BUSINESS WITH PERSONALITY
com
STAR FUND MANAGER IN CLEAR P7
Issue 1,353 Wednesday 30 March 2011
TAX RAID HALTS
NORTH SEA DRILL
ENERGY
▲
BY MARION DAKERS
THE CHANCELLOR was forced to
defend his surprise tax raid on oil
firms yesterday after energy giant
Statoil announced that it was suspend-
ing a $10bn (£6.2bn) investment in the
North Sea in response to the hike.
Statoil, Norway’s top fuel producer,
was due to hire contractors in the next
few weeks to work on the Mariner and
Bressay fields, the biggest develop-
ment opportunity left in the North
Sea with 3.5bn barrels of oil equiva-
lent. But a spokesperson for the firm
said yesterday: “We believed that we
were able to develop [the fields] but
with these proposed tax increases we
need to reconsider the project.”
Statoil was due to produce its first
oil at the site in 2016. Around 640m
barrels of crude oil are expected to be
extracted from the sites – carrying a
value of tens of billions of pounds at
today’s price of $115.34 a barrel.
George Osborne hiked the tax on
UK oil profits from 20 to 32 per cent in
last week’s Budget, fuelling fears that
jobs would be lost and exploration
halted, forcing the UK to rely more on
imported energy. Some older oil fields
now have a tax rate of 81 per cent.
The government hopes to raise
more than £10bn over the course of
the current Parliament, to fund an
immediate 1p per litre fuel duty cut
and a fuel stabiliser to cushion
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FSA DROPS PROBE INTO
GARTMORE’S RAMBOURG
George Osborne yesterday defended his tax on oil companies, which Statoil blamed for its decision to halt a key project
motorists from rising oil prices.
Osborne told yesterday’s Treasury
select committee: “I don’t think it is
possible to actively consult a business
sector on a tax rise in a Budget. I think
that would have been very difficult.”
He added: “No industry is going to
welcome with open arms a tax rise on
it and I would be very surprised if they
had, but I would suggest that the cur-
rent oil price and the forecast oil price
certainly makes it very profitable to
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invest in the North Sea.” Osborne said Responsibility, whose chairman
the government will get in touch with Robert Chote told the select commit-
Statoil to talk about the tax raid. tee yesterday that the tax increase
Industry body Oil & Gas UK said it would have “no significant impact” on
was not surprised by Statoil’s decision. investments, adding that Statoil had
“The tax change has damaged the merely postponed its final decision
industry’s confidence and trust in the rather than the actual project.
tax regime and that trust will take a Osborne added that the
long time to rebuild,” said economics Organisation for Economic Co-opera-
director Mike Tholen. tion and Development (OECD) has
Oil & Gas UK also contradicted guid- praised his Budget as “pav[ing] the way
ance from the Office of Budget for a stronger recovery”.
£/¤ t1.13 -0.01 ¤/$ 1.41 unc
KAUPTHING
NET WIDENS
SFO SWOOPS ON
LUXEMBOURG
BUSINESSES P2
FREE
Crisis talks
called over
Topaz float
▲
CAPITAL MARKETS
BY DAVID HELLIER
BANKING advisers to the £300m flota-
tion of Topaz Energy and Marine are
meeting with the management of the
group today amid fears that the flota-
tion might be dropped.
The Dubai-based oilfield services
group Topaz is a subisidiary of Omani
group Renaissance Services and its
proposed share listing has inevitably
been hit by concerns over Middle
Eastern stability.
“No decision has yet been made,”
said one person close to the situation,
“but clearly there are jitters.”
Renaissance shares fell yesterday by
6.6 per cent on speculation that the
IPO could be delayed.
Today’s meeting might conclude
without a definite decision on
whether to press ahead and advisers
could insist on changes to pricing or
structure to help push the deal
through.
In recent weeks the Danish group
ISS pulled a big issue and Lagardere
delayed an IPO of Canal Plus, citing
concerns over the Japanese earth-
quake.
The main banking advisers to
Topaz are JP Morgan and Bank of
America Merrill Lynch. JP Morgan is
also currently marketing the flota-
tion of Edwards, a vacuum technolo-
gy firm.
If the Topaz float does go ahead,
the firm should have a market capi-
talisation of more than £1bn, which
would put it in the FTSE 250. The
group declined to comment.
Certified Distribution
03/01/11 till 30/01/11 is 97,465
 2 News
National pay cut has only just begun
EDITOR’S LETTER
ALLISTER HEATH
FOR months now, it has been clear
that exploding inflation, costs and
taxes were the main threat to the
recovery. Yesterday’s figures showing
that real household disposable
income dropped 0.8 per cent in 2010,
the first national pay cut in two
decades, merely serve as a grim confir-
mation that the retail boom is well
and truly over. Given that the UK econ-
omy remains smaller than it was at
the height of the bubble, a drop in
incomes is not entirely surprising. If
we don’t produce as much as before,
we can’t expect to earn as much. But
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Deputy Editor David Hellier
News Editor David Crow
Night Editor Katie Hope
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WHAT THE OTHER PAPERS SAY THIS MORNING
NETWORK RAIL AIMS TO TAKE
TRACTION OUT OF BONUS ISSUE
Network Rail will seek to allay long-
standing concerns about its executive
bonuses by putting a new system to
the vote of its 100 members tomor-
row. But the scheme, intended to pro-
vide a longer term solution to the
issue, has been criticised by the TSSA
rail union, which predicted David
Higgins, the chief executive of the
track operator, could be entitled to a
£336,000 bonus next year on top of
his £560,000 salary.
GRANT SHAKE-UP WILL HIT POORER
PUPILS, WARNS IFS
The bursary scheme set up by the gov-
ernment as a replacement for the
education maintenance allowance
will see the poorest students at
schools and colleges on average lose
£370 of their current £1,170-a-year
support money, the Institute for
that is scant consolation for the pain.
Real, inflation-adjusted wages of
some key groups of workers had
already been stagnant in recent years.
After growing by 1.8 per cent a year on
average between 1977 and 2003, medi-
an male full-time pay fell by 0.2 per
cent a year between 2003 and 2008,
after controlling for retail price index
inflation. Female wage growth was 0.3
per cent a year in 2003-08, better but
still far lower than during the long
period of growth from 1977, the
Resolution Foundation calculates.
Higher benefits, cheap credit and
buoyant house prices masked the
trend at the time. More work needs to
be done to understand what is really
happening – and to check that this is
not merely a statistical artefact
explained by an increase in lower paid
or entry level jobs. But the data does
appear to suggest that a large percent-
age of the population, especially
unskilled men, lack the ability to com-
pete in today’s global economy.
Another, much healthier trend, was
S&P fuels fear
over Eurozone
EUROZONE CRISIS
▲
BY MARION DAKERS
STANDARD & POOR’S downgraded
Greece and Portugal’s sovereign credit
ratings yesterday, sending their bor-
rowing costs up.
Greece’s rating has been cut to BB-,
close to junk status and worse than
Egypt’s credit standing, while
Portugal is now rated BBB- with a neg-
ative outlook by S&P.
The yield on Portugal’s ten- and
two-year bonds jumped to Eurozone
lifetime highs after the downgrade,
and the yield on Greece’s two-year
bonds rose 10 basis points to 15.46 per
cent.
S&P analyst Frank Gill said the
downgrades came after the agree-
ment by European leaders last week
to replace the EU’s bailout fund with
the European Stability Mechanism in
Fiscal Studies has warned.
WALSH PUTS BA AND IBERIA GROUP
ON RUNWAY FOR SLICE OF JAPAN
