Consumers Warm To More Loans And Overdrafts

Consumers are returning to the habit of using credit to fund their spending, according to a banking body.

The British Bankers' Association (BBA) said personal loans and overdrafts are rising for the first time in five years.

It called it a "clear" sign of improving consumer confidence.

The BBA's report comes as official data revealed an above-expected rise in retail spending last month.

The Office for National Statistics (ONS) said retail sales volumes were up 0.1% in March compared to February.

The rise surprised City analysts who had predicted a 0.4% fall last month.

Clothing and retail saw a month-on-month climb of 3.1% - the best result for three years - while non-food shops saw a spike of 9.6% compared to the same period last year.

However, food retailers saw their worst month-on-month decline for a year, with March revenues down 2.3%.

The BBA said March overdrafts were up 0.5% on an annual rate, in the first rise since January 2009.

But it added that the number of mortgage approvals made to home buyers dropped to a four-month low, fuelling hints of market cooling ahead of new industry-wide mortgage risk checks.

The BBA said 45,933 approvals totalling £7.5bn - an average of £163,281 each - were made in March.

Home mortgage approvals have sunk amid a flurry of price rises particularly in the South East.

Fewer than 50,000 mortgages were approved in January.

Government's schemes such as Help to Buy have helped those with low deposit levels to gain mortgages, and the BBA said house purchase approvals were 43% higher in March compared to the same month last year.

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Mortgage Lending Clampdown Comes Into Force

Homebuyers will face more scrutiny by mortgage lenders under new regulations which take effect today.

The industry-wide changes affect home buyers and people looking to re-mortgage and they will mean that lenders have to take a much stronger interest in people's spending habits and how their life plans could affect their ability to meet their repayments.

Mortgage applicants will need to sit through longer interviews, and provide more evidence that they can afford a home loan before being offered one.

Each lender will have their own interpretation of the new rules, but in general people are likely to be asked for more detail about regular outgoings such as childcare, food, household bills, loans, credit cards and leisure activities.

The changes also mean lenders will have to test whether homebuyers will be able to afford their mortgage payments if interest rates rise sharply, to 7% or above.

The Mortgage Market Review (MMR) rules aim to ensure there is no return to any irresponsible lending practices of the past, but there are some concerns that it could slow down the housing market.

The changes come amid growing consternation about rising house prices

Paul Broadhead, head of mortgage policy for the Building Societies Association, said: "The Mortgage Market Review was introduced in order to ensure that a common sense approach to mortgage lending is applied by all lenders and that people are not borrowing more than they can afford to pay.

"A number of building societies implemented the process early and have been lending this way, without problems, for a number of weeks."

Andrew Montlake, a director at broker Coreco, said that for people considering applying for a mortgage: "It's important for people to prepare a lot earlier, potentially six months before you apply. Start looking through your documentation and go through a budget."

He said most lenders will want to know whether mortgage applicants are planning to increase their spending for any reason in the near future and if they are expecting a change in their income.

Martin Wheatley, chief executive of the Financial Conduct Authority was asked this week about reports that some people are being asked if they are planning to have children.

He told the Daily Mail: "If you are eight months pregnant, that is a reasonable question. But most of the time that is probably too invasive - and that is not committed expenditure. People have a right to a certain degree of privacy.

"People should be expected to talk about known costs, such as school fees and car loans, but planning for future unknown events is a much more difficult space."

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Starbucks Sales Fall For First Time In 16 Years

Starbucks' turnover dropped last year for the first time, in the wake of revelations about its corporate tax practices.

Sales for the year to September 29 were £399m, a decline of 3.4% compared to the previous year.

The company said the decline, the first since it started UK operations 16 years ago, was due to the closure of unprofitable outlets and not the result of other reasons.

It reduced its average UK workforce by 11.6% in the financial year to 7,726.

Starbucks was able to increase its gross profit by 13% to £79.7m, before deductions of £100.5m were taken into account.

Its pre-tax loss was £20.4m in the period, down from the £30.4m recorded in the 2011-12 financial year.

The company's tax liability in the period was £3.4m, but including deferred taxation was reduced to £2.25m.

A Starbucks spokesman told Sky News: "The UK business is moving in the right direction, but the turnaround will take time.

Protests outside Starbucks stores were held during this accounting period

"The continued loss is largely because the reforms we have introduced are yet to take full effect.

"Many of the expensive leases we have renegotiated occurred after our financial year started in October 2012. The benefits of this action will be shown in the accounts for this current year."

It said the £10m fall in the pre-tax loss was largely due to the rise in gross profits. Its staff costs dropped £13.5m in the tax year compared to the previous year.

