Twitter Snaps Back In Instagram Photo War

Twitter has fired the latest salvo in its social media war with Instagram by offering its own smartphone photo-sharing features.

It was forced to act after the Facebook-owned firm made it impossible for internet users to integrate Instagram images into their tweets.

"Starting today, you'll be able to edit and refine photos, right from Twitter," Twitter said in a blog post.

"Every day, millions of people come to Twitter to connect with the things they care about and find out what's happening around the world.

"As one of the most compelling forms of self-expression, photos have long been an important part of these experiences."

Twitter said its partner Aviary was powering filters and other effects for images using the latest Twitter applications for Apple iPhones or smartphones running on Google-backed Android software.

Instagram is still tweeting about itself despite the ongoing row

The feud between Twitter and Instagram escalated over the weekend when the smartphone photo-sharing service stopped internet users viewing its images in tweeted messages.

Instagram, which has some 100 million users, is seeking to route photo viewers to its own website instead. It then has potential to make money from adverts or other mechanisms, instead of letting Twitter get the benefits.

Previously, Instagram pictures shared in messages tweeted from smartphones could be viewed unaltered on Twitter.

Twitter confirmed on Sunday that Instagram had disabled its photo integration with Twitter, and photos were no longer appearing in tweets or user photo galleries.

Instagram rose to stardom with the help of Twitter, but has distanced itself from the messaging service since being acquired by Facebook.

Last month, Instagram was revamped with the roll-out of online profiles that let people showcase themselves and photos they have taken with the smartphone application.

People can share their profiles with whomever they wish, as well as "follow" other Instagram users, commenting on or expressing "likes" for pictures.

A distinctive feature of Instagram is that it allows users sharing smartphone snaps to enhance them with image filters for artistic effects such as mimicking historic types of film.

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Starbucks Tax Row Boosts Costa Coffee Sales

The UK's largest hotel and restaurant group, Whitbread, has said sales at its Costa Coffee brand have increased by over 25%.

Like-for-like sales at its coffee shops were up by 7.1%, while total sales increased by 25.5% in the three months to November 29.

It comes amid an ongoing row about the way that some companies - including its rival Starbucks - pay tax in the UK.

In October, it was revealed that Starbucks had paid just £8.6m in corporation tax despite taking billions of pounds in revenue from more than 750 outlets since 1998.

Whitbread's chief executive Andy Harrison said he acknowledged that "Starbucks has issues", and added: "UK consumers are voting with their taste buds."

Starbucks UK's Kris Engskov told Sky News the chain would "take action"

While Starbucks UK last week promised to pay around £20m in corporation tax over the next two years, the ongoing row sparked customer boycotts and protests.

Guardian Stockbrokers' Atif Latif said there was no doubt the tax row had benefited Costa.  

"This uptick at Costa is as a result of clever promotions, a large increase in Costa outlets and greater pricing parity now that many new customers have switched to Pret a Manger and Costa from Starbucks given the news on tax," he said.

"If Costa can capture and retain these customers then we envisage that many will not move back to Starbucks as they are more concerned about the ethical nature of businesses, which remains a priority over taste or habits."

Whitbread, which also owns Premier Inn and the Beefeater and Brewers Fayre pub chains, said total sales across the group were up 14.4% as its brands continued to outperform the market.

Its Premier Inn advertising campaign - featuring comedian Lenny Henry - boosted like-for-like sales at the hotel chain by 2.5%.

But growth across the group slowed when compared to its first half, which was boosted by the UK's wet weather and Olympic Games.

"Whitbread continued its strong growth momentum with total sales up 14.4% together with good like for like sales growth of 3.3%. This once again demonstrates the strength of our brands," Mr Harrison said.

"The economic environment remains challenging with no change in our background consumer market. We are on track to deliver full year results in line with expectations."

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HSBC Bonuses Hit After £1.2bn Fine

By Mark Kleinman, City Editor

HSBC's top executives are to defer a portion of any bonuses they are awarded for the next five years following the bank's £1.2bn fine for breaching money laundering rules in the US.

I have learned that the Deferred Prosecution Agreement (DPA) between HSBC and the US Department of Justice (DoJ), which will be published later today, will disclose details of fresh pay restrictions the bank is imposing on key staff.

The bonus deferrals, which will affect dozens of managers including Stuart Gulliver, HSBC chief executive, will be in addition to the clawing back of millions of pounds in past bonuses awarded to executives involved in HSBC's US operations.

