THE US Federal Reserve sailed further

into uncharted waters last night,

announcing an extra $45bn (27.9bn) a
month of monetary stimulus and an
unprecedented plan to keep its ultra-
loose policies running until it hits a
new employment target.
Chairman Ben Bernanke has driven
the Fed through an exceptional peri-
od of cash creation and quantitative
easing (QE), regularly speaking of the
dangers to American society from
stubbornly high joblessness.
And with President Barack Obama
a supporter of Bernanke back in the
White House for a second term, the
Fed chief is continuing to steer the
central bank in a dovish direction.
Historically low interest rates of
between zero and 0.25 per cent will
be anchored down at least as long as
the unemployment rate remains
above 6.5 per cent, the Feds Open
Market Committee (FOMC) said.
Unemployment in the US currently
stands at 7.7 per cent.
The holding down of interest rates is
also conditional on the Fed expect-
ing inflation to be no higher
than 2.5 per cent, one to two
years into the future.
Only one of the dozen voters on
the FOMC Jeffrey Lacker dis-
sented against the
action. Lacker was
also alone in oppos-
ing the Feds bolstered asset
purchasing programme. In
recent months the Fed has been
purchasing $45bn in long-
term Treasury securities,
funded by selling short-
er-term securities a
programme dubbed
Operation Twist.
And yesterday it announced that it
will continue with these purchases,
despite running out of short-term
paper to sell. The purchases will
therefore see the Fed significantly
expand its balance sheet.
The move will effectively double the
pace of QE, as the $45bn will come on
top of the $40bn in mortgage backed
securities the Fed is already buying
each month.
This is a very aggressive approach
and helps to explain why very long-
term Treasury yields and the dollar
immediately declined on the news,
said Paul Ashworth of Capital
Economics. Ben Bernanke wants
unemployment down
BUSINESS WITH PERSONALITY
JPs Dimon:
Dont dictate
our salaries
CAPPING bank bonuses is the
wrong way to promote equality, JP
Morgan chief Jamie Dimon said
yesterday, arguing politicians
should put more effort into
helping the most deprived if they
want to make a positive difference.
I dont like the fact that we have
increased inequality in the US. But
youd better be careful if you say we
are having that because I pay [an
employee] properly, he told the
Dealbook conference, citing poor
inner city education as the biggest
factor behind inequality.
We all want an equitable
society. You can do it the way Cuba
tried ok, it will be equitable, but
everyone wont have much.
We want to lift society up so
everyone is better off. That does not
mean people dont have to pay
people what they are competitively
worth. If you dont want a free
society then start dictating what
compensation can be, said Dimon,
who earned $23m (14.2m) in 2011.
His view on pay stands in stark
contrast to the approach from
many British bankers. For example
RBS boss Stephen Hester gave up
his bonus last year in the face of
public pressure. And the Bank of
Englands Bob Jenkins
yesterday called for
bankers to give up
more pay to win
favour with investors.
Meanwhile MEPs
may cap bonuses at the
same level as bankers
basic salaries.
www.cityam.com FREE
BY TIM WALLACE
FTSE 100 5,945.85 +20.88 DOW 13,245.45 -2.99 NASDAQ3,013.81 -8.49 /$ 1.61 unc / 1.24 unc /$ 1.30 unc
BY JULIAN HARRIS
FED TARGETS JOBS
AS IT DOUBLES QE
MARK KLEINMAN
OUR LUXURY
GIFT GUIDE
See Pages 20-23
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Certified Distribution
29/10/12 till 25/11/12 is 129,356
ICONIC carmaker Porsche has already broken its previous
record for annual sales, selling over 10,000 cars more than
the whole of last year. A total of 128, 978 vehicles were sold
in the 11 months to November, beating the 118, 868 sold in
2011. November sales alone were up 39 per cent on 2011
sales. Demand in China and the US has increased
by 70 per cent since last year, helping to make up for falling
car sales across Europe. The third-generation Boxster,
released at the beginning of this year, has been the most
popular international model.
PORSCHE RACES AHEAD WITH RECORD SALES
ISSUE 1,781 THURSDAY 13 DECEMBER 2012
OUR COLUMNIST HAS THE INSIDE TRACK ON THE CITY
See
Page 10
Dimon backs
high pay for
long term
success
Allister Heath is away
david.hellier@cityam.com
EUROPEAN leaders were last night
close to a deal to give the European
Central Bank the right to supervise
banks across the bloc after Britain
secured a crucial agreement which
would limit the new bodys powers.
Germany, the Netherlands and
Austria all agreed to back Britains
demands for double majority
voting, which means any decisions
by the European Banking Authority
(EBA) would also need to be
approved by EU countries outside
the union.
This agreement means the EBA
could not automatically force new
rules on all 27 EU countries without
them being put to the wider vote.
The compromise came ahead of
todays meeting of finance
ministers in Brussels aimed at
securing a deal on the make-up of
the banking union.
Agreement on a common bank
supervisor is a crucial first step
towards a broader banking union,
or common Eurozone approach to
dealing with failing banks that in
recent years have dragged down
countries like Ireland and Spain.
German finance minister
Wolfgang Schaeuble said last night
that there was a good chance to
reach a deal today. My intention is
that we find a solution to the
banking union on time before
Christmas, he added.
Britain secures
compromise on
EU bank body
BY KATIE HOPE
Former regulator Sants
takes up job at Barclays
FORMER financial watchdog Hector
Sants is joining Barclays as its head
of compliance.
Sants, who left the Financial
Services Authority in June, had
been scoping out new roles at both
Barclays and Deloitte.
He will take up his new position
on 21 January, having already
secured FSA approval for his
appointment.
The 56-year-old will also be respon-
sible for the banks relationships
with governments and regulators,
reporting directly to chief executive
Antony Jenkins. His newly-created
role does not come with a seat on
the board, though Sants will join
the executive committee.
Sants joins Barclays as the bank
tries to rebuild its reputation fol-
lowing the Libor-rigging scandal,
which led to the resignation of chief
executive Bob Diamond and chair-
man Marcus Agius over the sum-
mer.
One of his first tasks will be to
help steer the firm through an
ongoing Serious Fraud Office probe
into Barclays payments to Qatar
Holdings in 2008.
He is also likely to be involved in
dealing with the continued reputa-
tional fallout from the Libor-fixing
investigation, which saw Barclays
Steel chief Mittal upbeat on US growth
US manufacturing is poised to reap the
benefits of cheaper energy, propelling the
worlds largest economy into a new
growth phase, says Lakshmi Mittal,
chairman and chief executive of
ArcelorMittal.
Brussels backs Hutchison Orange deal
Europes top competition authority
approved the acquisition of France
Telecoms Orange Austria operation by
Hong Kongs Hutchison, but set a series of
tough conditions that could still derail the
deal. The decision by Brussels to
greenlight the 1.3bn deal which was
seen by the telecom industry as a test
case for whether consolidation would be
allowed within national telecoms markets
will be welcomed by mobile operators.
Lone Star in German property deal
The German government has completed
its largest privatisation since the start of
the financial crisis, selling a 1.1bn
(890m) portfolio of offices, shops and
warehouses to Lone Star, the US private
equity fund.
Shale gas cloud hangs over Sussex
The shale gas driller that triggered two
mini-earthquakes near Blackpool last
year is ready to start fracking near the
village in 2014. Cuadrilla Resources
presence is expected to bring protests
from residents.
Berlin warns UK is wrong about EU
Britain is leaving itself with no voice in
Europe by drifting to the margins of the
EU, according Wolfgang Schuble, the
German Finance Minister.
BHP Billiton sells stake in LNG project
China continues its grab for global energy
assets, as it agrees to buy a stake in an
proposed Australian gas project from BHP
Billiton, the worlds biggest mining
company, for $1.63bn (1bn).
Unilever boss warns of Europe slump
Europe faces a decade-long slump unless
France and Germany resolve their
differences and leaders stop "watering
down" decisions over the future of the
eurozone, Paul Polman, the chief
Facebook simplifies privacy settings
Facebook took steps yesterday to simplify
its privacy settings, in its latest bid to give
consumers more control and clarity over
what personal information is shared.
Puma chief executive to leave
Puma said yesterday its chief executive
Franz Koch will step down next spring,
part of a broad management overhaul by
the German sportswear brand's owner
PPR aimed at improving the fortunes of
the struggling label.
GOVERNMENT aides were yesterday
accused of warning journalists not
to publish a critical story about
Maria Miller, the culture secretary,
because of her position in talks
regarding regulation of the press.
Downing Street spokesman Craig
Oliver and Millers adviser Joanna
Hindley were accused by the Daily
Telegraph of warning it about
publishing allegations it made about
Millers expenses. The paper accused
the aides of using Millers
involvement in talks about press
regulation, stemming from the
Leveson inquiry, to warn journalists
about publishing the information.
Downing Street yesterday denied
any improper conduct. We dont
accept threats have been made, a
spokesperson said.
In todays
Telegraph, both
Hacked Off, the
campaign backing
state regulation of
the press, and
Roy Greenslade
call for Miller to
step away
from
implementing
the Levenson
report.
Miller and PM
aides accused
of press threats
Hector Sants visited the Occupy protesters last year
2
NEWS
BY JAMES TITCOMB
BY MARION DAKERS
To contact the newsdesk email news@cityam.com
W
EATHER permitting, Veysel
Aral and his team will be at
the offices of the London
Stock Exchange on Monday
morning to celebrate a coup.
For Aral has become the latest of an
elite batch of chief executives who
have managed to float their compa-
nies on the London Exchanges main
market this year
Aral runs Kcell, a Kazakh mobile
telecoms group that announced yes-
terday it was going ahead with an ini-
tial public offering (IPO) of shares that
will see its Swedish strategic investor
TeliaSonera selling $525m of stock in
the group.
The IPO comes at the end of a dismal
year in which volumes of flotations
in Europe, the Middle East and Africa
(EMEA) fell to a third of what they
were in 2011, according to data com-
piled by Bloomberg.
EDITORS
LETTER
DAVID HELLIER
London finishes the year with a last minute flotation flurry
THURSDAY 13 DECEMBER 2012
Companies in the EMEA region
raised $12.4bn in IPOs in 2012, com-
pared with $37.3bn in the previous
year as investors naturally fretted over
the uncertainties of the regions
financial markets.
The uncertainties and disagree-
ments over price have caused a num-
ber of IPOs during the year to be
pulled, including two Russian ones,
Promsvyazbank and QI Properties, as
well as a couple of potential bumper
issues such as Graff Diamonds in
Hong Kong and Evonik in Germany.
London has been smarting badly,
hosting only one domestic flotation
of any size, and that a forced sale of a
stake in Direct Line insurance by RBS
bank.
Altogether 2013 has spawned just
five main market floats of trading
groups in London, with four of them
coming from eastern Europe or
Russia.
Indeed, until Direct Line successful-
