RBS Confirms £1.2bn Loss After PPI Hit

RBS has confirmed it made a loss before tax of £1.2bn in the third quarter, compared with a profit of £2bn for the same period last year.

As revealed by Sky's City Editor, the bank has set aside a further £400m for the mis-selling of payment protection insurance, meaning the scandal has cost it £1.7bn to date.

This provision took the total compensation bill for Britain's four largest lenders past the £10bn mark.

The 82% taxpayer-owned bank also said it had taken a further hit of £50m to cover costs relating to the summer's massive IT failure - which saw many RBS, NatWest and Ulster Bank customers locked out of their accounts.

It takes its bill for the meltdown to £175m.

The bank also expects to face "material fines" in relation to how Libor and other interest rates were set, it added.

RBS is under investigation by US and UK authorities over the rate-rigging scandal and is expected to be one of the next banks to settle after Barclays was fined £290m in June.

"The group expects to enter into negotiations to settle some of these investigations in the near term and believes the probable outcome is that it will incur financial penalties," RBS said.

It added that it had dismissed "a number of employees for misconduct" after investigations into rate setting.

But the group's core banking operations - if the mis-selling and IT charges are stripped out - performed well, with operating profit for the three months reaching £1bn.

A decline in charges on bad debt helped boost performance at the bank, which said its restructuring would be complete in the next 18 months.

As part of this plan, the number of employees was down by 9,900 from a year earlier, resulting in a 5% fall in staff costs compared to the previous quarter.

The bank described the collapse of the sale of 316 branches to Santander as "disappointing".

As a condition of RBS' state bailout, the European Union ordered it to offload the branches by the end of next year. RBS said it did not expect this to change and so had restarted efforts to sell them.

The group's chief executive, Stephen Hester, said it now needed to focus on improving its reputation.

"The extraordinary challenges which RBS faced following the financial crisis are being worked through successfully," he said in a statement.

"The five year restructuring plan is now in its later stages with important work still to do, including an emphasis on dealing with reputational issues now that the bank's safety and soundness has advanced so well."

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Japan Tech Firms Need Revamp To Topple Korea

Japan's top electronic firms have been told to change their business model, amid plunging share prices and booming competition from South Korea.

Shares in Sharp fell on Friday as worries about the TV and display maker's future deepened, a day after it warned of a £3.5bn net loss for the year and said it might not be able to survive on its own.

Panasonic's shares have steadied after a slide to their lowest in more than 30 years, while in August Sony reported a £202m first quarter loss as it pinned its hopes on new TV technology.

Sharp, which makes displays used in Apple's iPads and iPhones, has lost three-quarters of its share price since the start of the year.

Meanwhile, South Korea's Samsung has cemented its place as the world's leading smartphone seller after setting a record for the most units shipped in the third quarter.

Samsung sold 56 million smartphones between July and September, representing 31.3% of the global market - more than twice as much as rival Apple's 15% share.

Japan's giants have been urged to target high value goods, such as cars

"What it is telling us is that the Japanese should be focusing on a lot more on higher value goods – automobiles are going very fine, mechatronics and machinery," Mizuho International director Seijiro Takeshita told Sky News.

"The vertical integration model that the Japanese are very strong at, at least on commoditised products such as televisions, is wearing thin as far as competitiveness is concerned."

"The Koreans are doing a very good job following that model."

The strong yen and falling prices for gadgets are only partly to blame for the ill health for some of Japan's top consumer brands.

Increasingly, Japanese companies have toyed with the idea of strategic partnerships – once anathema to the consumer powerhouse.

"I think this is an alarm bell to many of these companies, so there should be some kind of diversify move or transformational move that is needed," Mr Takeshita said.

Panasonic has said it will lose £5.9bn this business year as it writes down goodwill and assets and plans more restructuring - taking its cumulative loss over five years to nearly £15.6bn.

Sony eeked out a small quarterly operating profit for Q3, helped by the sale of a non-core chemicals business.

"A lot of Japanese companies have not reorganised or refocused. It takes time and there are a lot of political motives not to make the changes," Mr Takeshita said.

"I think it is very clear for Panasonic or Sony that they do have to make these changes."

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Car Insurance Cost Fall 'Will Not Last'

Car insurance premiums are said to have gone into reverse gear by £360 (13.6%) for young drivers - but there are concerns costs could rise dramatically after next month's EU gender ruling.

Insurance comparison site Confused.com has advised 17 to 20-year-old drivers to take advantage of "today's preferential rates" but warned them to avoid 2013's predicted price hikes by "shopping around".

Average comprehensive car insurance prices now stand at £757 as of this year's third quarter, compared to £843 for last year's third quarter - a significant year-on-year fall of £87 (10.3%).

