Osborne Urged To Begin Lloyds Share Sale

By Mark Kleinman, City Editor

The agency which manages taxpayers' stake in Lloyds Banking Group has told George Osborne that the sale of the Government's shareholding can begin imminently, paving the way for a disposal to take place within days.

Sky News understands that UK Financial Investments (UKFI) has informed the Treasury that it believes that the recent surge in Lloyds' share price means that taxpayers could receive value for money from a sale as early as this week.

The advice to the Chancellor does not mean that a placing of billions of pounds-worth of Lloyds stock will definitely take place that soon.

The Treasury has said consistently that it will not be rushed into a sale and that no timetable has been set following Mr Osborne's Mansion House speech in June in which he said the time to begin offloading the stake was fast approaching.

However, Treasury sources said they had been told that UKFI was "actively considering" pursuing an imminent sale, with this week considered to be the last viable window for a big share trade before September.

A disposal of part of the Government's 39% stake in Lloyds is almost guaranteed to happen by the middle of September if the bank's share price maintains its recent momentum.

Such a deal has been widely forecast since Lloyds' resounding return to the black last week, when it announced a £2.1bn profit for the first half of 2013.

Whatever the timing of a disposal, it would be a significant moment in unwinding the legacy of the financial crisis that initially hit the UK in 2007 when Northern Rock was forced to seek emergency funding from the Bank of England.

Mr Osborne has been given the advice by UKFI

The precise size of a Lloyds share sale is unclear although bankers say it is unlikely to account for less than a quarter of the Government's stake, which would be worth just over £5bn at today's share price just before the market close of 74.1p.

During the last 12 months, Lloyds shares have soared by nearly 140% as investors have begun to understand the bank's future profitability and potential shareholder returns.

Antonio Horta-Osorio, Lloyds chief executive, used last week's interim results media briefing to issue thinly-veiled encouragement to Mr Osborne to begin selling taxpayer-owned shares.

He said it was a matter for the Chancellor to determine when to do so, although his repeated references to the risks of a repeat of the eurozone crisis triggering market volatility were a clear hint of his belief that a delay could undermine efforts to sell taxpayers' stake for a profit.

In subsequent meetings with investors, he is understood to have pledged that Lloyds would seek to pay out up to 70% of its profits in dividends within three years, a promise that should offer continued support to its share price in the coming weeks.

Lloyds has been prohibited from paying dividends to ordinary shareholders since its £20bn bailout in 2008, which followed its takeover of the stricken mortgage lender HBOS.

The price of any Government placing of Lloyds shares would be crucial to Mr Osborne's presentation of a sale, with 73.6p the average price at which the last Labour government acquired the stake.

Although an imminent placing would be unlikely to occur above that level, bankers and investors believe it would be possible to do so for a price above 70p, which itself is well in excess of the 61p at which the stake is recorded in the national accounts.

The lower figure does not take into account £2.5bn of fees paid by Lloyds for implicit guarantees covering its toxic loans in the wake of the 2008 rescue.

The initial sale of part of the Government's Lloyds stake would be structured by engaging investment banks after the stock market closes and reaching out to scores of potential investors to build a book of orders for the shares before markets open the following morning.

Lloyds and UKFI declined to comment.

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Apple Offers Charger Trade-In Over Safety Fears

Apple has unveiled a worldwide programme to replace third-party and counterfeit USB power adaptors at a cheaper price.

The decision comes after a Chinese woman was reportedly electrocuted while answering her phone as it was being charged with a non-Apple device.

The technology giant has said consumers can buy an authentic USB adaptor for around $10 (£6.51).

Apple chargers normally cost around $19 or £15 in the UK.

Ma Ailun, 23, collapsed and died in China last month after answering her iPhone as it was charging.

In a statement, Apple said: "Recent reports have suggested that some counterfeit and third-party adaptors may not be designed properly and could result in safety issues.

"While not all third-party adaptors have an issue, we are announcing a USB Power Adaptor Takeback Programme to enable customers to acquire properly designed adaptors.

"Customer safety is a top priority at Apple."

Phil Buckle, director general of the Electrical Safety Council in the UK, warned about the dangers of cheap USB chargers.