AIRLINES
The airline group formed by the
merger of British Airways and Spain’s
Iberia is interested in the idea of
investing in Japan Airlines after its
emergence from bankruptcy. Willie
Walsh, chief executive of
International Airlines Group, floated
the idea yesterday in Tokyo, where he
had meetings with executives at
Japan’s formerly state-owned carrier,
which has cut staff and fleet since fil-
ing for bankruptcy in January.
J SAINSBURY HIT HARDEST BY
GROCERY SQUEEZE
Supermarket sales have slowed as
cash-strapped shoppers rein in spend-
ing on groceries, with J Sainsbury hit
particularly hard, according to indus-
try data. Consumers are spending
more on promotions, which stand at
a record 40 per cent of grocery sales.
also confirmed yesterday. Business
investment was revised up in the
fourth-quarter. It bounced back by
12.2 per cent over the past year.
Having fallen unusually sharply in the
downturn, corporate spending is now
recovering more quickly than in previ-
ous upswings. If this continues, it will
help drive the recovery and compen-
sate for miserable consumer spending
growth. It is vital that the government
puts in place policies that increase the
return on capital, as this will further
encourage corporate investment.
Contrary to what is usually believed,
firms don’t make investment deci-
sions only on the basis of demand –
they spend when they think that the
return will be higher than the cost of
capital. Boosting the average return
on every pound spent by UK plc by just
one per cent would trigger an explo-
sion in investment. Higher corporate
spending can thus quite easily go
hand-in hand with depressed con-
sumer spending – and eventually, as
the French economist Jean-Baptiste
2013, which could potentially require
nations to restructure sovereign debt
before they can borrow.
Ireland also suffered a setback yes-
terday when it emerged that bancas-
surer Irish Life & Permanent, the only
domestic lender to avoid a state
bailout thanks to its cash-rich insur-
ance arm, could fall into state control
after this week’s stress tests.
The Irish central bank is due to pub-
lish results of its banking stress tests
tomorrow, but reports of a looming
bailout for Irish Life sent its shares
tumbling 47 per cent yesterday.
Jose Socrates stood
down as Portugal’s
Prime Minister last
week after his budget
plans were rejected
MERLIN THINKS NOT JUST BIG, BUT
BIGGEST
Merlin Entertainments may have
been forced to put its flotation plans
on ice last year, but the boss of the
world’s second-biggest theme park
operator remains fiercely ambitious:
“One day we’d like to catch the
Mouse.” Nick Varney, Merlin’s chief
executive, said he was “under no illu-
sions” about the challenge of closing
the gap on Disney, which is more
than twice the size of the Madame
Tussauds and Legoland operator.
TERMINAL DECLINE: THE VERDICT ON
HEATHROW
Heathrow airport languishes in 99th
place — below Calcutta, Moscow and
Johannesburg — in a confidential
international table that tells the avia-
tion industry how passengers really
feel.
Say might have put it, supply could
even create its own demand. Over
time, greater amounts of capital in
the economy ought to boost produc-
tivity and hence wages, thus also alle-
viating the problem outlined above.
One final noteworthy development.
Bank of England figures show that
British non-financial companies’ ster-
ling deposits at UK banks have fallen
to 36 per cent of their total deposits,
from 61 per cent in 2002, with a mas-
sive surge in deposits held at non-UK
banks. There has been no such decline
in the extent to which UK companies
borrow from UK banks. One reason
could be that interest rates on foreign
currency deposits are sometimes
more appealing. Another could be a
decline in trust towards UK banks or
even sterling. It certainly shows just
how globalised British firms have
become, and that corporate banking is
far more competitive than is usually
understood. If in doubt, shop around.
allister.heath@cityam.com
Follow me on twitter: @allisterheath
The SFO, led by director Richard Alderman, was behind the raids Picture: Micha Theiner
Kaupthing search widens
REGULATION
▲
BY JENNY FORSYTH
POLICE working on the investigation
into Iceland’s failed Kaupthing Bank
raided five addresses yesterday,
including the bank owned by the
family of former Tory Party treasurer
David Rowland.
In a joint operation between the
UK’s Serious Fraud Office (SFO), the
Icelandic Special Prosecutor’s Office
and Luxembourg police, more than
70 investigators searched three busi-
nesses and two residential addresses
in Luxembourg.
BRITISH GAS CUSTOMERS TARGETED
IN IDENTITY THEFT SCAM
Consumers are being warned of a
scam that promises refunds of hun-
dreds of pounds on gas bills if they
send copies of documents that could
be used to steal their identity. The
bogus offer of a refund comes in an
email purporting to be from British
Gas. One email headed “refund notifi-
cation” said the recipient was due a
refund of £722.80, but would need to
fax copies of a passport or driving
licence in order to receive it.
BERTELSMANN EXPRESSES INTEREST
IN EMI AND WARNER MUSIC
Bertelsmann has said it expects EMI to
be formally for sale in the next few
months and has spoken out on the
German media conglomerate's inter-
est in the British music group and
Warner Music. The firm said it was
back on the acquisition trail.
CITYA.M. 30 MARCH 2011
NEWS | IN BRIEF
GE spends $3.2bn on Converteam
General Electric (GE) yesterday reached
a $3.2bn (£2bn) cash deal to acquire a
French maker of high-efficiency motors
used in the oil and gas sector, pouring
more money into its most profitable
division. The largest US conglomerate
said its acquisition of Converteam,
which reported 2010 revenue of $1.5bn ,
would boost its offering of equipment
used across the energy industry. GE has
made roughly $14bn worth of acquisi-
tions over the past year, mostly in the
energy sector, to steer the firm away
from its reliance on financial services.
ICB meets to finalise bank report
The members of the Independent
Commission on Banking (ICB) are due to
meet in London today to put the finish-
ing touches to their interim report into a
possible overhaul of the banking sector,
due to be published on 11 April. The
panel’s final recommendations are not
due until autumn, but three banking
bosses plan to pre-empt any plans to
raise capital or liquidity requirements by
writing to the commission to object,
according to a report on the Sky News
website. BARCLAYS: P15
The raids follow others earlier this
month in Iceland and in London,
where billionaire property entrepre-
neurs Robert and Vincent Tchenguiz
were arrested and questioned. They
were later released without charge
and deny any wrongdoing.
The Rowland family bought the
defunct Luxembourg branch of
Kaupthing in 2009. Yesterday the
bank stated it was “fully co-operating
with the authorities”. It added: “The
reason for the visit is not related to
the activity of Banque Havilland and
concerns the former Kaupthing Bank
and ongoing investigations.”
PROXY ADVISER SAYS BP’S EX-CEO
PAYOUT TOO HIGH
BP’s decision to pay “excessive” com-
pensation to top managers who had
responsibility during a fatal oil-well
explosion in the Gulf of Mexico
should be opposed by shareholders at
the company’s annual general meet-
ing 14 April, U.K. proxy-voting adviser
PIRC said yesterday.
AUSTRALIAN EXCHANGE ENTERS
COMMODITIES FRAY
A new Australian energy-and-com-
modities exchange is the latest player
hoping to lure trade away from ven-
ues in Chicago and London toward
fast-growing Asian-Pacific economies.
But Financial & Energy Exchange's
bet that Australia's resource bonanza
will buoy its newest commodities
exchange when it goes live this year is
unlikely to change the landscape of
energy trading globally.
CITYA.M. 30 MARCH 2011 News 3

