storm of an overheated private market, a fully priced offering, a massive amount of shares brought to market, all compounded by an historical technical glitch.

"That confluence of events is not likely to occur again."

The firm's co-founder Jack Dorsey

Analysts say Twitter, unlike Facebook, will not flood the market, and that with demand exceeding supply the price will rise.

The early Twitter investors may not get maximum value right away, but could benefit over time from a rise in the share price.

There is considerable excitement about the IPO because Twitter is "a unique product that no one can replicate," said Michael Pachter, head of equity research at Wedbush Securities.

Mr Pachter and his colleagues said: "We believe that the market is likely to generate appetite for more than $1bn in stock.

"The simple rules of supply and demand suggest that by limiting the supply of shares offered to the public in its IPO, Twitter will be unable to satisfy demand."

Twitter has some 232 million active users around the world, but has lost money steadily since 2010, according to IPO documents. The losses amounted to $133m on $422m in revenues in the first nine months of the year.

Twitter makes most of its money from advertising, chiefly in the form of "promoted tweets".

Meanwhile, the story goes that Jack Dorsey proposed the idea of Twitter to fellow co-founders at a playground in San Francisco.

But journalist Nick Bilton, author of "Hatching Twitter: A True Story of Money, Power, Friendship and Betrayal," said the history was not quite that simple.

Dorsey was a key member of Twitter's founders, but it was a collective effort, the New York Times journalist has argued.

14.47 | 0 komentar | Read More

Founders Eye £250m Jackpot From Tilda Sale

By Mark Kleinman, City Editor

A family which fled Uganda after being expelled by the dictator Idi Amin is eyeing a £250m jackpot from the potential sale of Tilda Rice, one of the UK's most prominent food brands.

Sky News understands that members of the Thakrar family which controls Tilda are considering a sale of part of all of the company more than four decades after they arrived in Britain.

Tilda, which is stocked by all of the major supermarket chains and has a huge share of the retail trade in packaged rice, has appointed investment bankers at Rothschild to oversee a review of options for the family's shareholding, sources close to the situation said.

An outright sale is thought to be on the agenda, with analysts estimating that the company could be worth in the region of £250m.

A sale at that price would cap a remarkable success story for the Thakrars, who arrived in north London in the early 1970s cleaning and packing rice and pulses after their expulsion from Uganda by Idi Amin's regime.

They focused the company initially on targeting sales within the UK's fast-growing community of immigrants from India and Bangladesh but quickly realised the much broader potential demand.

Now employing 200 people in the UK, Tilda has grown so ambitiously that six years ago it began exporting its rice products to India, one of the world's most voracious consumers of the food.

The Thakrars identified an opportunity to build their business in India amid changing consumption and buying habits in the world's second most populous nation.

Tilda is expected to make earnings before interest, tax, depreciation and amortisation of roughly £25m this year, with food companies often trading at multiples of about ten times their annual profits.

"The group's main objective is for growth in sales and profitability," the company's parent, Braunstone Properties, said in its most recent accounts filed at Companies House.

It added: "This will be achieved by building on the success of the existing brands in the EU and overseas markets, and by continuous improvements in operational efficiency."

A Tilda spokesman declined to comment on the appointment of Rothschild or on the shareholders' plans.

14.47 | 0 komentar | Read More

Co-op Bank Set For Stock Market Flotation

The Co-op Group has announced a plan to float its struggling banking arm on the stock market next year.

The decision comes amid a restructure of the Co-op Bank, which will see the mutual inject £462m into the lender.

The parent group will keep 30% of the bank ahead of the planned flotation.

City Editor Mark Kleinman, who revealed on Saturday that the bank would slash more than 1,000 jobs, said the flotation plan still requires approval.

The Co-op Bank, which was founded in 1872, made a £782m loss in the first half of 2013, and has 4.7 million customers.

More follows...

14.47 | 0 komentar | Read More

Co-Op: US Hedge Funds Reassure Watchdog

By Mark Kleinman, City Editor

A group of American hedge funds is trying to reassure the Bank of England about their role in the restructuring of the Co-operative's troubled banking arm ahead of a formal deal to be announced on Monday.

Sky News has learnt that the LT2 Group, a coalition of funds which has forced Britain's most important mutual to cede majority ownership of its troubled lender, has held talks with regulators to reassure them that they do not intend to cross a crucial bank ownership threshold.

Under Prudential Regulation Authority (PRA) rules, any party owning more than 10% of the shares in a regulated bank must receive approval from the banking watchdog.

The stipulation is designed to prevent undue influence being exercised over important financial institutions by unregulated entities.

The rule also applies to a group of investors acting in concert, which hedge funds including Aurelius and Silver Point have been doing as they sought to win a better restructuring deal for bondholders from the Co-op Group.

Last week, it emerged that the bondholders would gain control of 70% of the Co-op Bank's shares as part of a debt-for-equity swap, leaving the Co-op Group still as the largest individual shareholder, although holding just a 30% stake.

