Osborne 'Regrets' Lack Of Radical RBS Reform

The Chancellor has admitted he regrets not beginning a radical restructuring of Royal Bank of Scotland (RBS) following the last General Election.

George Osborne also told the Financial Times he would look to "get rid of" the taxpayer's "massive" 80% stake following the coming election, should he remain in the post, but warned the process may take many years.

He said: "First, it's not an exact science but on some measures it's bigger than all the privastisations of the 1980s put together.

"Second, I think people want to get their money back. The British taxpayer wants to feel they haven't suffered some enormous loss.

"So there are constraints around it but it's certainly something I would want to get moving on in the summer after the election."

Video: RBS Boss Dismisses Job Cull Figure

One option Mr Osborne ultimately ignored was a recommendation to break-up RBS - favoured by the business secretary, Vince Cable in 2012.

In 2013, RBS created its own so-called 'bad bank' to hold billions of pounds of its most risky assets.

Mr Osborne was instrumental in determining the bank's new focus on UK retail and corporate banking, having overseen the departure of chief executive Stephen Hester in favour of Ross McEwan.

Mr McEwan told Sky News earlier this week he would not put a number on an FT report that the bank was planning to shed 14,000 of its 18,000 investment banking jobs as it moves to shrink operations in the US and Asia.

The Chancellor's efforts to sell-off the Government's stake in RBS may be hampered by its share price.

It is currently trading at 373p per share, well short of the 455p average needed to recover the £45bn spent propping up the bank in 2008.

Any Government would be under pressure to secure a profit for the taxpayer - something which has been achieved so far with the slow disposal of Lloyds shares.

The bank revealed last week it remained loss-making in 2014 and Sky News has learned its remuneration report, due to be released later on Friday, will show it continues to pay dozens of staff more than £1m annually.

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Dozens Remain In Millionaires' Ranks At RBS

By Mark Kleinman, City Editor

The state-backed Royal Bank of Scotland (RBS) will disclose on Friday that it paid dozens of employees at least £1m last year, just days after reporting a £3.5bn annual loss.

Sky News understands that the lender will publish figures showing that the number of staff earning more than the £1m sum fell only marginally from 75 individuals a year earlier.

The disclosure will be awkward for RBS despite the fact that its overall bonus pool fell by more than 20% in 2014, and a decision by its chief executive to waive a £1m share allowance.

The bank will include the number of millionaires in its remuneration report, which is also expected to confirm a six-figure payout to Stephen Hester, its former boss, under a long-term incentive plan.

For the first time, RBS will denominate the number of millionaire staff in Euros, in order to comply with guidelines set by the European banking watchdog.

A source familiar with the figures said that when calculated in sterling, the decline in the number of millionaires would be "modest".

Last week, RBS said it had made a loss for the seventh consecutive year since being bailed out with more than £45bn of taxpayers' money.

The performance prompted Ross McEwan, its chief executive, to forego a £1m payment, which he said would have distracted from  to avoid distracting from "the task of building a great bank for customers and shareholders".

This week, the European Banking Authority cast renewed doubt on the ability of banks to continue awarding those payments.

RBS has been plagued by remuneration rows since its rescue in 2008, and was last year prevented by the Treasury from making variable pay awards on the same basis as commercial rivals.

Sky News revealed last month that RBS and Lloyds Banking Group would restrict cash bonuses to £2000 for a further year.

RBS has also decided that it will no longer pay annual bonuses to any members of its executive committee in a permanent decision cast by some City investors as endangering RBS's ability to compete for talent.

Mr McEwan and other top executives remain eligible for share awards under RBS's long-term incentive plan, which in the chief executive's case can have a maximum value at award of £2m.

Last week's results dashed hopes of a return to profit after a £4bn writedown of goodwill relating to Citizens, RBS's US bank.

Mr McEwan also announced further measures to improve the performance of its corporate and investment bank, including "substantial" job cuts which reports this week suggested could account for as many as 80% of the 16,000 positions within the division.