BP shares drop on worries of

criminal charges for Gulf spill
planned £10bn share swap with BP told investors yesterday it has

▲
ENERGY
BY MARION DAKERS
BP saw its shares drop 2.2 per cent yes-
terday after it emerged that execu-
tives at the oil major might face
criminal charges for their role in last
April’s Deepwater Horizon disaster.
BP was the biggest faller in the
FTSE 100 yesterday, closing at
466.55p. The shares have been under
The Deepwater Horizon oil rig explosion last April killed 11 workers Picture: REUTERS pressure since a tribunal blocked its
Russian oil explorer Rosneft on
Thursday.
Federal prosecutors in the States
are considering whether to press
manslaughter charges against BP
managers, including former chief
executive Tony Hayward, after 11
workers died in the explosion in the
Gulf of Mexico.
The Department of Justice declined
to comment last night.
spent $19bn (£11.9bn) so far on repair-
ing damage done by the resulting oil
spill, and has lined up enough asset
sales to reach its $30bn fund-raising
target.
The firm faces shareholder dissent
at its general meeting on 14 April,
after corporate governance group
PIRC yesterday recommended that
investors vote against “excessive”
director pay.

Lords report
to slam big
four auditors
probe lies with business secretary
▲

REGULATION
BY JULIET SAMUEL
AN influential House of Lords
Committee is set to issue a blistering
attack on the “big four” auditors
today after an eight-month inquiry
into the competitiveness of the audit
industry.
The Economic Affairs Committee,
which is chaired by Conservative Lord
John MacGregor, is understood to
want drastic action to deal with a
potential “systemic risk” created by
the dominance of the “big four” –
Deloitte, PricewaterhouseCoopers
(PwC), Ernst & Young (E&Y) and KPMG.
A likely outcome from the Lords’
inquiry is a full-scale probe into the
competitiveness of auditing by the
Office of Fair Trading (OFT), which
could recommend an overhaul of the
industry.
The OFT is already investigating the
effect of “big four clauses” in loan
agreements – whereby a lender
requires that a firm use one of the big
four auditors to check its accounts –
meaning that it would simply have to
widen the scope of its current inquiry.
The decision on an industry-wide
Vince Cable, who told City A.M. yester-
day that he is withholding judgement
until he reads the full report.
During their inquiry, the lords were
told that the dominance of the big
four contributed to the financial crisis
and that audit standards are slipping.
The big four currently audit 99 of
the firms in the FTSE 100. The lords
committee heard evidence that the
UK’s biggest firms change their audi-
tor on average only every 48 years,
although some say this figure is out of
date. The exception is Randgold
Resources, which uses BDO for audit-
ing services.
BDO partner James Roberts said: “A
lot of FTSE 100 financial directors and
non-executives are alumni of the big
four, so it gets very self-reinforcing.”
But Pauline Wallace, a senior audit
partner at PwC, said that while she
supports the current OFT inquiry, a
broader investigation is unnecessary:
“It’s a fiercely competitive market…
There’s a question about how many is
enough. The four firms absolutely do
compete at FTSE 100 level.”
Deloitte, E&Y and KPMG declined to
comment.

