Co-op Members Vote Through Big Reforms

Co-operative members have backed a shake-up of the way the crisis-hit group is run after a landmark vote on Saturday.

At a special general meeting in Manchester, 83% of votes were in favour of proposals drawn up after the mutual made record £2.5bn losses, the Co-op said.

The proposals include reform of the group's board structure, with elected directors largely replaced by professional business people.

The new structure also includes the creation of a smaller board of directors and the adoption of a one-member one-vote system.

Ursula Lidbetter, Co-op chair, said: "These reforms represent the final crucial step in delivering the change necessary to return the group to health.

"This will strengthen the society and enable us to move forward with the urgent work to rebuild the business and deliver on our renewed purpose, in the interests of all our colleagues and our millions of members and customers."

A poll in May saw unanimous support for the key principles behind the reforms.

The changes, which followed a review by former City minister Lord Myners, required the backing of a two-thirds majoriy.

The board will consist of an independent chairman, five independent non-executive directors, two executive directors and three elected directors.

Last year saw the Co-op group experience its worst crisis in its 150-year history after it discovered a £1.5bn hole in its balance sheet.

A separate report by Sir Christopher Kelly found the group had let down its members by failing to provide "proper stewardship".

Its stake in the bank has now fallen from 100% to 20% after a rescue plan that saw bondholders, including US hedge funds, take majority ownership.

Last week, the lender reported first-half losses had shrunk from £845m to £76m.

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Firm's $1.3m Bill After Suing Google Customers

A patent-holding firm has been hit with a seven-figure legal bill after attempting to sue several of Google's customers.

A US district court has ruled that Beneficial Innovations has to cover Google's $1.3m (£780,000) legal fees after it lost a jury case earlier this year.

Beneficial Innovations had attempted to sue several customers of Google's DoubleClick advertising service, alleging that its patents had been infringed.

But Google argued that the company had acted in violation of a licensing deal signed with Google in 2010.

Google successful persuaded a judge in January that the agreement would shield customers from litigation - meaning Beneficial Innovations' lawsuits against its customers had violated the deal.

At first, it looked like Google's victory was a hollow one - with damages awarded of just one dollar.

But a legal bill of $1.4m (£840,000) - rounded down by the court to $1.3m - means the search giant has set a precedent against companies which regularly file patent infringement claims against other firms hoping for an out-of-court settlement.

Beneficial Innovations has been suing over patents related to online gaming and advertising since 2006.

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Water Bills Set To Fall Over Next Five Years

Water bills are on course to fall 5% on average in real terms over the next five years - if the industry regulator gets its way.

Ofwat confirmed its draft determination for household water and sewerage bills for the 2015-2020 period while announcing its plans would also see the rollout of a £43bn investment programme.

The price controls - for all 18 water companies in England and Wales - are set by the regulator because of the industry's regional monopoly structure.

A final ruling will be made in December but the regulator said its draft decision would result in a series of benefits for customers.

They included an average 40% reduction in the time lost to supply interruptions, fewer instances of sewer flooding and cleaner water at more than 50 beaches.

So-called 'fatbergs' have become a growing city sewer menace

Ofwat said a saving of at least 340 million litres a day through tackling leakage and promoting water efficiency would be enough to serve each home in Birmingham, Liverpool and Leeds put together.

Most companies put forward lower bills in business plans submitted in June, with the exception of Thames Water and Dee Valley Water.

Bristol Water, Thames Water and United Utilities have been given further time to review their plans due to a "very material gap" between their expenditure projections and Ofwat's view.

Thames, the country's biggest water firm, has argued it needs more money so it can modernise London's Victorian-era pipe network which is susceptible to overflow and blockages from so-called 'fatbergs' - concentrations of waste from restaurant and home sinks.

It is planning a 15-mile 'super sewer', which would halt the release of raw material into the river at times of high rainfall and sewer volumes.

The regulator has challenged the estimated cost of £4.2bn.

Ofwat chief executive Cathryn Ross said of the wider announcement today: "This is good news for customers - with bills held down and better service.

"Our challenge to companies has resulted in the sector's biggest ever customer conversation.

"Delivering for customers rather than ticking regulatory boxes will drive what companies do over the next five years. Some will find this tough, but companies which really stretch themselves will reap the benefits of increased customer trust and confidence."

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Tesco Shares Slump As Trading Woes Deepen

Tesco's share price took its biggest one-day hammering in more than two years on Friday after it slashed its profit forecast following a sales slump.

