Canada has joined Colombia as a leading exporter of synthetic or designer drugs, flooding the global market on an almost unprecedented scale

 

Canada has joined Colombia as a leading exporter of synthetic or designer drugs, flooding the global market on an almost unprecedented scale, police say. The RCMP have seized tonnes of illicit synthetic drugs that include Ecstasy and methamphetamine being shipped abroad after being “cooked” in make-shift labs in apartments, homes and businesses in the GTA. Police are now seizing more chemicals and synthetic drugs, which they say is favoured by young people, at Canadian border checks rather than the traditional cocaine, heroin or hashish that officers call drugs of “a last generation.” Most of the Ecstasy (methylenedioxymethamphetamine), meth or ketamine, a hallucinogenic used in “drug cocktails,” are smuggled from Canada by trucks, air cargo, human couriers or courier services to a network of traffickers. The U.S., Europe, Australia, New Zealand and Japan are the world-wide targets of these highly organised criminal syndicates, the Mounties said. Two Japanese students were arrested at Vancouver International Airport in 2009 after 47,000 Ecstasy pills with the “Chanel” logo were seized from their luggage. And, in November that year 400,000 tablets and 45 kgs of pot were seized in Michigan as it was being transferred from a small Canadian aircraft to a vehicle. The RCMP is working to stamp out the problem and have created a Chemical Diversion Unit (CDU) to target “rogue chemical brokers” who import and sell chemicals to organized crime cells to “bake” synthetic drugs for export. The force also created a Synthetic Drug Operations (SDO) whose members target clandestine drug labs in the GTA that are operated by crime cells and traffickers. “We execute search warrants once we locate a clandestine lab,” said SDO Sgt. Doug Culver. “These labs are dangerous with toxic chemicals and our members are specially trained to handle them.” His officers use hazardous material suits to enter a suspicious lab to ensure it is safe from corrosive chemicals before uniformed officers can enter. Police said an Ecstasy tablet, that usually features a harmless-looking logo, is sold for up to $15 each at Toronto nightclubs and the potency can last for about 10 hours. The tablets used to sell on the street for about $40 each two years ago. Supt. Rick Penney, who is in charge of an RCMP-GTA Drug Squad, said tonnes of chemicals and synthetic drugs are being seized by his officers. “We are talking tonnes and not kilograms,” Penney said. “This is becoming a matter of routine for us and it concerns me.” Penney said Canadian-made Ecstasy and meth are popular in Australia, New Zealand, Japan, the U.S. and some European countries. “Canada is a player on the global market,” he said. “We see a lot of synthetic chemicals passing through the Canadian border or going out of province.” He said some of the chemicals are purchased by criminals on the Internet from suppliers in China or India. “The majority of the drugs we seize in Ontario are for export,” Penney said. “This is a global problem and Canada is a big player.” The drug officers said Canada exports as much Ecstasy and chemical drugs as Colombia ships out cocaine. Police said synthetic drugs are the choice of young people because it is cheap, with a pill being made for 50-cents and sold for up to $15; lasts a long time; can be easily hidden and a tablet appears relatively harmless with a “cute” imprinted logo. Sgt. Brent Hill, of the Chemical Diversion Unit, said rogue brokers use fake names, companies or addresses to import the chemicals into Canada. Some use the name of legitimate companies and give fake delivery addresses, he said. He said the imported chemicals are resold by rogue brokers at exorbitant profits to organized crime groups originating from China, Vietnam and India, including criminal bike gangs in Canada. The chemicals are “cooked” into synthetic drugs. The CDU monitors more than 100 chemicals entering the country. Some are for legitimate industrial uses ranging from industrial cleaners to pharmaceutical products. Others are strictly for “baking” drugs. Hill shows a make-shift laboratory that was seized in a 2007 Scarborough bust in which three people were arrested. Officers seized two million units of Ecstasy and bags of chemicals at a residence on Pipers Green Ave., in the Brimley Rd. and Finch Ave. E. area. Jian Yao Quan, 24, and Yan Shi, 46, both of Scarborough, and Wan Shun Ling, 55, of Brooklyn, New York, were convicted of drug-related offences and will be sentenced on Feb. 14. A warrant has been issued for Wei Quan Ma, 43, of Toronto, who’s believed to have fled to China. During that raid, police found a 22-litre round-bottom heating mantle filled with chemicals being baked as vapors flowed through a hose taped at the top of the container to a large can filled with cat litter, that helps to absorb toxic gases to avoid leaving smells behind, police said. Hill said the mixture leaves a cloud of corrosive chemical hanging over the area that is harmful to people and is the reason why officers wear haz-mat suits to enter drug houses. “These labs pose a serious threat to the safety of the public and emergency first responders such as police, fire and ambulance workers,” Hill said. “Most chemicals in a clandestine drug lab are highly toxic, corrosive, explosive or flammable “ He said some unsafe labs can cause a fire or explosion that can lead to environmental pollution. Police said its common to find an Ecstasy pill containing a combination of controlled substances including methamphetamine or other controlled or non-regulated psychoactive substances. Some doses can be lethal and kill users. Officers point to the deaths of five B.C. young people since last August from Ecstasy laced PMMA, the same lethal chemical linked to deaths in the Calgary area. There have been about 18 Ecstasy-related deaths in B.C. in two years. “Some of these drugs are dangerous cocktails,” Hill said. “Crime groups are putting more addictive chemicals in some of the mixtures to get kids coming back for more. “These brokers are aggressively targeting the legitimate chemical industry. They continue to expand in a highly-lucrative market selling legal chemicals, regulated precursors and non-regulated psychoactive substances.” Officers said some unscrupulous brokers establish fake front companies, or claim to be legitimate companies to import chemicals into Canada. They fill out paperwork required by the Canada Border Services Agency but usually provide false information, police said. “The acquisition of chemicals is the choke point,” Hill said. “We are fully engaged with the legitimate Canadian chemical industry and monitor suspicious chemical transactions.” He said its a crime under Bill C-475 to possess, produce, sell or import “anything” if the person involved knows it will be used to produce methamphetamine or Ecstasy. “Crime groups with links to south-east Asia continue to dominate chemical-brokering operations,” the Mounties said. “There are criminal enterprises including individual operators and semi-legitimate companies that are brokering or procuring chemicals for synthetic drug production.” Police said some chemical shipments imported into Canada for industrial use are stolen by crime gangs to produce drugs. “Global demand for Ecstasy remains high,” Hill said. “Ecstasy continues to be the most sought-after and widely available controlled synthetic drug in the Canadian illicit market.”

