Card Fraud Group Flags Up £150m Sale Prospect

By Mark Kleinman, City Editor

One of Britain's biggest providers of card fraud prevention services could be about to net its backers a £150m windfall.

Sky News understands that ReD, which is owned by Palamon, a private equity firm, is to be put up for sale later this year.

Previously a stock market-listed company under the name Retail Decisions, it processes billions of transactions each year and helps retailers to prevent purchases using stolen credit card details.

ReD has been a major beneficiary of the rapid growth in online shopping, which analysts expect to grow even more quickly during the next few years as consumers increase usage of  tablets and other mobile devices.

Palamon has hired William Blair, an investment bank, to handle the auction process, insiders said on Wednesday.

The investment firm bought Retail Decisions in 2006, and sold its Australian arm to the US fleet and corporate card specialist Wright Express Corporation for roughly £200m.

ReD's operating brands include Prism, Shield and Fraud XChange, while its corporate customers for processing payments have included Wal-Mart, Tesco, T-Mobile, Texaco, Shell and Comet.

The decision to sell the company comes amid a flurry of corporate activity in the financial services support sector.

Bidders for ReD are likely to include other payment processing groups and private equity firms.

A Palamon spokesman declined to comment.

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Immigration Curbs Bad PR For UK, Says Minister

Britain's immigration policy has been bad PR for the country abroad and is putting off students, according to the science minister.

David Willetts said that moves to reduce the number of people coming to the UK to the tens of thousands by next year had "played disappointingly badly" in India and had hampered the effort to attract international candidates.

It comes despite a charm offensive by ministers and an admission by the Prime Minister during a visit in November that plans to charge a £3,000 visa bond to ensure people didn't overstay had caused alarm.

Mr Willets said that the number of students from India had dropped by 38% by 2011 and 2012 and blamed it on the way India had reported on British immigration policy.

He said that by contrast there had been an increase in the number of applications to study from China, where press controls are significantly tighter.

David Cameron with Indian Prime Minister Manmohan Singh in November

In an interview with Total Politics magazine, he said: "It has played disappointingly badly on the Indian sub-continent.

"I've been with the Prime Minister to India on several occasions, and we both make the point that legitimate students can apply, with no number controls.

"But it's a striking contrast: in China, that is completely understood. The number of Chinese students coming to Britain continues to surge, which shows it's not a matter of British policy. It's about the different ways it's perceived and reported in India."

During a visit to India in November Mr Cameron called for "calm language" on immigration.

The Prime Minister has also been under fire in Europe for his immigration policy after introducing stringent measures amid fears of an influx of Romanians and Bulgarians at the beginning of the year.

Science minister David Willets

European Commission vice president Vivian Reding accused Mr Cameron of peddling myths about a "foreign invasion".

And employment commissioner Laszlo Andor warned Britain was at risk of being seen as the "nasty country".

Speaking on the Radio 4 Today Programme, he said Brussels was preparing to rule on whether the curbs on European Union migrants claiming benefits would be challenged.

EU migrants will have to prove they are earning at least £149 a week for three months from March 1 before they are allowed to claim benefits including child tax credits, child benefit and job seeker's allowance if they lose their jobs.

Mr Laszlo said that the new rules were likely in contravention of EU law.

Plans to charged a £3,000 visa bond were dropped by the Government.

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Mt Gox Bitcoin 'Theft' Faces Legal Probes

Authorities in Japan have confimed an investigation into the alleged theft of Bitcoins from Tokyo-based exchange Mt Gox while prosecutors in the US also demand answers.

Japan's Chief Cabinet Secretary told reporters a multi-agency inquiry had begun a day after the Mt Gox website was taken down by the company to protect users, leaving open the possibility of huge losses for investors and prompting the Bitcoin exchange industry to defend its future.

Yoshihide Suga told reporters: "I understand that ministries and agencies concerned - financial services, police and the finance ministry - are looking into the matter to learn the full scope of the issue.

The Mt Gox site went dark on Tuesday

"Once we have full knowledge of what happened, we will take action if necessary," he said.

Mt Gox - once the biggest player in Bitcoin trading - is expected to make an announcement concerning its future in the coming days.

It froze withdrawals earlier this month, claiming there was a bug in the software that underpins Bitcoin.

