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By Mark Kleinman, City Editor

The Serious Fraud Office (SFO) is poised to launch a formal criminal probe into the accounting crisis at Tesco that led the UK's biggest retailer to overstate profits by £263m.

Sky News has learnt that the agency could confirm as soon as this week that it is opening an inquiry, adding to separate investigations by the City regulator and the accounting watchdog.

The SFO is understood to have notified Tesco of its intention to formally investigate the issue in recent days, and is expected to trigger a stock exchange announcement by the supermarket giant.

The move is not entirely unexpected, but the news that the SFO is to undertake a formal probe will add to the sense of crisis at Tesco.

The company, which has lost more than half its value during the last year, has been hit by unprecedented boardroom turmoil, with the chairman, Sir Richard Broadbent, planning to quit next year.

Eight executives, including the UK managing director Chris Bush, have been asked to stand aside pending the outcome of the investigations into the accounting mis-statement, which relates to payments from major suppliers.

Deloitte, the accountancy firm, and Freshfields, Tesco's legal adviser, undertook a preliminary probe, which was handed to the retailer's board last week.

That report has been handed to the Financial Conduct Authority (FCA), with which Tesco said earlier this month it is co-operating.

Dave Lewis, the new Tesco chief executive, last week unveiled a fall in half-year profits of more than 90% as the company battles to recapture market share lost to discounters such as Aldi and Lidl.

Tesco has also been deserted by some of its leading shareholders, including the US-based Harris Associates and Warren Buffett's Berkshire Hathaway, amid concern over its strategy and the state of its balance sheet.

The turmoil has forced Tesco to shore up its financial position by turning to five banks to lend the company £1bn each in order to head off the prospect of lenders calling in existing loans.

The Daily Telegraph reported on Wednesday that major consumer goods companies which supply Tesco have asked auditors to scrutinise their dealings with the retailer.

The SFO, which has powers to prosecute companies as well as individuals, has been pursuing high-profile cases against Barclays, GlaxoSmithKline and Rolls Royce, among others.

The SFO and Tesco both refused to comment.

The City watchdog has fined Yorkshire Building Society (YBS) more than £4.1m for failures in its dealings with thousands of mortgage customers.

The Financial Conduct Authority said that between October 2011 and  July 2012, short-comings by call handlers dealing with customers in payment difficulties meant there were "significant delays" in determining appropriate payment solutions.

It said that while YBS properly viewed repossession as a last resort, the failures meant some customers incurred increased fees and associated interest - money it is already refunding.

Tracey McDermott, FCA director of Enforcement and Financial Crime, said: "Customers in financial difficulty need to be treated fairly and sensitively.

"Firms must ensure that they are taking into account the particular circumstances affecting customers who find themselves in difficulty.

"By allowing cases to drift without agreement, YBS's actions meant that customers in vulnerable circumstances risked falling into further financial difficulty."

The FCA said its investigation found that insufficient training and fragmented guidance meant that call handlers did not consistently probe customers' circumstances and identify the cause of their problems.  

A redress scheme means approximately 33,900 customers will be repaid a total of £8.4m at an average payment of £247.

Chris Pilling, YBS chief executive, said: "As a mutual organisation owned by our members, the service we give to customers is fundamental to us and we are very sorry for letting them down.

"I hope the refunds we have voluntarily given to customers and the changes we have made demonstrate how seriously we have taken this issue and our commitment to put things right."

The Serious Fraud Office (SFO) has launched a formal criminal probe into Tesco's accounting crisis that led the UK's biggest retailer to overstate profits by £263m.

The news was confirmed by both the supermarket chain and SFO, hours after Sky News revealed details of the investigation, which will be held in addition to an inquiry by the accounting watchdog.

The City regulator, the Financial Conduct Authority (FCA), said that it was to discontinue its own probe because of the SFO's decision.

The SFO's investigation, while not entirely unexpected, adds to the sense of crisis at Tesco.