He said: "Whilst everyone loves a bargain, if a cheap electrical product turns out to be fake then it is, at best, a waste of money.

"At worst, it could result in the death of a loved one.

"More than four million counterfeit goods were seized coming into the UK last year and one of the top fakes was phone chargers.

"This is worrying as faulty electrical goods are a leading cause of severe electric shock in the UK and cause thousands of house fires each year."

The Apple initiative will take place at stores and participating authorised service providers from August 16 to October 18.

Anyone who wants to take up the offer will have to provide the serial number of their iPhone, iPad or iPod, and hand over a USB charger.

The reduced price Apple chargers will be limited to one per Apple device.

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Fair Trade Warning To Quick Home Sale Sector

The trading watchdog is urging almost 120 firms operating across the "quick house sale" sector to make sure their business practices are up to scratch.

The warning comes after an investigation found some hard-pressed customers end up handing over their home for less than half of its market value.

The Office of Fair Trading (OFT) said it has also opened formal investigations into three un-named businesses for alleged unfair practices that may have led to some customers losing tens of thousands of pounds.

People who sell their homes to a quick house sale firm usually receive between 10% and 25% less than the market value of their property in return for getting fast access to cash.

But concerns have been raised about firms reducing the price offered at the last minute when the seller has already committed to the transaction.

The OFT said it has seen firms dropping the prices they will pay by up to 53% on initial offers which were already below market price, leaving people tens of thousands of pounds out of pocket compared with the market value.

The average quick sale is estimated at around £100,000.

The regulator warned that some firms risk giving the industry a bad name by exploiting a customer's difficult financial circumstances and giving them significantly less than they were expecting.

It said seven in 10 complaints received by the OFT about quick house sales came from "vulnerable" consumers who may have been particularly attracted by claims of a hassle-free service, with no viewings or hold-ups.

These include older people who may be suffering ill health, people who are heading for repossession and need a fast route out of their debt problems and those who are under pressure to stop a property chain collapsing.

Gaucho Rasmussen, OFT Director, said: "Responsible quick house sale firms offer a valuable service to consumers who want a fast sale.

"However, we have also seen potentially illegal behaviour and as a result the OFT has opened investigations into three companies.

"When sellers get a bad deal, they could lose a lot of money. We want to ensure that consumers can have confidence in this sector and put an end to these shoddy practices."

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US Sues Bank Of America Over Investor Losses

The US government is suing the country's second-largest bank over investor losses on $850m (£550m) of mortgage bonds sold ahead of the financial crisis.

Separate filings by the Justice Department and Securities and Exchange Commission (SEC) were launched in North Carolina, where Bank of America is based, accusing the firm of failing to disclose risks about the mortgages and misleading investors in its sale of the mortgage-backed securities in 2008.

The government claimed the bank failed to tell investors that more than 70% of the mortgages backing the investment were written by mortgage brokers outside the banks' network.

Bank of America, which said it would fight the allegations in court, could face financial penalties if found guilty in the civil cases.

The government did not specify how much it was seeking in damages but it estimated that investors lost more than $100m on the deal.

US banks are facing regulatory action over pre-crisis behaviour

In its filing, the SEC said: "Bank of America's CEO at the time described those mortgages as "toxic waste."

Anne Tompkins, the US attorney for the Western District of North Carolina, said in a statement: "Bank of America's reckless and fraudulent ... practices in the lead-up to the financial crisis caused significant losses to investors.

"Now, Bank of America will have to face the consequences of its actions," she concluded.

Bank of America responded: "These were prime mortgages sold to sophisticated investors who had ample access to the underlying data and we will demonstrate that.

"The loans in this pool performed better than loans with similar characteristics (made and packaged into securities) at the same time by other financial institutions.

"We are not responsible for the housing market collapse that caused mortgage loans to default at unprecedented rates and these securities to lose value as a result," the statement added.

The cases follow years of criticism that the government had failed to do enough to hold accountable those companies that contributed to the crisis.

When the real estate bubble burst in 2007, home values plunged and millions of people defaulted on their mortgages and lost their homes.

Investors who bought securities backed by high-risk mortgages lost billions.