Car insurance prices actually fell for all age groups, particularly young female drivers, but predictions from the Treasury indicate that young female drivers could see rises of up to 24% after the EU gender ruling becomes law on December 12.

After this date women and men cannot be priced differently for insurance meaning women will no longer directly benefit from being statistically less risky drivers as far as insurers are concerned.

This predicted insurance price rise could affect female drivers throughout various age groups, according to the Treasury data.

Sharon Flaherty, editor of Confused.com, told Sky News: "At the moment women pay less than men and statistically this is because on average they are less of a risk on the roads than young male drivers.

"However the bad news is that on December 21 the law change will mean that men and women have to be judged as exactly the same on the roads.

"Women will effectively be charged more because statistically they will no longer be allowed to be rated as safer on the roads."

Women aged 26-30 years are forecast an 18% price hike once the gender directive takes effect. Female drivers aged 31-35 are expected to suffer a 10% price rise.

Smaller price rises are expected for women aged 36-40 who are predicted to experience a 3% rise, and 41 to 45-year-old female drivers are only expected to receive a 1% price rise for their future car insurance policies.

Women on average saw their premiums shrink by 11.7% over all in the third quarter.

For spouses of either gender the average premium cost for a joint insurance policy is a lot less than average costs for solo drivers.

Male drivers insured plus spouse are quoted on average £432, compared to £907 as insured only driver, for women it costs an average of £787 for insured only driver cover, but just £418 for women who have a spouse on their policy.

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Lloyds Sets Aside A Further £1bn For PPI

Lloyds Banking Group has set aside a further £1bn to cover costs relating to the mis-selling of payment protection insurance (PPI) - taking its total bill to £5.3bn.

The announcement came as the 40% taxpayer-owned bank said it made a pre-tax statutory loss of £583m in the nine months to the end of September.

This compares with a £3.8bn loss over the same period last year.

If the cost of PPI is stripped from the results, the group's underlying profit hit £1.9bn for the three quarters - compared with 2011's £768m.

Lloyds had already set aside £4.3bn to repay customers wrongly sold the insurance - much more than its rivals because it had the biggest share of the PPI market.

It said it had paid out 70% of its provision by the end of September, and that the volume of claims had fallen to £250m in the last three months. 

The bank's chief executive, Antonio Horta-Osorio, said the "ultimate cost" of the PPI scandal was "going to be huge" - and the bank would not know the full extent of the damage until at least March next year.

Mr Horta-Osorio, who has been charged with turning around the bank following its 2008 bailout, said it is making good progress with its cost-cutting.

Lloyds' bad debts are expected to fall to this year to around £6bn - some £1.2bn less than it expected at the start of 2012.

"We have made further significant progress this quarter, improving underlying performance in a challenging environment, while continuing to deliver returns above the cost of equity in the core business and strengthen our already robust balance sheet." Mr Horta-Osorio said.

On a conference call following the results, he insisted retail banking in the UK was competitive, and stressed that Lloyds was continuing to boost its lending to small and medium-sized businesses and provide mortgages to first buyers.

The group's share price rose 3.6% in early trading. 

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Comet Electricals Chain On Brink Of Collapse

By Alistair Bunkall, Business Correspondent

More than 6,000 jobs are under threat as the high street braces itself for another high profile casualty.

Comet, an electricals chain, will go into administration next week after struggling to stock up for Christmas.

Staff were informed of plans on Thursday morning and restructuring specialist Deloitte has been lined up to handle the administration.

Comet has been trading without credit insurance, which protects its suppliers should the business fail, amid a cash-flow shortfall.

If the credit insurers withdraw their support it tells suppliers that the company cannot be trusted to pay its bills.

The future of the business in question is then a fait accompli.

The potential collapse raises the prospect of a pre-Christmas rush for discounted stock such as TVs and PCs at its 235 stores if the administrator chooses to wind down supplies and raise cash for creditors.

It will also be a boost for rivals Currys, who often jostle for market share sited cheek to jowl on retail parks.

Comet has based its business model on edge of town superstores. This was once, not so long ago, very convenient.

Nowadays the most convenient way to shop is online making Comet's model out of date.

Comet is owned by OpCapita, which bought it for just £2 less than a year ago from Kesa Electricals as it struggled to compete against strong supermarket and online competition.

This has also accounted for the troubles experienced by the likes of Clinton Cards and Game.

Sky News reported last month how OpCapita had received a number of unsolicited approaches for Comet and was exploring the option of a sale as a result.

News of the chain's cash problems come only weeks after JJB Sports called in administrators, resulting in 2,000 job losses.