The company, which has lost more than half its value during the last year, has been hit by unprecedented boardroom turmoil, with the chairman, Sir Richard Broadbent, planning to quit next year.

Eight executives, including the UK managing director Chris Bush, have been asked to stand aside pending the outcome of the investigations into the accounting mis-statement, which relates to payments from major suppliers.

Deloitte, the accountancy firm, and Freshfields, Tesco's legal adviser, undertook a preliminary probe, which was handed to the retailer's board last week.

That report has been handed to the Financial Conduct Authority (FCA), with which Tesco said earlier this month it is co-operating.

Dave Lewis, the new Tesco chief executive, last week unveiled a fall in half-year profits of more than 90% as the company battles to recapture market share lost to discounters such as Aldi and Lidl.

Tesco has also been deserted by some of its leading shareholders, including the US-based Harris Associates and Warren Buffett's Berkshire Hathaway, amid concern over its strategy and the state of its balance sheet.

The turmoil has forced Tesco to shore up its financial position by turning to five banks to lend the company £1bn each in order to head off the prospect of lenders calling in existing loans.

The Daily Telegraph reported on Wednesday that major consumer goods companies which supply Tesco have asked auditors to scrutinise their dealings with the retailer.

The SFO, which has powers to prosecute companies as well as individuals, has been pursuing high-profile cases against Barclays, GlaxoSmithKline and Rolls-Royce, among others.

By Sky News US Team

The US Federal Reserve has ended its stimulus programme known as quantitative easing, after six years of pumping money into the economy to bolster growth.

The US central bank showed confidence that the nation's economic recovery would remain on track as it ended its monthly bond purchases.

It said the economy continues to grow at a "moderate" pace, while job-market conditions have improved "somewhat".

Quantitative easing had been steadily cut from $85bn (£53bn) to $15bn as the economy began to revive after the 2007-2009 recession.

The Fed's policy committee said in Wednesday's statement following a two-day meeting: "The Committee continues to see sufficient underlying strength in the broader economy to support ongoing progress toward maximum employment in a context of price stability."

It also signalled interest rates would remain low for a "considerable time" following the close of the programme this month.

Most economists expect the Fed to keep that rate on hold until mid-2015. 

The statement largely brushed aside the challenges posed by recent financial market volatility, faltering growth in Europe and a weak inflation outlook.

The Fed suggested that low inflation was not too much of a worry as longer-term expectations "remain stable".

By Mark Kleinman, City Editor

Three of the UK's biggest banks are poised to set aside roughly £1bn for settlements with regulators during the next week following a probe into the abuse of critical foreign exchange benchmarks.

Sky News understands that Barclays, HSBC and Royal Bank of Scotland (RBS) plan to make the aggregate provision as part of their third-quarter results during the next week.

The charges will come ahead of a prospective deal with the Financial Conduct Authority (FCA), which could be announced as soon as next month.

The exact sums that the three banks will set aside was unclear on Wednesday, but sources indicated that the cumulative figure would be in the region of £1bn, underlining the scale of the penalties to be handed out by authorities in London and New York.

One source said at least one of the banks was likely to set aside a much higher figure than its anticipated FCA fine amid ongoing discussions with authorities in the US.

The provisions, which will follow similar moves earlier this month by Citigroup, UBS and JP Morgan, follow crunch talks held between the six banks and the FCA in September.

Sky News revealed details of those discussions, although sources said the aggregate penalty for the six banks from the FCA would be lower than the £2bn indicated a few weeks ago.

The so-called omnibus settlement, which the banks have been keen to coordinate with the FCA, will be the largest collective penalty ever imposed by the City watchdog.

The FCA will find the banks guilty of a string of systems and control failures in their foreign exchange businesses following the emergence of concerns that currency markets had been manipulated in a similar way to interbank borrowing rates such as Libor.

The timetable for the settlement could yet slip.