Recession causes 2,000 heart attack deaths

 

Since 2002 the number of people dying from heart attacks in England has dropped by half, the study conducted by Oxford University found. But within that, regional data revealed there was a 'blip' in London that corresponded to the financial crash in 2008 and continued through 2009. Heart attack deaths have dropped due to better prevention of heart attacks in the first place with fewer people smoking and improvements in diet through lower consumption of saturated fat. The treatment of people who do suffer a heart attack has also improved leading to fewer deaths with faster ambulance response times, new procedures to clear blocked arteries and wider use of drugs such as statins and aspirin. The research published in the British Medical Journal showed around 80,000 lives have been saved between 2002 and 2008 as deaths from heart attacks declined.

Businessman Asil Nadir would have needed banknotes 300 times the height of Nelson's Column to balance the books of his empire

Businessman Asil Nadir would have needed banknotes 300 times the height of Nelson's Column to balance the books of his empire, the Old Bailey hears.

He has said when pounds were taken out in London, equivalent amounts in Turkish lire were placed in a subsidiary firm in northern Cyprus.

Philip Shears, QC, prosecuting, said the claims were "not credible".

Mr Nadir, who is accused of stealing nearly £150m from his Polly Peck empire, denies all the charges.

The 70-year-old, who lives in Mayfair, central London, is facing 13 sample counts that he stole more than £34m from PPI between 1987 and 1990.

The prosecution has accused the tycoon of transferring millions of pounds through a complex series of companies and trusts in an attempt to hide his actions.

Judge orders search of News of the World executives' computers in bid to find out if key hacking evidence was destroyed

 

A judge overseeing the settling of hacking claims by victims of News of the World has ordered executives' computers be searched. Senior managers at News Group Newspapers – the parent company of the News of the World – were criticised by Mr Justice Vos, the judge supervising the settlements. Jeremy Reed, who is acting on behalf of several victims of phone hacking, said that when the News of The World moved offices in 2010, computers used by journalists accused of hacking were destroyed. He disparaged their reaction to a request in 2010 from lawyers for the actress Sienna Miller to retain emails that might be relevant to a phone hacking claim. Within three days, the judge said, ‘a carefully conceived plan to delete emails was put into effect at the behest of senior management’. He said the evidence raised ‘compelling questions about whether you concealed, told lies, actively tried to get off scot free’. He ordered the company to search a number of computers, adding that there was evidence that management had a ‘startling approach to the email record’.

News International faces FBI phone hacking probe

 

Yesterday the company paid the actor £130,000 after accepting that it had published stories gleaned from hacking his phone. One of the articles News International accepted had come from phone hacking was a 2003 story in the News of the World which referred to telephone calls Law’s assistant Ben Jackson had made to him when he arrived at an airport. It is believed the airport was John F. Kennedy airport in New York. News International’s admission has led the US authorities to investigate whether a crime took place on American soil. It is thought the possibility that Law’s phone was using an American network at the time could lead to offences having been committed under US law.