Heron boss sees All change for

tough market National Express
▲

PROPERTY
HERON INTERNATIONAL chief execu-
tive Gerald Ronson said he expects
the property market to recover by
2014 / 15, but believes rents and sales
will remain patchy before then, par-
ticularly outside of London.
Ronson said in a speech at the
annual Heron lunch that insurers
and overseas investors could take up
the slack over the next year as the
banks unload real estate used to
secure massive loans that went bad.
“We are not out of the woods, in
fact there is a lot going on in the
woods, but we can now see the wood
for the trees,” he said. DIARY: P 11
TRANSPORT
NATIONAL Express yesterday said it
would look to appoint new non-exec-
utive directors, after its second largest
shareholder Elliot Advisors demand-
ed a boardroom shakeup to help drive
growth.
The bus, coach and rail operator
said it will draw up a shortlist of
potential directors after its activist
shareholder wrote a letter to other
investors, asking them to vote in
three independent candidates at the
next general meeting on 10 May.
Elliott said the firm needs to grow
to fend off competition from other
operators.
 4 News
HSBC chairman calls for list
of banks to face tougher rules
▲
BANKING
BY HARRY BANKS
AT LEAST 80 banks should be deemed
systemically important and subject to
greater regulatory scrutiny and
potentially higher capital levels to
prevent competitive distortions,
HSBC’s chairman said yesterday.
In a speech on regulatory changes,
Douglas Flint also said the quality of
supervision needs to improve and
dropped a heavy hint his bank would
consider leaving the UK if a commis-
sion forces banks to separately capi-
talise their investment banking
operations. “As soon as that happens,
obviously banks impacted will take
decisions to protect their economic
activity,” he said.
Regulators are considering a pack-
age of extra safeguards on systemical-
ly important financial institutions
(SIFIs) to lessen the need for taxpayer
bailouts should one of them get into
trouble, which could see top banks
hold an extra capital cushion of one
to three percentage points.
There should be at least 80 SIFIs to
avoid smaller banks gaining an
advantage from holding less capital
and to prevent another unintended
consequence that the bigger banks
are seen as safer, Flint said.
“I suspect the systemically impor-
tant designated banks, if they are few
in number, will see a flow of business
to them,” he said.
MORGAN STANLEY CONFERENCE: P15
Hillary Clinton in London yesterday at a conference on Libya
Clinton calls for reform in Syria
as cabinet hands in resignation
▲
WORLD NEWS
US SECRETARY of state Hillary
Clinton yesterday used a conference
in London to call for the “timely
implementation of reforms” in Syria
as the president, Bashar al-Assad,
sought to stay in power after his gov-
ernment resigned.
Clinton, speaking at a conference
on the future of Libya, said the US
supports the demands of the Syrian
people for the immediate end to 48
years of emergency laws.
Bribery rules
may hit M&A
▲
REGULATION
BY ELIZABETH FOURNIER
INCREASED scrutiny of subsidiaries
under the new UK Bribery Act could
hit M&A deals, with buyers forced to
increase due diligence on acquisitions,
or risk liability for corrupt practices.
Guidance issued today on the Act is
expected to make it clear that the def-
inition of associated persons – those
who perform services on behalf on a
company and who the parent has lia-
bility for – is intended to be broad.
It means businesses will need to
make sure they have stringent risk
assessments in place on all sub-
sidiaries, joint ventures, and members
of their supply chains.
“This could affect the traditional,
devolved power model of UK business,”
said one person with knowledge of the
guidance’s contents.
More information on overseas facili-
tation payments – one of the key areas
Apollo Global Management float
to raise £350m as demand soars
▲
CAPITAL MARKETS
SHARES of private equity firm Apollo
Global Management priced at the top
of a proposed range last night and its
initial public offering is set to raise a
higher than expected $565.4m
(£353.4m), an encouraging sign for
other asset managers considering pub-
lic offerings.
Founded by former Drexel
Burnham Lambert banker Leon Black
CITYA.M. 30 MARCH 2011
Picture: GETTY
Assad yesterday accepted the resig-
nation of the cabinet, and oversaw
mass pro-regime demonstrations
across the country.
Protests in Syria have become
increasingly violent since flaring up
two weeks ago, with more that 60
people killed.
More than 40 foreign ministers
met in London yesterday to discuss
the next steps in Libya, 10 days after
the start of UN-backed air strikes.
that businesses have lobbied on – is
also likely to be unforthcoming.
Companies should instead look to
advice on prosecutions, which will
also be released today by the Serious
Fraud Office. It should give companies
a useful steer on what to expect from
the enforcers.
But it also means businesses are like-
ly to have to wait for future case law
for clarification on some points.
Though specific questions on hospi-
tality claims are unlikely to be
addressed, a focus on the intent rather
than the value of a gift, and on apply-
ing the Act proportionally according
to a business’ size should allay fears.
Full implementation can take place
three months after guidance, but
deputy leader of the house Lord
McNally told a CBI breakfast meeting
yesterday that it would be in force in
September – sparking speculation that
entrance could be delayed to account
for the summer break.
in 1990, Apollo follows Blackstone and
Kolhberg Kravis Roberts in the spate of
private equity firms going public.
The IPO could set the stage for oth-
ers such as Carlyle Group, which may
file papers to go public later this year.
The offering totals 29.8m shares,
more than originally expected. Apollo
itself is selling 21.5m shares, about 19
per cent more than it had planned,
while stockholders are selling 8.3m
shares, as planned.
CITYA.M. 30 MARCH 2011
CPP’s shares
plunge as FSA
probes sales
▲
INSURANCE
BY DAVID HELLIER AND JULIET SAMUEL
SHARES in CPP, the recently-floated
credit card and identity theft insur-
er, fell 46 per cent yesterday to 150p
following its after hours statement
on Monday revealing that the FSA
had been examining “alleged fail-
ings in sales calls with customers”.
The share price fall is embarrass-
ing for JP Morgan Cazenove and UBS
which floated the FTSE250 group on
the stock market last March at a
price of 235p.
The collapse is also bad timing for
Hamish Ogston, the entrepreneur
who founded the company and still
owns 57 per cent of the shares, since
his lock-up period ends shortly, leav-
ing him free to sell some of his
stake.
One of the larger investors, Andy
Brough from Schroders, suggested
that the company was now hoping
to avoid a crash landing: “The oxy-
gen masks have dropped from the
ceiling and we’re sitting tight.”
JP Morgan’s research analyst
Victoria Pryor was sticking by the
company yesterday.
She said the suspension of the-
group’s under-fire ID protection pol-
icy would affect profit estimates but
concluded that the group’s interna-
tional businesses offered good long-
term opportunities. JP Morgan’s
target price is 361p.
Some bankers said CPP’s problems
might affect sentiment in the IPO
market.
“This could put somebody off
investing,” said one banker, “but you
could take the view you could make
up the losses on a new float.”
ANALYSIS l CPP Group
300
p 150.00
29 Mar
250
200
150
100
06:00 11:00 14:00
News 5
Lazard loses a
Senior rainmaker who second top
advised Harrods sale
dealmaker
BANKING
▲
PROFILE BY JULIET SAMUEL
▲
He also chairs Alpha
BY JULIET SAMUEL
International, which runs courses
to introduce people to Christianity. LAZARD has lost a chief dealmaker
KEN Costa’s contacts book will be Last night, South with Ken Costa quitting his roles as
sorely missed at Lazard, which African born Costa chairman of Lazard International
he is leaving at the end of this was due to speak on and co-head of UK investment bank-
week for unknown reasons. the Robin Hood tax ing.
During his three and a half at St Paul’s Costa, 62, will leave at the end of
years at the firm he is best Cathedral, where he this week, creating a second gap
known for pulling off the was a trustee during among Lazard’s senior rainmakers
£1.5bn sale of Harrods to the its redevelopment. after the unexpected departure of
Qatari royal family, a deal in Lazard International chief executive
which he advised Mohammed Al Naguib Kheraj.
Fayed. Kheraj left recently just 32 days
He moved to Lazard from after joining, saying that he was too
UBS in October 2007, busy to continue in his post.
where he was vice-chair- It is understood that Costa, who
man. While at UBS, he was once tipped as a successor to for-
advised the Barclay broth- mer Lazard boss Bruce Wasserstein,
ers on their acquisition of does not have a new job lined up. He
the Daily Telegraph and has been at the bank for over three
aided insurer Allianz in years.
its purchase of Dresdner Lazard International, which Costa
Bank. led, does not include the main
He began his dealmak- bank’s operations but consists of a
ing career at SG group of senior dealmakers whose
Warburg in 1976, mov- main role is to drum up business for
ing to UBS when it the firm.
acquired the bank. Costa, who developed a reputation
He is also a well- as an aggressive advocate who spe-
known Christian conser- cialised in advising family-owned
vative and has written a companies, came to the bank after
book on the role of faith leaving UBS unexpectedly, bringing
in work called God at with him a strong base of contacts,
Work: Living Every particularly in the Gulf and Middle
16:00
Day With a Purpose. KEN COSTA East.
Lazard declined to comment.
School of Business,
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Officials check workers for radiation at the Fukushima plant yesterday Picture: REUTERS
Japan thinks
about taking
over Tepco
ENERGY
▲
BY MARION DAKERS
SHARES in Tokyo Electric Power
(Tepco) fell 18 per cent yesterday on
talk that the Japanese government
could nationalise the power producer
in the wake of the Fukushima nuclear
crisis.
Tepco, which owns the stricken
plants at Fukushima, had its shares
temporarily suspended yesterday after
