Co-Op Chair Wardle Quits Amid Bank Crisis

By Mark Kleinman, City Editor

Len Wardle, the chairman of the Co-operative Group, is to quit the mutual amid a crisis that is poised to leave American hedge funds in control of its banking arm.

Confirming a Sky News report on Tuesday that Mr Wardle plans to inform Co-operative members of his plan to step down at the Group's half-year meeting on November 2, he said he would encourage its millions of members to appoint an independent chairman for the first time.

Mr Wardle, who will leave next year, has chaired the Co-op - which has an empire comprising funeralcare, pharmacies, legal services, supermarkets and banking - since 2007, but stepped down from the board of its banking division last month.

A former Labour councillor, he was among the enthusiastic backers at the Co-op of its proposed takeover of 632 Lloyds Banking Group branches, a deal which collapsed earlier this year because of a £1.5bn black hole in the balance sheet of the Co-op Bank.

"On 2 November I intend to give the membership my notice that I will relinquish my Chairmanship in May 2014," he said on Tuesday.

"In August this year, I informed the Board that it was my intention to step down at the end of my term of office whilst also making clear that I wanted to drive hard the reforms to modernise the Group. During the last year, we have appointed Euan Sutherland as Group CEO and started the changes that I believe will make The Co-operative Group stronger than ever.

"The Co-operative is at its best when it is reforming and I want this change to continue. I want to persuade our members that The Co-operative Group should now look to an independent chair to lead the business, working side-by-side with the members who represent the movement."

In an article earlier this year, Mr Wardle told Co-op members he understood misgivings about relinquishing control of a shareholding in the bank.

"Let me reassure you that the decision to seek a listing for the ordinary shares of the Bank was not taken lightly, but was approved at Group Board level, following a recommendation from the Banking Group Board, and only after very detailed consideration of all the other options open to us," he wrote.

Since then, the Co-op has been forced to agree a more radical restructuring of its bank, ceding ownership of 70% of the shares to hedge funds and other investors.

Earlier on Tuesday, the Group's former chief executive, Peter Marks, was grilled by MPs on the Treasury Select Committee and faced accusations that he was passing the buck for the troubles at the Co-op Bank.

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Npower Energy Bills Up 11% Before Christmas

Energy giant npower has announced an increase in household tariffs of 9.3% for electricity and 11.1% for gas.

The price rise will be imposed from December 1.

Chief executive Paul Massara said: "This has been a really hard decision for us and I know this news will not be welcome.

"Nobody wants to see their bills go up particularly when household budgets are being squeezed.

"We've tried to protect customers for as long as possible but the truth is we simply cannot hold off any longer.

"There are many external costs which are increasing your bills, including Government schemes and the actual cost of buying energy."

The company is the third of the so-called big six energy firms to raise prices in recent days.

On Thursday, British Gas become the second major supplier of household energy to announce a rise in its prices - by an average 9.2%.

The company said its electricity and gas prices would rise by 10.4% and 8.4% respectively from November 23 - affecting 7.8 million households.

Rival SSE announced a price hike almost two weeks ago, raising its bills by 8.2% from November 15.

Prime Minister David Cameron has called the latest increase "disappointing" and urged households to try to save money by switching suppliers.

But critics say it is more important to lock into a fixed tariff to avoid future rises.

E.ON, Scottish Power and EDF Energy are the other big providers and are yet to make announcements on their winter pricing.

The price boost by npower came after the Government confirmed a deal for EDF to build Britain's first nuclear power station in a generation.

But the Chinese-backed plant at Hinkley Point in Somerset is not expected to be commissioned until 2023 at the earliest.

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Rescue Plan Leaves Co-op With 30% Bank Stake

The Co-operative Group is to lose overall control of its banking arm amid a funding struggle, Sky sources have confirmed.

The Co-op will be left with only a 30% stake in the bank, according to Sky News City Editor Mark Kleinman.

An announcement is expected to confirm the deal next Monday, with City investors and bondholders filling the funding shortfall.

The growing likelihood of the self-styled ethical lender being controlled by predatory US hedge funds and blue-chip investors such as pension funds and insurers has triggered warnings over the bank's future ethos.

Meanwhile, the bank has confirmed a suspension of listing and trading on the London Stock Exchange of its subordinated debt securities.