One source said the fact that the regulator had indicated the scale of potential fines during recent talks meant that banks were now under pressure from auditors to allocate provisions in their third-quarter results.

The FCA, Barclays, HSBC and RBS declined to comment on the ongoing foreign exchange settlement talks.

By Mark Kleinman, City Editor

A former BBC executive will on Thursday be appointed to the board of the body which oversees state-owned assets weeks before the completion of an inquiry into how such businesses are sold.

Sky News has learned that Caroline Thomson, who stepped down as the BBC's chief operating officer in 2012, will become a non-executive director of the Shareholder Executive (ShEx).

Her appointment comes just six months ahead of next year's General Election, when the major parties will face scrutiny over their approach to public ownership of prominent assets such as Channel 4 and the Royal Mint.

Ms Thomson, who now chairs Digital UK, the body responsible for digital terrestrial television, will attend her first ShEx board meeting next month, sources said on Wednesday.

Robert Swannell, the ShEx chairman who also chairs Marks & Spencer, has been keen to recruit additional non-executives at ShEx since taking the helm.

Earlier this year, Vince Cable, the Business Secretary, asked Lord Myners, the former City Minister, to examine how state assets could be sold on the public markets following the row over the £3.3bn privatisation of Royal Mail.

The postal operator's value soared after its shares were listed on the London Stock Exchange nearly 13 months ago, prompting criticism from the public spending watchdog that it had been undervalued.

Since then, its shares have slipped back amid growing external pressures on Royal Mail's business.

The next business in line to be sold is the Government's minority stake in Eurostar, which could fetch £300m.

Other major assets owned by the Government which could be privatised include a one-third stake in Urenco, the uranium processor; the Land Registry, which ministers decided this year not to sell; and the Met Office.

ShEx also works with recently created vehicles such as the British Business Bank and Green Investment Bank.

Israeli drinks maker SodaStream has announced it is shutting its controversial factory in the occupied West Bank after activists launched a campaign to boycott the company.

The firm said it would relocate the plant to a facility to Lehavim in Israel's southern Negev region by the end of 2015.

It made the announcement alongside news it had seen a 9% fall in sales.

SodaStream representative Nirit Hurwitz insisted the move was for "purely commercial" reasons and not linked to criticism over the factory's location.

The planned closure was welcomed by Palestinian activists behind the boycott campaign, who say the factory is an Israeli settlement.

The Palestinian Boycott Committee pushes for a ban on Israeli products "profiting from occupation". 

The dispute over the factory hit the headlines earlier this year after actress Scarlett Johansson came under fire for featuring in SodaStream's ad campaign.

At the time she was an ambassador for British charity Oxfam, which opposes all trade from Israeli settlements it says are illegal and deny Palestinian rights.

Johansson later announced she was parting company with Oxfam due to a "fundamental difference of opinion".

SodaStream had heralded its West Bank factory as a "model of integration", saying it employs 500 Palestinians, 450 Arab Israelis and 350 Israeli Jews on the same salaries and with the same social security benefits. 

Palestinian employees "receive salaries four or five times that of the average wage in the territories controlled by Palestinian authorities", it said. 

SodaStream said the closure of its largest plant will save $9m (£5.6m) in production costs. 

It said it was also closing another plant in northern Israel.

Samsung is to restructure its mobile phone unit as sales slow because of fierce competition across its ranges.

The South Korean electronics firm made the announcement following the release of its results for the July to September quarter in which profits dipped to a near three-year low.

Net profit for the third quarter fell 49% to 4trn won (£2.5bn) while the mobile unit reported operating profit of 1.75trn won (£1bn) - a dramatic decline from 6.7trn won a year ago. 

Its smartphone business - which accounts for more than half its total sales - has faltered under competition from Apple's iPhone6 and Chinese handset makers in an increasingly saturated market.

While it sold more units, Samsung sold them for less.

It said: "The average selling price of smartphones declined due to an increased share of middle- to low-end smartphone sales and price reductions of existing smartphone models."