a glut of sell orders on the back of
nationalisation rumours.
Japanese national strategy minister
Koichiro Gemba said yesterday that a
debate on nationalising Tepco is possi-
ble, but chief cabinet secretary Yukio
Edano later said that the government
is not considering that option.
Tepco said it was not aware of any
plans to take the firm into public own-
ership. “Our first and biggest priority
at this moment is to prevent the
nuclear power plant accident from
Nuclear renaissance could create
£10bn for UK says top scientist
▲
ENERGY
THE UK should stick with nuclear
power to fuel the country cleanly and
create around 40,000 jobs, the govern-
ment’s former chief scientist said yes-
terday.
Sir David King said the UK can gen-
erate £10bn over the next 50 years by
working on a “nuclear renaissance”,
through recycling nuclear materials
and storing waste more safely.
“We are talking about a £10bn boost
to the economy from the British gov-
ernment taking the opportunity to
build mixed-oxide plants, and 40,000
jobs over the next 20 to 30 years,” King
told Radio 4 yesterday.
CITYA.M. 30 MARCH 2011
worsening further,” spokesperson
Hajime Motojuku added.
The news came as traces of radia-
tion from the stricken Fukushima
nuclear plant were found in
Oxfordshire and Glasgow. The Health
Protection Agency said the “minutest
traces of iodine” were being seen in
the UK and they pose no health risk.
Tepco’s shares have lost around
three quarters of their value since the
earthquake and tsunami on 11 March.
The firm was forced into an embar-
rassing apology at the weekend, after
it overestimated radiation levels at the
Fukushima plant where workers con-
tinue to work on stabilising the
nuclear reactors.
Tepco has also found traces of pluto-
nium in the soil at the site of the dam-
aged reactors, but said the levels were
within ordinary levels and would not
stop repair work. The company said it
is likely to take months or years to
make the plants completely safe.
“We now have enough [nuclear]
material produced by reprocessing to
power the UK for the next 60 years.”
King said the Japanese quake has
proven how safe nuclear power is.
“They passed the earthquake test in
that 16 reactors, including the ones at
Fukushima, were shut down within
two minutes of the quake,” he said.
“We have a situation in which more
than 15,000 fatalities occurred in the
tsunami, none directly linked to radia-
tion, and in my view it’s very unlikely
that there will be.”
King estimated that power genera-
tors would save between £346m and
£1.2bn in carbon taxes by building
newer, mixed-oxide nuclear plants.
CITYA.M. 30 MARCH 2011
Rambourg is
cleared after
probe by FSA
The rise and fall of
Gartmore’s star, by
Steve Dinneen
A YEAR ago today Guillaume
Rambourg was sitting pretty in
Gartmore’s Fenchurch Street offices.
He was among the firm’s standout
performers and one of the brightest
stars in the City’s glittering constella-
tion. Alongside Roger Guy, co-head of
European hedge funds, he was
responsible for more than 20 per cent
of Gartmore’s £21bn investment port-
folio.
By the end of the day he had been
suspended for allegedly directing
trades to favoured brokers, stunning
the market. Gartmore announced a
company probe, which would later
lead to a full FSA investigation. His
importance to the fund manager was
underlined by a 30 per cent drop in
its share price.
It was the start of an annus horri-
bilis for both Rambourg and
Gartmore, which suffered, alongside
his shock departure, an exodus of
high-flying talent and the eventual
sale of the entire firm.
Rambourg yesterday said the
Financial Services Authority (FSA) had
dropped its probe without taking any
disciplinary action. The watchdog
was characteristically tight-lipped: it
only confirms investigations if they
result in a fine or other reprimand.
When news of the watchdog’s
investigation first surfaced, the tim-
ing could not have been worse. A pan-
icked market wrongly assumed
Rambourg had somehow been
caught up in a separate, far more seri-
ous, insider trading investigation,
which had surfaced the same week.
It sent Gartmore into a tailspin,
with clients withdrawing more than
£1bn from its funds in the wake of his
suspension.
A month later, Rambourg was
allowed to return to work. However,
he was forced to take on a far lesser
role – as an investment analyst – as
his licence had been suspended when
the probe was announced.
Guillaume Rambourg plans a speedy return to the City
During this time, things had gone
from bad to worse at Gartmore.
Speculation mounted that
Rambourg’s former partner Guy, the
star manager around whom
Gartmore built much of its reputa-
tion, could quit the firm after voicing
dissent over the way his friend was
treated.
The pressure got too much for
Rambourg when the FSA launched its
own investigation two months later
and he quit to focus on the case.
Spotting the potential catastrophic
talent-drain, Gartmore attempted to
lock in its key management. But it
was too little too late. Guy – the man
seen by many as the genius behind
the firm’s meteoric ascendancy –
announced he would quit. His team
TIME LINE | HOW GARTMORE’S
DOWNFALL UNFOLDED
was responsible for almost half of the
firm’s performance fees in recent
years.
With a rising sense of panic,
Gartmore put itself on the market.
Fund manager Henderson quickly
emerged as a buyer, eventually paying
£335m – just half Gartmore’s flota-
tion price just a year earlier.
Questions will now be asked over
whether the FSA overstepped the
mark by launching an investigation
that finished off not only Rambourg’s
Gartmore career but the firm itself
and destroyed shareholder value.
Rambourg plans a hasty return to
the City, working towards regaining
his FSA licence.
The legacy of his treatment, howev-
er, could last a lot longer.
News 7
December 2009: Gartmore becomes
the first IPO of a private equity-owned
company since the credit crisis in 2007.
December 2009: Roger Guy and
Guillaume Rambourg are crowned fund
managers of the year.
30 March 2010: Rambourg is suspend-
ed by Gartmore for “directing trades” to
his favoured brokers.
May 2010: Gartmore sees a net outflow
of funds of almost £1bn as clients react
to Rambourg’s suspension.
2 June 2010: The Financial Services
Authority (FSA) announces it will launch
its own investigation into Rambourg.
15 July 2010 : Rambourg resigns to
concentrate on the FSA investigation.
18 August 2010 : Gartmore’s assets
under management fall 10 per cent to
£19.9bn according to its six month
results.
8 November 2010 : Roger Guy sensa-
tionally resigns from the firm.
Beleaguered Gartmore immediately
places itself on the market. It says it will
implement a strict cost-cutting drive and
issue new equity representing 15 per
cent of its existing share capital, in order
to retain and incentivise staff.
13 January 2011: Fund manager
Henderson confirms it will buy Gartmore
in a deal valuing the firm at £335m – half
of its year-old IPO value.
CITYA.M. 30 MARCH 2011
Clarke plans
no win no fee
legal reform
▲
REGULATION
BY ELIZABETH FOURNIER
JUSTICE minister Ken Clarke yester-
day announced plans to reform the
UK’s no-win-no-fee system, lifting the
ban on contingency fees that lawyers
can claim for the work.
Instead of taking a so-called suc-
cess fee solely from the losing side,
lawyers will now be able to claim an
agreed percentage of any damages
won – sharing the risk with the
claimant party.
The amount that a lawyer can
claim will be capped at 25 per cent of
any damage payment.
The change should reduce costs for
businesses facing litigation claims,
and discourage claimants from
launching spurious cases. It should
also mean companies are less pres-
sured to settle, without the fear of
huge legal bills hanging over them.
Clarke announced the proposed
changes in the Commons yesterday,
saying that he wanted to restore “pro-
portion and confidence” to the sys-
tem.
They follow a review by Lord
Justice Jackson carried out in 2010 at
the request of the previous govern-
Barclays Capital hires Morgan
Stanley’s Connor to boost team
▲
BANKING
BARCLAYS Capital yesterday hired
Josh Connor from Morgan Stanley to
lead its global transportation bank-
ing group within the firm’s Global
Industrials Investment Banking
Group.
Connor will be based in New York
and will join the firm in July.
The hire follows a series of moves
by the bank over the past few months
to bolster its coverage of the industri-
als sector as part of a strategy to com-
pete with more established rivals in
equity capital markets.
Last year John Miller moved to
oversee industrials. Then Reid Marsh
News 9
Justice minister DO YOU THINK THAT THE GOVERNMENT IS RIGHT TO CLAMP DOWN
Ken Clarke said the
ban on contingency
ON THE “NO WIN, NO FEE” SYSTEM?
fees would be Interviews by Phoebe Torrance
reversed
HANNI ALI | MONTPELIER GROUP
Picture: Micha
Theiner/City A.M.
“No-win-no -ee encourages an immoral approach
to claims that may not usually trigger large fees.”
ZEESHAN CHOUDREY | XCHANGING
“Yes - the no-win-no-fee policy is encouraging
dodgy claims and causing a blame culture.”
JOHN PAUL CROCKER | JP MORGAN
“Yes, there are often stories about unfairly treat-
ed clients so people are frightened of the costs.”
ment.
UK business group the British
Chambers of Commerce (BCC), wel-
comed the proposals. “For too long the
compensation culture in the UK has
been allowed to grow, as claimants
currently have nothing to lose by
bringing even frivolous cases to court,”
said a spokesperson for the BCC.
“Employers should be able to con-
centrate on running their business,
instead of being faced with the con-
stant risk of legal disputes.”
Public services have been particu-
larly hard hit by litigation costs since
the ban on contingency fees was
introduced by Lord Woolf in 1999.
According to the Ministry of
Justice, in 2008-09 the National
Health Service paid out £465m in
legal costs, on just £312m in actual
damages.
But critics said the reform could
hit genuine claims for personal
injury.
Michael Frisby, head of litigation at
law firm Stevens & Bolton said:
“Although law firms are expected to
provide the [no win no fee] service in
place of legal aid, the reward for
doing so has effectively been
removed.”
from Citi was hired to become chair-
man of the global industrials group,
based in London, and Larry Hamdan