The terms of the new remuneration arrangements will involve Mr Gulliver and his colleagues deferring the element of their bonuses relating to adherence to compliance rules for the full five-year term of the DPA.

However, Sky News understands that the bank's remuneration committee has not yet decided whether Mr Gulliver and others should waive in full any bonuses they are awarded for 2012 following the US settlement.

Mr Gulliver took charge of HSBC at the beginning of last year, long after the breaches of US laws including the Trading With The Enemy Act, took place.

Last year, compliance-related functions accounted for approximately 15% of the overall bonus pots handed out to HSBC executives.

A number of senior staff, including HSBC's chief compliance officer, the former chief executive of its US business and the bank's anti-money laundering director, have had parts of bonuses clawed back already. Sandy Flockhart, a former board member who oversaw HSBC's Mexican operations, is also expected to have a substantial sum of money reclaimed by the bank.

It is questionable whether HSBC's shareholders will view these gestures as sufficient given that Barclays' top executives agreed to waive their bonuses in full following its settlement over Libor manipulation. Even that was not enough to save the jobs of Bob Diamond and Jerry del Missier, Barclays' chief executive and chief operating officer.

The agreement with US authorities, which was confirmed on Tuesday morning, represents a humiliating chapter in the history of HSBC, a bank that prided itself on remaining free from direct taxpayer support during the financial crisis of 2008.

The £1.2bn penalty represents about one-seventh of HSBC's annual profit in 2011.

A Senate hearing earlier this year disclosed a litany of failings within HSBC's Mexican operations, which effectively allowed the bank to be used as a haven for terrorist financiers and drug cartels.

Mr Gulliver said today: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organisation from the one that made those mistakes.

"Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters.

"While we welcome the clarity that these agreements bring, ensuring the highest standards wherever we do business is an ongoing process. We are committed to protecting the integrity of the global financial system. To this end we will continue to work closely with governments and regulators around the world."

HSBC also said that it would finalise an undertaking with the Financial Services Authority (FSA), the bank's lead regulator, shortly.

I understand that this will include the appointment of an independent monitor to oversee HSBC's compliance function as the bank attempts to restore trust among its supervisors.

HSBC said that it had also spent nearly £200m on remedial measures to overhaul its compliance function.

The FSA, which declined to comment, is likely to announce its new supervisory measures alongside the statements from US regulators later today.

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Pension Reforms: CBI Slams Europe Reform Plan

Planned changes to pension rules by the European Commission could cost the UK an extra £350bn and 180,000 jobs, according to the Confederation of British Industry (CBI).

A study for the business lobby group suggests the proposals, which include forcing employers to divert billions into defined benefit schemes, would be a "disaster" for the UK economy.

The CBI said long-term growth would also be cut by a potential 2.5% if the plans to require pension schemes run by individual employers to operate like insurance firms go through.

CBI chief policy director Katja Hall said: "Imposing £350bn more costs on business would be a disaster for the economy and for pension saving.

"The long-term economic outlook is so fragile and uncertain that it is crazy to entertain proposals which would cost jobs and cut so deeply into our long-term growth and competitiveness.

"We have a tough regulatory system in this country, so these changes are completely unnecessary.

"It's alarming the Commission is still turning a deaf ear to calls from businesses, trade unions and pension funds to bin these proposals.

The pensions minister Steve Webb described the Commission's plans as "reckless" and aimed to tackle a problem that does not exist.

He told Sky News: "The problem with a pension fund is that it's a liability for decades so you wouldn't have to pay a lot of this money for 10, 20, 30 years.

"What these European rules would require firms to do is shovel cash in now for liabilities that won't happen for decades."

The Government said it remains in discussion with the Commission about its proposals.

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Labour To Oppose 1% Cap On Benefits Payments

Labour has vowed to oppose the 1% cap on benefits payments proposed by Chancellor George Osborne in his Autumn Statement.

Ed Balls confirmed the decision at Treasury Questions in the House of Commons, claiming the measure is unfair.

The Chancellor sprung a political trap by including the cap in his mini-Budget, attempting to dare Labour to choose between the "strivers" and the "skivers".

Under the move, benefits and tax thresholds will only rise by 1% for the next three years - a below-inflation increase set to save £3.7bn.

There has been anger that maternity pay and child benefit will be among the payments hit by the squeeze, although the basic state pension, carer and disability payments are exempt.

The cap will have to be introduced via new legislation. A Welfare Uprating Bill will be tabled shortly, which Labour will vote against.

Mr Balls said: "We will look at the legislation but, if they intend to go ahead with such an unfair hit on middle and lower income working families while giving a £3bn top rate tax cut, we will oppose it."