The supermarket chain, which has seen its position as the UK's market leader slowly eroded amid a price war with rivals, underlined the sense of internal crisis by announcing that its new chief executive Dave Lewis would now start work on Monday September 1 - a month early.

He replaces Philip Clarke who paid the price for a string of problems with the company's UK offering.

Tesco, which now issued three profit warnings this year, said Mr Lewis would review all aspects of the business and Mr Clarke would be available to him as a source of information though he would relinquish his position on Friday.

The chain now expected trading profit for 2014/15 to be in the range of £2.4bn to £2.5bn, compared with an analyst forecast of around £2.8bn.

Dave Lewis will review Tesco's business

The group also cut its interim dividend by 75% to 1.16p-per share - a move that will hit many pension funds - and confirmed that its store refresh programme which was ordered by Mr Clarke as part of efforts to improve Tesco's customer appeal, would be slowed.

It said the move would hold back £400m from its planned annual capital expenditure.

Tesco said: "The combination of challenging trading conditions and ongoing investment in our customer offer has continued to impact the expected financial performance of the group."

Chairman Sir Richard Broadbent added: "The board's priority is to improve the performance of the group.

"We have taken prudent and decisive action solely to that end."

Tesco's shares opened almost 9% lower at one stage before recovering some of that ground - while those of its rivals also suffered when the FTSE 100 opened for business.

Sainsbury's lost more than 5% while Morrisons' value slipped by 3.5%.

Hard discounters are challenging the dominance of the 'Big Four'

Asda is owned by US retailer Walmart and not listed in London.

The problems at Tesco underline a big challenge for the so-called 'Big Four' from hard discounters.

According to industry figures by Kantar Worldpanel released earlier this week, Tesco sales declined 4% in the 12 weeks to August 17 compared to the same period last year.

Kantar estimated the drop in sales cost Tesco £300m.

Tesco's turnaround efforts have included a new fuel offer

Morrisons has also been suffering in the battle with Aldi and Lidl, with Asda the only member of the Big Four to be growing its share.

Analysts have speculated that the savings Tesco is planning could allow it to cut prices further to tackle the discount threat.

Nicla Di Palma of Brewin Dolphin told Sky News: "Refreshing the stores and cutting costs are the two priorities. They need to get customers in."

Mike Dennis of Cantor Fitzgerald believed it could go further: "Tesco's investment in margin and recovery plan could easily wipe-out the majority of its main competitors' trading margins, forcing them to reduce their dividends and capital expenditure and also forcing the discounters back to a loss making position, as they were in 2009".

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PPI Scandal: Lenders To Re-Open 2.5m Claims

The City regulator says banks and other lenders are to reassess more than 2.5 million payment protection insurance (PPI) complaints.

The Financial Conduct Authority (FCA) says the claims, which were made in 2012 and 2013, may have either been unfairly rejected or paid too little.

It intervened after investigating falling 'uphold' rates in relation to complaint volumes.

The scandal has resulted in 13 million complaints in total since 2007 - with victims receiving more than £16bn in redress since the FCA started tracking payments in 2011.

The sum is widely tipped to have risen above £20bn.

Lloyds has set aside more than £10bn for PPI compensation

The FCA added that seven-in-ten claims had been upheld in the consumer's favour since the scandal broke.

Martin Wheatley, its chief executive, said: "Making sure anybody previously mis-sold PPI is treated fairly now, and paid redress where its due, is an important step in rebuilding trust in financial institutions.

"In around two-and-a-half million complaints this was not necessarily the case so, at our request, firms will be looking at these complaints again.

"The process is now working well; in just over three years £16bn has been put back into the pocket of the consumer - that is unprecedented.

"Given the enormity of this exercise it is no surprise that there have been some issues along the way but our approach is delivering a good result for consumers."

The FCA issued its update as the Financial Ombudsman Service remains jammed with complaints about PPI.

It has received over one million complaints from people unhappy with the response from their provider, equal to about a quarter of all rejected complaints.

The cash which has found its way back to PPI mis-selling victims has been credited with boosting the UK's economic recovery - particularly the car and property markets - but also wider consumer spending.

:: In a separate announcement Coutts, the private bank that counts the Queen among its clients, has set aside £110m to compensate thousands of customers who may have been sold unsuitable investments.

Its review of advice to clients dated back as far as 1950.

Coutts confirmed the news days after its parent firm, Royal Bank of Scotland, was fined £14.5m for "serious failings" in its advice to mortgage customers from June 2011 to March 2013.

