Challenger Bank Aldermore Targets 2014 Float

By Mark Kleinman, City Editor

The challenger bank Aldermore is targeting a stock market listing within a year as it finalises a multimillion-pound fundraising to accelerate its expansion.

Sky News has learnt that two blue-chip funds, Lansdowne Partners and Toscafund, are to inject about £40m into Aldermore in a deal that will value the lender at more than £450m.

The transaction comes on the day that Aldermore joins the Government's Help to Buy scheme, which is aimed at stimulating the  housing market but which has already stoked a debate about whether it will foment a bubble in property prices.

Lansdowne is understood to be investing £10m in Aldermore, while Toscafund is injecting £30m as part of the fundraising.

A third fund, Och-Ziff Capital Management, is understood to have withdrawn from the talks at a late stage.

Aldermore is led by Philip Monks, a former Barclays executive, and its majority shareholder is AnaCap, a private equity firm.

"I can confirm that Aldermore is exploring options to raise additional capital to continue the bank's rapid growth," a spokesman said when Sky News revealed the talks with potential investors earlier this month.

"The bank returned a profit of £9.2m in the first half of this year and is on course to deliver even greater returns by the end of 2013.

"We have very supportive shareholders who are willing to invest in the bank and fund our growth plans to ensure we continue to champion SMEs and consumers across the UK."

An insider confirmed that Aldermore had agreed with its new investors that it would begin exploring an initial public offering of shares next year.

There is an unprecedented pipeline of British banks waiting to list their shares publicly, including branch networks being sold under European state aid rules by both Royal Bank of Scotland (RBS) and Lloyds Banking Group under the TSB name.

Metro Bank, which is raising £385m to fund its expansion, has said it is likely to target a flotation in 2016.

Virgin Money, which on Monday begins trialling current accounts with its 3,000 employees, and Santander UK are also likely to pursue listings within two years.

An Aldermore spokeswoman declined to comment on the details of its fundraising.

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RSA Slumps Further Amid Downgrade Rumours

Shares in insurance giant RSA have fallen by a further 2.5% during early trading on Monday, amid rumours of a possible credit rating downgrade.

The slump comes after its chief executive Simon Lee quit in wake of the company's Irish crisis, as well as the company's third profit warning in less than six weeks.

On Friday, the FTSE 100 company, which owns More Than and has more than 20 million customers worldwide, announced it will need to strengthen reserves by some £130m, on top of the £70m "black hole" uncovered during a routine internal audit last month.

The announcement comes amid an ongoing review of RSA's Irish business amid fears of inadequate bookkeeping systems.

RSA chairman Martin Scicluna is upbeat about the company's 2014 prospects

Auditor PwC is expected to file its report next month.

RSA chairman Martin Scicluna previously said the company remained a "leading insurance brand" and insisted the outlook was more positive for 2014.

However, the business has warned it expects to pay out up to £25m after a surge in claims for damage caused by severe weather that battered the UK and Scandinavia earlier this month.

The losses, coupled with the issues identified in RSA's Irish division, prompted Standard and Poor's to cut its credit rating to A and place the company on so-called "CreditWatch".

Moody's, whose A2 rating has stood since December 2008, says the outlook for the company is "stable" but warned: "The reduced level of profitability (from recent announcements) are credit negative for RSA."

Mr Scicluna said: "We have enviable market positions across the globe and attractive businesses with healthy underlying profitability.

"We have deep expertise and capability across our management team.

"The board and I are confident that RSA will re-emerge as a stronger group in 2014."

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Miliband Threat To Councils On House Building

Communities who refuse to allow thousands of homes to be built on their doorsteps will have their views over-ridden under plans by Labour for more housing.

Developers who hoard land would also be told to use it or lose it.

Announcing a commission into housing, Ed Miliband set out how Labour would tackle the "worst housing shortage for a generation".

He said that under a Labour government "stick-in-the-mud" local councils who refused to allow neighbouring authorities to expand would be forced to unlock land for development, under "right to grow" schemes.

Although Mr Miliband insisted: "Of course it is right that local communities have a say about where housing goes. But councils cannot be allowed to frustrate continually the efforts of others councils to get homes built."

He also said that developers who had bought land and had planning permission but did not develop it would be ordered to sell it to local councils or charged fees for leaving it empty.

Mr Miliband said during a visit to a housing development in Stevenage that his plans would double the number of new homes being built to 200,000 a year by 2020.

Ed Miliband is announcing a commission on housing

Estate agent Rightmove has warned that house prices will rise by 8% in 2014 unless more homes are built.

There are fears that the Government's Help to Buy scheme is overheating the market in the south.

Mr Miliband said: "Profits for our four biggest housing developers are going through the roof.

