RBS Lures Mastercard Boss For Payments Role

By Mark Kleinman, City Editor

The taxpayer-backed Royal Bank of Scotland (RBS) has lured the boss of Mastercard's British operation to overhaul its payments strategy following a series of failures which have left it exposed to potentially heavy financial penalties.

Sky News understands that Marion King, who resigned from her position as president of Mastercard UK and Ireland this week, will be joining RBS in the role of group director of payments.

Reporting to Simon McNamara, RBS's chief operating officer, Ms King will spearhead the bank's move towards greater automation of its payments operations, a crucial position at a time when British banks are under increasing pressure to overhaul outdated IT systems.

She will oversee the evolution of new payment platforms such as mobile apps and contactless payments as RBS aims to meet a stated target of becoming the leading bank for trust and advocacy among customers by 2020.

British taxpayers continue to hold 80% of RBS's shares, having rescued the bank with a £45.5bn capital injection during the 2008 financial crisis.

However, the legacy left by RBS's former chief executive Fred Goodwin, has continued to haunt the bank, with its patchwork of IT and other systems contributing to the complex nature of the overhaul confronting his successors.

RBS was hit by a serious failure of its systems in the summer of 2012, which led to millions of customers being unable to withdraw their money, triggering an as yet-incomplete enforcement investigation by the City watchdog.

This week, the Government outlined further details of the scope of its new independent Payment Systems Regulator, which will become operational next year.

Ms King has worked for companies including Reuters and Vocalink, the payments company which is now the subject of a review of its future ownership.

Her departure was announced earlier this week, but Mastercard's statement, which said that her successor would be Mark Barnett, made no mention of her new role at RBS.

Ms King's exit from Mastercard comes weeks after the payments company lost an appeal in the European Union's highest court to overturn an antitrust decision handed down in 2007.

A proposal for a cap on debit and credit card fees is being scrutinised by European Commission members, and is widely expected to be adopted.

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Ex-RSA Executive Miles To Join Troubled Wonga

By Mark Kleinman, City Editor

The chairman of troubled payday lender Wonga is recruiting another former colleague from the insurer RSA as he accelerates the company's attempt to repair its battered reputation.

Sky News has learnt that Paul Miles, the chief financial officer of Capquest, a debt recovery firm, is to take on the same role at Wonga.

His appointment, which is expected to be announced this week, will reunite him with Andy Haste, RSA's former chief executive, who was recruited by Wonga's shareholders during the summer following a string of scandals.

Mr Miles worked with Mr Haste as RSA's group financial controller until 2010, when he left to join Phoenix Group, the closed-life assurer, as deputy finance director. He quit that role to join Capquest last year.

In September, Wonga appointed Tara Kneafsey, another former RSA executive, to run its UK business, the largest division of the group.

Video: Wonga Writes Off Millions of Pounds

The overhaul of its executive team - which will be complete once Mr Haste identifies a new chief executive - follows a dismal few weeks for Wonga, during which it disclosed a 53% fall in annual pre-tax profits and an agreement to write off £220m of customer debts under a new regime of affordability checks.

The profit slump was partly explained by Wonga's decision to set aside almost £20m to cover the cost of compensation, as well as legal and administrative costs related to the company sending letters from fake law firms to thousands of customers.

Responding to the consumer debt write-off, Mr Haste said: "We want to ensure we only lend to those who can reasonably afford the loan in question and during my review, it became clear to me that this has unfortunately not always been the case.

"I agreed with the concerns expressed by the FCA and as a consequence of our discussions we have committed to taking these actions."

Last week, the Competition and Markets Authority added to the regulatory burden facing the payday lending sector, saying in the penultimate phase of an inquiry into the industry that new price comparison websites and a clampdown on intermediaries are required.

The Financial Conduct Authority will soon impose caps on the cost of short-term credit, a move that it believes will force many lenders out of business.

Wonga is not obliged to disclose the remuneration of its board members because it is privately owned, although insiders said that Mr Miles and Ms Kneafsey would be paid "very competitively" in recognition of the strategic and reputational challenges faced by the company.

Mr Miles will replace Tim Weller, who is serving as Wonga's acting chief executive until a permanent boss is recruited.

Wonga declined to comment on Wednesday.

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Shire Shares Slump 27% As AbbVie Hesitates

Shares in FTSE 100 pharmaceutical firm Shire have fallen 27% on opening amid renewed doubts that AbbVie's proposed takeover will go ahead because of new US tax rules.

