Airlines: 2013 profits to rise thanks to cost cuts






GENEVA (AP) — Airlines‘ profits will improve to $ 8.4 billion in 2013, mainly reflecting cost cuts and restructuring measures taken to compensate for stalling economic growth, the global industry‘s trade group forecast Thursday.


For 2012, the industry anticipates net profits of $ 6.7 billion based on strong second and third quarters — particularly for larger carriers with bigger economies of scale — despite high fuel prices and weaker demand.






But the 2013 results would still be below the $ 8.8 billion earned in 2011 and $ 15.8 billion in 2010. The net profit margin, at 1 percent, would also be well below the 7 to 8 percent officials say is needed to recover capital costs.


The International Air Transport Association‘s annual review focused on the impact of annual world economic growth falling below 2 percent and Brent crude oil trading at $ 109.5 a barrel.


“Airlines have adjusted to this difficult environment through improving efficiency and restructuring,” said Tony Tyler, chief executive of the Geneva-based global trade group.


Tyler told reporters in Geneva that airlines’ financial performance hinged partly on their size.


“Economies of scale are helping larger airlines to cope much better with the difficult environment than small and medium-sized carriers which continue to struggle,” he said.


IATA, whose 240 member airlines carry 84 percent of all passengers and cargo, said the industry’s overall revenue in 2013 is expected to rise to $ 659 billion from $ 637 billion this year, while costs will go up to $ 640 billion from $ 623 billion.


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Aides: Chavez in tough fight, may miss swearing-in






CARACAS, Venezuela (AP) — Somber confidants of President Hugo Chavez say he is going through a difficult recovery after cancer surgery in Cuba, and one close ally is warning Venezuelans that their leader may not make it back for his swearing-in next month.


Information Minister Ernesto Villegas said Wednesday night that Chavez was in “stable condition” and was with close relatives in Havana. Reading a statement, he said the government invites people to “accompany President Chavez in this new test with their prayers.”






Villegas expressed hope about the president returning home for his Jan. 10 swearing-in for a new six-year term, but said in a written message on a government website that if Chavez doesn’t make it, “our people should be prepared to understand it.”


Villegas said it would be irresponsible to hide news about the “delicateness of the current moment and the days to come.” He asked Venezuelans to see Chavez’s condition as “when we have a sick father, in a delicate situation after four surgeries in a year and a half.”


Moving to prepare the public for the possibility of more bad news, Vice President Nicolas Maduro looked grim when he acknowledged that Chavez faced a “complex and hard” process after his latest surgery.


At the same time, officials sought to show a united front amid the growing worries about Chavez’s health and Venezuela’s future. Key leaders of Chavez’s party and military officers appeared together on television as Maduro gave updates on Chavez’s condition.


“We’re more united than ever,” said Maduro, who was flanked by National Assembly President Diosdado Cabello and Oil Minister Rafael Ramirez, both key members of Chavez’s inner circle. “We’re united in loyalty to Chavez.”


Analysts say Maduro could eventually face challenges in trying to hold together the president’s diverse “Chavismo” movement, which includes groups from radical leftists to moderates, as well as military factions.


Tapped by the 58-year-old president over the weekend as his chosen political heir, Maduro is considered to be a member of radical left wing of Chavez’s movement that is closely aligned with Cuba’s communist government.


Cabello, a former military officer who also wields power within Chavez’s movement, shared the spotlight with Maduro by speaking at a Mass for Chavez’s health at a military base.


Just returned from being with Chavez for the operation, Cabello called the president “invincible” but said “that man who is in Havana … is fighting a battle for his life.”


After Chavez’s six-hour operation Tuesday, Venezuelan television broadcast religious services where people prayed for Chavez, interspersed with campaign rallies for upcoming gubernatorial elections.


On the streets of Caracas, people on both sides of the country’s deep political divide voiced concerns about Chavez’s condition and what might happen if he died.


At campaign rallies ahead of Sunday’s gubernatorial elections, Chavez’s candidates urged Venezuelans to vote for pro-government candidates while they also called for the president to get well.