In October and December 2012, key executives were grilled by MPs about multinational corporate (MNC) arrangements.

Revelations about royalty, licensing and transfer pricing structures used by MNCs to minimise UK tax burden became a focus for Westminster's Public Accounts Committee.

Seattle-based Starbucks was quizzed on why it remained a loss-making business for tax purposes while telling investors it was profitable.

Groups such as UK Uncut urged boycotts of Starbucks and organised store protests and the company's unmoderated website blog was flooded with hundreds of critical comments.

But the company said the latest sales drop was not related to the 2012 tax furore and says Britain is its star EU performer.

Executives from Amazon, Google and Starbucks were grilled by MPs in 2012

"The UK is our fastest growing market in Europe. We are on schedule to open 100 new stores this year and expect the business to continue to grow as economic growth picks up," the spokesman said.

However, the latest accounts filed with Companies House show that it is acutely aware of the impact certain issues may have on the company.

It said there was potentially a "significant risk" of "adverse impacts resulting from negative publicity regarding the company's business practices".

Responding to the widespread criticism in late 2012 it offered to pay a voluntary £20m in tax over two years, and has already given £15m of that to HM Revenue and Customs.

It also dropped total remuneration for its three directors by almost a fifth to £886,000, with the highest paid executive's salary falling by more than half to £268,582.

At the end of last September Starbucks had 549 company-operated stores in the UK, down 44 in the period.

It also had 125 licensed and 57 franchised operations. Although it has a planned franchise expansion, the company's website says it is not looking for new partners.

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Ford Profit Drops 39% In First Quarter

US car giant Ford has seen its net income in the first-quarter fall by 39%, compared to the same time last year.

Ford said income dropped to $989m (£560m), down from $1.64bn (£875m) in the first three months of 2013.

Despite a profit drop the company said worldwide sales rose in the period, boosted by growth in Asia and Europe.

However, ongoing fragility in North America dragged down the firm's profit.

Shares fell nearly 4% in early trading as the result was lower than Wall Street's expectations.

It said exceptional items in the period included a charge of $122m (£72m) for plant closings in Europe.

Revenue rose slightly to $35.9bn (£21.4bn), with worldwide sales figures up 6% to nearly 1.6 million vehicles.

But US sales dropped 3% to 580,260 vehicles in the quarter, citing bad weather and low buyer interest in smaller, fuel efficient cars like the Focus and C-Max hybrid.

While its iconic F-Series pickup continued to see gains, sales of other key vehicles like the Fusion sedan and Escape SUV were down.

In China, first-quarter sales spiked 45% to 271,321 vehicles.

And in Europe, where the company lost sales amid restructuring post-recession, vehicle sales rose 11% to 326,000, however it still lost $194m (£115m).

The company was also hit by a $400m (£240m) charge for warranty reserves and repair costs.

It has also put aside $340m for potential recalls and spent another $60m on two US recalls.

Ford's results come a day after General Motors saw a profit plunge of 85% in the quarter, on the back of a series of vehicle recalls.

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Apple And Google Settle Wage-Fixing Court Case

Apple and Google have settled a lawsuit in which they were charged with colluding to hold down salaries by agreeing not to poach each other's staff.

Adobe and Intel were also included in the suit, and all four have now reached an agreement to settle the claims against them.

It has not been disclosed how much - if anything - will be paid to the hundreds or thousands of workers covered under the class action suit.

Intel was named in the class-action suit

The lawsuit had claimed $3bn (£1.8bn) in damages for more than 60,000 workers. If the four companies had lost the case and damages were awarded, they could have tripled to $9bn (£5.4bn).

Lawyers for the plaintiffs alleged senior executives at the firms "entered into an interconnected web of express agreements to eliminate competition among them for skilled labour". The claims dated back to 2011.

The conspiracy allegedly involved agreements not to recruit each other's employees, to notify each other when making an offer to another's employee, and, when seeing an employee in negotiations with one company, not to make a counter-offer to the employee.

Adobe has also settled

The suit said: "The intended and actual effect of these agreements was to fix and suppress employee compensation, and to impose unlawful restrictions on employee mobility."

Sky's Technology Correspondent Tom Cheshire said: "The agreement between Apple and Google was maintained at the highest level.

"Steve Jobs emailed Eric Scmidt, then CEO of Google, to complain about a Google recruiter approaching an Apple employee.

"Schmidt sent a message saying the recruiter had been fired within the hour. Job sent a simple response: a smiley face.

"Since 2010, though, all Silicon Valley companies have abandoned no-poaching agreements - and the competition to recruit the best engineering talent is fiercer than ever."