"The group has stated that constructive engagement with bondholders is continuing and that Group remains confident that a proposal to recapitalise the bank can be agreed and put to bondholders," it said in a statement.

"The bank expects to request the suspension of the relevant securities to be lifted at the time that full details of a recapitalisation plan are announced."

The Co-op banking division operates as a mutual concept and currently has 4.7m customers. It includes an insurance arm for home, motor and pet cover.

On June 17 the bank, which was founded in 1872, announced it needed to raise £1.5bn to plug the capital black hole.

The bank now admits it needs an additional £105m to deal with increased provision for payment protection insurance (PPI) and other product mis-selling claims, and "expects that many elements of any recapitalisation plan will be materially different".

The recapitalisation from outside the mutual comes after the Co-op previously set aside £269m to compensate customers mis-sold PPI.

The recalculated funding shortfall is due to more customers coming forward as well as the Financial Conduct Authority providing fresh guidance on appropriate levels of compensation for customers.

The sum also includes a compensation for mortgage customers affected by a newly-discovered flaw in which they were charged only interest on their first mortgage instalment - meaning further payments were higher than they should have been.

Customers who took out Platform and Optimum mortgage products would have been affected although the bank has not yet notified any of them and further details of the scale of the issue remain unclear.

The bank said the overall new provision of up to £105m also took into account "the identification of a technical breach of the Consumer Credit Act".

This was thought to relate to failing to inform some loan customers that they could reduce their outstanding balance.

The overall provision from the bank also includes money put aside because of overdue payments and unpaid cheques.

Co-op disclosed the figures as it prepares for its recapitalisation plan - which will mean it has to publish financial details to the stock market.

The attempt to plug the £1.5bn black hole in its balance sheet through a painful fundraising will force losses on to owners of its bonds and leave it with a stock market listing - ending its prized mutual status.

Hedge funds represented by investment banks had earlier demanded the bank tear up its rescue plan, instead proposing an alternative plan of converting all its bonds into shares, giving it a bigger stake in the lender.

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One Direction Top Rich List For Under-30s

One Direction have earned a combined fortune of £59.33m, knocking Harry Potter actor Daniel Radcliffe off the top of a Rich List for British celebrities under 30.

The highest new entry in the list is DJ and music producer Calvin Harris, who is worth an estimated £22.1m.

Names falling out of the top 30 this year include Paolo Nutini, Jamie Bell, Natasha Bedingfield and Sienna Miller.

Daniel Radcliffe has been knocked-off the top spot by One Direction

The financial dealings, including TV shows, films, record sales and product endorsements were examined by a panel of industry experts to compile the list for Heat magazine.

One Direction were included as a single entry for their total earnings because the money was generated by the group rather than for any solo work.

Harry Potter star Radcliffe has topped the list since it was established in 2010, but is in second place this year with £56.19m.

Jamie Bell and Sienna Miller both fell out of the list

One Direction were apparently criticised for their earnings by Business Secretary Vince Cable during a debate about UK pay at an Institute of Directors event in April.

The Cabinet minister was questioned about the salaries of the band and was asked if he agreed it was "mad" the group had by then made an estimated £5m each over the past year.

He replied: "I agree ... about the extremities of pay and the fact much of it is downright insensitive and in some cases grossly immoral."

But aides later stressed the Liberal Democrat had misheard the question and was referring to the pay of chief executives, rather than the group.

Mr Cable was unveiling a 12p rise in the minimum wage when he made the remarks.

On October 1, the minimum wage for 18 to 20-year olds rose to £5.03, and to £3.72 for 16 and 17-year-olds.

:: The full list of the top 10 richest British celebrities under 30, with last year's position in brackets:

1 (5) One Direction, £59.33m

2 (1) Daniel Radcliffe, £56.19m

3 (2) Robert Pattinson, £44.16m

4 (3) Keira Knightley, £37.28m

5 (4) Emma Watson, £27.93m

6 (6) Adele, £27.54m

7 (7) Rupert Grint, £24.09m

8 (-) Calvin Harris, £22.21m

9 (9) Cheryl Cole, £15.50m

10 (8) Leona Lewis, £14.45m

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Grangemouth: Owner 'In Dark' As Buyer Sought

The owner of the Grangemouth refinery, currently shut down during a bitter dispute with staff, has told Sky News it did not know the Scottish Government was seeking a new buyer.

