Signs of recovery in the UK economy, more wrongdoings in the banking sector and turmoil at the Co-op's banking arm made for another interesting year in the City. Here are some of the highlights:
Signs of recovery in the UK economy, more wrongdoings in the banking sector and turmoil at the Co-op's banking arm made for another interesting year in the City. Here are some of the highlights:
The devastating impact of the internet on Britain's high street was laid bare after Blockbuster and HMV hit the rocks, putting more than 8,300 jobs at risk. Deloitte, the administrator for Blockbuster's 528 stores, blamed the DVD rental chain's woes on competition from internet firms and digital streaming of movies and games. It s administration came a day after 223-strong music and video chain HMV went under, following dismal Christmas sales. All 187 shops in the Jessops camera chain were also closed with the loss of 1,370 jobs as ONS figures showed the industry endured a worse-than-expected December.
Britain's biggest banks pledged to compensate thousands of small businesses after a review found more than 90% had been mis-sold complex financial products. The Financial Services Authority looked at 173 cases where so-called interest rate swaps had been sold to small firms as part of a pilot study and said a ''significant'' proportion were likely to result in redress being due to the customer. UK lenders were expected to face a compensation bill of at least £1 billion in what marked the latest scandal in the sector.
Campaigners were left "bitterly disappointed" after the competition watchdog ruled out a full investigation into the fuel market, having concluded that high prices are the fault of taxes and the cost of crude oil. The Office of Fair Trading said competition in the sector was ''working well'' and there was ''very limited evidence'' that pump prices rise quickly when the wholesale price goes up but fall more slowly when it drops. Furious campaigners said drivers would feel let down by the findings.
:: Nearly 6,000 UK employees at US banking giant Goldman Sachs shared out 12.9 billion US dollars (£8.1 billion) in pay and bonuses for 2012 after it posted better-than-expected profits.
:: Britain's economic woes showed signs of deepening after the UK shrank 0.3% at the end of 2012, fuelling fears of a triple-dip recession.
:: Regulator Ofwat announced plans to persuade utilities to transfer more water to dry regions as part of proposals that will change the way it regulates the sector.
:: Hovis said it would start using additional grain from the European Union as it expected to reduce its British wheat-buying by around a third during the year after UK farmers saw the worst harvest for 35 years.
Bribery and rate-rigging took place at Royal Bank of Scotland even after it was bailed out by the taxpayer, regulators revealed, as they fined the banking giant £391 million. Chief executive Stephen Hester said he would stay to ''finish the job'' at the bank despite damning evidence from US and UK authorities over the bank's role in the Libor scandal, dating back to 2006 and continuing through to late 2010. RBS said it would recoup around £300 million from its staff bonus pool and claw back previous awards to pay for the fines.
George Osborne insisted Britain would not ''run away'' from its problems after Moody's downgraded the country's AAA credit rating. The Chancellor said the coalition was determined to stick by its plan for economic recovery after the rating was lowered by a notch to AA1. The agency warned that ''subdued'' growth prospects and a ''high and rising debt burden'' were weighing on the economy.
Virgin Media vowed to become a ''disruptive challenger'' in the pay-TV market after agreeing a £10 billion takeover by US cable giant Liberty Global. The deal marks a breakthrough into the UK market for Colorado-based billionaire investor John Malone, whose Liberty empire will span 14 countries and have 25 million customers after taking on Britain's second biggest pay-TV company. It will make him a direct rival of Rupert Murdoch's News Corporation, the company which owns 39% of pay-TV market leader BSkyB.
:: Around 2,100 jobs were saved after fashion retailer Republic was bought by Sports Direct International. Jessops was also snapped up by a group of buyers that included Dragon's Den star Peter Jones.
- Telecoms watchdog Ofcom raised £2.3 billion from selling 4G mobile licences to Vodafone, EE, Hutchison and O2 parent Telefonica, along with a subsidiary of BT, well short of estimates it would provide a £ 3.5 billion boost to the public finances.
:: British Gas parent Centrica came under public and political fire after it revealed it made nearly £50 per household in 2012, just months after hiking customer bills. A £606 million profit haul at British Gas residential was slammed as ''staggering'' by a union leader.
