British Gas Defends Cold Winter Profits Boost

British Gas has said higher costs largely wiped out profit growth from the unusually cold winter in the first half of its financial year.

Profits for the residential energy business in the six months to June 30 grew by 3.2% to £356m.

While the company admitted a benefit from the bitter conditions between January and June - with gas consumption rising by 13% - it insisted that profits were curtailed by "significantly higher environmental and commodity costs".

It said a new duty to deliver energy efficiency measures in customers' homes drove its environmental costs up 37% in the period.

The supplier raised its domestic tariffs by 6% last December, saying it would put additional revenues over the period to limit further bill increases in future but campaigners have pushed for price cuts to help consumers.

Most energy suppliers raised their prices ahead of winter

It said it could not rule out further increases to tariffs ahead of the coming winter because an "upward pressure on costs" remained.

Nick Luff, finance director of parent firm Centrica, sought to shift part of the blame for any future rises to the Government-backed ECO (Energy Companies Obligation) scheme.

He said: "We will keep prices as low as we can for as long as we can for as long as we can. If prices do have to go up, we will delay it for as long as possible."

He defended the £11m rise in profits, saying it represented just 70p per customer.

Chief executive of Centrica, Sam Laidlaw, added: "With our customers using more gas to stay warm during the unusually cold winter, we're doing everything we can to help them keep their energy costs under control and make bills simpler and clearer."

Centrica posted a 2% rise in adjusted profits over the first half, spurred by higher output from North Sea gas fields.

The company made £767m as overall revenue rose 14% to £13.7bn though the focus remained on earnings at British Gas amid the continuing row over energy supplier profits.

On Tuesday, French-owned energy firm EDF said its profits had risen to a record £903m in the wake of the cold spell though its residential business, the company said, continued to operate at a loss.

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Nazi Gold Moved And Sold By Bank Of England

The role the Bank of England (BoE) played in moving and selling gold looted by the Nazis has been revealed in a previously unpublished file.

A record from the bank's archive shows it transferred £5.6m of gold from Czechoslovakia on behalf of Germany's Reichsbank, following the Nazi invasion in 1939.

The gold was moved from the National Bank of Czechoslovakia's account at the central Bank for International Settlements (BIS) to an account managed on behalf of the Reichsbank.

Some of the gold was later sold in London.

The 10-page document, published on the BoE's website, was produced following the Second World War amid fears the bank's position had "never been thoroughly appreciated" and that "their action at the time was widely misunderstood".

It states: "On March 21, 1939, the Chief Cashier received the request to transfer about £5.6m gold from the BIS No.2 Account to their No.17 Account.

"The bank, although it was no business of theirs, was fairly sure that the No.2 Account was a Czech National Bank Account and they believed, although they were not sure at the time, that No.17 was a Reichsbank.

"The amount was transferred on the same day and a small further amount on March 22.

"Between March 21 and 31, the gold received on the No.17 Account was disposed of, (with) about £4m going to the National Bank of Belgium and the Nederlandsche Bank and the remainder being sold in London."

The BoE document said its actions were "widely misunderstood"

The report also reveals the Governor of the Bank of England rejected a call from his French counterpart to prevent the transfer of Czech assets, believing such a move would be "wrong and dangerous for the future of the BIS".

Patrick Jenkins, banking editor of the Financial Times, told Sky's Jeff Randall: "There is some sense that this was being done without full disclosure to the UK Government.

"Clearly the UK Government was at the time on the brink of war and not keen to help the Nazis in any way politically or financially.

"It seems the Bank of England was undermining that position."

The report shows the Government was powerless to prevent the BoE obeying any instructions received from the BIS without violating its obligations under international law.

It also states how, in May 1939, the governor of the BoE declined to tell the Chancellor whether it still held any of the Czech gold.

"The Governor ... did not answer the question but pointed out that the bank held gold from time to time for the BIS and had no knowledge whether it was their own property or that of their customers," the report says.

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RBS Hunt For Hester Successor Nears Climax

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) hopes to announce the appointment of a new chief executive on Friday as its search for Stephen Hester's successor narrows to internal contenders.

Sky News understands that RBS directors will discuss the appointment of its next boss during a board meeting over the next two days ahead of its half-year results on Friday.

The talks are focused on the possible appointment of Ross McEwan, the head of RBS's UK retail banking operations, although Bruce Van Saun, the chief financial officer who was supposed to be moving to the US to head RBS's retail bank there, remains a possibility.

Sky News revealed last week that Mr McEwan had emerged as the leading internal candidate to replace Mr Hester, who will step down by the end of the year.

Insiders said there was no formal target of Friday to announce the new chief executive and insisted that there was still no formal decision, meaning that an announcement might yet slip beyond this week.

