South Korea Credit Card Data Theft Outrage

Thousands of concerned South Koreans have flocked to bank branches after the theft of data linked to 80 million credit cards.

There has been widespread public concern and anger after it was revealed that information including salaries, monthly card usage, credit rating and card numbers had been stolen from three major credit card firms.

Legal action is being threatened against the companies, which have been accused of failing to ensure adequate security.

It is the biggest confidential data breach ever in South Korea and has underlined the vulnerability of credit card information in a country where residents have, on average, more than four cards.

The stolen information from the companies involved - Lotte Card, KB Financial Group and NongHyup Bank - was unencrypted, according to the Financial Supervisory Service.

No financial losses have yet been reported.

Speaking outside a bank branch, Lee Young-hye said: "Of course I'm angry. Anyone might know when I pay my credit card bills, let alone my phone number and where I live. I might as well keep all my money in my closet."

Bosses at the companies have made a public apology and authorities have promised to improve security measures.

The regulator has urged the companies to be on their guard for data theft not only from hackers, but also by employees and contractors.

Prosecutors say an employee of Korea Credit Bureau, a contractor used by the companies, stole the data by copying it to a USB device.

The worker, who was responsible for developing new software to detect credit card fraud, sold the data to a loans company, it is alleged.

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OneSavings Heeds Miliband Call In Float Push

By Mark Kleinman, City Editor

A lender backed by a prominent Wall Street financier is stepping up plans for a stock market flotation that it hopes will help it to become a serious challenger to the main high street banks.

Sky News has learnt that OneSavings Bank, whose Kent Reliance and other trading brands have hundreds of thousands of customers, has hired Barclays, Royal Bank of Canada and Canaccord Genuity to work on the listing.

The flotation is expected to take place this year, and would offer at least a partial exit route for Christopher Flowers, the American tycoon whose investment vehicle helped to devise a rescue plan for the struggling Kent Reliance Building Society in 2010.

The appointment of the investment banks follows calls by the Labour leader, Ed Miliband, for greater competition in Britain's banking sector.

In a speech last week, Mr Miliband said that a Labour government would create two new challenger banks to the 'big five' by forcing established players to shrink their market share.

JC Flowers injected £50m of new capital into KRBS four years ago in exchange for roughly 40% of OneSavings, which describes itself as part of a "unique mutual hybrid arrangement", under which the bank is a subsidiary of an industrial and provident society called the Kent Reliance Provident Society (KRPS).

The restructuring was designed to allay members' fears about the loss of its mutual ethos when it agreed the deal with JC Flowers, one of Wall Street's most prolific investors in financial institutions.

Insiders insisted that a flotation would not diminish that mutual ethos, echoing a vow made by the Co-operative Group as part of its ongoing £1.5bn restructuring.

In a statement issued to Sky News last month, a spokeswoman for OneSavings Bank said:

"I can confirm that OneSavings Bank is reviewing various options to continue to build the business for the long term benefit of all its stakeholders whilst maintaining the bank's mutual ethos - to make any further comment would be premature."

the bank declined to comment on the appointment of advisers.

If it does float, it would herald a return to the stock market in the banking sector for Sir Callum McCarthy, the former boss of the Financial Services Authority, who is among OneSavings' non-executive directors. Stephan Wilcke, the bank's chairman, was one of the architects of the improved deal won by the Co-op Bank's private investors last month.

Since injecting funds into Kent Reliance in 2010, JC Flowers has sought to acquire other lenders in order to create a much larger organisation. However, it has been thwarted in its efforts to buy the Principality Building Society and more than 300 branches being offloaded by Royal Bank of Scotland (RBS).

It did succeed earlier this year in snapping up a package of performing loans from Northern Rock Asset Management, the taxpayer-owned "bad bank", which added 70,000 customers to its ranks.

OneSavings discloses some information about its financial performance because it has subordinated debt instruments which trade on the London Stock Exchange.

In August, it announced that it made a post-tax profit of £12.4m during the first half of the year, against a post-tax loss of £1.8m during the same period a year earlier.

There is an unprecedented pipeline of British banks waiting to list their shares publicly, including branch networks being sold under European state aid rules by both RBS and Lloyds Banking Group.

Metro Bank, which is raising £385m to fund its expansion, plans to float in 2016. Aldermore, a specialist lender to small and medium-sized companies, and Santander UK are also likely to pursue listings in the next two years.

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Horsemeat Scandal Firm Findus Plots Payout

By Mark Kleinman, City Editor

One of the companies at the centre of last year's horsemeat scandal is plotting a financial restructuring that will lead to a multimillion-pound payout for its owners.