Pumpkin Patch closes UK stores

 

400 employees across 36 stores in the UK face an uncertain future after the New Zealand-based company said it no longer made sense to maintain its loss-making British business. It is the latest in a string of retailers to run into trouble as consumers reign in spending. The company will continue trading online and in non-UK businesses in Ireland and internationally, administrators said in a statement. Only its UK stores are affected. Pumpkin Patch has already closed five UK stores with 60 workers being made redundant in Cambridge, Cheshire Oakes, Leeds, Swindon and Uxbridge. The company's administrator, Deloitte, said it would continue trading most UK stores as it explored options.

Peacocks To Axe 249 Staff In Cardiff As Administrators Take Action

 

The troubled fashion retailer Peacocks is set to axe more than 200 staff, its administrators KPMG have announced. Just 24 hours after the company went into administration, KPMG said 249 workers at its headquarters in Cardiff were going to lose their jobs. The administrators said the cuts follow "a commercial review of the staffing levels of the business." Chris Laverty, from KPMG, said: "No stores have been closed and will continue to operate as normal whilst we actively search for a buyer for the business." 266 staff will remain at the head office and work with the administrator while a buyer for the company is found. Peacocks has 611 stores and 49 concesssion in the UK Peacocks entered administration after apparently failing to persuade its lenders to agree to a debt-for-equity deal. The fashion chain, which has 611 stores and 49 concessions across the UK, is owned by hedge funds Och-Ziff and Perry Capital. Its like-for-like sales rose 17% over the Christmas period and the company said it was benefiting from its ability to react quickly to fashion trends. Bonmarche, which is also owned by the Peacock Group, has not yet entered administration but filed a notice of intention to appoint administrators on Monday. It employs 3,800 staff and operates some 394 stores in Britain.

Kodak files for bankruptcy protection

 

Company that pioneered the digital camera eventually brought down by its failure to invest in its own ground-breaking invention To all intents and purposes it is the end of the "Kodak moment". More than 130 years after a "not especially gifted" high school dropout, George Eastman, founded the camera company that dominated photography for most of the 20th century, Kodak Eastman filed for bankruptcy protection in the US on Thursday. The company which once sold 90 per cent of the film used in the US and made a type of film - Kodachrome - so beloved by amateur and professional photographers that Paul Simon wrote a hit song about it, finally succumbed to the digital revolution which left its products obsolete after years of ferocious competition from more light-footed rivals in the Far East. The company, whose little yellow film boxes could once be found throughout the world, had tried to reinvent itself as a manufacturer of printers to capitalise on its reputation as the best for film printing. But despite the closure of 13 factories, 130 processing labs and 47,000 job losses, the business had little choice but to file for chapter 11 bankruptcy protection. The filing lists its assets as worth $US5.1bn - but its debts stand at $US6.8bn.

Spanish Banks' Bad Loans Keep Rising

 

The bad debt ratio of Spain's banking sector rose for the eighth consecutive month in November to a new 17-year high, while deposits and loans shrunk further as the country edged towards a double-dip recession, data released Wednesday by the Bank of Spain showed. According to the data, 7.51% of loans held by banks were more than three months overdue for repayment in November, up from 7.42% in October. It is the highest percentage recorded since November 1994, and contrasts with bad debt levels below 1% of all loans in the years prior to the country's 2008 property bust. High unemployment, falling house prices and the sluggish economy likely will cause bad loans to continue to rise throughout this year and into 2013, said Gonçalo Guarda Garcia, an analyst at Portuguese brokerage BPI. Lenders have been struggling to cope with steep losses on loans extended to the real-estate and construction sector, as the country tackles the deepest economic downturn in decades and an escalating debt crisis in the euro zone that has sharply reduced their access to financial markets. Mr. Guarda Garcia also said he expects loans to shrink at a faster pace this year as lenders reduce risk on their balance sheets. The November data showed banks had cut lending by 2.54% on the year, while the pool of deposits fell at an annual rate of 2.14%. The new Spanish government said earlier this month that after stalling in the third quarter, the economy had contracted in the fourth quarter of 2011 and is set to shrink further this quarter. Overall, €134.1 billion ($171 billion) in loans were non-performing in November, up from €131.9 billion in October and €104.7 billion a year earlier. Banks had set aside a total of €73.82 billion to cover these soured loans at the end of November, up from €62.2 billion a year earlier. The amount of provisioning will likely rise sharply next month, as many of the country's lenders are expected to set aside a large chunk of their earnings to cover loan losses. As of November, Spain's banks had total of €1.79 trillion in loans outstanding, down from €1.84 trillion a year earlier.

