BUSINESS WITH PERSONALITY

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GREED
IS
BACK
 Lured by Money.

Driven by Revenge.

Obsessed with Power.

Defined by Integrity.

Issue 1,235 Wednesday 6 October 2010
PM TRIES TO WOO FAMILIES
AFTER BENEFITS BACKLASH
BUT DEFIES BIG BUSINESS BY DOWNPLAYING ITS CONTRIBUTION TO UK ECONOMY
CONSERVATIVE
CONFERENCE
BY DAVID CROW IN BIRMINGHAM
DAVID Cameron will today pledge to
press ahead with a married couple’s
tax allowance, in a move designed to
compensate some families who are
about to lose their child benefit.
The Prime Minister will tell dele-
gates at the Tory conference that the
coalition will “recognise marriage in
the tax system”, after a massive back-
lash over child benefit cuts that will
penalise stay-at-home mothers and
single parents.
Before the general election, the
Tories pledged to introduce an
allowance for married couples and
those in civil partnerships, but said it
would only be given when both part-
ners paid the basic rate of tax.
But last night aides to the Prime
Minister said he could expand the
policy to cover families with one high-
er-rate taxpayer.
“We certainly haven’t slammed
the door on that possibility,” said one.
And a source close to the chancel-
lor told City A.M. the allowance, to be
be introduced before the end of the
parliament in 2015, would apply to
some higher-rate taxpayers who have
lost out from the cuts to child benefit.
The Prime Minister is expanding
the policy to defuse the row over the
government’s decision to scrap child
benefit for 1.2m families that contain
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BUSINESS WITH PERSONALITY
JEROME KERVIEL GETS
FIVE YEAR SENTENCE
ROGUE TRADER JAILED P9
David and Samantha Cameron with baby Florence ahead of today’s key speech
a higher-rate tax payer, in a move that
is expected to save the exchequer
around £1bn a year.
The change will punish families
that have one adult paying the higher
rate of tax. From 2013, a two-child
family with a father that earns
£44,000-a-year and a stay-at-home
www.cityam.com
mother will lose £1,700 a year in child
benefit. But a two-earner family
where both parents earn £42,000 a
year – giving them a combined house-
hold income of £84,000 – will contin-
ue to receive their child benefit.
During the election, the Tories
unveiled plans to make up to £750 of
Picture: REUTERS
the personal allowance transferable
between adults who were married.
The Institute of Fiscal Studies said
the plan would cost the exchequer
£550m in foregone revenue.
But that plan only applied to cou-
ples where the higher-income mem-
ber was a basic-rate tax payer.
OPENING UP
PANDORA
FIRM CHAIRED BY
ALLAN LEIGHTON
DEBUTS P19
FREE
Extending it to higher-rate taxpayers
as well could wipe out most of the
£1bn the government will save by
scaling back child benefit.
The massive backlash over child
benefit cuts has taken the
Conservatives by surprise. Last night,
Cameron used a television interview
to apologise for not including the
plans in his election manifesto, while
chancellor George Osborne wrote to
MPs to explain the policy.
Meanwhile, the Prime Minister will
today champion the self-employed
over “big business”, as he seeks to
regain the political initiative and
reengage with voters.
He will say: “When you think of a
wealth creator, don’t think of the
tycoon in the glass tower. Think of the
man who gets up and leaves the
house before dawn to go out and
clean the windows.”
“The whole point is it’s not glam-
orous millionaires who are going to
get us out of this mess,” said one Tory
strategist.
The Prime Minister is also expected
to try and redefine the debate over
“fairness”, after the IFS and Labour
accused the government of delivering
a “regressive” budget that will hit the
poorest hardest.
“For too long, we have measured
success in tackling poverty by the size
of the cheque we give people. We say:
let’s measure our success by the
chance we give,” Cameron will say.
ALLISTER HEATH: P2, NEWS: P6-P7
Certified Distribution
02/08/10 – 29/08/10 is 93,782
 2 News
All businesses are wealth creators
EDITOR’S LETTER
ALLISTER HEATH
WHEN you think of a wealth-creator,
don’t think of a tycoon in a glass
tower – or so David Cameron will tell
the Tory party conference today.
Think instead of a window cleaner,
or a female entrepreneur who spends
every night balancing her books, he
will add. The Prime Minister is right
to celebrate those who have the
courage and vision to set up on their
own. But while small businesses are
fantastic, as are entrepreneurs, big
firms are equally vital sources of inno-
vation, jobs, investment and tax
receipts, as long of course as they
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24 Monument Street, London, EC3R 8AJ
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Email: news@cityam.com www.cityam.com
Editorial
Editor Allister Heath
Deputy Editor David Hellier
News Editor Ben Griffiths
Night Editor Katie Hope
Associate Editor David Crow
Business Features Editor Marc Sidwell
Lifestyle Editor Zoe Strimpel
Art Director Darren Soulsby
Pictures Alex Ridley
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Commercial Director Harry Owen
Head of Distribution Nick Owen
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WHAT THE OTHER PAPERS SAY THIS MORNING
HEDGE FUND MANAGER ENTERS BEAR
MARKET
A disgraced hedge fund manager is to
sell one of the world’s most valuable
collections of teddy bears at a London
auction later this month. Paul
Greenwood, who pleaded guilty to
fraud charges last year, will sell his
£1.2m collection of Steiff teddy bears
at Christies International on October
13, according to people familiar with
the situation.
MG PLANS FIRST ALL-NEW CAR IN 15
YEARS
MG, the Birmingham-based British
carmaker owned by China’s Shanghai
Automotive (SAIC), will by the end of
the year begin producing its first all-
new car in 15 years, and from 2011
relaunch in the UK as a “value”
brand. The company, which mainly
provides design and engineering serv-
ices for SAIC’s growing Chinese opera-
operate in a free market. This idea
that one can be pro one kind of
wealth creator but anti the other is
intellectually weak.
Anybody hoping that the coalition
would back down from its relentless
anti-big business and anti-City mes-
sage will therefore be disappointed. A
new financial activities tax (Fat) looks
likely to be imposed on banks soon,
on top of the existing tax on balance
sheets. This would include an addi-
tional levy on profits and on remu-
neration (even though bonuses are
already mostly taxed at 51.5 per cent,
and their continued payment is now
essential to the exchequer).
Previously, the government has
said it would only introduce a Fat if it
could secure international agree-
ment, due to fears that banks could
relocate some of their operations
overseas. This is no longer the case –
signing up France and Germany will
be held up as enough, which is non-
sense. Slowly but surely, activity, jobs
and tax receipts will migrate to other
UK taxes near top in Europe
TAX
▲
BY MATTHEW WEST
THE UK has become the fourth most
highly taxed country in the whole of
Europe, a report revealed yesterday
while also warning there could be an
exodus of high earners from the City.
KPMG’s annual individual income
tax and social security rate survey
showed the introduction of the 50
per cent rate of tax was the highest
personal income tax increase in the
world last year.
It also propelled the UK from 13th
on the league table last year to fourth
in terms of the amount of income tax
high earners are expected to pay.
Only Sweden, Denmark and the
Netherlands have higher personal
income tax rates.
Income tax levels in the UK are
now higher than those of key
European competitors, France and
Germany, KPMG found.
But the survey suggests other gov-
ernments in Europe and the rest of
the world may be following the UK’s
example by increasing the top rate of
tions, will in the fourth quarter of
this year begin assembling the MG6
at its Longbridge plant.
PRIVATE MONEY NOT ENOUGH, SAYS
ARTS REPORT
Philanthropy cannot make up for
public spending cuts of up to 30 per
cent facing arts bodies, according to a
new report, in a riposte to ministers
who have suggested donors could
help plug the forthcoming funding
gap. There may be scope for arts insti-
tutions to raise up to £100m over the
next six years by improving their tar-
geting of philanthropists, says the
study by Arts & Business.
FINANCIAL CRISIS GIVES NOBEL
FOUNDATION NO PEACE
This year’s Nobel laureates will
receive the lowest prize money in real
terms for a decade after the annual
pay-out was frozen for the eighth suc-
cessive year amid financial pressure
on the foundation that manages
Alfred Nobel’s endowment.
financial centres. London’s gradual
decline now looks inevitable: word at
the conference in Birmingham yester-
day was that the coalition wants to
“slap the bankers” and “not to allow
them to get away with it”.
So there you are: if you happen to
work in a glass tower or in finance,
you know what the coalition thinks
of you (though if you are married, you
may get an as yet undefined tax break
in 2015, to compensate for the
botched reform to child benefits). It is
extremely important to promote
entrepreneurship and to encourage a
flurry of new small businesses – but
denigrating those that have already
made it is not the way to go.
STRONG SERVICES SHOW EXPANSION
In both Britain and America, the serv-
ices sector is enjoying renewed signs
of life. Growth remains meagre but
positive; we are still expanding,
despite the gloom. In the UK, the serv-
ices sector’s purchasing managers
index enjoyed a rise to 52.8 from 51.3.
income tax as a way of dealing with
their budget deficits.
KPMG said income tax rates global-
ly had risen for the first time in seven
years reversing a general decline.
The majority of rate movement in
2010 came from Europe. Those pay-
ing the highest income taxes in the
world were still those living in the
European Union where average rates
went up by 0.3 per cent over the past
year, although this was in line with
the global increase in tax rates.
Jayne Vaughan, tax partner in
international executive services at
KPMG in the UK, said the higher rate
tax bracket could have a negative
affect on Britain’s economic competi-
tiveness.
“Individuals are highly mobile and
they may decide to vote with their
Chancellor George
Osborne could see an
exodus of City workers
if personal tax rates
remain high
GERMAN LAWYER POISED TO SMASH
GLASS CEILING
Clifford Chance could be set to shat-
ter one of the City’s longest-standing
barriers by becoming the first “magic
circle” law firm to appoint a woman
as its senior partner. The 560 partners
in Britain’s biggest law firm began
voting yesterday to replace Stuart
Popham, who is standing down in
December after eight years at the
helm.
LONDON’S GROWING LOVE OF MINERS
BECKONS A BRAVE NEW WORLD
They may already account for more
than 13 per cent of the Footsie by
value, but another big overseas miner
has set its sights on London. The ink
had barely dried on the biggest unso-
licited takeover in Polish history
before New World Resources revealed
its ambitions to re-incorporate in
Britain.
It was nothing to boast about – but
any reading above 50 suggests expan-
sion. The rebound in the US ISM non-
manufacturing index to 53.2 in
September, from 51.5, was even more
reassuring, even though the index is
still at a level consistent with sluggish
GDP growth.
The other key improvement comes
from China, where the manufactur-
ing PMI – that country’s most impor-
tant indicator, for obvious reasons –
rose to 53.8 from 51.7. The sharp slow-
down in the Chinese economy
appears to be ending, suggesting
world trade is improving again.
So what does all of this mean? I
have, of course, only focused on the
better news; there is plenty of bad
stuff too, with the Eurozone continu-
ing to slow and renewed sovereign
default fears from Ireland to Spain.
Manufacturing is still slowing. But in
the case of Britain, America and the
emerging world, there are still no
signs of a double-dip recession.
allister.heath@cityam.com MORE: P11
feet. And where employers are con-
cerned, tax is a crucial business issue
when it comes to deciding where to
locate workforces,” he said.
Vaughan said it was still unclear
EU HIGHEST RATES OF PERSONAL INCOME TAX 2010
COUNTRY RATE
2009 2010
Sweden 56.7% 56.6%
Denmark 62.3% 55.4%
Netherlands 52.0% 52.0%
Austria 50.0% 50.0%
Belgium 50.0% 50.0%
United Kingdom 40.0% 50.0%
Finland 49.8% 49.6%
Ireland 46.0% 47.0%
Portugal 42.0% 45.9%
Germany 45.0% 45.0%
WARREN BUFFETT SAYS IN FUTURE
WALL STREET CHIEFS SHOULD GO
BROKE – AND THEIR WIVES
Warren Buffett, the billionaire
investor, has hit out at pay practices
on Wall Street, attacking the lack of
reform despite two years passing since
the financial crisis struck. “People
have a propensity to gamble, and it
gets made easier and easier for them,”
Mr Buffett said.
ABSOLUTE RADIO LOSSES REACH
£4.3M
Absolute Radio, the former Virgin
Radio, has announced pre-tax losses of
£4.3m in 2009, as the radio group
owned by the Times of India saw the
impact of the recession and a change
of name. In the group’s first full year
of accounts the group revealed that
revenues in 2009 sunk to £14.8m from
£22m. Pre-tax losses for 2008 were
£2.66m.
CITYA.M. 6 OCTOBER 2010
NEWS | IN BRIEF
BT’s Tech Mahindra stake eyed
Private equity firms including Apax
Partners and Providence Equity have
shown interest in buying BT Group's
stake in Tech Mahindra that is likely to
be valued at $830m (£522m). BT has
restarted discussions to sell its holding
in Tech Mahindra following the restate-
ment of financial numbers by the Indian
IT services firm's unit Mahindra Satyam.
The British firm, which holds about a
third in Tech Mahindra, is expecting a 30
per cent premium over the current mar-
ket price for the stake sale, valuing the
deal at more than 37bn rupees (£522).
Boston Red Sox bid for Liverpool
Liverpool has received two new
takeover bids – one from Asia and the
other from the owners of the Boston
Red Sox, New England Sports
Ventures – but the football club's
American owners Tom Hicks and George
Gillett Jr. are trying to block the other
board members from pursuing negotia-
tions. Both bidders are understood to be
offering about £300m – enough to
cover around £280m in loan and fees
owed to Royal Bank of Scotland. Both
initial offers were rejected.
what the effect of the tax increases
around the world would be but
added “the fact that high income
earners are frequently more mobile
should not be overlooked.”
CHANGE 2010 2009
RANKING RANKING
-0.1% 1 2
-6.9% 2 1
0.0% 3 3
0.0% 4= 4=
0.0% 4= 4=
10.0% 4= 13=
-0.2% 7 6
1.0% 8 7
3.9% 9 11
0.0% 10= 8
ANOTHER NOKIA EXECUTIVE DEPARTS
Nokia said one of the key executives
involved in the development of its
new MeeGo operating system is leav-
ing the company, only months before
the Finnish company is expected to
launch handsets based on the soft-
ware. Ari Jaaksi has decided to step
down for personal reasons and will
leave the company in a couple of
weeks, a Nokia spokeswoman said.
His exit continues the recent exodus
of senior executives at the Finnish
company.
NOVARTIS CITES DISCONTINUED
DRUGS FOR CHARGE
Novartis warned third-quarter results
will be hit by a $590 million charge
linked to the discontinuation of the
development of two experimental
drugs, a move that comes amid the
company's ongoing portfolio restruc-
turing launched earlier this year.
CITYA.M. 6 OCTOBER 2010
Goldman sees
its first half
profits slide
▲
BANKING
BY STEVE DINNEEN
GOLDMAN Sachs yesterday revealed
profits at its London operations fell to
less than £1bn for the first half of the
year.
The bank posted a $1.47bn (£925m)
profit, compared to $2.72bn last year,
with revenues tumbling from $4.42bn
in the first half to just $7.34bn.
The bank revealed it paid the
Treasury $600m in the one-off bonus
tax, but this was offset by a fall of
roughly the same amount in the level
of corporation tax it paid.
The bank does not break out com-
pensation figures for its interim
trading period but its “administra-
tive expenses”, which are largely
made up of bankers’ pay, fell sharply
to $2.9bn.
However, last week it emerged the
bank handed mid-year bonuses worth
tens of millions to around 100 of its
London-based partners in the form of
stock compensation. The bank recent-
ly removed a £1m cap on the wages of
its partners and is now desperate to
hold onto its talented staff.
The bank said tough trading condi-
tions, including sovereign debt crises,
put pressure on its operations.
It said: “Several Eurozone coun-
tries remained under stress, reflect-
ing fiscal challenges and banking
sector concerns. In addition, concerns
about sovereign debt risk... intensi-
fied during the period, contributing
to higher market volatility and fund-
ing pressures.”
ANALYSIS l Goldman Sachs
160 $ 149.57
5 Oct
150
140
5 Jul 21 Jul 10 Aug 30 Aug 20 Sep
Ernst & Young is falling
behind its big four rivals
PROFESSIONAL SERVICES
▲
BY EMMA SADOWSKI
ERNST & Young (E&Y) has reported
flat revenue growth across its global
offices, falling behind big four rivals
Deloitte Touche Tohmatsu and PwC.
The accounting giant posted
$21.3bn (£13.3bn) in global revenue,
marking a slight decrease from 2009
when global income came to $21.4bn.
The firm’s results place it behind
Deloitte and PwC, which both posted
increases in global turnover.
Deloitte saw global revenue of
$26.6bn, while PwC’s revenue also
came to $26.6bn, marking a rise on
2009.
E&Y global chair-
man and chief
executive Jim
Turley will invest
over $1bn in the
next four years to
boost business.
E&Y’s figures were bolstered by its
Asia-Pacific practice, which delivered
a nine per cent rise in revenue.
However, its remaining regions,
including the UK, continued to suffer.
Pricing pressure in the UK led to a
two per cent decline in turnover last
year.
Jim Turley, global chief executive
said E&Y was “encouraged by the
return to growth”.
E&Y plans to invest $1.2bn in devel-
oping its business over the next four
years and will hire 3,000 people in the
UK and 5,000 in China and India this
year.
Deloitte said yesterday it also plans
to invest $1bn to fund growth.
News 3
Rio’s deal with
BHP on iron ore
hits a hurdle
MINING
▲
MINING group Rio Tinto has made no
decision on its planned $116bn
(£72.9bn) Australian joint venture
with BHP Billiton, it said yesterday
after claims that the deal could be ter-
minated.
“The Rio Tinto board has not made
any final decisions about possible out-
comes or next steps relating to the
proposed Rio Tinto/BHP Billiton iron
ore production joint venture in west-
ern Australia,” Rio said in a statement.
Earlier claims said Rio was prepar-
ing to walk away from the deal.
It is understood that Rio chairman
Jan du Plessis informed fellow direc-
tors on Monday he did not think BHP
would object to Rio ending the deal.
Rio said the BHP deal had been dis-
cussed during a board meeting on 4
October. “The board acknowledged
recent communications from regula-
tors that indicate potential obstacles
to achieving clearance for the joint
venture,” it said in its statement.
Some shareholders of Rio – the
world’s second largest iron ore
miner – have complained that BHP
should pay more than the agreed
$5.8bn to Rio as part of the JV, which
envisages a 50-50 partnership.
The payment accounts for the fact
that Rio is bigger in iron ore than
BHP.
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CITYA.M. 6 OCTOBER 2010
£1.6bn
first-half profit
8%
Sales jump to
3rd £32.9bn
Tesco is the third
biggest retailer in
the world
4,800
the number of
Tesco stores
around the
world
Outgoing chief executive Sir Terry Leahy reported a 12.5 per cent jump in first-half profit
Tesco talks
up economy
as profit lifts
▲
RETAIL
BY JOHN DUNNE
TESCO said yesterday that the UK was
unlikely to slide back into recession
as it reported a 12.5 per cent increase
in first half profit to £1.6bn.
The world’s third largest retailer
said it had been boosted by the
strength of Asian markets, offsetting
“modest” UK sales growth in the 26
weeks to 8 August.
Outgoing chief executive Sir Terry
Leahy, who is leaving the company in
March, said the company was in good
shape in a UK supermarket sector he
branded “the best in the world”.
Sales across the group jumped by
more than eight per cent to £32.9bn
over the period.
Overall UK sales were up by around
three per cent. Asked if the UK econo-
my was likely to lurch back into reces-
sion, Leahy said: “My starting point is
the global economy, which is in a
Russian grocer O’key planning
a £315m London share offer
▲
RETAIL
RUSSIA’S third biggest food retailer
O’key plans to raise up to $500m
(£315m) in a London share offer to
fund expansion, making it the latest
Russian firm to revive IPO plans.
O’key, which operates a 52-store
chain, will launch a global offering of
global depositary receipts (GDRs),
with each GDR representing one
share, by the year-end, it said yester-
News 5
12.5 % Leahy’s legacy means the shares are worth buying for now
rise in first-half
pre-tax profit
S
IR Terry Leahy effectively signs
off with yet another set of
results which shows Tesco is
negotiating choppy economic
of £1.2bn – was “remarkable” given
the headwind from petrol mix, club-
card initiatives and property charges.
Full-year net debt guidance of
ANALYSIS l Tesco
440 p
430.20
5 Oct
waters in a calm and assured way. £7bn was better than consensus 420
While UK sales growth of three per expectations of £7.8bn, while earn-
cent is far from stellar, growing ings per share jumped by 14 per cent.
Asian markets have helped to keep
the ship moving forward.
Analysts point to the surprise fore-
Leahy, who is planning to dedicate
time to private investments, charity
and watching his beloved Everton,
400
cast that the company’s US Fresh & when he leaves in March, can be
Easy chain will be profitable by more than satisfied with his legacy.
2012/13.
Meanwhile James Grzinic, retail
Under him the company has diver-
sified and become more internation-
5 Jul 23 Jul 12 Aug 2 Sep 22 Sep
analyst at Jeffries International, said al. Whether the momentum can be
UK profits before financial charges of
£1.22bn – compared with his forecast
maintained remains to be seen, but
for now Tesco is a “Buy”.
BOTTOMLINE
Analysis by John Dunne
pretty robust recovery. If you look at
the customer psychology and the
pulling power of the developing mar-
kets, I think they will pull Europe and
the United States into a stable and
established recovery.”
The company said UK like-for-like
sales excluding petrol rose 1.3 per
cent in the second quarter, compared
with 1.1 per cent in the first quarter –
but, adjusting for VAT sales, the fig-
ure was just 0.3 per cent higher over
the half-year.
Tesco has more than 4,800 stores in
14 countries, with two thirds of its
profit and sales generated in the UK.
Leahy was delivering his last set of
results before handing over to inter-
national chief Phil Clarke.
Kate Calvert, analyst at Seymour
Pierce, said: “These results show how
with good cost control in the UK and
internationally, Tesco is seeing the
benefits of the global economic recov-
ery and the benefit of food inflation.”
day.
It did not confirm how much it
wanted to raise from the deal -- which
will comprise both primary and sec-
ondary offer of shares.
“There continues to be substantial
under-penetration of modern retail
throughout Russia and we believe we
have the right business model and
customer value proposition opportu-
nity,” chief executive Patrick Longuet
said.
 6 Conservative Conference
Iain Duncan Smith has been forced into making some concessions
IDS offers lifeline to
business start-ups
CONSERVATIVE
CONFERENCE
BY DAVID CROW IN BIRMINGHAM
IAIN Duncan Smith yesterday out-
lined plans to give grants to unem-
ployed people who want to set up
their own businesses, in a bid to
boost the number of first-time
entrepreneurs.
The Halifax Reward The welfare secretary said the
New Enterprise Allowance (NEA)
scheme would offer financial sup-
Current Account. port and business mentoring to
enterprising people who are unem-
ployed.
He said: “If you have been unem-
Make the jump to simple, ployed for six months and want to
start your own business we want to
great value banking. support you. We will provide busi-
ness mentoring and a financial
package worth up to £2,000 to get
your business up and running. We
At Halifax we like to look after our customers. want to see 10,000 new small busi-
nesses by next year.”
That’s why our Reward Current Account gives you
£5 each month. And moving to us is easy, our
Head teachers gain power
Switching Team take care of everything for you.
To get your fiver just pay in £1,000 each month.
To find out more, pop into branch, call us
to discipline outside school
on 0845 122 1425 or visit halifax.co.uk
CONSERVATIVE
CONFERENCE
BY DAVID CROW IN BIRMINGHAM
HEAD TEACHERS are to be given
sweeping new powers to discipline
pupils who misbehave outside of
school gates, as part of new plans
to crack down on anti-social
behaviour.
Pay in £1,000 each calendar month to receive £5 (net)/£6.25 (gross) monthly. Reward paid net of income tax (at
Currently, heads have no author-
the rate specified by law, currently 20%). Higher rate tax payers may need to pay additional tax on the reward ity over pupils when they are off of
Call us, go online or visit one of our branches for more information on all fees and interest rates. Available only to school premises, making it diffi-
personal customers, aged 18 or over and who are resident in the UK. Halifax is a division of Bank of Scotland plc
Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ.
cult to punish them when they
misbehave in the local community.
Members of the NEA scheme will
get access to a low cost loan of up
to £1,000 to help with start-up
costs, as well as a grant worth up to
£1,000, paid out in weekly instal-
ments for six weeks.
A network of successful local
businesses will be asked to provide
mentoring and support through a
website, described as “online dat-
ing for entrepreneurs” by an aide
to Duncan Smith.
Duncan Smith made the
announcement as he unveiled the
“biggest reform of welfare in a gen-
eration”. A new Universal Credit
will replace the myriad of benefits
that are currently on offer, includ-
ing housing benefit and job seek-
ers’ allowance. Officials in the
Department of Work and Pensions
estimate there are 31 out-of-work
benefits currently available, rising
to 51 if one counts supplementary
and top-up benefits.
Crucially, the Universal Credit
But schools secretary Michael
Gove yesterday said he was rewrit-
ing the guidance that governs head
teachers’ powers, allowing them to
discipline pupils “any place, any
time, anywhere. Low-level anti-
social behaviour will now be the
responsibility of school principals.
“At the moment heads are pre-
vented from dealing with their
pupils if they run wild in a shop-
ping mall or behave anti-socially in
town centres,” Gove told delegates
at the Tory party conference in
Birmingham.
“So we will change the rules to
CITYA.M. 6 OCTOBER 2010
Picture: REX
will eventually be available to peo-
ple in low-paid employment as well
as the unemployed, to ensure that
no-one loses out when they take a
job.
But Duncan Smith had to make
big concessions to convince the
Treasury to give the green light to
his reforms. The Universal Credit
will now be phased in over ten
years, rather than five, while there
have been big cuts to the overall
benefits bill, including the scrap-
ping of child benefit for higher rate
taxpayers.
He also pledged a clampdown on
benefit fraud would not penalise
those in genuine need.
He said: “I say to those... who are
genuinely sick, disabled or are
retired: you have nothing to fear.
We will crack down on fraud and
help able people off welfare. This
means we will have enough
resources to provide peace of mind
to the very vulnerable.”
send one clear – and consistent –
message. Heads will have the free-
dom they need to keep pupils in
line.”
Gove also outlined plans to put
British history back at the centre of
the school curriculum, and
announced the appointment of
historian Simon Schama to lead a
review into the subject.
He said: “The current approach
we have to history denies children
the opportunity to hear our island
history. Our history has moments
of pride, and shame…. But the
trashing of our past has to stop.”
CITYA.M. 6 OCTOBER 2010
Home secretary Theresa May wants more power for victims
City bonuses facing
round two of taxes
CONSERVATIVE
CONFERENCE
BY DAVID CROW IN BIRMINGHAM
DOWNING STREET has confirmed
the government is considering a
second bank levy on pay and prof-
its, after new figures estimated the
bonus payout for the City would be
around £7bn this year.
Any new levy will take the form
of a Financial Activities Tax (FAT),
which would be imposed on remu-
neration and profits.
David Cameron will use his con-
ference speech today to promise to
“sort out the banks”, who he says
are not doing enough to boost the
CITY VIEWS: ARE THE CUTS TO CHILD BENEFIT FAIR?
Conservative Conference
▲
Picture: GETTY
economic recovery.
“Taxpayers bailed you out – now
it’s time for you to repay the favour
and start lending to Britain’s small
businesses again,” he will say.
“This is basically a slap in the
face for banks. They will not get
away with it,” said a source close to
the Prime Minister.
The government is stepping up
its threats after the Centre for
Economics and Business Research
(CEBR) said the total bonus payout
in the City would fall to £6.9bn this
year, compared to £7.3bn in the
2009-10 financial year.
However, the taxman will take
home more of the bonus than the
person who earned it, as the new
7
Victims to have
more power
over police
POLITICS
BY STEVE DINNEEN
HOME secretary Theresa May will tell
police to take anti-social behaviour
more seriously or face official sanc-
tions.
She says the coalition will give vic-
tims and communities the right to
force the authorities to take action.
She will also urge officers to treat
offences like vandalism and intimida-
tion as crimes rather than lower-level
anti-social behaviour.
Speaking at the Conservative Party
Conference in Birmingham yesterday
she said: “Too often we hear stories of
victims who are passed from pillar to
post.
“We hear about victims who call
the police on dozens of occasions but
aren’t taken seriously and in many
cases are ignored altogether.
“So as part of our reforms to anti-
social behaviour powers, we will give
victims and communities the right to
force the authorities to take action
where they fail to do so.”
tax rate of 50 per cent on income
over £150,000 comes into force.
Earlier this week, the Treasury
indicated it would be willing to
introduce a FAT for banks and
large building societies, as long as a The Halifax Reward
handful of other nations, such as
France and Germany, follow suit.
Chancellor George Osborne is
Current Account.
planning to discuss the FAT with
other finance ministers at interna-
tional meetings like the G20 to Make the jump to simple,
gauge support.
Even if nations like Hong Kong,
which is fast-becoming a major
great value banking.
international banking centre,
refuse to sign up to the FAT, the
government is prepared to press With our simple, straightforward overdraft fees it’s easy
ahead with the plans. to work out how much using your overdraft will cost;
Interviews by Marion Dakers
s¬a¬FOR¬EACH¬DAY¬YOU¬USE¬YOUR¬ARRANGED¬OVERDRAFT¬ON¬
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sending out half for many people. way. But it To find out more, pop
a message to Bills and tax are should be judged into branch, call us
families who already going up, on household on 0845 122 1425
want to return and it’ll come income, as or visit halifax.co.uk
to work, and as a real it seems a
works shock to much
against people with simpler
single more than way.” Call us, go online or visit one of our branches for more information on all fees and interest rates. EAR is the equivalent annual
parents too.” one child. rate. This is the actual annual interest rate for an overdraft. It does not take into account fees and charges. Overdrafts are
repayable on demand. Available only to personal customers, aged 18 or over and who are resident in the UK. Halifax is a
division of Bank of Scotland plc. Registered in Scotland No. SC327000. Registered Office: The Mound, Edinburgh EH1 1YZ.
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CITYA.M. 6 OCTOBER 2010
Kerviel emerges
from court after
being sentenced
to five years.
Picture: REUTERS
Rogue trader
prepares for
prison term
▲
BANKING
BY STEVE DINNEEN
JEROME KERVIEL emerged from court
yesterday sharp-suited and ashen-
faced, like a lost member of the
Reservoir Dogs cast, knowing he was
about to swap his black tie for a set of
prison overalls. He will wear the new
outfit for around two years, after
being handed a five-year prison term
for blowing €4.9bn (£4.3bn) of Societe
Generale’s money.
His conviction for forgery, unau-
thorised computer use and breach of
trust was the inevitable conclusion to
an almost unbelievable chain of
events, in which one man threatened
to bring down the entire French
banking system.
Almost as implausible has been
Kerviel’s personal journey. A bright
but never gifted student, he graduat-
ed from an average university before
starting his career at SocGen as, iron-
ically, a compliance officer. As a
banker he was largely overlooked, a
tiny cog in a sprawling machine, his
hands tied when it came to making
the big trades he craved. After eight
years he was still earning a relatively
meagre £75,000 a year.
Then, like a true gambler, he hit
upon a system: a system that would
prove to be the least effective in bank-
ing history. He masked vast trades
with fake hedge bets, allowing him to
Why was Kerviel sentenced to four
years when Madoff received 150?
Last night Kerviel’s five year sentence,
of which two were suspended, was
already being branded paltry. For a man
who blew a staggering sum of money, a
term that could last less than two years
seems remarkably generous.
Certainly when compared to the
dizzying 150 years handed to Bernard
Madoff for his $20bn ponzi scheme it
seems like a walk in the park. He will
only be 35 on his release – Madoff
would be 222. Nick Leeson, the banker
behind the Barings Bank collapse in
1995, served four years of a 6 1/2 year
Focus on Jerome Kerviel 9
TIME LINE | HOW KERVIEL BLEW €5BN
● 2000 finds controls at the bank lacked depth. Bouton, whose reputation was hit by a
The trader starts at SocGen in the middle ● 17 April 2008 trading scandal at the bank, resigns and
office, the department which controls SocGen says Bouton is relinquishing his blames relentless verbal attacks on his
traders’ activities. job as chief executive but will stay on as performance for his decision to quit.
● 2005 chairman of the board. ● 10 November 2009
Kerviel becomes an arbitrage trader in ● 4 July 2008 Kerviel loses appeal to delay trial.
what SocGen’s investment banking chief France's Banking Commission fines ● June 2010
calls a “very unusual” recruitment path SocGen €4m for serious breaches in Trial of Kerviel lasts over two weeks.
for a trader. His experience gives him sig- internal controls. Kerviel is branded a liar who took “inhu-
nificant knowledge of the bank's control ● 31 August 2008 man” risks by a former boss, former head
systems. Kerviel charged with fraud and breach of of investment banking, Jean-Pierre
● 24 January 2008 trust and ordered to stand trial. Mustier.
SocGen uncovers fraud involving Kerviel, ● 3 September 2008 ● 10 November 2009
resulting in a loss of €4.9bn. Kerviel appears at a court hearing. Kerviel is found guilty of breach of trust.
● 8 February 2008 ● 6 October 2008 The judges say Kerviel had not been given
Kerviel is jailed but leaves in March after SocGen unveils €4.8bn capital hike to even tacit authorisation from his bosses to
winning legal battle. repay state support and pursue acquisi- speculate excessively and that SocGen’s
● 20 February 2008 tions. own shortcomings did not exonerate him
Internal investigation into trading loss ● 29 April 2009 from his duties as a professional trader.
risk billions on his market hunches.
More than €50bn was tied up in his
crackpot plan. And eventually it all
came crashing down.
Since his arrest Kerviel, 33, has
been lauded by the French public as
an anti-hero of the financial crisis, a
man who superficially appeared to
prove the public belief that the finan-
cial system was dangerously out of
control.
He became a celebrity. Websites
sprang up lionising the rogue trader;
he released a book about his experi-
ences (albeit to modest sales); t-shirts
bearing his name sold in their thou-
sands. As the face of the financial cri-
sis, Kerviel was perfect. Young,
handsome, stylish and arrogant.
He goes to prison as one of the
most famous men in France, a pin-up
boy for people opposing the system
he loved. A movie of his life is a racing
certainty.
But it’s not all good news. Kerviel is
still liable for the €4.9bn he blew.
Going by his last salary, it will take
him nearly 50,000 years before he is
back on even terms.
For SocGen it is the start of a very
different journey. After being cleared
of turning a blind eye to Kerviel’s
actions (not “responsible for the crea-
ture that it had created”, in the words
of the judge) it can start to rebuild its
reputation. It will be a long road for
both parties.
sentence in a Singaporean jail. And
Allied Irish Banks’ John Rusnak was hit
with a 7 1/2 year stretch in the US for
concealing a relatively insignificant
$691m.
In many ways, Kerviel is lucky he
committed his crimes in his home
country, where sentences are more
lenient: he could have faced 20 years
if tried in the US. However, his time is
not likely to be easy. French prisons
have the highest suicide rates in
Europe and there are numerous
reports of breaches of human rights.
 10 Economic News CITYA.M. 6 OCTOBER 2010

