RBS Reserves £400m for Currency Probe

RBS Reserves £400m for Currency Probe
Royal Bank of Scotland has set aside £400m to cover potential costs from an investigation into alleged manipulation of the foreign exchange market. The provision, revealed in its third quarter results, follows Barclays’ decision to set aside £500m.

Pre-tax profit at RBS came in at £1.27bn – up £260m on the previous quarter and far better than the £634m loss in the same period last year. RBS also said that it planned to retain Ulster Bank.

The bank’s chief executive, Ross McEwan, said that Ulster remained a core part of the bank following a strategic review into its future. He said early progress had been made towards his goal of making RBS simpler, clearer and fairer, adding: “But we know we still have a long list of conduct and litigation issues to deal with and much, much more to do to restore our customers’ trust in us.”

The £400m provision for the currency investigation sent the corporate and institutional banking division to an operating loss of £557m.

RBS is among several banks being investigated by regulators over allegations that currency markets were rigged. The bank also set aside a further £100m to cover the cost of compensation for mis-sold payment protection insurance (PPI).

Investors welcomed the improving performance for the bank, sending shares up 3.4% in early trading in London to 375.8p, valuing RBS at £41.8bn.

RBS’s overall position improved slightly in the three months to September 30, with its core tier 1 ratio – a key measure of financial health – up 0.7 percentage points to 10.8% in the quarter. However, it warned: “Ongoing conduct and regulatory investigations and litigation continue to present challenges and are expected to be a material drag on both earnings and capital generation over the coming quarters. “The timing and amounts of any further settlements or redress however remain uncertain and could be significant.”

The bank also said that it had released £801m of money set aside for bad debts – known as impairment provisions – in the quarter compared with a figure of £93m in the second quarter of 2014. That was considerably better than the £590m analysts had expected and reflected an improving economic picture in both the UK and Ireland.

Total income fell 11% to almost £4.36bn, while operating expenses rose 5% to £3.88bn. Restructuring costs were down £205m to £180m compared with the previous quarter. Loans and advances to customers were up 2%, or £7.4bn, to £393bn, and customer deposits increased by £4.1bn, or 1%, to £405.4bn.

 

British Airways Owner – IAG Upgrades Profit Forecast

British Airways Owner IAG Upgrades Profit Forecast
The parent company of British Airways, IAG, has upgraded its profit forecast after it reported a 30% rise in third quarter profits. Operating profits at IAG rose to €900m (£708m) in the three months to 30 September, up from €690m a year ago.

IAG added that it expected an improvement in annual operating profits of €550m-€600m, compared with previous guidance of a rise of at least €500m.

In addition to BA, IAG also owns the Spanish airlines Iberia and Vueling.

IAG chief executive Willie Walsh, said: “We continued to grow capacity efficiently and both our non-fuel and fuel unit cost performances were strong with the latter boosted by the introduction of new, more efficient aircraft into our fleet.”

White House Computer Network Hacked

White House Computer Network Hacked
A White House computer network has been breached by hackers, it has been reported. The unclassified Executive Office of the President network was attacked, according to the Washington Post. US authorities are reported to be investigating the breach, which was reported to officials by an ally of the US, sources said.

White House officials believe the attack was state-sponsored but are not saying what, if any, data was taken. In a statement to the AFP news agency, the White House said “some elements of the unclassified network” had been affected.

A White House official, speaking on condition of anonymity, told the Washington Post: “In the course of assessing recent threats, we identified activity of concern on the unclassified EOP network. “Any such activity is something we take very seriously. In this case, we took immediate measures to evaluate and mitigate the activity. “Certainly, a variety of actors find our networks to be attractive targets and seek access to sensitive information. We are still assessing the activity of concern.”

The source said the attack was consistent with a state-sponsored effort and Russia is thought by the US government to be one of the most likely threats.

“On a regular basis, there are bad actors out there who are attempting to achieve intrusions into our system,” a second White House official told the Washington Post. “This is a constant battle for the government and our sensitive government computer systems, so it’s always a concern for us that individuals are trying to compromise systems and get access to our networks.”

The Post quoted its sources as saying that the attack was discovered two-to-three weeks ago. Some White House staff were reportedly told to change their passwords and there was some disruption to network services.

In a statement given to Agence France-Presse, a White House official said the Executive Office of the President received daily alerts concerning numerous possible cyber threats.

In the course of addressing the breach, some White House users were temporarily disconnected from the network. “Our computers and systems have not been damaged, though some elements of the unclassified network have been affected. The temporary outages and loss of connectivity for our users is solely the result of measures we have taken to defend our networks,” the official said.

The US’s National Security Agency, Federal Bureau of Investigation and Security Service were reportedly investigating.

