City Investors Vow Fight Over RBS Break-Up

By Mark Kleinman, City Editor

Some of the City's most prominent institutional investors are vowing to oppose any attempt to break up Royal Bank of Scotland (RBS), claiming it would undermine attempts to recover the taxpayer's £45.5bn of rescue funding.

Sky News can reveal that institutions including Royal London Asset Management and Standard Life Investments have begun to express profound concerns about a so-called 'good bank, bad bank' split of RBS.

Their reservations about such a structure emerged on the eve of the publication of a report by a panel of parliamentarians that is expected to recommend an analysis of an RBS break-up.

"I believe the best time to consider splitting RBS has probably passed," said Robert Talbut, chief investment officer of Royal London Asset Management.

A person familiar with the thinking of Standard Life Investments said it was also opposed to a break-up, saying that it would be both counter-productive and potentially destroy value for shareholders.

A number of other big institutions are expected to discuss the issue with Sir Philip Hampton, RBS chairman, in the coming days.

The Parliamentary Commission on Banking Standards (PCBS), which has been examining the industry's culture and ethics, will publish its final report tomorrow.

The institutions' views about a break-up of RBS effectively place them on a collision course with George Osborne, the Chancellor, who is expected to bow to the Commission's demands in his annual Mansion House speech on Wednesday.

Treasury officials said he was likely to signal in his speech that he had commissioned further work on the issue that would explore how to carve out RBS's remaining toxic assets, including large parts of Ulster Bank, its troubled Irish subsidiary.

Mr Osborne is expected to frame the review as facilitating the potential removal of one of the impediments to RBS's reprivatisation.

City institutions oppose the idea on the basis that such a move may have had merit immediately after RBS's bail-out, but that it would now be largely redundant.

External investors now hold roughly 18% of RBS's shares following its rescue in 2008, and would be expected to participate in the multiple phases of share sales by the Government as it seeks to exit its bank investments.

Last week, Stephen Hester, the bank's chief executive, announced that he would leave later this year, a decision triggered by Mr Osborne's desire to have a new leader in place to oversee RBS's eventual reprivatisation.

Mr Osborne is likely to refer to the need to renegotiate the Dividend Access Share, another obstacle to reprivatisation, at Mansion House, insiders said.

The Treasury and RBS declined to comment.

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Bankers Should Face Jail Terms, Report Says

By Mark Kleinman, City Editor

A new criminal offence punishing bankers for "reckless misconduct" while running their institutions is the centrepiece of proposals unveiled by a group of MPs and peers aimed at reforming the industry.

The Parliamentary Commission on Banking Standards (PCBS), which was set up after last summer's Libor-manipulation scandal led to Barclays being fined £290m, said in its final report that all areas of British banking required urgent change.

Citing "a profound loss of trust born of profound lapses in banking standards", the commission said a string of measures were needed to repair the industry's reputation.

In its 553-page report called Changing Banking For Good, the PCBS argued that individual accountability among senior bankers was lamentable, that industry pay schemes required a radical overhaul, and that executives should face a new sanctions regime that would dish out appropriate penalties, replacing a system that "looked good but achieved little".

It also said, as expected, that the Treasury's strategy for managing its 82% stake in Royal Bank of Scotland (RBS) was not working adequately and that options, including analysis of a break-up of the bank, should be conducted in the coming months.

The commission's hard-hitting recommendations underline the scale of public anger that so few British bank executives have faced punishment over the crisis that led to hundreds of billions of pounds of public money being put at risk to rescue them.

Only a small handful of senior bankers have been sanctioned by regulators for their roles prior to the bailouts of 2007 and 2008, while relatively few have been hit in the pocket despite mis-selling scandals such as the one involving payment protection insurance.

Andrew Tyrie, the Conservative MP who chaired the commission, said that senior bankers had hidden "behind an accountability firewall" but warned that governments and regulators had also been culpable for the decline in standards.

Among the concrete measures recommended by the PCBS are:

:: The introduction of a new criminal offence for reckless misconduct that would carry a custodial sentence.

:: Bankers' pay should be deferred for up to 10 years and should be more closely aligned to the safety and soundness of a firm.

:: Regulators should gain powers to cancel the pay and pensions of executives at banks which require taxpayer support.

:: UK Financial Investments, the body responsible for managing taxpayers' stakes in Lloyds and RBS, should be scrapped.