Sir Philip Hampton, chairman of RBS, is understood to have discussed the remaining candidates with UK Financial Investments (UKFI), which manages taxpayers' 82% shareholding in RBS, this week, according to a source close to the bank.

UKFI, the Financial Conduct Authority, the Prudential Regulation Authority and the Treasury will all need to approve the chosen candidate ahead of an announcement.

Mark McCombe, an executive at the asset management firm BlackRock, was among external candidates for the role but withdrew from the process, as did Richard Meddings, the finance director of Standard Chartered.

It is possible that Sir Philip has kept another outsider under wraps but people familiar with the process said it was "almost certain" that an internal candidate would replace Mr Hester on a salary and bonus package significantly smaller than that of the current boss.

Mr McEwan spent five years as the group executive for retail banking services at Commonwealth Bank of Australia before joining RBS.

Some analysts have positioned Mr McEwan as a similar candidate to Antony Jenkins, who headed Barclays' retail banking business before being appointed to replace Bob Diamond in the wake of the Libor rate-rigging scandal last year.

Appointing Mr McEwan would, nevertheless, represent something of a gamble for RBS and the Government.

He has limited experience of the British banking sector, having only been appointed to his current role in August last year.

His experience of investment banking is also negligible, although RBS's investment banking operations accounts for only 20% of its balance sheet.

The Treasury is carrying out a review of whether a 'bad bank' containing approximately £60bn of assets could be carved out of RBS, enabling its "good bank" to accelerate lending to the UK economy.

Such a split has been opposed by Mr Hester and was among the factors that triggered tensions between the outgoing boss and the Chancellor in recent months.

One advantage of appointing Mr McEwan would be his availability to take over the top job in time for Mr Hester's departure.

RBS declined to comment.

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Car Insurers Rapped Over Whiplash Fraud

Insurance companies have been told to "get their house in order" and end the additional cost to drivers from fraud and exaggeration in whiplash injury claims.

A report by the House of Commons Transport Committee said industry practices encouraged bogus cases and ministers should consider imposing several measures if insurers fail to act.

While companies insist progress has been made in bringing down premiums as a result of identifying fraud, they admit whiplash still costs UK motorists over £2bn a year, adding £90 to the average premium.

Among the committee's recommendations were reducing the limitation period for road accident insurance claims and requiring whiplash claimants to produce more supporting evidence of injury.

In their report the MPs concluded: "We were surprised to hear that insurers will sometimes make an offer to personal injury claimants even before a medical report has been received.

"We also note that our previous recommendation on making the links between insurers and other parties involved with claims more transparent has been ignored.

"Insurers must immediately get their house in order and end practices which encourage fraud and exaggeration. If not, the Government should take steps to protect motorists."

The committee's chairwoman Louise Ellman added: "The Government should consider requiring claimants to provide proof that they have either been seen by a doctor or attended A&E shortly after the accident.

"There should be a presumption against accepting claims where adequate proof of injury is not provided."

Justice Minister Helen Grant said: "Honest drivers should not have to bear the price of a whiplash claims system which has been abused and has contributed to increased insurance costs.

"We have already made major law changes to turn the tide on compensation culture to help ordinary people with the cost of living."

The Association of British Insurers said the committee was right to identify the need to tighten the rules.

Its motor insurance head, James Dalton, said: "There has been a growth in recent years in claimant lawyers and claims management companies encouraging people to submit an increasing number of frivolous or exaggerated claims.

"Following recent reforms to the civil litigation system, insurers committed to pass on cost savings to motorists. We have delivered on that commitment and average premiums have reduced by 10% in the last year."

But he added: "The committee's report has kicked into the long grass making the tough calls for reform that are needed to help insurers combat the whiplash epidemic and deliver further premium reductions for hard-pressed motorists."

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Supermarket Wars: Tesco Sees Off Ad Challenge

It has been confirmed that Tesco's 'Price Promise' has seen off a challenge from its biggest rival, which claimed the campaign misled consumers.

Sainsbury's made a formal complaint to the Advertising Standards Authority (ASA) about Tesco's money-back pledge, arguing it ignored the ethics and origin of food production.

In rejecting the case, as Sky News earlier reported, the ASA said the rules required advertisers to compare goods which met the same need or intended purposes.

The Price Promise compares the price of goods in a shopper's trolley at the checkout with prices at Asda, Sainsbury's and Morrisons, with any difference on comparable products refunded in the form of a voucher worth up to £10.

Ahead of the ASA's ruling, Sainsbury's commercial director Mike Coupe said the scheme made unfair comparisons between own-label products, citing its own Basics ham produced from British pork and the Tesco Everyday Value equivalent "sourced from somewhere else in the EU".

Mr Coupe said: "They are priced the same but our pork is British and Tesco's is sourced from somewhere else in the EU. They're not the same product.

