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Tuesday, 25 June 2013

Barclays to sell customer data

Bank tells 13 million customers it is to start selling information on their spending habits to other companies

Barclays is to start selling information about 13 million customers' spending habits to other companies, and has admitted it could share the data with government departments and MPs.

In letters being sent to customers, it is also outlining what details about them it holds and uses which, it said, "may include images of you or recordings of your voice", as well as comments made in interactions with the bank on social media sites such as Twitter and Facebook. Barclay ssaid it may collect "location data derived from any mobile device details you have given us" - suggesting it will be able to pinpoint where in the world a customer is at a particular moment in time.

However, the bank assured customers that any data it passed on to third-party companies would be aggregated to show trends, and that individuals would not be identifiable from it. A spokeswoman said there was "nothing sinister" going on, and added that it would not be profiteering from customers. Like most companies, Barclays has previously used customer data internally, but it has not shared it with third parties before. It is writing to current and savings account customers to let them know about the changes, which will take effect on 9 October.

Barclays said the data would be aggregated to show trends and individuals would not be identifiable

A leaflet details the "new ways" in which Barclays' companies can use customer data, stating: "We can combine information about you with information about other Barclays customers to create reports which we may share with companies outside Barclays. This information is numerical and not personal, and you will never be identifiable on the basis of it." This could include data on how much people spend on different products and services.

The bank said the data could be passed to government departments and MPs – for example, to give them an insight into what was happening in their constituency.

In a statement the bank said: "We only use information in a numerical, anonymised and aggregated way, as is standard practice at many companies. It is not about providing information for sales or marketing use and does not include any personal data."

It said the move was in accordance with industry guidance from the Information Commissioner's Office and the law. "Customers are always able to opt out of marketing activity and their personal data will never be passed on to anybody else without their explicit consent," it added.

The bank said that data relating to where a mobile phone was at a particular time would be used for fraud prevention purposes, and only when a transaction was picked up by its fraud detection systems. It would confirm "at a country level" if the customer was in the region where the suspicious transaction had taken place. Customers will be able to opt out of this if they wish.

Barclays is the latest in a line of companies to come under scrutiny over the way they use customer information. It emerged recently that Tesco is using data about what Clubcard holders buy in its stores to serve targeted ads to online users of its new movie streaming site, Clubcard TV. Tesco also plans to use its Clubcard data to tackle obesity by offering customers "tailored suggestions for how they could shop more healthily".

Financial companies have different policies when it comes to the use of people's data. For example, MasterCard states in its global privacy policy that it will "perform data analyses" and offers the chance to opt out on its website. Otherwise, people are automatically opted in.

Article Source : http://www.guardian.co.uk

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Five questions MPs should ask Bank of England governor Mervyn King

MPs should keep their questioning robust when the outgoing governor makes his final appearance in parliament

Mervyn King has enjoyed many congratulatory farewells ahead of his departure next month as governor of the Bank of England, but maybe MPs could stick to the robust questioning that is their hallmark when he appears in parliament for the last time on Tuesday.

Five questions that he should answer are:

• Should the government press ahead with the privatization of Royal Bank of Scotland or its break-up?

• Barclays and Nationwide have missed targets for capital – the new so-called leverage ratios – according to the new regulator. What is the deadline for meeting the ratios, is it earlier than the internationally agreed date of 2019?

Mervyn King speaks at his final Mansion House dinner as Bank of England governor

• Is it inconsistent to want easier credit while imposing tougher lending rules on banks? For the sake of the economy, should we not make it easier to lend, not harder?

• How would you like the MPC's remit to evolve under Mark Carney? Is there a single new policy initiative that your successor could adopt to improve the BoE's management of monetary policy?

• Can you explain how austerity has worked when growth has flatlined for three years, real wages are falling and the debt burden is higher?