:: New senior persons and licensing regimes to ensure that regulators can take tougher action against bankers whose actions damage their employer's reputation or finances.

:: Reforms aimed at bolstering competition in retail banking, including, as Sky News revealed this month, a review of the costs and benefits of full current account portability.

Parts of the banking industry, whose main lobbying group the British Bankers' Association refused to respond on camera to the report, are expected to argue that some of the proposed reforms would undermine the City's international competitiveness.

Measures to defer pay for up to a decade would go further than any other major banking centre, but the PCBS argued that it was essential to do so if the industry's culture was to be genuinely reformed.

"The scale of remuneration in banking, the way it has been set and the form in which it has been paid have all incentivised misconduct and excessive risk-taking. The rewards for fleeting, often illusory, success have been huge, while the penalties for failure have been much smaller, or non-existent," it said.

"Many bankers were on to a one-way bet. Unlike unlimited liability partnerships, they had little or no skin in the game."

The Government is expected to consult on the PCBS recommendations that would require legislative change.

In a statement, the Treasury welcomed the commission's report, saying there were "many recommendations in it which will help the government's plan to create a stronger and safer banking system".

"The Government publicly welcomes the commission's recommendations on increased personal responsibility especially at a senior level, increased professional judgement by regulators and better functioning markets.

"We will now get on with a swift response and will report before the summer recess."

In his annual Mansion House speech on Wednesday night, George Osborne is likely to back the commission's call for a review of the options for the Government's stake in RBS, according to Treasury aides.

Vince Cable, the Business Secretary, also welcomed the report, backing calls for banks to relinquish ownership of the payments system and for a new approvals regime for bank staff.

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UK Auditor Agrees 'Fine And Ban' In New York

A division of one of the UK's biggest auditors, Deloitte, has been fined $10m (£6.4m) by New York state for its actions in advising Standard Chartered Bank over money laundering.

In addition to the fine, Deloitte's Financial Advisory Services arm was also banned for one year from taking new work in the state after officials ruled it did not carry out its duties independently.

The settlement between Deloitte and New York was announced months after Standard Chartered was handed a $667m (£440m) penalty in the US for permitting hundreds of billions of dollars to be laundered through its US branch by clients from Iran, Burma, Libya and Sudan, in violation of US sanctions on the countries.

The transfers took place mainly between 2001 and 2007.

In 2004 the New York Department of Financial Services (DFS) required the London-based bank to contract an independent adviser to help it comply with money-laundering statutes.

But even after Deloitte Financial Advisory Services took that role, the laundering continued.

The department said the fine, which the company agreed to, was to cover its "misconduct, violations of law, and lack of autonomy" in advising Standard Chartered.

Benjamin Lawsky, New York superintendent of financial services, said in a statement: "At times, the consulting industry has been infected by an 'I'll scratch your back if you scratch mine' culture and a stunning lack of independence.

"Today, we are taking an important step in helping ensure that consultants are independent voices - rather than beholden to the large institutions that pay their fees."

Deloitte emphasised that its advisory unit was not accused of participating in the laundering.

Its statement said: "We are pleased that, as the agreement states, a thorough investigation by DFS found no evidence that Deloitte FAS knew of, or aided, abetted or concealed any alleged violation of law" (by Standard Chartered).

"Deloitte FAS looks forward to working constructively with DFS to establish best practices and procedures that are ultimately intended to become the industry standard."

The accounting industry has been under scrutiny worldwide since coming under heavy criticism for failing to raise the alarm ahead of the banking crisis.

An investigation into the UK's audit market by the Competition Commission (CC) released earlier this year found that competition is restricted because it is hard for listed companies to switch accountants.

It concluded that the so-called "big four" audit firms - Deloitte, Ernst & Young, KPMG and PricewaterhouseCoopers - dominated the market but it did not find sufficient evidence of collusion between the accountancy giants to recommend breaking them up.

The watchdog said it was looking into a host of measures that could increase competition - including mandatory tendering for audits and mandatory rotation of firms by companies.

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Sainsbury's Annual Profits Fall 1.4% To £788m

The boss of Sainsbury's has told Sky News he has a "few more years" in him at the helm of the supermarket chain despite the appointment of headhunters tasked with identifying his successor.