The UK's biggest payday lenders were threatened with being put out of business after a damning report into the industry uncovered evidence of ''widespread irresponsible lending''. The Office of Fair Trading's report was the culmination of a large-scale probe into the £2 billion payday sector, including spot checks on household names such as Wonga. The regulator handed the 50 biggest players a 12-week deadline for ''rapid action'' and prove they have cleaned up their act.
British ex-pats with savings under £85,000 were spared from being taxed by the Cypriot government following a last-minute EU deal. However, the island's 60,000 British expats who broke the threshold were told to expect the compulsory one-off levy. Cyprus was saved from a banking system collapse and bankruptcy when eurozone ministers agreed a rescue package of £ 10 billion euro (£8.5 billion). The UK Government had previously said it would only compensate British Armed Forces personnel left out of pocket.
Demands for banks to hold an extra £25 billion to guard against future financial shocks were criticised for potentially stifling cash-starved businesses. The Bank of England's Financial Policy Committee said banks needed to meet the shortfall to bolster their balance sheet strength in the face of a potential £50 billion blow to their reserves over the next three years. It said they will need to find the £25 billion by the end of the year, either by raising new capital or restructuring their balance sheets.
:: Morrisons admitted its performance fell short of expectations after a 7% drop in profits to £879 million. The chain said it had not done enough to communicate its promotions and still lacked a meaningful presence in the online and convenience store sectors.
:: The scale of mammoth pay packages in the banking industry was laid bare as Royal Bank of Scotland and Barclays revealed that over 500 workers between them were paid more than £1 million last year.
:: Supermarket giant Tesco bought restaurant chain Giraffe for £48.6 million under plans to transform its stores into family-friendly retail destinations.
:: UK Coal said Daw Mill Colliery in North Warwickshire, one of the UK's last remaining coal mines, was to shut with the loss of up to 650 jobs. The move followed a major fire, the largest in a UK mine for 30 years.
Former HBOS chief executive Sir James Crosby said he wanted to be stripped of his knighthood and would give up 30% of his £580,000 a year pension in the wake of a scathing report into the bank's collapse. Mr Crosby, who stepped down from his role with private equity firm Bridgepoint , said he was ''deeply sorry'' for what happened at HBOS and the ''ensuing consequences'' for the bailed-out bank's staff, shareholders and taxpayers. The bank's former boss was given a knighthood after leaving HBOS in 2006.
Barclays faced the wrath of small shareholders as it admitted rebuilding its tattered reputation and overhauling pay will take time. The bank faced shareholders at its annual meeting in London after a chastening year which included the Libor-rigging scandal and a boardroom clear-out. A report by top lawyer Anthony Salz, who was commissioned to look at the bank's culture, found Barclays became ''too complex to manage'' and that excessive pay and bonuses saw some bankers believe they were ''unaffected by the rules''.
Customers of energy giant SSE were urged to seek compensation from the company after Ofgem announced a record fine of £10.5 million for ''prolonged and extensive'' mis-selling. The e nergy watchdog said it found ''failures at every stage of the sales process'' across SSE's telephone, in-store and doorstep selling activities, adding that the level of the fine reflected the seriousness and the duration of the mis-selling, as well as the harm to customers.
:: The Bank of England said Sir Winston Churchill would become the first politician of the modern era to feature on a banknote, when the new £5 note is issued in 2016.
:: Parcel delivery firm City Link was sold for £1 after its owner called time on five years of substantial losses. Rentokil Initial offloaded the division to restructuring specialist Better Capital, even though it believed the business had turned the corner.
:: Lloyds Banking Group announced the collapse of its deal to sell more than 600 branches to the Co-operative Group. It said it would pursue a stock market flotation for the TSB division.
:: Around 2,500 jobs at entertainment retailer HMV were saved after restructuring firm Hilco bought 141 stores, including 25 previously slated for closure.