Requests for comment were referred to the Department for Homeland Security, a spokesman for which was not immediately available. A White House spokesman has not responded to the BBC’s request for comment.

HP Looks to 3D Printing Market

HP Looks to 3D Printing Market
The BBC Technology website is reporting that Technology giant HP has announced the launch of a 3D printer HP claims will be 10 times faster than current models. The company also unveiled a new computer with built-in scanner, projector and touchpad at an event in New York on Wednesday. The firm is hoping the products will help stir up a stagnant PC market.

One expert said printing companies were facing tough times and that HP needed its 3D printing to “work and to work well”.

The firm said that 3D printing remained a niche technology because it was a slow process and, besides very expensive models, the printers turned out low quality products. But it claimed that its own printer would be faster – and consequently cheaper – for manufacturers. HP also said that, for its price, it would turn out a better-quality product than its competitors.

HP’s senior vice-president, inkjet and web solutions, Steve Nigro, said the printer would be on sale for a “lower cost than any others in its class”. But he did not specify an expected retail price.

Analysts identified HP as one of the companies that needed to capitalise on the potentially large market for 3D printing to offset the stagnation in their core areas of business. “We estimate that the global 3D printing market is set to grow from $1.15bn (£930m) in 2013 to $4.8bn in 2018,” said Arnaud Gagneux, vice-president, technology transformation, at CCS Insight.

Joris Peels, an expert on 3D printing, said: “The existing 2D printing companies face dwindling prospects, with kids increasingly growing up in a world virtually without paper.”

Mr Peels worked for HP as a consultant on its 3D printing endeavour but was not employed to work on this project. “Competing tablet products such as Amazon’s also have better business models than HP’s tablets since Amazon’s and Apple’s tablets put a store in the consumer’s hand letting these vendors make more revenue over time. “HP needs 3D printing to work and to work well,” he said.

Peels said that the printer technology differed from other methods because it “hardens the entire layer in one pass and also uses several chemical compounds to do so. Existing technologies draw out a layer one curve at a time using heat or light”. This, he said, accounted for its purported relative speed.

HP printer
The “multi-jet fusion” 3D printer is scheduled for release in 2016

The “multi-jet fusion” printer will not be released to the open market until 2016, following a period of collaboration with certain users, during which it hopes to fine-tune the product.

In a departure for the firm, HP also announced that it would share its 3D printing technology in a bid to get feedback from experts. The company said it had waited until it had the right product ready before moving into 3D printing.

But Mr Peels said that by “announcing now and only launching in 2016, HP is giving EOS, 3D Systems and Stratasys years to come up with alternatives and build competing machines.”

The Sprout computer, which combines scanner, projector and touch pad, will be available to order online from Thursday 30 October and will be for sale in stores in the US from 9 November. It will cost $1,899 and the company said that launch dates for other countries would follow. It has a sensor-laden mat on the desktop, instead of a mousepad and runs on Microsoft’s Windows 8. It also has display-mounted 3D scanner and projector that creates a digital image of objects placed on the mat. The images are projected on to the desktop, which a user can edit by touch. At its launch event, HP demonstrated how items could be placed on the mat, scanned and incorporated into designs on the screen.

Eric Monsef, who heads the project for HP, said the initial production run would be modest but could be scaled up if needed.

The key is to attract developers for a new Sprout marketplace or apps store, for specifically designed software that can take advantage of 3D capabilities. It would come with apps from Dreamworks Animation, Skype and Evernote, among others.

“It’s about getting people excited again,” Mr Monsef told Reuters. The hope is that Sprout will entice more developers as time goes by, who will in turn devise novel ways to make use of the technology, he said. “Day of launch, we’re not even at the halfway point of our work.”

Mr Gagneux said: “Sprout is a unique product which will undoubtedly appeal to hobbyist and creative workers. It has no competition. “Both Stratasys and 3D Systems have to be concerned about this launch as the marketing and commercial might of HP can potentially dwarf any initiative they had to grow their business.”

Earlier this month, HP said it would separate its better-performing computer and printer business from its corporate hardware and services operations.

Number Spoofing Scam Nets Millions for Fraudsters

New ‘Number Spoofing’ Scam Nets Millions for Fraudsters
A new phone scam, known as number spoofing, is netting millions of pounds for fraudsters, consumers are being warned. Financial Fraud Action UK (FFA UK) said the scam has become increasingly common in recent weeks.

Typically criminals fool people into thinking they are talking to their bank, or the police, on the phone.

To help gain the target’s trust, they display a fake number on the phone’s caller ID screen. They then persuade the victim to hand over details of their bank account, or passwords, or suggest that they move money to keep it safe. Using those personal details, they then steal money from that person’s account.

Frequently it is businesses which are being targeted, as well as some well-off individuals.