Sky News has learnt that Findus is planning to launch a bond worth up to £200m in the coming weeks to take advantage of attractive financing markets.

People close to the company insisted that the restructuring was not designed to pay a dividend but conceded that because the shareholders also own some of Findus' debts, the refinancing would lead to a lucrative windfall.

The refinancing, which is likely to be handled by bankers at Goldman Sachs and JP Morgan, will focus on replacing about £200m of expensive mezzanine debt owed by Findus.

It is understood to be the first significant payout that Findus's shareholders have been in line to receive from the company since it was engulfed in crisis over the mis-labelling of ready-meal products last year.

A previous bond issue last summer did not result in a shareholder dividend, the company said at the time.

The frozen food group is majority-owned by JP Morgan and Highbridge Capital, a hedge fund, while Lion Capital, a private equity firm, owns a minority shareholding.

Their plans for a financial restructuring follows a move by the owner of rival Iglo Birds Eye to amend the terms of its borrowing agreements.

Findus' future in the UK looked in jeopardy last year when the discovery that some of its beef products were actually 100% horsemeat led to them being removed from sale.

The list of companies embroiled in the controversy eventually included Asda and Tesco.

Findus' UK sales are understood to have  recovered since then, with meat-based ready meals accounting for only 1% of its turnover.

The company, which operates internationally, had annual sales of last year of about £1.1bn and earnings before interest, tax, depreciation and amortisation of roughly £90m.

Findus declined to comment on Tuesday.

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Warning Over New Platinum Mine Strikes

The South African government has warned that the country cannot afford industrial action, ahead of a planned strike this week at the world's top three platinum producers.

Finance Minister Pravin Gordhan issued the warning as the platinum industry's main trade union served notice on Anglo American Platinum, Lonmin and Impala Platinum.

South African industry has been hit by a series of sometimes violent strikes in the factory and mining sectors.

Growth has been constrained to a sluggish 2% in 2013, which has thwarted job creation by President Jacob Zuma's administration.

Gold and platinum mining have been crucial to the economy

The African National Congress has ruled since white minority rule ended in 1994, but the Mr Zuma's party has suffered increasing hostility after failing to improve living standards.

On Monday, Platinum producers Anglo American Platinum, Lonmin and Impala Platinum confirmed they had received notice from the Association of Mineworkers and Construction Union (AMCU) to strike in 48 hours.

Industry experts now predict the onset of unrest to hit the sector.

Thousands of workers went on strike at the Marikana mine in 2012

The trade body representing the bullion producers said it hoped to thwart AMCU industrial action at three gold mining locations through court orders.

The AMCU has rejected an 8% pay hike that rival union National Union of Mineworkers (NUM) - which still represents most gold miners - negotiated with mine firms last year.

The South African currency has taken a battering in recent months.

The rand has lost 4% in 2014 against the US dollar, and now hovers near five-year lows after the strike plans were announced.

More than 50 people died in violent mine protests in 2012, amid claims of police brutality and firing on striking workers.

The impact on Africa's biggest economy prompted rating agencies Moody's, Fitch, and Standard and Poor's to downgrade the country.

Police were accused of indiscriminate firing on protesters

This prompted the rand losing value by around a quarter.

"The platinum industry needs to seriously get around the table," Mr Gordhan said.

"We can least afford another round of strikes that will act as a destabilisation to the platinum sector, which has had increasing difficulties over the last 18 months."

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UKFI Seeks Cut-Price Deal On New Lloyds Sale

By Mark Kleinman, City Editor

The agency which manages taxpayers' stake in Lloyds Banking Group is attempting to secure a knockdown price from City bankers vying to work on a share sale that will return it fully to the private sector.

Sky News understands that UK Financial Investments (UKFI) has asked investment banks in recent days to present fee proposals for executing a sale of part or all of the Government's remaining £20bn stake in Lloyds.

Insiders said the Treasury was seeking a deal under which UKFI would pay no fees on the portion of the transaction which involves selling Lloyds shares to institutional investors.

A previous sale in September saw the Government offload a 6% stake in the bank, a deal which the National Audit Office (NAO) concluded had resulted in loss to the taxpayer of more than £200m but which nevertheless represented good value.

That transaction, which yielded £3.2bn for the Government, saw the taxpayer's stake in Lloyds reduced from 39% to 33%.

The NAO revealed that while institutions paid £4.7m in selling commission to the bookrunners, UKFI negotiated to receive a payment of 25% of the commissions charged to investors.

A source suggested that UKFI would seek a similar structure from the next sale, although it was likely to have to pay substantial fees to brokers involved in organising a large-scale retail share offering.