"If there's one big lesson that we should all have learned from the horsemeat scandal, it's that customers care deeply about where their food comes from and how it is produced."

Defending the campaign to the ASA, Tesco said it did not believe that products containing British and Irish ingredients could only be matched with competitor products of the same provenance, adding that "for the majority of customers, the product's country of origin would only be a minor factor in a customer's decision-making".

Tesco said that for differences such as provenance or ethics, they would still match products providing the distinction was not "key" in a customer's decision-making process.

However, where an element like provenance was a factor, such as for Melton Mowbray pork pies, they price-matched on a like-for-like basis.

Sainsbury's launched an advertising campaign on Wednesday highlighting its "commitment to protecting customers' right to make fair comparisons based on all important characteristics of a product and not just price".

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China 'Owes Hollywood Millions For Films'

Hollywood studios are waiting for millions of dollars after a film organisation in China stopped paying royalties for blockbusters like Man of Steel and Skyfall.

The China Film Group, the only organisation allowed to import foreign films into the country, has been withholding payments because of a dispute over tax, according to the Hollywood Reporter.

China stopped payment at the beginning of the year when US studios took issue with a 2% value-added tax that the Asian power was levying on American films.

Chinese authorities want the studios to pay them the tax, but the studios argue it violates a World Trade Organisation agreement governing the film trade between the two countries.

China has been relatively closed to big-budget foreign films in the past, but recently increased its quota from 20 to 34 a year.

The Motion Picture Association of America (MPAA), which acts on behalf of studios' interests, is negotiating with Chinese authorities to resolve the tax dispute.

Disney, Warner, Universal, Paramount, Fox and Sony are reportedly involved in the row.

The Hollywood Reporter estimates that Warner Brothers would be owed more than $31m (£20m) in royalties from three films - Man of Steel, Hobbit: An Unexpected Journey and Jack the Giant Slayer.

Iron Man 3, which made over $121m (£79m) in China, means Disney has missed out on $30m.

In the meantime, lack of profit has not deterred US studios from sending their films to China, which currently has the world's most dynamic movie market.

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Ryanair Raises Hold Baggage Charges By 66%

Ryanair has raised the cost for passengers taking luggage in the hold of its planes from 30 euros to 50 euros (£43.60) for the summer.

The no-frills carrier's chief executive Michael O'Leary, who made the announcement at the height of the holiday getaway, also told a news conference in London it intended to increase baggage charges until no-one took its flights with hold luggage.

He confirmed that Ryanair had increased its charge for hold luggage by 20 euros until the summer's end because "that's when they are likely to bring more bags".

Mr O'Leary went on: "We will keep increasing charges until we get rid of (hold) bags."

He said Ryanair had reduced the number of its passengers who checked in hold baggage from 80% to 19% and that this was saving the airline "a fortune in money".

Ryanair aims to carry no hold luggage at all

Asked if Ryanair would consider charging for hand luggage, Mr O'Leary said: "At some point in the future I think it's likely that airlines will do it but I can't get my head round how you would do it. I think it's unlikely that we will do it."

Ryanair announced earlier this week that it would get its pilots to increase flight times by two minutes to save fuel, saving the airline around £70m a year.

Asked on Wednesday if he was considering reducing the amount of air conditioning on his flights, Mr O'Leary said: "No. Even I would not do that."

Mr O'Leary was speaking just 48 hours after the airline confirmed a first quarter year-on-year profit fall of 21%, despite a growth in passenger numbers.

Ryanair blamed the timing of Easter and impact of a French air traffic controllers' strike in June while its fuel costs rose 6%.

In addition to the announcement on hold baggage charges, Ryanair also confirmed that from the end of October it was adding one extra daily flight to its five main Ireland-UK routes - from Dublin to Stansted, to Manchester, to Birmingham, to Edinburgh and to Bristol.

It said this was in direct response to similar flight increases recently announced by Aer Lingus.

Ryanair's efforts to take over the Irish national flag carrier have been repeatedly blocked on competition grounds and Mr O'Leary described the Competition Commission's inquiry into the proposal as "misguided" and "a political farce which has no case, no evidence and no credibility either".

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Metro Bank Closes In On SME Invoice Purchase

By Mark Kleinman, City Editor

Metro Bank, the first new retail lender on Britain's high streets for more than a century, is closing in on its first-ever acquisition as it attempts to accelerate its challenge to the industry's major players.

Sky News understands that Metro Bank is close to striking a deal to acquire SME Invoice Finance, a provider of alternative forms of finance and working capital to small and medium-sized companies (SMEs).

The acquisition is designed to diversify Metro Bank's business model and funding at a time when its core banking business is demonstrating rapid growth.

A person close to Metro Bank said the deal, thought to be worth several million pounds, was expected to be signed on Thursday and announced within days.

