Job Boom Promise On £4bn Kraken Oil Field

The Government has given the green light for oil firm EnQuest to invest £4bn in a North Sea oil field scheme that will support an estimated 20,000 jobs.

EnQuest said that it would plough the investment into the Kraken oil field east of the Shetland Islands, which lie north of the Scottish mainland.

The plans have been approved by the Department of Energy and Climate Change and welcomed by Chancellor George Osborne.

Aberdeen-based EnQuest added that the development will support 20,000 jobs in Britain during construction and an average of around 1,000 jobs for each year of Kraken's life.

"Kraken is a transformational project for EnQuest and we are delighted to be able to proceed with it," EnQuest chief executive Amjad Bseisu said.

"Working with the Government and our partners to maximise the extraction of approximately 140 million barrels of oil in this field, over its 25-year-long life."

There is a complex system to get oil and gas products ashore in Scotland

Gross peak oil output is expected to be more than 50,000 barrels of oil per day, with first production likely to begin in 2016-2017.

The Kraken field has gross reserves of 137 million barrels of oil equivalent per day.

"This is a big investment that will create jobs and boost the British economic plan," Mr Osborne said.

"It is also evidence that our efforts to create a competitive tax regime that gets the most oil and gas out of the North Sea are working."

EnQuest has a 60% stake in the Kraken field, while its partners Carin and First Oil hold 25% and 15% respectively.

Ageing North Sea fields are being abandoned by oil majors and increasingly rely on national oil companies from countries such as China and large service providers to keep the oil - and tax revenues - flowing.

In the past, the company that owned the asset operated it, but as output from mature fields has dwindled and oil majors such as BP and Shell have sold out to smaller producers, traditional models have become less economic.

The number of fields in the UK Continental Shelf has multiplied from 90 to 300 in the last 20 years, but the average size of new fields is shrinking fast - from 248 million barrels of oil equivalent in the 10 years from 1966 to just 26 million from 2000 to 2008.

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JPMorgan Agrees $4.5bn Mortgage Payout Deal

US banking giant JPMorgan Chase has reached a deal to pay $4.5bn (£2.79bn) to investors for losses on mortgage securities sold before the financial crisis.

A total of 21 institutional investors are to receive the money.

JPMorgan said the deal would settle investors' claims with the bank and Bear Stearns, which it took over at the outset of the crisis.

The agreement comes after claims it misrepresented the asset quality of 330 residential mortgage-backed securities (RMBS) portfolios the investors were sold.

The bank said the settlement is "another important step in JPMorgan's efforts to resolve legacy-related RMBS matters".

"The firm believes it is appropriately reserved for this and any remaining RMBS litigation matters."

The deal follows JPMorgan's agreement to pay $5.1bn (£3.16bn) to government-controlled mortgage giants Fannie Mae and Freddie Mac over low-quality mortgage bonds it sold them.

And it also comes after the institutional investors struck a deal for Bank of America to pay $8.5bn (£5.27bn) for questionable deals sold with exaggerated quality ratings.

But like the Bank of America deal, the new JPMorgan agreement still needs to be approved by trustees of the mortgage securities in the case, as well as a court.

The trustees have until January 15 to accept the deal, but the offer could be extended by another 60 days if necessary.

In a statement the 21 investors said they agreed to the deal and are asking the trustees of the bond issues to accept it.

If accepted, the payout will benefit all investors claiming losses on the bonds, and not just the 21 institutions, they said.

"The Institutional Investors will participate in the settlement, like every other investor, based on the terms of the payment waterfall," they said in a statement.

The agreement would settle the investors' claims against RMBS sold by JPMorgan itself and Bear Stearns, but not by Washington Mutual bank, which JPMorgan also took over during the crisis.

JPMorgan has maintained that it took on the assets of Washington Mutual only after the bank had collapsed into the government's hands in 2008, and so it was not liable for its misdeeds.

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Crunch Time As Biscuit-Maker Seals £350m Sale

By Mark Kleinman, City Editor

The maker of Jammie Dodgers and Wagon Wheels is finalising an agreement to sell itself this weekend to a Canadian pension fund for around £350m.

Sky News understands that Burton's Biscuits is expected to announce on Saturday that it is being taken over by a major financial investor, with an arm of the Ontario Teachers' Pension Plan in pole position to land the deal.

The sale has not yet been completed, and sources close to the talks said it remained possible that a rival bidder could yet make an improved last-minute offer.

Three other firms - Clayton Dubilier & Rice, Apax Partners and Warburg Pincus, which is an investor in Premier Foods, the UK's biggest branded foods producer - also tabled final offers for Burton's on Thursday.