ly floated in October this year, the
London market was effectively closed
for business, with UK fund managers
largely on strike as far as new issues
were concerned.
So it is encouraging that since
Direct Line there have been two tele-
coms flotations in London - the first
being Alisher Usmanovs Megafon -
and also yesterday saw the flotation
of a property-based investment group,
getting to grips with the culture.
The hire probably would not have
appealed to the banks former chief
executive Bob Diamond who, accord-
ing to letters disclosed during the
Treasury Select Committee hearings
over the Libor affair, didnt enjoy the
best of relationships with those at the
top of the FSA. But then that too must
be one of the attractions.
NEW BROOM AT BUMI
Nick von Schirnding, who took over
as CEO at troubled Bumi yesterday,
needs nerves of steel as he tries to nav-
igate his way between Nat Rothschild
and the Bakrie family. I want to put
an end to all the in-fighting, he told
me yesterday. Famous last words or a
man on a mission? Good luck Nick.
Starwood European Trust. Those who
think the UK is being too lenient in
terms of its admission rules for
Russian or eastern European compa-
nies might care to look at the statis-
tics excluding our eastern European
friends.
SANTS MAKES SENSE FOR BARCLAYS
So what is the appeal of Hector Sants,
the former chief executive of the
Financial Services Authority, who is
joining Barclays Bank as its compli-
ance officer in January?
After paying out a fine of 290m for
its involvement in the Libor interest
rate manipulation scandal, Barclays is
hiring the man who was the top
industry regulator for its battered sec-
tor.
As far as new chief executive
Anthony Jenkins is concerned, the
appointment makes clear that he is
fined 290m in July.
Relationships with our regulators
and governments around the world
are obviously also of critical impor-
tance to us, said Jenkins yesterday.
We must apply a renewed leadership
focus on these to make them as con-
structive and productive as possible.
Sants resigned from the FSA after
five years in the top job, spurning a
new role as head of the new financial
watchdog, the Prudential Regulation
Authority.
He started his career at London-
based broker Phillips & Drew, and
headed up divisions at UBS and Credit
Suisse First Boston before turning his
hand to regulation.
Industry insiders said his banking
pedigree meant a move to Barclays
was a more natural choice than tak-
ing a position with Deloitte, thought
to be his only other firm job offer on
the table.
I left the FSA with the intention of
finding a role which would allow me
to put into practice the experience I
have gained in both the public and
private sector, said Sants in a state-
ment.
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
Maria Miller saw claims
about her expenses
NEWS INTERNATIONAL, the British
newspaper arm of Rupert Murdochs
News Corporation, swung to an oper-
ating loss in its last financial year,
after it took a massive writedown
from closing the News of the World.
Company filings revealed that
News Internationals former chief
executive Rebekah Brooks received a
10.9m compensation package when
she stepped down last year over the
phone hacking scandal.
This was much higher than the
7m previously estimated. News
International, which publishes the
Times, the Sunday Times and the
Sun, reported a 153m operating loss
in the year to July, compared to a
113m profit the year before.
Revenues at the group which
includes book publisher
HarperCollins were down 13 per
cent to 1.2bn.
The profits hit was partly due to a
host of charges related to closing the
News of the World in June 2011. The
company took 46.6m in one-off
costs over the closure, made up
Phone hacking
rings up 206m
bill at Wapping
BY JAMES TITCOMB
mainly of legal costs, and wrote down
160m from publishing rights.
The tabloid newspaper was shut
after a public outcry stemming from
a string of allegations made against
News of the World staff related to
phone hacking.
Losses also widened at Times
Newspapers Limited, the subsidiary
that owns the Times and Sunday
Times. Turnover fell from 402m to
361m and losses more than doubled
to 28.7m.
The editor of the Times, James
Harding, resigned yesterday after five
years in the role. Harding, who was
the youngest-ever editor of the news-
paper, told staff that News
Corporation had made it clear it
wanted him to leave.
It has been made clear to me that
News Corporation would like to
appoint a new editor of the Times. I
have, therefore, agreed to stand
down. I called Rupert [Murdoch] this
morning to offer my resignation and
he accepted it, Harding said.
The editor of the Sunday Times,
John Witherow, is strongly tipped to
take Hardings role.
Rebekah Brooks received 10.9m in compensation for stepping down over phone hacking
MARKETS and the Treasury
yesterday talked down incoming
Bank of England governor Mark
Carneys suggestion that a central
bank may need to tear up the
monetary rulebook to deal with a
sustained slump.
In a speech in Toronto, Carney
said that there was a case, in a
prolonged slump, for
abandoning inflation targets,
and moving to a nominal GDP
(NGDP) target a policy that
could lead to much more
aggressive stimulus than the
current approach.
Carney stressed he
Markets come out against end
to inflation targeting regime
BY BEN SOUTHWOOD was speaking only in a Canadian
context. But a spokesman for
George Osborne yesterday said the
chancellor was aware of Carneys
views on inflation targeting when
he was appointed.
However, the Treasury said it had
no plans to ditch the BoEs two per
cent inflation target.
And Chris Beauchamp at IG told
City A.M. that the ideas were
more of an evolution than a
revolution, as the Bank
already considers output in
its policy decisions.
THURSDAY 13 DECEMBER 2012
3
NEWS
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My Story, My Design
Bumi moves towards Bakrie
split as new CEO appointed
LONDON-listed miner Bumi moved
towards a divorce from powerful
Indonesian family the Bakries
yesterday, as the companys board
said it was working towards a split
as soon as practical.
Nick Von Schirnding, head of
investor relations at Bumi, has
been appointed as chief executive
to replace outgoing head Nalin
Rathod.
The Bumi board was yesterday
presented with findings from the
BY CATHY ADAMS Macfarlanes legal
investigation,
commissioned in
September, into
alleged financial
irregularities at
Indonesian arm
Bumi
Resources.
Bumi said it
had no
intention of
disposing of
Berau Coal, in
which it has an
85 per cent holding.
Von Schirnding, whose
appointment and strategy has
already received the backing of
two leading shareholders, is
described as a thoughtful, steady
individual by adviser Rupert
Hume-Kendall, chairman of
global corp and
investment banking at
Bank of America
Merrill Lynch.
Incoming Bank of England
governor Mark Carney
Von Schirnding: Ready for
the top job at Bumi
PROSECUTORS yesterday raided
Deutsche Banks Frankfurt headquar-
ters as part of an ongoing investiga-
tion into possible tax evasion around
carbon permits trading.
Co-chief executive Juergen Fitschen
and chief finance officer Stefan
Krause are among 25 individuals
involved in the investigation.
Seven staff are believed to have
been suspended last month, though
other staff are still at the bank and
five were arrested yesterday.
The investigation began in Spring
2010 and initially focused around
seven staff, though it recently
widened out to 25.
Two of Deutsche Banks manage-
ment board members Juergen
Fitschen and Stefan Krause are
involved in the investigations as they
signed the value-added tax statement
for 2009, Deutsche Bank said. We
continue to cooperate fully with the
authorities in this matter.
It is the individuals, rather than the
bank itself, who are being investigat-
ed by the authorities.
In a previous case around the car-
bon permits trading market six men
were jailed. Deutsche Bank was not
prosecuted in that case, but the
judge did warn the bank had created
the conditions in which evasion
could take place.
Deutsche chief
probed in tax
investigation
BY TIM WALLACE
PRIVATE SECTOR employment pro-
vided the fuel for the jobs boom to
continue into the third quarter,
data showed yesterday.
Private sector employment
climbed 65,000 in the third quar-
ter, according to data from the
Office for National Statistics, out-
weighing the 20,000 fall in overall
public sector employment.
This fall means the private sector
now employs 823,000 more people
than a year ago, and 336,000 more
than at its pre-recession peak.
The public sector employs
324,000 fewer people than a year
before and across all branches
employs fewer people than at any
point since the fourth quarter of
2000. However, part of this change
is due to a re-classification of
196,000 employees of English fur-
ther education colleges.
This data came in tandem with
statistics showing that the employ-
ment boom continued into
Private sector
drives ongoing
jobs recovery
BY BEN SOUTHWOOD
October. Total employment was
40,000 higher in the three months
to October than between May and
July, hitting another record high, of
29.6m. This put employment some
499,000 higher than a year before,
and up to 71.2 per cent of the popu-
lation aged 16 to 64.
The cheery picture continued
with unemployment, which slid
82,000 in the three month period,
to hit 2.5m or 7.8 per cent of the
economically active population. But
less encouragingly, the big fall in
unemployment came largely
because more people registered as
economically inactive 60,000
more, bringing the total to 9.1m
and 22.6 per cent of the working
age population.
But the claimant count continued
to edge down steadily in November,
suggesting that the labour market
recovery could go on. And once
again wage growth, at 1.3 per cent
in the year to October, was below
inflation, meaning employing UK
workers got cheaper in real terms.
Kcell succeeds with London IPO
LONDON saw another successful
listing from central Asia as
Kazakhstan telecoms firm Kcells
initial public offering (IPO) priced
yesterday.
The deal came in at the bottom
end of the price range, with the
global depository receipts (GDRs) in
London coming in at $10.50, pricing
the 25 per cent stake in the firm at
$525m (324.7m) and the business
as a whole at $2.1bn. The range was
previously set at $10.50 to $13.00.
But sources close to the deal
insisted demand was high, and the
seller, owner TeliaSonera, is happy
BY TIM WALLACE
with the price.
The deal went extremely well, it
is an amazing success we have
close to 200 investors participating,
more than two-thirds of them from
outside Kazakhstan, the source told
City A.M. There was a temptation to
raise the price, but we want to
allocate to high quality buyers and to
allow for market performance.
That market performance will
begin to be tested today when the
shares are traded on the Kazakh
market, before trading begins in
London on 17 December. But some
conditional trading began yesterday,
with shares edging up.
Russian, UK and US investors
made up the largest groups of
investors outside Kazakhstan,
alongside a small number of
continental Europeans.
Hedge funds and others with a
long only outlook are believed to
have invested, which those close to
the deal see as a vote of confidence
in the firm, particularly given such
investors usual preference for larger,
more liquid IPOs.
The listing follows London IPOs
from Russian Sberbank and telecoms
firm MegaFon. The flood of IPOs
from the region has come as sellers
seek bigger markets, as well as the
reassurance investors want from
tough governance rules in the UK.
THURSDAY 13 DECEMBER 2012
5
NEWS
cityam.com