Investors fear they have lost everything

It has not confirmed the reported theft but a widely-shared document purporting to be a Mt Gox "crisis strategy" said the firm might have lost more than 744,400 Bitcoins in a theft that had gone unnoticed for years.

The figure represents almost 6% of all the Bitcoins in existence worth more than $400m (£240m) at prices quoted late on Tuesday.

It was also reported that in addition to the inquiry beginning in Japan, Mt Gox was served with a subpoena earlier this month by US federal prosecutors in New York.

Citing an unnamed "person familiar with the matter" the Wall Street Journal said the document demanded that Mt Gox preserve certain paperwork.

The news agency Reuters later reported that Mt Gox was not the only exchange to be served, claiming officials in Manhattan are focussed on denial of service attacks on the industry.

The legal paper was understood, Reuters said, to have requested information on when exchanges first knew of alleged cyber attacks on their operations.

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RBS Reaches Deal To Award £550m Bonus Pot

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) is to pay approximately £550m in staff bonuses for 2013 after securing the agreement of the Treasury agency that is its biggest shareholder.

Sky News has learnt that the taxpayer-backed bank will disclose the sum - which is higher than previous reports had suggested - alongside its annual results on Thursday.

The bonus pot for 2013 is certain to reignite a row over pay at RBS because it will also announce a loss for the year estimated at £8bn, the biggest since its bail-out by the Government in 2008.

UK Financial Investments (UKFI), the body which manages taxpayers' stake in the bank, is understood to have signed off on the payments in recent days.

The sum of around £550m will represent a fall on the 2012 bonus pot of £679m of just under 20%, which Chancellor George Osborne is expected to cite as evidence that RBS is exhibiting restraint on bonus payments.

Last year's figure was further reduced by £72m to £607m because of the clawback of previous years' deferred bonuses, undertaken as a consequence of RBS's £390m fine for its role in the Libor-rigging scandal.

RBS is expected to have reduced the 2013 bonus pool by at least £25m under a commitment it gave 12 months ago to reduce bonuses in subsequent years.

It is unclear whether RBS will also announce a plan on Thursday to seek shareholder approval at its annual general meeting in May to allow it to pay bonuses worth double the value of senior employees' basic salaries.

Other UK banks are planning to do so, but RBS found itself at the centre of another political row last month when Labour leader Ed Miliband urged David Cameron to use the Government's stake to block any such request.

At the World Economic Forum in Davos, Switzerland, Mr Cameron told Sky News: "With our particular responsibility for RBS, I can tell you that I don't only want to see the level of pay and bonuses come down overall, I want to see it come down per-person, per-capita as well."

The Prime Minister said last month that new European rules on bankers' pay, which the Government is challenging, could exacerbate the riskiness of banks.

He said: "This European directive... in some ways might make things worse, because you could see rates of pay go up.

"You can claw back a bonus, the taxpayer can get the money back. You can't claw back [basic] pay."

Thursday's bonus announcement will come as Ross McEwan, RBS's new chief executive, unveils a plan that will mean the bank's 120,000-strong workforce shrinking to barely two-thirds of that number following the sale and closure of several business units.

RBS and UKFI declined to comment.

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Co-op Hits 6,500 Staff With Job Uncertainty

The Co-operative Group has confirmed it may sell its pharmacy business, employing 6,500 staff, as part of its strategic review.

It is also looking to offload 15 farms it owns, which have an estimated land value of £49m.

The review - ordered in the wake of the financial crisis at its bank - is yet to be completed.

But a short statement on Wednesday said: "As part of the wider strategic review of all of its businesses, The Co-operative Group has decided that its farms are non-core and has started a process that is expected to lead to a sale of the business.

"In addition, it is exploring options for the future of the pharmacy business; this could include the sale in whole or part of the business."

The Co-op's Blairgowrie farm is one of 15 sites

The Co-op operates 15 farms, three in Scotland and the rest in England, covering 50,000 acres in total with an estimated land value of hundreds of millions of pounds.

The division also owns three packing sites.

They are seen as surplus to requirements because the cereals and vegetables they produce only make up a small proportion of produce for Co-op supermarkets.