Bank of Japan
cuts interest
rates to zero

▲
CURRENCIES

THE JAPANESE government bond

yield curve steepened yesterday after
the Bank of Japan (BOJ) launched an
asset buying scheme, while super-
long yields rose on disappointment it
was not more aggressive about buy-
ing debt.
The BOJ also cut interest rates to
near zero and pledged to keep rates
effectively at zero until prices were
seen stabilising.
Such a commitment was expected
to help support short to medium-
term bonds.
In addition, since yields on such
sectors are already very low, it may
also help prod investors to buy long-
term Japanese bonds such as 10-year
bonds, market players said.
“The time horizon for keeping
interest rates low was extended and
clarified ... and that will make it easi-
er to buy short and medium-term
JGBs [Japanese government bonds],”
said a dealer for a Japanese brokerage
house. BOJ governor Masaaki Shirakawa has cut rates to zero Picture: GETTY

Moody’s eyes fresh

cut to Irish ratings
WORLD ECONOMY begin repairing the country’s bat- to bring the deficit below three per
▲

BY HARRY BANKS
MOODY’S has warned it may cut
Ireland’s credit rating again, saying
additional austerity measures are
needed given the huge bill for clean-
ing up its banks, a weak economic
recovery and rising borrowing costs.
Ireland’s deeply unpopular gov-
ernment says it could cost up to
€50bn (£43.4bn) to unravel banks’
property losses, driving the cost of
Dublin’s borrowing to almost three
times that of Germany and prompt-
ing renewed jitters about debt else-
where in the Eurozone.
While Moody’s emphasised there
must be additional fiscal rigour to
tered finances, the ratings agency
worried that prolonged austerity
could cripple domestic demand
with a knock-on impact on govern-
ment revenues.
In the latest sign of growing dis-
tress in the real economy, Ireland’s
services sector shrank for the first
time in six months in September
following a sharp drop in domestic
orders. The purchasing managers’
index survey came on the heels of
data last week indicating the manu-
facturing sector was also back in
recession.
“It’s important to anchoring fis-
cal expectations that the govern-
ment comes up with a credible plan
cent of GDP by 2014, and in that
context additional measures are to
be expected,” said Dietmar
Hornung, Moody’s lead sovereign
analyst for Ireland.
•Meanwhile, Allied Irish Banks
(AIB) said yesterday it will sell a 22
per cent stake, currently valued at
around $2.2bn, in New York region-
al lender M&T Bank Corp in a public
offering.
The Irish government will take a
majority stake in AIB next month to
help it fill a capital hole of €10.4bn
caused by the bank’s fatal courtship
of property developers during the
go-go years of the “Celtic Tiger”
economy.

IMF warns banks still pose

threat as currency war looms
GLOBAL ECONOMY “The global financial system is estimate of $2.3 trillion.
▲

BY HARRY BANKS
SOVEREIGN debt risk in Europe and
continued real estate woes in the
United States have dealt a setback to
global financial stability in the past
six months, the International
Monetary Fund said yesterday.
The IMF said risks to the financial
sector could be reduced if legacy
problem assets were cleaned up, if
governments improved their fiscal
positions and if more clarity were
provided on global financial regula-
tion.
still in a period of significant uncer-
tainty and remains the Achilles’
heel of the economic recovery,” the
IMF said in its twice-yearly Global
Financial Stability Report.
“The recent turmoil in sovereign
debt markets in Europe highlighted
increased vulnerabilities of bank
and sovereign balance sheets arising
from the crisis,” the fund said.
The IMF said it trimmed its esti-
mate of total global bank write-
downs related to the financial crisis
between 2007 and 2010 to $2.2 tril-
lion (£1.38 trillion) from its April
Separately, the head of the
International Monetary Fund
warned yesterday that countries
risked undermining the global eco-
nomic recovery if they sought to use
their currencies to boost domestic
growth.
“There is clearly the idea begin-
ning to circulate that currencies can
be used as a policy weapon,”
Dominique Strauss-Kahn told the
Financial Times. “Translated into
action, such an idea would repre-
sent a very serious risk to the global
recovery.”
CITYA.M. 6 OCTOBER 2010
Fears of double-dip
ease on services rise
ECONOMY
▲
BY HARRY BANKS
BRITISH services activity growth
rose unexpectedly in September
from a 16-month low, but the out-
look is poor with the weakest
inflow of new business in over a
year, a survey showed yesterday.
The figures are unlikely to alter
expectations that the Bank of
England will keep its ultra-loose
policy stance unchanged later this
week and probably well into next
year.
The headline index of the
Markit/CIPS services PMI index
increased to 52.8 from 51.3, versus
economists’ expectations for a
Greek premier George Papandreou is under pressure
Bernanke says it’s too early
to cut deficit despite growth
WORLD ECONOMY
▲
BY HARRY BANKS
FEDERAL Reserve chairman Ben
Bernanke yesterday warned against
taking immediate action to reduce
the US deficit warning it could
derail the nascent recovery.
“Economic conditions provide
little scope for reducing deficits sig-
nificantly further over the next
year or two,” Bernanke told an
audience in Rhode Island. “Indeed,
premature fiscal tightening could
put the recovery at risk,” he added
implying tax cuts should not be
Economic News
slight fall to 51.0.
However, planned cuts to govern-
ment departments’ spending of
around a quarter over the next five
years already seem to be affecting
the firms covered in the survey,
which excludes most activity in the
public and retail sectors.
“Inflows of new work and
prospects for the year ahead have
been hit by widespread worries
that the recovery is losing steam,
cancelled government contracts
and the prospect of more cuts to
come,” said Markit’s chief econo-
mist, Chris Williamson.
The new business component
slowed to a 15-month low of 51.3
from 51.4. Business expectations
Picture: GETTY
allowed to expire at the end of this
year.
Bernanke’s policy is in direct
contrast to that of Bank of England
govenor Mervyn King who has pub-
licly backed the coalition’s govern-
ment’s plan to slash spending next
year.
Bernanke’s comments came as
fresh data showed the pace of
growth in the US non-manufactur-
ing sector accelerated more quickly
than economists had expected.
The jump in the Institute for
Supply Management’s services sec-
tor index to 53.2 in September from
11
for the coming year increased to a
four-month high but remained
subdued by historic standards.
“Unless trends in new business
show an improvement soon, the
lack of confidence is consistent
with a downturn in business activi-
ty in the coming months,”
Williamson said.
Markit said that third-quarter
service-sector output was the weak-
est since the second-quarter of
2009.
This bodes ill for third-quarter
GDP growth, which economists
already expect to slow sharply from
a nine-year high of 1.2 per cent in
the second quarter as temporary
factors fade and spending cuts bite.
Eurostat may
revise Greece’s
2009 deficit
▲
WORLD ECONOMY
EU statistics agency Eurostat may
revise upwards Greece’s 2009 budget
deficit but this will not significantly
impact this year’s fiscal gap, a senior
official at Greece’s finance ministry
said yesterday.
“Even if there is a significant revi-
sion for 2009, the impact on the 2010
deficit will be very small,” the offi-
cial, who did not want to be named,
said.
Greece expects to slash this year’s
budget deficit to 7.8 per cent of GDP
from 13.8 per cent in 2009, based on
its draft 2011 budget unveiled on
Monday. Next year it wants to shrink
the budget hole to seven per cent,
below a 7.6 per cent target under an
IMF/EU bailout plan.
Eurostat said in April it might
revise upwards Greece’s 2009 deficit
by up to 0.5 percentage points of
GDP, and public debt by between five
and seven percentage points, to
account for uncertainties in the
reported statistical data.
51.5 in August provided some hope
that economic activity picked up in
the third quarter.
The reading was above the 52
median forecast by economists. A
reading above 50 indicates expan-
sion in the sector.
The index showed services firms
took on more workers in September,
with the employment component
rising to 50.2. Though that reflected
only modest hiring, it was above
August’s reading of 48.2, which
shows the sector shed jobs that
month. New orders rose to 54.9
from 52.4.
 The Capitalist
12 CITYA.M. 6 OCTOBER 2010
EDITED BY
JULIET SAMUEL
GOT A STORY? EMAIL
thecapitalist@cityam.com