Justin King was speaking after Sainsbury's confirmed a slight fall in annual profits, amid the intense battle among supermarkets to grow market share and invest in online.

It made a pre-tax profit of £788m in the year to March 16 - down 1.4% on the previous 12 months because of property disposals though underlying profits were up 6.2%.

Mr King also confirmed the weekend report by Sky's City Editor Mark Kleinman that it had struck an agreement with Lloyds Banking Group to take full control of Sainsbury's Bank, at a cost to the chain of £248m.

Sainsbury's said its move to acquire the 50% shareholding it did not own was an opportunity to "enhance loyalty by offering accessible, high quality and tailored products which reward customers who bank and shop with us."

Sainsbury's has been investing in its supply chain

Growth online and in convenience stores drove market share gains for the supermarket business by 0.2% over the period according to the Kantar Worldpanel measure.

Total sales over the year rose 4.6% to £25.6bn - boosted by what it called the "milestone" of non-food sales reaching £1bn for the first time.

Grocery online sales were nearing the £1bn mark, Sainsbury's said, while convenience stores took £1.5bn.

During the year, it opened 14 new supermarkets, eight extensions and 87 convenience stores.

The full-year dividend was increased 3.7% to 16.7p.

Mr King, who took over at the supermarket amid sliding sales nearly a decade ago, remained bullish about its prospects despite the flat-lining economy.

He said: "Whilst we see no near-term change in the current economic situation, we remain confident that by continuing to invest in our long-standing strategy and by understanding and helping our customers, we are well positioned for future growth."

In his interview with Sky News he moved to quell speculation about his future, adding: "I've got plenty of headroom left yet and I consider myself still to be a relatively young man so I've got a few more years in Sainsbury's left in me yet."

Sky News revealed last month that Egon Zehnder, the search firm, had been appointed by David Tyler, Sainsbury's chairman, to identify Mr King's successor.

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Tesla: Electric Car Sales Spark First Profit

Accelerating demand has helped US electric car-maker Tesla make its first quarterly profit, sparking a surge in its share price.

Ten-year-old Tesla Motors surprised the market on Wednesday night when it confirmed earnings of $15m (£9.6m) in its first quarter, having delivered nearly 5,000 Model S electric cars during the first three months of the year.

The Californian company, led by billionaire Elon Musk, said it expects to deliver 21,000 Model S cars worldwide, up 5% from its earlier target of 20,000, and said global demand might soon surpass 30,000 vehicles a year.

Mr Musk said: "There's potential for next year a fairly significant increase in volume as we really test the depth of the demand that's out there.

"It's probably quite a bit higher than we had originally thought."

Tesla also reported higher-than-expected revenue of $562m (£361m) after selling 4,900 cars in the first quarter.

The results sent Tesla shares up 17% to $65.50 in after-hours trading on the Nasdaq.

The Model S, a  four-door fastback sports sedan, is Tesla's second model after the more expensive Roadster and represents the company's effort to reach a broader group of buyers.

Bringing down the cost of its vehicles has been the issue Mr Musk has previously pledged to address - a strategy that has helped improve share values by two-thirds this year.

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Morrisons Sees First Quarter Sales Fall

Morrisons has had a "solid start" to its financial year despite sales falling 2.6% over the first quarter.

The performance, on a like-for-like basis, included fuel sales, though total sales contracted by just 0.3% as new store openings bolstered business.

However, Morrisons has been hurt by its limited exposure in convenience stores and its lack of an online food offer.

The company, which trails market leaders Tesco, Asda and Sainsbury's, said sales at stores open over a year fell 1.8% when fuel was excluded in the 13 weeks to May 5 - an improvement on the fourth quarter decline of 4.1%.

"This performance reflects a steady improvement from the previous quarter and is in line with our expectations," the firm said, adding that throughout the period the industry had remained very competitive with promotional coupons and vouchers a significant factor.

Morrisons said its expectations for the full year were unchanged and its plans to launch an online food operation by January 2014 were progressing.

Talks with online grocer Ocado on a possible tie-up were continuing, the chain said.

Online and convenience are the two fastest growing areas for Britain's supermarkets as shopping habits change, with consumers increasingly using the internet to shop.

Morrisons has accelerated investment in convenience stores, targeting 100 by the end of the year.