was hired from Credit Suisse as head
of global industrials M&A – based in
New York.
Connor played a leading role in
many of the sector’s most notable
IPOs while at Morgan Stanley.
He advised Continental on its
merger with United, Northwest on its
merger with Delta and Canadian
Pacific Railway.
“His vast experience as a trusted
adviser to corporations worldwide
will be highly valuable as we partner
with our clients,” said Miller.
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CITYA.M. 30 MARCH 2011
RONSON BLAMES TOXIC
IRISH BANKING ASSETS
TO the Dorchester for the annual get-
together of the great and the good in
the property world, hosted by Gerald
Ronson, Heron International’s
remarkable boss. The 71-year old prop-
erty sage and philanthropist, who
briefly spent time in jail in the 1990s
as a result of the Guinness share scan-
dal, before staging a spectacular per-
sonal recovery, remains as forthright
as he is driven.
There was an oblique reference to
his time spent inside when Ronson
told the audience of 350 – including
media tycoon Richard Desmond,
CVC’s Sir Trevor Chinn and Canary
Wharf’s Sir Martin Jacomb: “After
overcoming numerous battles, it
would be very nice if someone would
make my life a little easier.”
Things are certainly looking good
for Ronson, who has always main-
tained he did not receive justice: his
Heron Tower, the City’s tallest build-
ing, has just been completed and has
secured its first four tenants, with US
law firm Will & Emery moving in.
But while rental levels in the City of
London remain “highly attractive”,
says Ronson, the banking sector has
failed to “provide the oil to get the
development wheels working again”
– news that no doubt jolted
Christopher Canham, head of real
estate support for Lloyds Banking
Group, up from his salmon starter.
“Banks still have a lot of unfinished
business of their own, and the big
question is what happens to the
parcels of toxic waste they have
tucked away,” Ronson said. “It is easy
to get rid of the quality assets but the
banks, especially the Irish ones, will
be sitting on some very big losses.”
The Capitalist is sure that remark
was in no way directed at the sole
Ireland representative in the room,
the chairman of the Irish Nationwide
Building Society, Daniel Kitchen.
But just to make sure, perhaps any
lingering misunderstanding between
the two men can be defused over a
few pints of, er, Guinness.
WHO’S WHO AGAIN?
ALSO at the lunch was guest speaker
Boris Johnson, whose main theme
was why London is the world’s great-
est city, with eulogies for the Boris
Bike scheme, Britain’s exports and
the 2012 Olympic Games.
However, his praise for the compa-
nies that completed the Olympic velo-
drome was marred when, true to
bumbling form, he couldn’t remem-
ber for the life of him which construc-
tion firms were responsible.
“Probably someone in this room,”
he hedged. Not quite, Boris – try send-
ing your compliments to Hopkins
Architects and the Olympic Delivery
Authority who were, unfortunately,
otherwise engaged.
MILE HIGH CLUB
IT ISN’T all about globetrot-
ting and having lunch with
government ministers in
five-star hotels for EasyJet’s
well-heeled boss Carolyn
McCall.
Quite the opposite:
whenever she flies on her
own airline, McCall regu-
larly does the rubbish run
with the rest of the air stew-
ards.
As she told The Capitalist
on a trip to Jordan: “It’s the
The Capitalist
11
EDITED BY
HARRIET DENNYS
Got A Story? Email
thecapitalist@cityam.com
Follow The Capitalist
on Twitter: @citycapitalist
Heron International
chief executive
Gerald Ronson (left)
with the doorman
at the Dorchester
only way I can get to meet our cus-
tomers and hear what they really
think of our service.”
So the next time you throw the
remains of an EasyJet chicken sand-
wich into the bright orange bin provid-
ed, look up – you may have the chance
to tell the chief executive of the airline
what you thought of it in person.
NEVER LAY TIGER
TIGER Woods may be the 9/1 favourite
to win the Masters in Augusta next
month, but one former City boy is so
confident he will be defeated that he
has staked an estimated £1.5m on the
Wild card: Tiger is golf’s darkest horse
improbable outcome.
That reckless gambler is Ross
Marshall, formerly of ING and
Barings, who set up
YouGolfTravel.com five years ago with
a credit card advance of £100,000.
The company now has a turnover of
£35m and, in an attempt to win over
even more customers, Marshall is
offering a full refund to anyone who
books a holiday through his site
between now and 6 April if Woods
wins in Augusta.
All well and good – but you would
have thought the “avid betting man”
would have learnt from his experi-
ences before last year’s World Cup,
when he paid out £300,000 in a simi-
lar promotion when dark horse Spain
won the tournament.
As one concerned associate, mind-
ful of Woods’ unpredictable tempera-
ment, said: “Never lay Tiger.”
AVON LADIES
West Ham vice-chair Karren Brady
was cheered onto the stage when she
addressed 5,000 Avon ladies in her
home city to mark the beauty giant’s
125th anniversary. “Avon has been
championing women in business for
125 years,” she told the crowd, before
Avon’s boss Andrea Jung (below left)
presented Nicola Harwin of
domestic violence charity
Women’s Aid with a cheque for
$60,000.
Avon claims to be the largest
engine of opportunity for
women on the planet, with
some of the most successful
reps turning
over £5.5m a
year – not a
b a d
achieve-
ment for
door-to-door
direct selling enterprises that
require an initial seed invest-
ment of just £15.
12 News
Decision to diversify has already paid off
WHEN Man Group announced its
intention to snap up GLG back in
May 2010, it was nothing less than
a very public act of renunciation. It
was essentially saying that there
was more to fund management
than quant funds, which use com-
puter algorithms to make invest-
ment decisions. Diversification was
the future, Peter Clarke told share-
holders and clients.
In 2009, Man Group’s flagship
fund AHL – which then accounted
for about half of the fund manag-
er’s assets – lost some $1.2bn or
around 17 per cent. It was the first
ever annual loss in the fund’s 20-
year history, but Clarke decided it
was enough to instigate a massive
structural change.
As Man was putting the finishing
touches to its GLG acquisition last
October, there were suggestions
that the deal had been too rash.
Quant funds – including AHL along
with those run by Winton and
BlueCrest – were experiencing
something of a comeback thanks to
strong trends in bonds, currencies
and commodities.
But yesterday Clarke’s decision
was vindicated. AHL is still 10 per
cent below the high water mark at
which fund managers can cream
off all-important performance fees,
down from 3.7 per cent in
December.
The Japanese earthquake and
tsunami, which precipitated a stock
market shock, took AHL down with
it (although it has since pared back
some of its losses). At any rate it
proves that Clarke’s decision to
move some of the fund manager’s
eggs into another basket was the
right one.
david.crow@cityam.com
BOTTOMLINE
Analysis by David Crow
Man Group
sees positive
fund inflows
▲
FUND MANAGEMENT
BY ALISON LOCK
HEDGE fund manager Man Group
surprised the market with a mixed
results update yesterday, meeting
some targets but missing others
and writing off $375m (£234m) in
impairments.
Man will hold $69bn in funds
under management at the end of
March, above forecasts of $68bn, but
has attracted just $700m (£437m) in
net fund inflows in the current quar-
ter, below expectations of $1.2bn.
Its pre-tax profit of $560m is
reduced to $280m once a $375m
goodwill impairment charge from its
multi-manager business is included,
it said in its pre-close trading update.
The $560m was exactly in line with
consensus analyst forecasts and the
same as it made in 2009, it said. The
impairment charge was due to expec-
tations of lower sales in that division.
Chief executive Peter Clarke said
Man had “fundamentally reshaped”
its business in the period.
The world’s largest listed hedge
fund group has returned to positive
fund inflows after two years of net
outflows following poor performanc-
BATS Global Markets to offer
primary listing service in the US
▲
FINANCIAL MARKETS
EQUITY trading platform BATS Global
Markets is to launch its own primary
listings business to bring it directly
into competition with national stock
exchanges, it said yesterday.
The new platform will be called
BATS Listings and launch in the last
quarter of this year to compete directly
with exchanges such as the Nasdaq
and New York Stock Exchange.
Kansas-based BATS currently oper-
ates the third-largest US equities trad-
ing platform, and by offering a
primary listing service will enable
companies to raise capital as well as
allow traders to buy and sell stocks.
CITYA.M. 30 MARCH 2011
Man Group chief
executive Peter
Clarke
Picture: REUTERS
es in its computer-programme-driven
funds. It said its $1.6bn acquisition of
rival GLG, was designed to make it
less reliant on both Man AHL, its com-
puter-based business as well as rev-
enues from its stake in successful
niche fund manager BlueCrest.
Its sale last week of its 25.5 per cent
BlueCrest stake back to the company
has pushed its regulatory capital to
$850m while net cash grows to
$900m, it said.
Performance fee income came in
ahead of estimates at $145m, but less
volatile management fee income was
lower than expected at $415m.
Singer Capital analyst Sarah Ing
said the statement contained “mixed
messages”.
ANALYSIS l Man Group
320
p 246.20
310 29 Mar
300
290
280
270
260
250
240
230
10 Jan 17 Feb 9 Mar 29 Mar
“Market conditions have become
increasingly favourable to companies
looking to gain access to the capital
markets so we’re excited to launch our
listings business later this year,” its
chief executive Joe Ratterman said.
It follows BATS’ purchase of
European platform Chi-X Europe last
month, amid a flurry of exchange
mergers. National exchanges are scram-
bling to retain market share as multilat-
eral trading platforms gain ground but
until now proprietary services such as
derivatives trading and listing have
only been offered by established
exchanges. BATS has submitted draft
rules to markets regulator the
Securities and Exchange Commission.
CITYA.M. 30 MARCH 2011 News 13