PRIVATE SECTOR MAKES UP FOR FALLING PUBLIC EMPLOYMENT
1999
Q1
2000
Q1
2001
Q1
2002
Q1
2003
Q1
2004
Q1
2005
Q1
2006
Q1
2007
Q1
2008
Q1
2009
Q1
2010
Q1
2011
Q1
2012
Q1
6000
5800
5600
5400
5200
5000
4600
4800
24000
23500
23000
22500
22000
21500
Public Sector (thousands) Private Sector (thousands)
EMPLOYMENT
PUBLIC SECTOR
TOTAL EMPLOYMENT ROSE
40,000
FELL TO 5.745m
IN THE THIRD
TO HIT A NEW RECORD OF
IN THE THREE MONTHS TO
OCTOBER 2012 29.6m
QUARTER OF 2012
EMPLOYMENT
PRIVATE SECTOR
ROSE TO 23.856m
IN THE THIRD
QUARTER OF 2012
Private sector enjoys bafing post-crisis boom
*
A
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c
o
m
p
a
r
e
d

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o

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e

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e
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Swiss banks UBS and Credit Suisse lead the
international drive on Kcells initial public
offering (IPO), which includes roadshows in
London, Europe and New York. They are
believed to have held eight or nine meetings
and conference calls on each of those days,
gaining the interest of almost 200 investors,
leaving the deal rmly oversubscribed.
The pair were joined by Kazakhstans Visor
Capital, partly because Kcell is a national
champion, and partly because the listing is
joint London and Kazakhstan, so Visor led
the domestic offer.
Those joint global co-ordinators were joined
by Renaissance Capital, which steps in as
joint bookrunner, and Halyk Finance, which
was a co-manager on the global offer.
UBSs technology, media and telecoms
team was involved in the offer, using their
experience of the sector rather than of
Kazakhstan to sell the stock.
Meanwhile Credit Suisse has recent experi-
ence with joint London listings from the
same region it was a joint global coordi-
nator and joint global bookrunner on the
Sberbank IPO earlier this Autumn.
UBS
GLOBAL COORDINATOR
CREDIT SUISSE
GLOBAL COORDINATOR
VISOR CAPITAL
DOMESTIC BOOKRUNNER
ADVISERS KCELLS INITIAL PUBLIC OFFERING
SUPERGROUP said the colder weather
helped to boost sales of its trademark
coats and hoodies in the run-up to
Christmas, despite reporting a near
one-third drop in half-year profit that
sent its shares tumbling yesterday.
The Superdry owner posted a pre-tax
profit of 13.9m in the six months to
28 October, down 31 per cent on last
year due to a write-down on its
European business, acquired in 2010.
Excluding the write-down pre-tax
profits rose 13.1 per cent to 14.7m
ahead of consensus forecasts on
sales up 16.2 per cent to 158.2m.
Chief executive Julian Dunkerton
said ongoing investment in design
and the growing presence of the
brand have helped boost sales both
in the UK and overseas.
Superdry opened 45 stores, franchis-
es and concessions in the period
including its first store in India, bring-
ing its estate to 375.
The group is recovering from a
litany of mistakes and IT glitches that
led to three profit warnings last year.
This is the fourth hiccup-free state-
BY KASMIRA JEFFORD
ment in a row from Supergroup,
Philip Dorgan, retail analyst at
Panmure Gordon said.
The Beast from the East [the cold
weather front] has been good for
Supergroup. December payday gave
sales a major boost in common with
other retailers.
UK like-for-like sales were up 3.9 per
cent, while wholesale sales rose 7.9 per
cent on a constant currency basis.
The group launched websites in
Canada, Switzerland, Spain and Italy.
The internet now accounts for 10.2 per
cent of sales, up from to 8.2 per cent.
Supergroups recent management reshuffle is paying-off as trading improves.
SuperGroup PLC
12Dec 6Dec 7Dec 10Dec 11 Dec
580
560
600
620
640 p
557.00
12Dec
6
NEWS
cityam.com
INDITEX, the Spanish owner of
clothing store Zara, seems to be
defying the European economic
downturn, yesterday revealing a 27
per cent rise in profits since the
beginning of 2012.
Net profit in the nine months to
31 October was 1.65 bn (1.34bn),
while sales have gone up by 17 per
cent to 11.4 bn, giving Inditex its
highest quarterly margin in the
companys history.
BY ALEX WYNICK
Zaras new
stores pay off
WALMART, the American retail
giant which owns Asda in the UK, is
is understood to be eyeing a
takeover bid for Turkish
supermarket group, Migros Ticaret.
The retailer has been in talks
with private equity group BC
Partners about acquiring its 80 per
cent stake in the Turkish chain.
A source close to Walmart told
City A.M. last night it was in talks
with several companies in Turkey.
BY KASMIRA JEFFORD
Walmart eyes
Turkish group
Supergroups
sales warm up
from the cold
CUSTOMERS are increasingly
deserting the high street to do
their Christmas shopping online,
according to two data releases out
this morning.
Last week, retailers saw 1.7 per
cent fewer customers entering
their shops than last year,
according to the British Retail
Consortium (BRC)-Springboard
Footfall Monitor, out this morning.
Shopping centres were hit
especially hard with a 4.9 per cent
drop in footfall.
But customers have not lost their
appetite for Christmas spending.
Figures from Visa out yesterday
showed December spending was up
2.5 per cent compared to last year
with online sales soaring 4.4 per
cent. Clothing and shoes are the
items customers increasingly buy
online. Last Monday, dubbed Mega
Monday or Cyber Monday, was the
busiest online sales day ever in the
UK with 7m transactions.
High street hit
as customers
shop online
BY JAKOB HOHLMAN
THE NEW York attorney general
has complained that Stagecoachs
tourist bus services are anti-com-
petitive.
Twin America, a joint venture
half-owned by Stagecoach, has
been hit with an antitrust lawsuit
brought by attorney general
Eric Schneiderman
and the US
Department of
Justice.
The lawsuit
alleges that
the hop-on
hop-off bus
tour company
Stagecoach JV
hit by lawsuit
over US buses
BY MARION DAKERS
has raised prices 10 per cent since
two firms were merged into the
Twin America company.
Schneiderman said: The iconic
double-decker Gray Line and City
Sights buses are seen all over New
York City but few people know they
are a monopoly that has led to
higher prices and less
c o mp e t i t i o n .
Visitors to New York
deserve better.
Stagecoach said it
fundamentally dis-
agrees with the
allegations.
BOTTOM
LINE
MARC SIDWELL
Stagecoach operates
US bus tours
THURSDAY 13 DECEMBER 2012
7
NEWS
For travel on East Coast trains only, from 7 January 2013 to 1 March 2013, excluding 15-24 February inclusive. Book by midnight 18 December 2012 only at eastcoast.co.uk/sale. At least 40,000 30 fares and 85,000 10 fares will be made available for the ofer and are subject to
availability. Fares available across our route between London & Leeds, and London & Edinburgh and all calling points in between. Availability may be limited on Fridays and Sundays and for peak services. No other ofers or discounts can be applied, including Railcards or child
discounts. Travel on booked train only. No changes, no refunds and no break of journey permitted. Promoter: East Coast Main Line Company Limited, 4th Floor, One Kemble Street, London, WC2B 4AN. Registered in England no. 04659708.
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CITYAMCAREERS.com
Watch out for shrinking margins
OPTIMISTIC words from
SuperGroups chief executive
and co-founder Julian
Dunkerton couldnt stop
yesterdays interim results from
sending the owner of the
Superdry clothing brand down
by almost seven per cent.
The markets reaction may
seem harsh. A profit warning
this April, blamed on bad
arithmetic, knocked the share
price down by nearly 40 per
cent, but shares had been on
the up since the summer, and
there is a sense of the retailer
returning to an even keel, with
no great surprises in the
headline numbers yesterday.
Still, there are reasons for
concern. Profit before tax was
down 31.5 per cent, due to a
writedown on the acquisition of
SuperGroup Europe.
That, at least, is a one-off.
More concerning is that retail,
which accounted for 58 per cent
of revenues in the first half of
2012, produced a flat
underlying profit of 7.1m
despite 26.4 per cent revenue
growth, bringing a 200 basis
point dilution in the divisions
operating margin. That was
partly down to the cost of
discounting but it was also
because warehousing costs
increased by more than the
growth in sales.
SuperGroup is growing
aggressively, opening another 45
stores in the first half of the
year and planning to add the
majority of its annual target of
70-90,000 square feet of new
retail space in the last quarter
of the financial year. But
boosting sales by building an
empire is no help if the costs eat
into your profits and older
stores dont keep growing.
Excluding new stores, sales
growth is only 3.9 per cent
and that includes web sales.
SuperGroups internet sales
really are growing at a
respectable clip 24 per cent
year on year. But such sales are
a long way from being the heart
of the business, having only
grown from 8.2 per cent of
group revenues in 2011 to 10.2
per cent in 2012, on a rolling 12-
month basis.
Shareholders dont get much
say in how SuperGroup is run,
with more than 62 per cent of
shares in directors hands. After
a failed pay revolt in September,
a few are realising that the only
way to vote is with their feet.
EUROZONE industrial production
collapsed in October, as the real
economy tanked across the debt-
stricken currency bloc.
Seasonally-adjusted industrial
output was 1.4 per cent down in just
a month, the European statistics
agency Eurostat said, meaning it was
a full 3.6 per cent lower than a year
before. Analysts said the data only
added to the case that recession in
the euro area would get even deeper
in the fourth quarter.
Perhaps the gloomiest element of
the statistics was the evidence that
Eurozone powerhouse Germany was
being pulled down with the rest of
the beleaguered group. Industrial
production in the blocs biggest
economy sunk 2.4 per cent in just a
month, the latest fall in a year that
has seen industry produce 3.8 per
cent less. And Germany was by no
means one of the worst off Irish
industrial output was down 16.2 per
cent on the year, Italy saw a 6.2 per
cent drop, and Portuguese output
slid 3.9 per cent.
This came in tandem with news
that Germany and France had
slipped into deflation. Germanys
consumer price index edged down
0.1 per cent in November, Destatis
said, while official statistical body
Insee said French consumer prices
crept down 0.2 per cent in the same
month.
Factory output
plunges across
the Eurozone
BY BEN SOUTHWOOD
GOVERNMENT debt across the
European Union has bloated to the
equivalent of around 21,000
(16,972) per person, according to
calculations released this morning
by PwC.
Total EU government debt has
smashed past the 10 trillion mark,
the big four audit group says, with
the UK still in an unhealthy position.
At a time of slow growth and
steadily ageing populations, this
[level of state debt across the EU] is a
major concern, the report warns.
Ranking European countries
with a traffic light system,
the UK is given a red light
for the size of its annual
public deficit as a percent-
age of GDP as well as for
the level of private house-
hold debt, also as a percent-
age of GDP.
The UK does not have
the worst public debt
EU states debt
equals 21,000
for each citizen
BY JULIAN HARRIS
position but it is particularly exposed
to possible household deleveraging
more so than any other EU country
than Greece according to our analy-
sis, PwC said.
Chancellor George Osborne had
planned to eliminate the annual
deficit by the end of the current par-
liament, yet is still piling over 100bn
each year onto the national debt,
which stand in excess of 1 trillion.
The UK has... a budget deficit that
has fallen since 2010, but still has a
long way further to go before it reach-
es sustainable levels, the report said.
And Britains position is vulnerable
given the ongoing debt crisis in the
nearby euro area. The UK may not
be in the Eurozone but it is far from
immune from its problems given
that around 40 per cent of UK
exports go the Eurozone, even
though this ratio is in gradual long
term decline.
France also fared poorly in
the analysis, attracting
red lights for the size
of its government
debt, and its high
unit labour costs.
Chancellor Osborne
is piling on debt
FRENCH carmaker Renault
yesterday said it was selling its
remaining 6.5 per cent stake in
truckmaker Volvo as it seeks to
cut debt and boost its financial
stability.
The sale of the block of 138.6m
Series A shares is being made via
an accelerated book building,
Renault said.
Goldman Sachs is the sole
bookrunner for the deal.
After this transaction is
completed, the Renault group will
no longer hold any shares in AB
Volvo, Renault said in a statement
Renault sells off its remaining
stake in Volvo in 1.2bn deal
BY CITY A.M. REPORTER yesterday.
It said it would use the proceeds
from the share placement to
reduce debt and invest in France,
Russia and China.
The shares are being offered at
between 91.25 and 93.25 Swedish
crowns, according to a source
familiar with the matter,
indicating a transaction value of
up to about $1.94bn (1.2bn).
Renault sold a 14.9 per cent
stake in Volvo in 2010 for 3bn
(2.4bn).
Renault acquired its stake in
Volvo as part of the sale of its
truck business to the Swedish
company in 2001.
THURSDAY 13 DECEMBER 2012
8
NEWS
cityam.com
A

D
a
i
m
l
e
r

B
r
a
n
d
Ocial government fuel consumption in MPG (litres per 100km) for the new M-Class Special Edition: Urban: 34.4 - 38.7 (8.2 - 7.3), Extra Urban: 42.2 - 50.4 (6.7 - 5.6), Combined: 39.2 - 44.8
(7.2 - 6.3). CO2 Emissions 194-158 g/km. Model featured is a ML 250 BlueTEC Special Edition at 44,870 on-the-road including optional Intelligent Light System at 1,630.00. (OTR price Inc. VAT, delivery, 12 months Road Fund Licence, number plates, rst registration fee and fuel).
*Finance oer based on an ML 250 BlueTEC Special Edition on a Mercedes-Benz Agility Agreement, on 10,000 miles per annum. Excess mileage charges may apply. Payable if you exercise the option to purchase the car. Includes optional purchase payment, purchase activation fee and Retailer deposit contribution.
Orders/credit approvals on selected M-Class models between 1 October and 31 December 2012, registered by 31 March 2013. Guarantees and indemnities may be required. Oers cannot be used in conjunction with any other oer. Some combinations of features/options may not be available. Please contact Retailer
for availability. Terms and conditions apply. Credit provided subject to status by Mercedes-Benz Financial Services UK Limited, MK15 8BA. Prices correct at time of going to print 10/12.
Representative Example: ML 250 BlueTEC Special Edition
The new M-Class.
Introducing the Special Edition.
From just 469
*
a month, you can enjoy standard features including
19" alloy wheels, Mirror Package, aluminium running boards, chrome
underguards and LED daytime running lights. In the M-Class Special
Edition, you can go anywhere, and go there in style.
Visit mercedes-benz.co.uk/offers
36 Monthly
payments of*

469.00
Customer
deposit
7,374.77
On-the-road
price
43,240.00
Retailer deposit
contribution
1,500.00
Duration of
agreement
36 months
Optional
purchase
payment

20,975.00
Amount of
credit
34,365.23
Total amount
payable

47,008.77
Acceptance
fee
180.00
Purchase
activation fee

95.00
Fixed
interest rate
4.16%
Representative
APR
4.6%
Renault chief executive Carlos Ghosn is aiming to boost the firms financial stability
BUS passengers will from today
be able to use contactless debit
or credit cards to pay for
journeys, as Transport for
London begins its long-awaited
rollout of the new payment
method.
Anyone with a contactless Visa,
American Express or MasterCard
should be able to tap the yellow
Oyster pay point on the capitals
8,500 buses, without having to
register with TfL.
Users will be charged the same
fare as an Oyster Card holder,
meaning a single bus fare would
cost 1.35 rather than 2.30 for a
ticket bought with cash.
London buses
go contactless
BY MARION DAKERS
THE RISE of cheap smartphones in
emerging economies has led to a leap
in royalty payments to chip designer
Imagination Technologies.
The company, which is locked in a
bidding war to acquire US-based chip
designer MIPS, has seen a 66 per cent
year-on-year rise in royalty revenues
in the last six months, it said yester-
day. This was down to a 90 per cent
increase in the sales of chips that use
Imaginations technology, such as
those in Apples iPhone.
However, shares in the company fell
slightly, as analysts flagged a drop in
average royalty rates. Rising sales of
cheap smartphones in China and
other emerging economies means
Imagination is licensing more chips
using cheaper technology.
The companys losses in its Pure dig-
Lower royalty
rates chip away
at Imagination
BY JAMES TITCOMB
ital radio division also widened in the
six months to the end of October.
Imagination reported a 27 per cent
increase in group revenues to 71.4m,
although profits were flat at 10.5m.
Chief executive Hossein Yassaie was
unfazed by the average royalty
decline. [All parts of the chip busi-
ness] are all growing together so the
transition is not an issue, he said.
Chief executive Hossein Yassaie shrugged off the fall in average royalty rates
Imagination Technologies Group PLC
12Dec 6Dec 7Dec 10Dec 11 Dec
440
450
420
430
410
460
470
480 p
425.00
12Dec
THURSDAY 13 DECEMBER 2012
9
NEWS
cityam.com
NEW8 FROM THE
CTY OF LONDON
ADVERT8EMENT
News, info and offers at www.cityofIondon.gov.uk/eshot
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We are initially encouraged by today, with a very strong royalty unit
performance. However, we calculate a 15 per cent decline in average rates which
suggests full year royalty revenue unlikely to move up materially. Hold.
ANALYST VIEWS

HOW HAS IMAGINATIONS

INVESTMENT CASE
CHANGED AFTER TODAY? Interviews by James Titcomb
JAMES GOODMAN INVESTEC
The investment and losses at Pure are likely to drive downgrades to
earnings estimates. However on balance the investment case is more centred
around the longer term earnings opportunity from demand. Buy.

NICK JAMES NUMIS SECURITIES

Royalty rates should hold up for the second half of the year and chip
shipments are expected to reach 500m by the end of the year. These are all posi-
tive signs, and we continue to like the long-term prospects. Buy.