Regulators have said that inaccurate statements by banks in packaging and selling mortgage bonds contributed to the investors' losses.

Bank of America, which received $45bn in federal bailout aid during the crisis, has had to pay tens of billions of dollars to settle class-action lawsuits and previous actions brought by the SEC.

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China Fines Formula Milk Firms For 'Fixing'

China has fined six companies a total of $110m (£71m) following an investigation into price fixing and anti-competitive practices by foreign baby formula makers.

They are accused of cashing-in on strong demand for foreign infant formula in the wake of a 2008 scandal in China, where public trust in local products was hugely damaged after six infant deaths as a result of a chemical contamination.

Hundreds of thousands of other babies or toddlers were made ill.

The international firms fined included Mead Johnson Nutrition Co, Danone and New Zealand dairy giant Fonterra.

China's National Development and Reform Commission (NDRC) announced the penalties as it continued separate pricing investigations into foreign and local pharmaceutical firms.

The 2008 contamination of Chinese products boosted demand for foreign milk

Foreign brands account for about half of total formula sales and can sell for more than double the price of local products in China.

Estimates suggest the infant milk market in the world's second biggest economy is set to grow to $25bn (£16.3bn) by 2017.

The NDRC said the fines against the six companies were for restricting competition, setting curbs on minimum prices for distributors and for using a variety of methods to disrupt market order.

After the NDRC probe was announced, a number of companies including Mead Johnson, Danone and Nestle - which was not fined because it co-operated - cut prices on their baby formula in China by up to 20%.

Fonterra, the world's biggest dairy exporter, said it would give additional training to sales staff and review its distributor contracts in the wake of its fine.

The company is embroiled in a separate milk powder botulism contamination scare that has led to product recalls in China, Hong Kong and elsewhere in Asia.

Its chief executive Theo Spierings has blamed human error for the problem but insisted all tainted products had been taken out of the market.

His position has been called into question as a result of the fine and recent scare and he has said his future is a matter for the Fonterra board.

He told reporters in Auckland: "I said at a press conference in China that I would not leave before the situation was stable from the perspective of markets, consumers, customers and global authorities.

"We had all those discussions yesterday, and I decided late last night that the situation is stable," he concluded.

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Financial Predators Stalk Co-op Funerals Arm

By Mark Kleinman, City Editor

The Co-operative Group has rebuffed a string of takeover approaches for its funerals arm amid a controversial restructuring of its troubled banking division.

Sky News has learnt that buyout firms including CVC Capital Partners, the controlling shareholder of Formula One motor racing, and Montagu Private Equity, a former owner of the Dignity funeral planning business, are among a large number of parties to have expressed an interest in acquiring the Co-op unit in recent weeks.

The prospective buyers have all been rebuffed by the Co-op, whose new chief executive, Euan Sutherland, has made it clear that he does not want to part with any of the mutual's "crown jewel" assets.

The precise value of the Co-op Funeralcare business is unclear, but analysts expect that it would be worth hundreds of millions of pounds if it were to be sold.

With around 880 sites across the UK, the Co-op is the largest private provider of funeralcare services in the UK.

CVC, which recently lost out in the bidding for OGF, a leading funerals operator in France, is understood to have been working on an offer for the Co-op business for some time and had made several approaches suggesting different structures for a possible deal, according to a person close to the mutual.

Montagu, which made a handsome return from its ownership of Dignity between 2002 and 2004, when it floated on the London Stock Exchange.

Mr Sutherland is understood to view the approaches as opportunistic and believes that offloading the Funeralcare arm would anger the Co-op's 7.2m members.

"There is no interest in selling and that has been made clear to those who have made approaches," said the source.

The Co-op has said it will offload its general insurance division but has vowed to hold onto its core businesses, which include its food retail chain and pharmacy operations.

Interest in the funerals arm comes amid a contentious restructuring of the mutual's bank, which had its credit rating downgraded five notches in May following its withdrawal from a deal to acquire 632 branches from Lloyds Banking Group.

A heavyweight new management team, led by former HSBC executive Niall Booker, was parachuted into the bank, and was tasked with devising a restructuring plan aimed at filling a £1.5bn capital hole identified by the PRA.