Ineos said it would announce on Wednesday morning whether it planned to keep the site open following a shareholder meeting - hours after Finance Secretary John Swinney confirmed talks with several parties.

The developments emerged after two-thirds of workers at the refinery refused to accept new terms and conditions as part of a survival plan for the site's future.

Unite has welcomed the prospect of a sale

The Scottish Government's move was seen as a precaution - given the threat the shutdown poses to fuel supplies.

In an interview with BBC Radio Scotland Mr Swinney warned that the dispute between the current owner and the Unite union was heading for a stalemate and said "alternative options" were being considered.

"I don't think it will come as any surprise to anybody that the Scottish Government is looking at alternative options and there will be other players around the globe who will be interested in this particular plant.

"There are discussions...going on with other parties. The Scottish Government will continue to pursue those discussions because we think that is the right and the responsible thing to do."

Mr Swinney dismissed any idea of Government ownership of the site as "not appropriate".

"We are in a situation where the plant is operating successfully within the marketplace and it can work and operate more successfully in the market place," he said.

He urged Ineos to accept a trade union statement that there would be no strike action during negotiations at "face value".

"I can see no good reason for the plant lying idle today and I think it should be started as a matter of urgency," he said.

Ineos had set a deadline of 6pm on Monday for its employees to sign up to changes to pay, pensions and terms and conditions.

The company said hundreds of workers had accepted the proposals, but Unite maintained that, as the deadline passed, two out of three of its members had said no.

Last Thursday, Ineos sent a letter to all 1,350 workers at the site asking them to indicate their rejection or acceptance of the plan.

It said those who supported the survival plan would receive a transitional payment of up to £15,000.

The two sides have been embroiled in a bitter dispute for weeks, initially over the treatment of Unite convenor Stephen Deans, who was involved in the row over a selection of a Labour candidate in Falkirk, where he is chairman of the constituency party.

He was suspended, then reinstated, and is facing an internal investigation, which is due to report on Friday.

The dispute has since widened to the future of the entire site, with Ineos warning that it will close without fresh investment and changes to pensions and other terms and conditions.

The company said the plant, which has been shut down since last week because of the dispute, is losing £10m a month.

Ineos shareholders are expected to meet today to discuss the dispute and Unite released the text of a letter to the company's chairman Jim Ratcliffe ahead of the meeting, which accused him of standing in the way of an agreement.

Unite general secretary Len McCluskey also welcomed news of the buyer talks with the Scottish Government in a statement.

He said: Jim Ratcliffe's behaviour has exposed a dreadful frailty at the heart of our energy supply, which is that one man's power and wealth can hold our governments and citizens to ransom.

"Our politicians need now to step up. Our public utilities cannot be run by those indifferent to considerations of social responsibility.

"Unite calls upon politicians in Edinburgh and Westminster to support a new beginning for Grangemouth, free of the tyranny of one man's whims.

"If this means securing financial assistance - or even nationalisation - then this must be done. We can have no objections from Westminster when they have handed our nuclear energy future over to the state-owned Chinese and French nuclear industries."

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Nokia Reveals Lumia Tablet And Windows Phone

Nokia has revealed its first tablet device, the Lumia 2520, as well as a new Windows Phone with a large six-inch display.

The announcements were made at its showpiece Nokia World event in Abu Dhabi.

Apple is also expected to reveal its new iPad range later on Tuesday.

Nokia's first tablet has a 10.1-inch screen, runs on Windows 8.1 and comes with a 2.2GHz Snapdragon 800 processor.

It also has fast LTE connectivity for mobile use, a 6.7 megapixel camera and can hook up to Nokia's slimline Power Keyboard.

The Lumia 2520 is due out before Christmas and will cost $499 (£309) in the US, while a UK price has not yet been revealed.

Nokia also presented its latest smartphone line-up at the Abu Dhabi event.

Its brightly-coloured Windows Phone handsets have been given a boost to a six-inch screen.

The display size of the new 1520 and 1320 Lumia phones trumps that of rivals such as Samsung's Galaxy S4, reflecting a trend toward "bigger is better" when it comes to flagship handsets.