PIA TAPLEY N+1 SINGER

Thats capitalism, says Google
chair Schmidt in tax response
GOOGLES chairman Eric
Schmidt has defended his
company against criticism of its
tax affairs, saying: Its called
capitalism.
I am very proud of the
structure we have set up. We
pay lots of taxes; we pay them
in the legally prescribed ways,
he told Bloomberg.
Google has been chastised by
MPs for funneling $9.8bn (6bn)
of revenue into a Bermuda
company, allegedly saving $2bn
in taxes last year. Although the
company makes more than 10
per cent of its sales in the UK, it
paid just 6m in corporation
tax last year.
The government has probed
the Silicon Valley firm,
alongside Starbucks and
BY ALEX WYNICK Amazon, over the issue.
Starbucks has offered to pay
20m a year over the next two
years, but Schmidts comments
suggest a similar move from
Google is unlikely.
Vince Cable, the business
secretary, responded to
the former chief
executive yesterday.
It may well be
[capitalism] but its
certainly not the job of
government to
accommodate
it. On behalf of
taxpayers we
have got to
change the
situation,
Cable said at
a press
conference
for the
Association of British Insurers.
Schmidt also compared the
popularity of Googles Android
smartphone software to
Microsofts dominance of
computer software in the 1990s.
This is a huge platform
change; this is of the scale of 20
years ago Microsoft versus
Apple, he said. Were
winning that war pretty clearly
now. Android accounted for
72 per cent of worldwide
smartphone sales in the third
quarter, against Apples
14 per cent, according to
research firm Gartner.
Over 1.3m Android
devices are now
activated every day.
Shazam hires lastminute.com
founder amid float rumours
MOBILE music-recognition
service Shazam has hired the
founder of the travel website
lastminute.com, in a move that
could pave the way for an initial
public offering.
Brent Hoberman, who has
joined Shazam as an
independent board member,
started lastminute.com in 1998,
together with Martha Lane Fox,
who is now the governments
digital champion.
Hoberman helped take the
company public in March 2000,
at the height of the dotcom
boom, and left it in 2006, the
year after it was acquired.
Shazam, a smartphone app
that recognises songs, has made
a big push into TV, allowing
users to access additional
content while watching shows.
The technology makes money by
selling the songs it recognises,
but also sees an opportunity in
TV, offering supplementary
content to adverts. Hoberman
has been hired to speed up the
monetisation strategy.
David Jones, Shazams vice
president for marketing, told
City A.M. that a flotation is an
option thats absolutely on the
table but that there are no
plans at the moment.
BY JAMES TITCOMB
Schmidt said he is proud
of Googles tax affairs
FTSES QUARTERLY RESHUFFLE
COMPANY MOVE NEWINDEX
Tui Travel FTSE 100
Pennon FTSE 250
Enterprise Inns FTSE 250
Direct Line FTSE 250
Ruspetro Small-cap
Talvivaara Small-cap
Shanks Small-cap
TUI TRAVEL has rejoined the
FTSE 100 stock index after more
than a year as a mid-cap firm,
while newly-floated Direct Line
clinched a FTSE 250 ranking.
FTSE Group said in its quarterly
reshuffle that water company
Pennon, which has lost around 15
per cent of its market value in the
period, will be demoted to the
FTSE 250 when the new rankings
take effect on 24 December.
At the bottom end of the
corporate league table, Ruspetro,
Talvivaara and Shanks Group have
all sunk below the market
capitalisation required to remain
in the FTSE 250 and will be
relegated to the small-caps.
Tui Travel joins
the blue-chips
BY MARION DAKERS
BRITAIN has become a nation of
online shoppers and internet televi-
sion addicts, dedicating more time
and money to those activities than
any other nation.
Research released today from
Ofcom, the communications regula-
tor, will reveal that UK citizens
spend more than 1,000 a year
online hundreds more than other
countries and that a greater pro-
portion of us use online TV services
such as the BBCs iPlayer, than those
in other nations.
The research also shows that, on
average, Brits are amongst the keen-
est adopters of technology such as
big-screen high-definition TVs,
smartphones, and social network-
ing such as Facebook.
The research demonstrates the
rapid shifts in how people are con-
suming content. One in four Brits
use online TV including film
UK leads global
internet TV use
BY JAMES TITCOMB
streaming services such as Netflix
every week, while one in six owns an
internet-connected smart TV and
four in ten own a set-top box for
recording video.
Brits are also particularly enthusi-
astic users of smartphones and
tablets 16 per cent of web traffic
comes via the devices. The average
smartphone user in the UK also uses
more mobile data per month than
in other countries, despite the roll-
out of high-speed 4G mobile internet
services lagging behind the likes of
the US and France.
James Thickett, Ofcoms director of
research, put the UKs appetite for
TV catchup services down to the
early launch of technology such as
iPlayer, as well as improved broad-
band coverage.
However, he did add that Britain is
lagging behind others in the rollout
of internet protocol television, in
which channels are beamed into a
TV via an internet connection.
THURSDAY 13 DECEMBER 2012
10
NEWS
cityam.com
THE UK IS THE WORLDS MOST-CONNECTED COUNTRY
OWN A
SMARTPHONE
44%
58%
50%
45%
30%
WATCH TV
ONLINE
17%
23%
9%
13%
3%
ANNUAL ONLINE SPENDING
(PER HEAD)
DAILY TV VIEWING
(PER HEAD)
4 hrs 53 min
4 hrs 2 min
3 hrs 45 min
3 hrs 47 min AVG MONTHLY COST OF FAMILY
TV/INTERNET/PHONE PACKAGE
314
146 262
178
620
1,083 377
N/A
N/A
497
527
JAPAN
GERMANY
FRANCE
UK
USA
SOURCE: OFCOM
Mark Kleinman is the City editor of Sky
News. Twitter: @MarkKleinmanSky
S
UPERMARKET own-label ranges,
package holidays and ... City
lobbying groups? Punters desire
for value-for-money appears to be
stretching further than ever in gloomy
economic times.
Thats the conundrum confronting
my fellow City A.M. columnist Anthony
Browne, recently installed as chief
executive of the British Bankers
Association (BBA).
Relinquishing its role in supervising
the Libor-setting process will cost the
organisation millions of pounds, gnaw-
ing deeply into its revenue base and
leaving it with a stark choice: to hike
fees for members or risk denuding the
BBA of the services they demand.
Browne has plumped for the former
option. I understand that the BBA has
asked its biggest members, the leading
INSIDE
TRACK
MARK KLEINMAN
British Bankers Association mulls merger in hunt for cash
high street banks, to stump up as
much as 25 per cent more for their
membership, according to people
close to the talks.
For some banks, that might mean an
additional bill of 1.5m-a-year.
So determined was Browne to avoid
the issue dominating last weeks BBA
board meeting that he held bilateral
talks with major lenders before it took
place. That didnt prevent his proposal
earning a frosty reception.
The quid pro quo for agreeing to the
plea for more cash was that the BBA
should examine a merger with anoth-
er trade body, such as the Council of
Mortgage Lenders. That work is now
underway, according to BBA execu-
tives.
Amid a protracted run of conduct-
related fines which have left their rep-
utation in ruins, Britains banks need a
robust and respected trade association
more than ever.
The odds on it continuing to exist in
its current form have, however, sud-
denly lengthened.
PRUS BOARDROOM VACANCY
If Tidjane Thiam had sold an insur-
ance policy for every time his aborted
bid for the Asian insurer AIA had been
mentioned, Prudential would have
warily viewed.
That, though, overlooks the quality
of the job that Thiam has done since
the AIA bid collapsed. Expect the Prus
boardroom vacancy to be filled before
long.
PERMIRA THIN END OF THE WEDGE
Whats going on at Permira? The titan
of European private equity and owner
of companies such as Birds Eye Iglo is
making stuttering progress towards a
2bn target for the first closing of its
latest fund.
Few doubt that it will get there
before an informal deadline it has set
for investors early next year. Insiders
say, though, that the lukewarm recep-
tion may mean the firm scaling back
its eventual target for the fundraising.
Permira is hardly alone, as limited
partners reassess asset allocations and
take a tougher stance on management
fees. A string of redundancies at
Permiras network of international
offices feels like the thin end of the pri-
vate equity wedge.
been guilty of monopolising the mar-
ket for life cover.
Over two years since its abandon-
ment, the Pru chief is sailing in more
serene waters: profits have soared and
the share price has outspiked most of
its rivals.
Yet there continues to be a hole in
the Pru boardroom as it struggles to
identify a senior independent director
to replace Paul Manduca, who stepped
up to the chairmanship earlier this
year. The process to hand Manduca
that role was hardly derived straight
from the textbook, which was mildly
embarrassing given the Prus owner-
ship of M&G, one of the Citys biggest
fund managers. Still, in the context of
corporate governance disasters past, it
merited a footnote at most.
Among those approached about the
senior independents role, I under-
stand was Guy Dawson, a former
investment banker at Nomura. The
talks broke down and the Prus head-
hunters are back at the drawing board.
Given the Prus often-fraught rela-
tions with investors during the last
decade, its hardly surprising that a
frontline role dealing with them is
GOVERNMENT delays in getting
financial education on the national
curriculum is a massive drain on tax-
payer resources, according to fresh
research published today.
Poor financial education costs the
UK government 3.4bn a year, accord-
ing to the report published today by
the Centre for Economics and
Business Research (CEBR) for
MoneySavingExpert.com.
The study finds there are four key
areas where poor household knowl-
edge of financial matters is costing
the government, including personal
debt, mis-selling, retirement and
unemployment.
Of these, the CEBR con-
cludes that people not
saving for retirement is
costing the govern-
ment the most at
6.2bn in subsidies.
It estimates that
financial edu-
c a t i o n
could also
help slash
the cost
Poor lessons in
finance costing
taxpayer 3bn
BY KASMIRA JEFFORD
of retirement to the taxpayer by
1.8bn.
The report comes a year after a peti-
tion calling for a curriculum change
signed by 118,000 people and backed
by Martin Lewis, the founder of
MoneySavingExpert.com prompted a
debate on the matter in the
Commons.
During the debate, schools minister
Nick Gibb agreed to consider financial
education during the still unpub-
lished curriculum review, which is
expected to be implemented in
September 2014.
The support for compulsory finan-
cial education in schools is a huge 97
per cent. The population, teachers
unions and many heads agree...some-
times, I feel the only people who arent
lined up are those sitting round the
Cabinet table, Lewis said.
The cost of not equipping young
people to become responsible con-
sumers is huge compared to the trivial
price of adding financial numeracy to
the maths curriculum and money
awareness to PHSE, he added.
Martin Lewis, the founder of
MoneySavingExpert.com
BANKS will face tougher penalties
if they put incorrect information in
the prospectuses of firms planning
to list, under new proposals from
the Hong Kong authorities unveiled
yesterday.
Under new rules sponsor firms
have civil and criminal liability for
defective prospectuses, the
Securities and Futures Commission
said, concluding its consultation.
But the sponsoring bank will also
be given more powers to find out
the information it needs: A listing
applicant commits that it and all
professional advisers involved in
the IPO will fully co-operate with
Hong Kong to crack down on
poor share issue prospectuses
BY TIM WALLACE
the sponsor.
That could make banks wary of
taking on some firms, and so
reduce the options for listing firms,
possibly driving them to London.
The proposals could have
unintended consequences like
driving some banks away from the
sponsor role to a pure
underwriting role. That could
reduce the overall size and quality
of the pool of available sponsor
firms, said Linklaters Robert
Cleaver. But he expects the impact
to be marginal at most, as factors
like the valuation and liquidity are
more important for listing firms
than the regulation of their
sponsoring banks.
THURSDAY 13 DECEMBER 2012
11
NEWS
cityam.com
Zombie firms taking a bite out
of earnings at Begbies Traynor
AN ARMY of zombie companies
being kept afloat by record low
interest rates have hit business
recovery group Begbies Traynors
earnings in the last six months.
The firms revenues fell 11 per
cent to 26.1m in the half-year to
the end of October, while pre-tax
profits dropped from 3.4m a year
ago to 2m.
A subdued summer insolvency
market was to blame for some of
the decline, Begbies said
yesterday, as firms that would
BY MARION DAKERS
otherwise have struggled got a
reprieve in the form of the Bank of
Englands loose monetary policy.
There are currently no signs of
an increase in insolvency volumes,
in spite of the many indicators of
financial stress, it said in a
statement.
However, it said business is in
line to pick up once interest rates
rise again, forcing zombie firms to
confront their debts.
Begbies noted that it had
successfully trimmed its cost base
after selling off some non-core
divisions last year.
It has cut its number of
insolvency practitioners from 466
to 449 since the start of the year.
High-profile corporate collapses
on the firms books during the
period included Port Vale Football
Club, Twickenham Film Studios
and United Carpets (Northern)
Limited.
Shore Capital said the results
show the effects of a subdued UK
insolvency market but continued
tight cost controls have led to a
robust outcome, in our view.
Shares in the firm closed 3.3 per
cent lower at 32.75p.
BERKSHIRE Hathaway, the company controlled by billionaire financier Warren Buffett
yesterday said it paid $1.2bn (743m) to repurchase 9,200 Class A shares from the estate of a
longtime shareholder. The move comes after Berkshire hit historically low valuations last year.
BERKSHIRE HATHAWAY IN $1.2BN SHARE BUYBACK
Help give someone Opportunity
12
CHRISTMASAPPEAL
CITYA.M.
THURSDAY 13 DECEMBER 2012
cityam.com
SANDRA and her family are among
the many that were helped by the
money raised from the appeal last
year.
Full Name: Sandra Clara Tomas
Gender: Female
City, Country: Tete, Mozambique
Children: four aged five to 21
Sandra Clara lives in Tete, the
north-western province of
Mozambique, with her four
children aged five to 21. She used
to run a small business at home
making sweet rocks of ice and
selling them for children but she
struggled to make a profit. She
knew she needed to expand or
change her business but didnt
know how.
Sandra first heard about
Opportunity International on a
visit to the mercado novo (new
market) where loan officers were
explaining the financial products
and services that they offered.
Knowing that selling second
hand clothes can be very
profitable, Sandra applied for an
Opportunity loan and with it
started a new business selling
second hand clothes and bags at
the market.
Sandra used the loan to buy
stock for her business. Her stall
was a great success as it was full
with customers trying on clothes
and she often made 100 per cent
profit on her purchases. She would
then put this money back into
buying even more stock for the
business.
She now buys stock three or four
times a week and often sells all of
it, particularly at the end of the
month when customers have more
money.
The business is now booming
and Sandra has had to employ two
people to help her sort and display
her clothes.
A little loan can go a long way
and many others in her family and
community are benefiting as a
result. Her quality of life has also
improved: I installed running
water, bought a fridge, and bought
some land to build a house.
Looking forward, Sandra hopes
to open another market stall and
one day be able to buy a car to help
her purchase her goods.
Opportunity International began
working in Mozambique in 2004.
The majority of its clients are
farmers or run small businesses in
markets.
Before Opportunity, they were
ignored by commercial banks
because they were just too poor.
The majority of these working
people live in rural areas far from
the city. Through satellite branches
and mobile banks, banking is
brought closer to those who need
it. The results are worth
celebrating: Businesses are
profitable, families are better fed,
children better educated and the
sick are better cared for. Lives, like