The chemists business, which operates out of 750 outlets, has suffered in recent times amid Government attempts to reduce its prescription costs.

The group ordered the strategic review after a huge £1.5bn capital black hole emerged in its banking arm, resulting in control passing to bondholders including US hedge funds.

The problems at the bank are currently subject to a number of inquiries.

The scandal also brought the appointment of Paul Flowers, now ex-chairman of the bank, into the spotlight amid questions about his lack of banking experience.

Just nine days ago the Co-op Group launched an online poll to help shape its future, admitting the mutual had lost touch with its customers and members.

Group chief executive Euan Sutherland said it would listen to suggestions and the results would feed into the strategic review.

The Co-op operates a wide variety of businesses, including supermarkets and funeral services.

Its 2013 results - due to be released in late March - are expected to confirm growing losses.

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Adidas Shelves Racy Brazil World Cup T-Shirts

Adidas has agreed to stop selling a line of World Cup T-shirts after officials in Brazil claimed they encouraged "sexual tourism".

The raunchy range included a top with the caption "Lookin' to Score" alongside the word "Brazil" and an image of Sugar Loaf mountain.

Another carried an "I Heart Brazil" imagine - but the heart was replaced by a woman wearing a thong.

Adidas are a major sponsor of Brazil 2014 and will supply the balls.

They have said the T-shirts were limited edition and available only in the US.

"Adidas always pays close attention to the opinion of its consumers and partners," the company said in a statement.

"Therefore, it is announcing that these products will not be sold anymore."

The T-shirts are no longer available on Adidas's website.

Brazil's tourism board said their government was "vehemently" against anything that "links Brazil's image to sex appeal" and was working hard to repress "sexual tourism".

"We want to make it very clear to our main commercial partners in tourism that Brazil does not tolerate this type of crime in its territory," said Flavio Dino, president of the tourism board Embratur.

"This campaign goes against what Brazil defends.

"Our effort is to promote Brazil for its natural and cultural attributes. An initiative like this one ignores and disrespects the message the government is trying to get across."

The campaign against sexual tourism will see videos warning football fans against paying for sex with children during the World Cup played on Brazil-bound flights from England.

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Energy Bills: New Rules To Boost Competition

The energy regulator has announced new rules to try to boost competition between household suppliers and provide greater clarity for bills.

Ofgem has confirmed that new regulations due to be implemented at the end of next month will force the so-called Big Six energy suppliers to publish their wholesale generation prices to independent suppliers up to two years in advance.

The move is aimed at making it easier for smaller competitors - who do not produce their own energy - to budget better, while giving consumers more information on the charges they face.

Ofgem said that a failure to ensure fair trade in the wholesale market will result in financial penalties, while a range of other measures would result in the annual statements produced by the large companies being more "robust, useful and accessible".

The Energy Secretary has welcomed Ofgem's approach

The Big Six - British Gas, SSE, ScottishPower, npower, EDF and E.ON - endured a fresh public and political backlash on bills last year when inflation-busting increases were announced ahead of winter - rises that were later reduced when green levy costs were stripped from bills.

The row resulted in greater Government pressure on Ofgem to act on competition and price clarity. 

Its chief executive, Andrew Wright, said: "Our rules for a simpler, clearer, fairer energy market are coming into force, meaning that it is getting easier for consumers to pick out the best deals.

"Now we are also breaking down barriers to competition for new entrant suppliers. These reforms give independent suppliers, generators and new entrants to the market, both the visibility of prices and opportunities to trade that they need to compete with the largest energy suppliers.

"Almost two million customers are with independent suppliers, and we expect these reforms to help these suppliers and any new entrants to grow.

"We also want to ensure that information on revenues, costs and profits of the largest energy suppliers is as clear as possible for consumers."

Energy Secretary Ed Davey added that the moves were a "big step forward" in creating a fairer, more competitive energy market in the UK.

He said: "This is a significant and welcome toughening up of competition in electricity markets. By making these wholesale prices more transparent, it will help reveal how the Big Six energy companies are trading, and make it easier for new competition to challenge their business model."

Labour argued that the reforms did not meet the country's demands for a fair market.

Shadow energy secretary Caroline Flint said: "Any reforms to improve transparency and competition in the energy market are to be welcomed, but Ofgem's proposals yet again fall well short of what is needed.