It also pushes the devices into the loosely-defined "phablet" category, where the line between a tablet and a phone blurs.

The new top-end 1520 model comes with a full 1080p high definition display and a 20 megapixel camera, while the 1320 model has a 720p screen.

Too big for your pocket? Nokia's Lumia 1320 has a very large screen

Windows Phone devices have been starting to gain popularity with consumers, largely thanks to Nokia.

They now have 9.2% share in the main European markets, according to researcher Kantar World Panel, up from 5.2% a year before.

However, they still lag significantly behind Android and Apple iPhone handsets.

Nokia revealed last month that Microsoft is to buy its mobile phone business for £3.2bn, with 32,000 employees to transfer to the US company early next year.

The timing of its first tablet may surprise some, considering Microsoft has just starting selling an updated version of its own Windows tablet, the Surface.

Tuesday's second big technology reveal takes place in San Francisco at 6pm UK time, when Apple takes centre stage.

Weeks of speculation point towards a thinner and lighter iPad that should also feature a faster processor.

The higher resolution Retina display is also expected to be introduced for the iPad Mini.

Other likely updates include a refreshed MacBook Pro laptop and a release date for Apple's latest operating system, called Mavericks.

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Energy Regulator Moves To Protect Fixed Rates

Energy suppliers have been banned from increasing their prices on fixed-rate deals, the industry regulator confirmed while announcing an £8.5m penalty against ScottishPower over misleading sales techniques.

News of the redress comes at a sensitive time for the big six energy firms which are under fire from customers over inflation-busting increases to bills ahead of winter while politicians scrap over intervention in the market.

To date, three of the firms have announced average rises of between 8% and 11% and today the Energy Committee of MPs added to the backlash by confirming it would be summoning the bosses of British Gas, Scottish Power, E.ON, EDF Energy, nPower and SSE to give evidence on the hikes to bills.

Amid accusations it had been slow to protect consumers, Ofgem said new rules were now in force meaning energy suppliers were banned from increasing prices on fixed-term tariffs over the course of a contract and banned from automatically rolling householders onto another fixed-term offer when their current one ended.

Energy Secretary Ed Davey had demanded simpler tariffs

The regulator said it wanted to end loopholes in fixed rates, including fixed deals linked to standard tariffs, meaning they would rise as standard prices increased.

From December 31, firms will have to cut the number of tariffs they offer customer to just four for gas or electricity, while from March companies will have to show the cheapest tariff they offer on every customer's bill.

Andrew Wright, Ofgem's chief executive, said: "Ofgem is resetting the energy market in consumers' favour to make it simpler, clear and fairer.

"Today's extra protection for consumers on fixed prices is just one of a range of reforms we are bringing in over the next six months to hold energy companies to higher standards.

"If suppliers fail to deliver, then Ofgem stands ready to take enforcement action to protect consumers.

"In an era of rising prices it is vital that competition works as effectively as possible. Our reforms seek to give consumers the tools they need to find the best energy deal for them and to ensure that suppliers have to treat them fairly.

"Ofgem is going to make it easier for consumers to 'vote with their feet' and for new suppliers to enter the market and take on the big six.

"Now we are looking for energy suppliers to pick up the baton and put their efforts into restoring consumer trust.

"Encouragingly suppliers have shown a willingness to start on this journey by signing up to our reforms and are now acting to implement them."

ScottishPower: 50,000 households may get up to £30 compensation

Ofgem's action followed criticism from MPs and Labour which have accused the regulator in the past of failing in its duty to protect energy customers.

Energy and Climate Change Secretary Ed Davey said: "This is a clear, strong signal that energy companies shouldn't expect to get away with bad practice.

"We're giving Ofgem powers that force energy companies to make direct payments to consumers hurt by these kinds of activities, and backing up Ofgem's reforms so that consumers get a simpler, fairer deal."

Ofgem also confirmed on Monday a deal with ScottishPower to rectify previous mistakes.

The firm is to pay £7.5m to benefit vulnerable customers and establish a £1m customer compensation fund for breaching the terms of its market licence between October 2009 and January 2012.

Ofgem said ScottishPower provided customers with inaccurate estimations of annual charges and comparisons with their current supplier both on the doorstep and over the phone.