BT threw down the gauntlet to BSkyB by offering free live Premier League action to football fans for the first time. The telecoms giant muscled in on Sky's dominance of sport by winning a three-year deal worth £738 million to show 38 Premier League games a season . Sky responded to BT's offer of free top flight football to new and existing broadband customers by labelling it a ''marketing gimmick'' designed to halt its loss of broadband customers.
The Co-operative insisted its bank did not require government support after a ratings agency warned it may need a taxpayer bail-out. In a message to reassure customers and members, the Co-op said ''we haven't sought nor do we need government support''. A downgrade from Moody's saw Co-op Bank's investment grade rating slashed to ''junk'' status - followed just hours later by yet another blow as the lender's chief executive Barry Tootell resigned. He had been brought in to lead the group's failed deal to take over more than 600 branches from Lloyds Banking Group.
Google boss Eric Schmidt said he was ''perplexed'' by the debate over the company's tax affairs. The internet giant's executive chairman insisted the company paid everything it was legally required to in the UK and suggested it was up to the Government to change the law if it wanted more from the firm. Google came under fire over reports that it paid only £10 million in corporation tax in the UK between 2006 and 2011, despite revenues of £11.9 billion.
:: US tech giant Yahoo snapped up Tumblr in a deal that reportedly net the blogging site's 26-year-old founder a 250 million US dollar (£164 million) fortune six years after he started it.
:: British Gas owner Centrica said it had made so much money from h ouseholders during the prolonged freeze at the start of the year that it was putting a lid on further price rises for the time being.
:: The announcement of Sir Alex Ferguson's retirement as Manchester United manager caused shares in the club to dip by as much as 4% on the New York Stock Exchange, only to rebound later in the session.
:: Marks & Spencer's boss Marc Bolland brushed off speculation about his future after t he retailer delivered its worst annual profits figure in four years amid a disastrous performance from its clothing lines.
Sir Mervyn King fired his final parting shot at the banks as he attacked lenders for their intense political lobbying against tougher balance sheet rules. In his last appearance in front of MPs on the Treasury Select Committee , the Bank of England governor said banks sought to put ''tremendous pressure'' on politicians at the highest levels to lean on regulators to water down demands to raise capital strength. Nominated for a life peerage by the prime minister for his ''significant public service'', Sir Mervyn helped steer the country through the financial meltdown that brought the banking system to its knees.
Ousted Royal Bank of Scotland boss Stephen Hester warned it could take up to a decade for the taxpayer to be repaid its £45 billion stake in the bailed-out bank. His comments came after his surprise departure, amid speculation about political interference in the decision. Ministers denied direct involvement but MPs were told that Chancellor George Osborne had met the bank's chairman last week to discuss the move. There was also anxiety about whether the departure could delay privatisation plans and speculation that it would increase the likelihood of RBS being split into a good bank and a bad bank.
Five high street banking groups were ordered to raise another £13.4 billion to plug a higher-than-expected £27.1 billion hole in their finances. The Prudential Regulation Authority said Barclays, Lloyds, Royal Bank of Scotland, Nationwide and The Co-operative Bank must fill the gap in their capital cushions by the end of 2013 or early 2014. In the Co-op's case it said it would fill a £1.5 billion hole in its balance sheet by forcing bondholders to take losses on their investment as part of a ''bail-in'' due to happen in October. They would be offered shares in the banking arm, a move resulting in a stock market listing for the UK's biggest mutual. No taxpayers' money would be involved in the plan.
- BT said its chief executive Ian Livingston was leaving to join David Cameron's Government as trade minister, replacing Lord Green of Hurstpierpoint when the former HSBC chairman steps down in December.
:: Supermarket giant Tesco was forced to defend its £1 billion turnaround plans after UK sales dropped amid further fall-out from the horsemeat scandal. The group posted a 1% fall in UK like-for-like sales in its first quarter.
:: Payday lenders became the subject of a Competition Commission investigation after the OFT said that consumers who cannot afford to pay their loans on time were finding themselves trapped with one firm when their loans are rolled over.
New Bank of England governor Mark Carney was met with a flurry of good news on his first day as one of the world's most powerful central bankers. The Canadian, who was at the Bank's Threadneedle Street offices by 7am after joining commuters on London Underground's Central line, was given a fillip with better-than-expected figures on home loans and manufacturing. Mr Carney, described as a ''rock star'' and the George Clooney of central banking, arrived to a storm of publicity and great expectations.