Royal Bank of Scotland can switch off firms' life support

 

The downfall of the Peacocks fashion chain has turned a spotlight on the fact that taxpayer-owned Royal Bank of Scotland is wielding the power of life and death over hundreds of financially stretched companies. The decision by RBS that it did not want to swap debt in Peacocks for a stake in the business – in contrast with fellow lender Barclays, which believed the company was viable – is just one of many such dilemmas it will face in the coming months. Thanks to the gung-ho approach to lending taken by previous management, RBS is saddled with a huge exposure to the struggling retail and property sectors. Its new bosses have to decide whether to back these companies and hope they can trade their way out of difficulty, or whether to pull the plug – and all under the glare of publicity. RBS faces a storm of criticism over its decision to walk away from Peacocks. But the reality is there are no easy ‘right’ answers on its treatment of the ailing store chains clogging its loan books. Withdraw support, and the bank stands accused of failing to back British firms and of letting down the workers who bailed it out with their taxes. But if RBS continues to pour money into companies with no hope of ever recovering it, then taxpayers will lose even more in the long run. As well as Peacocks, RBS is also a lender to ailing music seller HMV and Clinton Cards, along with Premier Foods, the makers of Angel Delight, and tour operator Thomas Cook. Others include Endemol, the production house behind Big Brother, and hotel chain Jurys Inn. The legacy of the loan-happy Goodwin years is so large that the bank’s ‘restructuring’ division, which tries to get financially strapped borrowers back on their feet, employs no fewer than 1,000 staff. The bank claims it strives to keep businesses afloat wherever possible, as that gives it the best chance of having its loans repaid. But a spokesman said: ‘There are some, though, where their time is up.’ The bank supported failed nightclub operator Luminar for a long period before it, and fellow lender Lloyds, pushed the firm into administration. It also carried on lending to social housing group Connaught after a series of profit warnings, though eventually it fell into administration too. The restructuring unit is run by Derek Sach, a former private equity boss at 3i. He claims that in 2010, the latest full-year figures available, it dealt with around 1,000 British businesses, saving 64,000 jobs and that fewer than 10 per cent went into insolvency. Sach runs his own private-equity style operation within his empire, by taking stakes in the distressed firms he considers to have a strong chance of being profitable in future. This tactic of taking a share in a company at a rock bottom price when it is in trouble is a tried and tested technique among private equity operators. RBS is essentially trying to beat them at their own game. It has taken share stakes in luggage firm Samsonite and care home operator Four Seasons, among others. Insiders at RBS believe Peacocks is trying to make political capital out of the fact the bank is state-controlled. ‘We are damned if we do lend to companies in trouble, and damned if we don’t,’ said one executive. Peacocks has announced its intention to appoint an administrator and has lined up KPMG. It now has a 10-day window of opportunity to find new backers before the administration actually happens. It may yet find a white knight. But for RBS, there will be many more such difficult decisions for the companies it has on life support in the coming months.

Past Times goes into administration

 

Gift retailer Past Times has fallen into administration and confirmed 507 staff were made redundant before the move. The private equity-owned group, which last week shut 46 stores and 72 temporary stores, said KPMG had been appointed as administrator to the loss-making business following weak trade. An additional 67 redundancies were made on appointment, comprising 30 from the Past Times head office in Witney, Oxfordshire, and 37 from its warehouse, leaving a central workforce of 31. The remaining business, comprising 51 stores and 500 employees, is continuing to trade under the control of the administrators in the short term with an "orderly wind down" planned in the event a sale cannot be sealed. Past Times made the announcement as clothing retailer Peacocks revealed it planned to appoint administrators to the business, raising doubt over the future of 11,000 positions. Past Times is understood to have suffered over Christmas despite heavy discounting and its range of Downton Abbey-themed memorabilia. The group sells a wide range of toys and gifts, including teddy bears, mugs, jigsaws and puzzles and stationery. The group is owned by private equity firm Epic, which itself bought the chain out of administration in 2005. Past Times is the latest in a long line of retailers to collapse into administration. Outdoor retailer Blacks Leisure and lingerie chain La Senza were recently bought in a pre-pack administration deal, while Peacocks and Bonmarche will both appoint administrators in the next 10 days.

RBS puts 13,000 jobs at risk as it pulls the plug on Peacocks

 

Royal Bank of Scotland was last night branded ‘deplorable’ for pulling the plug on fashion retailer Peacocks – putting 13,000 high street jobs at risk. The taxpayer-controlled bank withdrew from last ditch talks to save the store chain yesterday, threatening the biggest retail collapse since the demise of Woolworths three years ago. Its move forced Peacocks, which has more than 700 shops in the UK and abroad, to announce it will go into administration in ten days unless new investors are found.