Three other companies originally named in the suit, Intuit, Lucasfilm and Pixar, settled their cases last July for $20m (£11.9m).

That settlement covered fewer than 8% of those involved in the class action suit.

This suggests Thursday's settlement - announced in a statement from a San Francisco district court - could be much higher.

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End Of An Era As Microsoft Buys Nokia Phones

The era of Nokia as a mobile phone manufacturer is over after Microsoft completed a deal to buy the Finnish firm's troubled device division.

Microsoft acquires Nokia's smartphone and mobile phone businesses as part of the $7.5bn (£4.46bn) deal, plus its design team, most of its manufacturing and assembly facilities and operations, and sales and marketing support.

Nokia led the phone market for years

The closure of the deal ends the production of mobile phones by the Finnish company, which had led the field for more than a decade.

It peaked with 40% global market share in 2008.

Nokia says it will now focus on networks, mapping services and technology development and licences.

More details of its future plans will be given when it releases first-quarter earnings on April 29.

Microsoft will acquire 25,000 Nokia employees in 50 countries.

More than 4,000 employees in Finland will transfer to Microsoft, and Nokia's headquarters Helsinki will be taken over.

Nokia's share price was up more than 1.5% in afternoon trading in Helsinki.

Stephen Elop, former Nokia CEO turned Microsoft executive, said: "The opportunity for Microsoft to be both a devices and services company, so that it can deliver the complete proposition to its consumers, is at the heart of this."

The two companies have previously worked together on the Lumia line of phones.

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William Hill To Close Stores After Tax Hike

Betting group William Hill has blamed the Chancellor's tax increase on high-stake gambling machines for planned shop closures, as it reports a 14% fall in first quarter operating profit.

William Hill told Sky News that it would try to minimise redundancies among the 420 staff at risk of losing their jobs and it hoped to redeploy many of those affected. 

The betting chain has 2,434 sites in the UK - 109 of its worst-performing outlets are to close.

Ralph Topping, chief executive of William Hill, said: "This is particularly disappointing as, through the economic downturn, we have worked hard to grow our retail base but this further planned increase in indirect taxation makes this action necessary".

George Osborne announced a hike in gaming duty in last month's Budget from 20% to 25% on machines that charge more than £5 to play.

Critics of problem gambling see fixed-odds terminals as particularly addictive, as they can accept wagers of up to £300 a minute.

And while they welcomed the Chancellor's move, the industry was furious.

William Hill said at the time that the increase in tax would cost it around £22m a year. Its rival Ladbrokes, which makes more than half its profits from the machines, has also warned it will close shops.

In January, the Labour Party lost a parliamentary vote calling for local authorities to be given powers to restrict the growth of the controversial, high-prize terminals.

The bookmaker said its results were additionally hit by big payouts over two weekends when popular football teams won their matches.

It hoped to recover profit later in the year with heavy betting on the World Cup in June and July.

The majority of City analysts have a "buy" rating on William Hill.

Numis Securities analyst Ivor Jones called it "a market leader which has seen a trough in trading in the first quarter of 2014".

Shares in the group were up 2.3% in morning trades, before they eased to 1.8%.

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Miliband Pledges To Tackle Zero-Hour 'Abuses'

Ed Miliband is promising to change what he calls the "worst abuses" of zero-hours contracts.

The opposition leader says a number of safeguards would be introduced to protect workers if Labour is elected.

The party's manifesto will propose a series of measures including legal rights against being forced to be available at all hours, and a ban from doing other jobs when no work is being guaranteed.

People working regular hours for six months would have the right to ask for a fixed-hours contract and this would be automatic after a year unless the individual opted out.

Compensation for shifts cancelled at late notice are also among the Labour proposals.

A recent survey found around 5.5 million people could be on the contracts, under which workers may not know if they have work from one week to the next.

Trade unions have warned of a "growing sub class" of low-paid workers

The Government's own figures indicate they have increased three-fold since 2010, with their growth prompting trade unions to warn of a "growing sub class" of insecure, low-paid employees.

Mr Miliband is due to outline his plans to tackle the issue in a speech in Glasgow, where he is holding a meeting of his shadow cabinet.

He will point to the proposals as an example of how Scotland could lose out if it votes for independence.

Mr Miliband is expected to say: "Zero-hour contracts have spread like an epidemic across our economy.

"Sometimes, they can provide short-term flexibility for employers and employees alike.

"But we know most employers don't use them and for good reasons: the widespread use of zero-hours contracts is incompatible with building a loyal, skilled and productive workforce.

"And we also know a minority of employers are misusing zero-hours contracts as a crude way of cutting costs or managing staff.