The firm, which unlike rivals produces a lot of the products it sells, said it was doing a better job of telling customers how its offer was better by, for example, highlighting its more than 5,000 trained butchers, bakers and fishmongers, and doing more to make its promotions stand out.

Its chief executive Dalton Philips said: "Our promotions have been more innovative and we are explaining Morrisons' points of difference more effectively.

"These efforts were further reinforced by the horsemeat scandal which helped drive increasing customer recognition of Morrisons' unique supply chain and approach to meat sourcing."

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Unauthorised Apps 'Costing Parents £30m'

Children buying unauthorised apps have cost parents around £30m, a study suggests.

The survey found youngsters using smartphones or tablets increase families' average monthly charges by around £34, with more than a quarter of parents (28%) hit by inflated bills.

Eight-year-olds were shown to run up the highest bills, adding an average of £59.59 - while 36% of children aged four and under have made purchases without permission.

The data emerged after five-year-old Danny Kitchen hit the headlines for racking up a £1,700 bill in a few minutes while playing a game on his parents' iPad.

A total of 14% of parents to have received unexpected charges for similar reasons voiced concerns over affording the costs, and 34% say they now hide their tablets or smartphones.

However, the study suggested nearly one in five parents equips their children with their passwords, nearly a quarter of parents do not have a security password, and one in 10 give their children free rein to access whatever content they want.

Meanwhile, more than half (54%) of the parents surveyed said they link their smartphone or tablet to an easily accessible subscription service or direct debit account.

The Windows Phone UK-commissioned study said unauthorised purchases had an estimated total cost of £30,883,157.

Brett Siddons, of Windows Phone UK, said: "Our research reveals parents are worried about the impact of app and in-app purchases on their bills and we understand the stress this can cause.

"With technology becoming more and more intuitive, it's important that parents can trust in the technology they use and feel as safe as possible when handing over their smartphone and tablet devices to their children."

According to the survey, children spend on average three hours and 21 minutes a week playing games and using apps.

More than 2,000 parents who own smartphones or tablets were consulted for the survey by OnePoll last month.

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Queen's Speech: Immigration Set To Dominate

Measures to combat immigration and schemes to help businesses are among the Government's priorities which are due to be outlined in the Queen's Speech.

David Cameron says the new policies - including a crackdown on foreign criminals and rogue employers who take on illegal migrants - will back the people of Britain "every step of the way".

The agenda for the next session of Parliament will also see powers strengthened to deport foreign criminals by preventing the abuse of human rights laws.

The Prime Minister and his deputy Nick Clegg will say in a joint foreword to the speech: "In May 2010 we came together to govern in the national interest.

"We knew the road ahead would be tough and so it has proved to be.

"But three years on, our resolve to turn our country around has never been stronger. We know that Britain can be great again because we've got the people to do it.

"Today's Queen's Speech shows that we will back them every step of the way. It is all about backing people who work hard and want to get on in life."

While 163,000 migrants came to the UK in the year to June 2012 - down from 247,000 in the previous year - Mr Cameron has said he aims to reduce the figure to tens of thousands.

A new Immigration Bill will write into law rules to ensure the Article 8 human right to a family life does not prevent the courts from balancing the crime against the perpetrator's right to remain in the country.

Firms exploiting illegal labour will face stiffer fines, as will private landlords if they fail to check on tenants' immigration status.

Incomers' access to NHS services will be regulated and temporary migrants will be expected to make a contribution.

Shadow Commons leader Angela Eagle said: "We will look at measures on immigration. But the truth is over the last three years they have failed on immigration as they have failed in so many other areas.

David Cameron and Nick Clegg admit the last three years have been "tough"

"And at the same time, there is one group that is decisively better off - the richest in society."

Also due to be announced is a National Insurance Contributions Bill which will cut the cost of recruiting new employees and a Deregulation Bill to cut red tape for firms looking to grow.

A Social Care Bill will cap care costs, in an attempt to avoid pensioners being forced to sell their homes.

Meanwhile, a Pensions Bill will create a flat-rate pension, which ministers claim will encourage saving and help women who have had long career breaks.

Measures notable for their absence include mooted plans to force cigarettes to be sold in plain packaging and those to set a minimum price for alcohol.

Aid agencies are also angry the Government will again not enshrine in law its commitment to meet the United Nations target to devote 0.7% of GDP to aid spending.