The settlement, the company said, meant that more than 140,000 people on the Warm Home Discount scheme would automatically receive payments of around £50 each.

ScottishPower said it would write to 336,000 households that may have been mis-sold but came under fire for estimating mis-selling compensation payments at between £5-£30 per affected customer.

Shadow energy secretary Caroline Flint said: "This is yet more evidence that Britain's energy market is broken.

"Yet again Ofgem's response has been weak and David Cameron refuses to stand up to the energy giants. These companies need to know that if they mistreat their customers there will be a heavy price to pay."

The company said it accepted the selling failings, but insisted it had now rectified the problems. It stopped door-to-door selling in 2011.

:: We want to hear from you - if you've signed up for a fixed tariff, only to find your bill has gone up, or if you've been a victim of mis-selling please get in touch. You can email your comments - or a video of yourself making them - to news@sky.com.

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Metro Bank Targets New Funds As Losses Peak

By Mark Kleinman, City Editor

Metro Bank is weighing plans to take advantage of favourable stock market conditions by floating in the coming months even as some of its shareholders clamour to buy more shares privately.

In a letter to shareholders - a copy of which has been obtained by Sky News - the first new UK high street lender for more than a century said it was drawing up plans to raise fresh funding in addition to roughly £250m for which it has tapped investors since being set up four years ago.

"The bank intends to conduct a further capital raise to support the dynamic growth in lending and stores; the timing, quantum and methodology of the capital raise will be formally communicated shortly," the letter said.

People close to Metro Bank said its board had not yet decided whether to seek the new money, which would probably involve raising at least £100m, from existing shareholders or through a stock market listing. Executives from the bank are understood to have been in discussions with investment banks about its plans in recent weeks.

The circular to investors also outlined the escalating losses at Metro Bank, which lost £14.3m before tax in the three months to September and £38.6m in the year-to-date. That takes the lender's total losses since being set up to nearly £140m.

However, Vernon Hill, chairman, and Craig Donaldson, chief executive, told shareholders that the second quarter of 2013 "will therefore have marked the peak quarterly loss and that quarterly losses will now fall until the bank achieves profitability".

The losses underline the costs associated with breaking into the UK's retail banking sector at a time when Government ministers are attempting to foment new competition through a string of new policy measures, including reducing capital and liquidity requirements for new entrants.

The numbers handed to Metro Bank's investors, which are broadly in line with the bank's expectations, also demonstrate strong growth in its deposits and lending activities, with loans growing by nearly £200m during the third quarter.

Metro Bank's first branch opened in Central London in July 2010, and it now has 20 open, with aggressive expansion plans set out over the next five years.

Among the innovations it has introduced to the UK are dog-friendly and drive-through branch facilities, reflecting Mr Hill's determination to revolutionise the consumer banking experience.

According to the circular to shareholders, who include the American hedge fund tycoon Steve Cohen and the billionaire Reuben brothers, loans and advances to customers grew at an annual rate of 370% between July and September.

Metro Bank said on Tuesday that it had been the biggest beneficiary of the new seven-day current account-switching regime, with customer accounts rising from 136,000 on January 1 to 238,000 by September 30.

Mr Donaldson said that "huge numbers of customers [have been] using the new service to vote with their feet, and join us for a customer service focused banking experience", although industry analysts suggested that the total of 89,000 customers switching during the first month had been modest.

Metro Bank plans to enter the market for lending to small and medium-sized businesses (SMEs) by rebranding SME Invoice Finance, a company it bought recently, as Metro Bank Invoice Finance.

Metro Bank is chaired by Vernon Hill, who enjoyed huge commercial success with the launch of similar banking ventures in the US before encountering difficulties with regulators.

The company's directors include Luke Johnson, the restaurants entrepreneur, and Lord Flight, former chief secretary to the Treasury.

A Metro Bank spokeswoman declined to comment.

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US Economy Adds 148,000 Jobs In September

US employers added just 148,000 jobs in September - far fewer than expected – suggesting a loss of momentum in the economy.

Still, hiring was strong enough to lower the unemployment rate.

The Labor Department said the rate fell to 7.2%, down from 7.3% in August and nearly a five-year low.