The decision marked another nail in the coffin of RBS's attempts to build a global investment bank, drawn up under Fred Goodwin, its former boss.

RBS also confirmed the appointment of Sir Howard Davies as its new chairman, replacing Sir Philip Hampton.

The bank declined to comment on Thursday on its remuneration report.

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Club Med Owner Takes 5% Thomas Cook Stake

The new Chinese owner of Club Med has taken a 5% stake in Thomas Cook to begin a "stretegic partnership".

The investment by Fosun, which bought French resort firm Club Med only weeks ago, is aimed at giving both Fosun and Thomas Cook access to new markets - with Thomas Cook hoping for access to China's growing tourism sector in the "medium term".

Fosun told the Hong Kong stock exchange it paid £91.9m for the shares and said it would seek to double its holding in Thomas Cook, the world's oldest travel group, to 10% with purchases on the open market. 

The deal could help Fosun promote holiday packages at Club Mediterranee SA, which is widely known as Club Med, as it looks to turn around the firm's struggling business in Europe.

"The investment in Thomas Cook complements other recent investments of the group in the sector, providing opportunities for further value creation," Fosun chairman Guo Guangchang said.

Thomas Cook, which lost its chief executive Harriet Green late last year, remains in the middle of a cost-saving plan but aims to grow this year despite also facing tough trading conditions in mainland Europe.

New chief executive Peter Fankhauser said: "Our partnership with Fosun is aimed at accelerating our profitable growth strategy by allowing us to further develop our differentiated product in our core destination markets, to collaborate with Fosun's other portfolio businesses particularly in France, and to access the world's largest and fastest-growing tourism markets with an experienced local partner.

"We are looking forward to working closely with Fosun's team to execute the commercial opportunities we are developing."

Thomas Cook's statement said it expected the tie-up to be earnings accretive in the financial year ended 30 September 2016, assuming plans under the partnership were implemented in 2015.

More follows...

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Eurostar Stake Sale Raises £757m For Treasury

The Government has confirmed its stake in Eurostar is to be sold to a consortium of British and Canadian pension and infrastructure funds, raising almost £760m.

The Chancellor George Osborne said the sale, reported by Sky News on Tuesday night, represented a "fantastic deal" for the taxpayer and the money would be used to draw down debts and on core infrastructure.

However, rail unions accused him of putting short term financial gain ahead of the travelling public.

Under the agreement Caisse de depot et placement du Quebec (CDPQ) and Hermes Infrastructure have agreed to acquire the Government's 40% holding for £585.1m.

In addition, Eurostar will redeem the Government's preference share, raising a further £172m.

Video: Eurostar A 'Long Term Investment'

The stake in the cross-channel rail link operator was put up for sale last autumn as part of a plan to raise £20bn from asset sales by the end of the decade.

Eurostar, which launched its inaugural service in 1994, has seen a surge in demand, with more than 10 million passengers travelling on its trains in 2013 alone.

Among the other bidders for the Eurostar stake were 3i, the private equity firm, a division of the French bank Credit Agricole and an arm of the Singaporean government.

The remainder of Eurostar is owned by SNCF, the French state-owned rail operator, which controls 55%, and the Belgian government.

Mr Osborne said it was "a fantastic deal" for UK taxpayers that exceeds expectations.

"Investing in the best quality infrastructure for Britain, getting the best value for money for the taxpayer and tackling our country's debts are key parts of our long term economic plan, and in today's agreement, we are delivering on all three".

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1. Gallery: Eurostar: Fires, Frost And Facelifts

   Feb 1986: The Treaty of Canterbury is signed and the construction of the Channel Tunnel commences

May 1994: The Queen opens Waterloo International before travelling to Calais for the Channel Tunnel inauguration with the French President

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Heathrow Row Over Exchange Of Currency Firms

By Mark Kleinman, City Editor

Heathrow Airport has become embroiled in a bizarre commercial row over the withdrawal of one of the UK's biggest providers of foreign exchange services.

Sky News understands that Moneycorp, which is backed by the private equity firm Bridgepoint, is to leave Heathrow, the UK's busiest travel hub, in June, just 14 months into a five-year deal.