Ontario Teachers has become a voracious acquirer of British companies in recent years, taking over Camelot, the National Lottery operator, and Busy Bees, the nursery chain.

If it completes the Burton's deal, it will look to expand the business overseas and consider further acquisitions.

A sale of Burton's will entail a change of ownership for another portfolio of prominent UK food brands following the sale several months ago of the snacks division of United Biscuits (UB), which included Hula Hoops and KP Skips among its products.

Burton's is Britain's second-largest biscuits manufacturer by sales, behind UB, which is also owned by two private equity groups, Blackstone and PAI Partners.

As well as Wagon Wheels, Burton's produces Cadbury Biscuits, Lyon's and Maryland cookies.

Based in St Albans, Hertfordshire, Burton's traces its roots back to the mid-1800s when it was founded by George Burton.

It employs more than 2,200 people around the UK in three manufacturing facilities in Llantarnam, Edinburgh and Blackpool, a chocolate refinery in Moreton and a central distribution hub in Liverpool.

Burton's is one of a sizeable number of mid-sized British companies which has been through several phases of private equity ownership.

In 2009, Apollo and CIBC, the Canadian bank, seized control of the company after Duke Street Capital, its previous owner, was forced to surrender control to the biscuit-maker's lenders.

Another private equity group, HM Capital, had bought the company in 2000 from Associated British Foods, owner of the Primark retail chain.

The auction of Burton's will pre-empt that of UB, which is expected to be put up for sale in the next couple of years.

Ontario Teachers is now likely to draw up plans to bid for part or all of UB.

UB, which now consists solely of a biscuits business, owns the McVitie's brand, which includes products such as Jaffa Cakes and Penguin.

Spokesmen for Burton's and Ontario Teachers declined to comment.

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.London: Capital To Get Its Own Domain Name

London is to get its own website domain suffix, in what is seen as a major boost for businesses in the capital.

A deal was signed this week that will make available internet addresses ending in .london, instead of the usual .com or co.uk, from next year.

The agreement, signed off by the Internet Corporation for Assigned Names and Numbers (Icann), allows London-based businesses, organisations and individuals to apply for the domain name from spring 2014.

London & Partners, the city's promotional body, says tens of thousands of businesses, including prestigious brands like Selfridges and Carnaby Street, have already expressed an interest.

London Mayor Boris Johnson said it would be a major boon for businesses.

He said: "Adopting the .london suffix will enable organisations to more closely associate themselves with our great city's powerful global brand.

"This is also an excellent opportunity to expand London's digital presence, which in turn is set to generate funds to invest back into the city."

New York became the first US city to have its own domain name after Icann approved .nyc in June.

London & Partners applied to Icann in 2012 to set up and manage the .london domain name.

A new subsidiary, Dot London Domains Ltd, has been created and signed a contract with Icann to operate the .london registry.

:: Information on the new domain is available online at www.mydotlondon.com.

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China Pledges Economic And Business Reform

China has pledged more reforms to loosen the communist authorities' grip on the world's second-largest economy, raising hopes of greater benefit for its foreign trading partners.

The ruling party issued a document detailing economic reforms following a key meeting, known as the Third Plenum, which ended earlier this week.

The plans include requiring state firms to pay larger dividends to the government, and allowing private companies a bigger role in the economy, according to the document issued by the official Xinhua news agency.

The government will require 30% of earnings from "state capital" to be paid back to the public coffers and used for social security by 2020, it said.

China's 113 major state-owned enterprises (SOEs) directly under the central government typically pay 5 to 20% of their profits to the government in dividends - the part of a company's earnings distributed to shareholders.

"This will have an effect on facilitating a better competitive environment," ANZ Banking Group economist Liu Ligang said, adding it would make cash-rich SOEs allocate funds more rationally.

China moved to shut down or merge loss-making state firms in the late 1990s, leaving a smaller number, but with immense power over large sectors of the economy.

Further reforms have been made difficult by opposition from the state sector, which has been enriched by close ties to the government and lack of competition.

In acknowledgement of private firms, China will allow private capital to take equity stakes in state-funded projects, Xinhua said, but gave no proportion.

China will also allow the set-up of smaller banks and financial institutions using private funds, the document said. The country currently has just a handful of private banks.

In the financial sphere, China will push forward liberalisation of its interest rates and free convertibility of its yuan currency, the document said.

China currently sets deposit rates by administrative order, but the central bank began allowing banks to decide their own lending rates in July in a long-awaited move.