Investors took flight - wiping £8.5bn from Shire's value in a matter of minutes - after Chicago-based AbbVie said it would reconsider its recommendation to shareholders to back the planned £55bn (£32bn) takeover of Shire.

The move followed a decision by the US authorities last month to impose new rules in a bid to prevent firms moving their tax bases overseas to ease costs.

London-listed Shire responded to AbbVie's announcement by releasing a statement saying it believed AbbVie should proceed, despite the change to the tax regulations, arguing a change of heart would cost AbbVie $1.6bn (£1bn) in fees to Shire.

Its release said: "The board of Shire believes that AbbVie should proceed with the recommended offer on the agreed terms in accordance with the Cooperation Agreement.

"The board will meet to consider the current situation and a further announcement will be made in due course.

"The Board of Shire notes that, in the event that the AbbVie Board adversely changes its recommendation and AbbVie stockholder approval is not obtained (or another triggering event occurs), a break fee of approximately $1.635bn would be payable by AbbVie to Shire."

AbbVie's proposed acquisition of Shire was not solely driven by tax benefits, it also wanted to reduce its reliance on Humira, the world's top selling arthritis drug which loses US patent protection in 2016.

Under the terms of the cash and stock offer that was agreed in July AbbVie would own 75% of the new entity - giving Shire investors a greater stake than the 24% previously proposed.

Shire had rejected four earlier offers.

Its best selling product is hyperactivity drug Vyvanse, which achieved revenues of $1.2bn (£753m) last year.

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PM: Only 'Mega-Rich' Should Pay Inheritance Tax

Only the "mega-rich" will pay inheritance tax under proposals announced by David Cameron, in a move which will appeal to middle class voters.

The Prime Minister gave his clearest indication yet that only those with more than £1m to leave will have to pay the tax and suggested he would try to make sure it was in the Chancellor's last Budget before the election.

Mr Cameron said those paying the 40% tax levied on estates over £325,000 - £650,000 for married couples - did not consider themselves to be "in any way mega-rich".

Mr Cameron indicates the Chancellor could be persuaded

Speaking to older workers and pensioners at Age UK, Mr Cameron said: "To me inheritance tax is a tax that should be paid by the very wealthy. I think you should be able to pass a family home on to your children rather than leave it to the taxman."

He added: "I would like to see that go further because I think even at £650,000, particularly in some parts of the country, you see someone who has worked hard, they have put money into their house, they have done it up to improve it and they want to leave it to their children and they don't feel that they are in any way the mega-rich, and they feel 'I should be able to do that without having 40% of it knocked off'."

Video: Cameron Plans Tax Cuts For Millions

Raising the threshold at which people start to pay Inheritance Tax to £1m is calculated to come at a cost of around £3bn.

Mr Cameron joked he wanted to see the changes in the next Budget but that he had to convince the Chancellor, who "is keen on it too".

It comes after Mr Cameron announced a £7bn tax giveaway at the Conservative conference, which would see an income tax cut for 30 million workers.

However, the Chancellor is still struggling to balance the country's books and bring down the deficit.

Video: Osborne Scraps Pension 'Death Tax'

At the party conference, George Osborne announced a two-year freeze on working age benefits, which would generate £3bn of cuts, and he said there would be a further £9bn of cuts announced ahead of May's General Election.

The inheritance tax plan will also be seen as a further attempt to stave off the UKIP threat.

Nigel Farage's party pledged to scrap inheritance tax at its conference in September and target multinational companies, foreign tycoons and the very rich to pay for the move.

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Jobless Total Back Below Two-Million Mark

The latest unemployment figures show the jobless total below the two-million mark for the first time since 2008.

The Office for National Statistics (ONS) said unemployment fell by 154,000 in the three months to August to 1.97 million, with the jobless rate falling by more than expected to 6% - its lowest level since October 2008.

But the figures also highlighted continuing concerns about wage growth - measured at just 0.7% on an annual basis between June and August.

It meant that earnings were still failing to keep pace with inflation despite annual living cost increases being calculated on Tuesday at just 1.2%.

The ONS statistics also showed that growth in employment had slowed to its weakest pace since May 2013 though it took the total in work to a new UK record of 30.7 million.

The fall in the number of people claiming unemployment benefits in September was the smallest since April last year, down 18,600 month on month.

There are fears the UK's economic recovery risks being damaged by renewed weakness globally - with some economists forecasting a new recession in the UK's biggest market, the eurozone.