Advisers to Aurelius, Silver Point and other bondholders have informed the PRA that none of them plans to individually hold a stake of 10% in the Co-op Bank, and that they should not be deemed to be acting collectively despite their months-long campaign to restructure the bank.

People close to the situation said on Friday the PRA was expected to be sympathetic to the hedge funds' argument, but that the issue was the subject of strict legal tests and would be closely monitored.

The funds are anxious to avoid having to be approved by the PRA because of the length of time the process can take.

The restructuring of the Co-op Bank will involve listing its shares on the London Stock Exchange next year, as it seeks to raise £1.5bn to fill a capital hole in its balance sheet.

Next Monday's financial restructuring is expected to be accompanied by the publication of a revised business plan for the Co-op Bank, which will entail significant cost cuts and job losses.

The news that the Co-op Bank would no longer be majority-owned by a mutual has sparked fury among many customers, prompting the bondholder group to acknowledge the lender's ethos.

"The Co-Operative Bank is unique for its ethics, mission and heritage which are an essential component of the Bank's differentiated approach," LT2 said in a statement last week.

"It is important to us that the Bank will maintain its unique characteristics and ethos.

"The Co-operative Group Ltd. will remain the Bank's largest shareholder by far and the Bank will benefit by this connection to the Co-operative movement."

Spokesmen for LT2 and the Co-op declined to comment.

14.47 | 0 komentar | Read More

Water Bills: Crackdown On Costs Expected

Water bills may be "rolled back" after the Government vowed to get tough on the rising cost of living.

David Cameron's spokesman indicated that an announcement on water bills would be made next week.

The spokesman said the Department for Environment, Food and Rural Affairs (Defra) would be making the announcement.

He said: "There will be some action next week from Defra with the intention of looking at water bills.

David Cameron says he wants to see household costs cut

"The Prime Minister takes household bills across the piece seriously and wants energy prices to be rolled back and wants various things done, whether it's council tax being frozen, the flex on rail fares being brought down, MoT costs being frozen, these sorts of measures to protect household bills."

He added: "The Prime Minister wants to see household costs across the piece being reduced as low as possible. The intention is to try to reduce the burdens on hard-pressed families."

Mr Cameron "wants regulators to look at the industry they regulate and make sure that they are robust and delivering what they need to deliver for consumers", the spokesman added.

Concerns have been raised that consumers are being ripped off

The move comes after Labour leader Ed Miliband said the market needed to be scrutinised to ensure it was working for consumers.

The soaring cost of living has rocketed up the political agenda since Mr Miliband's pledge to freeze energy prices if his party wins the 2015 General Election.

Mr Cameron, seeking to win back the political initiative on energy policy from Labour, said last week he wanted to "roll back" environmental taxes that bump up energy bills, promising more details in Chancellor George Osborne's Autumn Statement on December 4.

Speaking on Friday at an event for regional newspaper journalists, Mr Miliband said: "I think we should be looking at all markets to make sure they are working properly - and that includes the water industry."

The Western Morning News quoted the Labour leader as saying: "Some people will say this is an anti-business agenda. I think it is a pro-business agenda that you have got to reform markets that are not working properly.

"I think the water industry is something that should be scrutinised to make sure it is working properly, and make sure it is working properly for the benefit of consumers, because I know concerns have been raised.

"I'm proud Labour is championing this agenda and I think it is consistent with believing what a market economy can do, and water is part of that."

Labour's environment secretary Maria Eagle said the party would look to amend existing draft legislation, review the need for tougher regulation, and push for new ways to help reduce bills for low-income households.

MPs are set to consider the reform and infrastructure of the water industry on Tuesday next week after Tory Robert Buckland secured a backbench debate.

14.47 | 0 komentar | Read More

Co-op To Axe More Than 1,000 Banking Jobs

By Mark Kleinman, City Editor

The Co-operative Group is to axe more than 1,000 jobs at its troubled banking arm as part of a complete overhaul of its business and finances.

Sky News understands that the job cuts, which could be detailed as soon as Monday, will account for well over 10% of the Co-operative Bank's workforce.

The redundancies will underline the human toll of the lender's mismanagement in recent years as it finalises a plan to fill a £1.5bn hole in its balance sheet.

As expected, the deal, which will have the approval of the Bank of England, will involve Britain's biggest mutually-owned organisation relinquishing ownership of the Co-op Bank.

Insiders said a decision had yet to be taken about whether the scale of the jobs cull would be made public on Monday by Euan Sutherland, the Co-op Group chief executive.

"It's unlikely he'll want to go public with it at this stage," said one.

The final number was still being decided this weekend but sources said that well over 1,000 of the roughly 9,000 people who work for the mutual's banking arm were expected to lose their jobs.

The axe will fall principally on those working in the Co-op Bank's corporate lending business, with a revised strategy focused on retail and small business customers.