The latest edition of Samsung's previously all-conquering Galaxy S smartphone met with a lukewarm response on its launch in April. 

It was also forced to introduce a new edition of the oversized smartphone Galaxy Note earlier than scheduled in September as the latest iPhone6 from US rival Apple enjoyed better-than-expected demand.

And in the low-to-mid range smartphone segment, Samsung has faced a growing challenge from Chinese firms in key emerging markets including China. 

Samsung saw its leading share in the global smartphone market slip to 25.2% in the second quarter of this year from 33.3% a year ago.

At the same time, Chinese firms Huawei and Lenovo saw their combined share grow from 9% to 12.3%.

Kim Hyun-Joon, senior vice president of Samsung's mobile unit, vowed to dramatically reshuffle product lineup to "actively respond" to the needs of the mid and low-end markets.

"Our mobile unit is going through a temporary difficulty, but we are trying to maintain a steady growth by ... fundamentally changing our business structure," he said.

The company promised earlier this month it would soon release a new range of smartphones with "innovative designs."

Barclays has confirmed a £500m provision for fines relating to allegations foreign exchange markets were manipulated by banks.

The London-listed lender announced the figure in its third-quarter results statement which also contained further costs associated with the historic payment protection insurance (PPI) mis-selling scandal.

It set aside an additional £170m for PPI and said it was also taking a charge of £160m related to the sale of interest rate hedging products.

More follows...

The Australian owner of the Clydesdale and Yorkshire banks says it may float them on the stock market as it prepares to exit UK banking.

National Australia Bank (NAB) said it was considering a number of options for the banks, which collectively employ more than 7,000 staff and have proved costly since the financial crisis, given their exposure to toxic property loans.

NAB, which has owned Glasgow-based Clydesdale since 1987 and Yorkshire since 1990, said the pair were now well placed for "sustainable growth" after an efficiency drive and greater emphasis on product competitiveness.

Chief executive Andrew Thorburn said: "Clydesdale and Yorkshire Banks are strong brands with good market shares in the communities in which we operate.

"We've made good progress in the past year in sharpening the competitiveness of our products, introducing customer service enhancements and improving the efficiency of our operations.

"In addition, we have undertaken extensive programmes to address legacy conduct issues and ensure fairness for our customers is at the heart of everything we do."

He argued the UK exit plan was an "absolute priority" for the group after it reported a 1.1% drop in full-year profits to £2.9bn.

NAB reported £823m in one-off charges which included costs to cover mis-sold payment protection insurance (PPI) and interest rate hedging products sold to small businesses.

The company also said it was facing higher-than-expected levels of new complaints and warned that Clydesdale was still subject to an enforcement action by the City regulator in relation to its previous PPI complaints-handling process.

Collective underlying annual profits for the banks, which exclude such costs, rose 6.8% to £283m.

The prospect of the brands being sold on the stock market in the short term seem remote given current volatility and concerns about global economic growth and strength of the banking sector.

Virgin Money and Aldermore, who were both planning flotations, recently confirmed they were delaying their listings until conditions improved.

Apple has reportedly met with Iranian distributors at its regional headquarters in London as it looks to expand into the country.

Senior Apple executives want to distribute iDevices in the country if Western sanctions are eased sufficiently.

Instead of opening official Apple stores, the company plans to sell its products using "premium resellers" - franchisees that only sell Apple products - according to the Wall Street Journal.

An easing of diplomatic tensions between Iran and the West means several major companies are looking to expand into the country.

Several European companies have reportedly taken part in trade missions to Iran.

Restrictions on exporting spare aircraft and car parts to Iran were lifted in January after Iran struck a deal over its nuclear programme.

However, sanctions on financial institutions are still in place meaning its difficult to transfer payments into and out of the country.

The US changed rules that barred the sale of consumer communications technologies to Iran last year.

Dell, General Electric and Boeing are among the other companies examining a move into Iran.