“Onward, Commander!” gubernatorial candidate Elias Jaua shouted to a crowd of supporters at a rally Wednesday. Many observers said it was likely Chavez’s candidates could get a boost from their supporters’ outpouring of sympathy for Chavez.


Opposition leader Henrique Capriles, who lost to Chavez in the October presidential election and is running against Jaua, complained Wednesday that Chavez’s allies are taking advantage of the president’s health problems to try to rally support. He took issue with Jaua’s statement to supporters that “we have to vote so that the president recovers.”


Maduro looked sad as he spoke on television, his voice hoarse and cracked at times after meeting in the pre-dawn hours with Cabello and Ramirez. The pair returned to Venezuela about 3 a.m. after accompanying Chavez to Cuba for his surgery.


“It was a complex, difficult, delicate operation,” Maduro said. “The post-operative process is also going to be a complex and hard process.”


Without giving details, Maduro reiterated Chavez’s recent remarks that the surgery presented risks and that people should be prepared for any “difficult scenarios.”


The constitution says presidents should be sworn in before the National Assembly, and if that’s not possible then before the Supreme Court.


Former Supreme Court magistrate Roman Duque Corredor said a president cannot delegate the swearing-in to anyone else and cannot take the oath of office outside Venezuela. A president could still be sworn in even if temporarily incapacitated, but would need to be conscious and in Venezuela, Duque told The Associated Press.


If a president-elect is declared incapacitated by lawmakers and is unable to be sworn in, the National Assembly president would temporarily take charge of the government and a new presidential vote must be held within 30 days, Duque said.


Chavez said Saturday that if an election had to be held, Maduro should be elected president.


The dramatic events of this week, with Chavez suddenly taking a turn for the worse, had some Venezuelans wondering whether they were being told the truth because just a few months ago the president was running for his fourth presidential term and had said he was free of cancer.


Lawyer Maria Alicia Altuve, who was out in bustling crowds in a shopping district of downtown Caracas, said it seemed odd how Maduro wept at a political rally while talking about Chavez.


“He cries on television to set up a drama, so that people go vote for poor Chavez,” Altuve said. “So we don’t know if this illness is for that, or if it’s that this man is truly sick.”


Some Chavez supporters said they found it hard to think about losing the president and worried about the future. His admirers held prayer vigils in Caracas and other cities this week, holding pictures and singing hymns.


Chavez has undergone four cancer-related surgeries since June 2011. He has also undergone months of chemotherapy and radiation treatments. Throughout his treatments, Chavez has kept secret some details of his illness, including the exact location and type of the tumors.


Ecuadorean President Rafael Correa wished his close ally the best, while also acknowledging the possibility that cancer might end his presidency. “Chavez is very important for Latin America, but if he can’t continue at the head of Venezuela, the processes of change have to continue,” Correa said at a news conference in Quito.


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Associated Press writer Christopher Toothaker contributed to this report.


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iPad mini deemed a ‘game changer,’ outgrew Kindle Fire by nearly 50%






Smaller tablets in the 7-inch range have been on the market for more than two years now, but it looks like it took Apple (AAPL) just one month to vault to the top of the category. Mobile advertising firm Millennial Media recently published the findings of a study pitting the iPad mini against Amazon’s (AMZN) popular Kindle Fire, which has been an extremely popular iPad alternative since it first launched last year. According to Millennial, iPad mini usage grew about 50% faster during early November than the Kindle Fire did immediately following its successful launch last year, as measured by ad impressions served by the firm’s network.


Millennial found that impressions served to the iPad mini in early November grew at an average daily rate of 28%. In the weeks following the Kindle Fire’s launch last year, usage of Amazon’s tablet grew roughly 19% each day.






“In the first weeks after the iPad mini went on sale, we saw an average daily growth in impressions of 28 percent. Last holiday season, Amazon launched the Kindle Fire to much anticipation, Millennial Media’s Matt Mills wrote on the company’s blog. “As a comparison, we saw Kindle Fire impressions grow at an average daily rate of 19 percent in the first two weeks after it went on sale last year. So, by our math it looks like Apple could have itself another massive holiday season.”