Beijing has repeatedly said it would push forward convertibility of the yuan - allowing the currency to be freely bought and sold, and with it the movement of funds into and out of China.

The government keeps a tight grip on the capital account - investment and financial transactions, rather than those related to trade - over worries that unpredictable inflows or outflows could harm the economy and reduce the party's control over it.

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Business Round-Up And Week Ahead

Sky's Naomi Kerbel offers a round-up of what's coming up in the week's business news.

:: Monday November 18

BMW will launch its new Mini on Monday. The German manufacturer ploughed £750m into production of the third generation car which is due to go into full production in February.

:: Tuesday November 19

On Tuesday, Crossrail will unveil its first completed tunnel in Farringdon. The east to west link across london is due to open in 2018. 10,000 people are currently working across its 40 construction sites.

:: Wednesday November 20

Business secretary Vince Cable will be grilled by MPs about the Royal Mail's privatisation on Wednesday. The sharp increase in the share price has fuelled concerns that it was sold too cheaply.

:: Thursday November 21

On Thursday, VisitBritain will release a national report about how much domestic and inbound tourism is worth to the UK economy.

:: Friday November 22

The IMF, ECB and EU are expected to leave Greece on Friday before returning in December to complete their latest quarterly review.

Tweet your business stories to @SkyNKTweets

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Former RSA Boss Makes Haste For TSB Chair

By Mark Kleinman, City Editor

Andy Haste, the former boss of RSA Insurance, is being lined up to take the helm of TSB as it prepares for a rebirth as an independent bank on Britain's high streets.

Sky News can reveal that Mr Haste has emerged as the preferred candidate to become chairman of TSB ahead of a planned flotation on the London Stock Exchange next year.

Mr Haste, who stepped down from RSA in 2011, has not yet formally agreed to take the role, and the approval of the Prudential Regulation Authority, the UK banking watchdog, would also be required.

That consent is unlikely to be withheld, however. Mr Haste is highly regarded from his time at RSA, where he steered the company from the brink of collapse, although it has endured a rockier period since his departure with two profit warnings in the last 10 days alone.

His appointment as TSB's chairman would give a boost to the prospects of a successful flotation of what will be the UK's seventh-largest lender.

Lloyds Banking Group, which is 33%-owned by taxpayers, has to sell TSB under the orders of the European Commission in return for the state aid it received when it was bailed out in 2008.

Lloyds had planned to sell the 632 branches to the Co-operative Group, a plan which was abandoned because of the financial crisis at the mutual.

TSB was relaunched in September and has pledged to restore local banking services to British communities.

The bank has a 4.3% share of the current account market and under the stewardship of Paul Pester, chief executive, wants to increase that to at least 6%.

It will also make a series of commitments next year about executive pay and transparency of lending decisions as it tries to distinguish itself from its high street rivals, many of whom remain tainted by mis-selling scandals which pre-date the financial crisis.

Mr Haste has taken on a portfolio of jobs since leaving RSA, including the deputy chairmanship of Lloyd's of London and an ad hoc role with Advent International, the private equity firm.

Taking on the TSB role would reunite him at least temporarily with George Culmer, the Lloyds Banking Group finance director, who joined the lender from RSA.

Among the other candidates interviewed for the TSB chairmanship was Dennis Holt, a former Lloyds TSB executive.

Lloyds has lined up Citi and JP Morgan, the investment banks, to work on the TSB flotation, which is pencilled in for the middle of 2014.

Lloyds declined to comment, while Mr Haste could not be reached for comment.

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£11bn Olympics Benefit Target Met

A four-year target of raising £11bn worth of economic benefit from the London Olympics has been met in 12 months, the Government has said.

The country has benefited from new foreign investment, additional sales and firms winning contracts since last summer's events, according to a report.

The total includes £130m of contracts won by UK companies for next year's soccer World Cup in Brazil, and the next Olympic Games, in Rio in 2016

Trade and Investment Minister Lord Green said: "The delivery of London 2012 on time and on budget led to hosting nations turning to the UK to help deliver their own events with supply opportunities running into the billions.

"UK Trade & Investment has played a key role in helping British companies maximise these opportunities and the result is a £11.06bn boost to the UK economy from the Games, reaching our four-year target in just over a year."

Secretary of State for Culture Media and Sport Maria Miller said: "Last year's Games put the UK in the global spotlight and showed the rest of the world that this country is open for business.

"The economic legacy of last year's Olympic and Paralympic Games is sometimes neglected but these figures show that the financial investment made into London 2012 has already been recouped."