Tax adviser guilty of fraud scheme

 

A professional tax adviser from Bedfordshire has been convicted of trying to defraud honest taxpayers of £70 million, HM Revenue & Customs (HMRC) said. David Perrin spent his cut of the stolen cash on expensive second homes, exotic holidays, works of art and luxury cars, a spokeswoman said. The 46-year-old, of Leagrave, Luton, Bedfordshire, was found guilty at Blackfriars Crown Court and will be sentenced next month, she added. Perrin, deputy managing director at Vantis Tax Ltd, devised and operated a tax avoidance scheme which he sold to wealthy taxpayers in order to exploit the law on giving shares to charity, she said. The scheme allowed him to pocket more than £2 million in fees from unsuspecting clients. He used a network of finance professionals to advise more than 600 wealthy clients to buy shares, worth a few pence each, in four new companies he had set up, the spokeswoman said. He then listed the companies on the Channel Islands Stock Exchange and paid people money from an offshore account to buy and sell the shares simply to inflate their price. The share owners then donated 329 million shares to various unsuspecting registered charities and tried to claim £70 million tax relief on a total of £213 million of income and company profits. This was based on the shares being worth up to £1 each, rather than the pennies they were originally bought for. Perrin also used the bogus scheme to claim money back, the spokeswoman said. The scheme proved so popular that Vantis employees performed a smug celebratory song at their annual conference, to the tune of I will Survive, she said. It included the verse: "They should have changed that stupid law, they should have buggered charity, but they have left that lovely tax relief, for folks to pay to me." Jim Graham, HMRC criminal investigator, said: "With his knowledge of the tax system, Perrin thought that he was one step ahead of both HMRC and the law. "This cynical fraud not only stole millions of pounds from taxpayers, but also conned innocent charities into accepting gifts of virtually worthless shares, just so Perrin could inflate his own criminal earnings." Perrin was charged with cheating the revenue by dishonestly submitting and dishonestly facilitating and inducing others to submit claims for tax relief which falsely stated values of shares which were gifted to charities. He will be sentenced on February 9 and confiscation proceedings are under way, the spokeswoman said.

Top former art dealer faces 87 charges after fraud probe

 

One of Australia's former leading art dealers, Ronald Coles, faces up to 10 years in jail after being charged today with 87 offences relating to an alleged multimillion-dollar investment art fraud scheme. Mr Coles, 64, was ordered to appear at Gosford police station at 10am today. Fraud Squad detectives formally charged him following an "extremely protracted and legally intricate" two-year investigation into his business affairs. Under the Crimes Act, Mr Coles was charged with 77 counts of "larceny as a bailee" and a further 10 counts of "director/officer cheat or defraud". For more than 30 years, Mr Coles specialised in fine art by some of Australia's most celebrated artists, including Sir Arthur Streeton, Eugene von Guerard, Brett Whiteley and Norman Lyndsay. Advertising on national radio and television, he offered clients an opportunity to boost their life savings through the purchase of investment art, which he bought and sold on their behalf, using their superannuation funds. NSW Police launched Strike Force Glasson in January 2009 after a Fairfax investigation unearthed dozens of investors who were missing millions of dollars in lost art and money, all allegedly retained by Mr Coles. Today's police charges relate to more than $8 million in financial loss to a total of 43 clients nationwide. Mr Coles failed to make conditional bail of $50,000. It is understood he offered a car and paintings as surety but they were refused. He is due to appear at Gosford Local Court shortly.

RBS to cut 3,500 jobs in investment bank shake-up

 

The Royal Bank of Scotland (RBS) has said it is planning to cut 3,500 jobs, with most of them to happen this year. The cuts are part of a reorganisation and shrinkage of its investment bank. The losses, which will be split between its UK and international offices, come on top of 2,000 cuts announced earlier. Its "wholesale banking" business, which provides services to large clients including investment banking services, will be split into separate "markets" and "international banking" divisions. The markets division - which comprises RBS' main trading activities - will focus on the bank's traditional strengths of debt, currency and money markets, the bank said in its statement. The wholesale banking division will provide services for the bank's biggest clients. These will include corporate advisory services transferred from its investment bank - such as helping major companies borrow money by issuing bonds - as well as cash management and payments services. The bank has already shed some 30,000 employees over the last two years, 22,000 of them in the UK. "It is a disgrace that while on a daily basis, stories are emerging about the massive bonuses at the top of the bank, increasing numbers of jobs are being cut from amongst the hard working staff," said David Fleming of the Unite union. Continue reading the main story “ Start Quote For a bank that has shed 30,000 jobs over the past couple of years, a further 3,500 departures may not seem massive” Robert Peston Business editor, BBC News Read Robert's blog Markets took the statement well, although many of the details had been flagged up in advance. RBS's share price rose 6.8% in morning trading, outperforming other banks and other large companies on the FTSE 100 index. Cutting back The bank said that it planned to close or sell off other business lines, such as those dealing with shares and stock markets, as well as its business advising companies on mergers and acquisitions. It is also looking to dispose of its corporate brokerage, Hoare Govett. These business lines were ones that had been added or expanded only in recent years under the leadership of former chief executive Sir Fred Goodwin. Continue reading the main story Royal Bank of Scotland Group RBS also said in its statement that the size of the balance sheet - the total loans and investments - of its former investment banking division would be reduced by more than a quarter, from £420bn to £300bn, over three years. This will enable it to cut its borrowing from wholesale money markets - which evaporated during the 2008 financial crisis, threatening the bank's collapse - by £75bn. "The overall aim is to improve profits and reduce risks," says the BBC's business editor, Robert Peston. "Which matters to most of us, since taxpayers are sitting on losses of £26bn on the £45.5bn they invested in RBS to rescue it." However, he also notes that the business lines being disposed of were not the ones responsible for causing RBS its huge losses during and after the 2008 financial crisis. UK clients RBS said the restructuring was also designed to prepare the bank for new UK regulatory requirements for banks to ring-fence their core UK operations from their riskier investment banking activities. Continue reading the main story Crisis jargon buster Use the dropdown for easy-to-understand explanations of key financial terms: Investment bank Investment bank Investment banks provide financial services for governments, companies or extremely rich individuals. They differ from commercial banks where you have your savings or your mortgage. Traditionally investment banks provided underwriting, and financial advice on mergers and acquisitions, and how to raise money in the financial markets. The term is also commonly used to describe the more risky activities typically undertaken by such firms, including trading directly in financial markets for their own account. Glossary in full The bank's dealings with British small and medium-sized companies will accordingly be transferred away from the new international banking division, and handled via its UK banks. There was no mention of any specific downscaling of its international operations. However, there has been speculation that its operations in the Irish Republic - including Ulster Bank, which RBS bought in 2000 - and in Australia may be affected Chancellor George Osborne announced the change in strategy at the bank in December 2011. "Investment banking will continue to support RBS's corporate lending business but RBS will make further significant reductions in the investment bank, scaling back riskier activities that are heavy users of capital or funding," Mr Osborne told Parliament in December. Mr Osborne's announcement came in the wake of a report into the bank by the Financial Services Authority in December 2011 which pointed to "errors of judgement and execution" by RBS management which led to its failure in 2008. The bank is now 82%-owned by the UK government after taxpayers injected £45.5bn of new capital into RBS.