Article Source : http://www.guardian.co.uk

Monday, 24 June 2013

Fed fears and China credit crunch concerns send jitters through markets

FTSE 100 falls to just above 6000 from all-time highs last month, while Dow Jones index opens 200 points down in New York

Fears that the Federal Reserve is preparing to remove its stimulus from the US economy coupled with anxiety that China is being gripped by its own credit crunch have sent jitters through global stock and bond markets.

The rout hit yields on UK government bonds which hit their highest level since October 2011 in what analysts said was one of the most rapid moves ever witnessed on the market. Yields, which move inversely to price, on 10-year gilts have now risen a full percentage point to edge towards 2.6% in just two months, a rapid pace of change in the potential cost of government borrowing that could in turn increase the price at which companies and households borrow.

The FTSE 100, which last month was testing all-time highs, lost another 70 points to sit just above 6000 – a key level it only moved through at the start of 2013 – while the Dow Jones Industrial Average in the US suffered a 200-point loss in the first half hour of trading. Commodity prices, such as copper, were also lower.

Yields on US government bonds, known as Treasuries, also hit two-year highs as investors digested recent remarks by the Fed chairman, Ben Bernanke, that he might begin to slow down the central bank's $85bn (£55.1bn) monthly purchases of bonds which are being used to simulate the economy.

Governments in the eurozone, particularly the fragile economies of Spain and Italy, also faced their highest borrowing costs since May as yields rose.

Chinese stock markets dropped more than 5%, the biggest fall in three years to reach their lowest close in more than four years, after the People's Bank of China (PBoC) – the central bank – appeared to suggest it would not step in to prevent a rise in the rates at which banks borrow from each other.

Analysts at Nomura said that "investors remain concerned over tight liquidity conditions in the banking system" in China after the PBoC said it would "contain financial risks with more solid actions" and "fine-tune policy when necessary".

The rates which banks borrow from each other in China have jumped to close to 10% and to as much as 25% for some banks – from just 3% a month ago – raising concerns about the impact of lending by non-banks in China, known as shadow banks.

Traders on the floor of the New York Stock Exchange

Michael Hewson, senior market analyst at CMC Markets, said: "Fears of a continued cash squeeze in the Chinese banking system has seen European markets continue their soft tone on fears that a dislocation in the banking system will cause further downward revisions in forward expectations for growth over the coming months".

Hewson noted that the warning at the weekend by the Bank for International Settlements, the international central bank organisation, that more stimulus could actually harm fragile economies had also ratted markets. Stephen Cecchetti, head of the BIS monetary and economic department, warned on Sunday: "Unfortunately, central banks cannot do more without compounding the risks they have already created. Monetary stimulus alone cannot put economies on a path to robust, self-sustaining growth, because the roots of the problem preventing such growth are not monetary."

But a senior US central banker attempted to fight back against the market reaction saying that the Fed could not be broken in its resolve in easing back from monetary stimulus in the way that the UK had been forced out of the exchange rate mechanism in 1992 by speculative attacks by George Soros. "But I do believe that big money does organise itself somewhat like feral hogs. If they detect a weakness or a bad scent, they'll go after it," Richard Fisher, president of the Dallas Fed, told the Financial Times. The Fed had not even started to cut back its purchases of bonds, Fisher said. "I don't want to go from Wild Turkey to 'Cold Turkey' overnight," said Fisher.

John Higgins, chief markets economist at Capital Economics, said the potential removal for stimulus by the Fed was the main cause of the upheaval in bond markets but said, though, that a "bloodbath" should be averted. Even if US Treasury bond yields rose to 3.5% by the end of the year – from around 2.5% now – it would be low by historical standards, Higgins said.

In China, concerns about a rapid expansion in lending have dogged Beijing's economic management as consumers seek to maintain their living standards by borrowing cash from these local finance companies rather than main stream banks, although much of the lending can ultimately be traced back to the banking sector. Deutsche Bank has estimated that the among credit extended by non-banks could account for as much as 40% of Chinese GDP.