Mills called the iPad mini a “game changer” and said he expects “a massive amount” of iPad mini tablets to be given as gifts this holiday season.


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Publisher Bonnier, Flingo partner to make Smart TV Apps






NEW YORK (TheWrap.com) – Bonnier, the publisher of magazines like Savuer and Popular Science, and Flingo, the largest publisher of apps for Smart TVs, have partnered to create a series of apps extending Bonnier’s titles onto Internet-enabled TV sets and set-tops boxes like the Roku.


Together, they will release a new app for each magazine, offering videos, images and archival content for fans. Savuer has a couple of web series, including “The Test Kitchen” which helps home chefs learn how to peel garlic or dice an onion. Those videos, currently on Saveur’s website YouTube channel, will resurface in the apps, which will be distributed for free in app markets thanks to advertising and sponsors.






Though smart TVs remain a small segment of the TV market, Bonnier believes it is an ideal platform for leading media companies to extend their brand.


“This is about going after new technologies and being at the forefront,” Sean Holzman, Bonnier’s Chief Brand Development Officer, told TheWrap. “We don’t look closely at what other publishing companies may be doing. Flingo has a universe of 15 million devices and that should double in 2013.”


The emphasis will be on video since research demonstrates that it remains the top activity, even more than gaming.


Ashwin Navin, CEO of Flingo, said that while many media companies are putting secondary titles on Internet-enabled TVs, Bonnier is using its top titles.


“Major media companies aren’t putting their crown jewels on smart TVs,” Navin told TheWrap. He added that when they measure how long users spend online with certain brands, websites register just a few minutes.


“You see 10 times that in a TV app. People are more captive and less ADD.”


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Outlook remains cloudy for fiscal “cliff” deal






WASHINGTON (Reuters) – More public jousting from both sides in the “fiscal cliff” talks is expected on Wednesday in what has become a daily ritual of mutual “you go first” calls for more specifics in proposals to avert the steep tax hikes and budget cuts set for the end of the year.


On Tuesday the White House and House of Representatives Speaker John Boehner traded offers still couched in broad and familiar terms that neither side found sufficiently detailed.






If the public back and forth between Boehner and President Barack Obama reflects what’s happening behind the scenes, negotiations to avoid the cliff have a long way to go in the short time remaining in 2012.


Obama and Boehner each have proposed cutting deficits by more than $ 4 trillion over the next 10 years as a way of averting the cliff, but they differ on how to get there. Economists have warned that failure to strike a deal could send the economy back into a recession.


On Tuesday Boehner rejected what the White House viewed as a concession, shrinking the proportion of deficit reduction to come from revenue from $ 1.6 trillion over 10 years to $ 1.4 trillion. Boehner has called for $ 800 billion in revenue through tax reform.


There were also reports, unconfirmed by either side, that the White House has repeated a proposal it made in February to consider reductions in corporate tax rates.


That proposition is considered relatively uncontroversial compared to such politically sensitive matters as cutting entitlement programs such as Medicare, the government health insurance program for the elderly.


‘PLAYING TO THE MEDIA’


White House Press Secretary Jay Carney, commenting Tuesday on suggestions of vagueness in Obama’s dealings with Boehner, responded by holding up copies of prior administration budget proposals that include, among other things, corporate tax reductions, and comparing them to the two-page offer that Boehner has sent to the White House.


A senior Republican fiscal hawk, Senator Tom Coburn of Oklahoma, faulted both sides for playing politics.


“There’s no leadership in Washington either at the presidential level or the leadership level in Congress,” Coburn said on CNN Tuesday night. “People are playing to the media rather than playing to the future of the country.”


Kentucky Republican Senator Rand Paul suggested in a Fox News interview late on Tuesday that, to get things moving, the House vote on the stickiest issue, whether to extend expiring tax cuts to all taxpayers except high-earners, as Democrats want, or to everyone, as Boehner wants.