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Malaysia Airlines Shake-Up After Planes Lost

The impact on Malaysia Airlines from the disappearance of MH370 and shooting down of MH17 has forced it to cut 6,000 jobs.

The tragedies - in March and July respectively - compounded long-running losses at the airline which prompted it to confirm a restructuring of its business.

It said 30% of its workforce would go under the plans, which would also see the company going into private hands again for a minimum of three years.

Its majority owner, the Khazanah Nasional state fund, said Malaysia would be taken off the stock market by the end of the year so it could undergo the painful changes - with the bill estimated at $1.9bn (£1.15bn).

Khazanah forecast a return to profitability within three years of its de-listing.

A restructuring of its routes was also announced although the twice-daily service between London's Heathrow and Kuala Lumpur will continue.

A London-based Malaysia Airlines spokesman said: "The London-Kuala Lumpur route is highly successful and will carry on".

On Thursday, Malaysia confirmed its second-quarter net loss had widened in the wake of the mysterious disappearance of Flight MH370 with 239 people aboard - 153 of them Chinese - after flying far off course from Kuala Lumpur to Beijing.

It warned that the shooting down of MH17 over Ukraine - while not reflected in its financial figures for March to June - would be reflected in its earnings for the rest of the year as passenger numbers fell.

Khazanah Managing Director Azman Mokhtar said: "Recent tragic events and ongoing difficulties at Malaysia have created a perfect storm that is allowing this restructuring to take place".

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Iceland Volcano: Airlines On Ash Cloud Alert

Iceland has told airlines to be vigilant following a volcanic eruption near the Dyngjujokull glacier just after midnight.

An orange alert warning issued by the Icelandic Met Office indicates that the Bardarbunga volcano shows "shows heightened or escalating unrest with increased potential of eruption".

After cancelling a red alert earlier, Iceland's Air Traffic Control has now completely lifted flight restrictions which stopped planes from flying below 18,000ft.

The eruption, which took place approximately five miles north of Bardarbunga, follows a fortnight of earthquakes throughout the area.

There has been no indication of ash being released into the atmosphere

Martin Hensch, a seismologist with the Met Office, told Sky News: "The most powerful phase of the eruption is already over. It was at its most powerful between 12.20am and 2.30am, with volcanic activity peaking shortly before 1am.

"We are still seeing slight volcanic tremors, but at the moment, there is no major concern, as there have been no changes since 3am."

The Dyngjujokull glacier is not far from the Bardarbunga volcano

Mr Hensch said there was no evidence for the emission of ash into the atmosphere so far, adding that airspace would have been restricted to 50,000ft or higher if that was the case.

"There is no immediate danger to flight traffic or the aviation industry. What we are monitoring closely is how these things develop," he added.

The Eyjafjallajokull ash cloud, seen from space, caused major disruption

The development of an ash cloud in Iceland could be disastrous for the aviation industry and cause widespread disruption for travellers.

In 2010, an ash cloud from the Eyjafjallajokull volcano left vast swathes of European airspace closed for six days.

There have been fears that insurers may not pay claims related to future ash cloud disruption, on the basis that repeated warnings from the Icelandic Met Office make it a "known event".

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The Week's Big Business Stories

Once you've caught up on last week's business news video, you can get ahead on what's coming up next week with Sky's Week Ahead.

:: Monday, September 1

On Monday, the Ian King Live programme will return from its summer break. The show will run from 6.30pm to 7pm and tune in for extended business bulletins with Ian and Dharshini David at 12.45pm and 1.45pm. Bulletins continue to broadcast hourly out of the Gherkin from 9.45am.

Tesco's new chief executive, Dave Lewis starts on Monday, a month earlier than planned. He replaces Philip Clarke. On Friday, the retailer  issued another profits warning. Tesco said it expects trading profit for 2014/15 to be in the range of £2.4bn to £2.5bn, compared with an analyst forecast of £2.8bn.

:: Tuesday, September 2

More corporate news on Tuesday as both Whitbread and Countrywide welcome new executives. Richard Baker becomes Whitbread's chairman, succeeding Anthony Habgood. Alison Platt becomes Countrywide's group chief executive.

:: Wednesday, September 3

On Wednesday, the Organisation for Economic Co-operation and Development will release its employment outlook for 2014. Last week it was revealed that unemployment in France hit a new high in July whereas in the United States the number of new applications for jobless benefits is at near post-recession lows.