“There’s a big surge in criminals using this,” said an FFA UK spokesman. He said they had seen hundreds of such cases, with some companies losing as much as a million pounds.

When indulging in phone “spoofing”, criminals will often draw attention to the number that is showing on the recipient’s screen.

Officials warn people to watch out for such odd behaviour, as it is a big clue that something is wrong. “Remember that if a caller is trying to draw your attention to the number on your phone display, it’s very unlikely the call is genuine as there is no legitimate reason to point it out,” said Craig Jones of the FFA.

The technology being used has existed for a number of years, but fraudsters have only recently started using it. “It’s not difficult for the criminals to fake a caller ID,” said Mr Jones.

Earlier this month some of Britain’s High Street banks launched a campaign to warn consumers about the dangers of “vishing” – otherwise known as voice phishing. That is when fraudsters telephone victims, to try to get them to give out details of their accounts. The campaign listed eight things a bank will never ask its customers to do, including asking for details of PINs or passwords.

Facebook Warns Higher Costs will Hurt Revenues

Facebook Warns Higher Costs will Hurt Revenues
Facebook has warned that its spending will increase sharply next year and its revenue growth will slow in the fourth quarter.  Shares in the social network fell almost 10% in after hours trading after it said expenses would be up to 75% higher next year. The warning came after it reported third quarter revenues of $3.2bn (£1.98bn) well ahead of analysts’ forecasts.

It made $806m profit, up 90% on 2013. The increased profits were driven by another formidable three months for Facebook’s advertising business. Ad revenues for July to September were sharply higher than a year ago.

Perhaps most telling as an indicator of its future profitability was Facebook’s performance in mobile advertising. Mobile ads now make up 66% of its total advertising revenue. A year ago they accounted for less than half of it, and at the time of its stock market debut in 2012 Facebook’s mobile ads barely brought in any money at all.

Just as important to social networks as their earnings, are their user numbers, which in Facebook’s case were also better than many expected.

As of the end of September, Facebook had 1.35 billion active users every month, 14% more than in 2013. And the number of people checking their Facebook page at least once a day jumped 19% to 864 million. “This has been a good quarter with strong results,” said Mark Zuckerberg, Facebook founder and chief executive.

However, costs increased by 41% during the quarter mainly due to its recent acquisitions: messaging app WhatsApp and virtual reality headset maker Oculus Rift.

Chief financial officer Dave Wehner said these would increase further over the next year, and forecast revenue growth would slow to between 40% and 47% in the fourth quarter from 59% in the third quarter. “We believe that we have very substantial growth opportunities in front of us and we plan to invest aggressively to capitalise on those opportunities,” Mr Wehner said. Mr Wehner did not provide any prediction on revenue growth next year.

“Giving expense guidance without giving revenue guidance is frustrating and spooking The Street. The multi-billion dollar question is what’s revenue growth going to look like next year,” said BTIG analyst Richard Greenfield.

EU Set to Approve France and Italy Budgets

EU Set to Approve France and Italy Budgets
The European Commission has said it is likely to approve France and Italy’s 2015 budgets after both countries made adjustments to their first proposals, submitted earlier this month.

France had initially disregarded the Commission’s calls for further budgetary cuts.

Since the financial crisis, the Commission has gained greater powers to ensure members meet deficit targets.

France’s original budget forecast a deficit of 4.3%, above the 3% target. The 3% target would not have been met until 2017, under this first proposal.

The budget deficit is the amount a government spends over and above its annual income, expressed as a percentage of total economic output, or GDP.

“After taking into account all of the further information and improvements… I cannot immediately identify cases of particularly serious non-compliance which would oblige us [to reject the plans]“, said EU Economic Affairs Commissioner Jyrki Katainen.

France and Italy have been negotiating with the Commission since they submitted their budgets on 15 October.

On Tuesday, France’s Finance Minister Michel Sapin said he would cut a further €3.6-3.7bn ($4.6bn; £2.8bn) from the 2015 budget to meet the EU rules. He said he had found the money because of lower-than-expected costs on interest payments, as well as lower contributions to the EU’s budget.

Bank of England: Keep Interest Rates Low

Bank of England Says Keep Interest Rates Low
Interest rates should remain low to avoid long-term economic stagnation, the chief economist at the Bank of England has said. Andrew Haldane said in a speech he was downbeat over the UK economy because of weaker global growth, low wage growth and financial and political risks. “Put in rather plainer English, I am gloomier,” Mr Haldane said. “This implies interest rates could remain lower for longer, certainly than I had expected three months ago.”

Global markets have tumbled this week, with investors disconcerted at the lack of growth in Europe and especially Greece, the impact of Ebola, and worrying economic data from China and the US.

Previously, UK interest rates had been expected to rise early next year.