Capital Economics' China analyst, Mark Williams, said investors were factoring in lower growth as the credit squeeze takes effect while the Nomura analysts said the liquidity squeeze was the first real test for China's new leaders, in office for just three months.

"If the new leaders maintain their current approach, we believe it will add downside risk to growth in 2013 but in our opinion this would help reduce systemic financial risks, supporting long-term sustainable growth," the Nomura analysts said.

China's economy has already slowed in recent months: manufacturing contracted and property construction weakened in May, leading most analysts to say that hopes earlier this year of a bounce in growth have proved misplaced.

Article Source : http://www.guardian.co.uk

UK alcohol and tobacco prices among highest in EU

EU survey shows Denmark and Norway most expensive, with Macedonia cheapest – but Britain places well above average

Britain has some of the highest prices for alcohol and tobacco in the European Union and shoppers pay more than average for milk, cheese and eggs, according to official figures from the EU statistical office, Eurostat.

Booze prices in Britain are 43% above the EU average, while cigarettes cost 94% more and are the third highest in the EU, only just behind Ireland and Norway.

Inside the EU, Denmark has the highest overall price level but Eurostat, which surveyed an additional 10 non-EU members in Europe, found that Norway is worst for costs, while Macedonia is cheapest.

General food and non-alcoholic beverage prices in Britain are 4% above the EU average, and milk, cheese and eggs are 7% more. However bread prices are 11% below the average for Europe.

The average figures for the EU include prices in the newer members such as Romania and Bulgaria. Compared with the major western European countries, such as France and Germany, the UK's price level (apart from alcohol and tobacco) is favourable.

For example, average food prices in Italy are significantly higher than in Britain, while in France meat costs 23% more than in the UK, and in Germany 28% more.

Among the major economies, Spain is best value. In almost every category, its prices are about one-tenth lower than the EU average, and nearly a quarter below the price level in France. For example, meat in Spain costs one-third less than in France.

But other countries that went through a boom and bust following their entry into the euro still have very high price levels. In Cyprus, milk, cheese and eggs are 41% above the EU average, while in Greece, bread and milk are significantly pricier than average. In Ireland, despite a steep rise in unemployment and wage cuts, prices remain among the highest in Europe. The average Irish food price is 18% higher than the rest of the EU, and its alcohol prices are the highest in the EU barring Finland.

Norway remains the country where prices for almost everything are the highest in Europe and possibly the world. Average food prices are 86% higher than across the EU; milk, cheese and eggs are 114% more and alcohol is 188% higher.

In the former Yugoslav republic of Macedonia, home to Europe's lowest prices, alcohol is half the price of the UK, while food is 70% cheaper than Norway. Turkey has surprisingly high food prices despite having much lower average earnings than European countries. Average food prices in the country are 88% of the EU average, with milk, cheese and eggs 22% more.

Article Source : http://www.guardian.co.uk

ENRC founders submit lower bid for their Kazakhstan mining company

Billionaires reduce offer already rejected by troubled company's independent directors as 'undervaluing' the business

The three billionaire founders of controversial Kazakh mining company Eurasian Natural Resources Corporation are poised to unveil a final but reduced £3bn bid before a deadline on Monday.

The oligarchs, Alexander Machkevitch, Alijan Ibragimov and Patokh Chodiev, made a tentative proposal in May worth around £3.3bn, which was rejected by ENRC's independent directors.

The offer involved a mixture of cash plus shares from the Kazakh government's stake in rival London-listed mining group Kazakhmys. Under the new proposal, the structure remains the same but the total price is lower following a fall in Kazakhmys shares since May. To complicate matters further, Kazakhmys itself holds a 26% stake in ENRC.