PETTIGREW “I love the

CALLS ALL
ABOARD FOR
STEAM RIDE
IT was all aboard at Tower Pier last night as
City bigwig Jim Pettigrew added an unusu-
al venture to his impressive CV, which
includes stints at Marks and Spencer, CMC
Markets, Icap and, in his current role,
Aberdeen Investment Managers. Pettigrew
played host as fellow City figures arrived to
experience his latest venture: the relaunch
of the world’s last seagoing paddle steam-
er, The Waverley. Pettigrew had the steam-
er paddle its way down from Scotland to
take up residence in the Thames for its
grand opening cruise during which guests
admired its fully restored steam engines
and supped on canapés. “Hopefully corpo-
rates around London will start to use it as
an events space for charities,” he told The
Capitalist as he readied himself for its glam-
orous voyage. With the 100-strong guest
list including former Treasury select com-
mittee head Labour MP John McFall, as
well as representatives from the Royal
Bank of Canada, Lloyds and Invesco
Perpetual, and with the addition of an
impromptu bagpipe solo from an
enthused Alistair Campbell as the party
wound down -- the boat could hardly have
hoped for a more auspicious launch.
Bon voyage.
The Waverley steam boat passed under Tower Bridge with 100 guests aboard Picture: Micha Theiner
STICK IN THE MUD
Over a hundred competitors will brave
the mud this weekend at the 100% 10km
Run, organised by Steven Tredget.
Readers might already know Tredget,
who is known variously as the City’s Iron
Man, “the Tredge” and Liberum Capital’s
head of equity sales. The event is being
held in aid of Kids Company, a charity
that helps 14,000 kids from deprived
backgrounds in the City. The idea is that
instead of going through the hassle of
getting sponsors, runners will pay £20
each to enter the race, with 100 per cent
of profits going to the cause.
“I thought if you just put all the profits
to charity, it would avoid the hassle of
idea of a few
pinstripes up
against a few
paras,” says
charity race
organiser
Steven
Tredget
sponsorship forms and so on,” says
Tredget.
The race is set to include runners from
Liberum, Barclays Capital and Citigroup,
with a fierce rivalry developing between
the brokers and rival fund managers
from Octopus Investment Managers. But
Tredget thinks they might both be out-
done by the soldiers taking part: “I love
the idea of a few pinstripes up against a
few paras,” he says. And he has left no
detail ignored: runners will get goodie
bags courtesy of Zetar and For Goodness
Shakes and can look forwards to being
greeted by a band of bagpipers after they
slave up the biggest hill.
And with the Surrey course – which is
on Ministry of Defence land – having
Steve Tredget is no stranger to mud
recently hosted a horse trial, muddy run-
ners could well feel they have earned the
serenade. Of course, City joggers know
that mud is good for you, and Tredget is
inviting anyone tempted to take part to
show up on Sunday. Look up the logistics
at www.race100percent.com.
SOLDIER, SAILOR
To deepest Essex, where The Capitalist
recently caught up with Simon Moore,
intrepid chief executive of the London
Gateway port development at the mouth
of the Thames. An ex-Navy man, Moore
was keen to impress his nautical prowess
upon a boatload of hacks during a tour
of the still-waterlogged site. “I’ve sailed
on ships around the world – and I’ve not
once worn a coat on deck,” boasted
Moore, who donned nothing but a crisp
shirt and appropriate navy blue tie
under his life jacket. “I’ve spent 90 per
cent of my working life in the sunshine,
so Essex is a bit of a challenge – but I
don’t intend to start wearing coats now.”
Brrr.

Future City after-work debates

every night this week
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 14 News
Sportech in
£51m deal for
US bets firm
▲
LEISURE
BY JOHN DUNNE
FOOTBALL pools operator Sportech
yesterday completed a £51.4m acquisi-
tion of US-based gaming group
Scientific Games Racing (SRG) and
said it was looking to further expand
its presence in the country.
SGR’s parent company, Scientific
Games Corporation, now holds a 19.9
per cent stake in Sportech, under the
terms of the deal.
The acquisition will transform the
Liverpool-based group into one of the
world’s leading pool and tote betting
operators.
It will now have a significant
foothold in football and horseracing,
across Europe and North America.
The completion of the deal has
taken almost a year as regulators in
the US and Europe have been scrutin-
ising the details. Sportech will now
operate from bases in the Hague, in
the Netherlands, Essen in Germany,
and Connecticut and Atlanta in
North America. But the Liverpool
operation will remain the headquar-
ters of the new group which will
process more than £8.2bn in bets.
Chief executive Ian Penrose said
that the US offered a gateway to more
sales both online and in the more tra-
ditional method of betting on paper
forms.
He said: “This is a massively impor-
tant move for us and makes us very
well placed in a changing US market.
Over the past three years Sportech
has undergone significant restructur-
ing, culminating in the completion of
the SGR acquisition. This acquisition
creates a world-leading pools betting
company with international reach.
“As well as significant growth
potential in our existing main mar-
kets of Europe and North America,
the enlarged Sportech will have the
scale and capability to compete in the
new and emerging regulated global
gaming markets.”
The company said it was not taking
on any debt to finance the acquisition
which had been carried out with a
number of partners. Penrose added:
“This is a solid investment.”
ANALYSIS l Sportech
p 42.50
44 5 Oct
40
38
5 Jul 23 Jul 12 Aug 2 Sep 22 Sep
Central London property prices have fallen 0.2 per cent Picture: Micha Theiner/City A.M.
Central London homes hit
as summer lull takes a toll
PROPERTY
▲
BY MATTHEW WEST
HOUSE prices in central London fell
for the first time in 18 months in the
third quarter of the year, the property
firm and chartered surveyor Cluttons
said yesterday.
Prices fell 0.2 per cent, reversing a
0.9 per cent increase in the previous
quarter, as demand for property
weakened and the number of proper-
ties offered for sale over the summer
increased. House prices in prime cen-
tral London locations remained flat
while in non-prime city locations
house prices fell.
The fall is the first since March
2009 and although prices have risen
by 5.9 per cent on last year they are
still 11.1 per cent below their
September 2007 peak.
Andrew Stanford, head of Cluttons’
residential professional division said
prime located properties were hold-
ing their value to a certain extent,
although potential buyers had
become more discerning with
demand focused on properties in the
mid-market range up to £2.5m
“Only properties in prime locations
or those with a unique selling angle
were receiving real interest from
potential purchasers,” he added.
CITYA.M. 6 OCTOBER 2010
FSA mortgage
plans would
have left 4m
without loans
▲
PROPERTY
BY MATTHEW WEST
NEARLY four million homeowners
would have been denied a mortgage
between 2005 and 2009 under afford-
ability proposals put forward by the
Financial Services Authority (FSA), the
Council of Mortgage Lenders (CML)
said yesterday.
It said that amounted to over half
of all loans during the period not
being granted to potential borrowers,
despite the fact most were coping
with repayments.
The trade body also warned
730,000 first time buyers, equivalent
to 95 per cent of all those trying to get
onto the property ladder, would have
been rejected by lenders as affordabil-
ity criteria would have been too tight.
The CML said that while its analysis
was backward looking it suggested
the impact of the FSA proposals on
the future mortgage market would be
significantly higher than the regula-
tor’s own assessment.
Moreover, some 80 per cent of
impaired credit borrowers would
have been denied a mortgage despite
only 20 per cent of them experienc-
ing difficulties in meeting repay-
ments in 2009, the CML said.
But in a statement the FSA said its
proposals were designed to “address
the major failures that have occurred
in the mortgage market”, and that its
evidence showed “16 per cent of mort-
gage borrowers were already finan-
cially overstretched.”
CITYA.M. 6 OCTOBER 2010
Tui gains from
collapse of
smaller rivals
▲
TRAVEL
BY STEVE DINNEEN
TUI Travel yesterday released what an
analyst described as a “real
humdinger” of a trading statement
for August and September as it took
advantage of the collapse of some of
its smaller rivals.
Europe’s largest travel firm said
holiday bookings for winter and next
summer were encouraging and said
net debt should fall by more than it
expected.
Chief executive Peter Long said hol-
idaymakers were seeking the security
of a major tour operator after the fail-
ure of a number of smaller operators
and airlines earlier this year, claim-
ing: “We have benefited from this
flight to quality.”
British travel companies that have
collapsed, leaving thousands of pas-
sengers stranded, include Kiss Flights,
Goldtrail and Sun4U.
TUI said winter sales in the UK
were up 17 per cent compared with
News 15
Chief executive Peter Long says the
security Tui offers as a major tour
the previous year, while summer 2011 operator has helped sales.
booking volumes were up five per Picture: REX
cent in the UK and up 18 per cent in
the Nordic region, the two markets it
currently has on sale.
The company said its summer 2010 ANALYST VIEWS: WHAT DO Y0U THINK OF TUI’S TRADING UPDATE?
By Steve Dinneen
programme, which runs to the end of
October, was almost fully sold after a
surge in late bookings. WYN ELLIS| NUMIS CHRIS ALEXANDER| BNP PARIBAS
“ “
After warning on profit in August,
TUI Travel maintained guidance for
the year. Analysts are predicting full- Demand has held up well over the sum- This morning’s update strikes a more
year profits for Tui of £269.5m on mer and TUI appears to be encouraged by the confident posture than that from Cook last week.
sales of £13.4bn.
apparent return of consumer confidence. In bookings terms, the summer was OK, but win-
ANALYSIS l TUI Additional restructuring is required however, ter bookings are better – TUI has probably out-
225.50 notably at Corsair (possibly£60m) and in the UK performed Cook and raised market share. In the
5 Oct
” ”
240
p
(around £20m). High levels of exceptional near term we see few catalysts to lead to
costs are a sadly recurrent feature. a material revaluation.
220
RICHARD CURR| PRIME MARKETS
“
200
Tui Travel has well and truly caught the market napping this morning, with a real humdinger of a trading update. the
”
group has taken advantage of tough trading conditions to build market share as smaller operators struggle and fail, and with
5 Jul 23 Jul 12 Aug 2 Sep 22 Sep net debt reduced and positive noises for summer 2011, shareholders should see some decent gains in coming weeks.
 16 News
Superwoman Horlick
sets up film finance firm
▲
PRIVATE FINANCE
BY MATTHEW WEST
BRAMDEAN Asset Management, the
investment company run by the City
fund manger once dubbed super-
woman, Nicola Horlick, will launch a
film development company today.
Derby Street Films is seeking £2m
from private investors to develop
books and potentially television pro-
grammes into movies.
Horlick said the company planned
to develop 25 films over the next
three years, either developing a book
into a film from the ground up or
investing in an existing script, which
needed some more money to reach
completion.
Horlick said many producers were
concerned about the lack of develop-
ment finance available. She added
Derby Street Films would provide a
safe bet for investors, while providing
the finance producers wanted, as it
didn’t depend on box office success.
CITYA.M. 6 OCTOBER 2010
She also dispelled any suggestion
that she would be financing her hus-
band, journalist Martin Baker’s
attempts to turn his book, Meltdown,
set at the height of the financial cri-
sis, into a film.
She said: “My husband has been
working on a script for his book and
has been working with a producer in
Hollywood but the timing of the
launch of the company and that are
purely coincidental and we have
nothing to do with it.”
Bramdean’s Nicola Horlick is seeking £2m for her new film development company Picture: REX
CITYA.M. 6 OCTOBER 2010 Focus on Recruitment 17

... but UK job demand falls

▲
UK ECONOMY
BY MATTHEW WEST
OVERALL demand for staff among
employers across the UK grew at its
slowest rate in almost a year last
month, a report published today will
City job vacancies are at their highest level since 2007 Picture: REUTERS show, prompting fears the economy
may be slipping back into recession.
And hourly pay among temporary
and contract staff actually decreased
marginally in September for the first
time in nine months.
Engineering, construction and
executive staff were those most in
demand indicating a continuing
recovery in the private and manufac-
ment cutbacks and efforts to reform
the NHS, which KPMG partner and
head of business services, Bernard
Brown warned “may be only a sign of
things to come.”
Kevin Green, chief executive of the
REC, said September’s report showed
the jobs market was “starting to flat-

City jobs at
The Recruitment and Employment
Confederation (REC)/KPMG report
showed a slower rise in both perma-
nent and temporary vacancies during
the month.
Salary increases among permanent
turing sectors.
But public sector recruitment had
seen a severe drop in demand as
organisations began redundancy pro-
grammes or imposed hiring freezes.
There had been “a sharp decline”
line” adding the figures could “her-
ald a ‘double dip’ in employment”.
Green said: “While there is margin-
al growth, these figures are the worst
we have seen for a year. The govern-
ment must do everything possible to

highest level
staff also rose by the lowest amount in the demand for healthcare profes- avert the threat of increasing unem-
in ten months, the report shows. sionals as a direct result of govern- ployment.”

since 2007 ...

debt obligation product experience in
▲

UK ECONOMY
BY MATTHEW WEST areas such as project management,
performance analysis, back office,
THE number of job vacancies in bank- risk and compliance, finance depart-
ing and financial services has reached ments and marketing teams were in
levels not seen since before the credit particular demand, Ambition added.
crunch, a forecast by a City recruit- Tim Gilbert, UK managing director
ment consultancy claimed yesterday. of Ambition, said: “We predicted in
Recruitment firm Ambition said early 2010 that there would be rapid
job vacancies in the City were now up growth in the City and this forecast
260 per cent on the first quarter of has played out. Significant increases
2009, which was at the height of the in demand for staff off the back of
economic downturn. the equities markets helped fuel the
While there had been a slight early growth. But increased activity in
decrease in the number of vacancies the fixed income market has boosted
between the second and third quarter many companies’ appetite to hire in
of this year, overall the number of recent months.”
roles available remained higher than But the City is currently suffering
at any point since 2007, according to a skills shortage, warned the recruit-
the report. ment company, with more vacancies
The growth in job vacancies had than skilled candidates available to
been driven by increased business fill them.
activity in the fixed income and for- There are currently 11 vacancies for
eign exchange markets, said every 10 candidates actively searching
Ambition. for work in the City, said Gilbert, a
Expansion in the interest rates, ratio which had risen sharply from
structured rates and structured cred- the three vacancies per 10 candidates
it markets during 2010 had also led in the first quarter of 2009.
many City institutions to add to their Gilbert added candidates were
workforce, the report found. more confident about their prospects
Candidates with interest rate, cred- than at any time in the last three
it default swap and collateralised years.

ANALYSIS l Number of financial services vacancies by quarter

750
xx
Source: index Points

80

40

0
02 07 03 07 04 07 01 08 03 07 03 08 04 08 01 09 02 09 03 09 04 09 01 10 02 10 03 10

Big three recruitment firms are

expected to post solid growth
growth to be broadly flat at Hays,
▲

UK ECONOMY
arguing its exposure to the public sec-
THREE of the capital’s largest recruit- tor in the UK could potentially hold
ment firms are due to provide trading growth back despite the fact it is
updates this week. making greater in-roads into conti-
Robert Walters is due to report nental Europe and Asia.
third quarter gross profit today. Collins Stewart upgraded its recom-
Hays is due to publish first quarter mendation on Robert Walters to
growth figures tomorrow, while “buy” from “hold” while remaining
Michael Page will announce third neutral on Hays and Michael Page.
quarter figures on the same day. Hays only announced its full-year
Fund managers Collins Stewart yes- results to 30 June five weeks ago.
terday forecast gross profit in the An City insider told City A.M. that
range of £110m and £113m for analysts will be looking to see
Michael Page and £40.5m for Robert whether it has lowered its public sec-
Walters. However, it said it expected tor exposure since then.
 18 News CITYA.M. 6 OCTOBER 2010

Grainger is
Restructuring HARBINGER SELLS 14.1PC OF INMARSAT

upbeat on
cuts Northern residential
Foods’ costs

▲
PROPERTY
BY HARRY BANKS
THE largest quoted housing landlord,
Grainger, said yesterday it expects
the valuation of its cornerstone resi-
FOOD PRODUCERS rise in input costs going into 2011. dential property portfolio to outper-
▲

BY HARRY BANKS
FOOD manufacturer Northern Foods
saw sales growth accelerate in its sec-
ond-quarter and said it was changing
the structure of its business to save
money as it braces for a possible dou-
ble-dip recession.
“We don’t know whether there’s
going to be a double-dip or not but we
are planning for it and keeping a
weather eye open on it,” chief execu-
tive Stefan Barden said yesterday. He
said the firm, which makes own-label
products for retailers as diverse as pre-
mium food seller Marks & Spencer
and discounter Aldi, would shift from
five business units to two divisions –
branded and chilled.
The branded division will comprise
Goodfella’s Pizza, McDougalls and
Hollands Pies, Fox’s Biscuits and
Matthew Walker Puddings, while the
chilled division will combine sand-
wiches and salads with ready meals
and the firm’s British Airways supply
business.
Northern Foods said the move
would mean a restructuring charge of
up to £6m, with payback by the end
of 2011. Some jobs would go with a
consultation programme under way.
Barden said he expected competi-
tive market conditions to continue
and forecast a two to four per cent
But he said action taken at the start
of the last recession, when the firm
increased the proportion of value
lines to 20 per cent of sales, meant it
was well placed if consumers rein in
spending.
“If it happens again we can react
very quickly and deliver what the
retailers want,” he said.
Northern Foods has lost over a
third of its value over the last year,
underperforming a five per cent rise
in the UK food producers’ index. The
stock closed up half a per cent yester-
day, valuing the business at £216m.
The firm said underlying sales rose
7.1 per cent in its second quarter to 2
October, having fallen 1.6 per cent in
the first quarter. The outcome reflect-
ed a rise of 16.4 per cent in the chilled
division and a 10.9 per cent increase
in the bakery division.
ANALYSIS l Northern Food
p 46.00
48 5 Oct
46
44
42
5 Jul 23 Jul 12 Aug 2 Sep 22 Sep
US HEDGE fund Harbinger Capital Partners has halved its stake in satellite operator
Inmarsat, headed by Andy Sukawaty (above), ending constant bid speculation. Harbinger,
which still holds 14 per cent of the stock, sold 65m ordinary shares at 630p per share or
£410m, after deciding not to make a full offer.
Picture: Micha Theiner/City A.M.
form the market when it issues its
full-year results in late November.
Chief executive Andrew
Cunningham said the 13,000-proper-
ty portfolio, about half of which is in
London and the south east of
England, would benefit from the
strength of those markets. “I would
say in terms of valuation it will out-
perform,” he said, referring to the
recent annual valuation of
Grainger’s portfolio for its full-year
results.
“You can’t be blind to the fact that
broadly prices in London and the
south east have remained pretty
strong,” he said. Grainger’s UK resi-
dential properties were worth £1.6bn
on 31 March, he said.
In September, data from
Hometrack showed house prices rose
at their slowest annual rate in seven
months in September, with prices
falling monthly in all regions. The
data showed house prices were up
one per cent year-on-year.
Cunningham also said the margin
at which Grainger sells its residential
properties would be up on last year,
but declined to give a specific figure
ahead of its full-year results.
Grainger achieved a margin of 37.6
per cent on property sales in its 2009
full-year, down from 45.9 per cent in
2008.