Unemployment has fallen by 538,000 over the past year, the biggest annual reduction since records began in 1972.

Prime Minister David Cameron reacted to the figures by tweeting: "The biggest-ever fall in unemployment in history, taking it below two million, is great news. Our plan is working, but there's still much more to do."

The statistics showed progress on the crisis in youth unemployment - which covers 16 to 24-year-olds - easing by 88,000 over the quarter to 733,000.

There were 162,000 unemployed 16-and-17-year-olds, down by 11,000 on the previous three months.

But the number classed as economically inactive increased by 113,000 in the latest quarter to more than nine million - a figure that risks damaging the Government's attempts to bring down the UK's welfare bill.

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Time Out Owner Oakley Eyes Lastminute Swoop

By Mark Kleinman, City Editor

The entrepreneur who owns London's Time Out magazine is courting one of the darlings of the original internet boom with a takeover bid for Lastminute.com.

Sky News has learnt that Oakley Capital, which is run by Peter Dubens, one of Britain's most successful technology investors, is among a small number of parties trying to acquire Lastminute from its US parent.

Initial bids for the company, which was founded by Brent Hoberman and Baroness Lane Fox in the late 1990s, were tabled earlier this month, with Oakley understood to be among the leading bidders.

Any purchase of Lastminute would be for a fraction of the £600m that Sabre Holdings, a travel and tourism technology group, paid for it in 2005.

Sky News revealed in August that Sabre had appointed bankers at Houlihan Lokey, an advisory firm, to oversee an auction of the website.

In a subsequent statement, Tom Klein, Sabre president and chief executive, said: "As part of Sabre, lastminute.com has significantly improved its technology and operations, and is now perfectly positioned to unlock its full growth and profitability potential."

"The decision to review strategic options for lastminute.com supports Sabre's strategy to focus on our core business as the world's leading technology provider to the global travel and tourism industry."

A sale of Lastminute could still be aborted if the terms of a deal are not sufficiently attractive to Sabre, but sources said that the US company was prepared to accept a substantial loss on the sum it paid in 2005.

Mr Dubens has built a reputation as a shrewd investor in leisure, media and technology assets, and is chairman of the telecoms group Daisy, which is in the process of being taken private.

In 2010, Oakley bought Time Out London, eventually turning it into a free sheet, and last year acquired its New York sister title.

Besides Oakley, other possible buyers of Lastminute include rival private equity firms or online travel groups such as Expedia, although it is unclear whether any of them have tabled offers.

It has four main divisions, with Lastminute operating as a subsidiary of Travelocity, Sabre's group of travel e-commerce businesses.

However, Lastminute's performance has been underwhelming, despite it continuing to spend substantial sums on marketing and advertising.

Its biggest market shares are in the UK and France but it has struggled to make an impact elsewhere in Europe.

Oakley declined to comment.

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Sainsbury's Endures Backlash On Nectar Cuts

Sainsbury's customers have threatened to shop elsewhere after the supermarket chain confirmed it was planning cuts to its Nectar reward points.

The company, which announced the changes in an email, said it was halving points to one per pound spent in store or online from 11 April 2015.

It also planned to stop rewarding customers with points for using their own bags but would continue to award one point for each litre of fuel bought from its pumps.

Sainsbury's insisted there would be "lots of opportunities to boost your balance faster and more value when you spend your points" but recipients of the email took to Twitter to complain.

Chris Whitehead tweeted: "Hey @Sainsburys if I enter into a relationship with an agreed expectation of loyalty, then you change it, expect divorce. Hi @Ocado."

Anna McNally wrote: "So @Sainsburys will no longer be giving me nectar points for reusing my bags but will be giving out extra points on fuel. Sounds very green."

A Sainsbury's spokeswoman said: "We are changing the way customers earn Nectar points and launching more high-value bonus events, like Swipe to Win, 10xpoints on fuel and adding more categories to our Christmas 'Double Up' event so that customers can make their points go even further."

It claimed the changes were a "redistribution" of points rather than a saving on the scheme and said there were no cost savings to the retailer in the first 12 months.

Sainsbury's - like its biggest rivals Tesco and Morrisons - have been losing ground to hard discounters such as Aldi and Lidl in a fierce price war.

Of the 'big four' chains, only Asda has grown its share in recent months.

The new Sainsbury's boss, Mike Coupe, has previously warned that the supermarket sector is facing its most turbulent period in three decades.

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