In a statement on Sunday the oligarchs said: "In response to the recent press speculation, the consortium confirms that it is in the advanced stages of preparation of a possible offer to be made for the entire issued and to be issued share capital of ENRC. It is a pre-condition that Kazakhmys delivers an irrevocable undertaking to accept the offer (subject to Kazakhmys shareholder approval) in respect of [its stake in ENRC."

Ferroalloys at an ENRC site in Kazakhstan. The company, troubled by corruption allegations, is the subject of a reduced bid by its founders.The consortium is offering 172.3p in cash plus 0.23 Kazakhmys shares. Based on Friday's price of 269.4p for Kazakhmys shares, it values each ENRC share at around 234.3p compared to its latest market price of 216.9p.

But the original proposal was worth 260p for every ENRC share, which ENRC's independent directors had already rejected as "materially undervaluing" the business.

However, there is little they can do if Kazakhmys decides to put its 26% shareholding behind the bidders, which it is reportedly minded to do. Between them, the oligarchs and the Kazakh government already own 53.9% so any deal with Kazakhmys would see the offer go unconditional.

The ENRC founders decided to take the company private amid investigations by the Serious Fraud Office over fraud, bribery and corruption allegations, boardroom rows and an acquisition spree which left it with around $5bn (£3.24bn) of debt.

Article Source : http://www.guardian.co.uk

Sunday, 23 June 2013

George Osborne to offset further spending cuts with capital investment

Mersey Gateway and HS2 projects will be announced this week as Vince Cable is last cabinet minister to settle with chancellor

Gorge Osborne agreed the final details of spending cuts worth £11.5bn for 2015-16 on Sunday, ahead of an announcement this week that will also see the Treasury unveiling a multi-billion, six-year infrastructure investment programme.

Vince Cable, the business secretary, was the last cabinet minister involved in the spending review to settle, although defence, education, local government, health and international aid also kept negotiations with the Treasury going until very recently.

At one stage Osborne said that ministers who refused to cut their budgets for would be summoned before the "star chamber" for a grilling on why they could not find savings. In the event the "star chamber" was never convened for this purpose, although Treasury sources insisted that the threat of a summons did help to concentrate minds.

Osborne will announce details of the 2015-16 spending review cuts in a statement to the Commons on Wednesday.

In a move which suggests that the chancellor wants to prevent Labour being seen as the party most committed to capital spending, the Treasury will this week combine the spending review with the announcement of a series of infrastructure investment projects running from 2015-16 to 2020-21.

Given that the total sum allocated in the budget for capital spending in 2015-16 alone is £50bn, the headline sums involved could be huge.Danny Alexander, the chief secretary to the Treasury, will announce the details in the Commons on Thursday.

Details of the first tranche of work on the HS2 high-speed railway are expected to be madeThe infrastructure investment programme will be funded from within the Treasury's long-term spending envelope and it will include spending on road, rail and high-speed internet. The projects are expected to include upgrading the A14, a new Mersey Gateway bridge in the north-west and the first tranche of work on the HS2 high-speed railway.

Alexander agreed the final details of the spending review with his Lib Dem colleague Cable on Sunday morning. At around the same time, Osborne and his Labour opposite number, Ed Balls, were both raising the prospect of further spending cuts after 2015-16 in interviews on the Andrew Marr show.

Osborne told the programme that on Saturday he reached a settlement with the Ministry of Defence that would protect frontline service personnel but lead to the loss of civilian jobs. Several hundred posts are expected to go, with the rest of the estimated £1.5bn savings achieved through cuts to civilian allowances, efficiency measures and contracts with suppliers being renegotiated.

"There will not be a reduction in our military capability," Osborne said. "We're not going to reduce the number of soldiers, sailors, airmen, and in fact we're actually going to be able to spend some money on things like cyber [security], which is the new frontier in defence."

The Labour party has already announced that it will accept the coalition's overall day-to-day spending plans for 2015-16, although it reserves the right to change how current spending is allocated, and to increase capital spending. But yesterday Balls went further, saying he expected to make cuts beyond 2015-16.