The Financial Times reported OpCapita was likely to face controversy as it had received a £50m cash dowry from Kesa, now known as Darty, to take it over.

Darty also retained Comet's pension liabilities.

OpCapita also negotiated a £130m dowry before it bought furniture chain MFI in 2006 which later collapsed.

According to the Local Data Company and PwC an average of 32 chain stores a day closed in July and August, underlining the challenges facing the wider high street.

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RBS Confirms £1.2bn Loss After PPI Hit

RBS has confirmed it made a loss before tax of £1.2bn in the third quarter, compared with a profit of £2bn for the same period last year.

As revealed by Sky's City Editor, the bank has set aside a further £400m for the mis-selling of payment protection insurance (PPI), meaning the scandal has cost it £1.7bn to date.

The 82%-taxpayer owned bank also said it had taken a further hit of £50m to cover costs relating to the summer's massive IT failure - which saw many RBS, NatWest and Ulster Bank customers locked out of their accounts.

This takes its total bill for the meltdown to £175m.

RBS also said it expects to enter negotiations to settle investigations into Libor rate-fixing at the bank, incurring some financial penalties.

But the group's core banking operations - if the mis-selling and IT charges and stripped out - performed well, with operating profit for the three months hitting £1bn.

A decline in charges on bad debt helped boost performance at the bank, which said its restructuring would be complete in the next 18 months.

But the group's chief executive, Stephen Hester, said RBS needed to focus on improving its reputation. 

"The extraordinary challenges which RBS faced following the financial crisis are being worked through successfully," he said in a statement.

"The five year restructuring plan is now in its later stages with important work still to do, including an emphasis on dealing with reputational issues now that the bank's safety and soundness has advanced so well."

More follows...

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JP Morgan UK Staff Hit By Offshore Tax Demand

JP Morgan workers have been ordered to pay tax - or face legal action - over allegations the firm transferred salary payments offshore, Sky News has learned.

HM Revenue and Customs (HMRC) deemed the money as "disguised remuneration" and not retirement benefits as claimed.

Workers and executives have been told they must agree to pay up to 40% backdated income tax, 1% National Insurance contributions and interest accrued by December 7.

JP Morgan Chase and Co has agreed to pay 12.8% NI contributions for those who accept the settlement terms.

Those who do not agree to the terms face the threat of legal action by the Tax Office.

Sky News understands the money since classified as earnings by HMRC was transferred to Jersey from 1998, with most transferred from the 2005/6 tax year onwards.

The specified amount paid by individuals to the Tax Office to avoid litigation will be determined ultimately by how many agree to the settlement terms on offer. The investment bank employs thousands of people in the UK.

The Tax Office has offered settlements to numerous trust beneficiaries

In a letter to the head of JP Morgan's tax department dated September 10, HMRC said: "As you are aware, the Government put in place legislation in 2011 to put beyond doubt the tax treatment of employee benefit trust arrangements.

"In addition, HMRC continues to robustly challenge the taxation treatment of such arrangements under previous legislation.

It adds: "In this context and where we are unable to agree a settlement HMRC will continue to formally progress its enquiries into the taxation treatment of the trusts."

Last year HMRC contacted more than 2,000 employers and offered settlements over disputed employee benefit trusts (EBTs).

Earlier this year action was taken by HMRC against UBS and Deutsche Bank over EBTs, which contested the Tax Office claims.

HMRC has estimated that up to £1.7bn of tax and NI contributions were at stake in EBTs, including the "dependent fund" plans operated by JP Morgan.

The investment bank's staff who were part of the employee benefit trusts of 1998, 2006, 2007 and 2008 and the 2010 executive retirement plan are affected by the HMRC action.

The ruling impacts both current and former UK-based staff, whether or not they are British citizens or foreign nationals.

The employees' Jersey tax haven funds have been managed by subsidiaries of the Royal Bank of Canada (RBC), which describe the island as "tax neutral".

RBC's wealth management section actively promotes the benefits of using the island for affluent individuals.

"The chief preoccupation of most ultra high net worth families is wealth preservation," RBC explains on its website.

"Only by structuring their affairs legitimately and with the advice of professionals, including lawyers, accountants, trust and tax experts, private clients will be able to protect their assets."

RBC Europe Ltd has offered JP Morgan workers collaterised bridging loans of more than £250,000 to fund the Tax Office demand.

Jersey is described as "tax neutral" by fund manager RBC

JP Morgan's private bank has also offered financing arrangements for those who need more than £300,000, or mortgage arrangements in excess of £1m, to facilitate the settlement payments.

Helplines have been set up for workers in regard to the Tax Office offer by JP Morgan, RBC and advisers KPMG.