Sandras, are transformed.
Every pound donated by City A.M.
readers will be matched by the UK
Government. So far the City A.M.
appeal has raised 520,208.
Text donations may not
work from company
mobile phones as these
often block premium
messages.
If donations exceed our
programme needs in
Africa, they will be
deployed elsewhere.
online at:
www.cityam.com/appeal
70070
TWEET
by text
Opportunity International
(01865 725 304)
credit or debit
card by phone to
#cityamappeal
CITY13 and amount
(5 or 10 only) to
with details of why youve
donated. These comments
may be printed in City A.M.
HOW TO
GIVE
Proudly sponsored by
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Matching your
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When I joined Opportunity it changed my life!
says Sandra Tomas from Mozambique
Sandra
Clara
Tomas
from Tete
in
Mozambi
que
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14
NEWS
cityam.com
THURSDAY 13 DECEMBER 2012
IN BRIEF
Callebaut swallows cocoa firm
n Barry Callebaut, the Switzerland-
based group that supplies chocolate
and cocoa products to large suppliers,
said yesterday it has agreed to buy
Petra Foods cocoa ingredients business
for $950m (590m). The company said
the acquisition would help boost its
presence in developing countries.
Barry Callebaut expects the cocoa
market in the Asia-Pacific region to
grow by five to nine per cent, and in
Latin American by three to eight per
cent annually.
Ophir reveals Tanzania find
n Africa focused oil company Ophir
Energy yesterday said it had
successfully completed appraisal drilling
on three wells in a block offshore
Tanzania, and found a consistent, high-
quality reservoir at the Jodari field. As
a result, it has reconfirmed the 3.4
trillion cubic feet recoverable resource
estimate. Ophir Energy will now focus
its efforts on appraising the Mzia
discovery. Shares in the FTSE 250
energy firm closed down 4.17 per cent
yesterday at 495p.
EastCoal eyes AIM listing
n EastCoal yesterday announced its
application for admission on the junior
stock market, expected before the end
of December. The mineral development
company has already raised 9.5m
through a private placing and when
admitted to AIM, it is expected to have a
market cap of around 42m. For the
past three years, EastCoal has been
focused on the development of coal
mining assets in the Ukraine, and wants
to increase current production levels to
around 3m saleable tonnes a year.
A DOWNWARD trend in like-for-
like sales at British builders
merchant Travis Perkins
continued in November, as weak
construction and consumer
markets weighed on business.
Like-for-like sales for the year-to-
date slipped 1.8 per cent. Total
sales, which includes the
acquisition of Toolstation last
BY HARRY BANKS January, fared better, rising 1.6
per cent for the 11 months to
the end of November.
It also said its specialist
merchanting division felt a
small positive impact from the
closure of a competitor.
Both the construction and
retail sectors in Britain have
suffered in the economic
downturn, but Travis Perkins
said trading was in line with
expectations and that it was on
track to meet consensus
earnings per share for the year.
Despite the evident
weakness in UK construction
and poor consumer confidence,
Travis Perkins is performing
reasonably well, said Seymour
Pierce analysts.
Travis Perkins also trades as
City Plumbing, Keyline, Tile
Giant, Wickes and BSS.
Carillion confident on full year
as it snaps up Canadian firm
Travis Perkins hit by weak market conditions
SUPPORT services firm Carillion
said yesterday it was on track to
deliver a robust full-year
performance, adding that the
value of its pipeline is expected to
be larger than previously thought
by the year-end.
Carillion, which maintains
roads, railways and military
bases, said in a trading update
that revenue will be lower this
year than last largely due to a
cutting back of its UK
construction business, although
BY CATHY ADAMS the groups total operating
margin is expected to increase.
The FTSE 250 support services
firm added that its investment
in Public Private Partnership
projects continued to perform
well.
Separately, it announced
yesterday the acquisition of a 49
per cent interest in Canadian
support services business
Bouchier Group for 24m.
Meanwhile, Carillions
Canadian arm has snapped up
highway maintenance contracts
worth around 525m, while in
Carillion PLC
12Dec 6Dec 7Dec 10Dec 11 Dec
287.5
290.0
292.5
297.5
295.0
300.0
302.5
305.0 p
300.32
12Dec
SSP, the airport and railway station
caterer, yesterday reported a 3.2 per
cent rise in annual sales, boosted by
its expansion in Asia and the US.
The group, which runs more than
2,100 travel outlets for brands such
as Marks & Spencer and Starbucks,
said operating profit jumped 23.7
per cent to 61.5m on sales of
1.74bn in the year to 30 September.
Like-for-like sales rose 2.7 per cent.
SSP was spun off from catering
giant Compass in 2006 in a 1.3bn
management buyout backed by EQT,
the Swedish private equity firm. It
also owns brands including Upper
Crust, Camden Food and opened a
pub called The Merchant at Liverpool
Street station in March.
The group has been targeting the
US and China with recent contract
wins at Phoenix and JFK airports and
at Hangzhou and Xian airports.
BY KASMIRA JEFFORD
Lancashire Carillion been selected as
preferred bidder for a contract worth
up to 150m.
Travel caterer cooks
up strong sales rise
BROWSING the pages of the January
issue of Wired magazine, The
Capitalist stumbled across a
penchewing piece of research by
stockmarket trader turned neurosci-
entist, John Coates.
In the article, Cambridge-educated
Coates asserts that testosterone
skews financial markets, and poses
the question should more decisions
be left to women?
The former Goldman Sachs
trader began working on
Wall Street in 1989: I
would see people get on a
winning streak on the
trading floor and go
lunatic.
He left in 2002 to test
his hypothesis that finan-
cial instabilities are
driven by hor-
mones, claim-
Scientist says
bank bosses
are acting ape
ing that: Women knew there was a
bubble and were acting sane; men
were out of control.
His first test subjects were 17 traders
from a midsize firm in the Square
Mile, who were required twice daily
to register their profit and loss state-
ments, and give saliva samples. He
concluded that, in financial markets,
men are more hormonal than
women.
Coates makes an unusual
analogy about his time as a
trader: During a crisis, man-
agers behaved like a stressed-
out troop of primates.
The Capitalist hopes this
does not mean biting the
junior monkeys, or else we
really are in trouble.
Former trader turned
neuroscientist John Coates
DESPITE Jack Frost nipping at
their heels, 200 leaping lords and
dancing ladies donned costumes
for a sponsored dash around
Canary Wharf yesterday
lunchtime.
The fancy dress charity race was
in aid of childrens charity
Starlight. Competitors complied
with the festive dress code by
donning team costumes, inspired
by the 12 Days of Christmas
Ten leaping lords, nine ladies
dancing, eight maids and a cow
rhyme. The result? An array of
morphsuits, tutus, wings and
maid outfits being paraded
around Docklands.
Theres a first time for
everything, and running through
Canary Wharf in a tutu during my
lunch hour is certainly a first for
me said Neil Darke, chief
executive of Collins Stewart
Wealth Management and one of
seven swans a-swimming.
THURSDAY 13 DECEMBER 2012
Photograph posed by model Getty Images. Emmas story draws on real life examples from NSPCC services, but does not describe a specic case. Texts will be charged at 4 plus your standard rate.
A minimum of 3.97 will be received by the NSPCC. By using this service you agree to being contacted by the NSPCC by telephone or SMS. Registered charity numbers 216401 and SC037717.
Text HAT to 70744 and give 4 Be a S NTA for the NSPCC
Santas urgently needed
This Christmas, most
children will look
forward to getting toys.
But others, like Emma,
will be wishing more
than anything, for their
hurt to end.
Will you be a Santa for the NSPCC and send
a special Christmas gift of 4 to help us support
a child who needs us most?
Brokers from Peel Hunt as the eight maids a-milking (left) and Neil Darke, chief
executive of Collins Stewart Wealth Management (right)
15
cityam.com
Iceland Foods chairman Malcolm
Walker (pictured) headed off on a
trek to the South Pole in November to
mark the firms 42nd anniversary. The
140 mile unsupported trek across the
Antarctic ice cap to the geographic
South Pole aimed to raise funds for
Alzheimers Research UK and Walking
With The Wounded.
Walker, who abseiled down the Shard
earlier this year and has already checked
the North Pole off his exploration list, is
clearly no stranger to danger: Now Im
aiming to complete the Polar double
through 19 days of what I know will be
utter misery, given that my natural
habitat is a centrally heated five star
hotel, rather than a shared tent at minus
40C. Famous last words, as they say.
Walker flew home before completing
the trek due to illness: What the hell
have I done to my stomach? I blame the
expedition food, he said. However his
fellow adventurers, including Olympian
Matthew Pinsent,
reached the pole
and are
expected
safely back
on UK terra
firma
tomorrow.
cityam.com/the-capitalist
THECAPITALIST
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
CONGRESS and President Obama
will be able to reach agreement on
the bulk of the fiscal cliff the
$600bn (371.7bn) in automatic tax
rises and spending cuts due in
January making the consolidation
into more of a molehill, Legal &
General analysts suggested yesterday.
The Republican-held House of
Representatives and the executive
branch will reach a deal preventing
most Bush-era income tax rates from
jumping and will be able to agree to
halt spending cuts, the analysts
forecast.
It calculates this will reduce the
magnitude of the fiscal
consolidation from 4.9 per cent of
GDP to 2.1 per cent of GDP or
$340bn, instead of $780bn.
The US federal government debt
stands at $16.4 trillion, and the
government plans to add around
$1.3 trillion to it this year through its
deficit. The fiscal cliff would drive
that deficit down to hundreds of
billions of dollars but Legal &
General said so much fiscal
tightening at the same time would
undoubtedly push
the US back into
recession.
But Obama and
the House have
been at loggerheads
over tax measures,
with many
representatives
refusing to accept
any deals that
include tax hikes.
L&G says fiscal
cliff dilemma
can be solved
BY BEN SOUTHWOOD
MORTGAGE lending bounced back
strongly in October, according to
industry figures released yesterday,
yet analysts remain unconvinced that
the governments Funding for
Lending Scheme (FLS) is delivering a
sea change in the housing market.
The total number of loans for house
purchase climbed 13.8 per cent to
49,500, data from the Council of
Mortgage Lenders (CML) revealed.
After a disappointingly flat
September, the figures provided some
cause for optimism, with the number
of loans made to first time buyers
jumping by 14.3 per cent to 20,000.
Yet the CML was careful not to get
carried away. An uptick in remort-
gage lending may be an early sign of a
small positive impact of the Funding
for Lending scheme, but its still too
soon to evaluate the effects of the
scheme, said its head, Paul Smee.
Loans for remortgaging were up 11.6
per cent on the month; the number
of remortgage loans can be a better
barometer of the FLSs effect than
loans for purchase, due to the lag
from the length of time it takes to buy
a house.
The government and the Bank of
England launched the FLS, which pro-
vides funding to participating banks
with the intention of boosting loans
to individuals and companies.
Yet David Newnes, director of estate
agent owner LSL Property Services,
Mortgage loans
jump back after
September dip
BY JULIAN HARRIS
remains unconvinced.
The impact of FLS is being felt on
mortgage rates, but in reality, the
extent to which it can provide a sus-
tained boost to first-time buyer num-
bers in the coming year is likely to be
counterbalanced by the capital buffers
banks must set in place for higher risk
lending to new buyers, Newnes said.
Yet Octobers pick up in the availabil-
ity of mortgages to young people look-
ing to get onto the property ladder
will be welcomed, he added. Any sign
of improvement will be welcomed
with open arms by the legion of frus-
trated first-time buyers swelling the
ranks of renters at present.
The number of loans to first time
buyers was up 19 per cent compared to
the same time last year. The 2.5bn in
mortgages included an average loan-
to-value ratio of 80 per cent, with the
data revealing that first time buyers
spend an average of 13.5 per cent of
their income on mortgage interest
payments, the data showed.
Number of mortgage loans
Oct12 Jul 12 Apr12 Jan12 Oct11 Jul 11 Apr11 Jan11
30
35
40
45
50
25
55 Thousands
THE BANK of Englands chief
economist, Spencer Dale, warned
yesterday that inflation could
continue to stick above target,
tightening the squeeze on UK
households budgets.
Stubbornly high inflation has
been prompted by unavoidable yet
painful adjustments in the
economy such as sterlings
depreciation and higher VAT, while
tumbling productivity has also hit
the economy, Dale said.
Real wages and productivity are
down by around 15 per cent
compared with the pre-crisis trend,
Dale told a gathering at Stationers
Hall in London.
The harsh but inescapable
Top Bank of England economist
warns over UKs sticky inflation
BY JULIAN HARRIS
reality of these developments and
the real adjustments they
necessitate is that households
and families in our economy are
worse off. Much worse off, he said.
And Dale warned that inflation
levels higher than wage rises could
continue to plague the UK.
Looking ahead, it seems likely that
that this adjustment process is not
yet complete and so the stickiness
in inflation may persist for a while
yet, Dale said.
The consumer price index
measure of inflation has stayed
above its two per cent target for 35
straight months.
Despite slipping to 2.2 per cent in
September, it worried economists
by springing back up to 2.7 per cent
in October.
THURSDAY 13 DECEMBER 2012
16
NEWS
cityam.com
Spencer Dale warned living standards will continue to be hit by economic adjustments
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Analysts fear watchdog is
too optimistic on UK growth
OFFICIAL growth and inflation
forecasts are too optimistic,
because the independent body
responsible is afraid of spooking
markets with a gloomy outlook,
a top economist warned
yesterday.
The Office for Budget
Responsibility (OBR) was set up to
monitor the economy to judge
how likely the chancellor is to hit
his debt and deficit targets.
It is supposed to be
independent, to avoid the
political manipulation that had
plagued government forecasts in
BY TIM WALLACE the past.
But economists fear the OBR
is still too optimistic not
because it is being pushed by
politicians, but because it fears
the impact on confidence of a
pessimistic forecast.
The OBR is inclined to be too
optimistic if I was the OBR, I
would worry that a forecast that
debt will rise to above 100 per
cent of GDP would prompt
downgrades from some
agencies, said BNP Paribas Paul
Mortimer Lee to the Treasury
Select Committee of MPs.
Being wrong in too
pessimistic a direction might
have adverse consequences here and
now, so they instead prefer to be
too optimistic, he said, predicting
another downward forecast will
come in the near future.
TRANSPARENCY in pension fees is
the best way to help firms and
staff make the best choices on how
they save, business groups told
MPs yesterday.
And they rejected a cap on
charges in the Work and Pensions
Select Committee hearing on
pensions auto-enrolment.
There may come a time when a
cap on auto-enrolment charges
Firms demand more pensions transparency
BY ALEX WYNICK will become necessary, but the
average charge is now down to
just over 0.5 per cent, said
Neil Carberry from the
Confederation of British
Industry.
Large companies have had to
automatically enrol staff in
pension schemes since October,
and smaller firms must follow
within the next five years.
We are often dealing with
people with a limited degree of
sophistication regarding
pensions, said Tim Thomas
from manufacturers trade
association EEF.
The solution is
transparency of charging.
The pair told the committee
that informing employers of
the effects of charges and
allowing them to make
informed decisions is crucial
for businesses to benefit from
the schemes.
Obama wants
higher tax rates
for big earners S
O
U
R
C
E
:

C
M
L
The OBRs GDP forecasts may be too optimistic
2016 2014 2012 2010 2008 2006 2004 2002
-4
-2
0
2
4
-6
6 Percentagechangeonayearearlier
THURSDAY 13 DECEMBER 2012
17
Wall St flat as
fiscal cliff fears
remain high
U
S stocks ended nearly flat
yesterday, giving up most of
the days gains after Fed
Chairman Ben Bernanke
reiterated that monetary policy wont
be enough to offset damage from the
fiscal cliff.
His comments followed the Federal
Reserves announcement of a new stim-
ulus plan, which briefly pushed the
S&P 500 to a seven-week high.
The plan, the latest attempt to boost
the countrys struggling economy, will
replace a more modest program set to
expire with a fresh round of Treasury
purchases that will increase its balance
sheet. The program is known as quan-
titative easing or QE.
In comments after the announce-
ment, Bernanke said he hopes that
markets wont have to tank to get a fis-
cal cliff deal.
Bernanke reiterated the fact that
monetary policy has its hands tied as
far as addressing the seriousness of
going over the fiscal cliff, Hellwig
added. The S&P financial sector index,
which had been up more than one per
cent after the Feds announcement,
ended up just 0.5 per cent.
Wal-Mart Storess stock was the
biggest drag on the Dow, falling 2.8 per
cent to $68.94 following the Indian gov-
ernments announcement of an
inquiry into the companys lobbying
practices.
The Dow Jones industrial average
slipped 2.99 points, or 0.02 per cent, to
13,245.45 at the close. The Standard &
Poors 500 Index inched up just 0.64 of
a point, or 0.04 per cent, to 1,428.48.
But the Nasdaq Composite Index shed
8.49 points, or 0.28 per cent, to end at
3,013.81. Though the S&P 500 ended up
just slightly, it was the sixth day of
gains for the index its longest win-
ning streak since August.
B
RITAINS top share index closed at
a new nine-month high yesterday,
led by an energy sector buoyed by
hopes that the US Federal Reserve
would continue to provide stimulus for
the worlds biggest economy.
Oil & Gas and basic materials, which rise
and fall with optimism over the economic
outlook, combined to added over 13 points
to the FTSE, which rose on expectations
the Fed will launch a fresh round of $45bn
in bond buying a month, bringing the
monthly pace of asset purchases to $85bn,
The FTSE 100 index closed up 20.88
points, or 0.4 per cent at 5,945.85, its high-
est close since March, and marking a nine-
month high for the index.
The energy sector added nine points to
the index as oil rose to around $110 a bar-
rel, with investor anticipation of renewed
monetary stimulus outweighing plentiful
supply.
The materials sector also prospered, with
miner Anglo American among the FTSE
100 leaders, ahead by 2.7 percent as it was
lifted by a Barclays upgrade to equal
weight from underweight.
The rise took gains for December to 1.3
per cent less than halfway through the
month, despite recent downgrades to
growth outlooks across the UK and the
euro zone.
A rise in December would be the 10th
straight year of gains in the last month of
the year, and the index rose for the sixth
straight day for the first time this year.
However, the recent gains have been
made in thin volumes, and while the index
closed above 5,932, the intraday high in
September, other key levels need to be
passed before it can hit 6,000.
BESTof theBROKERS
Tullow Oil PLC
6Dec 7Dec 10Dec 11Dec 12Dec
p 1,275
1,250
1,150
1,175
1,200
1,225
1,125
1,100
1,182.00
12 Dec
TULLOW OIL
Credit Suisse has cut the oil
firm from outperform to
neutral and has a new
target price of 14.80. The
broker sees a subdued end
to the year for Tullow, with
few opportunities on the
horizon until the spring.
DASHBOARD CITY
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
cityam.com
FTSE
12Dec 6Dec 7Dec 10Dec 11Dec
5,950
5,940
5,930
5,920
5,900
5,890
5,910
5,945.85
12 Dec
Oxford Catalysts Group PLC
6Dec 7Dec 10Dec 11Dec 12Dec
p 160
155
145
150
135
130
140
139.00
12 Dec
OXFORD CATALYSTS
Peel Hunt has lowered its
rating from hold to
buy and has a target of
125p. While a recent
fundraising gives the firm
more credibility, the broker
thinks Oxfords value is in
its potential in shale gas
rather than its cash flows.
ITV PLC
6Dec 7Dec 10Dec 11Dec 12Dec
p 105
104
102
103
101
102.30
12 Dec
ITV
Liberum repeats its buy
rating and 145p fair value.
The broker thinks there is
still a reason to buy
despite the recent share
price rise, and thinks a
significant return of
cash is likely at the full
year results.
Westhouse Securities
Finlay Thompson has been
appointed specialist oil and gas
salesman on the stockbrokers
institutional sales desk. He has 18
years experience in the industry,
and has previously held roles at
ABN Amro, Credit Lyonnais,
Natixis and others.
Quadrangle
Phil Rance has been appointed corporate development
director at the consultancy firm. He was previously UK
managing director at YouGov and European managing
director at Research Now. Rance has also held senior roles at
the AA and Bradford and Bingley.
Speechly Bircham
Claire Fallows has been appointed partner in the law firms
real estate and consultancy grojup. She joins from Hogan
Lovells, where she has worked for the past 10 years. Fallows
is a specialist in urban regeneration projects and strategic
land development.
Futures and Options Association
Natasha Stromberg has been appointed regulation manager
at the derivatives industry association. She joins from the
FSA, where she was lead supervisor at the London Metal
Exchange. Stromberg has also held positions in the
investment banking industry.
Pioneer Investments
The investment group has announced two new hires to its
European fixed income team. Vianney Hocquet joins from
BNP Paribas as a corporate portfolio manager. Elizabeth Van
Sante joins from Credit Agricole as a credit analyst.
Crimson & Co
Matt York has been appointed head of the supply chain
consultancys organisational design practice. He has 12
years experience as a management consultant, and has
held positions at United Biscuits and Coca Cola.
WHOS SWITCHING JOBS Edited by Daniel Zuidijik
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
in association with
LONDONREPORT
NEW YORK
REPORT
in association with
in association with
FTSE surges to nine-month high on
hopes of further stimulus from Fed
I
HOPE, dear CityA.M. reader,
that you occasionally
manage to unchain yourself
from your desk, rip yourself
away from the trading floor,
and escape from the shadows of
the towers of Canary Wharf and
the Square Mile. Because and I
hope this wont come as a total
shock to you there is a banking
industry outside the centre of
London.
These giants of exporting have
created thousands of jobs across
the UK Citi works out of
Belfast, Morgan Stanley has
divisions in Glasgow and JP
Morgan in Bournemouth. But
numerically more significant are
the people who keep the
W
OLFGANG Schuble, the
German finance minister,
recently said that we can
only achieve political
union if we have a crisis.
His idea is to exploit the Eurozones
sovereign debt problems to confer
additional powers on the EU. And his
most recent project is the single
supervisory mechanism otherwise
known as banking union. EU finance
ministers are meeting this week to
thrash out the details.
The argument goes that, if Europe
directly finances the recapitalisation of
Greek and Spanish banks, these insti-
tutions should fall under the supervi-
sion of a single authority. Schuble
asserts that national regulators lack
the incentive to be strict, and that a
European supervisor is needed to pre-
vent moral hazard. But he is wrong,
and the UK is wrong to be sympathetic.
Firstly, the incentive to be strict
depends almost entirely on the price of
bail-out loans. A lender of last resort
ought to lend at a penalty. The prob-
lem here is not national regulators but
the European Stability Mechanism
cityam.com/forum
National regulators
did fail to foresee the
financial crisis but so
did the EU Commission
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.