Earlier this week, Metro Bank announced that it had accumulated a deposit base of £870m, a 25% quarter-on-quarter increase, while its after-tax loss for the three months ended June 30 was £12.4m.

"Recent reductions in the future rate of UK Corporation Tax announced by the UK government are positive for shareholder returns in the long run but reduce the value of the current operating losses adversely impacting the current after tax return," it said in a circular to shareholders.

Metro Bank, which now has 19 branches (referred to by the company as stores), said customer accounts had increased from 136,000 on 1 January 2013 to 202,000 on June 30 and 214,000 by July 29.

Sky News revealed in May that losses at Metro Bank had passed £100m since the lender's establishment. The figures underline the costs associated with breaking into the UK's retail banking sector at a time when the Government is attempting to stimulate new competition through a string of policy measures.

The UK banking regulator, the Financial Conduct Authority, has reduced the level of capital required to be held by Metro Bank by a quarter, "reflecting the increasing maturity of the bank and the quality of risk management", it told shareholders in May.

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

Its directors include Luke Johnson, the restaurants entrepreneur, and Lord Flight, former chief secretary to the Treasury.

The lender has raised hundreds of millions of pounds from shareholders to fund its launch and subsequent expansion, and is targeting a stock exchange listing as soon as next year.

A Metro Bank spokeswoman declined to comment on the SME Invoice Finance deal.

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Rihanna Wins Topshop Image Rights Fight

Singer Rihanna has won her High Court battle with fashion chain Topshop over T-shirts bearing her image.

The Barbadian singer accused the fashion chain of passing off, or attempting to pass off, the garments as being approved by her.

Topshop disputed her claim.

Judge Mr Justice Birss ruled in favour of the Umbrella singer after a hearing in London.

He said Topshop's sale of a Rihanna T-shirt at the centre of the dispute was an act of "passing off".

But he said the "mere sale" of a T-shirt bearing the image of a famous person was not necessarily an act of "passing off".

The T-shirt was withdrawn from sale

He said a "substantial number" of buyers were likely to have been deceived into buying the Rihanna T-shirt because of a "false belief" that it had been authorised by the singer.

The judge said that was damaging to her "goodwill" and represented a loss of control over her reputation in the "fashion sphere".

He said it was for the singer, not Topshop, to choose what garments the public thought were endorsed by her.

Bringing the action under her full name of Robyn Rihanna Fenty, the US-based celebrity alleged an unknown quantity of T-shirts was acquired by Topshop in 2011 and early 2012 and offered for sale under the name "Rihanna Tank".

Court documents claimed that, after being challenged by the singer's lawyers, Topshop dropped her name from the T-shirt and referred to it as "Headscarf Girl Tank", and then to "Icon Tank".

The image under attack was taken by a freelance photographer "without her permission" while the pop star was filming a video in Northern Ireland for one of her singles in 2011.

Rihanna had claimed that she was entitled to damages from Arcadia Group Brands, which operates Topshop, for the unauthorised use of her picture.

The judge did not make any assessment of damages in a written judgment.

Topshop, which is considering an appeal, said it was "disappointed" with the decision and said it believes its "reputation and popularity" has worked against it.

Rihanna was not in court for the proceedings.

The European leg of her Diamonds World Tour has just come to an end and she is understood to be taking a break before it continues in Macau, China, in September.

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US Economy Grew 1.7% In Second Quarter

The US economy grew at an annualised rate of 1.7% in the second quarter of the year - a better performance than most economists had predicted.

The Commerce Department said growth improved from a sluggish 1.1% rate in the January-March quarter, which was revised from an initial 1.8% rate.

Consumers increased their spending more slowly in the second quarter and a surge in imports reduced growth by the most in three years.

But the federal government cut spending only 1.5%, while state and local governments increased spending for the first time in a year.

Economists are hopeful that growth could improve to around 2.5% in the third and fourth quarters - boosted by jobs growth.

A closely-watched private survey released on Wednesday suggested that firms created 200,000 net new jobs in July.

Payroll company said that firms hired at the fastest pace since December.

The government also released comprehensive revisions that updated the nation's gross domestic product, or GDP, over the last several decades.

Those figures showed that the economy grew at a stronger 2.8% in 2012, up from an earlier estimate of 2.2%. Last year's first quarter was revised much higher, while the economy barely expanded in the fourth quarter.

Other recent data - for example on home construction, sales and prices - have suggested that growth will continue to improve.

Americans purchased newly built homes in June at the fastest pace in five years. That has raised builder confidence to a seven-year high, which in turn should lead to increases in construction and more jobs.

Overall hiring has accelerated this year, but unemployment remains high at 7.6%, limiting consumer spending.

Federal Reserve officials have forecast better growth in the second half of the year.

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