"They have soared 557% since this Government took office - even though homes have been built at their slowest rate witnessed in peacetime for almost a century.

"But there are large amounts of land - enough to build more than a million homes - earmarked for houses which have not been built. Developers need a bank of land with which to work. But sometimes they, and other landowners, are hoarding it.

"The next Labour government will give councils powers to charge fees or, if necessary, purchase such land, so that developers have an incentive to do what they went into business to do.

"We will back home builders. But we will tell land hoarders with sites that have planning permission that they must use it or lose it."

Deputy Prime Minister Nick Clegg said Mr Miliband's initiative on housing was one of a series of "populist, gimmicky" announcements by Labour designed to draw attention from the party's failure to put forward a plan on the economy.

he said: "They are avoiding making any pronouncements on the major economic judgments they would need to make if they were to find themselves in government, instead favour a series of populist, gimmicky policy pronouncements."

Communities Secretary Eric Pickles rejected Labour's proposals, arguing that councils should be able to decide where new developments were located through local plans while safeguarding important environmental protections.

He said: "Under Labour, housebuilding fell to its lowest peacetime rate since the 1920s. Their top-down regional strategies and eco-towns failed hard-working families who aspired to own their own home, building nothing but resentment."

The commission set up by Labour under ex-BBC Trust chairman Sir Michael Lyons, will begin work looking at the "right to grow" scheme and the "use it or lose it" powers.

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Inga Beale Becomes Lloyd's First Female CEO

Lloyd's of London, the world's biggest insurance market, has appointed a female boss for the first time in its 325-year history.

Inga Beale, who has more than 30 years' experience in the industry, will take up the role in January, replacing the outgoing Richard Ward.

It follows an "extensive global search" by Lloyd's for someone with the right credentials for the job.

Ms Beale replaces former CEO Richard Ward

Chairman John Nelson said he was "absolutely delighted" with the appointment.

"Inga's CEO experience, underwriting background, international experience and operational skills, together with her knowledge of the Lloyd's market, make her the ideal chief executive," he said.

A prominent gender divide remains in the City, where four in every five workers are male, according to recruitment company Astbury Marsden.

Fewer than half of staff consider their employer has a clear policy on diversity, while just one in five believe their firm actively recruits with diversity in mind.

Ms Beale, whose appointment follows that of Charlotte Hogg to chief operating officer of the Bank of England, said: "I'm looking forward to working with the Lloyd's team ... to deliver a strategy for profitable and sustainable growth."

The 50-year-old's most recent role was as group chief executive of Canopius, prior to which she worked at Zurich Insurance as its global chief underwriting officer.

She started her career at Prudential, working as an underwriter at its London offices.

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Carrefour Plans £1.7bn Shopping Malls Deal

Carrefour has announced plans to buy 127 shopping centres across Europe in a €2bn (£1.69bn) deal.

France's largest retailer, which already owns nearly 10,000 hypermarkets, supermarkets and convenience shops across the continent, has joined forces with eight investors to buy the centres in France, Spain and Italy.

Many of the Klepierre sites, which are located in France, Spain and Italy and generate an annual rental income of €135m (£114m), are close to its existing stores.

They will sit alongside its existing 45 malls in a new company, 42% of which will be held by Carrefour with the rest held by investors.

Carrefour has been struggling for years, even before the European debt crisis hit its biggest markets.

Georges Plassat took over as chief executive last year, pledging to cut costs and improve the fortunes of the company's 1,300 hypermarkets.

Carrefour's share price climbed more than 1.5% in the hours following the announcement.

The deal, which Carrefour said would make it one of Europe's leading shopping mall companies, is subject to regulatory approval.

The company is expected to close the deal in March or April next year.

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Virgin Money To Launch Current Account Trial

By Mark Kleinman, City Editor

The banking arm of Sir Richard Branson's business empire will on Monday become the latest high street lender to begin an assault on Britain's lucrative current account market with the launch of a pilot among its 3000 employees.

Sky News understands that Virgin Money, one of the country's fastest-growing banking groups, will unveil the trial ahead of a full launch scheduled for next year.

It will mark a potentially-significant phase in efforts to bolster competition in the current account market, with well over 80% of accounts currently supplied by the five biggest lenders: the state-backed Lloyds Banking Group, owner of HBOS, and Royal Bank of Scotland, which owns NatWest; Barclays, HSBC and Santander UK.

Once the staff trial has been completed, Virgin Money will target consumers who are underserved by the major lenders, offering a basic account with no fees or charges and free access to the UK ATM network of cash machines.

Sir Richard Branson celebrates his acquistion of Northern Rock in Newcastle

Doing so is expected to be loss-making for Virgin Money, according to analysts, meaning that the availability of the product is likely to be restricted to those consumers without an existing current account.