Its 28 outlets and staff will be transferred to Moneycorp's larger rival, Travelex, which will become the exclusive provider of currency exchange services at the airport.

The termination of Moneycorp's deal to operate at Heathrow prompted recriminations between the two parties.

In a statement issued to Sky News on Wednesday afternoon, a Heathrow spokeswoman said: "Moneycorp signed a contract in April 2014 to provide currency exchange services to passengers at Heathrow. 

"After eight months they informed us that they could not honour the financial terms of the contract and served notice that they will cease trading at the airport in June of this year.

"Travelex will now be the currency exchange provider at Heathrow. 

"Travelex comes with a wealth of experience in the foreign exchange market and we will work with them to offer our passengers good value for money, competitive rates and an excellent online pre-order service."

Just hours later, however, Heathrow said it was "rescinding" that statement, and issued a replacement which omitted any mention of Moneycorp being unable to honour the financial terms of its contract.

In a separate statement, Mark Horgan, Moneycorp's chief executive said the company had "resigned its contract with Heathrow Airport and will fully exit operations at each terminal by the summer".

He said: "The commercial opportunities at Heathrow did not materialise as expected and therefore the decision was made to refocus the growth of our retail business elsewhere."

Moneycorp has exclusive deals to offer foreign exchange services at five other UK airports, including Gatwick and Stansted.

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ScottishPower Sales Ban For Complaint Failure

ScottishPower has been handed a 12-day sales ban for failing to meet targets on handling customer complaints.

The industry regulator said the company, a member of the so-called 'big six' energy suppliers, had agreed to temporarily stop proactive selling from today as punishment for a series of failures.

Ofgem found the supplier had failed to remove a backlog of outstanding Energy Ombudsman decisions by a November deadline.

It said: "Customers were experiencing long call waiting times, receiving late bills and the firm was not implementing Ombudsman decisions.

"ScottishPower ... signed up to three Ofgem targets to improve customer service within three months or suspend proactive sales activities until the targets were met.

"It has failed to reach the target to remove the backlog for acting on Ombudsman decisions for individual complaints by the end of November."

Ofgem said ScottishPower's IT systems only allowed "a partial implementation" of the Ombudsman's proposed remedies and the firm had been providing thousands of affected customers with free energy and writing off past debt as a result.

The statement continued: "ScottishPower has assured us that these Ombudsman requirements will remain in force for any case where the company can only partially implement the Ombudsman's decisions.

"More than 2,000 customers are currently receiving free energy."

Sarah Harrison, who heads enforcement at the regulator, said: "A sales ban illustrates the difficulties ScottishPower is having in delivering the levels of service customers deserve.

"While Ofgem's targets have driven significant improvements in ScottishPower's performance, we remain very concerned about how customers are being treated.

"As well as our ongoing investigation, we require ScottishPower to undertake an independent audit of its progress on improving customer service.

"We will keep the need for any further action under review."

ScottishPower insisted it was committed to improving customer service and said it had voluntarily agreed to the improvement targets.

The chief executive of its retail and generation business, Neil Clitheroe, said: "The process of moving to our new (IT) system has been challenging and has resulted in service problems for some of our customers.

"We are determined to put this right. We continue to correct problems, pay appropriate compensation and ensure no customer is left financially disadvantaged."

It said the failure to clear complaints via the Ombudsman was down to the fact 30 cases had been closed incorrectly.

The statement continued: "We are all fully committed to delivering continued service improvements, return to the high service standards long associated with ScottishPower and ensure that our customers realise the very real benefits of our IT system investment."

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Eurostar Stake Sale Raises £757m For Treasury

The Government has confirmed its stake in Eurostar is to be sold to a consortium of British and Canadian pension and infrastructure funds, raising almost £760m.

The Chancellor George Osborne said the sale, reported by Sky News on Tuesday night, represented a "fantastic deal" for the taxpayer and the money would be used to draw down debts and on core infrastructure.

However, a rail union accused him of putting short term financial gain ahead of the travelling public.