Kazakhmys chairman offloads chunk

of shares to the Kazakh government
COMMODITIES ing it the second biggest loser in the fund Samruk-Kazyna. He sold the
▲

BY HARRY BANKS
KAZAKHMYS chairman Vladimir
Kim has sold nearly a third of his
stake in the company to the Kazakh
government for about $1.3bn
(£818m), sparking concerns about
increasing government involve-
ment in the copper producer.
Kim sold about 11 per cent of the
London-listed company to diversify
his investments ahead of a possible
secondary listing next year in Hong
Kong, the firm said yesterday.
Shares in Kazakhmys – the
world’s 10th biggest copper produc-
er – fell 2.8 per cent to 1,383p, mak-
blue chip FTSE 100 index.
“We think the market will see
two negatives from the announce-
ment: the state’s increasing control
of the business, and Mr Kim being a
seller at current levels. As a result
we expect profit taking in the near-
term but see no change to the
underlying investment case,”
Liberum Capital said in a note.
Evolution Securities cut its rating
on the stock to “Reduce” from
“Add” with a price target of 1,290p.
Kim reduced his stake in the
company to 27.9 per cent from 38.9
per cent, selling the shares to the
government’s national welfare
shares on the Kazakh stock
exchange for the equivalent of
1,423p each, Monday’s closing price
in London.
Kim agreed not to sell any more
shares for 12 months, except for a
stake representing four per cent of
the company which would be avail-
able to promote liquidity during a
possible secondary listing in Hong
Kong next year, it said.
A listing there would be natural
since the region is important for
the company. Kazakhmys sells the
bulk of its products there and it has
formed a joint venture with China’s
Jinchuan Group.

VLADIMIR KIM
KHAZAKHMYS
VLADIMIR Kim, aged 50, has long
been a cornerstone of Khazakh
commerce. He joined an embryonic
form of Kazakhmys in 1995, as the
government was privatising the
country’s industries. He was the
chief executive of one of its compo-
nent companies, JSCZ, before taking
the chair at Kazakhmys in
September 2005 when the firms
merged.
His close ties to Kazakhstan hit
the headlines this summer, after
pressure group Global Witness
claimed his links with the govern-
ment could clash with shareholder
rights, though the company insisted
its disclosure regime was vigorous.
Kim was listed 247th in Forbes’
rich list earlier this year, with a per-
sonal fortune of $3.7bn (£2.33bn).
The Sunday Times also named him
as the 14th richest UK resident.
Kim serves on the board of
Eurasian Natural Resources
Company (ENRC), another FTSE
100 miner with a focus on
Kazakhstan. He bought a 25 per
cent stake in ENRC from its
founders in 2006, but this has
slimmed down to around 15 per
cent since ENRC’s London float.
The two firms have regularly been
subject to merger gossip – but now
that Kim has reduced his stake in
Kazakhmys to 27.9 per cent, the pos-
sibility is even more remote.
CITYA.M. 6 OCTOBER 2010
Pandora lists
in strong $2bn
market debut
▲
CONSUMER
BY HARRY BANKS
PANDORA, the Danish jeweller,
made a strong debut in one of
Europe’s largest bourse listings this
year, worth up to $2.1bn (£1.3bn), as
investors bought into prospects for its
main product – charm bracelets.
Analysts said Pandora’s high
growth and strong margins made its
initial public offering (IPO) attractive
to investors hungry for new stock
after a period of scant IPO activity,
despite its short track record and
heavy reliance on a single product.
Pandora, which has former Asda
and Post Office boss Allan Leighton as
its chairman, sells mass-market jew-
ellery mainly in the United States and
Europe that is priced between £100 to
£900.
Shares in Pandora, which manufac-
tures jewellery relatively cheaply in
Thailand where it employs the bulk
of its 4,500 staff, at one point traded
20 per cent above the 210 crowns
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Registered Offi ce: 36 St Andrew Square, Edinburgh EH2 2YB. RBS is authorised and regulated in the UK by the Financial Ser vices Authorityy. RBS
(£24.50) per share offer price.
Pandora priced its Copenhagen IPO
at the high end of a previously indi-
cated range of 175-225 crowns.
Sydbank analyst Soren Lontoft
Hansen said the IPO price was “fair”
but assumes strong prospects for the
firm.
Pandora, established as a in the business. This will rise to 41 per
Copenhagen shop in 1982, has grown
briskly over the past decade, with
sales of around €465m (£404m) in
2009.
The IPO values Pandora, which
made 86 per cent of first-half sales
from bracelets and charms, at about
$5bn and makes the listing one of the
top five largest in Europe this year.
The shares debuted at 225 crowns
and climbed as high as 251.90 crowns
before cooling to 247.50 crowns -- still
up nearly 18 per cent from the IPO
price -- in unusually heavy volumes.
“The idea is to make [this] into one
of the most successful branded com-
panies in jewellery and luxury
goods,” said chairman Allan Leighton.
Pandora jewellery chairman Allan Leighton
ROTHSCHILD
ROTHSCHILD was among the lead
advisers to Danish jewellery firm
Pandora that surprised markets with
its strong debut yesterday.
“We thought investor appetite
would be good because this is a com-
pany that is growing strongly and still
has the emerging markets to expand
into,” said a banker connected to the
deal. But the strength debut certainly
exceeded our expectations.”
Danish private equity firm Axcel,
R is an authorised agent of The Royal Bank of Scotland plc N.V in cer tain jurisdictions.
▲
Picture: Micha Theiner/City A.M.
and the Enevoldsen family who
launched the business in 1982, sold
just under 36 per cent of their holding
cent if demand for the shares exceeds
the original amount offered. City
heavyweight Allan Leighton was draft-
ed in as chairman over the summer.
“Whenever you bring Allan into a
project he inevitably puts his stamp on
it,” said the banker. “He has a lot of
international experience and he will
bring this to bear as the company
seeks to expand into emerging mar-
kets in Brazil and eastern European.”
Goldman Sachs, JP Morgan,
Morgan Stanley and Nordea were
joint global coordinators and bookrun-
ners for the IPO, while Carnegie and
SEB were co-lead managers. FIH
Partners were also advisers.
News 19
Gymboree hires
Goldman Sachs
to consider float
RETAIL
CHILDREN’S apparel retailer
Gymboree is understood to have
hired Wall Street investment bank
Goldman Sachs to begin a formal auc-
tion of the company, which could
fetch more than $1bn (£628m).
Sources close to the deal, who
declined to be identified by name
because they were not authorised to
speak with the media, confirmed the
move yesterday.
Gymboree, which runs retail stores
and play centres in the United States,
hired Goldman last month after it
was approached by at least two
firms – one of which was Apollo
Management, according to the New
York Post newspaper.
Billionaire Leon Black’s Apollo
Management – whose recent unso-
licited approach to Gymboree helped
spur the auction that’s now under
way, according to one source – is
expected to be among the leading bid-
ders, the newspaper said.
Other buyout firms such as Bain
Capital, KKR, Apax Partners and
Irving Place Capital have also shown
interest in the San Francisco-based
retailer, the paper said.
Gymboree was founded by Joan
Barnes in 1976 when she couldn’t
find a safe place for new parents and
children to play together.
 20 News
German carmakers speed ahead in popularity
BRANDINDEX
STEPHAN SHAKESPEARE
W
HILE the flocks of motor
enthusiasts descending on
Paris this week for the 2010
Motor Show may suggest
otherwise, prospects are less than
rosy for the automobile industry.
During July and August there were
Traffic rebound boosts BA
▲
AVIATION
BY EMMA SADOWSKI
FLAG-CARRIER British Airways (BA)
reported a 1.3 per cent rise in air traf-
fic during September, mainly on the
back of a return in business travel,
boosting its shares to a new two-year
high yesterday.
BA said that its premium traffic –
business and first-class passengers –
rose by 4.3 per cent, signalling an end
to the impact of the summer’s strikes
decreases of 18.6 per cent and 12.9 per
cent in like-for-like sales, compared to
the same months last year.
With over 50 new models being
unveiled at the Motor Show for the
first time, manufacturers are still
attempting to capture a slice of an
increasingly small market with inno-
vation and novelty. But YouGov’s
BrandIndex indicates that concerns
of quality, reputation and “impres-
sion”, in terms of generally positive or
negative perceptions, remain crucial
in understanding how UK consumers
relate to automobile brands.
Apparently bucking the industry’s
downward trend, German luxury car
makers Audi, BMW and Mercedes
have posted significantly better
by cabin crew and general malaise of
the business traveller.
The airline, which excluding last
month has reported consecutive
monthly declines in traffic figures,
said that overall traffic in the year
ending in September was still down
by 7.4 per cent.
However, BA flew three million pas-
sengers globally during the month,
marking a 4.3 per cent rise on the
same period last year when 2.9m peo-
ple flew with the airline.
results for August than the sector
average; with BMW reporting a three
per cent rise in like-for-like sales com-
pared to the same month last year.
What is driving such resilience
amongst “luxury” car brands?
Ongoing data gathered from con-
tributors to www.TellYouGov.com sug-
gest it is the quality, reliability and
brand recognition these German
manufacturers provide, that sets
them apart from competition.
This is confirmed by YouGov
BrandIndex tracking, in which these
three brands consistently register
among the highest overall “index”
scores in the automobile sector. As
the graph indicates, a comparison of
these manufacturers with the sector
The passenger figures were boosted by
a 6.2 per cent climb in passengers travel-
ling within Europe and the UK, and 6.9
per cent more passengers flying to its
African and Middle Eastern destinations.
BA’s shares jumped 6.48 per cent
on the positive news yesterday and
closed at 245.60p, marking the high-
est close for the airline in two years.
Meanwhile, 82.4 per cent of BA’s
flights were full last month, improv-
ing on last year when 81.5 per cent of
seats on its flights were booked.
median in terms of quality, reputa-
tion and general impression shows
where their strengths lie. When times
are hard it seems consumers trust in
car manufacturer quality and reputa-
ANALYSIS l Automobile Trends
60
50
40
30
20
10
0
Audi BMW
UK TV exports grow to £1.3bn
despite tough trading conditions
▲
MEDIA
SALES of UK TV programmes on the
international market soared almost
10 per cent to £1.3bn last year, buoyed
by the success abroad of hit shows
like the BBC’s Top Gear, according to
the UK TV Exports Survey.
Sales to the US alone reached
£485m – a three per cent hike. Sales in
Australia and New Zealand, the fastest
CITYA.M. 6 OCTOBER 2010
tion. This will only continue while
investment for the future remains
more important than the latest trend.
Stephan Shakespeare is founder and chief
executive of YouGov.
Impression
Quality
Reputation
Mercedes Sector Median
growing area of exports, jumped 32
per cent.
Meanwhile, Google’s TV venture is
expanding, with the internet giant
signing new content partnership
deals with media and internet compa-
nies, including NBC Universal’s CNBC,
Time Warner’s HBO and Amazon.
NBC Universal will bring access to
financial news television CNBC, while
HBO will also provide programming.
CITYA.M. 6 OCTOBER 2010 News 21

CITY MOVES | WHO’S SWITCHING JOBS Edited by Marion Dakers in association with

KPMG
The financial services group has hired Iain
McLaughlin as its new UK head of recruitment.
He joins from GlaxoSmithKline, where he spent
six years working in human resources, most
recently with a focus on the emerging markets.
He has also worked in HR for the banking and
IT sectors. McLaughlin’s appointment is part
of an expansion of KPMG’s London offices, to
which the firm expects to add around 3,000
members of staff over the next three years.
Evolution Securities
The investment bank has appointed
Gary Jenkins as its new head of fixed
income. Jenkins joined Evo in January
2009, and has since worked to develop
the firm’s fixed income product. Evo
said he was instrumental in the compa-
ny being awarded the title of fixed
income agency broker of the year by
Credit Magazine in 2009 and 2010.
Jenkins himself has been ranked num-
ber one Extel analyst / team leader on
four occasions. He was previously head
of fundamental credit strategy at
Deutsche Bank, and has also spent time
at Barclays Capital as global head of
credit research.
Cushman & Wakefield
The property consultant has hired John
Mundy as a partner in its City invest-
ment team. He has more than 20 years’
experience in investment agency, valua-
tions, capital raising and asset manage-
ment. Mundy joins from DTZ, where he
was most recently the head of capital
markets for the Middle East. He also
ran the company’s City and West End
investment teams.
Navigant Consulting
The management consultancy has
appointed Jim Evans to its London
financial services practice. Evans has
taken up the role of managing director
in the recently established regulatory
strategy, risk and compliance solutions
team. He has previously worked at
Ernst & Young, Deloitte and KPMG.

To appear in CITYMOVES please email your career

updates and pictures to citymoves@cityam.com SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT +44 (0)20 7557 7245
morganmckinley.com

AIA warns
Edmund Tse, 72, who
spent more than four
decades at AIG, was
recently named a non-
executive director of
AIA ahead of the

on risks as it
planned IPO.
Picture: REUTERS

launches IPO
INSURANCE
▲

AIA at as much as $30.5bn.

BY HARRY BANKS
AIA Group, which aims to raise
about $15bn (£9.4bn) through a
Hong Kong listing, flagged a series
of business risks including the col-
lapsed bid from Prudential as it
launched the share offering yester-
day.
AIA, the Asian life insurance
business of American International
Group, also said in the preliminary
prospectus filed to the Hong Kong
Stock exchange that it would not
pay a dividend before 2011.
AIG is planning to sell 48.6 per
cent stake in AIA to raise up to
$14.86bn, a document shows. The
net proceeds will be used to repay
financial aid AIG received from the
US government.
AIG revived AIA’s IPO after
Prudential cut its takeover offer for
AIA to $30.4bn from $35.5bn.
In contrast, the IPO would value
“The terminated Prudential
transaction also adversely impact-
ed and may continue to adversely
impact agency recruitment and
new business production by our
agents,” AIA said in its prospectus.
“We cannot assure you that our
business and prospects will not be
materially and adversely affected
by the terminated Prudential trans-
action.”
AIA, an Asia-focused insurer, is
selling 5.86bn secondary shares at
an indicative price range of ANALYSIS l AIG
HK$18.38 (£1.50) to HK$19.68 per 42 p
39.90
5 Oct
share.
Despite the red flags, there was a
burst of demand for the shares yes-
terday, with demand equalling the 38
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d eat
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ASOS
Goldman Sachs revises its price targets
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 Markets&Investment
22 CITYA.M. 6 OCTOBER 2010

LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk
Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p)
3i . . . . . . . . . . . . . . . . . . . . . . . .290.00 +3.30 310.00 246.90 Compass . . . . . . . . . . . . . . . . . .519.00 +4.50 574.50 376.30 JPMorgan Emerg Mkts . . . . . . . .601.00 +7.00 601.00 443.00 SABMiller . . . . . . . . . . . . . . . . .2020.50 +25.50 2090.00 1499.00
3i Infrastructure . . . . . . . . . . . . . 114.10 +0.30 115.00 97.00 Cookson . . . . . . . . . . . . . . . . . . .548.50 +2.50 616.00 347.60 Jupiter Fnd Mgmt . . . . . . . . . . . .247.60 –4.40 264.00 180.00 Sage . . . . . . . . . . . . . . . . . . . . . .285.10 +3.50 285.10 208.20
A.B. Foods . . . . . . . . . . . . . . . .1048.00 +12.00 1096.00 790.00 Croda Intl . . . . . . . . . . . . . . . . .1499.00* +32.00 1529.00 656.00 Kazakhmys . . . . . . . . . . . . . . . .1427.00* +4.00 1634.00 955.50 Sainsbury(J) . . . . . . . . . . . . . . . .389.60 +0.30 397.00 307.60
Aberdeen Asset Man . . . . . . . . . .166.20 +3.20 166.20 111.00 Daily Mail ‘A’ . . . . . . . . . . . . . . . .527.00 +8.00 539.00 381.00 Kesa Electricals . . . . . . . . . . . . .149.30* +3.20 162.00 98.45 Schroders . . . . . . . . . . . . . . . . .1443.00 –2.00 1459.00 1056.00
Admiral. . . . . . . . . . . . . . . . . . .1664.00 –7.00 1695.00 1003.00 Dana Petroleum . . . . . . . . . . . .1800.00 +2.00 1817.00 968.50 Kingfisher . . . . . . . . . . . . . . . . . .230.50 –2.40 255.00 196.50 Schroders N/V. . . . . . . . . . . . . . 1166.00 +2.00 1191.00 864.00
Aegis . . . . . . . . . . . . . . . . . . . . .124.50 +1.30 137.30 103.10 Davis Service . . . . . . . . . . . . . . .407.90* +3.70 442.30 356.00 Ladbrokes . . . . . . . . . . . . . . . . .134.90* +0.20 164.60 114.60
Afren . . . . . . . . . . . . . . . . . . . . . 116.40 +1.90 117.30 76.50 Debenhams . . . . . . . . . . . . . . . . .66.80 –0.10 90.00 51.95 Lamprell . . . . . . . . . . . . . . . . . . .348.10* –1.90 372.30 157.30 Scot. & Sthrn Energy. . . . . . . . .1130.00 +7.00 1206.00 1006.00
African Barr Gold . . . . . . . . . . . .616.00 +11.00 685.00 520.50 Derwent London . . . . . . . . . . . .1567.00* +18.00 1572.00 1174.00 Lancashire Hldgs . . . . . . . . . . . .568.00* +8.00 570.00 416.70 Scottish Mortgage. . . . . . . . . . . .646.50 +6.50 648.00 475.00
Aggreko . . . . . . . . . . . . . . . . . .1571.00* +24.00 1639.00 664.50 Dexion Absolute . . . . . . . . . . . . .139.00 — 148.00 130.00 Land Securities . . . . . . . . . . . . . .663.00* +10.00 743.50 543.00 SEGRO . . . . . . . . . . . . . . . . . . . .287.60* +6.70 389.90 244.00
Alliance Trust . . . . . . . . . . . . . . .337.50 +6.20 352.70 292.80 Diageo . . . . . . . . . . . . . . . . . . .1099.00* +7.00 1176.00 930.50 Legal & General . . . . . . . . . . . . .104.50 +2.50 105.70 69.05 Serco . . . . . . . . . . . . . . . . . . . . . 611.50* +14.50 656.50 485.60
AMEC . . . . . . . . . . . . . . . . . . . . .998.50 — 1024.00 724.50 Dimension Data . . . . . . . . . . . . . 119.60 — 125.50 62.40 Lloyds Banking Gp . . . . . . . . . . . .75.67 +2.34 79.15 45.30 Severn Trent . . . . . . . . . . . . . . .1320.00 +13.00 1404.00 939.50
Amlin . . . . . . . . . . . . . . . . . . . . .400.80* +1.90 437.60 350.80 Dixons Retail . . . . . . . . . . . . . . . .27.01 +0.68 39.75 23.07 Logica . . . . . . . . . . . . . . . . . . . .129.70* +1.60 149.10 100.80 Shaftesbury . . . . . . . . . . . . . . . .444.50 +3.60 456.00 348.00
Anglo American . . . . . . . . . . . .2641.50 +103.50 3015.50 1880.00 Domino’s Pizza . . . . . . . . . . . . . .469.20 +6.70 484.70 278.20 London Stk Exchange . . . . . . . . .678.00 +3.00 949.50 540.50 Shire. . . . . . . . . . . . . . . . . . . . .1422.00* +17.00 1532.00 999.00
Antofagasta . . . . . . . . . . . . . . .1269.00* +45.00 1276.00 734.00 Drax . . . . . . . . . . . . . . . . . . . . . .386.30* +3.60 479.30 321.50 Lonmin . . . . . . . . . . . . . . . . . . .1723.00 +32.00 2198.00 1344.00 Smith & Nephew . . . . . . . . . . . . .577.00 –2.50 700.50 525.50
Aquarius Platinum . . . . . . . . . . .345.60 +9.90 490.00 211.50 Dunelm . . . . . . . . . . . . . . . . . . . .405.20 +12.30 438.40 305.00 Man . . . . . . . . . . . . . . . . . . . . . .227.10 +9.50 373.60 199.60 Smith(Ds) . . . . . . . . . . . . . . . . . .154.60 +0.60 156.00 103.00
ARM Holdings . . . . . . . . . . . . . . .400.00* –1.50 419.50 135.30 Easyjet . . . . . . . . . . . . . . . . . . . .386.90 +17.00 499.90 339.80 Marks & Spencer. . . . . . . . . . . . .392.50 +2.30 412.70 321.90 Smiths . . . . . . . . . . . . . . . . . . .1240.00 +14.00 1253.00 867.50
Ashmore . . . . . . . . . . . . . . . . . . .348.60 +5.80 352.50 215.00 Edinburgh Inv Tst . . . . . . . . . . . .429.00 +7.30 436.00 338.00 Meggitt . . . . . . . . . . . . . . . . . . . .302.00 +5.80 331.00 226.80 SOCO Intl . . . . . . . . . . . . . . . . . .444.00 +2.50 510.00 380.60
Astrazeneca . . . . . . . . . . . . . . .3242.50 +30.50 3389.50 2668.00 Electrocomponents . . . . . . . . . . .240.80 +2.80 251.00 142.90 Melrose . . . . . . . . . . . . . . . . . . .285.90 +10.20 286.30 160.00
Atkins(Ws) . . . . . . . . . . . . . . . . .738.50 +0.50 801.00 532.50 EnQuest . . . . . . . . . . . . . . . . . . . 118.20 +1.20 125.90 87.35 Mercantile IT . . . . . . . . . . . . . . . .970.50* +11.00 1002.00 822.50 Spectris . . . . . . . . . . . . . . . . . .1075.00 –9.00 1117.00 653.00
Autonomy Corp . . . . . . . . . . . .1852.00 +8.00 2012.00 1278.00 Essar Energy . . . . . . . . . . . . . . .481.40 +14.60 481.40 358.50 Michael Page Intl. . . . . . . . . . . . .470.10* +4.90 471.00 314.40 Spirax-Sarco Eng . . . . . . . . . . .1809.00 +6.00 1859.00 1050.00
Aveva . . . . . . . . . . . . . . . . . . . .1460.00 –1.00 1504.00 856.50 Eurasian Nat Res . . . . . . . . . . . .910.50* –4.00 1276.00 801.00 Micro Focus . . . . . . . . . . . . . . . .379.30 –1.70 550.00 272.20 Spirent Comms . . . . . . . . . . . . . .144.10 +2.50 145.70 84.55
Aviva . . . . . . . . . . . . . . . . . . . . .396.30* +3.40 474.00 290.20 Euromoney Inst Inv . . . . . . . . . . .597.00 –8.00 630.00 361.70 Millen & Copthorne . . . . . . . . . . .520.00* +2.00 547.00 321.40 Sports Direct Intl . . . . . . . . . . . . .145.90 +2.40 148.00 89.85
Babcock International . . . . . . . . .580.50 +10.50 660.50 489.00 Experian . . . . . . . . . . . . . . . . . . .682.50 +6.50 698.50 516.50 Misys . . . . . . . . . . . . . . . . . . . . .294.60 +6.60 295.80 193.80 SSL Intl . . . . . . . . . . . . . . . . . . . 1158.00 +2.00 1190.00 616.00
BAE Systems . . . . . . . . . . . . . . .350.80 +8.30 389.90 288.10 Ferrexpo . . . . . . . . . . . . . . . . . . .314.50 –1.70 396.20 139.10 Mitchells & Butlers . . . . . . . . . . .293.50 +3.50 343.90 228.30 St James’s Place . . . . . . . . . . . . .284.00 –3.60 298.00 203.40
Balfour Beatty . . . . . . . . . . . . . . .271.60 +5.60 304.80 228.60 FirstGroup . . . . . . . . . . . . . . . . .370.90 +8.90 428.40 331.20 MITIE . . . . . . . . . . . . . . . . . . . . .192.80 +1.50 257.00 187.60 Stagecoach. . . . . . . . . . . . . . . . .182.40 +0.20 204.90 137.00
Barclays . . . . . . . . . . . . . . . . . . .308.80 +9.00 394.25 253.40 Foreign & Col Inv Tst. . . . . . . . . .288.90 +4.40 297.20 248.70 Mondi . . . . . . . . . . . . . . . . . . . . .533.00 +16.50 536.50 303.90 Standard Chartered . . . . . . . . . .1894.00* +46.00 1946.00 1366.50
Barratt Development . . . . . . . . . .100.20 +1.95 178.75 89.10 Fresnillo . . . . . . . . . . . . . . . . . .1300.00 +34.00 1304.00 647.00 Monks Inv Tst . . . . . . . . . . . . . . .323.40 +3.70 325.80 265.00 Standard Life . . . . . . . . . . . . . . .228.30* +0.70 237.00 170.00
BBA Aviation . . . . . . . . . . . . . . .189.90* –0.10 220.00 145.90 G4S . . . . . . . . . . . . . . . . . . . . . .251.40* –0.90 285.70 218.10 Morrison Wm . . . . . . . . . . . . . . .298.40* +1.90 307.10 255.00 SuperGrp . . . . . . . . . . . . . . . . .1225.00 –12.00 1312.00 499.00
Bellway. . . . . . . . . . . . . . . . . . . .598.50 +12.50 842.50 510.00 Genesis Emerging Mkts Fd . . . . .517.50 +3.00 520.00 370.00 Murray Intl Tst . . . . . . . . . . . . . . .909.50 +16.00 909.50 720.00 TalkTalk . . . . . . . . . . . . . . . . . . .143.60 –3.40 153.80 106.60
Berkeley . . . . . . . . . . . . . . . . . . .836.50 –2.00 949.50 735.00 GKN . . . . . . . . . . . . . . . . . . . . . .167.90 –1.00 174.30 100.40 National Express. . . . . . . . . . . . .239.00 –0.60 258.60 155.86 Talvivaara Mining . . . . . . . . . . . .500.00 +10.00 503.00 341.40
BG . . . . . . . . . . . . . . . . . . . . . . 1167.00 +14.50 1248.00 966.90 GlaxoSmithKline . . . . . . . . . . . .1269.50* +20.50 1347.00 1088.00 National Grid . . . . . . . . . . . . . . .560.50 +7.00 607.65 474.80
BHP Billiton . . . . . . . . . . . . . . .2074.50 +48.00 2346.00 1618.50 Great Portland Estates . . . . . . . .353.70 +2.40 356.50 236.60 Next . . . . . . . . . . . . . . . . . . . . .2261.00 +30.00 2360.00 1726.00 Tate & Lyle . . . . . . . . . . . . . . . . .474.00 +5.60 509.00 388.00
BlackRock Mining . . . . . . . . . . . .649.00 +12.00 654.50 475.00 Greene King . . . . . . . . . . . . . . . .428.70 +13.60 484.00 372.50 Northumbrian Water . . . . . . . . . .332.90 –1.10 353.00 225.20 Taylor Wimpey . . . . . . . . . . . . . . .28.41 +0.20 46.34 24.29
BlueBay . . . . . . . . . . . . . . . . . . .348.00 +5.80 393.00 251.00 Halfords . . . . . . . . . . . . . . . . . . .442.60 –5.40 562.50 346.00 Ocado Grp . . . . . . . . . . . . . . . . .132.20 +0.70 169.00 129.20 Telecity . . . . . . . . . . . . . . . . . . . .498.10 +0.10 546.00 311.30
Bluecrest Allblue GBP . . . . . . . . .169.00 +0.40 170.00 147.00 Halma . . . . . . . . . . . . . . . . . . . . .320.30 +1.70 323.90 215.90 Old Mutual . . . . . . . . . . . . . . . . .139.00 +1.70 142.50 95.30 Templeton Emrg Mkts . . . . . . . . .636.50 +2.50 641.50 453.00
Booker . . . . . . . . . . . . . . . . . . . . .49.67 –0.10 50.50 37.50 Hammerson . . . . . . . . . . . . . . . .401.70 +3.70 460.30 332.20 Partygaming . . . . . . . . . . . . . . . .285.40 +6.40 339.70 205.80 Tesco . . . . . . . . . . . . . . . . . . . . .431.25 +0.90 454.90 368.40
BP . . . . . . . . . . . . . . . . . . . . . . .431.50 +1.40 658.20 296.00 Hargreaves Lansdown . . . . . . . .461.50 +8.50 478.00 259.40 Pearson . . . . . . . . . . . . . . . . . . .982.00 +14.50 1069.00 752.00 Thomas Cook . . . . . . . . . . . . . . .179.70* +6.70 277.20 167.50
Brit Insurance . . . . . . . . . . . . . .1030.00 — 1045.00 709.00 Hays . . . . . . . . . . . . . . . . . . . . . . 118.60 +2.30 120.10 82.50 Pennon . . . . . . . . . . . . . . . . . . . .581.50* +1.50 616.50 440.40 Travis Perkins . . . . . . . . . . . . . . .854.00 +14.00 915.00 647.50
British Airways . . . . . . . . . . . . . .254.60 +15.50 255.80 172.40 Henderson . . . . . . . . . . . . . . . . .127.90 +2.60 157.80 112.10 Persimmon . . . . . . . . . . . . . . . . .394.00 +2.50 520.00 335.90 TUI Travel . . . . . . . . . . . . . . . . . .225.90 +9.10 313.90 189.20
British Amer. Tob . . . . . . . . . . .2367.50 +22.50 2439.00 1832.00 Heritage Oil. . . . . . . . . . . . . . . . .312.00 +12.00 585.00 295.90 Petrofac . . . . . . . . . . . . . . . . . .1395.00* +5.00 1446.00 900.00 Tullett Prebon . . . . . . . . . . . . . . .399.70 –4.30 436.20 261.20
British Empire Tst . . . . . . . . . . . .477.10 +8.30 477.10 338.50 Hikma Pharma . . . . . . . . . . . . . .703.00* +9.00 813.00 452.20 Petropavlovsk . . . . . . . . . . . . . . 1103.00* +20.00 1370.00 834.00 Tullow Oil . . . . . . . . . . . . . . . . .1301.00* +5.00 1375.00 979.50
British Land . . . . . . . . . . . . . . . .487.80 +11.40 515.00 416.00 Hiscox . . . . . . . . . . . . . . . . . . . .348.60 — 371.60 299.60 Phoenix Group . . . . . . . . . . . . . .685.00* — 775.00 550.50 UK Commercial Prop. . . . . . . . . . .80.00 +1.00 84.90 69.40
Britvic. . . . . . . . . . . . . . . . . . . . .475.10 –2.80 518.00 341.50 Hochschild Mining . . . . . . . . . . .452.40 +12.00 457.50 220.00 Premier Farnell . . . . . . . . . . . . . .274.00* +5.50 276.30 140.60 Ultra Electronics . . . . . . . . . . . .1740.00 +28.00 1774.00 1198.00
Brown(N.) . . . . . . . . . . . . . . . . . .239.90 +3.90 284.30 204.80 Home Retail . . . . . . . . . . . . . . . .207.90 +4.80 326.30 201.70 Premier Oil . . . . . . . . . . . . . . . .1675.00 –14.00 1703.00 984.00
BSkyB . . . . . . . . . . . . . . . . . . . .707.00 +1.00 732.00 521.00 Homeserve . . . . . . . . . . . . . . . . .459.10 +17.10 502.00 422.00 Provident Financial . . . . . . . . . . .822.00 +0.50 986.00 795.00 Unilever . . . . . . . . . . . . . . . . . .1834.00 +10.00 2024.00 1662.00
BT . . . . . . . . . . . . . . . . . . . . . . .148.50 +2.70 151.00 108.40 HSBC Hldgs . . . . . . . . . . . . . . . .665.50* +13.90 766.80 595.20 Prudential . . . . . . . . . . . . . . . . . .637.00 +1.50 665.00 475.70 United Utilities . . . . . . . . . . . . . .583.50 +5.50 620.00 429.00
Bunzl . . . . . . . . . . . . . . . . . . . . .758.00 +5.50 784.50 614.00 Hunting . . . . . . . . . . . . . . . . . . .655.50 +15.50 659.50 429.10 PZ Cussons . . . . . . . . . . . . . . . .374.40* +4.20 382.70 231.70 Utd Business Media . . . . . . . . . .620.00* +4.00 656.50 408.30
Burberry . . . . . . . . . . . . . . . . . .1014.00 –12.00 1065.00 495.50 ICAP . . . . . . . . . . . . . . . . . . . . . .444.30 +12.10 478.30 291.70 Qinetiq . . . . . . . . . . . . . . . . . . . .108.50 +0.70 179.10 103.50 Vedanta Resources . . . . . . . . . .2197.00 +9.00 2967.00 1795.00
Cable & Wire Comms . . . . . . . . . .56.90 +0.10 150.00 53.00 IG . . . . . . . . . . . . . . . . . . . . . . . .513.50* +13.00 532.00 291.00 Randgold Resources. . . . . . . . .6655.00 +195.00 6690.00 3930.00 Victrex . . . . . . . . . . . . . . . . . . .1328.00 –2.00 1347.00 726.50
Cable & Wire Wwide . . . . . . . . . . .75.00 +1.55 94.80 60.05 Imagination Tech Gp . . . . . . . . . .384.70 +4.70 399.00 160.00 Reckitt Benckiser . . . . . . . . . . .3495.00 +20.00 3667.00 2971.00 Vodafone . . . . . . . . . . . . . . . . . .161.00 +2.00 164.95 126.50
Cairn Energy. . . . . . . . . . . . . . . .445.00 –4.30 497.60 306.80 IMI . . . . . . . . . . . . . . . . . . . . . . .786.00* +19.50 788.50 410.00 Reed Elsevier . . . . . . . . . . . . . . .544.50 +16.00 566.00 454.60 Weir . . . . . . . . . . . . . . . . . . . . .1486.00 +33.00 1488.00 638.00
Caledonia Invs . . . . . . . . . . . . .1653.00 +16.00 1759.00 1496.00 Imperial Tobacco. . . . . . . . . . . .1903.00 +4.00 2159.00 1728.00 Regus . . . . . . . . . . . . . . . . . . . . . .80.25* +0.10 125.50 64.05 Wellstream Hldgs . . . . . . . . . . . .780.00* –9.00 810.00 429.70
Capita . . . . . . . . . . . . . . . . . . . . .778.50* –6.50 829.50 693.00 Inchcape. . . . . . . . . . . . . . . . . . .316.80 +8.40 347.00 235.00 Renishaw . . . . . . . . . . . . . . . . .1075.00* +5.00 1083.00 479.00 Whitbread . . . . . . . . . . . . . . . . .1647.00 +33.00 1653.00 1172.00
Capital & Counties . . . . . . . . . . .134.10 +1.70 137.50 99.60 Informa . . . . . . . . . . . . . . . . . . . .421.50 +9.30 439.40 263.30 Rentokil Initial . . . . . . . . . . . . . . .103.00 +1.70 140.20 91.15 William Hill . . . . . . . . . . . . . . . . .168.20 +1.70 217.80 160.50
Capital Shopping Centres . . . . . .384.00 +7.60 533.50 300.10 Inmarsat . . . . . . . . . . . . . . . . . . .629.00* –26.00 831.00 528.50 Resolution . . . . . . . . . . . . . . . . .244.00* +1.00 264.80 220.10 Witan Inv Tst . . . . . . . . . . . . . . . .473.30 +7.40 487.00 396.30
Carillion . . . . . . . . . . . . . . . . . . .321.10* +7.00 361.90 271.00 Intercontl Hotels . . . . . . . . . . . . 1146.00 +19.00 1244.00 762.50 Rexam . . . . . . . . . . . . . . . . . . . . 311.80* +5.60 348.80 261.50
Carnival . . . . . . . . . . . . . . . . . .2558.00 +61.00 2937.00 1876.00 Intermediate Capital . . . . . . . . . .303.70 +4.70 307.20 233.50 Rightmove . . . . . . . . . . . . . . . . .745.50 +5.50 796.50 456.90 Wolseley . . . . . . . . . . . . . . . . . .1617.00 +16.00 1742.00 1155.00
Catlin . . . . . . . . . . . . . . . . . . . . .338.80 –1.20 394.60 303.20 Intertek . . . . . . . . . . . . . . . . . . .1820.00 +21.00 1863.00 1136.00 Rio Tinto . . . . . . . . . . . . . . . . . .3792.00 +95.00 4104.00 2524.50 Wood Group (John). . . . . . . . . . .424.60 –3.30 443.50 279.60
Centamin Egypt . . . . . . . . . . . . .167.90 –2.20 194.40 98.00 Intl Personal Fin . . . . . . . . . . . . .268.50* –0.60 283.00 160.40 RIT Capital Partners . . . . . . . . .1142.00 +17.00 1215.00 940.00 WPP . . . . . . . . . . . . . . . . . . . . . .699.50 +3.00 744.00 521.00
Centrica . . . . . . . . . . . . . . . . . . .327.00* +5.10 347.00 236.30 Intl Power . . . . . . . . . . . . . . . . . .397.50* +3.40 398.10 248.20 Rolls Royce . . . . . . . . . . . . . . . .600.00 +9.00 631.50 434.50 Xstrata . . . . . . . . . . . . . . . . . . .1240.00* +31.00 1344.50 832.50
Charter Intl . . . . . . . . . . . . . . . . .722.50 +22.00 855.50 563.50 Invensys . . . . . . . . . . . . . . . . . . .307.20 +9.20 350.30 224.90 Rotork . . . . . . . . . . . . . . . . . . .1795.00 +29.00 1802.00 1101.00 LONDON TOP 250 BY MARKET CAPITALISATION
Chemring . . . . . . . . . . . . . . . . .2995.00 +24.00 3711.00 2436.00 Investec . . . . . . . . . . . . . . . . . . .506.00 +7.30 565.00 411.50 Royal Bank Of Scot . . . . . . . . . . . .49.08 +1.52 58.95 28.25
Close Bros . . . . . . . . . . . . . . . . .750.00 +6.00 803.50 657.00 ITV . . . . . . . . . . . . . . . . . . . . . . . .59.25 +0.30 71.75 41.04 Royal Dutch Shell A . . . . . . . . .1939.50 +23.00 2068.50 1621.00 * Ex-Dividend † Suspended
Cobham . . . . . . . . . . . . . . . . . . .229.50 +3.40 278.60 205.50 Jardine Lloyd Thompson. . . . . . .571.00* +3.00 604.50 420.70 Royal Dutch Shell B . . . . . . . . .1882.00 +16.50 1997.50 1550.00
COLT Group . . . . . . . . . . . . . . . . 118.50 +0.40 144.20 107.70 Johnson Matthey . . . . . . . . . . .1780.00 +40.00 1814.00 1308.00 RSA Insurance . . . . . . . . . . . . . .132.20* –0.30 142.00 114.10 www.interactivedata.com

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FTSE hits a five month closing high, Economic stimulus hope

led by banks, miners and oil stocks boosts mood of investors
blue chips, adding 2.5 per cent, as the new 26-month peaks, the euro rose economy in a similar fashion.

THELONDON sector rallied from falls last week on

fresh European debt concerns.
The pace of growth in the US servic-
against the dollar and after Japan
unexpectedly lowered interest rates,
raising expectations of further boosts
THENEW YORK Crude oil hit a five-month peak
near $83 a barrel and gold hit anoth-
er record high at $1,341.20 an ounce.
REPORT es sector accelerated last month more
quickly than economists had expect-
ed and hiring also picked up, accord-
for other major economies.
It was a similar story with energy
stocks, which put on 0.8 per cent, as
REPORT The materials sector led the S&P 500,
gaining 2.8 per cent, with mining
company Freeport-McMoRan Copper

S
TRONGER banking and com- ing to a report from the Institute for crude prices rose, with BG Group, up & Gold jumping 4.6 per cent to $91.21.