"Instead of simply stopping energy companies doing secret trades between the generation and retail parts of their businesses, as Labour has proposed, Ofgem is tinkering around the edges with a whole host of complicated interventions which will be difficult to properly monitor and enforce."

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Blackphone Promises Super Security And Privacy

A new Android phone promising "security provided by the world's leading experts" has been unveiled.

Blackphone comes from cryptographer Phil Zimmerman, whose company Silent Circle has joined forces with Spanish smartphone company Geeksphone for the project.

The $629 (£377) "sleek and slender" handset goes on sale in June and has been launched at the Mobile World Congress (MWC) in Barcelona, Spain.

It has a 4.7 inch, high-definition screen, and uses Silent Circle's Private OS version of Android, offering anonymous search and remote data wiping, private calls, texting and file exchange.

On the Blackphone website, users are promised they will be able to "choose what to reveal, when and to whom" and "world class cryptography built-in every Blackphone app".

It comes at a time when Smartphone security firms are reporting a surge in demand following NSA contractor Edward Snowden's revelations of US and British spying activities.

The device was launched at the Mobile World Congress (MWC) in Barcelona

However, the privacy protector device does not claim to be "NSA-proof".

"The Snowden disclosures have certainly raised awareness about some of these issues," Mr Zimmerman told a news conference at the mobile phone show.

"I think what we have seen is that there is a heightened sensitivity to the implications of what a loss of privacy can mean.

"Just to be clear, we have never claimed that we are offering an NSA-proof device and we will not make such a claim. It would be, perhaps, foolhardy.

"But we are offering a tool that makes a huge difference to somebody who is currently using no privacy tools at all."

The growth of Android applications provides an open doorway to hackers because the devices have access to the internet, a camera, sound and even systems.

Con Mallon, head of mobile products at security software group Symantec, said: "For attackers, it is a business. With the decline of PC, they are looking at how they can make money with smartphones and tablets.

"The threats that are moving from the desktop to mobile are not new, but the context is new."

Symantec estimates the number of viruses detected quadrupled in a year to 273,000 in June 2013 on the Android platform.

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Cameron Criticised On Flood Defence Spending

The boss of the country's biggest insurance firm, Legal & General, has told Sky News he is concerned about a lack of spending on flood defences.

As the industry faces Government pressure to pay out quickly on the costs of the winter storms, Nigel Wilson also spoke out against policy on home building in flood-prone areas.

He said: "We've had a housing policy that has encouraged too much building in flood plains area. And we've been on and on about this.

"There's an issue in the UK. We're not building enough and where we're building them is in the wrong place.

"So we've got a multi-phased approach in actually increasing housing supply.

L&G is facing a multi-million pound flood bill

"The Government needs to focus much more attention on housing supply and where that supply is."

He was speaking hours after David Cameron's boast that flood defence spending will increase under his leadership was contradicted by the UK's statistics watchdog, which claimed the budget had actually been cut by £250m.

Sir Andrew Dilnot, head of the UK Statistics Authority, called on the Government to publish its real-term figures "in the public interest."

Mr Cameron claimed at Prime Minister's Questions that spending between 2011 and 2015 would be higher than in the previous four years under Labour.

The results of the wettest winter on Met Office records

But Labour leader Ed Miliband accused him of using "phoney figures".

Environment Secretary Owen Paterson went further, saying the Government is "providing more than any previous government in this spending review".

The discrepancy stems from the Government including money spent by private firms and other third parties in its figures.

Flood defence spending was £2.37bn between 2007 and 2011, according to House of Commons library figures.

The Army was called in to help tackle the rising waters

Between 2011 and 2015 it will be £2.34bn - a £247m cut in real terms.

Sir Andrew believes the House of Commons numbers are more credible than those being stated by Mr Cameron and his colleagues.

He said: "We agree with their finding that, as of January 2014, government funding for flood defences was expected to be lower in both nominal and real terms during the current spending period than during the last spending period.

"Our analysis also supports the conclusion that the statement 'over the current spending review period, more is being spent than ever before' is supported by the statistics if the comparison is made in nominal terms and includes external funding, but is not supported by the statistics if the comparison is made in real terms or if external funding is excluded."