The RAC is demanding action to cap motoroway service station fuel prices, describing them as "21st century highway robbery."

The motoring group said its research found that petrol and diesel costs can be over 15p-per-litre more expensive and it was unacceptable that drivers had to pay such a premium.

Motorists told the RAC's survey they felt they were being "held to ransom" with one-in-four saying they refused to buy fuel at services and almost one-in-two admitting they only used motorway stations as a last resort.

The RAC said almost two-thirds of those questioned wanted Government or industry action to cap fuel, so it was no more expensive than on non-motorway forecourts.

The organisation said the results highlighted "real concern" about drivers risking their fuel tanks running dry rather than filling up at motorway services, posing a danger to themselves and other motorists.

Its fuel spokesman Simon Williams said: "It's no wonder that motorists feel held to ransom with prices on the motorways inflated to such an extent.

"In some cases motorway petrol and diesel might even be 15p dearer than the cheapest forecourts, which would add as much as £8 to the price of a tank of an average family-sized vehicle.

"We can see no reason why motorway fuel should be so much more expensive. In fact, arguably it is much easier from a delivery point of view than it is getting fuel to urban filling stations.

"We're calling for motorway fuel retailers to be more reasonable with their pricing."

It also suggested service stations were forced to display the price of their fuel well before the exit so drivers knew how much it would cost to fill up before leaving the motorway.

Apple chief executive Tim Cook has come out as gay and says he wants to "inspire people to insist on their equality".

Writing in Businessweek he said: "Let me be clear: I'm proud to be gay, and I consider being gay among the greatest gifts God has given me.

"Being gay has given me a deeper understanding of what it means to be in the minority and provided a window into the challenges that people in other minority groups deal with every day.

"It's made me more empathetic, which has led to a richer life."

Mr Cook has never publicly acknowledged his sexuality, but said he was motivated to speak about it to inspire others.

He said: "I don't consider myself an activist, but I realise how much I've benefited from the sacrifice of others.

"So if hearing that the CEO of Apple is gay can help someone struggling to come to terms with who he or she is, or bring comfort to anyone who feels alone, or inspire people to insist on their equality, then it's worth the trade-off with my own privacy."

He emphasised that Apple has "long advocated for human rights and equality for all", and cited its intervention in Arizona - where it successfully urged the governor to veto a bill which would have let businesses discriminate against homosexuals.

But he said his decision to publicly come out was not an easy choice, adding: "Privacy remains important to me, and I'd like to hold on to a small amount of it."

By Mark Kleinman, City Editor

A logistics firm which counts the former Tesco boss Sir Terry Leahy among its directors is drawing up plans for a share sale that would crystallise multimiillion pound fortunes for its investors.

Sky News understands that MetaPack, which provides internet delivery services to leading retailers such as Marks & Spencer, has appointed GP Bullhound, a technology-focused investment bank, to work on the fundraising.

Sir Terry has been a shareholder in and director of MetaPack since 2011, one of a string of investments he has made since leaving the UK's biggest retailer at the end of 2010.

It is unclear whether Sir Terry is planning to offload any of his stake in the company or whether he plans to reinvest as part of the latest funding round.

Index Ventures, arguably the UK's best-known investor in technology and other growth companies, invested £20m in MetaPack a year ago.

The business has seen revenues rapidly increase amid growing demand from retailers to improve their online delivery capabilities, and now works with companies including John Lewis and Asos.

Sir Terry's stake in MetaPack is said to be worth several million pounds, underlining the contrast in his fortunes with his successor at Tesco, Philip Clarke.

Mr Clarke, who stepped down as chief executive last month, faces a delay to his termination payment from Tesco amid inquiries by regulators including the Serious Fraud Office.

A MetaPack spokesman said: "We have good relations with our shareholders and some may increase their holding while others trim theirs. 

"At the same time our commercial success and plans are likely to attract new investors as well as lead existing shareholders to grow their holding."