Republicans would simply vote “present” on the Democratic plan, he said, allowing it to pass.


Let the Democrats approve a tax increase on upper-income taxpayers, he said.


But “do it with their votes, not our votes. Republicans vote present in the House. Democrats can pass the tax increase with only Democrat votes and then the Democrats are the parties of high taxes and the Republicans are the party of lower taxes. And I think that’s the way it should be.”


(Editing by Xavier Briand)


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Doing the College Bowl Game Shuffle






In 1997, when the Arizona-based Copper Bowl was rechristened the “Insight.com Bowl”—and billed as “the first bowl game to be sponsored by an electronic commerce Web site”—it touched a nerve. Sports columnists called the tech suffix “ridiculous.” To echo one cantankerous newspaper writer: “What next? A flag game matching sororities, sponsored by AirTouch?”


Be careful what you wish for. More than a decade later, the Peach Bowl and the Citrus Bowl have been replaced by the Chick-fil-A Bowl and the Capital One Bowl (COF), respectively. The Humanitarian Bowl is no more—it’s now the Famous Idaho Potato Bowl. Teams from the Big East and Conference USA conferences duke it out in the Beef ‘O’ Brady’s Bowl, located in St. Petersburg, Fla. Speaking of which, the Gator Bowl, hosted every year in Jacksonville, Fla., is now the Taxslayer.com Gator Bowl. And starting this year, the once controversial Insight Bowl (the “.com” was dropped in 2002 after the bubble burst) will be known as the Buffalo Wild Wings Bowl (BWLD), named after the Minneapolis-based chain of sports bars.






Some fear the bowl market is getting saturated. “I understand the financial considerations of getting those [sponsorship] checks,” says Kevin Adler, president of Engage Marketing. “But I think some of these bowls devalue themselves with the type of brands they associate with.”


Regardless, this year marks the introduction of three newly renamed bowl games to the mix. What they pay for the title sponsorships is just as mutable as the ever-shape-shifting bowl landscape. “The agreements are always changing,” says Doug Shabelman of Burns Entertainment & Sports Marketing. “With the economy, you’re seeing these bowls and marketers getting as creative as possible. The marketer might pay $ 350,000 to be the title sponsor, but they’ll guarantee exposure in other advertising. It’s like a combination of marketing efforts. Everyone is looking to see where they can get added value.”


Here’s a quick rundown of the NCAA’s newest postseason sponsorships, as well as a rough estimate of what they paid for the title rights:


The Russell Athletic Bowl
Estimated title sponsorship value: $ 350,000 to $ 550,000

This summer, the Kentucky-based sports-apparel manufacturer Russell Athletic partnered with Florida Citrus Sports on a deal to be the title sponsor of the Orlando-based game through 2015. The previous title sponsor from 2004 to 2011 was Champs Sports. The agreement makes Russell Brands (no relation to this guy) the sole apparel provider for this game, the nearby Capital One Bowl, and the Fresh From Florida Parade. Last year’s Champs Sports Bowl, between Florida State and Notre Dame, drew 68,305 ticket holders and 6 million viewers on ESPN.


Heart of Dallas Bowl
Estimated title sponsorship value: $ 350,000 to $ 550,000


In 2010, the AT&T Cotton Bowl Classic (T) was relocated from the Cotton Bowl, a stadium in downtown Dallas, to the gleaming Cowboys Stadium in nearby Arlington. Last year, the contest that took place in the actual Cotton Bowl was the TicketCity Bowl. This year, the game will bear the name Heart of Dallas, a new nonprofit group that will direct funding to a local homeless charity. The “presenting sponsor” is PlainsCapital Bank (HTH), “with additional support from MetroPCS (PCS), Dallas Convention and Visitors Bureau, Omni Hotels and Hyatt (H).” The payout to participants is $ 1.1 million. According to an editorial in the Dallas Morning News, locals are pleased—mostly with the name. “Simple and descriptive, the name also carries potentially great meaning,” the editorial board wrote.