U
modity shares helped drive Supply Management. 1.3 per cent, the best performing inte- S stocks rallied to nearly a The Dow Jones industrial average
Britain’s top share index to a “The market always appears to be grated oil stock. five-month high yesterday on gained 193.45 points, or 1.80 per cent,
more than five-month closing waiting for the next bit of data, but Anglo American led the miners growing conviction that cen- to 10,944.72. The Standard & Poor’s
high yesterday, after encouraging US the picture that is building here, for higher, rising 4.1 per cent, followed tral banks will do even more 500 Index rose 23.72 points, or 2.09
economic data gave a boost to mar- me, is one where the recovery by Antofagasta, 3.7 per cent firmer. to bolster struggling economies per cent, to 1,160.75. The Nasdaq
kets. remains on track, albeit it has had its Kazakhmys did not fare so well, worldwide. Composite Index jumped 55.31
The FTSE 100 closed 79.79 points, fair share of wobbles,” said Paul adding only 0.3 per cent, after its The Bank of Japan lit the fuse points, or 2.36 per cent, to 2,399.83.
or 1.4 per cent, higher at 5,635.76, its Kavanagh, a partner at broker Killik & chairman Vladimir Kim sold around overnight when it unexpectedly cut About 8.77bn shares traded on the
highest closing level since 26 April, Co. an 11 per cent stake in the company rates closer to zero. This move came New York Stock Exchange, the
after a 0.7 per cent fall on Monday. Strong demand was also seen for to the Kazakh National Welfare Fund, as markets increasingly believe the American Stock Exchange and the
Banks were the best performing miners, up 2.7 per cent, as copper hit reducing his holding to 27.9 per cent. US Federal Reserve will stimulate its Nasdaq.
CITYA.M. 6 OCTOBER 2010
Buy City offices for steady income
Pick your property
fund carefully for
great rental yields,
writes Juliet Samuel
C
ONFIDENCE in UK property has
plummeted over recent months. The
recent commercial property confi-
dence survey conducted by Lloyds
showed that almost half of property profes-
sionals now think that property prices will
stay flat over the next six months (up from
36 per cent in May). So is now the time to
ditch commercial property and sit tight?
The overall news does not look good. Of
those expecting price movements in the
Lloyds survey, most now expect falls rather
than rises. Tellingly, despite anticipating a
general fall, a larger percentage surveyed
think that their own portfolios will rise.
This should be a warning signal: fund man-
agers can often be overly optimistic about
their own picks.
Even so, there are clearly some good
opportunities for investment in certain seg-
ments of the market, especially for those
hunting income. But Frogmore managing
director Paul White says that investors
must remember to be picky: “There are two
commercial property markets in the UK:
central London and the rest of the country.
Outside London, the market has still not
found a consistent level and there remains
a considerable overhang of properties to
come out of the banks.” White expects
more distressed stock to come to market in
the coming months, depressing prices.
But while the next few quarters are
unlikely to see good capital growth, for the
right property, funds can expect good
rental yields to deliver a steady stream of
income. Caisson Investment Managers’
David Carter says that prime yields now
range between 5 per cent and 10 per cent,
with prime retail at the bottom of this
range and City offices at the top: “There is a
dearth of space in the City. At current take-
up rates, there’s only one year’s worth of
grade-A office space left, which is why rents
are being driven up so quickly. People know
Track records
no guarantee
Past performance is no guide to
future success, says Jessica Mead
T
HERE is nothing institutional
investors dislike more than uncer-
tainty since it robs them of their
ability to plan for the future. This
has led some institutional investors, in par-
FUND MANAGEMENT NEWS
BY JESSICA MEAD
Certain funds to see record jump in inflows
Investment | Fund Management
that supply is shrinking and so they’re will-
ing to pay the higher rates to get hold of
space. And banks wants to avoid lending on
speculation, so the majority of new stuff
coming onto the market is pre-let.”
Even at the lower end of this yield range,
commercial property far outperforms bond
yields (see chart) and is on level pegging
with many dividend-generating shares. As a
result, Carter says that many cash-rich pen-
sion funds are diving into the market,
pointing to Scottish Widows’ recent pur-
chase of 75 King William Street for around
£60bn as an example.
Due to the unusually wide spread
between bond and property yields, howev-
er, Chesterton Humberts urges caution in
its October commercial property report. It
expects property yields to drop closer to
their average distance from bond yields,
predicting a yield close to 4.85 per cent by
2014. But the firm expects this decline to be
balanced by an increase in capital growth:
“Stable growth and serious deficit reduc-
tion should decrease the risk premium on
UK commercial property,” its analysts
write, “narrowing the spread to its long run
average.” In other words, there is a greater
ticular wealth managers and fund selec-
tors, to exclude funds without a record of
at least three years. The rationale is
straightforward: looking at past perform-
ance allows investors to sift out the less
successful funds and gives them some
basis on which to project the fund’s
returns. As BestInvest’s Adrian Lowcock
stresses, you want to know that the man-
ager you are investing in has a track record
that is not just based on luck.
But while clear-cut, it may be misguided,
according to new research from Lipper, the
data provider. Lipper researchers Dunny
Moonesawmy and Juan Manuel Vicente
Casadevall say that excluding newly
launched funds or funds with short track
records might not be best. Having com-
pared the performance of funds less than a
year old and those with a track record for
more than three years between June 2009
RECORD 2010 EXPECTED FOR SOME FUNDS
A number of fund groups are on track for
record-setting years, according to flow data
provider EPFR Global. Emerging markets, US
and global bond funds as well as global emerg-
ing market equity funds are likely to experi-
ence record inflows in 2010. Against a
backdrop of soaring equity markets and rising
risk appetite, September saw Japan Equity
Funds snap an 11-week outflow streak, Latin
America equity funds extend their longest
winning run since the fourth quarter of 2009
and US equity funds enjoy their best period
Picture: GETTY since late May and early June.
likelihood of capital growth than is being
priced in by yields at the moment. So even
if yields fall, values should go up. While
this might not hold for properties in the
north, many of which are let by the govern-
ment, it should hold for the south.
Either way, investors looking for income
in the short-term could do far worse than
to put money into prime commercial prop-
ANALYSIS l Historic relationship between UK bond and property yields
14 %
12 Ten-year nominal par yield
10
8
6
4
2
Apr 00 Apr 01 Apr 02 Apr 03 Apr 04
to June 2010, June 2008 to June 2009 and
June 2007 to June 2008, they said: “We find
no evidence that funds with long track
records enjoy better performance or incur
less risk than new funds.” The empirical
data suggests that newly launched funds
post higher average total returns and lower
risk data. This means that institutional
investors may miss out on several years of
good performance if they exclude new
funds from their portfolio.
But Crispin Lace, senior investment con-
sultant at Mercer, says that the larger insti-
tutional investors such as sovereign wealth
funds, pension funds and large charities
do not necessarily screen based on number
of years’ performance. Indeed, he points
out that Mercer has worked with some
fund managers to launch a new product.
In terms of manager performance,
Moonesawmy and Casadevall found that
OFFSHORE EM FUNDS OUTDO UK OEICS
UK-domiciled emerging market funds are fac-
ing tough competition from offshore rivals
after the latter was included in the Investment
Management Association (IMA) performance
league tables in the first quarter of this year.
Analysis of Lipper performance data by HSBC
Global Asset Management and Baring Asset
Management shows that over the past three
years to August 2010 at least eight of the top
10 funds specialising in a particular major
emerging market have been domiciled off-
shore. HSBC AM said this has levelled the play-
ing field and given investors more choice.
23
The Walbrook is one
of the few large unlet
office buildings in the
Square Mile.
Picture:
Micha Theiner
/City A.M.
erty. The key is to stick to areas with high
demand such as central London and to
make sure you are targeting income – there
is no point pricing an empty building out
of the rental market just to keep its head-
line capital value high, as some pension
funds are reportedly doing. But if a proper-
ty fund can offer steady income, it is a solid
option in uncertain times.
Sources: CBRE and Bank of England
Property Yields
Apr 05 Apr 06 Apr 07 Apr 08 Apr 09 Apr 10
“fund managers also tend to perform
slightly better and they have a better
chance to beat their peers at the beginning
of their tenure”. While the research didn’t
investigate this, it proposes that there
might be two factors at play. First, a stellar
first-year performance is virtually essential
to generate significant money inflows, and
by extension, continued success. Second,
managers have strong incentives and pres-
sure to outperform during the first couple
of years of their fund’s existence.
But while a fund might outperform in
its first year of life, there is no guarantee
that it will continue to do so. Investors are
still looking for active fund managers that
can consistently deliver over a sustained
period of time. There is no evidence yetto
suggest that funds which enjoy a success-
ful first year will necessarily become stars
rather than dogs.
THREE FIDELITY FUND RATINGS ON HOLD
Morningstar has placed three Fidelity funds’
ratings under review following the departure of
fund managers Brenda Reed and Ilario di Bon.
The funds are: Fidelity Funds – Global Focus,
Fidelity Global Focus and Fidelity Funds –
Global Opportunities, which were rated superi-
or. Morningstar’s Mark Laidlaw said the ratings
all rested substantially on the presence of the
previous fund managers: “Incoming manager
Amit Lodha [Fidelity Funds – Global Focus and
Fidelity Global Focus] has not run a diversified
offering before and we’ll need to meet with him
to determine our conviction in his capabilities.”
 24 Investment | Foreign Exchange CITYA.M. 6 OCTOBER 2010

AUSSIE WILL
HAVE TO WAIT
TO HIT PARITY
BORIS SCHLOSSBERG
DIRECTOR OF CURRENCY RESEARCH, GFT

Y
ESTERDAY’S decision by the Reserve Bank
of Australia (RBA) to keep rates steady
surprised the currency markets and sent
the Aussie tumbling in reaction to the
news. Prior to the release traders had been rela-
tively certain (75 per cent) that rates would
increase by 25 basis points.
In fact, over the past week the buying pressure
on the Aussie had been so strong that markets
were acting like it was a foregone conclusion that
Aussie-US dollar would reach parity before year-
end. While the prospect of parity still remains a
serious possibility, I believe its chances have been
greatly diminished by the RBA’s latest actions. It
hinted at an additional hike in November in its
statement: “If economic conditions evolve as the
Board currently expects, it is likely that higher
interest rates will be required, at some point, to Emerging market policymakers are struggling to hold back the flood of capital Picture: ALAMY
ensure that inflation remains consistent with the
medium-term target.”

Don’t go with the flow

But its decision is by no means assured and
likely to be governed by several key releases over
the near term including tonight’s employment
data report as well as the third quarter CPI
inflation release on 27 October. Recent economic
data has been respectable but hardly robust. For
example, yesterday’s retail sales rose only 0.3 per
cent versus 0.5 per cent forecast. Furthermore,
the housing market – which is the true driver of Seek fiscally prudent According to Societe Generale’s Kit
Juckes, central banks face three choices: let
towards long-term appreciation in emerg-
ing market FX, it is likely to be a white-
RBA monetary policy – has been relatively weak
for some time. Building approvals contracted for commodity currencies, the currency appreciate, impose some
form of capital control, or import US mon-
knuckle ride for traders in these
currencies over the next couple of months
the fourth month out of the past five, suggesting
that RBA’s program of consistent monetary writes Jessica Mead etary policies and accept domestic asset
inflation. Some in the developing world
as the developed world loosens monetary
policy further and the emerging markets
tightening is beginning to take its toll. have opted for the second option in order try to impose further capital controls.
Therefore, all talk of Aussie going to parity ver- to keep their currencies deliberately weak Those who want to avoid this volatility

sus the greenback should ease for the time being
as traders adjust their expectations of Australian
short-term rates. It remains the highest-yielding
currency in the G10 but yesterday’s surprising
announcement should slow its ascent with the
US$0.9750 level becoming a key resistance point
in the pair. For now it appears that any move
towards parity can occur only if we see another
broad sell-off in the greenback caused by further
concerns of a US economic slowdown.
Boris Schlossberg and Kathy Lien are direc-
tors of currency research at GFT. Read commen-
tary at www.GFTUK.com/commentary or e-mail
borisandkathy@gftuk.com.
W
HEN Brazil’s finance minister
Guido Mantega last week
warned of an international cur-
rency war, he said what many
other emerging market policymakers were
privately thinking. Competitive devalua-
tions have become a hot topic of discussion
and there are growing calls for an interna-
tional accord to help coordinate a rebal-
ancing of the global economy.
According to the Institute of
International Finance (IIF), the low interest
rate environment in the mature
economies is driving money into emerging
and competitive compared to China with
its still-inflexible yuan policy.
John Hardy, FX consultant at Saxo Bank,
says: “As long as countries are seen as
unable to effectively intervene – Brazil,
Korea and Mexico are already taking meas-
ures – and outright safe haven-seeking fails
to develop, the flows are going where the
yields are. Those point to the emerging
markets with their higher yields as well as
Australia, which has both the yield and the
leveraged exposure to emerging market
strength via its export industries.”
The IIF adds that recent renewed
should look towards Norway, Canada and
Australia. All three benefit from greater fis-
cal prudence, a move towards monetary
policy normalisation and exposure to com-
modity demand. These will provide steady
returns without being directly affected by
policy intervention.
ANALYSIS l Net private capital flows to
emerging markets in 2010
850
$bn
800 net private capital
flows to emerging markets
750

Source: IIF
markets in search of higher yields and upward pressure on emerging market FX
strong economic growth. “The persistent rates needs to be seen in context. Many of
strength in private capital inflows raises these weakened in the second quarter so 700
new headaches for emerging market poli- the recent appreciation is merely a natural
cy makers. For one thing, flows are apt to rebound. Moreover, on a purchasing power
650
lead to upward pressure on emerging mar- parity basis, many emerging market cur-
ket real exchange rates vis-à-vis most rencies are undervalued.
mature market currencies,” the IIF says. While the signs are clearly pointing 600
Oct 2009 Jan 2010 Apr 2010 Oct 2010

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CITYA.M. 6 OCTOBER 2010 Investment | Foreign Exchange 25

THE
Fundamentals TIPSTER
NOW MAY BE

fail to offer a THE TIME T0

BUY PESOS

D
ESPITE widespread dollar weakness for
the US greenback against the Mexican

clear picture Peso, the pair has not done so badly in

the last month and now sits on a good
support level offering a possible buying oppor-
tunity. Capital CFDs quotes a price of
peso12.5500-peso12.5700 for dollar-peso.
The Bank of Japan announced yesterday
that it will extend its quantitative easing (QE)
Technical analysis provides a surer outlook scheme and the central bank cut interest
rates and the dollar-yen bounced in trading.
for euro-dollar traders, says Donata Huggins Investors will be thinking ahead to Friday’s
non-farm payrolls figures for a clearer picture
on the Fed’s next move. A US QE expansion

E
VERY day there seems to be further
bad news from the Eurozone’s
periphery. Only yesterday Moody's
rating agency warned it might
downgrade Irish bonds. Yet the euro con-
tinues to rally against the dollar, reach-
ing $1.3833 yesterday at 6.45pm. The
market just does not seem to care what
trouble the Eurozone stirs up. All eyes are
fixed on the US and the dollar. “The mar-
ket is like a typical man, it can only focus
on one thing at a time – and at the
moment that’s further US quantitative
easing (QE2)” says Michael Hewson of
CMC Markets.
The market certainly expects QE2 and
the Federal Reserve has all its indicators
pointing in that direction. The anticipa-
tion in the lead to the announcement
seems to have lodged euro-dollar into a
range. We may have to wait until the
Fed’s meeting on 3 November – the earli-
est occasion that it could realistically be
announced. Should QE2 occur, analysts
predict a serious plunge for the dollar.
The chart below demonstrates what hap-
pened last time QE was announced. Many
expect a retracement of that dive.
But in the meantime, how should the
trader select a position? Neil Mellor of
The Bank of New York Mellon says traders
tend to turn to technical analysis when
the economic fundamentals do not offer
a logical picture.
The charts certainly offer patterns for
euro-dollar: for instance, despite the
euro’s strength it is struggling to find
buying momentum to carry it above
$1.3800. Yet it has established a support
level at $1.3635. Every time the euro
drops, the bounce-back carries it slightly
higher, maintaining the upward trend.
This channel pattern emerges on the 240-
minute time frame. But Raghee Horner
of Autochartist warns that this rally has
the potential to retrace itself, suggesting
that: “If the $1.3808 high holds, look for a
possible retracement on the daily chart
down to the 23.6 per cent Fibonacci level
at $1.3535.”
QE2 UNCERTAINTY
But beware, Hewson warns that doing
precisely the opposite to consensus can
often offer the golden ticket: “Just look
what happened in Australia on Monday:
75 per cent of analysts predicted a hike in
interest rates but the Reserve Bank of
Australia were kept on hold with no inten-
tion of raising them.” Mellor expresses the
same concern: “Nobody really knows
whether the Fed are actually going to go
through with QE2. I’ve heard people sug-
gesting that the Fed are entertaining the
idea to weaken the dollar so they don’t
have to go actually through with it.”
could see the dollar’s strengthening undone.
Cantor Index offers Daily dollar-yen
¥8342–¥8345.
The Reserve Bank of Australia left interest
rates unchanged at 4.5 per cent yesterday
and didn’t seem overly hawkish regarding
higher interest rates in the future. This sent
Australian dollar-dollar crashing 120 basis
points in a matter of hours to the 15-day
exponential moving average at Au$0.9643
before settling around Au$0.960. The charts
look bearish and a dip to Au$0.9470 and
Au$0.9350 is a possibility. Spread Co offers a
With so much uncertainty surrounding The markets wait for spread of Au$0.9594–Au$0.9596.
the prospect of QE2, technical analysis Ben Bernanke’s QE2 Sterling has suffered after talk of further
could be the surer bet in the near-term – decision QE. It looked to be soaring away against the
at least until Friday’s non-farm payrolls euro only a few weeks ago but suffered a
figures shed a little more light on the state Picture: REUTERS rough September, with sterling-euro retreat-
of the US economy. ing to the well-established support level. But
sterling could bounce from here. Capital
ANALYSIS l 2008 Euro - US dollar reaction to QE Spreads offers a price of €1.1500-€1.1504 on
1.5 $ sterling-euro.
The threat of further US QE is adding to
1.45 Euro - US dollar the dollar exodus and the Swiss franc contin-
ues to be a beneficiary. But there has been a
1.4
degree of profit taking and the question is
1.35 whether a push to fresh lows can be sus-
tained. The pair looks overbought but with
1.3 traders continuing to seek out safe havens
and markets far from normal, the traditional
1.25 rules don’t necessarily apply. The current IG
Source: Societe Generale Index price on dollar-Swiss franc is
1/10/2008 1/11/2008 1/12/2008 SFr0.9695-SFr0.9697. Donata Huggins

FOREX ANALYST PICKS

FOREX STRATEGIST FOREX STRATEGIST FOREX STRATEGIST
ILYA SPIVAK JOHN KICKLIGHTER JOEL KRUGER

My pick: Short euro-US dollar (pending market moves)
Expertise: Global macro
Average time frame of trades: 1 week-6 months
Euro-US dollar has put in a bearish dark cloud cover candlestick for-
mation following a test of resistance at the $1.38 figure, hinting
that a turn lower may be ahead. Confirmation is required on a break
below the sharply upward, slowing trend line now at $1.3687. I look
for a daily close below here to sell, initially targeting the $1.33 fig-
ure. Alternatively, a daily close above the 4 October high at $1.3811
would relieve bearish pressure and open the door for further gains.
My pick: Short euro-US dollar below $1.36 pending market moves
Expertise: Fundamental and technical analysis with risk management
Average time frame of trades: 1 day-1 week
My long euro-Japanese yen breakout scenario from last week was met
and I took a very small position in recognition of the volatility potential
on the Bank of Japan and European Central Bank rate decisions. On a
different tack, I think the euro’s run against the dollar is reaching an
extreme on a speculative versus fundamental perspective. I will wait for
confirmation of a break below $1.36 for the channel give and look for
fundamental confirmation.
My pick: Buy US dollar-Swiss franc at SFr0.9885
Expertise: Classic technical analysis
Average time frame of trades: 1 week-6 months
Setbacks have finally stalled out ahead of the critical record lows
from 2008 by SFr0.9645 with the market finding a bottom for now in
the 0.9700s ahead of the latest minor bounce. Short and medium-
term studies are looking stretched and longer-term cyclical studies
warn of a major bottom. This sets up the potential for a weekly rever-
sal, with a break and close back above SFr0.9880 to confirm bias and
likely accelerate gains. Target SFr1.0500 with a stop at SFr0.9585.
 City Focus
26
FSA will flex its muscles over bonuses
The new City pay code is almost
here, and much hangs on how
harsh the regulator decides to be
MARK LEVINE
MISHCON DE REYA
C
ITY bonus rounds are always an
interesting time, but this year’s
promises to be more fascinating
than most. This is because it is the
first time we will see the impact of the
new version of the Financial Services
Authority (FSA) Remuneration Code. The
first version of the code, which was intro-
duced earlier this year, applied to 26 of
the largest banks, building societies and
broker dealers in the UK.
But the new version will be far more
wideranging, and is expected to cover
over 2,500 FSA authorised firms, includ-
ing hedge funds. We’ll see very soon what
the new code will look like – consultation
on the proposals will come to a close on 8
October. The new rules will come into
effect on 1 January 2011, but will apply
retrospectively to remuneration paid on
or after that date for services performed
in 2010.
So what can we expect in the code?
Firstly, it sets out both general require-
ments in respect of firms’ remuneration
policies, which apply to all employees, as
well as specific principles which apply to
the remuneration of those individuals
that the FSA categorises as “code staff” –
Class action hopes
quashed by ruling
Shareholders from Northern Rock and others will no
longer be able to pursue cases in the American courts
WILL STUTE
FAEGRE & BENSON
S
INCE the financial crisis of 2008,
shareholders in several companies
including RBS, Northern Rock,
Lloyds, BP and Porsche have pur-
sued the possibility of suing for fraud in
the American courts, where class actions
are far easier. But a recent Supreme Court
decision could scupper these plans.
The verdict in Morrison v National
| Law
Looking big and
tough matters
Picture: GETTY
senior managers and risk takers whose
bonuses are more than 33 per cent of
their total remuneration and whose total
remuneration is more than £500,000. In
respect of non-code staff, the FSA propos-
es to issue guidance explaining that the
firm should give consideration to the
remuneration principles that will apply
to code staff.
Secondly, it deals with bonuses. The
code does not include any specific
requirements on the amount that can be
paid to staff in bonuses. But it will
require that a minimum of 50 per cent of
the code staff’s bonuses are paid in
shares (or the equivalent) with between
40 per cent and 60 per cent deferred for
between three and five years. Firms
Australian Bank puts an end to a long-
standing set of rules that often allowed
foreign investors who purchased shares of
a foreign company on a foreign
exchange – so called F-cubed investors – to
pursue claims of securities fraud under
US law in the American courts. Indeed, F-
cubed investors have frequently partici-
pated as class members in securities fraud
claims filed in the United States.
The High Court created a bright-line
test, rather than diving into the particu-
lars of the defendant’s conduct or the
nationality of the parties, holding that
Section 10(b) of the 1934 Securities
Exchange Act does not give rise to a pri-
vate cause of action for securities that are
traded outside of the United States. The
Court stated: “[T]hose purchase-and-sale
transactions are the objects of the
statute’s solicitude... And it is in our view
should also retain the ability to make
(downward) adjustments to unvested
individual awards and to awards that
have vested but which the individual has
to repay.
Deferred bonuses and payment in
shares were being used by the banks
before the crisis but they apparently did
little to avert excessive risk taking in the
past. However, it will be interesting to see
whether, absent another crisis, the banks
are willing to please the FSA and alienate
their staff in future years by aggressively The code says that a minimum of 50 per cent
using the power to claw back bonuses
which most individuals will still view as of a bonus is in shares, and between 40 and
rewards for past performance.
Ultimately, much will depend on 60 per cent is be deferred by up to five years
whether the banks are truly committed
only transactions in securities listed on
domestic exchanges, and domestic trans-
actions in other securities, to which
Section 10(b) applies.”
The Morrison decision drastically reins
in the extraterritorial reach of US securi-
ties laws. Indeed, in barring so called F-
cubed investors from pursuing claims
under US law, it also bars these investors
from taking advantage of the US class
action litigation mechanism.
This decision could also have a material
impact on foreign investors currently
seeking redress in the US courts. For
instance in January 2010 a jury verdict
was entered against Vivendi, finding the
company and several of its officers and
directors guilty of misleading sharehold-
ers. If French investors, or any Vivendi
investors outside the US, purchased their
shares on exchanges located outside the
United States, then under Morrison those
investors are barred from pursuing
claims in the US courts. Up to two-thirds
of Vivendi’s investors live in France.
As well as the cases mentioned above, a
number of securities fraud claims pend-
ing against foreign companies in
American courts, including claims
against Porsche, EADS, Alstom, BP, and
Toyota are now unlikely to proceed. Of
course, all this is good news for non-
American companies facing potential
investor fraud class action claims as the
pool of potential class members, and thus
the size of any potential claim for dam-
ages, is reduced by the application of
Morrison.
Under Morrison companies located out-
side of the US can seemingly avoid the US
securities laws and the risk of facing
CITYA.M. 6 OCTOBER 2010
to the new pay structures and embrace
the theory that these changes are needed
for the long term prosperity of the indus-
try. As interesting as that, though, will be
the FSA’s behaviour. It is determined to
take a hard line, even if regulators else-
where do not. Many will watch with
interest just how much it dares to flex its
muscles in dealing with non-compliance.
mark.levine@mishcon.com
expensive class action litigation there
altogether by simply not selling their
shares on American exchanges. But it is
unclear whether the decision will survive
financial reform and political pressure
which has generally favoured extending
the reach of the US securities laws beyond
American shores.
Indeed, it is possible that Morrison will
be overruled or eroded in the near future.
The ruling was explicitly based on the
absence of language in Section 10(b)
extending its reach to foreign investors
and stock exchanges. Accordingly, a con-
gressional amendment to the statute
would render the court's opinion moot.
And the financial reform bill winding its
way through Congress now contains a
proposal to extend the extraterritorial
reach of the Securities and Exchange
Commission and the Department of
Justice. This could erode the Court's new
transactional rule significantly by giving
regulators the power to enforce US securi-
ties law against foreign companies. Other
recently proposed legislation, such as
that providing for aiding and abetting lia-
bility in securities fraud suits, or lan-
guage adopting the conduct and effects
test that Morrison overruled, could also
extend the reach of the statutory fraud
remedy beyond US shores.
For now, Morrison reduces the litiga-
tion risk and expense for non-American
companies associated with being a pub-
licly traded company – particularly if the
company does not sell shares on the US
exchanges. Whether the decision spurs
EU countries to adopt parts of the
American-style class action system
remains to be seen.
 Lifestyle
27