Wonga stops targeting students after Twitter protests

 

Short-term lender Wonga.com has announced that it is taking down information on student finances from its website following accusations it was encouraging undergraduates to take out one of its high-interest loans. Earlier Wonga.com came under severe criticism after its website claimed that its loans can offer students "a little more financial freedom and independence". The claim attracted outrage on Twitter. One user, Neale Gilhooley, tweeted: "A pox on loan company #Wonga offering students loans at a sharking 4,214pc APR." On the "student loans" section of its website, Wonga.com says these government-backed loans – despite their very low interest rates – could encourage people to borrow too much. Student loans currently attract interest at 1.5pc or 5.3pc, depending on when they were taken out. "It's pretty hard not to get carried away when you're a student on a budget and have the option to borrow large amounts of money with a student loan. But the problem with student loans is that they potentially encourage you to live beyond your means," the website says. "They're intended for living and education costs, but it's all too easy to fritter away the money once you have it. Wonga encourages responsible borrowing because, depending on your trust rating, you can borrow as little as £1 up to £1000, as long as you can repay it within a month."

Little Chef to cut 600 jobs in 'aggressive' rebuilding strategy

 

He's been slimmed down, fattened back up again and placed under the care of celebrity pal Heston Blumenthal, but now "Charlie", the symbol of Little Chef, will be disappearing from 67 locations across the country, putting up to 600 jobs at risk. The private equity owners of the 54-year-old roadside restaurant chain shut 18 loss-making outlets on Wednesday and will close another 49 next month. Graham Sims, Little Chef's chairman, said the closing stores were "losing money to a very large degree" and had to be shut to allow the remaining 94 sites to survive. He said the 18 restaurants boarded up on Wednesday were losing "in excess of £10,000 a year before rent" and had "dragged down" the rest of the company. The closure programme comes five years after the turnaround specialist RCapital rescued Little Chef – and 3,500 jobs – from administration. Since then, the company has tried to reposition itself away from its greasy-spoon image by drafting in the Michelin-starred Blumenthal to jazz up the menu. Blumenthal's Big Chef Takes On Little Chef was a hit for Channel 4, but his new menu – including coq au vin and braised ox cheeks – only made it in full to three restaurants. Blumenthal, who collects a "minimal fee" for his help, will be kept on to advise the chain about menu ideas and food provenance. Sims said the three restaurants transformed by Blumenthal "probably wouldn't have survived" without the celebrity chef's intervention. Sims, whose first job was flipping hamburgers at Little Chef in 1997 before he rejoined the company in the top job three months ago, said the chain was struggling because it had not been "aggressive" enough. "The problem is Little Chef has in the past never been brave enough to make a big change. I don't want to nibble at it any more – I want to make big changes." He said Little Chef, which began life as an 11-seat restaurant in Reading in 1958, would have to "shrink to grow". He said it was also finally time for Charlie to face up to competition from other, faster, alternatives up and down Britain's motorways. But he did not seem to be daunted by the fight ahead. "I used to run BP in the UK and created BP Connect and the BP Wild Bean Café," he said. "Now I'm going to start attacking BP. I will compete with those other restaurants and fast-food brands. This is a great opportunity for the great travelling British public." Grab-and-go takeaway, which is already available at 13 Little Chefs, will be rolled out across the rest of the network this year, but Sims insists it will be "quality quickly takeaway" not "just a dirty greasy takeaway". At the same time, Little Chef will keep its favourite dishes, including the Olympic Breakfast, which continues to go down well with its 9 million annual sit-down customers – including Sims, who eats at least one a week and recommends customers "don't eat the day before". "I have very big aspirations to grow our business," Sims said. "There are sites that I can comfortably invest in and see more jobs." After that, there are plans for a new franchise operation of 40-50 new restaurants. But there are no plans to expand to other countries yet.