Start-ups could create UK’s own Silicon Valley

US.
The top seven brands contain the
Mountain View based Google and
Firefox (Mozilla), San Bruno’s
Youtube, San Jose’s Ebay, and
Facebook which share YouGov’s US
HQ’s home town of Palo Alto.
Amazon (Seattle) break Silicon
BRANDINDEX Valley’s dominance and the one
STEPHAN SHAKESPEARE British player in the top seven is
BBC.co.uk.
The impact that online now has
glance at the online sector of on our life can be seen when we
BBC.co.uk is a shining example of
how we can make it work here but
they have done it by successfully
adapting an established brand to a
new era rather than creating a revo-
lutionary new idea.
With the right investment in
entrepreneurs we should be aiming
to get Silicon roundabout (Old
Street) and its equivalents around
the country to rival Silicon Valley.
With this in mind YouGov and
UCL, working with StartUp Britain
port student entrepreneurs. stimulating and supportive environ-
Start-up Summer is an entrepre- ment.
neurs’ development programme Stephan Shakespeare is chief executive
that will offer students the opportu- of YouGov.
nity to develop their own innova-
tive, business ideas into actionable, ANALYSIS l BrandIndex scores for tech
start-up business plans. 70.0 companies
During an eight week period, five 65.0
project teams of five students each
60.0
will have ongoing access to a range
of resources, a project budget of
55.0
£2,000 and regular contact with
entrepreneur mentors such as

A
BrandIndex quickly reveals
the truth behind the belief
that tech start-up success is
dominated by the West Coast of the
50.0
realise that Google (+61), Amazon and in collaboration with Imperial Martha Lane Fox and Luke Johnson. Amazon BBC.co.uk Google
45.0
(+58) and BBC.co.uk (+54) are the College London, will lead the devel- It will give participants the
three highest index scorers across opment of a pilot Start-up Summer opportunity to develop their skills 40.0 Source: YouGov
all the 850 brands measured. to stimulate, encourage and sup- and networks within business in a 2010 Mar May Jul Sep Nov 2011 Mar

Wal-Mart opposes sex-bias case

at class-action suit filed in the US
gathered outside the Supreme Court
▲

RETAIL shouted “fair pay now” and carried

SEVERAL US Supreme Court justices
questioned yesterday whether female
employees at Wal-Mart can proceed
with the largest class-action sex-dis-
crimination lawsuit in history that
seeks billions of dollars.
At issue in the case was whether a
small group of women who began the
lawsuit 10 years ago against the
world’s largest retailer can represent
a huge nationwide class that could
total millions of women.
After attorneys for Wal-Mart and
for the employees presented argu-
ments, a crowd of protesters that had
signs such as “Stop discounting the
women of Wal-Mart”.
Chris Kwapnoski, a 24-year Wal-
Mart employee and one of the named
plaintiffs in the case, confidently told
reporters after the arguments, “We’re
not going to lose.”
She recalled being told by a manag-
er to “brush the cobwebs off” and
“doll up” if she wanted advancement.
After listening to the attorneys, the
top court took the case under advise-
ment, with a ruling expected by late
June. The decision could change the
legal landscape for workplace and
other class-action lawsuits.

Phoenix ups
cash targets
as profit rises
cent in 2010, from 58 per cent in 2009,
▲

INSURANCE
BY ALISON LOCK
LIFE insurance and pensions consolida-
tor Phoenix Group posted a 16 per cent
rise in underlying operating profit yes-
terday and set ambitious targets for
cash generation in 2011.
Phoenix made £373m operating
profit in 2010, up from £318m in 2009
on a like-for-like International
Financial Reporting Standards (IFRS)
basis and generated £734m cash, beat-
ing its internally-set £625m goal.
Phoenix, the UK’s largest buyer and
integrator of life policies with more
than six million customers, also
announced stretching new financial
targets for 2011, including generating
£750-850m of cash in 2011 and £3bn
between 2010 and 2014.
“We are confident in the prospects
for 2011 and beyond and have set chal-
lenging new targets to reflect this,”
said group chief executive Clive
Bannister. FTSE 250-listed Phoenix also
returned £122m to its lenders to
reduce its £2.7bn total debt, which
includes £2.3bn of bank loans at low
interest rates but with strict covenants.
Phoenix, which writes no new busi-
ness, reduced its gearing level to 52 per
and is planning to push it below 50 per
cent by the end of 2011. It is also in dis-
cussions with lenders to restructure its
debt to make it less restrictive.
“Our present facilities feature
favourable interest margins and we
will only agree to new arrangements if
an opportunity arises that we consider
to be in the best interests of our share-
holders,” Bannister said.
JP Morgan and Deutche Bank said cash
generation information was a positive.
“The message appears to be that the
group has ample cash flow to handle
the debt repayments,” JP Morgan ana-
lyst Duncan Russell said in a note.
Phoenix had £67.5bn of assets under
management at the end of 2010.
ANALYSIS l Phoenix Group Holdings
680
p 675.00
29 Mar
660
640
620
600
580
560
10 Jan 17 Feb 9 Mar 29 Mar
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CITYA.M. 30 MARCH 2011 News 15

Commerzbank
UBS: Barclays
HESTER: EXPECT TWO RATE RISES IN 2011

could pay back

more of bailout
too big for UK
▲

BANKING

COMMERZBANK has signalled it may BANKING headquarters to a larger economy

pay back more state bailout money
this year than originally planned,
with sources close to the bank saying
some details may be published as
early as next week.
“This year, we are already looking
to repay a sum running into the bil-
lions, while at the same time main-
taining a healthy equity ratio,” chief
executive Martin Blessing said in a let-
ter to shareholders in the bank’s
annual report yesterday.
Until now, Commerzbank had only
said it wanted to repay “at least 10 per
cent” – or €1.6bn (£1.41bn) – this year.
According to several people famil-
iar with the bank, Commerzbank is
also currently putting the finishing
touches on a plan that will include a
single capital increase of at least
€5bn.
A capital increase in several steps
could depress the share price for
months as investors could fear dilu-
tion of their holdings in stages.
▲
BY JULIET SAMUEL
BARCLAYS will have no choice but to
consider leaving the UK, according to
prominent UBS banks analyst John
Paul-Crutchley.
In a note to investors asking if the
bank could be “the first to leave”
London, Paul-Crutchley said yesterday
that Barlcays and JP Morgan are
“broadly comparable”, except that the
Fed has given JP Morgan permission to
up its dividend whereas “Barclays
remains mired in the fog of regulatory
uncertainty”.
Comparing the £554m compensa-
tion that Barclays paid to its top man-
agers versus the £653m it was
permitted to pay out in dividends by
UK regulators, he said: “If this differ-
RBS expects the Bank of England to raise interest rates twice this year even though the ence [between local regulations]
economic and market environment remains uncertain, chief executive Stephen Hester becomes permanent, we think Barclays
said yesterday at the Morgan Stanley European Financials Conference. He said that “two has little option but to consider shift-
steady rate rises” should boost RBS’s net interest margin. RBS said it was keeping its tar- ing domicile.”
get of having a return on equity of more than 15 per cent. Picture: REUTERS Paul-Crutchley adds that moving its
could make sense for Barclays given
that its balance sheet is equivalent to
100 per cent of GDP. “Rather than
Barclays being too big [to fail], it may
well be that the UK is too small.”
The analysis points to Barclays’ 2010
annual report, which lists only HSBC in
its peer group in the UK. Speculation
on whether London could lose a major
bank due to stringent regulation has
centred on HSBC due to the bank deriv-
ing most of its revenues abroad.
Paul-Crutchley also estimates both
Barclays’ and JP Morgan’s core tier one
capital ratio under Basel III as opposed
to Basel I or II, which neither of the
banks have yet disclosed.
The estimates come out at 7.81 per
cent for Barclays and 7.23 per cent for
JP Morgan. If accurate, it means both
banks have their work cut out to meet
Basel III requirements (seven per cent)
plus a likely capital surcharge for “too
big to fail” banks, which is expected to
be two to four per cent.