Sky News revealed earlier this month that UKFI wrote to the Lloyds board during the Christmas break to ask it to write a prospectus that would accompany a major retail sale.

The latest developments underlines the Treasury's intention to sell a large chunk of its remaining 33% shareholding in Lloyds this year.

A formal announcement from the Treasury about a new share sale cannot take place until after Lloyds' full-year results at the end of next month.

Insiders pointed out that the bank would be required to wait until its full-year results had been audited several weeks later before a prospectus could be completed.

Antonio Horta-Osorio, its chief executive, hopes to signal at Lloyds' results that the bank has been given regulatory approval to resume dividend payments to ordinary shareholders for the first time since 2008.

George Osborne, the Chancellor, believes that a sale in which the public can participate could be politically useful as well as delivering a financial boost to the Treasury.

Shares in Lloyds closed on Monday at 83.18p, just 4% below its 12-month high.

The bank now has a market value of almost £60bn, having risen by more than 63% during the last year and meaning that the Government's remaining 33% stake is worth nearly £20bn.

Lloyds and UKFI declined to comment.

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Small Business Lending Has Gone Down Say MPs

Many smaller firms are still struggling to get finance and Whitehall is not doing enough to raise awareness of the help available it has been warned.

But the critical report by the Commons Public Accounts Committee has been rejected by the Government, which argues credit conditions for small and medium-sized enterprises (SMEs) are improving, and new lending is being provided.

MPs on the influential financial watchdog said that up to 2015 the Government was spending nearly £3bn on schemes to help firms, but departments could not show these were being successful in tackling the market failures they were designed to tackle.

The committee's report said: "Indeed far from encouraging more lending to SMEs, investment has declined."

Margaret Hodge, who chairs the committee, said: "Small and medium-sized enterprises have a vital role to play in driving the UK's economic recovery, but despite Government attempts to encourage lending to SMEs many still struggle to access the finance they need.

Margaret Hodge said schemes were run as a series of ad hoc initiatives

"At the time of our hearing overall lending to SMEs was down. Net lending by banks participating in the Funding for Lending scheme has declined by £2.3bn since the scheme was launched, and the number and value of loans backed by the Enterprise Finance Guarantee fell each year between 2010 and 2013.

"Departments manage their various schemes not as a coherent programme but simply as a series of ad hoc initiatives.

"There is no common understanding about which parts of the SME sector are generating the most growth and where government support would do most good.

"Departments were therefore unable to demonstrate that they are achieving best value for taxpayers' money."

The MPs recommended the establishment of the British Business Bank should be used to oversee and coordinate schemes.

John Allan, chairman of the Federation of Small Businesses, said: "Recent FSB research shows hundreds of schemes available to support small and medium-sized businesses, but no clear mechanism for evaluation, co-ordination or communication either at the national or local level."

A Government spokesman said: "The PAC's assessment does not reflect the reality, which is that credit conditions for SMEs are improving, new lending is being provided and small businesses are being offered cheaper loans rates.

"But we want to do more which is why the British Business Bank will be fully operational later this year.

"We expect the Bank to unlock up to £10bn of funding for firms over the next five years."

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Energy Bosses 'Utterly Complacent' Over Storms

Energy bosses have been accused of "utter complacency" over their response to the Christmas storms that left hundreds of thousands without power.

The heads of the six companies, responsible for the networks which provide power to the UK's homes, were appearing before MPs on the House of Commons Energy Select Committee.

They said they were pleased with the response to the crisis, which saw some homes without power for up to five days, effectively claiming that customers were lucky it had not taken longer to restore electricity to homes.

In addition they were unable to tell MPs how many people were affected, even three weeks after the event.

The committee accused them of having exploited their "privileged monopoly position" and of a lack of sympathy for families who were left without electricity on Christmas Day.

Yalding resident Erica Olivares confronted David Cameron over power cuts

Conservative MP Tim Yeo lambasted them saying: "I've heard nothing at all this morning which reassures me that you are taking this problem seriously enough to deal with the concerns of millions of your customers.

"There is no sense of urgency in what you said about any plans to step up your capacity to respond to severe weather even though we now have quite clear warnings that extreme events are likely to take place more frequently in future."

In addition they cast doubt on Energy Secretary Ed Davey's pledge to introduce a 999-style emergency blackout telephone number for households confused over whom to call in a crisis.

Mr Davey made the claim on January 8 following a meeting with the six energy network company bosses, however, when questioned David Smith, chief executive of the Energy Networks Association, said they were "working on it".