The weaker job figures make it more likely that the Federal Reserve will maintain its level of bond purchases when it meets next month.

The bond purchases are intended to lower long-term interest rates and boost borrowing and spending.

The closely-watched monthly employment report was released more than two weeks later than originally scheduled because of the partial shutdown of the federal government.

The government reopened last week after the 16-day shutdown that may have further depressed economic growth and hiring.

Temporary layoffs of federal workers and private government contractors will probably lower October's job gains. But that is likely to be a temporary decline.

Many economists say they will not have a clear view on hiring and unemployment until the November jobs report is released, in early December.

High unemployment has discouraged many Americans from looking for work. The percentage of Americans working or looking for work remained at a 35-year low in September.

There were some positive aspects in the latest jobs report, though.

Several higher-paying industries added jobs at a healthy pace, while construction firms gained 20,000 positions.

Government boosted payrolls by 22,000, and transportation and warehousing gained 23,400 jobs.

Despite the jobless rate being at its lowest level since November 2008, the market reaction has been relatively soft.

The market was expecting 180,000 net new jobs and Dow Futures were just 0.3% higher ahead of the 2.30pm opening.

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Energy Bills: Major Calls For 'Windfall Tax'

By Jon Craig, Chief Political Correspondent

Former Prime Minister Sir John Major has dropped an energy price hike bombshell on David Cameron by calling for a windfall tax on power companies this winter.

In a move that stunned the Tory high command, he said the recent price rises were unacceptable and many people would have to choose between heating and eating.

And he said that if there was severe cold weather this winter and the Government had to help vulnerable people it should impose an "excess profits tax" on the energy companies.

But within an hour the former Prime Minister was slapped down by Downing Street, with the Prime Minister's spokesman declaring: "We have no plans for this."

Labour seized on the apparent disarray.

Ed Miliband, whose price freeze pledge has put the Government on the defensive for weeks, tweeted: "Sir John Major makes Labour's argument: David Cameron stands up for the energy companies not hard-pressed families."

Ed Miliband said Sir John was making "Labour's argument"

Sir John's shock intervention in the energy price row came in a comeback speech to political journalists at Westminster in which he made a passionate plea to the Tories to win back the support of blue collar voters.

Asked about energy price hikes of up to 10%, Sir John said: "I do not see how it can be in any way acceptable that with energy prices rising broadly 4% in terms of costs that the price to the consumer should rise by the 9-10% that we are hearing.

"I do not regard that as acceptable at all by the energy companies.

"And it is not acceptable to me, it ought not to be acceptable to anyone, that many people are going to have to choose between keeping warm and eating. That is not acceptable.

"So if we get this cold spell the government, I think, will have to intervene and if they do intervene, and it is costly, I for one would regard it as perfectly acceptable for them then, subsequently, to levy and excess profits tax on the energy companies and claw that money back to the Exchequer, where their primary job is to get the economy working and people back to work."

Asked if he was backing the Labour leader, the former Prime Minister said: "When Ed Miliband made his suggestions just a few weeks ago I think his heart was in the right place but his head had gone walkabout.

"But he did touch on an issue that's very important. The private sector is something the Conservative party support but when the private sector goes wrong or behaves badly I think it is entirely right to make changes and put it right."

David Cameron's spokesman said it was an "interesting contribution"

Sir John told reporters that with interest rates at a record low, energy companies should be looking to borrow money to pay for investment rather than funding it "out of the revenue of families whose wages have not been going up at a time when other costs have been rising".

"I believe there will be difficulties this winter without action and, if there are those difficulties, the Chancellor will have my total support if he acted in the way I suggest and imposed an emergency impost upon the energy companies to claw back the money that we will have to give to people to help them see the winter in any form of warmth," he said.

Shortly after Sir John's speech, Mr Cameron's spokesman told reporters: "The Prime Minister's view on this is that this is an interesting contribution. We have no plans for this.

"What the Government is doing is legislating around forcing energy companies to put customers on their lowest tariffs and more competition in energy markets."

Asked about Sir John's concerns about people having to choose between eating and heating this winter, the spokesman said: "There are a number of initiatives that the Government has to support vulnerable people, such as the cold weather payments.

"We have a range of ways in which support is given and those are the right ones."

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