| Motoring WORDS BY
RYAN BORROFF

School of
speed
W
E’VE done rather well in this col-
umn, test driving Aston Martin
sports cars for CityA.M. The City
of course is a key market for
these cars, which is why I’ve been fortu-
nate enough to get them. But the thing is,
the more familiar I became with them the
more I realised that UK speed restrictions
in combination with my own inadequa-
cies as a driver have resulted in a discon-
nect.
The truth is that when you get behind
the wheel of an Aston you can easily get
caught up in the euphoric whirlwind of
engine symphony and awesome power
beneath your driving shoes, and get ideas
above your station. The car makes you feel
like James Bond, when really you’re more
of an Inspector Clouseau. As wonderful as
these cars are I haven’t been able to fully
experience their superb high-performance
capabilities.
And it would seem I am not alone.
Aston Martin has created its Performance
Driving Course – a course that is designed
to teach drivers how to better appreciate
the capabilities of their cars with the aim
of making them safer and better drivers –
for people like me. Although to be fair
most – but not all – of the people that get
to experience such a driving day actually
own their own Aston Martin.
Which is how I find myself in a V8
Vantage hurtling into a banked bend at
160mph on the Mile Straight at Millbrook
Proving Ground. My instructor Andy tells
me to hold on, hold on, hold on... okay now,
Aston Martin’s advanced driving
course puts our man through
his paces – at a scary 175mph
and so I brake... hard. The car decelerates
without wavering, and we round the
banked bend at a far more reasonable
speed, just 80mph. I am not sure who is
more relieved, myself or Andy. (I suspect
me.) It’s clear that under such heavy brak-
ing the car remained far more composed
than I did. Speeding at such a bend and
not braking earlier involves an element of
trust in one’ s instructor... To say the very
least.
But then the chaps in the passenger seat
are certainly very good. A crew of Aston
Martin’s own instructors, they take us
through a number of different driving sce-
narios in most of the cars in the range.
Specifically, we’re driving the DB9, DBS,
Rapide and V8 N420 Vantage coupes.
It’s on the hill route that you really get a
chance to let rip. I drive the four-seat
Rapide and the V8 Vantage here and
though the Rapide is astonishingly good,
it’s the N420 that really shines. I simply
can’t get enough of it and like a spoiled
child beg to go around again once I’ve
completed my designated three circuits.
My instructor doesn’t just teach me about
gearing, speed and braking, he also points
out how to read the incline and camber
Ryan in the wet,
above, and putting
his foot down on
a bend, right.
and how to use the circuit’s road signs as
markers. It’s an exercise in how to be more
efficient and precise at speed. The result is
that I improve the more times I go around.
Normally with my hands on a car this
exciting, the emphasis is less on honing
my driving skills, and more about making
my hair fly back, so this is definitely a few
steps in the right direction.
Next up and I’m spinning out on a wet
skid pan in a DB9. It’s an exercise in learn-
ing how effective the Dynamic Stability
Control system is and how important it is
on a powerful rear-wheel drive car like
this. With the system back on the car
pirouettes in a perfect circle despite the
gallons of water on the tarmac. It’s an
important lesson on why you shouldn't
floor it coming out of a turning in poor
weather unless you’ve got the traction
control system on.
Back on the high speed circuit I get to
drive a DBS at very high speed and at
175mph it’s much less noisy than one
would imagine. It’s a pleasure to finally
experience an Aston at such a speed and
discover that it’s actually pretty tiring,
with so much visual information flashing
past so quickly. I find I have a new found
respect for racing drivers – no wonder
they always look so knackered on the
podium. My driving has undoubtedly
improved. Now I just need to save up for
an Aston.

CAR TALK

JAZZ GOES HYBRID
The best seller in the B-segment – the Honda Jazz – is now the first to
go hybrid. The hybrid version of the Jazz has the same 1.3 litre i-VTEC
engine as the Insight hybrid and is able to run on the electric motor
alone. This will mean the cars emits only 104 g/km of CO2 and has
fuel economy of up to 64.2 miles per gallon. Road tax is free in year
one (it will cost just £20 a year after that) and there's no congestion
charge either.
ONE FOR THE LADIES
This is the Twingo Miss Sixty, the result of yet another tie-up
between a car manufacturer and a fashion label, and according to
Renault it's the first Twingo to be designed purely for women.
Available in Bohemian Pink or Pearlescent black, the car has a “rock
‘n’ roll interior” of pink and black and includes a pink-rimmed
tachometer and speedometer and a pink-stitched leather steering
wheel. How very glam.
INFINITI AND BEYOND
OK so it's only a sketch, but Nissan’s premium brand Infiniti has shown
this drawing of a new high-end electric car for launch in 2013. The
Infiniti EV will be a stylish and compact five-seat luxury car offering
zero emissions and will share much of its technology with the Nissan
Leaf. It will also be one of the world's first luxury electric cars when it
arrives. The sketch was revealed at the opening of Infiniti's new brand
centre and showroom at 77 Piccadilly.
 28 Lifestyle | TV& Games CITYA.M. 6 OCTOBER 2010

BBC1 BBC2 ITV1 CHANNEL4 CH FIVE TV PICK

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
6.55pm Party Political
Broadcast
7pm The One Show
7.30pm Bang Goes the Theory
8pm Waterloo Road
9pm CHOICE The Apprentice
10pm BBC News
10.25pm Regional News
10.35pm National Lottery
10.45pm Reggie Perrin:
11.15pm FILM Hope Springs:
2002; National Lottery Update
12.45am Sign Zone: Dragons’ Den
1.45am Country Tracks 2.40am
Bang Goes the Theory 3.10am
Watchdog 4.10am Britain’s Empty
Homes 4.40am-6am BBC News
6pm Eggheads
6.30pm Strictly Come Dancing
– It Takes Two
7pm Games Today
8pm MasterChef
9pm Secret Iraq: Part two of
two. How the insurgents turned
against al-Qaeda. Last in the
series.
10pm The Apprentice: You’re
Fired! New series. Interview
with the show’s freshly rejected
candidate.
10.30pm Newsnight; Weather
11.20pm Today at Conference
11.50pm Wonders of the Solar
System
12.50am BBC News
4am-6am BBC Learning Zone
6pm London Tonight 6pm The Simpsons 6pm Home and Away
6.30pm ITV News 6.30pm Hollyoaks 6.25pm Live from Studio Five
6.55pm Party Political 7pm Channel 4 News 7pm Five News at 7
Broadcast 7.55pm 4thought.tv 7.30pm Highland Emergency;
7pm Emmerdale 8pm Food: What Goes in Your Five News Update
8pm Midsomer Murders: A Basket? 8pm Cowboy Builders; Five
music prodigy witnesses a 9pm CHOICE Grand Designs News at 9
woman drowning. With James 10pm Rude Tube 9pm NCIS:
Fox and Richard Fleeshman. 11.05pm 3 Minute Wonder 10pm CHOICE Law & Order:
10pm ITV News at Ten 11.10pm Ramsay’s Best Criminal Intent: Goren goes
10.30pm London News Restaurant undercover to take down a THE APPRENTICE
10.35pm FILM The 12.15am Music on 4: On Track high-profile drug dealer. BBC1, 9PM
12.30am The Album Chart Show Alan Sugar challenges the new batch
Bodyguard: Romantic thriller,
Spotlight 12.45am 4Play: Badly 10.55pm Law & Order:
with Kevin Costner. 1992. 11.55pm Poker: of entrepreneurial hopefuls to create
Drawn Boy 1am The Crush 1.25am
12.55am The Zone; ITV The Astronomer’s Sun 1.35am Hung 12.50am SuperCasino their own range of sausages at short
News Headlines 2.05am Studio 60 on the Sunset 4.05am Police Interceptors 4.55am notice and sell them at local markets.
2.55am FILM In the Name of the Strip 2.50am FILM She Creature: Animal Rescue Squad 5.10am
Father: 1993. 5.10am-5.30am ITV 2001. 4.20am Hill Street Blues Michaela’s Wild Challenge 5.35am-
Nightscreen 5.10am-5.55am Countdown 6am Michaela’s Wild Challenge

SKY SPORTS 1 BRITISH EUROSPORT 11pm Criminal Minds 12am 12.05am RuPaul’s Drag Race 3.50am Raging Planet 4.40am
SATELLITE & CABLE

6pm Live Darts 12am
Johnstone’s Paint Trophy
Football 1.30am Prizefighter
Boxing 3am 15 Years of the
European Cup 4am FIFA
Futbol Mundial 4.30am Total
Rugby 5am-6am Transworld
Sport
SKY SPORTS 2
7pm Live Johnstone’s Paint
Trophy Football 9.30pm
Prizefighter Boxing 11pm ICC
Awards 2010 12am European
Tour Weekly 12.30am Inside
the PGA Tour 1am Champions
Tour Golf 2am Golf 3am-4am
ICC Awards 2010
SKY SPORTS 3
7pm 15 Years of the European
Cup 8pm Champions Tour Golf
9pm Golf 10pm 15 Years of
the European Cup 11pm
Golfing World 12am F3
Euroseries 1am Max Power
2am-4am Poker Million
6.40pm Polo 7.40pm Riders
Club. Magazine show for
equestrian fans. 7.45pm US
Tour Golf 8.45pm Golf Club
8.50pm Sailing 9.50pm Yacht
Club 10.05pm Olympic
Magazine 10.30pm Eurogoals
Flash 10.45pm-12.30am
International Football
ESPN
7pm Live NBA Basketball
9.30pm NHL Ice Hockey
10.30pm 30 for 30 11.30pm
Premier League World 12am
Poker 1am Press Pass 2010
1.30am ESPN Kicks Extra
1.45am ESPN Serie A Kicks
2am 30 for 30 3am NHL Ice
Hockey 4am-5.30am
Premiership Rugby Union
LIVING
7pm Baggage 8pm Psychic
Sally: On the Road 9pm Ghost
Whisperer 10pm CSI: Crime
Scene Investigation
CSI: Crime Scene Investigation
2am Medium 3am Diet on the
Dancefloor 4.40am The Jerry
Springer Show 5.30am-6am
Home Shopping
BBC THREE
7pm The Real Hustle: Celebrity
Scammers 7.30pm The Real
Hustle Undercover 8pm Don’t
Tell the Bride 9pm FILM The
Guardian 2006. 11.15pm
Family Guy 12am One Non
Blonde Down Under 12.30am
Ideal 1am Him and Her 1.30am
The Real Hustle: Celebrity
Scammers 2am The Real
Hustle Undercover 2.30am
One Non Blonde Down Under
3am Ideal 3.30am Him and
Her 4am-5am Don’t Tell the
Bride
E4
7pm Hollyoaks 7.30pm Friends
9pm Ugly Betty 10pm FILM
Ferris Bueller’s Day Off 1986.
1.05am Scrubs 2am RuPaul’s Unsolved History 5.30am-6am
Drag Race 2.45am What How Does That Work?
About Brian 3.25am Life
Unexpected 4.10am The Hills DISCOVERY HOME &
4.30am-6am Switched HEALTH
7pm Deliver Me 8pm The 28 GRAND DESIGNS
HISTORY Stone Teenager: Shocking CHANNEL 4, 9PM
7pm How the Earth Was Made Story 9pm A&E 10pm Kevin McCloud follows a couple who
8pm Mega Movers 9pm Ax Hospital Sydney 11pm The discovered that a barn they were about
Men. A weak cable risks lives Trauma Team 12am A&E 1am to restore is one of the smallest surviv-
at Browning. 10pm Sliced Hospital Sydney 2am The ing medieval guildhalls in the country.
11pm Mega Disasters 12am Ax Trauma Team 3am The 28
Men 1am Vampire Princess Stone Teenager: Shocking
2am How the Earth Was Made Story 4am A Baby Story 5am-
3am The Aztec Massacre 6am Bringing Home Baby
4am-5am Disappearing Britain
SKY1
DISCOVERY 8pm Emergency Animal
8pm How Do They Do It? Rescue 9pm Madonna: Sticky
8.30pm How It’s Made 9pm and Sweet – Live from Buenos
The End of the World Cult Aires 11.30pm Ross Kemp on
10pm Trawler Wars 11pm Is It Gangs 12.30am Road Wars LAW & ORDER: CRIMINAL INTENT
Possible? 12am Bear Grylls: 2.20am Street Wars 3.10am CHANNEL FIVE, 10PM
Born Survivor 1am Deadliest Bite Size Brainiac 3.30am Lost Under suspension pending a psychiatric
Catch 2am Rory McGrath’s 4.20am Vroom Vroom evaluation, Goren places his life and
Best of British Engineering 5.10am-6am Sell Me the career in jeopardy working undercover
3am Weaponology Answer to take down a high-profile drug-dealer.

COFFEE BREAK
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk

QUICK CROSSWORD
    

SUDOKU KAKURO
22 39 30 17 20 10 
14 9 4
4 11  
16 21
Place the numbers from 1 to 9 in each empty cell so that each 25 
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 45
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 7 23 5
     
above or to the left of it. 6 22
You can only use the digits 1-9 17 8
    and you must not use the
18 38 21
11 29      
same digit twice in a block. 15
   The same digit may occur 15 13 
19 13 27
  more than once in a row or
column, but it must be in a
3
18
7
11
6
 
45
  separate block. 
24 35
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CITYA.M. 6 OCTOBER 2010
‘England’s greatest Tests lie ahead’
In the second part of our
exclusive interview,
Andrew Strauss looks
ahead to a defining winter.
By Frank Dalleres
E
NGLAND captain Andrew
Strauss believes the current side
has the potential to be even bet-
ter than the iconic Ashes win-
ners of 2005. Strauss, who scored two
centuries in that landmark series,
will lead the class of 2010 in Australia
this winter as they look to retain the
urn. And he says that it is how they
fare in that series, and the World Cup
early next year, that will determine
whether their legacy eclipses that of
their illustrious predecessors.
“I think this has the most potential
of any England team I’ve played in,”
Strauss told City A.M. “The 2005 side
was a very strong side – a lot of play-
ers at the peak of their powers. But
that side never got on a pitch again
after that series. I think this team’s
got potential to continue improving
and there’s quite a lot of youth in our
side so I think we can be a lot better
than we are at the moment.”
Strauss has already tasted Ashes vic-
tory as captain, skippering the team
to glory in a hard-fought series last
year on home soil. Indeed, his tenure,
and that of coach Andy Flower, has
coincided with something of a boom
in English cricket and they will travel
to the southern hemisphere as
favourites to beat Australia again. Not
that he takes any notice.
“I’m proud in what the team has
achieved over the last couple of years,
certainly. I’m not proud of being a
favourite going into the Ashes
because it means nothing – it really
does mean nothing,” he says.
“I’m proud of the way the team has
developed, I’m proud of the way indi-
vidual players have come through.
Graeme Swann only played his first
Test match in December ‘08, the likes
of Ian Bell have really stood up to the
plate, and we’ve seen the likes of
Jimmy Anderson and Stuart Broad
develop incredibly.
“But the greatest tests lie ahead.
There’s no doubt about it. An Ashes
series away from home – it doesn’t
Cipriani is a Rebels rebel
after missing team meet
▲
RUGBY UNION
BY JON COUCH
DANNY CIPRIANI has angered his
new Melbourne Rebels bosses already
by failing to turn up for their pre-sea-
son team conference.
The former Wasps and England fly-
half has told the club he is having
problems obtaining a visa, but Rebels
coach Rod Macqueen says he is disap-
pointed by his absence.
The Rebels squad assembled in
Melbourne to announce the team’s
naming-rights sponsor before prepar-
ing for the start of the Super Rugby
season with a four-day team session.
Macqueen said: “Danny’s telling us
he’s had problems with his visa.
We’re working together with his
get harder than that – and a World
Cup – an event that England have per-
formed poorly in in the past – we
want to make amends for that. And at
the end of this winter we’ll be in a
much better place to measure exactly
where we are as a side.”
BLUNT INSTRUMENTS
Measuring exactly where they are is
precisely why Strauss is here at Lord’s
to talk to City A.M. He is endorsing the
FTI MVP rankings, a points-based sys-
tem that factors in every run scored,
wicket taken and catch held and is
billed as a more accurate measure of
performance than the blunt instru-
ments of batting and bowling aver-
ages. Happily, Strauss sits atop of the
management at the moment.
“There’s an issue with the visa com-
ing out of the English side of things.
That’s not to say it probably couldn’t
have been done a couple of months
ago.
“We’re disappointed he’s not here. I
won’t get into that at this stage. We’ve
been told he’s not far off and will be
here next week.”
England outcast Cipriani, 22,
announced he would join the Rebels
from Wasps back in February.
He has recently been keeping in
shape by training with various foot-
ball teams, including Premier League
sides Tottenham and Fulham.
He also spent time in the United
States with Major League Soccer fran-
chise Colorado Rapids.
England one-day table, while Swann
leads the rankings overall, and the
spinner – a huge Twitter fan – is not
hiding the fact from his colleagues.
“Graeme Swann is at the top so you
can imagine he has been letting
everyone know that. I’m sure he will
be tweeting about it at some stage,”
he adds. “There is a bit of banter
about it but we also recognise that
cricket is such a form game. One day
you’ll be top of the rankings, the next
you’ll be right down the bottom.”
Which brings us on to Kevin
Pietersen and Alastair Cook, two play-
ers who have endured disappointing
seasons. Having two of your premier
batsmen struggling for form is far
from ideal preparation for an Ashes
Irish legend
Moss Keane
dies, aged 62
IRISH rugby is mourning the death of
legendary forward Moss Keane, who
died yesterday at the age of 62.
The Kerry lock was regarded as
one of Irish rugby’s great characters
after making the first of his 51 caps
for Ireland in France in 1974.
He went on to tour New Zealand
with the British and Irish Lions three
years later and became only the third
player, behind Willie John McBride
and Fergus Slattery to win 50 Irish
caps in 1984. He was also part of the
Munster side which famously beat
the All Blacks in 1977.
Keane had been battling cancer for
some time.
series, but Strauss is confident he has
the strength in depth to compensate.
RETRIBUTION
“It’s not a major concern to me,” he
says. “The game of cricket always
throws up a batsman who’s strug-
gling for form at one stage or anoth-
er; you never get a situation where all
of your batsmen are at the top of
their form. So I’m very comfortable
that they are world-class internation-
al players – their records say it and
they’ll come through.
“I think we’ve got to prepare our-
selves that over the course of the win-
ter one or two of our players will have
a tough time. The key is to minimise
the number and for us to absorb the
SPORT | IN BRIEF
Alex out for three weeks
FOOTBALL: Chelsea defender Alex is
facing a three-week lay-off after sus-
taining a thigh injury in the final stages
of Sunday’s game with Arsenal.
The centre back picked up the injury
after scoring a spectacular 85th-minute
free-kick which clinched a 2-0 win.
He has withdrawn from Brazil’s forth-
coming internationals with Iran and
Ukraine and is set to miss Chelsea’s visits
to Aston Villa and Spartak Moscow on
16 and 19 October.
Mallya in Rangers talks
FOOTBALL: Indian billionaire Vijay Mallya
is in talks to buy a share of Queens Park
Rangers – a move which could finally
bring an end to Flavio Briatore and Bernie
Ecclestone’s involvement with the club.
Mallya, who owns Kingfisher Airlines
and the Force India Formula One team,
was linked with a similar move two years
ago, but is expected to be successful this
time in ousting Briatore and Ecclestone,
who want to sever ties with the club.
Sport 29
Strauss led England
to success in the
Ashes last year (left).
Picture: REUTERS
one guy who is struggling and make
sure the rest of us do enough to keep
winning consistently.”
Seven of the 16-man squad for this
winter’s series, which starts next
month, are veterans of the 2006-7
Ashes, and could be forgiven for shud-
dering at the thought of returning to
the scene of that 5-0 whitewash.
But Strauss says: “I don’t think it’ll
be on their minds. This tour is not ret-
ribution for what happened last time
or anything like that. There were
some lessons learned. Most of the
team weren’t involved in it.
“Ultimately, we’re holding the
Ashes at the moment and we still
want to be holding the Ashes in six
months’ time.”
Laxman clinches thrilling win
CRICKET: Australia captain Ricky
Ponting admitted his side were outplayed
in the first Test against India after going
down to a one-wicket defeat in a tense
finale in Mohali.
VVS Laxman struck a superb unbeat-
en 73 as India limped to the victory tar-
get of 216 for a 1-0 series lead.
“It’s one of best and most exciting Test
matches I’ve played in,” said Ponting.
“They outplayed us today, we weren’t
quite good enough to get across the line.”
Murray safely through in China
TENNIS: Andy Murray cruised into the
second round of the China Open yester-
day after a comfortable 6-2, 6-3 victory
over French qualifier Paul-Henri Mathieu
in Beijing.
“I thought I did well,” said second seed
Murray. “I started well and didn’t give him
any chances except for a couple of break
points on my serve in the second set.”
He now takes on Spain’s Albert
Montanes in round two.
 30 Sport CITYA.M. 6 OCTOBER 2010