Mr Yeo accused the firms of managing to "make the Secretary of State look ridiculous in his claim that there is going to be a three digit number that customers can use".

Power cuts caused chaos as Gatwick Airport. Pic: Andrew Jennings

He asked Mr Smith if he had informed Mr Davey's office that the introduction of an emergency number were "complete nonsense" and was told: "We had the conversation with the Secretary of State and one of the things that we were very clear on was we need to do some more work, we need to get the final bits and pieces in place, and that was the key point."

Mark Mathieson, managing director of SSE's electricity networks, told the committee: "It was just the impact of the event. It was a massive event. Certainly we haven't seen damage like this in the South back from the early 90s and even back to the great storm of 1987.

"I think the one thing I would say, and I've been in this industry for 25 years, we as an industry clean these events up much quicker than we used to. But we also recognise the impact that has on customers.

"We are sorry and I did go out to communicate with customers that we were sorry that they were off."

Tim Yeo criticised firms for neglecting customers

Basil Scarsella, the chief executive of UK Power Networks, said that they had been prepared for the storms but that the weather forecast "escalated significantly".

He said that on Friday they had forecast 40-50mph winds for Monday but by Sunday that has increased to 70-80mph.

The bosses were also questioned over the levels of compensation offered to customers who had gone without power.

They said they had doubled the levels of compensation to households who had been without power.

However, they were given examples where payouts were being questioned where homes had not met the criteria of 24 hours without power because electricity had been restored for five minutes during the day.

There was widespread anger about the delays in restoring power during the prolonged period of flooding over Christmas.

The outages caused significant delays at Gatwick airport with hundreds of passengers affected and flights cancelled.

David Cameron was memorably confronted by angry resident Erica Olivares during a visit to the village of Yalding in Kent on December 27.

Mr Yeo concluded the committee hearing by telling the six men: "I have to conclude that you are exploiting your privileged monopoly position and you have displayed a neglect of your customers which I personally find absolutely astonishing."

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Lloyds Co-Op Deal Denounced By Lord Levene

A peer has alleged "bad faith" after a bid he was leading to buy hundreds of Lloyds bank branches lost out to the rival Co-operative Group.

Giving evidence to MPs at Westminster, Lord Levene, who chaired NBNK Investments which had been seeking to create a new 'challenger' bank, said the bidding process had been unfair.

And he accused Lloyds of "unattractive commercial practice".

Lord Levene also claimed he was told in a confidential meeting with the then-Governor of the Bank of England, Mervyn King, that it would be a "political decision".

Lord Levene claimed the bidding process for the Lloyds branches was unfair

The hearing formed part of the Treasury Select Committee's inquiry into the collapse of the Co-op's acquisition of 632 Lloyds branches.

Lord Levene appeared alongside Gary Hoffman, the former chief executive of NBNK.

Speaking about the thwarted NBNK bid, Lord Levene told MPs: "It's a matter of great regret to me this didn't happen.

"I think it was a good idea but life goes on and you have to get on with it."

But when asked by committee chairman Andrew Tyrie if the bidding process was fair he said: "No."

Under further close questioning by Mr Tyrie, he was asked if he was alleging bad faith.

He replied: "Yes."

In evidence to MPs, Lord Levene said during the bidding process he was told to look at the reference to financial services in the Coalition agreement, which said one of the goals was "to promote the interests of mutuals".

Lord Levene said: "With the benefit of hindsight there seems to have been a view that if the creation of a new challenger bank was created by a mutual it would be another tick in the box for the goals set out.

"I have no problem with that provided it's done by fair means rather than than foul.

"In our view they chose to concentrate on all the positive aspects of the Co-Op, and none of the positive aspects of our bid."

He said later: "It was like a penny dropped, and we suddenly started to realise where this was coming from."

Lord Levene also accused Lloyds of "unattractive commercial practice", and said  the evidence it had given to the Treasury committee was "at best disingenuous".

Lord Levene repeated his claim that the bid by NBNK had been "financially superior".

The peer told MPs he had personally lost £60,000 as a result of the failed bid. Investors collectively lost £30m.

Mr Hoffman said: "The great tragedy out of all of this is that it's been to the detriment of the mutual sector, and that's a great tragedy.

"The other great tragedy is we don't have a challenger bank."

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Motorway Pub Opens Despite Opposition

A new £1m pub has opened at a motorway service station, in the face of fierce criticism from road safety and alcohol campaigners.

Pub chain JD Wetherspoon says The Hope & Champion will be open from 4am to 1am, seven days a week.

The venue is located in the Extra Motorway Service Area at junction 2 of the M40 in Beaconsfield, Buckinghamshire.