A wider launch will get underway in Scotland and Northern Ireland in the first quarter of next year, with nationwide coverage and a digital banking service likely to be available by the end of 2014, according to people with knowledge of Virgin Money's plans.

Virgin Money executives are understood to be confident of making a serious impression on the current account market by utilising the network of Northern Rock branches and infrastructure that it acquired in 2011, and through a marketing campaign emphasizing the parent brand's credentials of service and value.

"There won't be hidden charges or gimmicks. It will be about delivering for consumers," an insider said on Sunday.

Sir Richard has said previously that he wanted to offer a choice between 'free' current accounts and those which incur a small up-front fee. It is unclear whether that will be the case as Virgin Money ultimately grows its presence in the sector in the coming years.

The issue of current account charges is becoming more intensively-debated as banks face up to the increased regulatory costs that will be triggered by the ring-fencing structure being introduced as part of the Government's banking reforms.

Under the new rules, so-called universal banks such as Barclays and RBS will have to establish separate subsidiaries for their high street and investment banking arms, which the Independent Commission on Banking said in 2011 was likely to cost the industry several billion pounds annually.

Virgin Money is likely to be an indirect beneficiary of the new rules because its sole focus on retail banking will mean that it does not have to process many of the complex structural changes required by its competitors.

Taking over Northern Rock was a crucial moment in Virgin Money's expansion

It is also likely to be aided by the new seven-day switching system for current account providers which came into effect during the autumn. Barclays and the Co-operative Bank are among those which have seen net losses of customers, the latter as a result of the adverse publicity over its £1.5bn capital hole and allegations about the behaviour of its former chairman, Paul Flowers.

During the last year, Virgin Money sold more than 1.5 million new products to customers, having established a significant market share in loans, insurance and savings.

Its takeover of Northern Rock was a crucial moment in its expansion, but the length of time between that deal and the current account launch reflects both Virgin Money's determination to develop the right products and the pitfalls of associating its brand with the poor service that has blighted British banking.

Senior executives at the major banks admit that they have only been able to avoid charging for current accounts because they have been subsidised by the sale of products such as payment protection insurance (PPI).

The mis-selling of PPI and a range of other products have cost the major banks billions of pounds in compensation and further tarnished the industry's reputation.

Last week, Tesco said it was poised to create hundreds of jobs by entering the current account market at a time when the supermarket group is wrestling with challenges in its core retailing business.

Other new current account providers include Metro Bank, which is raising nearly £400m from investors in an attempt to accelerate its growth.

Jayne-Anne Gadhia, Virgin Money chief executive, declined to comment on the details of its plans but told Sky News: "Our entry into the current account market is a significant step on our quest to make banking better."

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Music Industry Worth £3.5bn To British Economy

The music industry is worth an annual £3.5bn to the British economy - much more than previously thought, a new report has revealed.

Figures from UK Music, the trade body for the recorded and live music industry, show how much profit the sector makes and how much its 100,000 full-time workers are paid - a combined amount known as gross value added (GVA).

They also reveal music businesses generate £1.4bn every year from exports, while British chart-toppers including Emeli Sande, Adele and Ed Sheeran, whose albums dominated the 2012 sales chart, boost the UK's international brand and reputation by an estimated £72m.

Until now, it has been difficult to measure exactly how much the music industry is worth.

Adele, who has had two number one albums, is another British success story

Figures from the vast majority (86%) of record labels and music publishing companies are stored using inaccurate codes, while smaller companies and freelance workers earning less than the £79,000 VAT threshold do not feature in statistics at all.

UK Music, which described existing estimates as "flawed", pored through pages of data from thousands of businesses to calculate the GVA figure.

It found musicians, composers, songwriters and lyricists contribute the most (£1.6bn) to the economy and also employ seven out of every 10 people who work in the sector.

Live music contributes £662m, followed by recorded music (£634m), music publishing (£402m), music representatives (£151m) and music producers and recording studios (£80m).

The success of artists like Ed Sheeran has boosted Britain's reputation

Jo Dipple, chief executive of UK Music, said the results prove the industry is a "substantial contributor to the economy".

"Our music might be fun, but it's also a formidable asset to the UK," she said.

"The Government has said it wants to support the creative industries but until now it's not had the precise data to hand. It does now.

"A realistic picture of the how the industry is made up will lead to a better understanding of what investment and regulatory environment is needed to help our industry thrive.

"It's a great UK success story, but now it can be even better understood and developed."

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Young Entrepreneurs Set Up Shop In Britain

A new wave of young entrepreneurs behind innovative start-up businesses, including one which makes green energy from waste coffee, have arrived in the UK.

Under the Government's Sirius scheme, graduates from across the world are given a 12-month support package, including financial aid of up to £48,000, to set up in Britain.