That plan involves the Co-op Group injecting £1bn of new capital, while bondholders will swap their existing debt for new debt and a chunk of shares in a new company that will be listed on the London Stock Exchange.

Bondholders angered by the proposed terms have vowed to fight for a better deal, with two US hedge funds buying up a chunk of the bank's debt, but could see their investments wiped out if they voted to block it in the autumn. Under that scenario, the banking regulator would probably take control of the Co-op Bank under a new resolution programme.

Spokesmen for the Co-op, CVC and Montagu all declined to comment.

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Vodafone To Launch 4G On Same Day As Rival

The roll-out of high speed 4G services is gathering pace as Vodafone confirms it will launch its offering on the same day as rival O2 - August 29.

The companies are following in the footsteps of EE, which stole a march on them with a 4G offering last October after overhauling its network to find spare spectrum capacity.

Both Vodafone and O2 - along with other firms - had to wait for industry regulator Ofcom's auction of 4G spectrum in February.

Hutchison - which owns 3 - and BT were among the other successful bidders.

Vodafone said it would offer 4G to its customers in London first and planned to extend the service to another 12 cities by the end of the year.

EE was first to introduce 4G services to the UK market

The Vodafone "Red 4G-ready" package, the company said, would offer people access to either the music streaming service Spotify or Sky Sports.

It also promised unlimited UK data for the first three months and while its full prices would not be announced until next week, starting prices would be at £26 per month - more than its rivals.

Guy Laurence, chief executive of Vodafone UK, said: "With 4G, speed is just the start: it's what you do with it that really matters.

"We are taking 4G into a new league by offering sport and changing the tune with all the music you could want.

O2's owner paid £550m for 4G spectrum

"4G is finally worth getting and there's plenty to look forward to."

On the issue of cost, he added: "Price wasn't the key factor. It's all about entertainment."

Vodafone expects a broadband speed that is around six times faster than standard 3G while O2 had already promised download speeds up to five times faster than on 3G.

The details prompted Ernest Doku, telecoms expert at comparison site uSwitch.com, to suggest that at face value Vodafone's package provided consumers with "clear and tangible benefits" and claimed O2 could be "left behind in the 4G race".

Despite Vodafone only launching in London initially, compared to O2's roll-out in London, Leeds and Bradford, he said: "Vodafone has added some fuel to the 4G fire with its new plans.

"As competition finally looks set to heat up, Vodafone has thrown down the gauntlet with deals that offer not only faster data speeds, but more mobile data and - most importantly - a great selection of extra benefits to really make the most of it."

Vodafone said its 4G services would arrive in Birmingham, Bradford, Coventry, Edinburgh, Glasgow, Leeds, Leicester, Liverpool, Manchester, Newcastle, Nottingham and Sheffield before the end of the year.

O2 said a total of 13 UK cities would be connected by the year's end.

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The Lone Ranger To Make Disney Huge Losses

Disney has confirmed that it expects to lose up to $190m (£123m) on the new Johnny Depp western, The Lone Ranger.

The adventure movie, directed by Gore Verbinski and produced by Jerry Bruckheimer, has made just $86m (£55m) at the US box office and $176m (£114m) worldwide.

The film, which cost more than $215m (£139m) to make, received poor reviews in the US.

Chief financial officer of Disney, Jay Rasulo said the loss for The Lone Ranger would be recorded for the quarter that ends in September.

Disney chief executive Bob Iger said: "There has been a lot said, I know, about the risk of basically high cost, tent pole films ... and we certainly can attest to that given what happened with Lone Ranger."

Armie Hammer plays the ex-Texas ranger

For the quarter that ended in June, operating income at Disney's film studio declined 36% as hit film Iron Man 3 failed to match the success of last year's The Avengers.

Meanwhile, the cast and crew of The Lone Ranger have said reviewers were "gunning" for the movie even before it was released.

Depp, who plays tribesman Tonto, told Yahoo Movies UK: "I think the reviews were written seven to eight months before we released the film.

"They had expectations that it must be a blockbuster, I didn't have any expectations of that. I never do."

Armie Hammer, who plays the masked hero, said he thought the press began targeting the film when Disney halted the production in 2011 to allow the budget to be trimmed.