Buffalo Wild Wings Bowl
Estimated title sponsorship value: “$ 2 million plus”

This year, Arizona’s Fiesta Bowl, which had operated the Insight Bowl, announced that it had entered into a multi-year deal with the Minnesota-based sports-bar chain after Insight Enterprises (NSIT), based in Tempe, Ariz., didn’t re-up its title sponsorship. The payout to participants in the game is $ 3.35 million. According to filings with the U.S. Securities and Exchange Commission, it’s estimated that Insight paid roughly $ 2 million for the last two bowl games.


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North Korea’s new leader burnishes credentials with rocket






SEOUL/TOKYO (Reuters) – North Korea successfully launched a rocket on Wednesday, boosting the credentials of its new leader and stepping up the threat the isolated and impoverished state poses to its opponents.


The rocket, which North Korea says put a weather satellite into orbit, has been labeled by the United States, South Korea and Japan as a test of technology that could one day deliver a nuclear warhead capable of hitting targets as far as the continental United States.






“The satellite has entered the planned orbit,” a North Korean television news-reader clad in traditional Korean garb triumphantly announced, after which the station played patriotic songs with the lyrics “Chosun (Korea) does what it says”.


The rocket was launched just before 10 a.m. Korea time (9 p.m. ET on Tuesday), according to defense officials in South Korea and Japan, and easily surpassed a failed April launch that flew for less than two minutes.


The North American Aerospace Defense Command (NORAD) said that it “deployed an object that appeared to achieve orbit”, the first time an independent body has verified North Korean claims.


North Korea followed what it said was a similar successful launch in 2009 with a nuclear test that prompted the United Nations Security Council to stiffen sanctions that it originally imposed in 2006 after the North’s first nuclear test.


The state is banned from developing nuclear and missile-related technology under U.N. resolutions, although Kim Jong-un, the youthful head of state who took power a year ago, is believed to have continued the state’s “military first” programs put into place by his deceased father Kim Jong-il.


North Korea lauded Wednesday’s launch as celebrating the prowess of all three Kims to rule since it was founded in 1948.


“At a time when great yearnings and reverence for Kim Jong-il pervade the whole country, its scientists and technicians brilliantly carried out his behests to launch a scientific and technological satellite in 2012, the year marking the 100th birth anniversary of President Kim Il Sung,” its KCNA news agency said.


Washington condemned Wednesday’s launch as a “provocative action” and breach of U.N. rules, while Japan’s U.N. envoy called for a Security Council meeting. However, diplomats say further tough sanctions are unlikely to be agreed at the body as China, the North’s only major ally, will oppose them.


“The international community must work in a concerted fashion to send North Korea a clear message that its violations of United Nations Security Council resolutions have consequences,” the White House said in a statement.


Japan’s likely next prime minister, Shinzo Abe, who is leading in opinion polls ahead of an election on December 16 and who is known as a North Korea hawk, called on the United Nations to adopt a resolution “strongly criticizing” Pyongyang.


BEIJING BLOCK


China had expressed “deep concern” prior to the launch which was announced a day after a top politburo member, representing new Chinese leader Xi Xinping, met Kim Jong-un in Pyongyang.


On Wednesday its tone was measured, regretting the launch but calling for restraint on possible counter-measures, in line with previous policy when it has effectively vetoed tougher sanctions.


“China believes the Security Council’s response should be cautious and moderate, protect the overall peaceful and stable situation on the Korean peninsula, and avoid an escalation of the situation,” Chinese Foreign Ministry spokesman Hong Lei told journalists.


Bruce Klingner, a Korea expert at the Heritage Foundation, told a conference call: “China has been the stumbling block to firmer U.N. action and we’ll have to see if the new leadership is any different than its predecessors.”


A senior adviser to South Korea’s president said last week it was unlikely there would be action from the U.N. and that Seoul would expect its allies to tighten sanctions unilaterally.


Kim Jong-un, believed to be 29 years old, took power when his father died on December 17 last year and experts believe the launch was intended to commemorate the first anniversary of the death.