Europe Banks Hoarding Cash Resist Draghi Bid to Avoid Crunch

 

Banks are hoarding the European Central Bank's record 489 billion-euro ($625 billion) injection into the banking system, thwarting attempts by policy makers to avert a credit crunch in the region. Almost all of the money loaned to 523 euro-area lenders last month wound up back on deposit at the Frankfurt-based central bank instead of pouring into the financial system, ECB data show. Banks will use most of the three-year loans to meet their refinancing needs for this year and next, analysts at Morgan Stanley and Royal Bank of Scotland Group Plc estimate. “It's illusory to think that the measure will translate into credit generation,” Philippe Waechter, chief economist at Natixis Asset Management in Paris, said in an interview. “It will assuage some of the anxiety banks have regarding their liquidity needs. But they've engaged into a massive overhaul of their strategy and shrinkage of their balance sheets, which is, coupled with the deteriorating economy, not compatible with increasing credit.” Governments are urging European banks to keep lending to companies and individuals while requiring them to raise an additional 114.7 billion euros of core capital by June to weather a deepening sovereign-debt crisis. Instead of raising equity, most lenders across Europe have vowed to meet capital rules by trimming at least 950 billion euros from their balance sheets over the next two years, either by selling assets or not renewing credit lines, according to data compiled by Bloomberg. ECB Deposits That has stirred concern among policy makers that banks will cut lending and throttle growth in the euro region. Banks have been parking almost all extra liquidity from the ECB loans back at the central bank. Barclays Capital estimates firms used 296 billion euros of the Dec. 21 three-year loans to replace maturing shorter-term ECB borrowings. That left only 193 billion euros of additional money for the financial system. Overnight deposits with the ECB have jumped by about 223 billion euros since the loans to a record 486 billion euros, suggesting the central bank funds haven't so far reached customers. Banks account for about 80 percent of lending to the euro area, making them “crucial to the supply of credit,” according to recently installed ECB President Mario Draghi. By contrast, U.S. companies rely more on capital markets for financing, selling bonds to investors. Refinancing Needs The ECB lending, and a follow-up loan offering on Feb. 28, won't ease the pressure on banks to shrink, say analysts including Huw van Steenis at Morgan Stanley in London. “The ECB loans will largely be used to pre-fund 2012 and some of 2013's bank refinancing needs, but it will not stimulate lending,” Van Steenis said. They will “just stop it falling off precipitously.” Euro-area banks have more than 600 billion euros of debt maturing this year, the Bank of England said in its financial stability report last month. The first ECB loan offering should help cover about two-thirds of that amount, Goldman Sachs Group Inc. analysts say. Morgan Stanley's Van Steenis estimates banks may reduce assets by as much as 2.5 trillion euros in two years, a process known as deleveraging. The volume of loans to households and companies in the 17- nation euro area shrank in November for the second consecutive month, the ECB said on Dec. 29. Loans were still up 1.7 percent over the year-earlier period, slowing from a 2.7 percent increase in the 12 months through October. Merkel, Sarkozy When granted, loans are getting costlier for borrowers. Since July, interest margins have increased, with investment- grade borrowers in Europe paying an average of 91.6 basis points more than benchmark rates, up from 84.4 basis points during the first half of 2011, according to data compiled by Bloomberg. A basis point is one-hundredth of a percentage point. “We must avoid a credit crunch for our economies,” European Union President Herman Van Rompuy said on Jan. 9. “The recent measures by the European Central Bank on a long-term lending facility for the banks are welcome in this context.” The European Banking Authority, which oversees the region's regulators, asked banks on Dec. 8 to retain earnings, curb bonuses and raise equity to boost core capital before resorting to cuts in lending. The EBA followed both French President Nicolas Sarkozy and German Chancellor Angela Merkel in urging banks to keep lending. Sarkozy said on Oct. 27 that he had asked firms to shift “almost all” of their dividends into strengthening balance sheets and to make bonus practices “normal.” Merkel said on Oct. 9 she was “determined to do whatever necessary to recapitalize the banks to ensure credit to the economy.” ‘No Credit Crunch' Bankers have said they haven't restricted lending and that demand for credit is slowing as growth slows. “All banks I talk to keep lending to small- and medium- size enterprises and households,” Christian Clausen, president of the European Banking Federation, an industry association, said on Dec. 9. “That part of the bank will keep rolling.” There is “no credit crunch,” Frederic Oudea, chief executive officer of Societe Generale SA, France's second- biggest lender, and chairman of the French Banking Federation, said last month. “The reality is that credit is available,” he said in an interview on BFM radio on Dec. 16. Even so, companies across Europe say credit is tightening. ‘Double Punch' In France, where credit to the private sector increased by 3.7 percent in November compared with a year earlier, the majority of the country's company treasurers said they encountered “very strong tensions” in negotiating bank loans, with more than 50 percent of respondents saying the process led to more expensive terms, according to a December survey by the French Association of Corporate Treasurers. The majority of those polled said obtaining bank financing was “as difficult as at the end of 2008,” after Lehman Brothers Holdings Inc. collapsed. U.K. banks expect to toughen their criteria on loans to companies and households in the first quarter because of strains in the wholesale funding market, the Bank of England said Jan. 5in its fourth-quarter Credit Conditions Survey. Belgian credit growth slowed to 3.1 percent in the 12 months to the end of October, from 3.6 percent at the end of September, the country's central bank said on Dec. 12. In Italy, some companies with annual sales of 30 million euros to 40 million euros are charged as much as 10 percent interest on loans, Emma Marcegaglia, chief of the country's Confindustria lobby group, said in an interview on Dec. 20. Lending to businesses and consumers grew at the weakest pace in a year, the Bank of Italy said today. Draghi's Priority With the ECB's injection, “deleveraging may happen in a more orderly way, but it doesn't mean it will be painless,” said Alberto Gallo, head of European credit strategy at RBS. Banks are faced with high long-term financing costs, a deteriorating economy and difficulties raising capital, he said. “It's what I call the double punch: A combination of negative growth and banks' deleveraging will affect lending activity.” Even the ECB's Draghi, who has made it one of his priorities is to keep credit flowing into the economy, said the central bank's loan offerings may fail to achieve that goal. “Monetary policy cannot do everything, but we're trying to do our best to avoid a credit crunch that might come from a lack of funding,” Draghi said Dec. 19 at the European Parliament in Brussels. “We have to be extremely careful here, because there may be other reasons that create a credit crunch.” Draghi may be wary of the U.S. experience with multiple rounds of bond purchases. That so-called quantitative easing hasn't stimulated lending, Natixis's Waechter said. ‘Kick the Can' “Lending really picked up when the economy got better,” he said. The ECB cut its forecast for euro-area economic growth in 2012 to 0.3 percent on Dec. 8 from a September prediction of 1.3 percent. The central bank expects the economy to expand 1.3 percent next year. In the U.S., almost all categories of bank lending fell in 2009 and 2010 and didn't start improving until last year, when the Federal Reserve stopped its second wave of quantitative easing, according to data by the U.S. institution. Banks increased their holdings of Treasury and agency securities in 2009 and 2010, showing they were using the Fed's cheap money to own safe government paper. Because quantitative easing tends to improve capital markets first, the healing will be even slower in Europe given its reliance on banks for borrowing, according to Gallo.