He said: "This is the deal with American critics: they've been gunning for our movie since it was shut down the first time, that's when most of the critics wrote their initial reviews."

The Lone Ranger is showing in US cinemas now and opens in the UK on Friday.

Disney will be relying on the movie's final run at the worldwide box office to stem its losses.

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Borrowers Boost: Interest Rates Tied To Jobs

The Bank of England plans to keep the base rate of interest at its record low level until unemployment falls to 7% - unlikely for another three years.

The announcement was made by new governor, Mark Carney, at his first Inflation Report news conference where he outlined sweeping changes to monetary policy in a bid to provide more clarity to the public and financial markets.

The bank said it would keep the base rate at 0.5% unless inflation threatened to spiral out of control or there was a danger to financial stability.

Policymakers said they stood ready to buy more government bonds if additional stimulus was needed and would not reverse existing purchases while unemployment was too high.

It meant there would be no scaling back on the bank's £375bn programme of quantitative easing (QE) for at least three years.

The bank expects economic recovery to accelerate

Mr Carney said unemployment falling to 7% would mean more than 750,000 UK jobs are created, which, combined with rising wages, would represent "real improvements in the lives of people across the nation".

But the Bank suggested that growth was likely to be "weak by historical standards", even though economic recovery was "taking hold."

Inflation, the report said, was forecast to stay above its 2% target until the second half of 2015 based on market rate expectations though it was now not expected to rise above 3% this year.

The forward guidance on the likely movement of bank rate - while welcome news for borrowers - means savers face more years of weak interest on their money.

A growing number of major central banks, including the US Federal Reserve, are providing so-called forward guidance to help nurse their economies back to health.

The BoE also forecast that the economy would grow by 0.6% during the current quarter - the same as between April and June, and that growth would reach an annual rate of 2.6% in two years' time.

The Chancellor welcomed the introduction of forward guidance by the Bank in a letter to Mr Carney.

George Osborne said: "Given the exceptional economic challenges continuing to face the UK economy, I agree with you that forward guidance can play a useful role in enhancing the effectiveness of monetary policy and thereby supporting the recovery."

Vicky Redwood, chief UK economist at consultancy Capital Economics, said the Bank's guidance was a "clear steer that interest rates will stay on hold until the end of 2016 or even 2017.

"Although financial markets already expected rates to stay low for a long time, this probably exceeds their expectations," she added.

But the Bank's interest rate pledge did little to boost market confidence as the FTSE 100 Index fell as much as 1% after the announcement, although the pound gained some strength.

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Emerging Markets Chief Quits In Blow To Amec

By Mark Kleinman, City Editor

The executive responsible for emerging markets at the FTSE-100 engineering services group Amec has quit, dealing a blow to the company the day before it announces half-year results to the City.

Sky News understands that Hisham Mahmoud, who only joined Amec in October 2010, has resigned and is in the process of negotiating his exit package.

The reasons for his departure are unclear but his resignation comes just ten months after Neil Bruce, Amec's chief operating officer, quit in frustration at an organisational shake-up of the company.

Amec is relatively little-known outside the sectors in which it operates but is one of Britain's most important industrial technology groups, servicing clients in the oil and gas, energy, mining and infrastructure industries. It counts BP, Shell, National Grid and the US Navy among its biggest customers.

Mr Mahmoud, group president for growth regions, had been responsible in recent months for Amec's global business in the Middle East, Africa, CIS, and Asia-Pacific, some of which are among the company's most important growth markets.

Among the major contract wins he had overseen was the construction of what will become the Middle East's largest oil refinery, situated in Kuwait.

His resignation is expected to be confirmed alongside Amec's interim results on Friday, although he is understood to have handed in his notice last week.

Analysts at Credit Suisse expect Amec to report pre-tax profit for the first half of £160m but said:

"We remain positive on Amec, but unless 1H results surprise significantly to the upside we feel the shares may trade sideways in the near-term."

The company has set itself a target of doubling earnings per share between 2010 and 2015 although a fall in margins last year led some analysts to question whether its growth momentum could be sustained.

Amec declined to comment.

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