Humberside News.co.uk

Greeks resent terms of bailout agreement enforced by IMF, EU and European Central Bank

After councils and care units, now schools are being encouraged to imitate the department store's stakeholder structure

Once upon a time, we knew three things about John Lewis. One: it's a very nice, very middle-class department store. Two: it owns Waitrose, that very nice, very middle-class supermarket. Three: it is, or claims to be, never knowingly undersold.

These days, we can add a fourth: never knowingly under-referenced within plans to reform the welfare state. In 2010, London's Lambeth council announced an intention to remould itself according to the "John Lewis model". Last June, David Cameron unveiled plans to turn parts of the public sector into "John Lewis-style" mutuals. This week, a rightwing thinktank suggested turning state schools into John Lewis-like companies. A planned free school in Suffolk will be a John Lewis-style partnership, while an NHS hospital in Cambridgeshire and a care unit in Swindon already claim to operate along those lines. Even Nick Clegg has talked about making other firms in the private sector operate a bit more like John Lewis.

The John Lewis business model gives each employee part-ownership of the company, a share of its annual profits, and a say in how it is run. In theory, it makes employees more invested – literally – in their work, and so heightens both productivity and profits. At least, that's how it works at John Lewis itself. Critics argue that the right's proposals either only pay lip service to the scheme on which they are based – or are simply a way of making privatisation seem fluffier. This week's plans could encourage stakeholders (teachers, pupils) to work harder. On the flipside, they could also lead to the outsourcing of a school's management structures, and thereby make teachers less accountable. Suffolk's Breckland Free School has already outsourced its management to a private firm, and won't be overseen directly by the parents who set it up.

Lambeth's John Lewis council promised much – community involvement in exchange for council tax rebates – but has been criticised for playing an active role in privatisation. Only last week the council sold off a community-run arts centre to developers. And what of the Swindon care unit? In the words of cabinet office minister Francis Maude: "It's a mutual where there's no financial incentive. They will own it, but with no profit share or anything, no financial upside. They will have to take out 30% of their cost over the next four years and they are really excited about it." In other words, it's a John Lewis partnership, but without most of the rewards. Unless you count swingeing cuts as a good thing.

Nick Clegg's ideas seem the most appropriate interpretation of the John Lewis model: they're about making capitalist structures fairer. But proposals to turn public services into John Lewis-style firms seems slightly disingenuous. After all, the NHS – which gives citizens both a say in its organisation (at the ballot box) and a piece of its resources (in the surgery) – might already be the biggest John Lewis model going.

Max Temp: 16°C (61°F), Min Temp: 9°C (48°F), Wind Direction: WSW, Wind Speed: 11mph, Visibility: good, Pressure: 1024mb, Humidity: 84%, UV risk: low, Pollution: low, Sunrise: 06:59GMT, Sunset: 17:30GMT

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Max Temp: 16°C (61°F), Min Temp: 3°C (37°F), Wind Direction: W, Wind Speed: 14mph, Visibility: good, Pressure: 1026mb, Humidity: 75%, UV risk: low, Pollution: low, Sunrise: 06:57GMT, Sunset: 17:32GMT

Royal Bank of Scotland is expected to reveal a loss of £2bn after the eurozone crisis hit the performance of its investment bank

Royal Bank of Scotland risks igniting a row over City pay when it is expected to announce it is setting aside almost £400m for bonuses despite reporting its fourth consecutive year of losses.

The Edinburgh-based bank, which is more than 80% owned by the taxpayer after a series of bailouts that began in October 2008, is expected to try to defuse any controversy by revealing that 10,000 of its top staff will have pay freezes after a year in which the bank is is expected to reveal a loss of £2bn. The eurozone crisis dented the performance of its investment bank while the retail arm will be hit by a £1bn provision for payment protection insurance (PPI) mis-selling.

After the furore surrounding the award of a near-£1m bonus for chief executive Stephen Hester – - which he waived – he is still on course to be handed £600,000 in bonuses next month while close colleagues in the next few weeks could be handed up to £11m depending on the share price and their performance.

David Hillman, a spokesman for the Robin Hood Tax campaign, on Wednesday:"It is incredible that while the rest of us suffer, a loss-making bank bailed out by the taxpayer is allowed to pay out hundreds of millions in bonuses. The British public is getting a raw deal from RBS and the wider financial sector: it is time they were made to pay their fair share rather than line their own pockets." TUC general secretary Brendan Barber added pay and bonuses were "out of control" in the City.