Mr Osborne wants to break the link between welfare payments and inflation, which earlier this year saw benefits uprated by 5.2%.

He has previously said workers resent leaving their homes early in the morning while benefits-claiming neighbours sleep on with their curtains drawn.

But Mr Balls, speaking in the Commons, claimed the Chancellor was making "striving, working families pay the price for his economic failure".

Mr Balls added: "Sixty per cent of families hit by the tax changes are in work.

"According to the Institute for Fiscal Studies, as a result of the Autumn Statement measures, a working family - the average one-earner couple - will be £534 a year worse off by 2015.

"These are the very people who pull up the blinds and go to work."

But Mr Osborne said: "Of course tax credits go to some people in work, but we are also helping those people with a personal allowance increase, and working households are £125 better off."

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Northern Rock To Refund £270m To Customers

Northern Rock Asset Management (NRAM) - the state-owned part of the defunct lender - is to refund a total of £270m to customers.

The bank will pay an average of £1,775 to each affected customer after failing to disclose information in documents and letters in 2008.

The Chancellor told Parliament that 152,000 customers who had loans below £25,000 were affected and blamed "an error originating in 2008 when Northern Rock was in public ownership".

"Some customers with certain types of mainly unsecured personal loans were not given all the mandatory information in their statements which they were entitled to by law," George Osborne added.

The chief executive of UK Asset Resolution - NRAM's holding company - Richard Banks said: "We are determined to do the right thing for customers and the taxpayer.

"We will be writing to all customers who are affected and advising them on next steps."

Northern Rock was split into two separate companies in 2010 – Northern Rock plc, which was sold to Virgin Monday earlier this year, and NRAM.

At the height of the financial crisis, the troubled bank was forced to rely on funding from the Bank of England to keep it from collapsing

Treasury Economic Secretary Sajid Javid said the refunds are "likely to increase public sector net borrowing for 2012/2013."

But he added that they are "not expected to delay materially" the timings of NRAM's repayment of £19.6bn Government funding.

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Shale Gas Drilling 'Huge Boost' To UK Economy

By Richard Suchet, Sky News Reporter

Drilling for shale gas could create "tens of thousands" of jobs in the UK and generate vast sums of money for the Treasury, according to a UK-based exploration company.

Cuadrilla chief executive Francis Egan has told the Commons Energy and Climate Change Committee that the controversial process will also reduce Britain's dependency on imported gas.

Opponents say the method of hydraulic fracturing - or 'fracking' - which involves pumping water into rock to push out natural gas, carries numerous environmental risks.

But Mr Egan insists there are huge benefits, and that everything is being done to negate the dangers.

"The UK is importing most of its gas. In 10, 20, 30 years it will be importing virtually all of its gas," he said.

" ... If [fracking] is successfully developed, it will generate significant tax revenues and employment."

Bulgaria and France have both banned shale gas exploration, and in Britain it has yet to receive full Government approval.

"The only way we can prove the safety of shale gas exploration is by doing it and demonstrating we can be good neighbours," Mr Egan told the committee of MPs.

He added: "I think that's the case for any industry that's starting up. You have to do it, show that you are doing it properly and then you win trust. We can't talk the gas out of the ground."

Cuadrilla Resources estimates that its Bowland Basin site in Lancashire contains as much as 200 trillion cubic feet of gas.

Engineers at work on the drilling platform of a shale fracking facility

If even a fraction of that is extracted, the company says it could make a significant contribution to Britain's energy supplies and be good news for the economy, with the potential to create "thousands to tens of thousands" of jobs.

"We have spoken of meeting 25% of the UK's gas demand. You can't do that without generating thousands of jobs.

"The oil and gas industry creates jobs across the full range of disciplines: Engineering jobs, accounting jobs, technician jobs, security guard jobs and out from that into the supply business," said Mr Egan.

Corin Taylor from the Institute of Directors added: "A lot of these jobs will be in parts of the UK that really need them so I think it's an important part of re-balancing the economy."

Also giving evidence to the committee was Graham Tiley, general manager of Shell, Ukraine.

He told the panel he sympathised with public concern and that the term "unconventional gas" had been misunderstood.

"The term 'unconventional' has a very specific meaning. It means 'unconventionally trapped hydrocarbons'.

"It's fine for a bunch of geologists to throw these words around but when that comes out in a public sphere, it leads to concern and unease.

"Hydraulic fracturing is a very descriptive and straightforward term. That's what you do. You use water to fracture the rock.