:: Thursday, September 4

The Co-Operative Group reports interim results on Thursday. On Saturday August 30 the mutual's members will vote on new rules covering governance.

:: Friday, September 5

On Friday, we will get the latest snapshot for the UK housing market for August. The Halifax house price index showed last month that prices were 1.4% higher than the previous month and 10.2% higher than in July 2013.

:: Missing something? Tweet your business stories to @SkyNKTweets and @SkyNewsBiz

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Lib Dems Promise Six Weeks' Paternity Leave

The Liberal Democrats will promise fathers an extra four weeks' paternity leave under new manifesto plans due to be announced.

The policy would extend the total parental leave to 58 weeks by extending fathers' current entitlement of two weeks to six.

Under the plans, the law would be amended to provide parental rights to cover six weeks reserved for working fathers and six weeks for working mothers.

The remaining time would be available to share between partners.

For same-sex couples, each partner would be entitled to six weeks' reserved leave, with the rest available to share.

The policy goes further than the Coalition's introduction of shared parental leave from next April.

Business and Equalities Minister Jo Swinson said shared paternal leave plays an essential part in building a stronger economy and a fairer society.

"It allows couples to choose how to split time off work to look after their new baby," she said.

"Extending paternity leave is an important next step to encouraging new dads to spend more time with their child in those vital early weeks and months after birth.

"When parents share caring responsibilities, more equality in the workplace will follow.

"It is a nonsense to think it is only the mother's job to look after children. Parenting is a shared responsibility."

A Lib Dem spokeswoman said the policy would also encourage fathers to spend more time with their children.

"It's very important to us. We have done lots in government so far to make sure fathers get more rights," she said.

"This is just the extra step in encouraging them to spend more time with their children."

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Branson Banks On £2bn Virgin Money Float

By Mark Kleinman, City Editor

Sir Richard Branson is poised to pull the trigger on a stock market listing of Virgin's banking arm that City insiders predict could value it at up to £2bn.

Sky News has learnt that directors of Virgin Money are in talks with advisers about announcing an intention to float as soon as early October, as they look to exploit strong current trading and investors' appetite to buy shares in the company.

A final decision about the timing of an initial public offering (IPO) will not be taken for several weeks and it remains a strong possibility that Virgin Money could opt to wait until next year, according to people close to the company.

If it does press the button on a listing this year, Virgin Money, which has more than four million customers, would become the third so-called challenger bank to sell shares on the London Stock Exchange this year.

OneSavings, which does not offer current accounts, listed during the spring, while TSB was spun out of Lloyds Banking Group as part of the bank's state aid settlement with Brussels triggered by its taxpayer bailout in 2008.

Aldermore, another new lender, is also planning a flotation this autumn and could announce its plans at around the same time as Virgin Money.

Sir Richard's plan to float his banking business has been well-flagged, although it was not expected to happen as soon as this year.

Sources said that Virgin Group, which owns just over 46.5% of Virgin Money, planned to retain a large a shareholding as possible after a flotation.

WL Ross, the investment vehicle of billionaire US financier Wilbur Ross, also wants to hold onto the vast majority of its 45% stake, meaning that the free float of Virgin Money shares after the sale of new equity is likely to be close to the minimum requirements under City rules.

Virgin Money has been performing strongly in recent months, according to insiders, with a new current account making strong progress in Scotland and Northern Ireland before its wider nationwide launch.

The product, branded Essential, is designed to build a substantial presence in the current account sector at a time when ministers are attempting to foment greater competition.

Last month, Virgin Money announced a deal to raise £160m in the debt markets in order to repay part of a financing package taken on when it acquired Northern Rock from the Government in 2011.

Jayne-Anne Gadhia, Virgin Money's chief executive, said in July that 200 new jobs would be created by the business this year.

"We have grown the business strongly, exceeding market growth in both our core mortgage and savings business, and returned to profitability," she said.

"We have achieved this whilst maintaining the strength and quality of our balance sheet."

The bank added that it had grown mortgage balances by over 40% to exceed £20bn, significantly ahead of market growth, while savings balances had increased by more than 30% to over £21bn.

Last year, Virgin Money made an underlying profit of £53.4m in 2013, compared to a £2.5m loss the year before.

Chaired by Sir David Clementi, the former Prudential chairman, Virgin Money is expected to add further board members ahead of a listing.

The bank declined to comment on Saturday on the potential timing of a flotation, which is being handled by Bank of America Merrill Lynch and Goldman Sachs.

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