The first person to order a pint was a man called Tom who told Sky News he had heard on the news that it was the first motorway pub to open so he had stopped on his way into work.

He ordered his pint at 9.20 and, when asked what he thought of the idea of selling alcohol on the motorway, he said it was "frankly ridiculous".

Tom, who was "slightly surprised" by the number of photographers on hand to record the moment, had a few sips of his pint and then put it down, saying he was driving.

It is the first pub ever to be opened at a motorway service area, and will sell real ale from local and regional brewers.

But critics say the location of the pub is "at odds" with public opinion.

Wetherspoon's is defiant about the opening, despite critics' complaints

The RAC said a survey of 2,000 people showed only 12% of respondents supported putting pubs into motorway service stations.

Around two-thirds said they did not agree with the move, with older drivers more likely to oppose the sale of alcohol at motorway service areas.

Only 8% of over-55s were in favour, with 71% against, while almost one in five of those aged between 18 and 34 were in support.

The RAC's head of external affairs Pete Williams said: "The public appear to be very much against the introduction of motorway pubs.

"In our view this is a risky and frankly unnecessary move. The question we are struggling to answer is - of all the places to open a pub, why choose a motorway service station?

"The temptation to drink and drive can only be increased by easier access to alcohol."

But Steve Baldwin, manager of the new pub, said the venue would serve the local community.

"The Extra Motorway Service Area, now including The Hope & Champion, primarily serves the motorway users, but its facilities are also available to the surrounding community from the local road network," he said.

Sir Ian Gilmore, Royal College of Physicians special adviser on alcohol and chair of the Alcohol Health Alliance, said: "I am disappointed by the decision to open a JD Wetherspoon on the M40.

"We are trying to prevent harm from alcohol-related traffic accidents and this sends out completely the wrong message."

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IMF Improves Economic Growth Forecast For UK

Full-Blown Recovery Uncertain Despite IMF Boost

Updated: 4:40pm UK, Tuesday 21 January 2014

By Ed Conway, Economics Editor

The chances are by now that you are already well aware of the gist of the International Monetary Fund's latest update to their economic forecasts.

As we revealed on Sky News on Monday, the Fund is raising its forecast for UK economic growth this year from 1.9% to 2.4% - the biggest upgrade of any major economy.

It is raising its forecast for world economic growth as well, though by far less: it is 0.1 percentage points higher than in October, at 3.7%.

The US is also slated to grow at a faster rate than previously expected - 2.8%, compared with the 2.6% forecast last time around.

The news is not uniformly positive, however. There are cuts in the forecast for Russian and Brazilian growth, and although China's growth forecast is notched up slightly, it is nonetheless poised to be at its lowest rate since the mid-1990s.

And while many will look at the IMF upgrade and exhale a large sigh of relief, the numbers are by no means compatible with a full-blown recovery.

In fact, the Fund itself points out that, for the most part, the recent improvement in GDP numbers - the key metric it bases its forecasts on - is down not to a genuine bounce-back in spending but to something else.

As it puts it, in advanced economies, "much of the upward surprise in growth is due to higher inventory demand".

Inventories are a rather bizarre element of national accounting - essentially they measure the work and products companies have made, but not sold. It is the stuff they have warehoused away until there is more demand.

The problem is that a big reliance on inventories often means that today's growth may not be sustained all the way into the future (after all, those big stockpiles mean companies may not have to produce as much in the coming quarters).

Now, on the one hand, set against the scale of the recession and crisis faced both in the developed and developing world, this question of whether we are now witnessing the "right kind of growth" might seem like a minor one.

But the worry is that the world economy (especially the UK and US) is still reliant on the massive monetary stimulus provided by quantitative easing.

As Olivier Blanchard, the chief economist of the Fund, put it on Tuesday: "As the recovery takes hold in advanced economies, a main challenge will be to normalise monetary policy."

This will imply big movements in markets in the coming years as investors become accustomed to the new world where markets are no longer being artificially propped up by central banks.

This, in turn, holds some risk for developing economies, which are reliant on those capital flows for much of their growth.

But the more profound concern is that despite the monetary mountain of cash which has been poured into major economies, many consumers are still reluctant to spend. Those high inventory numbers are a little worrying in that respect.

There seem to be two alternative extremes going on right now: in countries like Britain people are willing to go out and spend, but only using their saved cash or by borrowing (because of those low interest rates caused by Quantitative Easing).

Meanwhile, in other areas, Europe in particular, there still seems to be a profound reluctance to spend.

A real rebound may well be on the cards in the coming months, but the IMF is worried we are still yet to see the full-blooded recovery that often follows a recession.

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