"Unfortunately the shorthand version of 'fracking' has become almost an accepted swear word these days.

"I think what the industry has recognised is that we have done a very poor job of communicating our activities to the public," he said.

Mr Egan also told MPs that the drilling company is still in consultation with the Treasury about tax arrangements.

He said: "We're potentially at the point of starting a whole new industry in the UK.

"If that industry is allowed to grow up into a tax-paying adult, it will pay a lot of tax. But it is in its infancy.

"There is a concern that the infant could be strangled at birth if the tax system isn't appropriate."

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Virgin Atlantic Takes On BA With Delta Deal

Singapore Airlines has sold its 49% stake in Virgin Atlantic to rival Delta, in a move that will bolster Virgin's reach in the United States and intensify its rivalry with British Airways.

The deal was announced just 24 hours after a verbal spat between the chief executive of BA's parent firm and Virgin founder Sir Richard Branson over Virgin's future.

In their statement, Delta and Virgin said their joint venture would enhance competition between the UK and North America, offering greater benefits for customers travelling on those routes.

As part of the agreement Delta, which is the largest carrier in North America, will invest $360m (£224m) in Virgin Atlantic.

Virgin Group and Sir Richard Branson will retain a majority 51% stake and Virgin Atlantic Airways will retain its brand and operating certificate.

Between them, they will jointly operate up to 31 round-trip flights between the US and UK each day.

Delta is taking a 49% stake in Virgin Atlantic

Steve Ridgway, Virgin Atlantic Chief Executive, said: "Consumers will reap the rewards of this partnership between two great airline brands on services from the U.K. to the USA, Canada and Mexico through a shared ethos in the highest standards of customer service.

"This unique joint venture will deliver much more effective competition at Heathrow.

"Both airlines are confident that the Department of Transportation will be as convinced as we are of the extensive consumer benefits arising from this joint venture, with expedited approval being granted by the end of 2013.

"The trans-Atlantic market is Virgin Atlantic's heartland - it's where we started. By aligning with Delta we can continue to grow our North American network and offer greatly enhanced connectivity across the USA."

Sir Richard Branson and Willie Walsh are at each other's throats

Sir Richard, who is Virgin Atlantic's President, commented: "This is an exciting day in Virgin Atlantic history. It signals the start of a new era of expansion, financial growth and many opportunities for our customers and our business.

"I truly look forward to the possibilities our partnership with Delta will offer. We have always been known for our innovation and service and have punched above our weight for 28 years. That is why our customers love us so much. We will retain that independent spirit but move forward in a strengthened partnership with Delta."

News of the deal followed the latest spat between BA and Virgin. Sir Richard offerefd to pay staff at BA £1m if the Virgin brand disappeared within five years as the boss of BA's parent firm, Willie Walsh, had suggested would be the case if Delta sided with Virgin.

Mr Walsh is reported to have responded that he did not have £1m as he was not a billionaire banker (referring to Virgin Money) but would settle for a 'knee in the groin' instead.

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HSBC To Pay £1.2bn In Money Laundering Case

Record Fine: HSBC's Statement

Updated: 8:39am UK, Tuesday 11 December 2012

HSBC released the following statement after confirming it will pay $1.9bn (£1.2bn) to the US Department of Justice over money-laundering.

HSBC has reached agreement with United States authorities in relation to investigations regarding inadequate compliance with anti-money laundering and sanctions laws.

This includes a Deferred Prosecution Agreement (DPA) with the US Department of Justice. HSBC has also reached agreement to achieve a global resolution with all other US government agencies that have investigated HSBC's past conduct related to these issues and anticipates finalising an undertaking with the United Kingdom Financial Services Authority shortly.

Under these agreements, HSBC will make payments totaling $1.921bn, continue to cooperate fully with regulatory and law enforcement authorities, and take further action to strengthen its compliance policies and procedures.

Stuart Gulliver, Group Chief Executive, said: "We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organisation from the one that made those mistakes. Over the last two years, under new senior leadership, we have been taking concrete steps to put right what went wrong and to participate actively with government authorities in bringing to light and addressing these matters.

"While we welcome the clarity that these agreements bring, ensuring the highest standards wherever we do business is an ongoing process. We are committed to protecting the integrity of the global financial system. To this end we will continue to work closely with governments and regulators around the world."

In the past several years, the Board of HSBC Holdings plc has taken decisive action to direct management to fix past shortcomings as they have come to light. Since 2011, with new senior leadership teams in place at both HSBC Group and HSBC North America, HSBC has taken extensive and concerted steps to put in place the highest standards for the future.