Results
FOOTBALL
JOHNSTONE'S PAINT TROPHY NORTHERN
SECTION SECOND ROUND
Olly deserves a shot at the No1 job
Bury..................................(0) 0 Shrewsbury.....................(0) 0
Att: 1,944
Bury win 6-5 on penalties.
Carlisle...........................(0) 2 Port Vale .............................(1) 2
Chester 76 Norwood 42 (og)
Price 81 M Richards 64
Att: 2,273
Carlisle win 4-3 on penalties.
Hartlepool ...................(0) 1 Bradford.............................(0) 0
McSweeney 69 Att: 1,728
Huddersfld...................(3) 3 Peterboro ..........................(0) 2
Carey 6 Mclean 51 FORMER RYDER CUP CAPTAIN
Pilkington 12, 24 Little 87
Att: 2,904
Macclesfield...............(2) 2 Crewe ...................................(2) 4
SAM TORRANCE

J
Ada 13 (og), 30 (og) Daniel 4 (og) OSE Maria Olazabal’s admission
Bell 29 (pen) that he would relish the opportu-
Artell 48
Att: 1,103 Grant 59
nity of leading the European
team in Medinah in 2012 will
SOUTHERN SECTION SECOND ROUND
have certainly come as a welcome
Barnet.............................(0) 1 Southend ............................(1) 3
Marshall 79 Paterson 22, 55 boost for the Ryder Cup committee,
Att: 1,356 Soares 85 who would surely have had him as
Bristol Rovers ...........(0) 1 Aldershot...........................(0) 0 frontrunner in any case.
Hoskins 90 Att: 4,050 But this is by no means a closed
Cheltenham................(0) 0 Plymouth ............................(1) 2 book.
MacLean 10
Att: 1,597 Noone 46
No captain has retained the job
Colchester...................(0) 0 Wycombe...........................(0) 2 since Bernard Gallacher led Europe to
Betsy 75 victory at the third time of asking in
Att: 2,379 Davies 82 1995 and Colin Montgomerie’s deci-
Hereford........................(0) 0 Exeter....................................(1) 3 sion to stand down after leading the
Nardiello 12 (pen) team to glory at Celtic Manor has set
O'Flynn 53
Att: 1,286 Duffy 90
the ball rolling for a whole new selec-
Leyton Orient ............(0) 0 Brentford...........................(0) 0 tion process with several big names in
Att: 1,152 the running to succeed him. Olazabal is a popular member of the European team. Picture: ACTION IMAGES
Brentford win 5-4 on penalties. Olly, naturally, is many people’s
Milton Keynes Dons(1) 1 Charlton..............................(0) 2 No1 pick. He has a proud playing I just hope that his health stands Like Olazabal, Darren Clarke has McGinley, also have bags of experi-
Chadwick 2 Abbott 53 record in the Ryder Cup and is well up to allow him to play enough on huge Ryder Cup pedigree but while ence and are more than capable of
Att: 3,773 Wagstaff 85
Swindon ........................(2) 2 Torquay...............................(0) 0 respected by the players. the Tour to help him keep that close- it’s not too early for him to get the stepping into the breach and leading
Ball 10 Who can forget his rousing speech ness that you need with the players. job, he, I’m sure, will be setting his the side.
Pericard 45 Att: 3,625 as vice-captain to Nick Faldo at But while Olly will start as many sights on boarding the plane to But these two have plenty of time
BLUE SQUARE BET PREMIER Valhalla two years ago, and his late people’s favourite, the Ryder Cup Medinah in a playing capacity. on their side and it is probably more
Hayes & Yeading ......(1) 2 Cambridge Utd...............(0) 0 call-up to assist Monty at Celtic Manor committee do have a very healthy Darren’s co-vice captains at Celtic likely that either will take the reins
Histon..............................(2) 2 Southport ..........................(1) 1 was clearly a popular move. selection dilemma on their hands. Manor, Thomas Bjorn and Paul for Gleneagles in 2014.
Kidderminster..........(0) 2 Gateshead..........................(1) 1
Luton ...............................(0) 1 Crawley Town.................(0) 2
Mansfield......................(1) 2 AFC Wimbledon.............(3) 5
Newport County .....(2) 3 Eastbourne Borough..(1) 3
Rushden & D...............(0) 2 Darlington..........................(1) 1
Tamworth.....................(1) 2 Barrow .................................(1) 2
Wrexham......................(0) 0 Fleetwood Town...........(0) 0
York..................................(0) 0 Kettering ...........................(0) 1
COMMONWEALTH GAMES
I’ve never been so nervous, claims G-Mac
GYMNASTICS — Men’s Artistic Team Competition Final: 1
▲

Australia 259.050, 2 England 256.750, 3 Canada 248.500, 5 GOLF the US Open at Pebble Beach in June. with Hunter Mahan, which ultimate- “I hoped I wasn’t going to be need-
Wales 240.450. The Northern Irishman also won ly proved decisive in handing Europe ed. I was hoping my caddie would
BY JON COUCH
CYCLING — Men, 1000m Time Trial Final: 1 S Sunderland the Wales Open at Celtic Manor and a 14½-13½ victory. give me the nod [that the side had
(Aus) 1min 1.411secs, 2 M Tisin (Mkd) 1:2.768, 3 E Dawkins WIN, lose or draw, Graeme McDowell is now many people’s favourite to be “I have never been that nervous won].
(NZ) 1:2.777, 8 C Skinner (Sco) 1:5.095, 10 Philip Lavery
(NIrl) 1:8.985, 13 A Armstrong (NIrl) 1:11.659. would still have walked away from named BBC Sports Personality of the before,” reflected the man affection- “I imagined winning and losing in
Women, 500m Time Trial Final: 1 A Meares (Aus) Celtic Manor on Monday celebrating Year in December. ately known as G-Mac. “It was the the same breath. That’s just the way
33.758secs, 2 K Mcculloch (Aus) 34.780, 3 B James (Wal) the greatest year of his life. Yet McDowell claims nothing most difficult nine holes of golf of my golf is – there are good times and
35.236, 5 J Davis (Sco) 36.416, 7 A Blyth (Eng) 36.807, 8 C It was the year the 31-year-old burst comes close to the nerves he felt life – it made the US Open back nine bad times, great shots and bad shots.
Joiner (Sco) 37.539, 9 W Houvenaghel (NIrl) 38.289, 12 H
Wilson (NIrl) 40.189. into the world’s top 20 for the first when walking down the back nine in feel like playing with my dad at Royal That is what makes this game so
SHOOTING — Men, Pairs 10m Air Rifle Final: 1 India time with a maiden Major victory in the final Ryder Cup singles match Portrush. great.”
1193pts, 2 England 1174 (J Huckle & K Parr), 3 Bangladesh
1173.

Pool stars Tancock

Pairs 50m Pistol Final: 1 Singapore 1094pts, 2 India 1087, 3
Trinidad and Tobago 1081, 5 J Huckle (Eng), K Parr (Eng)
England 1073.
Women, Pairs 25m Pistol Final: 1 India 1156pts, 2 Australia
1146, 3 England (G Geikie & J Lydall) 1122.
SWIMMING — Men, 200m Freestyle Final: 1 R Renwick

and Halsall start

(Sco) 1min 47.880secs, 2 K Monk (Aus) 1:47.900, 3 T Fraser-
Holmes (Aus) 1:48.220, 5 R Davenport (Eng) 1:48.600, 7 R
Bale (Eng) 1:48.730, 8 D Carry (Sco) 1:49.190 5.
50m Backstroke Final: 1 L Tancock (Eng)24.620secs, 2 H
Stoeckel (Aus)25.080, 3 A Delaney (Aus)25.210, 5 M
Loughran (Wal) 25.580.

English gold rush

Women, Butterfly Final 50m: 1 F Halsall (Eng) 26.240secs, 2
M Katherine Guehrer (Aus) 26.270, 3 E Seebohm (Aus)
26.290, 5 E Gandy (Eng) 26.800, 6 J Lowe (Wal) 27.150.
Breaststroke, Final 50m: 1 L Pickett (Aus) 30.840secs, 2 L
Jones (Aus) 31.100, 3 K Haywood (Eng) 31.170, 5 R Achieng
Ajulu-Bushell (Eng) 31.560, 7 K Johnstone (Sco) 32.190.
CRICKET
FIRST ONE DAY INTERNATIONAL: Bangladesh v New
▲

Zealand (Mirpur); Bangladesh 228 (Shakib Al Hasan 58) v COMMONWEALTH GAMES Tancock, who also has 100m back-
New Zealand 200-8 (B B B B McCullum 61, Shakib Al stroke aspirations, set a new Games
Hasan 4-41). Bangladesh beat New Zealand by 9 runs. BY FRANK DALLERES
record of 24.62 seconds as he comfort-
First Test Match: Australia v India (Mohali); Australia 428 SWIMMERS Liam Tancock and Fran ably won over the shorter distance.
(S R Watson 126, T D Paine 92, R T Ponting 71, Z Khan 5-94)
and 192 (S R Watson 56) v India 405 (S R Tendulkar 98, S K Halsall secured England’s first gold “It’s a great start to the meet for us,
Raina 86, R Dravid 77, V Sehwag 59, M G Johnson 5-64) and medals of the Commonwealth Games a couple of golds,” said the Devon
216-9 (V V S Laxman 73no, B W Hilfenhaus 4-57). India on a day of further success in the pool swimmer. “It felt pretty good but it
beat Australia by one wicket. in Delhi. didn’t feel amazing. I gave it my best,
World champion Tancock won the though, and stroked on through to
TODAY’S DIARY men’s 50m backstroke after Halsall the win.”
Johnstone’s Paint Trophy Northern Section Second had upset the odds to snatch the Halsall just pipped Australian
Round women’s 50m butterfly. world champion Marieke Guehrer in
Burton Albion v Rotherham (7.30) ...................................................................... England’s Kate Haywood won a race in which the top three were
Sheff Wed v Chesterfield (7.15)............................................................................
bronze in the 50m breastroke, while separated by just 0.05 seconds.
COMMONWEALTH GAMES Robbie Renwick claimed a first gold “When I saw I’d won I thought,
2010 Commonwealth Games (Delhi, India). for Scotland in the 200m freestyle. ‘That was cheeky’,” said the 20-year-
Away from the pool, England’s old. “I enjoy being the underdog and
Terrence Bosson took silver in the when there are people better than me
SPORTS EDITOR JON COUCH 60kg Greco-Roman wrestling, losing to take down, that’s incentive to take
email sport@cityam.com Tancock (top) and Halsall struck gold in the pool. Picture: ACTION IMAGES, GETTY the final to India’s Ravinder Singh. it one step further.”
 Tenacity
Teenaac and
endur
endurance
ur can pay
dividends.
d
de

Congratulations,
Congratulations, Monty.
Monty.

www.aberdeen-asset.com/sponsorship
www
w..abe
.aberdeen-asset.com/sponsorship
Issued and approved by Aberdeen Asset Managers Limited, 10 Queen’s Terr
e ace, Aberdeen AB10 1YG.
Authorised and regulated by the Financial Services Authority.
 Sport
32
Tottenham at
loggerheads
with Coe over
Olympic track
▲
FOOTBALL
BY FRANK DALLERES
TOTTENHAM are on collision course
with Lord Coe over the Olympic
Stadium after it emerged yesterday
their bid to move into the arena does
not include keeping the running
track.
Coe, a key figure in bringing the
2012 Games to London and chairman
of the Organising Committee, has
insisted that preserving the stadium’s
ability to host athletics is “non-nego-
tiable”.
But AEG, the entertainment com-
pany which runs the O2 and has sub-
mitted a joint bid with Tottenham,
revealed they would scrap the track if
they move into the stadium in
Stratford.
Tim Leiweke, AEG’s president and
chairman, said: “I think it is a crime if
you sacrifice having a perfect football
stadium for convincing yourself you
are going to do a track and field event
every 10 years.”
AEG Europe chief executive David
Campbell added: “If you get a premier
football team you cannot have a run-
ning track around the stadium.”
Spurs declined to comment but City
A.M. understands that the club is very
unlikely to consider any arrangement
that includes retaining the track.
Five years ago Tottenham walked
Hicks and Gillett set to block
fresh offers to buy Liverpool
▲
FOOTBALL
BY JON COUCH
UNPOPULAR owners Tom Hicks and
George Gillett faced the wrath of
Liverpool supporters again last night
after it was revealed they are to set to
oppose two fresh bids to buy the club.
The Liverpool board met yesterday
to discuss proposals from two consor-
tiums – one believed to be from Asia
and the other from the current own-
ers of the Boston Red Sox.
But while the three independent
members of the board – chairman
Martin Broughton, managing direc-
away from discussions about moving
into the Olympic stadium because
they were told they would have to
keep the facility.
And their plans for a new ground
next to current home White Hart
Lane were specifically drawn up with
the closeness of the crowd to the
pitch in mind – a factor a running
track would severely impede.
Tottenham and AEG submitted
their bid on Thursday, the cut-off
point for interested parties, as a back-
up option in case their plans to build
a new stadium fall through.
A spokesperson for the Olympic
Park Legacy Company, which will
decide the fate of the 80,000-seater
stadium, told City A.M. that it was “not
compulsory” for bidders to include a
provision to retain the track.
But Coe has always pledged, as part
of London’s legacy commitments for
2012, that it would remain an athlet-
ics venue, regardless of its new occu-
pants. “It’s non-negotiable that this is
a track and field facility,” he said in
February.
Olympic hero Dame Kelly Holmes
was shown around the stadium by
Coe last month and told City A.M.:
“The way it’s going to go is the track
will stay.”
Fellow top-flight club West Ham
have also bid for the stadium but
have promised to retain the track.
tor Christian Purslow and commer-
cial director Ian Ayre – were all in
favour of selling, the proposals were
being blocked by Hicks and Gillett,
who are holding out for as much prof-
it as possible.
Hicks and Gillett need to find a
buyer before 15 October to repay their
£282m loans to the Royal Bank of
Scotland and Wachovia.
If no buyer is found by that date,
then RBS are free to take control of the
club and its assets or even place the
company into administration, thus
invoking a subsequent nine-point
penalty from the Premier League.
IT’S ALL GOING
SWIMMINGLY IN DELHI
HALSALL LEADS GOLD
RUSH IN THE POOL: P30
Olazabal played in seven Ryder Cups and has been vice-captain twice.
▲
This latest development came on
the day when one potential buyer,
Syrian businessman Yahya Kirdi,
claimed there was “no logic” in Hicks
and Gillett’s £600m asking price for
the club – and vowed to withdraw his
interest.
“Right now is not the time for me
and my group to enter into any negoti-
ations,” Kirdi said. “Once everyone is
united and there’s logic in the price
and the overall deal, me and my group
will be prepared to return to the table.”
Hicks and Gillett put the club up
for sale back in April after struggling
with debts of £351m.
Picture: PA
Ashes tour is not about
retribution, says Strauss
CRICKET
ENGLAND captain Andrew Strauss
insists they will not be on a revenge
mission when they travel to Australia
for the Ashes this winter.
Strauss is one of seven players in
the 16-man squad who were on the
receiving end of a series whitewash
when the contest was last held Down
Under, four years ago.
But in the second part of an exclu-
sive interview with City A.M. he says: “I
don’t think it’ll be on their minds.
This tour is not retribution for what
happened last time or anything like
that. “There were some lessons
learned. Most of the team weren’t
CITYA.M. 6 OCTOBER 2010
Olly’s our
man for
Medinah,
says Monty
▲
GOLF
BY JON COUCH
COLIN MONTGOMERIE has given Jose
Maria Olazabal the ultimate accolade
in his bid to succeed him as European
Ryder Cup captain, insisting: ‘I’m sure
he’ll do a better job than me”.
The Scot stood down as skipper
after leading the side to a thrilling
14½-13½ victory over the Americans
at Celtic Manor on Monday.
Now Olazabal, who was drafted in
at the last minute to fill in as one of
Monty’s vice-captains, is favourite to
take the team to Medinah in 2010 –
provided he recovers sufficiently
from the rheumatism from which he
has been suffering.
“I would love to do it,” said the
Spaniard, who has played in seven
Ryder Cups and vice-captained in the
last two. “It all depends on my physi-
cal situation, but it’s much better
than it was a few months ago.”
Montgomerie said: “I hope Jose
Maria will be well enough to be the
next captain. It was between him and
me for the captaincy this time and in
two years’ time he’ll be 46, just a year
younger than I am now. The passion
he brings to any team room means
he’s everybody’s choice to retain this
trophy. We played many Ryder Cups
together and I’m sure he’ll do as good
a job – if not better – than I did.”
Monty’s sentiments have been
endorsed by several players, including
new world No2 Lee Westwood. “I
think it’s time Jose had a go,” he
added. “He’d make a fantastic cap-
tain, he’s very inspirational and gets
everybody on-side.”
SAM TORRANCE: PAGE 30
involved in it. Ultimately, we’re hold-
ing the Ashes at the moment and we
still want to be holding the Ashes in
six months’ time.”
Strauss led England to Ashes glory
on home soil last year and was also
part of the iconic side who recap-
tured the urn in 2005.
But while the current crop have
enjoyed strong results, with a
Twenty20 World Cup and seven wins
from eight Tests this year, he believes
their true measure is to come. “The
greatest tests lie ahead,” he adds. “At
the end of this winter we’ll be in a
much better place to measure exactly
where we are as a side.”
INTERVIEW: PAGE 29
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