Labour and Friends of the Earth say the cuts contributed to the damage endured across swathes of the country this winter - and the issue will be debated by MPs on Wednesday.

Mr Paterson has already apologised for "any offence" caused by his flood defence spending claims, but denied there had been any "manipulation of figures".

A spokesperson for the Department for Environment, Food and Rural Affairs said: "Figures on flood defence spending are published. The Government is spending £2.4bn on flood management and protection from coastal erosion which is more than ever before.

"The Prime Minister also recently announced £130m extra for flood defence repairs following the extreme weather."

All this comes as the Institution of Civil Engineers called on Chancellor George Osborne to use next month's  Budget to return spending on flood risk management to pre-2010 levels.

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RBS Slashes Costs As Markets Chief Bows Out

By Mark Kleinman, City Editor

Royal Bank of Scotland (RBS) will on Thursday unveil plans to slash billions of pounds from its cost-base in an overhaul aimed at facilitating its eventual return to private sector ownership.

Sky News has learnt that Ross McEwan, RBS chief executive, is expected to outline a blueprint that will involve removing roughly 20% of its operating costs, which hit £13.8bn in 2012.

That target would mean slashing more than £2.75bn of the bank's costs, which over time will entail substantial job losses.

Mr McEwan is expected to acknowledge that some jobs will go but is unlikely to announce a figure on Thursday.

The measures being drawn up to revive RBS as it prepares to announce losses of around £8bn for last year include the likely departure of Suneel Kamlani, the co-chief executive of RBS's markets business, which houses the group's remaining investment banking activities.

Mr Kamlani, who joined in 2010 from UBS, is likely to leave in the coming months, according to a person close to the bank, although a final decision had not yet been taken, they said.

There will also be a stronger focus on lending to small and medium-sized business customers (SMEs), which will reflect the political pressure on Mr McEwan to ensure a greater flow of credit into the UK economy. Alison Rose, a senior investment banker at RBS, is expected to be appointed to oversee these efforts.

Alongside the losses for last year, RBS is expected to state that its newly-formed Capital Resolution Group has already made strong progressing in reducing the assets it oversees from £38bn last November to closer to £30bn.

RBS is also understood to have made further progress on negotiating the removal of the Dividend Access Share, for which it will have to pay well over £1bn, although an insider said there was unlikely to be formal news about this on Thursday.

Sky News revealed on Wednesday that RBS has reached a deal with UK Financial Investments (UKFI), the agency which manages taxpayers' 81% stake in the bank, to pay approximately £550m in bonuses for last year.

The figure will take the total sum paid by RBS in bonuses since its rescue in 2008 to roughly £6.3bn, while over the same period it has recorded attributable losses of more than £44bn.

The sum of around £550m will represent a fall on the 2012 bonus pot of £679m of just under 20%, which Chancellor George Osborne is expected to cite as evidence that RBS is exhibiting restraint on bonuses.

Last year's figure was further reduced by £72m to £607m because of the clawback of previous years' deferred bonuses, undertaken as a consequence of RBS's £390m fine for its role in the Libor-rigging scandal.

RBS is expected to have reduced the 2013 bonus pool by at least £25m under a commitment it gave 12 months ago to reduce bonuses in subsequent years.

It is unclear whether RBS will also announce a plan on Thursday to seek shareholder approval at its annual general meeting in May to allow it to pay bonuses worth double the value of senior employees' basic salaries.

Stoking the rhetoric ahead of RBS's announcement, Cathy Jamieson, the shadow financial secretary to the Treasury, said:

"Taxpayers will be staggered if huge bonuses continue to be paid out at a time when significant losses are being made.

"George Osborne should make clear he will reject any request from RBS to increase the bank bonus cap so bonuses worth more than 100 per cent of salary can be paid.

"With bumper bonuses continuing this year across a number of banks, the Government should also be repeating Labour's successful tax on bank bonuses this year. This could fund a paid job for every young person out of work for 12 months or more, which they would have to take up or lose benefits."

The other measures proposed by Mr McEwan will include withdrawing from dozens of overseas markets, as well as running down some of the areas in which RBS Securities, its investment bank in the US, operates.

RBS declined to comment.

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