The Archbishop of Canterbury said he was irritated and embarrassed after it emerged that the Church of England helped to fund the payday lender he wanted to drive out of business. The Most Rev Justin Welby suggested a comprehensive review of the Church's investment portfolio could follow, after he expressed his unease over its ties to short-term, high-cost credit firm Wonga. Although the amount of Church money indirectly invested in Wonga was £75,000, out of investments totalling £5.2 billion, it has proved embarrassing for the Archbishop, who had spoken out against the payday lending industry.
Drugs giant GlaxoSmithKline admitted that certain top executives appeared to have broken the law, as the company faced an investigation over multi-million bribery allegations in China. The company also said it would cut medicine prices for Chinese patients in the wake of the scandal, in which funds were alleged to have been paid to doctors and health officials to boost sales and raise prices. Abbas Hussain, GSK's president of emerging markets and Asia Pacific, said after a meeting with Chinese authorities that some senior employees had acted outside of the firm's ''processes and controls''.
:: Fashion brand Nicole Farhi was rescued from administration after it was snapped up by the daughter of Matalan founder John Hargreaves. Maxine Hargreaves-Adams said she was delighted to have acquired the ''iconic and much-loved British brand''.
:: The owner of Yellow Pages was seized by its lenders under a restructuring plan that will safeguard the jobs of 12,000 staff but wipe out long-suffering shareholders. Hibu was struggling under a £ 2.3 billion debt mountain.
- Britain has three times as many highly paid bankers than the rest of Europe put together, figures showed. There were 2,436 paid more than one million euro (£860,000), compared to 739 in the rest of the EU.
Interest rates will not rise from their record low until more than 750,000 new jobs have been created, the Bank of England pledged in a radical step to bolster the economy. Households and businesses were told not to expect rate rises for at least the next three years as new Bank governor Mark Carney said rates will remain at 0.5% until the unemployment rate drops to 7%, depending on stable inflation. He insisted the new ''forward guidance'' strategy of explicitly pinning rate rises to queues at the job centre is vital to help secure Britain's recovery, which remains the weakest on record.
Royal Bank of Scotland ended uncertainty over its leadership by announcing that retail boss Ross McEwan will take on one of the ''most important and challenging'' roles in global banking. The 56-year-old New Zealander - who was reportedly paid a £3.2 million ''golden hello'' on joining RBS last year - asked to defer bonus awards under his current role until 2017 and to forgo an annual bonus as chief executive for 2013 and 2014. The announcement came alongside half-year figures showing RBS swung out of the red with pre-tax profits of £1.4 billion against losses of £1.7 billion a year earlier.
Around seven million people were to share up to £1.3 billion in compensation after 13 high street banks and credit card companies agreed to offer redress for mis-sold credit card and identity theft protection. The Financial Conduct Authority said major lenders including Barclays, HSBC, Royal Bank of Scotland and Lloyds signed up to the compensation scheme. The scandal involved 23 million policies and saw customers given misleading and unclear information about the insurance. CPP had earlier been fined a joint record £10.5 million by the City watchdog.
- The Co-operative admitted its banking arm will not make a profit for years after plunging to a half-year loss of £709.4 million on surging bad debts and a bungled roll-out of a new computer system.
:: Marks & Spencer put its faith in an advertising campaign featuring a dozen high-profile women including Oscar-winning actress Dame Helen Mirren and Olympic boxer Nicola Adams to revive its fashion fortunes.
:: Families used nearly a quarter less energy than in 2005 as household efficiency measures and rising costs took effect, the Office for National Statistics said.
Investors in Vodafone were promised £54 billion cash and shares windfall after the telecoms giant sold its share in America's Verizon Wireless for £84 billion. The group confirmed one of the biggest corporate deals in history by agreeing to sell its 45% stake in the US operator to its joint venture partner Verizon. But the deal will not involve a tax payment to the UK exchequer, the company revealed, risking further controversy after intense scrutiny of its tax affairs.