Making reference to Hester's salary, Liberal Democrat peer Lord Oakeshott said that "every small business in Britain would love to have their bosses' pay frozen at £1.2m".

The bonus pot, expected to be just under £400m, is more than half the £950m paid out in 2010 .The chief executive will on Thursday present a three-year report card to set out the progress the bank is making - despite the £21bn loss the taxpayer is currently incurring in its 82% stake - along the path to recovery following the near £24bn record-breaking loss he inherited in 2008.

Hester will add further detail to the £38bn of costs that have already been incurred to clean-up the bank. Some £28bn relate to losses on loans which have turned sour and almost £3bn from restructuring charges as 33,000 roles have been shed since the financial crisis.

When Rob Freeman took to the slopes with former Olympian Graham Bell he was more than a little apprehensive. Would he live up to his reputation for doing something completely bonkers, not to say terrifying, as soon as he gets to the top of a mountain?

In the colder post-2007 climate for financing, Peacocks chief executive Richard Kirk failed to get rid of the pay-in-kind notes (PIKs). Thus the inevitable process of financial strangulation began

Go back to the £404m management buy-out of Peacocks in 2005 and look at the reason given for taking the company private: "The shares have, for a number of years, traded at a valuation that was a relative discount to what the independent directors perceived to be the comparable companies listed on the London Stock Exchange." That was it: the shares were seen as too cheap compared with the opposition.

Thus chief executive Richard Kirk's offer to pay a 35% takeover premium was approved and nobody stopped to ask whether the boss's financing arrangements were too aggressive for anybody's long-term health. After all, the bid announcement did not contain a portrait of a company enjoying explosive success: profit on ordinary activities had risen from £22.6m to £25m in the year to March 2005 but trading conditions since October 2005 were described as "more challenging."

Aggressive financing was part of the culture of the times, of course. Leverage was the rage and private equity-style deals were appearing everywhere, especially in the retail sector. All the same, Kirk's proposal can be seen as an extreme version, even by 2005 standards: the capital structure, arranged by investment bank Goldman Sachs, relied on the issue of £110m-worth of so-called pay-in-kind notes (PIKs) to a couple of US hedge funds, Och-Ziff and Perry Capital. These notes attracted an annual interest rate of 17.2%.

Those are pauper's terms. Unless you refinance quickly, or produce truly explosive increases in profits every year, you will be slowly strangled by the law of compounding because the PIK feature means that interest payments are rolled up every year and added to the total pile of debt to be repaid at a fixed point in the future.

In the colder post-2007 climate for financing, Kirk failed to get rid of the PIKs. Thus the inevitable process of financial strangulation began. By 2010, the PIK liabilities had reached £301m. Peacocks' total debts at the point of administration last month are thought to have been about £750m, of which the PIKs may be roughly £400m.

The 2005 buy-out was an absurd bull market deal. Kirk's bet rested entirely on the expectation, or hope, that cheaper financing would be available within a year or two. Administrator KPMG's reference on Wednesday to an "unsustainable" capital structure is an understatement.

The anger and despair in Greece has not receded after Tuesday's bailout deal, claim Athens trade union leaders

In the end it was a bit of a damp squib: protesters, put off by the rain and perhaps fatigue, did not come in their thousands to oppose the emergency legislation that is likely to change the face of Greece. But trade union leaders said it mattered not.

The €130bn (£110bn) bailout deal secured in the early hours of Tuesday had not erased the anger or despair of Greeks. "Two years ago we were demonstrating about [wage and pension] cuts but now they want to take away everything," said Ilias Iliopoulos at the civil servants' union Adedy. "People are literally hungry and the number of homeless is growing every day … soon they won't take anymore. There'll be a popular revolt."

Barely a day after Athens agreed to the excoriating EU/European Central Bank/IMF terms to be saved from bankruptcy for a second time, popular fury at the terms of the rescue shows no signs of ebbing.

Demonstrators at an Athens rally on Wednesday night claimed the argument, articulated by the Greek finance minister Evangelos Venizelos, that the debt-choked country has escaped a "nightmare" meant little when so many had already been impoverished. "It would be bad but it's already bad, and it's going to get a lot worse," said Evangelia Fasilakaki, an umbrella in her hands as she evoked the deepening mood of resignation and defeat. "They are even closing down cancer wards here."

But opposition has not dampened the resolve of the technocrat prime minister Lucas Papademos to do what he was appointed to do: pass the reforms that will release the funds to keep bankruptcy at bay.