Trial begins in giant Spanish corruption scandal

 

top Spanish former official went on trial Monday at the start of legal proceedings into a raft of corruption scandals in which King Juan Carlos' son-in-law is also accused. Jaume Matas, the ex-head of the regional government of the Balearic islands who had also served as environment minister, appeared at a court in Palma de Majorca alongside three other suspects. They have been charged with embezzlement, fraud, falsifying documents and influence peddling. Matas was charged in March 2010 and was released after paying a record bail of 3.0 million euros ($3.8 million). Prosecutors are demanding an eight and a half years jail term. Matas served as president of the government of the Balearic Islands between 1996-1999 and then between 2003-2007. He was environment minister between 2000-2003. The so-called "Palma Arena affair" as the Spanish press has dubbed the corruption scandal centres on the suspected embezzlement of public funds during the construction of a velodrome in Palma de Majorca between 2005-2007. An investigation concluded that the cycling track had an unjustified cost overrun of 41 million euros. That led authorities on the archipelago to uncover other cases of suspected embezzlement of public funds, including one allegedly involving royal son-in-law Inaki Urdangarin. The 43-year-old ex-Olympic handball player is scheduled to appear in court on February 25 as part of a probe into corruption at a non-profit organisation, Instituto Noos, which he headed between 2004 and 2006. The probe centres notably on a payment of 2.3 million euros to Instituto Noos for organising a tourism and sports conference in 2005 and 2006. Urdangarin, who has the title Duke of Palma and is married to the king's youngest daughter, Princess Cristina, has denied any wrongdoing. Last month the royal family suspended the the duke from official engagements and the palace's highest official, Rafael Spottorno, gave an unprecedented rebuke, telling Spanish media his behaviour "does not seem exemplary".