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EU Tax 'To Have €50bn Impact On Pensions'

By Mark Kleinman, City Editor

A proposed European tax on financial transactions would cost pension funds and insurance companies up to €50bn each year, dealing a significant blow to the continent's economic recovery, according to a new report.

Sky News has obtained a copy of a study undertaken on behalf of the Association of Financial Markets in Europe (AFME), whose members include the city's major investment banks.

The research, carried out by the consulting firm Oliver Wyman, comprises one of the most detailed quantitative assessments to date of Brussels' Financial Transactions Tax (FTT), which is scheduled to be introduced next year.

Although the FTT has run into considerable opposition from business groups - as well as politicians such as George Osborne, who is mounting a legal challenge against its introduction - EU member states including France and Germany say they remain committed to it.

The AFME report argues that the new levy would cost insurers, asset managers and pension funds between €30bn and €50bn annually by driving up direct trading costs and triggering a decline in the value of securities issued prior to the FTT's introduction.

The FTT would also have a significant effect on the costs to governments and companies of administering their finances, the report warned.

"We estimate that annual costs for EU-11 corporates will increase by €8-10bn as financing and risk management become more expensive," it said.

"This represents 4-5% of post-tax corporate profits in the affected economies, and will have a material impact on the ability of corporates to invest or pay dividends."

Simon Lewis, the chief executive of AFME, said: "The proposed financial transaction tax will damage markets beyond the 11 states that are considering it, across Europe and also internationally. 

"This latest report clearly demonstrates the harmful impact of the tax on the end-users of financial markets - such as governments, corporates, pension funds, insurers and asset managers - and these negative effects will, in turn, will have serious implications for the real economy, resulting in reduced income generation from long term savings and corporate investments." 

The proposals hatched in Brussels would impose a 0.1% levy on stock and bond trades and 0.01%, and would target a yield of between €30bn and €35bn in annual revenues.

Among the opponents of the tax, which critics say would seriously undermine the city despite the UK's decision not to join the FTT, have been Lord King, former Governor of the Bank of England, and John Cridland, director-general of the CBI, the employers' lobby group.

The 11 countries backing the tax are Austria, Belgium, Estonia, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain.

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Broadband Firms Join Forces For Online Safety

The Prime Minister has welcomed plans by the UK's largest broadband companies to join forces and help families stay safe online, by funding a new multimillion-pound campaign.

Sky, BT, TalkTalk and Virgin Media are supporting the drive to raise awareness of how to tackle issues including cyber-bullying and limiting minors' access to adult content on the internet.

Aimed at parents, it will encourage and support them in talking to their children about how they can stay safe when surfing the net.

The nationwide campaign will inform people about whole-home and device-level parental controls, helping them make the right choices for their household.

The broadband companies said they were committed to ensuring this is a sustained effort by supporting it for a minimum of three years, and will be forming a new joint venture to lead the campaign.

The cost of next year's marketing and advertising alone will be in excess of £25m.

Research conducted for the campaign found that while more than four out of five (83%) parents have talked to their children about how to stay safe online, nearly as many again (81%) are unsure where to go to get good advice.

The campaign will guide parents to expert help and recommendations about how to stay safe on the web.

The Prime Minister has long supported family-friendly internet access

The four companies together supply broadband to around 90% of households in the UK.

Jeremy Darroch, the chief executive of BSkyB - the parent company of Sky News - said: "We are pleased to be supporting this industry-wide initiative to help families enjoy the best of the internet in a safe and secure environment.

"Protecting children from inappropriate content in the digital world is something Sky has led the way on.

"Sky Broadband Shield is now available to all of our five million broadband customers, offering family friendly filters that help parents choose which websites can be accessed in the home.

"This builds on the leadership position we have taken through our TV and public Wi-Fi platforms."

The announcement was welcomed by David Cameron, who is due to host a meeting with industry representatives in Downing Street on Monday.

No 10 said that Sky and TalkTalk were now installing "family friendly" internet filters that will be automatically switched on for all new broadband account holders, with Virgin and BT set to follow in the next two months.

The main internet service providers have said homes with an existing internet connection will be required to choose whether to switch on a filter by the end of next year.

Mr Cameron said: "In the weeks and months ahead, millions of hardworking families will only need one click to protect their whole home and to keep their children safe.

"As a dad, it is very simple: I want to know my children are protected when they go on to the internet.

Mr Cameron added: "We all need to work together, both to prevent children from accessing pornography and educate them about keeping safe online, and I will continue to ensure this happens."

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