Chancellor George Osborne hailed the taxpayer's £61 million profit on the sale of shares in Lloyds Banking Group as more evidence that the economy was ''turning a corner''. Mr Osborne claimed the £3.2 billion sale of a 6% slice of the bank to institutional investors represented a half-billion pound boost to the public accounts - because of the way it is valued on the Government's books. He indicated that the disposal of the rest of the Treasury's holding, now standing at 32.7%, may be opened up to the public in a stock market float likely to revive memories of the major privatisations of the 1980s.
Popular soft drinks brands Lucozade and Ribena were swallowed by Orangina Schweppes owner Suntory for £1.35 billion. GlaxoSmithKline sold the historic brands to Japanese drinks group Suntory Beverage & Food after putting them up for sale earlier in the year. Lucozade and Ribena, which date back to 1927 and the 1930s respectively, are made in the UK at a factory in Coleford, Gloucestershire, which employs around 500 staff.
:: TSB became Britain's eighth biggest high street bank after it was re-launched as a standalone brand, 18 years after disappearing when it merged with Lloyds. Lloyds Banking Group transferred more than 4.6 million customers to the revived TSB - famous for its 1980s slogan ''the bank that likes to say yes''.
:: Estate agent Foxtons increased its value by more than £100 million in just a few hours after a ''stunning'' debut on the London stock market saw investors vie to capitalise on Britain's resurgent property market.
:: US investment bank JP Morgan Chase was fined 920 million US dollars (£572 million) by regulators for ''serious failings'' over the London Whale trading scandal, which triggered 6.2 billion US dollars of losses and sent shock waves through financial markets.
:: Technology giant Microsoft said it would buy Nokia's mobile phone arm in a ''bold step'' in the smartphone market that will cost it about £4.6 billion.
US politicians struck a last-minute deal to avert a catastrophic debt default that threatened to derail the global economy. Stock markets rallied as Democrat and Republican leaders in the Senate reached an agreement to avoid missing a deadline on the US borrowing ceiling. The deal was the culmination of weeks of political brinkmanship as opponents on both sides refused to blink. America would not have run out of money instantly, but it would have had to prioritise debt payments, such as an interest payment on its debt , meaning other bills could have gone unpaid.
The Government tried to take the heat out of the furore over soaring energy bills by unveiling a package of reforms, including the prospect of criminal penalties for energy companies found to have rigged the markets. The moves followed continuing controversy over rising bills after four of the Big Six energy firms said charges would rise by an average of over 9% and Labour leader Ed Miliband pledged to freeze bills if he wins the next general election. Energy company bosses defended the rises in customers' bills, partly blaming green taxes.
Royal Mail shares surged to new heights on its first full day of stock market trading, leaving it around 50% higher than its original sell-off price - despite the looming threat of industrial action. Business Secretary Vince Cable and investment bank Lazards were facing fresh questions from MPs over the privatisation amid concerns that ministers heavily underpriced the shares at 330p. Mr Cable dismissed the steep rise when conditional trading began the previous week as ''froth'' but days later the stock was still ticking up, at 490.7p .
:: The Co-operative Group struck a deal to save its battered banking arm by ceding control of the ethical lender to a group of powerful investors. C hief executive Euan Sutherland said the group will be left with a 30% stake but insisted the lender will retain its ethical values.
:: Burberry's respected boss, Angela Ahrendts, said she was leaving the luxury goods firm to join technology giant Apple. Ms Ahrendts spent more than seven years with Burberry, transforming it into a global luxury brand with a growing presence in emerging markets.
:: British boot brand Dr Martens was snapped up by private equity firm Permira in a £300 million deal ending more than 50 years of family ownership. It means the boots - footwear of choice for generations of skinheads, punks and students - will join a stable of brands which also includes Hugo Boss and New Look.
:: Thames Water's attempt to slap an extra £29 on customers' water bills in 2014 was rejected by the industry regulator. Ofwat said the water and sewerage company could only justify a bill hike of around £7 but that this would not be imposed on customers.