Under the agreement Caisse de depot et placement du Quebec (CDPQ) and Hermes Infrastructure have agreed to acquire the Government's 40% holding for £585.1m.

In addition, Eurostar will redeem the Government's preference share, raising a further £172m.

The stake in the cross-channel rail link operator was put up for sale last autumn as part of a plan to raise £20bn from asset sales by the end of the decade.

Eurostar, which launched its inaugural service in 1994, has seen a surge in demand, with more than 10 million passengers travelling on its trains in 2013 alone.

Among the other bidders for the Eurostar stake were 3i, the private equity firm, a division of the French bank Credit Agricole and an arm of the Singaporean government.

The remainder of Eurostar is owned by SNCF, the French state-owned rail operator, which controls 55%, and the Belgian government.

Mr Osborne said it was "a fantastic deal" for UK taxpayers that exceeds expectations.

"Investing in the best quality infrastructure for Britain, getting the best value for money for the taxpayer and tackling our country's debts are key parts of our long term economic plan, and in today's agreement, we are delivering on all three".

CDPQ is a Canadian institutional fund manager with investments worldwide in major financial markets, private equity and real estate.

Hermes Infrastructure - part of Hermes Investment Management - is a UK-based fund managing approximately £3bn on behalf of clients.

Manuel Cortes, leader of the TSSA rail union, said: "George Osborne, because of his outdated belief in unvarnished Thatcherism, is once again selling off the family silver for short-term financial gain.

"The reason that France and Belgium already own the majority stake in Eurostar is that they believe in running a publicly owned railway for the benefit of everybody.

"One-eyed Osborne, on the other hand, prefers the private English model where fat cat bosses are at the front of the queue, way ahead of the passengers".

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Taxpayers To Meet £30m Bill For UK Coal Staff

By Mark Kleinman, City Editor

Taxpayers are poised to fund a multimillion pound bill to help workers at two of the UK's remaining deep coal mines as part of preparations for their closure, ministers are expected to disclose this week.

Sky News understands that the Government will propose amendments to the Small Business Bill to facilitate so-called concessionary coal payments to hundreds of UK Coal workers.

The commitment to the payments, which could be made on Wednesday, would come just weeks after ministers reiterated earlier rejections of a trade union plea for £300m of state aid to keep the sites open.

A source with knowledge of the latest plan said that if it proceeded, concessionary coal payments to workers at UK Coal collieries would be made in July and December.

They said the aggregate sum involved was unclear but added that between £28m and £30m was "a sensible estimate".

The development, which was the subject of talks in Whitehall on Tuesday, followed a pledge by George Osborne in 2013 to guarantee free coal deliveries or a substitute cash sum under a scheme dating back to the 1980s.

The UK coal mining industry has been in long-term decline, accelerated by falling prices on international markets.

Under a deal struck with UK Coal last September, the Government agreed a £4m loan on commercial terms to ensure the managed closure of deep mines at Kellingly in North Yorkshire and Thoresby in Nottinghamshire.

More than £15m was received from suppliers, customers and other stakeholders to prolong the sites' operations alongside the Government loan.

The mines' closures, which are due to take place later this year, are expected to cost up to 1,300 jobs.

A separate £8m loan to prevent the insolvency of Hatfield colliery in South Yorkshire was agreed in January.

A putative attempt by employees and the National Union of Mineworkers to buy UK Coal was aborted last year.

On Tuesday, the Pension Protection Fund said it had agreed to sell its stake in Harworth Estates, UK Coal's former property arm, in a deal worth £150m.

Vince Cable, the Business Secretary, said in August that the mines had "no long-term future unless very large amounts of taxpayers' money are involved".

"The state aid case remains unaffordable, particularly given the fall in the price of coal," a source said.

A Government spokesman said: "The Government is working closely with UK Coal to keep these two coal mines open.

"We will make sure UK Coal miners receive the security they are entitled to through concessionary payments."