18
THURSDAY 13 DECEMBER 2012
ROLAND VAUBEL
European banking union will be no
friend of vibrant financial services
(ESM) the body meant to provide
financial stability in Europe. If the ESM
charged punitive rates of interest,
instead of subsidising loans, moral
hazard would disappear.
Secondly, proponents of banking
union suggest that national bank
supervision creates a vicious circle due
to regulatory capture. According to
this story, banks persuade regulators
to be lax in exchange for promising to
buy government bonds at low interest
rates. When a banking crisis causes a
budgetary crisis, therefore, the col-
lapse of bond prices feeds back to bank
balance sheets, thus aggravating the
banking crisis. European bank supervi-
sion, it is said, would prevent regulato-
ry capture and interrupt this cycle.
But this justification is also uncon-
vincing. The budgetary problems of
most southern Eurozone countries
were not caused by a need to support
banking. Greece, Portugal and Italy did
not have to bail out banks during the
financial crisis. Moreover, regulatory
capture may be stronger on a
European level. By shifting lobbying
upwards, interest groups can escape
the attention of voters their rivals in
influencing policy. One recent study
concluded that the EU is now more
lobbying-oriented than any single
European country.
Most importantly, you dont need
European banking supervision to elim-
inate this vicious circle. If regulators
are inducing banks to hold excessive
amounts of government debt, this
could be stopped through a rule that
limits the share of government debt
that can be held in a banks portfolios.
Some justify banking union by refer-
encing the failure of national regula-
tors during the financial crisis. Its true
that they did fail to foresee it. But so
did the European Commission even
though its responsible for the EUs
internal market. And although multi-
national banks did pose a problem for
regulators, these issues have been han-
dled effectively through bilateral coop-
eration between them. Would 27 EU
members, or a majority among them,
have known better?
Perhaps the strongest justification
for European supervision is that poli-
cies in one country cause external
effects in others. But, the internal
effects of bank failure are much
greater than those outside. A national
regulator has a stronger interest in
adequate supervision than a European
authority deciding by majority vote. It
follows that supervisory control
should primarily rest with the nation-
al supervisory authority. National
authorities tend to be better informed
and have better incentives.
Most perniciously, banking union
advocates suggest that there should be
a level playing field in banking regula-
tion. But there are key reasons not to
impose equal conditions on all mar-
kets. National banking systems differ,
and consequently have different needs.
Regulatory competition generates peer
pressure and encourages innovation.
Further, decentralised supervision
helps to diversify regulatory risk.
There is a real danger that Europe
will create a level playing field with a
very high level of regulation. If deci-
sions are taken by the majority as is
currently the case across much of the
EU the majority of highly-regulated
member states have an incentive to
impose their regulations on the minor-
ity of less regulated member states to
reduce the competitiveness of the lat-
ter. This is the so-called strategy of
raising rivals costs. A banking union
would be no friend of a vibrant market
in financial services.
Roland Vaubel is professor of economics at
the University of Mannheim.
networks of banks large,
challenging and small operating
across the kingdom. Of the
452,000 people employed directly
in banking, a full 312,900 work
outside of London.
These are the cashiers paying in
your cheques, the currency dealers
selling you euros, and the
relationship managers helping
small businesses. It is worth
asking, when people relish a
good bashing of the City, what
the broader impact is on the
banking equivalent of middle
England or France profonde.
The frontline staff feel the full
force of public ire over bailouts
and bonuses. Bank employees
who used to be proud of their
jobs now get hurled abuse by
customers. Pillars of the
community are turned into
pariahs. Old Bob the banker has
30 years good service. But the
payment protection insurance
scandal, and its subsequent
feeding frenzy, has marked him
as someone who deliberately
miss-sold to Auntie Maude,
trashing his reputation among
his neighbours. The clamp down
on bonuses across the entire
industry has also hit front line
retail staff far harder than the
Ferrari-buying classes.
The retail distribution review,
due to come into force at the
beginning of next year, bans
commission payments to
financial advisers. As a result,
banks have been forced to
withdraw from offering financial
advice, leading to tens of
thousands of advisers losing their
jobs and whole swathes of the
population no longer getting the
help they need. This is neither
good for the economy, good for
workers, or good for the
financially disadvantaged.
Bashing City bankers might be
good fun for some, but there are
often unintended consequences
that many would agree are
unpleasant.
City slickers may not generate
sympathy in the current climate,
but they are just a small part of
the banking industry. When a
whole sector is shrinking in size
and under pressure from
politicians and the media, it can
be very uncomfortable for those
that work inside it. Trust and
confidence needs to be restored
to banking but so does pride.
Anthony Browne is the chief
executive of the British Bankers
Association.
ANTHONY BROWNE
Bashing City bankers has unintended consequences for middle England
MORNING UPDATE
A.M.
19
THURSDAY 13 DECEMBER 2012
The Forum is open for you to take part. Got a sharp comment on
one of todays columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email theforum@cityam.com or comment at cityam.com/forum
Urban renewal
[Re: Decline in homeownership is the result
of bonkers red tape, yesterday]
Unfortunately, the housing shortage is
London is not just an issue of idiotic
planning rules but a fundamental
unwillingness to allow the city to expand
physically. The debate has artificially divided
into supporters of the green belt and those
who want to brick over the south east.
Surely theres an alternative. Cities like
Copenhagen show the possibilities it has
green fingers (rather than a belt), which
stretch attractively into its centre. People
can live in large suburban homes, and the
danger of unattractive, faceless exurbia (like
you see in Los Angeles) is carefully avoided.
Growth doesnt need to be ugly.
CarolineMorgan
Tax simplicity
Im afraid tax simplicity wont happen until
the chancellor is unafraid to stand up to
special interest groups. Its the classic
problem of government. More people will
lose from taking loopholes away than will
gain from a simpler, more effective tax
system
RichardBryant
I wish someone would make the case that
simpler taxes would help solve the problem
of avoidance. Corporations and individuals
are able to exploit the system and to use
loopholes in unintended ways and
therefore reduce their tax bills. Complicated
anti-avoidance rules will only ever be a
sticking plaster.
BrianPoor
T
HIS weeks draft Finance Bill
gave a number of revealing
insights into the mind of the
chancellor and the direction
the 2013 Budget will likely
take. Among its contents was a
long-overdue update on the general
anti-abuse rule (GAAR) the
governments much-hyped silver
bullet for the scourge of tax
avoidance.
Over the past year, intense focus
on tax avoidance by both compa-
nies and individuals has turned
the practice into a deadly sin in the
minds of many. It is therefore rea-
sonable that something is being
done, and the GAAR certainly pres-
ents a worthy ideal. But how does it
fare in reality?
One welcome development is that
the rule will target not only indivi-
aul tax avoiders, but the companies
that promote aggressive schemes.
This willingness to confront both
the practice and the enablers
should be applauded, as the prob-
lem is systemic.
However, the governments word-
ing could prove problematic. A
GAAR is an incredibly tricky piece
of legislation, as catching abusive
or aggressive acts of tax avoidance
first requires defining them. This is
no easy task, and one pen stroke
here or there could spell the differ-
ence between a flexible and effec-
tive tool against tax dodgers and a
draconian clampdown on almost
any form of tax planning.
Unfortunately, the wording
included in this weeks Finance Bill
does not deliver. Schemes and
arrangements that result in a lower
tax bill will have to be reconciled on
a just and reasonable basis. This is
semantic wrangling of the first
order. The breadth of the wording
does a poor job of covering up a
deficit in any actual meaning,
TOP TWEETS
Will EU banking union be effective? The City
of Londons financial sector is bigger than
the rest of Europes combined.
@GABaines
Mark Carney is already sending signals he
wont take a different course to that
masterminded by Sir Mervyn King.
@NickVose
If North Korea has achieved successful orbit,
the greatest concern is its a successful pitch
for selling illicit missile technology.
@ReethsOnDefence
Fed policy seems to be: inject stimulus to
lower unemployment until serious inflation
threatens. By then it will be too late to react.
@asentance
Should North Koreas surprise rocket launch
raise concerns over security in the region?
YES
There is no doubt that North Koreas test will terrify the people of
South Korea as well as other nations in the region. The West will not
only be concerned by the threats and strains created by an
emboldened North Korea, but also by the reaction of its partners.
Over the past few years, North Korea and Iran have stepped up their
co-operation and interdependence over their respective nuclear
programmes. This was made all the more clear by Irans
congratulatory remarks to North Korea yesterday. Their alliance
threatens the West and its allies not just militarily or territorially,
but economically also. The British defence secretary Philip
Hammond noted last week that an attack on Iran could drive oil
prices up and threaten our economic recovery. As the situation
stands, Iran holds many cards in the region already. Both of these
tyrannies must be confronted.
Raheem Kassam works at the Henry Jackson Society.
Raheem Kassam
NO
Ashvin Patel
North Koreas provocative rocket launch should not create global
panic. Instead, it will most likely serve to bolster the regime of its
young leader Kim Jong-Un, especially as the test occurred close to
the anniversary of the death of his father and former leader Kim
Jong-Il. But despite the recent launch, North Koreas missile
ambitions are still some time away from fruition, and some distance
away from being technologically proven and tested. The
development of a functioning miniature nuclear warhead would
require continued nuclear tests, which would further expose North
Koreas secretive actions to international scrutiny. The US and Europe
are continuing to develop a credible deterrent capability, through a
multilayered and flexible missile defence architecture, which could
be reconfigured to intercept long-range North Korean missiles.
Avnish Patel is project manager at the Royal United Services
Institute.
RAPIDresponses
New tax avoidance
rule is a recipe for
chaos and disorder
which could be a real sticking point
when it comes to implementation.
Without stamping a real defini-
tion on what counts as tax abuse
and what doesnt, the GAAR will
never be fool-proof. The problem is
subjectivity. What is just and rea-
sonable in a tax situation? How is
this decided and who decides it?
The GAAR in its current form may
well end up causing more problems
for HMRC than it solves. Without
injecting more certainty, the tax
authorities will be locked in litiga-
tion with taxpayers over the validity
of their tax arrangements until the
cows come home. This is not good
news for an institution short on
both time and money, and its not
good news for taxpayers mitigating
their tax exposure in a legitimate
fashion.
George Osborne recently
announced a 154m boost to HMRC
and the hiring of a further 2,500 tax
inspectors. Resources are certainly
needed, but they wont fix the fun-
damental problem at the heart of
GAAR. In its current form, 2,500
more inspectors will simply trans-
late into 2,500 more interpretations
of what is fair and what is abusive.
Britain had a 32bn shortfall in
tax collections last year, so a better
means of tackling avoidance is cer-
tainly needed. Unfortunately, A
GAAR in this form will do little to
close this gap.
Ronnie Ludwig is a partner in the pri-
vate wealth team at Saffery Champness,
and a former tax inspector.
RONNIE LUDWIG
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THURSDAY 13 DECEMBER 2012
cityam.com
20
LIFE&STYLECHRISTMAS GIFT GUIDE
This year buy tech gifts that will last
Steve Dinneen rounds up the top 10 technology gadgets that will keep everyone happy long after Christmas day
Attacknid combat robot
49.99
This beast is sure to get more
attention on Christmas morning than
any other gift. With eight moving legs
and an independently operated, foam
disc-firing turret, it is as close to
Robot Wars as most people are ever
going to get. Realistically, it will
probably end up in a cupboard by
March, but for a short burst, this is a
fantastic present.
www.iwantoneofthose.com
Bowers & Wilkins A7 speaker
system
699.99
There is a reason Bowers & Wilkins
has become the go-to audio
manufacturer. The A7 is one of its
top of the range products, with
immaculate sound and booming
bass. Its AirPlay system allows you
to wirelessly connect the system to
your laptop, iPhone or iPad making
it the ideal party jukebox.
www.hificorner.co.uk
Nintendo Wii U
(Premium Package)
300
The first of the big three console-
makers to launch their next generation
machine, the Wii U is everything you
would expect from Nintendo: strange,
family-friendly and great fun. It may
take a few months for developers to
fully grasp the potential of the
hardware but this is one gift that will
still be in use long after Christmas.
www.amazon.co.uk
YouView
299.95
*
Whether youre a live TV or internet-only
viewer, YouView condenses everything
into one handy box, allowing you to
watch catch-up TV, browse iPlayer and
rent movies from one easy to use
platform. A great gift for any gadget-
obsessed members of your family.
www.johnlewis.com
*Some BT customers are eligible for a free YouView box
depending on your subscription options. For more
information visit bt.com/youview
Samsung Galaxy Camera
Prices start from 394.99
While its on the pricey side, the
Samsung Galaxy camera is the
perfect model for budding
photographers. The 16 mega
pixel 21x optical zoom lens
produces quality photos and is
easier to use than an SLR. Its
built in 3G and wifi allows you to
send images instantly to Twitter,
Facebook and Instagram.
www.jessops.com
Plantronics GameCom 780
40
Off the back of its hugely successful 777
model, Plantronics has created GameCom
780, the perfect gift for gamers. The new
headset transforms standard audio into a
7.1 surround sound experience to allow you
to feel full immersed in the game.
www.amazon.co.uk
Amazon Kindle Fire HD
159
This 7 inch colour e-reader is a great
gift for any Amazon junkies out there.
After syncing with your account, the
device will, as if by magic, begin to
recommend books tailored to your
tastes. If the iPad seems like a little
too much of an extravagance, the
Kindle Fire HD is a very worthy
compromise and at almost half the
price.
www.amazon.co.uk
iPad mini
269
What more can you say about the
company that attracts more hyperbole
than any other? The iPad Mini is a thing
of beauty: light, impossibly thin and
featuring a screen that seems far
bigger than its 7.9 inches. If the special
person in your life has been gazing
lovingly through the window of the
Apple Store, this is sure to make their
day.
www.apple.com/uk
Ferrari Enzo Bluetooth car
80
The Ferrari Enzo isnt like any other
model. The 1:16 scale car comes with
iConnect technology, enabling you to
control it easily from your iPhone. The
car itself comes equipped with a host
of unique features like working hazard
lights, sound effects and full
functional suspension. The perfect gift
for car fans.
www.amazon.co.uk
TEC
H
G
IFTS
Apple TV
99
Any Apple fan would be happy to find
Apple TV under the tree. The slick box
connects to your TV via HDMI allowing
you to watch films through Netflix and
access YouTube, Vimeo and iTunes. Fans
will appreciate its ability to play content
from your other Apple devices too.
www.apple.com/uk
THURSDAY 13 DECEMBER 2012
22
cityam.com
LIFE&STYLE CHRISTMAS GIFT GUIDE
Dolce & Gabbana
415
Two-tone leather
derby shoes
www.mrporter.com
Lanvin
110
Silver-plated
engraved
t-bar cufflinks
www.mrporter.com
Mulberry
165
Leather iPad case
www.mrporter.com
Tom Ford
75
Black orchid collection
gift set
www.selfridges.com