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Sainsbury's Annual Profits Fall 1.4% To £788m

The boss of Sainsbury's has told Sky News he has a "few more years" in him at the helm of the supermarket chain - dampening speculation he was planning to leave.

Justin King was speaking after Sainsbury's confirmed a slight fall in annual profits, amid the intense battle among supermarkets to grow market share and invest in online.

It made a pre-tax profit of £788m in the year to March 16 - down 1.4% on the previous 12 months because of property disposals though underlying profits were up 6.2%.

Mr King also announced an agreement with Lloyds Banking Group to take full control of Sainsbury's Bank, at a cost to the chain of £248m.

Sainsbury's said its move to acquire the 50% shareholding it did not own was an opportunity to "enhance loyalty by offering accessible, high quality and tailored products which reward customers who bank and shop with us."

Sainsbury#s has been investing in its supply chain

Growth online and in convenience stores drove market share gains for the supermarket business by 0.2% over the period according to the Kantar Worldpanel measure.

Total sales over the year rose 4.6% to £25.6bn - boosted by what it called the "milestone" of non-food sales reaching £1bn for the first time.

Grocery online sales were nearing the £1bn mark, Sainsbury's said, while convenience stores took £1.5bn.

During the year, it opened 14 new supermarkets, eight extensions and 87 convenience stores.

The full-year dividend was increased 3.7% to 16.7p.

Mr King, who took over at the supermarket amid sliding sales nearly a decade ago, remained bullish about its prospects despite the flat-lining economy.

He said: "Whilst we see no near-term change in the current economic situation, we remain confident that by continuing to invest in our long-standing strategy and by understanding and helping our customers, we are well positioned for future growth."

In his interview with Sky News he moved to quell speculation about his future, adding: "I've got plenty of headroom left yet and I consider myself still to be a relatively young man so I've got a few more years in Sainsbury's left in me yet."

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TweetDeck: Twitter's UK Firm Shut By Regulator

By Pete Norman, Sky News Online

A British company bought by Twitter for a reported £25m has been shut down by the business regulator after it failed to file its accounts, Sky News has learned.

The official message of TweetDeck's demise

TweetDeck Ltd, which was bought by the California-based social media giant in 2011, was officially struck off the register by Companies House this morning.

The action comes after the wholly-owned British subsidiaries, TweetDeck and Twitter UK Ltd, failed to file accounts for 2011.

The account deadline was last September and both companies were subsequently penalised.

Although Twitter UK later filed its 2011 accounts, TweetDeck did not and the Cardiff-based Companies House moved to strike off the company in January, as first revealed by Sky News.

A notice confirming the action has now been published in the London Gazette, which is the Government's official journal of record, saying TweetDeck has been "dissolved".

A Companies House spokesman told Sky News: "We go through a strict compliance process to try and ensure companies file documentation in a timely manner.

"Unfortunately, in a small number of cases, matters proceeded to strike off, as in this case."

Twitter CEO Dick Costolo (l) and Alex Macgillivray

TweetDeck is used by so-called social media power users to integrate their online messaging activity.

Its functionality has now been incorporated within Twitter's main corporate structure, according to the San Francisco-based firm.

A Twitter spokesperson told Sky News: "TweetDeck the product continues to thrive as part of Twitter, but the old TweetDeck company has been dormant for some time, with no outstanding liabilities; hence our agreement with the move to dissolve it."

TweetDeck was controlled by two American directors, Twitter Inc CEO Dick Costolo and its general counsel Alex Macgillivray.

According to the business regulator, of the three million companies registered in the UK, 99.1% maintain up to date account filings.

Dissolution of dormant companies is normally initiated by the directors rather than it being imposed by the regulator.

In March an unnamed entity investigated TweetDeck but later halted action

The Companies House spokesman told Sky News: "It is incumbent on all directors to ensure documentation is submitted appropriately and it is always disappointing when this is not the case.

"As well as being a legal requirement, those wishing to research and invest use the register as an information source, and for this reason it is unhelpful if business records are not up to date and in good order."

TweetDeck was founded by Sheffield-educated computer programmer Iain Dodsworth in 2008 and sold to Twitter two years ago in what was widely reported as a £25m deal.

The microblogging giant controls its UK operations through a Dublin-based parent firm, known as Twitter International Company.

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