JP Morgan still disputes the offshore payments as being salary but has agreed to the settlement to avoid litigation under the recently enacted Disguised Remuneration legislation.

A JP Morgan spokesman told Sky News: "Our employee trust has always been transparent to HMRC, and its independent trustee has consistently paid taxes in accordance with UK tax law.

"In addition to taxes paid by the trust, JP Morgan has paid, on average, more than £1bn of corporation and payroll taxes to HMRC annually over the past decade."

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Retail Chain 'Faces Threat Of Administration'

6,000 jobs are under threat amid fears of another high profile casualty among UK retailers.

Comet, the electrical chain, is on the verge of calling in administrators as early as Thursday morning after struggling to stock up for Christmas.

It has reportedly been trading without credit insurance, which protects its suppliers should the business fail.

Comet is owned by OpCapita, which snapped up the retailer for just £2 less than 12 months ago from Kesa Electricals as it struggled to compete against strong supermarket and online competition.

It is that threat that has accounted for the troubles experienced by the likes of Clinton Cards and Game and comes only weeks after JJB Sports called in administrators, resulting in 2,000 job losses.

The Financial Times (FT) reported that OpCapita was likely to face controversy as it had received a £50m cash dowry from Kesa, now known as Darty, to take it over.

Darty also retained Comet's pension liabilities.

OpCapita also negotiated a £130m dowry before it bought furniture chain MFI in 2006 which later collapsed.

According to the Local Data Company and PwC retail chain closures hit an average of 32 stores a day in July and August, underlining the challenges facing the high street.

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Lloyds Sets Aside A Further £1bn For PPI

Lloyds Banking Group has set aside a further £1bn to cover costs relating to the mis-selling of payment protection insurance (PPI) - taking its total bill to £5.3bn.

The announcement came as the 40% taxpayer-owned bank said it made a pre-tax statutory loss of £583m in the nine months to the end of September.

This compares with a £3.8bn loss over the same period last year.

If the cost of PPI is stripped from the results, the group's underlying profit hit £1.9bn for the three quarters- compared with 2011's £768m. 

Its bad debts are also expected to fall to this year to around £6bn - some £1.2bn less than it expected at the start of 2012.

The bank's chief executive, Antonio Horta-Osorio, said it was making good progress on its cost-cutting plan.

"We have made further significant progress this quarter, improving underlying performance in a challenging environment, while continuing to deliver returns above the cost of equity in the core business and strengthen our already robust balance sheet." he said.

He added that Lloyds was continuing to increase its lending to small and medium-sized businesses and provide mortgages to first buyers.  

More follows...

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Star Wars Given New Hope In £2.5bn Disney Deal

Disney has agreed a deal to buy Lucasfilm from its founder George Lucas and says it will make a new series of Star Wars movies.

The US entertainment giant, which already owns brands such as Pixar, Marvel, ESPN and ABC, announced it is paying $4.05bn (£2.52bn) for the production company.

It also confirmed it is making Star Wars Episode 7, which is scheduled to be released in 2015.

Disney said the project would be the first in a new series of Star Wars films, with Disney chief executive Bob Iger revealing the plan is to release a new movie every two to three years.

The last Star Wars picture was Revenge Of The Sith in 2005, and Lucas has in the past suggested there were no plans for any more.

The deal also includes the rights to the Indiana Jones franchise, although Disney did not reveal if it planned to revive the films featuring the action hero, played by Harrison Ford.

Kathleen Kennedy, the current co-chairman of Lucasfilm, will become its president and report to Walt Disney Studios chairman Alan Horn.

The deal could also spell a return for Harrison Ford's Indiana Jones

Lucas, who created the Star Wars fictional universe and with it one of the most lucrative box office draws of all time, will be creative consultant on the new films.

After the deal was announced he said: "It's now time for me to pass Star Wars on to a new generation of filmmakers.

"I've always believed that Star Wars could live beyond me and I thought it was important to set up the transition during my lifetime."

Lucas will become the second-largest individual holder of Disney shares, with a 2.2% stake.

Disney will pay about half the purchase price in cash and issue about 40 million shares to complete the deal.

Chief financial officer Jay Rasulo, in prepared remarks, said the deal would lower Disney's earnings per share by a low single-digits percentage in 2013 and 2014.

He also said Disney would repurchase all of the issued shares on the open market within the next two years, on top of planned buybacks.

The deal marks the third time in less than seven years that Disney has signed a massive deal to take over beloved studios or characters, part of its strategy to acquire brands that can be stretched across TV, movies, theme parks and the internet.

In early 2006, Disney struck a deal to acquire Toy Story creator Pixar, and in the summer of 2009 it bought the comic book powerhouse Marvel Entertainment.

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