FO
R
H
IM
FOR HER
Valentino
890
Crystal-embellished
pumps
www.net-a-porter.com
Ugg
70
Suede Scuff slippers
www.uggaustralia.co.uk
Bottega Veneta
160
Intrecciato woven-leather
card holder
www.mrporter.com
Jo Malone London
182
Enticingly decadent
gift set
www.jomalone.co.uk
COMO at The
Metropolitan Hotel
90 for 1 hour
Shambhala massage
www.comohotels.com
Yves Saint Laurent
720
Arum Lily
gold-plated bracelet
www.net-a-porter.com
THURSDAY 13 DECEMBER 2012
23 LIFE&STYLE CHRISTMAS GIFT GUIDE
F
OR CHRISTMAS this year, I want
to look like James Bond. And I
dont mean Timothy Dalton or
Pierce Brosnan I want to look
like Daniel Craig. Can Santa make
that happen?
The answer is: yes, kind of. You
can, at least, dress like him. The
most memorable sartorial choice in
the latest 007 movie, Skyfall, was a
beautiful deep blue Tom Ford
dinner suit with a shawl collar
and satin lapel, which Bond
wore to a floating Casino in
Macau. It was subtle enough
so as not to be showy yet
distinct enough to set you
apart.
A dinner suit is an
excellent idea for a gift.
Its an extravagance,
something you will
probably wear only a
handful of times a year;
something that
demands quality and
that should make you
feel like well, James
Bond.
The tailors at Apsley, which has
been around since 1889, agreed to
recreate the famous suit for my less
than Bondian frame, to show off the
quality of its tailoring. Its corporate
service sees a tailor travel to your
office first for the initial fitting,
then again to make the alterations
and a third time for the final
adjustments. If you are buying the
suit as a gift, the recipient need not
even know what it is he is being
made until the final product
arrives.
After your measurements are
taken, the shell is brought to
your office your desk, if you like,
although getting changed might
be a bit odd for a full
fitting. A couple of
weeks later, the suit
arrives and any last
minute alterations
noted. The entire
process takes a little
over a month, from
measurements to final
product. And what a
product.
Like a lot of men, I spend more
money on suits that I care to think
about, and Ive had a few tailor made
but this is the best Ive seen. It smacks
of class from the immaculate fit
down to the satin detailing over the
pockets. Distinctive yet understated.
Just like Bond.
If youre looking for the perfect
gift for the man who has almost
everything, this is sure to hit the
spot. Order soon and itll be ready in
time for the Oscars then you really
can pretend to be a film star.
An Apsley dinner jacket suit costs
from 880. Bespoke suits cost from
750. Log on toapsleytailors.com or
call 020 7925 2238 for more
information.
Channel your inner James Bond with help from Apsley
Left: Daniel Craigs Tom Ford dinner suit. Above: An Apsley jacket in the early design stage.
S
TR
ES
S
ED
EX
EC
G
IFTS
Steve Dinneen
Kenneth Jay Lane
185
22-karat gold-plated
Swarovski crystal
clip earrings
www.net-a-porter.com
Crme de la Mer
210
Radiance
collection gift set
www.selfridges.com
Smythson
225
Mara collection
2013 Soho diary
www.smythson.co.uk
Derek Rose
175
Plaza polka-dot cotton
dressing gown
www.mrporter.com
Stella McCartney
60 for 50ml
L.I.L.Y fragrance
www.harveynichols.com
24
TV & GAMES
cityam.com
T
E
R
R
E
S
T
R
I
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E4
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6pmBBC News
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The River Wild. 1994.
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Wild Challenge
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5 6
7
8 9 10
11
12 13 14
15 16 17 18
19
20 21 22
23
24 25
17 6 5
25 16
7 34
20 6
24 13
45
16 22
15 29
16 11
3 38
14 12 11
14
10
8
27
36
39
12
10
30
12
20
9
10
23
6
41
23
28
21
15
11
ACROSS
1 Rise to ones feet (5)
4 Protective secretion of
bodily membranes (5)
7 US musician and
record producer,
former husband of
Tina Turner (3)
8 Silt deposited by
the wind (5)
10 Flurry (3)
11 Solemn promise (4)
12 Frock (5)
14 Roused from slumber (5)
15 A Town Like ___,
Nevil Shute novel later
made into a lm (5)
16 Gusset (5)
19 Ground fog (4)
20 Known (3)
21 In that place (5)
23 Floral garland (3)
24 Long-necked birds (5)
25 Dirt-free (5)
DOWN
1 3D shape (5)
2 Period of time (3)
3 Take apart (11)
4 Explained in
terms of physical
forces (11)
5 Goat-like
antelope (7)
6 Gleamed (5)
9 Distress signal
(inits) (3)
13 Book of the New
Testament written
in the form of
a letter (7)
15 In accompaniment
or as a
companion (5)
17 To the ___ degree
(to the utmost) (3)
18 Link up,
connect (3,2)
22 Lambs mother (3)
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H A I L S A I L O R
O O W E I
B L E D T A N G L E
N G I W
O S T E N S I B L E
B O A K A L B
P R O F I T A B L E
R N N E
C A V O R T G O A T
N W O E L
T O M A T O R A C E
9 3 3 1 2 7 9
4 1 5 8 2 3 9 6 7
7 8 9 1 4
1 2 4 1 3 8 5
7 4 6 1 5 8 2 9 3
9 2 6 3
2 1 7 3 6 9 4 8 5
5 4 5 9 1 5 2
3 5 8 6 9
3 2 6 9 1 4 5 7 8
9 8 8 2 9 6 4
4
4
4
4
4
4
4
4
4
The nine-letter word was
EXCLUSION
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
THURSDAY 13 DECEMBER 2012
YOUNG APPRENTICE
BBC1, 8PM
Alan Sugar sets the hopefuls their
penultimate challenge, which is to
select products to sell at Womad, the
world music festival.
KIRSTIES VINTAGE HOME
CHANNEL4, 8PM
Kirstie Allsopp helps a man redecorate
his daughters bedroom, incorporating
their love of butterflies and
1970s-style visuals. Last in the series.
NEWCOWBOY BUILDERS
CHANNEL5, 9PM
Dominic Littlewood gets into a war of
words with a builder, while Melinda
Messenger and her team try to repair
the property.
TVPICK
IN BRIEF
Swans into semis for first time
nFOOTBALL: Swansea reached the
semi-finals of the Capital One Cup for
the first time in their history last night
with a 1-0 win over Middlesbrough,
thanks to Seb Hiness late own goal.
Watson poised for Ryder role
n GOLF: Veteran Tom Watson is today
expected to be named US captain for
the 2014 Ryder Cup at Gleneagles.
Watson, 63, would be the oldest man
to lead the team.
Bradford handed FA Cup reprieve
n FOOTBALL: Bradford have been
reinstated to the FA Cup after
successfully appealing their expulsion
for fielding an ineligible player in the
second round. Arsenals Capital One
Cup conquerors face a replay against
League One Brentford next week.
LOWDOWN: MONTERREY
nReached the semi-finals with a 3-1
win over South Koreas Ulsan Hyundai
in the last eight on Sunday, making
their second straight appearance at
the Club World Cup
nThey are consecutive winners of the
CONCACAF Champions League, which
is the central American, South
American and Caribbean combined
equivalent to the European
Champions League
nThe Mexicans are on a poor run of
form. Before the win over Unsal
Hyundai they had one victory in seven
and lost the Mexican Liga MX Clausura
play-off final last month
nChilean striker Humberto Suazo is
the main attacking threat with 49
goals in 92 appearances for Monterrey
nThey qualified for the tournament
in dramatic fashion, beating fellow
Mexican side Santos Laguna 3-2 on
aggregate to retain their CONCACAF
Champions League title
nFormer players include Portuguese
legend Eusebio who made 10
appearances for the club back in 1975
and Jared Borgetti, who represented
Bolton back in 2005-06
By Alex Sharp
UNDER-FIRE manager Arsene
Wenger is still the right man to
revive Arsenal, despite mounting
criticism, insists former Gunners
defender Martin Keown.
Tuesdays shock Capital One Cup
defeat to League Two Bradford
compounded Wengers worst start to
a Premier League season and
increased calls for him to quit.
Suggestions of a souring of
relations between the long-serving
boss and his assistant Steve Bould
have only heightened speculation
about his future.
But Arsenal are set to stick with
the man who brought them two
Doubles and groomed the
Invincibles and Keown, part of that
2003-04 side, backs that call.
Its about growing the players
youve got, making the necessary
signings in the future and certainly
Arsene Wenger is the man for that,
he said. Hes going to find out a lot
about himself in this difficult period
but hes a winner, a fighter and hell
come back stronger from this.
Former Arsenal midfielder
Stewart Robson, who left in 1987 and
has been highly critical of Wenger,
yesterday accused the manager of
obstructing Boulds coaching
because the Frenchman has a
massive ego and is a dictator.
Wenger is still
right man for
job Keown
CHELSEA manager Rafael Benitez
has vowed to pick his strongest team
in this mornings Club World Cup
semi-final against Monterrey, insist-
ing that winning the trophy would
make his players dreams come true.
The Blues jetted out to Japan in
the thick of a gruelling fixture sched-
ule featuring nine matches this
month alone, raising the temptation
for Benitez to rotate his squad as he
battles on four fronts.
The Club World Cup, which pits
the champions of footballs six conti-
nental confederations, lacks prestige
in Britain but is huge elsewhere, par-
ticularly in South America, from
where a number of Chelsea stars,
including David Luiz and Oscar, hail.
And the Spaniard, who lifted the
trophy as Inter Milan boss two years
ago, insists he will not risk slipping
up against the Mexicans and missing
out on his third appearance in the
final on Sunday.
I intend to pick a team to win the
game, he said. You cannot think
about the final until youve won the
semi-final, after all, so we are focus-
ing just on Monterrey. But for us this
is a very important tournament.
Ive had two opportunities to par-
ticipate in it before so I know the
meaning of it, but Ive heard some of
my players saying they have been
dreaming of winning this tourna-
ment. That is what we want to do.
Stalwart Frank Lampard is in con-
tention after returning from a six-
week lay-off in Saturdays win at
Sunderland, but captain John Terry
remains injured and midfielder
Oriol Romeu has been ruled out for
six months.
Chelseas first match of the Club
World Cup, having enjoyed a bye into
the last four, is at the same
Yokohama stadium where Benitezs
Liverpool lost the final 1-0 to Sao
Club World Cup is our
dream, insists Benitez
Paulo in 2005. He fared better two
years ago, when Inter beat Congos TP
Mazembe in the final in Abu Dhabi,
although he was still sacked by the
Italian club just five days later after
only six months in charge.
Once again he arrives at the tour-
nament with his future uncertain,
having endured a rocky start to his
stint as interim Chelsea boss, only
winning his first match seven days
ago and at the fourth attempt.
It would be enough to keep Benitez
awake at night, were he and his play-
ers not already suffering jetlag-
induced insomnia that threatens to
give an edge to Monterrey, who have
been in Japan for 12 days and already
beaten Asian champions Ulsan
Hyundai of South Korea.
My main focus so far, and that of
my players, has been to try and sleep
more than four hours, he said.
Its quite difficult. Weve tried to
adapt to the time difference, as well
as the pitches here and the ball. Its
all a bit new, but weve done every-
thing we have to do.
Brazils Corinthians, the South
American champions, lie in wait in
the final after beating African kings
Al-Ahly, of Egypt, 1-0 yesterday,
although Benitez is already thinking
beyond that.
The transfer window reopens next
month and Chelsea are considering
recruiting a midfielder, following the
serious knee injury to Romeu, who
Benitez had earmarked for a key role.
He said: The club is working and
always looking for good players, so
well see if there are any surprises.
A
RSENE Wenger will still be
Arsenal manager at the end of
the season, but the next six
months will tell us everything
about his remaining ambitions and
will determine whether he sticks
around beyond May.
Supporters have had enough of
watching their team decline while
the club makes money and directors
are handsomely paid. They should
have wiped the floor with Bradford
on Tuesday evening; instead they
suffered a shock cup defeat to a
team three divisions beneath them.
Earlier in the season there was
optimism. They won well at
Liverpool, Wenger had bought
established talent in Lukas Podolski,
Santi Cazorla and Olivier Giroud;
there seemed to be a plan. All of a
sudden they had to start delivering
and they have been shabby.
Arsenal have lost belief in
themselves. They keep the ball but
have no cutting edge. There is
fouling but no aggression. Of course
they want to win but they dont
desire it enough.
EMBARRASSED
They should be embarrassed to come
off the field without winning. As a
club they have forgotten how to win
and become a kind of football school
instead. They lack courage and
leadership, the difference between
an OK team and a good one.
Defender Thomas Vermaelen is
the strongest character but has been
below par since becoming skipper.
Centre-back partner Per Mertesacker
doesnt rally them as much as he
should. Young midfielder Jack
Wilshere is bold but its too soon to
expect him to bear the burden of
driving the side.
Giroud is a good player, but hasnt
settled enough yet to carry the fight
himself. Cazorla started brilliantly
but has been disappointing in the
last couple of months.
The players must take the bulk of
the blame; Wenger can only do his
best with what hes got. But the
deterioration has gone on so long
now that the Frenchman deserves to
be criticised too.
Abou Diaby looked like being the
player they need: a strong and
dynamic midfield presence; an heir
to former skipper Patrick Vieira.
FUTURE
If hes not going to be fit they need
to sign a replacement in January
someone with vigour, nastiness even.
A Roy Keane or Scott Parker of two
years ago.
Wenger only needs to buy one
player, but they must be someone
with the confidence to go straight
into the team and be a leader.
Wilshere and Alex Oxlade-
Chamberlain have the right spirit
but are too young. If Arsenal arent
careful, however, they will lose the
players who should be their future.
Trevor Steven is a former England
footballer who played at two European
Championships and two World Cups. He
now works as a media commentator.
Benitez (centre) won the competition in 2010 with Inter but was sacked five days later
Arsenal are set to keep faith with Wenger
THURSDAY 13 DECEMBER 2012
26
SPORT
cityam.com/sport
BY FRANK DALLERES
BY FRANK DALLERES
@cityam_sport
FOOTBALL
COMMENT
TREVOR STEVEN
Shabby Arsenal lack courage and leadership
27
Brit Hannah Miley beat London 2012 star Ye
Shiwen to win 400m medley gold at the world
short course swimming championships
cityam.com
THURSDAY 13 DECEMBER 2012
All Black demolition
should pave way for
several English Lions
TWICKENHAM
25TH MAY
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Premiershiprugby.com/socks or 0844 847 2492
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RUGBY FINAL STOCKING FILLER!
INDIA captain Mahendra Singh
Dhoni has hinted that the fourth
and final Test against England
could be his last as skipper.
Dhoni has faced calls to quit in a
harrowing series for the hosts,
who won the first match but lost
the next two equally emphatically
to leave them facing a first home
series defeat since 2004.
An England victory or draw in
India captain considers quitting
as England look to wrap up win
BY FRANK DALLERES
Nagpur, where action starts this
morning, would clinch their first
series win in India since 1985.
Lets see, Dhoni said of his
future. While Im enjoying it,
because thats very important. If
youre not really enjoying the
sport, it becomes very difficult.
Dhoni is also at loggerheads
with Gautam Gambhir, according
to reports in India, and is said to
have complained to chiefs about
the openers attitude.
Dhoni has faced calls to quit and is said to have fallen out with team-mates
BRITISH and Irish Lions coaches
Graham Rowntree and Andy Farrell
hope to persuade head coach Warren
Gatland to take a strong nucleus of
English players on the 10-match tour
of Australia next summer.
Gatland announced Rowntree and
Farrell alongside Rob
Howley as his
forwards and
defence coaches
respectively, and
they hope this
months stunning
38-21 victory over
New Zealand has
proved England have
the players to secure
the Lions a first
Test series win
since 1997.
England have
dominated
recent Lions
squads, with 20
on the 2005 tour, but only provided
eight of the 37-strong party that
toured South Africa in 2009.
Im hoping, especially off the
back of the New Zealand game, that
there will be a lot of England players
on the tour, said Rowntree.
Farrell added that the emphatic
All Blacks victory had underlined the
claims of several England players,
such as Manu Tuilagi.
Quite a few of our old boys stood
out, theres a lot of inexperience in
our side in terms of international
rugby but there are already guys
putting their hands up, said Farrell.
For me and Graham to be on the
tour and hopefully a good handful of
England players to be there as well
is going to be a good testament to
the environment weve all
created here.
The tour starts in June
against the Barbarians.
BY ALEX SHARP
Tuilagi is one of Englands
Lions tour hopefuls
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