"We'll put that right by ensuring employees who have worked regular hours get a regular contract.

"And by banning the worst abuses of the system like people being required to be on call all hours of the day for one employer without any guarantee of work."

And he will argue this would be harder to achieve if Scotland left the UK.

Mr Miliband will say: "If Scotland left the UK, the nationalists would compete in a race to the bottom: lowering taxes for the richest, lowering wages for everyone else, letting the banks and the energy companies do as they like.

"I will come here again and again ahead of the referendum in September with this message for the people of Scotland: by working together we can ensure that the Tory government in Westminster is just for one more Christmas.

"But independence would be forever; by working together we can change Scotland without you having to change your passport."

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RBS Ditches Double-Salary Bonuses For Bankers

Taxpayer-backed Royal Bank of Scotland has ditched a proposal to give bankers bonuses of up to twice their salaries.

The bank had wanted to give workers lucrative and competitive bonuses, despite making a pre-tax loss of £8.2bn in 2013.

British taxpayers own 81% of the bank, which received the biggest bailout in history following the financial crisis.

UK Financial Investments, which manages the Government's stake, said it would not support the proposal.

As a result, RBS said a planned vote at the bank's annual general meeting (AGM) in June would not take place.

The Treasury rebuked the bonus plan and said "an increase to the bonus cap cannot be justified and the Government made clear it would not have supported such a proposal".

Last year the European Parliament agreed to cap bonuses for bankers at their fixed annual salary, or twice that sum if shareholders approve.

Mindful of London's importance in world finance, the Government remains opposed to the EU 2:1 bonus-to-salary cap.

A Treasury spokesman said: "The European bonus cap is not a well-thought out idea and will not support stronger and safer banks, which is why the Government is challenging it in the European Court.

"But while it exists, we will make sure it is applied fairly.

"Under the new strategy set out by RBS chief executive Ross McEwan, RBS is heading in the right direction, but it has not yet completed its restructuring and remains a majority publicly-owned bank."

RBS also said Mr McEwan and chief financial officer Nathan Bostock would not receive bonuses from 2014.

But it said they would still receive share-based "long-term incentive awards" that vest in five years.

The RBS bonus block comes just a day after a heated Barclays AGM saw jeering from shareholders and a partial rejection - reaching 24% of votes - of its remuneration proposals.

And on Friday, 38.5% of pharmaceutical firm AstraZeneca shareholders rejected a lucrative management remuneration plan.

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Cable Drawn Into Row Over 'Russian' Oil Bid

By By Mark Kleinman, City Editor

Vince Cable, the Business Secretary, has been drawn into a row about the controversial takeover of a London-listed oil group that is reliant on funds from one of Russia's largest banks.

Sky News has seen a letter sent by the Association of British Insurers (ABI) to Mr Cable warning him that the Stanlow refinery, which produces 15% of the UK's transport fuel, is being used as collateral in a bid for Essar Energy.

Robert Hingley, an ABI director, said in the letter to Mr Cable that Essar Global, the vehicle of the billionaire Ruia brothers who want to buy the company, had failed to provide any indication of its plans for the Stanlow site in north-west England.

By highlighting the Russian provenance of the financing for the offer, the ABI's intervention will escalate tensions over the cut-price bid by Essar Global for the 22% of Essar Energy shares it does not already own.

The Ruias listed Essar Energy in London by selling shares less than four years ago priced at six times the price they are now offering.

The cut-price offer has sparked fury from big City institutions, including Standard Life Investments, which in February described it as "cynical opportunism" and "a calculated attempt to deprive minority shareholders of the substantial future upside in Essar Energy's valuation".

Under stock exchange rules, because the Ruias already control a majority of the shares, they can declare their offer unconditional even if no other shareholders accept their bid.

Doing so would enable them to delist the company without a vote, which would either force investors to accept just 70p-a-share or to remain shareholders in a more highly-indebted and unlisted company where they possess no influence.

The ABI special committee, which represents major City shareholders including Standard Life and Henderson, has urged Essar Global to commit to a delisting only if a majority of the independent investors accept its offer.

The Financial Conduct Authority is changing its rules relating to delistings but has irritated the ABI by not applying that rule-change to takeover situations.

It is unclear what power Mr Cable has to intervene in the situation, although question marks over the future of the Stanlow refinery and the involvement of Russian funds are likely to put the issue on the political agenda.

Investors believe that while the right to make an offer for the company was detailed in a relationship agreement drawn up when Essar Energy floated, its terms were not made clear in the shareholder prospectus, which could provide the ABI with another legal avenue to explore.

Skadden Arps Slate Meagher & Flom, a law firm, is advising the ABI committee.

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