"Do I think after 2015-16, the next Labour government will be making very difficult decisions which will involve some cuts? Yes," the shadow chancellor said.

Some in Labour are strongly opposed to this. In a letter in today's Guardian, Peter Hain, the former cabinet minister, Neal Lawson, chair of the pressure group Compass, and other signatories say that continuing austerity measures beyond the next election would be "politically and economically disastrous".

Balls has already announced that Labour would cut winter fuel payments for wealthy pensioners after the general election, saving £100m a year. The government is committed to keeping winter fuel payments for all pensioners until 2015 and until now, senior Conservatives have said very little about whether or not they would renew that pledge.

But Osborne suggested that a rethink was now under way, stressing that benefits for pensioners had to be "sustainable".

"On pensioner benefits, including the winter fuel allowance, we made a very clear promise about this parliament, and we believe in keeping our promises to the British people," Osborne said.

Article Source : http://www.guardian.co.uk

Starbucks pays corporation tax in UK for first time in five years

Starbucks says customers 'should not have to wait for us to become profitable' before corporation tax is paid

Starbucks, one of the companies exhorted by the prime minister to "wake up and smell the coffee" over tax, has handed over £5m to HM Revenue and Customs – its first payment in five years.

But the cash has only gone some way towards assuaging critics, one of whom complained that companies should not be able to "pick and choose" how much tax they wanted to pay.

The coffee shop chain said on Sunday it had made the contribution to please its customers and would be paying a second £5m instalment in the last half of the year despite claiming the business overall continued to make a financial loss in Britain.

"Six months ago, we felt that our customers should not have to wait for us to become profitable before we started paying UK corporation tax," the company explained in a written statement.

"We listened to our customers in December and so decided to forgo certain deductions which would make us liable to pay £10m in corporation tax this year and a further £10m in 2014. We have now paid £5m and will pay the remaining £5m later this year," Starbucks added.

Starbucks has paid £5m corporation tax this year with a further £5m to come. It says it will pay another £10m in 2014 The move follows a barrage of criticism, including a comment from David Cameron at the World Economic Forum in Davos in January when he attacked low tax payers using the coffee reference – though not specifically naming Starbucks, Google or Amazon .

A spokeswoman for Starbucks declined to say how many customers it had lost following the high profile row which started with demonstrations outside some of the outlets by the campaign group, UK Uncut and ended with scorching criticism from parliament's public accounts committee.

Margaret Hodge, MP and chair of the PAC, said on Sunday she welcomed the first payment by Starbucks but added: "Companies should not be able to pick and choose how much tax they pay. We need a system which ensures that everybody pays a fair share of tax on the profits they gain from the economic activity they undertake."

The initial row followed revelations that Starbucks had paid £8.6m in corporation tax in its 15 years of trading in Britain, and nothing in the last three years despite overall sales of £3bn.

Amazon, which had book and CD sales in Britain of £3.35bn in 2011, only reported a "tax expense" of £1.8m while Google's British business paid £6m to the Treasury in 2011 on UK sales of £395m.

During a period of austerity, the issue has turned into a major political storm with the prime minister making tax avoidance one of the key issues at last week's G8 summit of leading economies at Lough Erne, Northern Ireland.

Campaigners claimed that various licensing and supply agreements with Dutch and Swiss arms of the Starbucks empire were being used to allow it to switch profits from Britain to other countries.

UK shops are able to buy their coffee from Switzerland at a 20% premium and yet the foreign business is charged corporation tax there of 12% compared with Britain's level of 25%.

Kris Engskov, managing director of Starbucks UK, responded last December by promising to pay £20m within two years.

Accounts filed by Starbucks UK with Companies House this week will show the British side of the business still not formally profitable. Starbucks is expected to close up to 30 of its shops around the country this year. A similar number were shut last year amid tough competition from Costa and other brands.

Article Source : http://www.guardian.co.uk