The April launch was timed for the centennial of the birth of Kim Il Sung, the grandfather of its current ruler.


Wednesday’s success puts the North ahead of the South which has not managed to get a rocket off the ground.


“This is a considerable boost in establishing the rule of Kim Jong-un,” said Cho Min, an expert at the Korea Institute of National Unification.


There have been few indications the secretive and impoverished state, where the United Nations estimates a third of the population is malnourished, has made any advances in opening up economically over the past year.


North Korea remains reliant on minerals exports to China and remittances from tens of thousands of its people working on labor projects overseas.


The 22 million population often needs handouts from defectors who have escaped to South Korea in order to afford basic medicines.


Given the puny size of its economy – per capita income is less than $ 2,000 a year – one of the few ways the North can attract world attention is by emphasizing its military threat.


Pyongyang wants the United States to resume aid and to recognize it diplomatically, although the April launch scuppered a planned food deal.


It is believed to be some years away from developing a functioning nuclear warhead although it may have enough plutonium for around half a dozen nuclear bombs, according to nuclear experts.


The North has also been enriching uranium, which would give it a second path to nuclear weapons as it sits on vast natural uranium reserves.


“A successful launch puts North Korea closer to the capability to deploy a weaponized missile,” said Denny Roy, a senior fellow at the East-West Center in Hawaii.


“But this would still require fitting a weapon to the missile and ensuring a reasonable degree of accuracy. The North Koreans probably do not yet have a nuclear weapon small enough for a missile to carry.”


Pyongyang says that its development is part of a civil nuclear program, but has also boasted of it being a “nuclear weapons power”.


(Additional reporting by Jumin Park and Yoo Choonsik in SEOUL; David Alexander, Matt Spetalnick and Paul Eckert in WASHINGTON; Linda Sieg in TOKYO; Sui-Lee Wee in BEIJING; Rosmarie Francisco in MANILA; Writing by David Chance; Editing by Raju Gopalakrishnan)


World News Headlines – Yahoo! News


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Luke Bryan cleans up at ACAs with 9 awards






Luke Bryan didn’t want the American Country Awards to end.


He cleaned up during the fan-voted show, earning nine awards, including artist and album of the year. His smash hit “I Don’t Want This Night To End” was named single and music video of the year.






Miranda Lambert took home the second most guitar trophies with three. Jason Aldean was named touring artist of the year. Carrie Underwood won female artist of the year, and a tearful Lauren Alaina won new artist of the year.


Bryan, Aldean, Keith Urban, Lady Antebellum and Trace Adkins with Lynyrd Skynrd were among the high-energy performances.


The third annual ACAs were held at Mandalay Bay in Las Vegas Monday night.


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Online: http://www.theACAs.com


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Novo bets on high-price niche for obesity drug






LONDON (Reuters) – Denmark’s Novo Nordisk is sizing up a high-price niche market for its drug liraglutide as a weight-loss treatment, with the United States the prime opportunity.


The premium-price approach could turn it into a multibillion-dollar-a-year product, the company believes.






Novo is studying the injected drug – already on the market as a treatment for type-2 diabetes under the brand name Victoza – as a therapy for the seriously obese, with pivotal clinical trial results due in the first half of next year.


While some in the industry are sceptical about using so-called GLP-1 diabetes drugs such as liraglutide to fight obesity, Novo’s Chief Science Officer Mads Krogsgaard Thomsen believes the approach can offer cost-effective benefits.


Glucagon-like peptide-1, or GLP-1, drugs work by stimulating insulin release when glucose levels become too high. Their ability to induce weight loss is an added benefit, since type-2 diabetes is linked to obesity.


What is more, the willingness of the U.S. Food and Drug Administration to license new obesity pills from Vivus and Arena Pharmaceuticals last summer shows the door is open to such new medicines, Thomsen said.


“It’s positive. More physicians are now knowledgeable that pharmacotherapy can make a difference and the political establishment in the U.S. now knows that behavior change alone is not enough,” he said in an interview in London.


