The government plans to put an end to excessive bonuses at the banks it partially owns.

Treasury insiders have reported plans to draw up legally binding agreements between banks and the government committing them to issue “proportionate” rewards for staff.

The plans come after the financial services secretary Lord Myners announced an end to “the golden days of huge bonuses” in an interview with the Times on Saturday. He added that many executives were “grossly over-rewarded” and had “no sense of the broader society around them”.

He said that executives should choose whether to pay back bonuses or lose knighthoods, and should be prosecuted if they have committed a criminal offense.

(more…)

Two local authorities in England have announced plans to launch their own ‘banks’ to assist small businesses in securing credit.

Birmingham City Council and Essex County Council want to make loans available to local firms which have been refused credit from High Street banks. The two councils say they will screen thoroughly companies applying for cash to make sure that they are financially viable.

However, critics of the scheme say that the move is too risky, and that local authorities lack the necessary expertise to issue loans.

“We intend to do a thorough risk assessment, we’re not just using local government officers, we’re using banking people,” said Mark Wallace from the pressure group Tax Payers’ Alliance.

“I think having had their fingers burnt so badly in the Icelandic banks disaster, councils should be looking for a safe investment,” he added.

(more…)

The number of new mortgages approved by banks fell by 52% last year.

According to figures released by the British Bankers’ Association (BBA) approvals went up from 17,000 in November to 22,000 in December 2008. However, this slight raise still left mortgage approvals down 47% compared with December 2007.

The BBA said that the December rise was “more likely to reflect delayed activity from November” than indicate any recovery in lending.

“The banks approved less than half the 2007 number of loans for house purchase, reflecting falling demand from households facing greater economic uncertainty and double-digit falls in house prices over the year, which led to a wait-and-see mentality,” said David Dooks from the BAA.

(more…)

Sainsbury’s is offering a 15% discount on their pet insurance if you order online, and they’ll also give you three months free on renewal. What is more, if you insure more than one pet whith Sainsbury’s you will receive a further 5% discount. The offer applies until 23rd February.

With Sainsbury’s Pet Insurance you can choose from two levels of cost: Option 1 covers the cost of vet’s fees up to £3,000 for a maximum of 12 months, whilst Option 2 covers vet’s fees up to £7,500 per condition. For more information, look at our pet insurance page.

The Post Office has released its latest Worldwide Holiday Costs Barometer as part of a report on exchange rates and costs released today. The barometer ranks 27 of the most popular destinations for British holidaymakers in terms of value for money, based on the current exchange rate and local costs for popular tourist items such as mineral water, meals out and sun cream.

This year six European countries have appeared in the top ten value holiday hotspots, including Spain, still the most popular destination for British tourists, according to cheapflights.co.uk. Cheapest of all are Hungary and the Czech Republic, where a bottle of Heineken will set you back £1.77 and £2.47 respectively. Budapest and Prague are therefore likely to be popular choices for short breaks this year. For longer breaks, it is worth looking at Turkey, Bulgaria and Croatia, which all offer beautiful beaches and plenty of sun during the summer months.

(more…)

The Nationwide Building Society has announced that it is to cut the price of its fixed rate mortgage deals by up to 1%.

The rates cut will apply to its two, three, and five-year deals and will take effect from tomorrow (21st January).

Nationwide has already slashed its standard variable rate by half a percentage point to 3.5%, following the latest cut in the official Bank Rate.

Customers with a 40% deposit who sign up for a two-year fixed rate mortgage and pay a £955 fee will see their rates fall from 4.88% to 4.39%, or from 5.38% to 5.09% with no fee. The biggest drop applies to three-year fixed rate deals, from 5.88% to 4.88% in the case of customers with a 25% deposit who pay the £955 fee.

The building society said that the cuts were a result of the lower cost of borrowing on the financial markets.

(more…)

The European Commission has predicted that the economy of the eurozone will shrink by 1.9% in 2009 and grow by only 0.4% the following year.

The commission said that annual inflation in the 16 countries that use the euro would be 1% in 2009 and 1.8% in 2010. By 2010, 10% of the workforce is expected to be unemployed, up from its current 7.5% level.

Official figures show that the eurozone has been in recession since last September. Its key interest rate currently stands at 2%, its lowest level since 2005.

The commission says that it hopes to “create the conditions for a gradual recovery in the second part of 2009″ in the eurozone economy.

Last week, Germany unveiled a package of measures worth about €50 billion (£45 billion) to stimulate the country’s ailing economy.

HSBC has announced that it will be introducing new measures to help combat card fraud. As part of the plan, every HSBC credit card transaction will be scrutinised for fraud. Over 10 million card accounts will be affected by the measures.

After several years of falling numbers, card fraud is once again on the increase, up 14% in the first half of 2008. Card fraud is believed to have exceeded £600 million last year alone, and fraud abroad accounted for 40% of all card crime. However, banks are developing increasingly sophisticated technology to try and outwit fraudsters.

Formerly HSBC checked 25% of all credit card transactions for fraud. Now the bank is to check all transactions as they are made, with a decision made in seconds.

(more…)

The government will again pump hundreds of billions of pounds of taxpayers’ money into Britain’s damaged banking system, as it announced a second set of measures to insure banks against losses from bad debt in order to prevent the recession getting worse.

Under the new plan, the government will guarantee £100 billion of mortgage backed securities, and expand its existing £200 billion liquidity facilities, allowing banks access to liquidity until the end of the year. The government has also agreed to change the terms of its rescues of Northern Rock and the RBS Group. Rather than offering punitive rates of interest in order to get rid of its mortgage customers, as previously instructed, the state-owned Northern Rock will be told to offer more mortgages. The bank has also been given longer to pay back its loans from the government.

(more…)

Some borrowers are paying as much as 10,000% interest on “pay-day” loans according to a Conservative report.

This comes despite the Bank of England cutting its main interest rate to just 1.5%, its lowest level in its 314 year history.

The shadow housing minister, Grant Shapps said that such rates of interest were “obscene”, especially since they often hit some of the country’s most vulnerable households.

He said that a lack of competition in the home credit market meant that loan sharks could charge such extortionate rates. The market is estimated to be worth £3 billion a year, although it is dominated by just six companies. Mr Shapps added that the problem could be tackled by creating a national finance advice service which would help consumers choose cheaper borrowing options, such as joining a credit union.

(more…)