Despite widely expressed doubts over the efficacy of the latest aid package and attendant bond swap that will write off €100bn from the country's debt pile, Papademos insisted the deal would "create the conditions for growth and the recovery of the [recession-hit] Greek economy."

Although the bailout has generated widespread relief, politicians and analysts voiced consternation over a "confidential" IMF assessment of the Greek economy showing its debt-to-GDP ratio at 160% in 2020, the same level as today, and far above the rescue programme's target of 120.5%. Former finance minister Stefanos Manos said Greek debt would only become sustainable when cut to 90% of national outlay.

Reforms that are expected to overhaul the workings of Greece economically, politically and judicially will be fast-tracked through parliament in a record nine days as the government tries to convince creditors the country is willing to change. The emergency measures include a further €3.2bn in spending and income cuts.

It is hoped that with default no longer on the cards, Greeks will end a capital flight that has seen an estimated €65bn in deposits removed from banks since the crisis erupted in December 2009.

Venizelos said €16bn had been whisked abroad – mostly to banks in Britain – but the rest had remained in Greece, kept under the proverbial mattress of a nation that no longer believed in its own financial system.

Royal Dutch Shell's offer values Cove Energy at £992m

The bosses of London-listed oil and gas explorer Cove Energy are in line for a £38m payday after Royal Dutch Shell put in a near-£1bn takeover bid.

John Craven, Cove's chief executive and veteran geologist, is line for a £18m payout less than three years after he created the African-focus explorer. Michael Blaha, Cove's chairman and Shell's former head of Alergia, holds shares and options worth £13.5m under the 195p-a-share cash offer Shell. The company's finance director, Michael Nolan, is in line for £7.1m.

The offer, which values Cove at £992m, comes a month after Cove reported one of the world's largest gas discoveries off the coast of Mozambique. Cove owns a 8.5% stake in Mozambique's Rovum Offshore Area 1, which operator Anadarko reckons could hold more than 30tn cubic feet of recoverable natural gas.

That discovery and similar finds by Italy's Eni suggest the area could contain up to 60m cubic feet of natural gas, which would be enough to support a liquefied natural gas (LNG) project to supply fast-growing Asian markets.

"East Africa is a major prospective hydrocarbon province, which has seen a significant increase in exploration activity in recent years," Shell said in its offer document.

"Shell already has interests in Tanzania, and the acquisition of Cove would mark Shell's entry into exciting new hydrocarbon provinces in Kenya and Mozambique, with significant potential for new LNG from recent gas discoveries offshore Mozambique, and further complementary exploration positions in East Africa."

Shell's offer represents a 70% premium to Cove's share price before it put itself up for sale in January, and a 29% premium to Cove's average share price over the last five days. Cove's shares jumped by 25% to 193½p on Wednesday.

Stuart Joyner, an analyst at Investec, said the offer was a "much better price than the market anticipated" and said it was unlikely any higher bids would trump it.

Irene Himona, analyst at SocGen, said she expected Shell to buy up other players in the Rovuma field. "As the number one LNG player, Shell absolutely must be in East Africa," she said. "We should assume that 8.5% is too small for them."

The deal requires the approval of Mozambique's government. Standard Chartered Bank is advising Cove on the sale, while Morgan Stanley is acting for Shell.

Separately, Shell said Malcom Brinded, the head of its oil and gas exploration and production operations outside the America's, is to step down. Brinded, who was a contender for the chief executive post before Peter Voser was appointed in 2009, will be replaced by Andrew Brown, currently head of Shell's operations in Qatar.

The Royal Navy selects South Korean firm Daewoo for a £452m deal to build four new fuel tankers.

PORTSMOUTH Football Club has today made a number of staff redundant.

HSBC is issuing £1.7bn of new shares to meet bonus payouts and awards to its 300,000 staff ahead of the publication of its full year results on Monday

HSBC is issuing £1.7bn of new shares to meet bonus payouts and awards to its 300,000 staff ahead of the publication of its full year results on Monday.

By issuing the 300m shares - 1.6% of its existing shares - the bank is also adding to its capital cushions, a move that is encouraged by the Financial Services Authority.

Not all of the shares will be used to pay its UK staff or to fulfil a new bonus scheme where the bank is issuing shares that it sells immediately to hand cash to its UK staff. Companies are permitted to extend their share capital by 10% over 10 years to pay their staff.

US President Barack Obama proposes a cut in corporate tax and an end to tax loopholes, as part of his election-year strategy on the economy.

The chubby, land-bound kakapo is so uninterested – and hopeless – at mating that the native New Zealanders now number just 124.