More than a third of American adults, or some 100 million people, are obese and the figure is rising fast, posing a growing threat to the nation’s health.


Among this population group, liraglutide may help the severely obese, including those with related problems like interrupted breathing during sleep and pre-diabetes, who might otherwise receive stomach surgery.


“We are not going out to treat the 100 million … We see this as solving a problem in a niche of maybe a few million patients,” Thomsen said.


“If you took one million patients and gave them liraglutide at 3.0 milligrams (a day) at the U.S. price that would be a $ 6 billion market.”


When used in diabetes as Victoza, liraglutide is given at daily doses of either 1.2 or 1.8 mg. Novo is betting on a higher dose to produce greater weight-loss in the obese. A key unknown is whether this will produce unacceptable side effects – and Thomsen admits this makes it something of a “joker” in the company’s line-up of new products.


The main adverse effect of Victoza is nausea in some patients, although this is not strong enough in itself to account for the weight loss seen with the drug and Thomsen does not see nausea as a hurdle to regulatory approval.


More worrying, would be any evidence that high-dose liraglutide is linked to pancreatitis.


Given the high safety bar required for a new obesity drug, analysts are currently divided as to whether liraglutide will make it for weight loss – especially given past disappointments with diet drugs such as Sanofi’s Acomplia.


If all goes according to plan, however, Novo aims to file for approval at the end of next year, implying a potential U.S. launch in late 2014 or early 2015 for a product that would add a new string to the bow of the world’s biggest maker of insulin.


Medications/Drugs News Headlines – Yahoo! News


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Northern Rock will repay £270m







Some 152,000 Northern Rock Asset Management customers will receive hundreds of pounds each in compensation owing to mistakes made in paperwork.






Customers who took out personal loans of less than £25,000 will receive an average of £1,770 each.


Bank staff failed to include key details on annual statements about loans, including the original amount which had been borrowed.


Refunds of the interest paid by customers will now be made.


‘Right thing’


Many of the loans were provided on top of Northern Rock’s Together mortgage which was popular before the credit crunch, and allowed homebuyers to borrow more than their homes were worth.


The rules on loan paperwork changed, but this was not implemented properly on these loans after the bank was nationalised in 2008.


All of the interest charged on these loans since 2008 will be refunded.


The £270m bill for the refunds will have to come from the taxpayer, as this section of the bank has been owned by the government since 2008.


The problems with the paperwork arose as a result of an investigation by UK Asset Resolution (UKAR), which looks after rescued banks for the government.


Continue reading the main story

Where redress is required, this will be made by correcting a customer’s account balance”



End Quote Sajid Javid Economic secretary to the Treasury


“Northern Rock Asset Management is acting in accordance with its legal responsibilities and we are determined to do the right thing for customers and the taxpayer,” said UKAR chief executive, Richard Banks.


“We will be writing to all customers who are affected and advising them on next steps. We have not received any complaints or claims as a result of this matter and as far as we are aware it has not resulted in financial loss for customers.”


Letters


Affected customers would be refunded for all the interest they paid after the mistakes were made in 2008, economic secretary to the Treasury Sajid Javid confirmed in a written statement.


Customers did not need to do anything at this stage. They will receive a letter in the next few days.


There are 107,000 accounts which remain live and so the balance will be altered to take the refunds into account.


“Where redress is required, this will be made by correcting a customer’s account balance to reverse the consequences of them being charged any interest over the period in which the documentation is non-compliant,” Mr Javid said in the statement,


An additional 45,000 customers have paid back their loans and will receive a refund of the interest charged.


The mistakes pre-date the separation of Northern Rock plc and Northern Rock Asset Management.


The bill would not delay the repayment of government funding, which stood at £19.6bn in June. The Treasury said it would fully recover the whole of the taxpayer support for the bank.


This part of the bank is being wound down, while the mortgage lending and savings arm, Northern Rock plc, was sold to Virgin Money in 2011.


BBC News – Business


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