The first 19 young entrepreneurs to be accepted onto the programme come from 13 countries including India, China and Germany, as well as African countries like Kenya and Nigeria.

They include Tim Brown, an ex-footballer who played for New Zealand at the 2010 World Cup, who founded ToBe, a company making running shoes which do not need socks.

"Our invention will totally revolutionise the way athletes train," he said.

"Being based in the UK will enable us to start up and develop alongside like-minded entrepreneurs and gain access to world class strategic advice and support."

Other entrepreneurs include Kenyan Edwin Openda and Italian trio Carlo de Micheli, Stefano Caso and Andrea Gurnari, whose Savesquared portable chargers allow smartphone users to charge their handset's battery for £1.

British pair Benjamin Harriman and Arthur Kay launched Bio-Bean to convert waste coffee grounds into biofuel, while Vietnam's Duy Nguyen, India's Amit Pate and David McGee, from the UK, founded Veri-tag.com, which helps consumers prove any branded products they buy are genuine.

Lord Livingston, the trade and investment minister, said: "The UK is one of the best places in the world to become a successful entrepreneur and we're committed to helping talented entrepreneurs from around the globe to build their businesses here.

"Looking at the high calibre of entries we've received for this programme, it's clear that Britain is fast becoming the country of choice for talented graduates to start and grow their businesses, which will ultimately help our economy to grow, boost productivity and create jobs, and succeed in the global race."

The Sirius programme, which offers young entrepreneurs business mentors and help gaining clients, is accepting entries until January 15, 2014.

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Small Business: More Jobs As Confidence Soars

More than half of Britain's small businesses say they plan to expand in 2014 amid surging confidence in the economy.

Some 56% of firms hope to grow moderately or rapidly in the next 12 months, according to the Federation of Small Businesses (FSB).

Its Q4 2013 survey found confidence among business owners was up 21 points, with those in the East Midlands most upbeat about their prospects.

Confidence was especially high among small firms offering financial services, as well as those in computing, business services, manufacturing and real estate.

Meanwhile, the number of small businesses applying for credit in the past three months fell to 16% - its lowest level for two years.

About a third (32%) of companies are running at full capacity, while one in 10 have more work than they can handle.

Although only 1% of firms increased staffing levels in Q4, 3% plan to increase their head count in Q1 2014.

Rob Harbron, a senior economist at Cebr, said the survey pointed towards an "optimistic trend" that lays "solid foundations" for economic growth next year.

"Turnover growth is increasingly buoyant and profitability has increased for the first time since the data series began," he said.

"Particularly promising trends are being seen in business intentions for the coming quarter and year.

"Small firms plan to increase headcounts for the third consecutive quarter.

"This follows three-and-a-half years of reported reductions and should help to bring UK unemployment down towards the 7% level that has not been touched since early 2009."

However, John Allen, national chairman of the FSB, warned the UK economy still has "long-term structural problems", including skills shortages and ill-functioning markets in banking and energy.

"Tackling skills and work-readiness should be an absolute priority for the Government as recent headlines show the UK risks lagging behind competitors in emerging markets, and there remains the outstanding issue of fundamentally reforming business rates," he said.

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France: Fears Of New Recession As Output Falls

Manufacturers in France say output has fallen to its lowest level for seven months, renewing fears of another recession in a country described as the "new sick man of Europe".

The latest purchasing managers' index (PMI) figures reveal the rate of decline has accelerated, falling to 45.3 - down from 48.0 the previous month.

It is the fifth month in a row that production has contracted, with lower orders from cautious new customers blamed for the decline.

Meanwhile, services activity decreased at the fastest rate since June and staffing levels continued to decline, meaning employment in the private sector has fallen in 21 of the previous 22 months.

The decline would need to be reflected in gross domestic product (GDP) figures for France to officially return to recession.

The country only climbed out of its previous slump in September, when growth in Q2 was put at 0.5% by the National Institute of Statistics and Economic Studies (Insee).

Chris Williamson, chief economist at Markit, which compiled the data, said: "France looks increasingly like the new 'sick man of Europe', as a second successive monthly contraction may translate into another quarterly decline in GDP, pushing the country back into a technical recession."

Senior economist Andrew Harker added: "The last flash PMI readings for 2013 paint a worrying picture on the health of the French economy.

"The return to contraction in November has been followed up with a sharper reduction in December, with falling new business at the heart of this as clients were reportedly reluctant to commit to new contracts.

"Firms will hope that such reticence ends in the new year as they seek to avoid another protracted downturn."

Output in France was in stark contrast to that of Germany, where expansion returned to a rate not seen for more than two years.

The eurozone as a whole saw output rise for the fifth month in a row and at the steepest rate since April 2011.

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