Senior managers, led by Niall Booker, the Bank's chief executive, had also been examining a relaunch of Smile, its internet brand, one insider said.

Retail bondholders are likely to receive a better deal than one presented as a fait accompli by Mr Sutherland until last week.

People close to the deal said that ordinary investors would probably be handed a combination of bonds and a new instrument guaranteeing income.

The biggest institutional bondholders - two US hedge funds - fought to overturn the original deal and will emerge as big shareholders when the bank's shares are listed on the stock exchange next year.

The news that the Co-op Bank will no longer be majority-owned by the mutual has sparked fury among many customers, prompting the bondholder group to praise the lender's ethos.

"The Co-Operative Bank is unique for its ethics, mission and heritage which are an essential component of the Bank's differentiated approach," LT2 said in a statement last week.

"It is important to us that the Bank will maintain its unique characteristics and ethos.

"The Co-operative Group Ltd. will remain the Bank's largest shareholder by far and the Bank will benefit by this connection to the Co-operative movement."

14.47 | 0 komentar | Read More

RBS Confirms Plan For £38bn 'Bad Bank'

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) has confirmed plans to hive off nearly £40bn of toxic assets into a new division as part of an effort to accelerate its recovery that will be treated with scepticism by advocates of a more radical break-up.

Announcing a third-quarter pre-tax loss of £634m, RBS said £38bn of impaired loans would be placed into an 'internal bad bank' to be called RBS Capital Resolution Division.

The new arm of the bank is designed to provide a clearer distinction between the clean parts of the business and the tens of billions of pounds of legacy loans that critics say have hampered its ability to play a role in aiding the recovery of the UK economy.

Ross McEwan, RBS's new chief executive, conceded that quickening the run-off of these assets - with a target of up to £25bn of the £38bn being shed by the end of 2015 - would incur steeper losses.

The outcome of the four-month review commissioned by the Chancellor, George Osborne, and conducted by City firms BlackRock and Rothschild will see the rebranding of RBS's existing non-core wing, which has already offloaded hundreds of billions of pounds of toxic loans since the bank's £45.5bn bail-out by UK taxpayers in 2008.

Price correct at 09.43 GMT

Sky News exclusively revealed details of the internal bad bank plan and the broader restructuring of the bank, which is 81%-owned by taxpayers, last weekend.

Alongside the new bad bank, RBS will also bring forward the disposal of its US retail bank, Citizens; further shrink its investment banking business; resolve the issue of a dividend-blocking instrument that RBS will need to acquire from the Government; and target new cost-cutting measures that could lead to thousands more job cuts.

Mr Osborne said the reforms were part of a broader objective of "creating a banking system that works for Britain".

"Under this new direction RBS will deal decisively with the problems of the past by separating out the good from the bad, and putting the bad loans in a bad bank.

Stephen Hester left RBS amid his support for investment bank operations

"Our independent analysis shows that the bad bank should be an internal one, funded by RBS, rather than an external one funded by the taxpayer."

In a pointed remark highlighting divisions between the Treasury and Mr McEwan's predecessor, Stephen Hester, the Chancellor said that the new strategy was jointly-supported by RBS's management, the Government and the regulator.

The Bank of England said that it welcomed "the development of a more focused strategy for RBS and the commitments of the Board to specific actions that will bolster its capital position in the next three years".

"These actions should create a more resilient institution that is better able to support the real economy without any expectation of further Government support," it said.

"Given these developments, the Bank of England fully supports the conclusions of the review published today by HM Treasury."

While there was a consensus about the reforms within Government, Mr Osborne may have to brave a more hostile response from figures who wanted a more radical split of RBS.

Among their ranks were Lord Lawson, the former Chancellor; Lord  King, former Governor of the Bank of England; and Andrew Tyrie, chairman of the Parliamentary Commission on Banking Standards.

Alongside the new measures aimed at boosting RBS's recovery, a report was published condemning the bank's attitude to lending to small and medium-sized businesses (SMEs).

Mr McEwan pledged to implement the recommendations, and said RBS would target becoming the best SME bank in the UK.

In response to today's announcements, Shadow Chancellor Ed Balls said: "After the firesales of Royal Mail and Northern Rock, we will scrutinise George Osborne's plans for the future of RBS very carefully.

"As we argued when, earlier this year, the Chancellor flirted with the idea of a quick sale of RBS to a political timetable, the taxpayer interest must come first.

"The tests for these changes at RBS are whether they see the taxpayer ultimately get its money back and whether they actually boost business lending and radically transform this bank to put an end to business as usual.

"On the banking system more widely, business and the public are right to be concerned that lending to business is still falling while the radical reforms we need are being watered down.

"For example, he is still refusing to implement the Parliamentary Commission's call for a backstop power that would allow for full separation of all the banks, not just one or two, if ring-fencing proves ineffective and does not deliver the cultural change we need."

14.47 | 0 komentar | Read More