State-backed Royal Bank of Scotland hired a law firm to investigate claims of ''unscrupulous'' treatment of small businesses - described as ''shocking'' by Chancellor George Osborne. A report alleged that the lender drove firms to collapse to buy back their assets at rock-bottom prices. Businessman Lawrence Tomlinson, entrepreneur in residence at the Department for Business, Innovation and Skills, said he had uncovered a dossier of evidence that RBS had deliberately forced companies into default to seize their properties.
A decision by defence giant BAE Systems to axe 1,775 jobs and end shipbuilding at one of the country's most historic industrial sites sparked a huge political and industrial row. The firm said 940 jobs will be lost in Portsmouth and a further 835 in Glasgow, Rosyth and Filton, near Bristol. Shipbuilding operations will end in Portsmouth in the second half of 2014, but an engineering team will be retained to support the new Type 26 warships, which will be built in Glasgow. Unions said the job losses were a ''devastating blow'' to the industry, while some politicians said Portsmouth was being hit harder than yards in Scotland b ecause of the independence referendum.
Chancellor George Osborne announced an independent investigation into the near-collapse of the Co-op Bank, including the competence of Paul Flowers as chairman. The Prudential Regulation Authority and Financial Conduct Authority also announced they were considering whether to launch formal enforcement investigations into the bank. The political fall-out from the matters continued, with both Labour and the Chancellor facing questions about their handling of the situation.
:: A Twitter storm on Wall Street saw the micro-blogging site add billions of dollars to its value as the company made its market debut. It meant that just seven years after starting up, the technology brand was worth 31 billion dollars (£19 billion).
:: Antonio Horta-Osorio, the boss of state-backed Lloyds Banking Group, won a long-term bonus worth more than £2 million after a strong share price performance qualified him for the windfall.
:: Shares in BSkyB took a hammering after losing out to BT's £900 million bid for the UK rights to s how Champions League and Europa League matches for three seasons from 2015/16.
:: The Bank of England took the first step in putting the brakes on the surging property market when it scrapped a flagship initiative that encourages mortgage lending.
Royal Bank of Scotland boss Ross McEwan admitted that it had failed to invest properly in systems for decades as he apologised for another embarrassing IT failure on the busiest online shopping day of the year. The problems left customers of RBS and its NatWest subsidiary unable to use credit and debit cards for three hours while the banks' websites and smartphone apps were also affected. Mr McEwan said he would outline plans in the New Year for making RBS the bank " that our customers and the UK need it to be".
Plastic bank notes will be issued by the Bank of England for the first time when the new £5 featuring Sir Winston Churchill appears in 2016. A £10 note featuring Jane Austen to follow around a year later will also be made from polymer rather than the cotton paper currently used, the Bank said. The move follows a three-year research programme that concluded plastic notes stay cleaner for longer, are more difficult to counterfeit and are at least 2.5 times longer-lasting. A public consultation including events at shopping centres across the UK found 87% of 13,000 individuals w ere in favour of polymer.
Households will be spared the full force of recent bill hikes after power firms pledged to pass on savings from a Government shake-up of energy levies. British Gas said it would cut dual-fuel bills by an average of £53 from January 1, but this was still less than half the increase imposed on customers in November. The moves come after George Osborne confirmed that the costs of some energy-efficiency and social schemes will be rolled back, marking a concerted effort to regain the initiative on the energy issue, which has dominated the political agenda since Ed Miliband promised to freeze prices for 20 months if he wins the general election.
:: Blockbuster's last remaining stores shut down after administrators failed to find a buyer for the rental and DVD chain. Blockbuster had 264 stores and a 2,000-strong workforce when it collapsed.
:: Lloyds Banking Group was fined a record £28 million over incentive schemes that rewarded staff with ''champagne bonuses'' and put advisers under pressure to hit sales targets or face demotion.
:: The boss of More Than insurer RSA resigned after the company said it will need to set aside more money for its troubled Irish division. Simon Lee, whose job was on the line after two recent profits warnings, stood down immediately.
- World-leading insurance market Lloyd's of London named its first female boss in 325 years of history. Inga Beale was appointed chief executive and will replace Richard Ward from January 2014, Lloyd's said.