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Women Face Poorer Retirement, Research Shows

By Poppy Trowbridge, Consumer Affairs Correspondent

A new report has revealed the scope of the gender disparity in pension savings and income.

Funding retirement remains a significant challenge for many women.

According to the annual State of Retirement report by LV=, women who have occupational or private pensions reach retirement with pots worth on average £107,000.

This is almost half that of men who, on average, retire with a fund worth £201,000.

Nearly a quarter of women approaching retirement are set to rely solely on the state pension, which is currently a maximum of £113.10 per week.

Vanessa Owen, head of product at LV=, told Sky News: "It's actually less about how much people are saving, but the percentage of their income actually means pounds, shillings and pence are less."

She says the current gap is largely down to the fact many more women stayed at home to raise children without returning to work 30 or 40 years ago.

This means that as they reach retirement age now, they have less put away.

Ms Owen said more women now chose to return to work, and do so sooner, meaning when this generation retire, there may be less of a disparity.

The report also shows 4.3 million retirees have some form of debt, either in the form of a mortgage or on credit cards.

However, research from Prudential also shows the pension gender gap is shrinking and is now at its narrowest since 2009.

This year's female retirees have the highest average expected annual retirement income ever recorded by the insurer and are nearly 17% better off than those who planned to retire last year.

Prudential suggests women planning to retire this year have, on average, an expected retirement income of £14,300 compared with £19,100 for men.

Vince Smith-Hughes, a retirement income expert at Prudential, said: "There are a number of steps that both men and women can take to further improve their retirement income prospects, including maintaining pension contributions during career breaks and if possible, making voluntary National Insurance contributions upon returning to work."

This April, the Government's pension reforms come in to effect, giving retirees greater freedom as to how they take an income from their savings and how much can be drawn in a lump sum.

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StanChart Risks Reigniting Bank Bonus Row

By Mark Kleinman, City Editor

The emerging markets bank Standard Chartered will risk reigniting a row over City bonuses this week when it reveals that it is cutting bonuses by a smaller percentage than its decline in profits.

Sky News understands that the lender, which announced a boardroom clearout last week, will say on Wednesday that it is shrinking its bonus pool by approximately 9% from last year's $1.208bn (£786m), according to insiders.

That would mean Standard Chartered's bonus pool for 2014 will be in the region of £715m, they said.

However, the consensus among City analysts is for annual pre-tax profits to have slumped by as much as 20%, which one source acknowledged would leave Standard Chartered exposed to criticism that it is rewarding "payment for failure".

A person close to the company pointed out that Peter Sands, the bank's chief executive, had last year cut bonuses by 15% while profits had fallen by 11%.

The source also said that Standard Chartered paid out more in shareholder dividends than it did in staff bonuses, highlighting a contrast with banks including Barclays, which reports its full-year results on Tuesday.

Nevertheless, the remuneration figures may stoke criticism of Mr Sands even as he prepares to leave the bank, which is the shirt sponsor of Liverpool FC.

That will be reinforced when Barclays says that bonuses have fallen from close to £2.4bn to less than £2bn despite an increase in profits.

Last week, Sky News revealed that Standard Chartered had recruited Bill Winters, a former JP Morgan executive, to replace Mr Sands, which was later confirmed by the bank.

The company also said that Sir John Peace, its chairman, would also step down, alongside some other executive and non-executive directors.

Standard Chartered, which recently announced the sale of its consumer finance operations in Hong Kong, has endured a torrid couple of years.

US authorities recently said they were extending their scrutiny of the bank until 2017 as part of a deferred prosecution agreement.

In 2012, Standard Chartered struck a deal with regulators that saw it pay a $667m fine for violating sanctions requirements, and was forced to pay a further $300m in August after failing to make sufficient improvements to its systems and controls.

The management changes were welcomed by leading shareholders including Temasek, the Singaporean state fund, and Aberdeen Asset Management, the fund management group which is heavily exposed to emerging markets.

Standard Chartered, which has seen shares fall by more than 22% during the last year, has shaken confidence among investors after a string of profit warnings, regulatory bust-ups and management changes.

The bank declined to comment.

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