The Department of Justice has recognised these efforts in the DPA: "Management has made significant strides in improving 'tone from the top' and ensuring that a culture of compliance permeates the institution. The efforts of management have dramatically improved HSBC Bank USA's and HSBC Group's Bank Secrecy Act / Anti-Money Laundering and Office of Foreign Assets Control compliance programmes."

As noted in the DPA, HSBC Bank USA already has, over the past several years, undertaken the following voluntary remedial measures:

• increased its spending on anti-money laundering (AML) approximately nine-fold between 2009 and 2011;
• increased its AML staffing nearly ten-fold between 2010 and 2012;
• revamped its Know Your Customer programme, including treating non-US HSBC Group Affiliates as third parties subject to the same due diligence as all other customers;
• exited 109 correspondent relationships for risk reasons;
• clawed back bonuses for a number of senior officers, and
• spent over $290m on remedial measures.

HSBC Group has also undertaken a comprehensive overhaul of its structure, controls, and procedures. A number of these improvements is included in the DPA. Among other measures, HSBC Group has:

• simplified its control structure, allowing the Group to manage risks worldwide more effectively;
• elevated the role of Group Compliance and given it direct oversight over every compliance officer globally, so that both accountability and escalation now flow directly to and from HSBC Group Compliance;
• created the new role of Head of Group Financial Crime Compliance and Group Money Laundering Reporting Officer, who will help to establish a Global Financial Intelligence Unit;
• made other new senior hires with extensive experience handling relevant international legal and regulatory issues, including a new Chief Legal Officer and a new Global General Counsel for Litigation and Regulatory Affairs;
• adopted a set of guidelines limiting business in those countries that pose a high financial crime risk;
• issued a new global sanctions policy using a more extensive and consistent set of lists to screen all cross-border payments;
• commenced a review of all Know Your Customer files across the entire Group - the first phase of this remediation will cost an estimated $700m over five years, and
• undertaken to implement single global standards shaped by the highest or most effective anti-money laundering standards available in any location where the HSBC Group operates.

Over the five-year term of the agreement with the Department of Justice, an independent monitor will evaluate HSBC's progress in fully implementing these and other measures it recommends, and will produce regular assessments of the effectiveness of HSBC's compliance function.

The agreement notes that HSBC Bank USA and HSBC Group have "provided valuable assistance to law enforcement." HSBC conducted multiple extensive internal investigations, voluntarily made employees available for interviews, and collected, analysed and organised voluminous evidence and information.

HSBC is firmly committed to putting in place robust standards that will help promote the integrity of the global financial system. 

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Libor Scandal: UK Police Make Three Arrests

The Serious Fraud Office (SFO) has made three arrests as part of its investigation into the manipulation of the interbank lending rate, Libor.

The major banks declined to comment on the development but Sky sources have suggested that one of the people detained used to work as a trader at the Swiss bank UBS, which has a big presence in the City.

The SFO, with the assistance of the City of London Police, executed search warrants at three residential premises - one in Surrey and two in Essex.

It said in a statement: "Three men, aged 33, 41 and 47, have been arrested and taken to a London police station for interview in connection with the investigation into the manipulation of Libor."

It added: "The men are all British nationals currently living in the United Kingdom."

The SFO's criminal inquiry began in July when it decided existing legislation gave it the scope to bring potential prosecutions.

While the identities of those arrested and their employers are not known at this stage, it is known that the SFO's inquiry has been wide-ranging and not limited to Barclays - the only UK bank so far to have been fined in connection with the scandal.

Bob Diamond quit Barclays after its £290m fine came to light

The £290m penalty inflicted on Barclays preceded the departure of its chief executive Bob Diamond and forced the British Bankers' Association to signal it would abandon its responsibility for oversight of Libor amid a clamour among politicians for reform.

Libor, which stands for London interbank offered rate, affects more than £350trn in global transactions and the rates created through the submissions bear a heavy influence in the calculation of a host of financial products including mortgages.

The City regulator, the Financial Services Authority (FSA), has been working closely with the SFO in its investigation.

A review of Libor by the FSA's boss Martin Wheatley has suggested a new body be created to oversee it with the rates set being based more on actual trades rather than just banks' own estimates.

Around 16 financial institutions have been investigated worldwide over alleged Libor rigging - including a total of three based in Britain.

Taxpayer-backed Royal Bank of Scotland has previously said it hopes to settle any claims over Libor manipulation soon and warned that potential penalties could be significant.

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