Mr Haldane made his remarks at a speech to local business leaders in Kenilworth, where he described the UK’s economy as “writhing in both agony and ecstasy”. He said there were still plenty of reasons to be cheerful. Growth is set to be the fastest of any major economy this year and inflation and borrowing costs are low, he said.

However, he said the “reasons to be fearful” included productivity and wages, which had not risen. “If there is genuine uncertainty about the path of the economy, the optimal policy response may be to avoid the worst outcomes,” said Mr Haldane.

Sterling dropped 0.5% against the dollar following his remarks. Share trading on the London market has been volatile.

Mr Haldane’s caution about global economic prospects were echoed by the Chancellor, George Osborne, who told the BBC that the worldwide economy was “more unstable than it has been for some time”.

Mr Osborne would not comment on Mr Haldane’s remarks. But he said there were “a lot of global risks out there at the moment” affecting the international economy. “Interest rates are entirely a matter for the independent Bank of England, the monetary policy committee there,” Mr Osborne said.

He added: “I’ll say this about the economy more generally – there are clearly a lot of global risks out there at the moment – we see these problems in the European economy, we’ve got this horrific disease Ebola in West Africa, all the problems in the Middle East and in the Ukrainian border. “The global economy is more unstable than it has been for some time. That is all the more reason why in the UK we have to stick to the stability we have won.” He said it was important to “make sure Britain is well protected as we’re in these stormy international economic waters”.  Earlier this month, Mr Osborne warned that the Eurozone slowdown will impact UK economy.

UK Unemployment Falls Below the 2 million Mark

UK Unemployment Falls Below the 2 million Mark
UK unemployment fell by 154,000 in the three months to the end of August to 1.97 million, official figures show. The drop took the unemployment rate to 6%, its lowest level since late 2008, the Office for National Statistics said.

Over the year, the number of unemployed people fell by 538,000, the largest annual fall since records began. The number of people claiming Jobseeker’s Allowance in September fell by 18,600 to 951,900.

The drop marks the 23rd consecutive monthly reduction.

Excluding bonuses, average weekly earnings in the June-to-August period rose by 0.9% from a year earlier. Including bonuses, earnings rose by 0.7%. However, earnings remain below the rate of inflation, currently 1.2%.

In total, there are now a record 30.76 million people in work.

However, the number of people classed as economically inactive, including students, long-term sick and those retiring early, increased by 113,000 in the quarter to more than nine million.

The number of self-employed people dropped by 76,000 in the latest three-month period to 4.5 million, but the total is 279,000 higher than a year ago, and the number of employees in part-time jobs has reached a record high of 6.8 million.

Youth unemployment, covering 16-to-24-year-olds, fell by 88,000 over the quarter to 733,000, giving a jobless rate among the age group of 16%.

Employment minister Esther McVey said: “Today’s record figures show that the government’s long-term economic plan to help businesses create jobs and get people working again is proving successful.”

Shadow work and pensions secretary Rachel Reeves tweeted that the jobs figures showed a “welcome fall in unemployment”. “But wages still well behind inflation. The pay squeeze on working people continues,” she added.

Chief secretary to the Treasury Danny Alexander said: “Britain is fast becoming the job creation capital of the Western economies. Because our recovery plan is working, so is the country and in record numbers.”

UK Manufacturers Hit by Global Economic Worries

UK Manufacturers Hit by Global Economic Worries
UK manufacturers are feeling the impact of the eurozone’s slowdown and wider global problems, a survey has found. The business trends report from the accountancy and services group BDO said that in September growth expectations among manufacturers saw their steepest fall since May 2013. Optimism among UK business generally saw a slight fall, the report said.

But with many manufactures reliant on exports, worsening economic conditions overseas are starting to hit.

BDO’s manufacturing index, which records growth expectations over the next three months, fell from 113.2 in August to 111.6 in September. A reading above 100 still indicates growth, but the unexpected sharpness of the fall shows how manufacturers are suffering from the recent downturn in the global economy, said BDO partner Peter Hemington.

“With global conditions becoming increasingly challenging, it was only a matter of time before the stellar increases in economic growth recorded earlier this year came to and end. “Given their reliance on exports, manufacturers have borne the brunt of weakening global demand but the effects of stuttering worldwide growth are obvious throughout the economy,” he said.

Last week, poor economic data from Germany intensified worries about growth in the eurozone and helped to send global stock markets into reverse.

However, UK businesses overall are only slightly less positive about growth expectations over the next quarter, BDO found.

The general index fell from 103.8 in August to 103.3 in September.

Meanwhile, worries about global growth have failed to dent recruitment expectations over the coming months. The BDO employment index rose from 111.2 in August to 112.3 in September. The report said: “This indicates that the recent trend of falling unemployment is likely to continue, with firms expecting to increase hiring towards the end of the year.”