Pay likely to rise as

firms court talent
RECRUITMENT
▲

BY JULIET SAMUEL reflects the fact that firms face grow-

FOUR in ten chief financial officers
in the finance industry plan to
increase bonuses over the next six
months, according to a survey by the
Institute of Chartered Accountants in
England and Wales (ICAEW) and
recruiter Robert Half.
Forty-three per cent of those plan-
ning bonus rises for their staff are
looking to increase them by around
five to six per cent – just above infla-
tion, while 29 per cent will beat infla-
tion with a seven to ten per cent pay
rise.
However, just over half of those
surveyed said they expected bonuses
to stay the same, with zero respon-
dents expecting a decrease. The trend
ing competition for staff from a lim-
ited talent pool.
Robert Half director Neil Owen
says: “Many organisations are finding
that they currently do not have the
resources to manage emerging initia-
tives and are therefore engaging sen-
ior-level financial professionals on an
interim basis.”
The research also includes a survey
of 513 associate chartered account-
ants, which reveals that the median
bonus is £16,000, much lower than
public perceptions would suggest,
with only nine per cent of respon-
dents saying they receive a bonus of
over £100,000.
The survey queried 280 chief finan-
cial officers about their pay plans.

Goldman regains lead on

back of Continental deal
ADVISERS
▲

BY DAVID HELLIER the bookrunners on the share place-

GOLDMAN Sachs yesterday regained
pole position in the EMEA equity capi-
tal markets (ECM) tables as a result of
its role in the sale of $2.5bn (£1.8bn) of
shares in German auto-parts supplier
Continental.
The bank, which is sole bookrun-
ner on the Continental deal, had
slipped behind Bank of America
Merrill Lynch in the EMEA ECM table.
Goldman is also number one in the
global table.
Goldman is believed to be one of
ment at Porsche, but the names of the
banks on the deal have not yet been
officially released.
The German auto-parts supplier
Schaeffler Group said it sold
Continental AG shares worth $2.5bn
in a debt-refinancing that unravels
one of the German auto industry’s
most audacious and ill-timed
takeover bids in recent years.
The luxury car maker Porsche
announced at the weekend that it
was having a deeply discounted $7bn
rights issue to reduce debts.
16 News CITYA.M. 30 MARCH 2011

CITY MOVES | WHO’S SWITCHING JOBS Edited by Harriet Dennys in association with

GGW head of relationship management for Brewin Dolphin

Glendavon King AM
The independent fixed income boutique has
appointed Richard Kendall as chief executive
with immediate effect, following a strategic
review of the business. Kendall will be responsi-
ble for leading the new management team
through the next phase of growth, and shifting
the firm’s focus towards institutional investors,
private banks and ultra high net worth individu-
als. Kendall joined GKAM in February 2010 and
was promoted to director later in the year.
Prior to joining GKAM, Richard spent 25 years
as a solicitor in private practice.
Matthew Gash has joined the corporate
debt advisory company GGW as direc-
tor, joining Alistair Lee and founder
directors Greg Begley and Gerry
Milligan. Gash has more than 20 years’
experience with City banks, principally
MeesPierson-Fortis, where he led the
Real Estate and Healthcare teams.
BNY Mellon
BNY Mellon Alternative Investment
Services has appointed Jim Whitaker
as head of relationship management for
the Americas, and Mark Mannion as
EMEA. Whitaker and Mannion will con-
tinue to be based in New York and
Dublin respectively, reporting to Brian
Ruane, chief executive.
Menzies
The regional accountancy firm has
appointed Zoe Pink as marketing and
business development manager. Pink
joins from Grant Thornton, where she
advised on business development and
marketing strategies across the firm’s
pensions advisory and investment man-
agement groups.
Ruth Murphy will join the financial serv-
ices group as head of charity business
development this summer. Murphy has
worked in the charity sector for almost
30 years, at firms including Scope and
the Charities Aid Foundation.
WP Carey & Co
The investment management company
has appointed Jeffrey Lefleur to man-
aging director, operating out of London
and New York. He will continue to be
responsible for sourcing and executing
sale-leaseback transactions in Europe.

To appear in CITYMOVES please email your career +44 (0)20 7557 7245
updates and pictures to citymoves@cityam.com SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT morganmckinley.com

Kazakhmys
Gain an edge in a
boosts profit
▲
MINING Meanwhile, the miner announced

competitive market BY HARRY BANKS

KAZAKHMYS, the world’s 10th largest

copper miner, said yesterday its full-
year profit jumped 74 per cent thanks
to higher metal prices.
that Peter Hickson will retire from
the board and will be replaced by a
new independent non-executive
director in due course.
David Munro will also be stepping
down from his position as develop-

Study part-time for a successful Earnings before interest, tax, depre-

ciation and amortisation, excluding
special items, rose to $2.84bn (£1.8bn).
ment director, although he will con-
tinue to serve as a part-time executive
with Kazakhmys.

career within the financial The figure included a $903m con-

tribution from its 26 per cent stake in
Eurasian Natural Resources
Eduard Ogay, chief executive of
subsidiary Kazakhmys Corporation,
will be appointed to the board. Ogay
services industry Corporation (ENRC).
Earlier this month, Kazakhmys
chief executive Oleg Novachuk said
joined the company in 2001.
The final dividend, which had
already been declared, was 16 cents a
he was exploring “strategic options” share. The full year-dividend is up 144
for the stake in ENRC. At yesterday’s per cent on 2009 to 22 cents.
closing price, the stake is worth about Shares in the firm closed 0.1 per
£3.1bn. cent higher yesterday at 1,426p.
The biggest one-off item in the 2010
results was $130m to fund major ANALYSIS l Kazakhmys
social projects in Kazakhstan.
1700
Prices for benchmark London p 1426.00
Metal Exchange copper rose 31 per 29 Mar
1600
cent last year and hit a record high
last month, driven partly by rising
1500
demand from markets such as China.
Kazakhmys said cost pressures
1400
increased over 2010, as they have for
many miners, although its copper
1300
production costs remained globally
Professional Certificate in Banking competitive at 89 cents per pound. 10 Jan 17 Feb 9 Mar 29 Mar

Foundation Degree in Banking Practice and Management

Professional Diploma in Banking Practice and Management
BSc (Hons) in Banking Practice and Management
Hochschild sees Afren bullish on
lower production targets for 2011
Join us to find out more
London 6 April 2011
▲

MINING MINING

Open evening 6pm-8pm LATIN American precious metals

group Hochschild Mining forecast
Drop-in between 12pm-5pm for a more informal chat lower production for 2011 and said
costs would continue to rise, after
Free to attend record gold and silver prices boosted
profits for 2010.
Spaces are limited so book your open evening place today, The company expects production
to drop by nearly 15 per cent in 2011
visit www.ifslearning.ac.uk/CityAM to register as it moved to lower output at its
and for more information Arcata mine in Peru, while costs are
expected to rise 10 per cent in Peru
Venue: ifs School of Finance, Peninsular House, 36 Monument Street, EC3R 8LJ and at least 25 per cent in Argentina.
“2010 was not only a year of high
prices but also of high cost infla-
tion,” Hochschild said, adding that
unit costs at underground opera-
The ifs School of Finance is incorporated by Royal Charter and is the only specialist financial education body with tions were up 16 per cent mainly
the power to award its own taught degrees due to local price inflation in
Argentina.
AFRICA-FOCUSED oil and gas com-
pany Afren said production opera-
tions at a key field in Nigeria have
started, giving it confidence it
would reach its output targets this
year.
Afren said oil production from its
Ebok project started in February,
behind its earlier goal of October,
but in line with guidance it gave in
December, as it confirmed it was on
track to produce 40,000 barrels of
oil equivalent per day in 2011.
“We’ll reach 15,000 barrels a day
from the first phase during the
course of April and 35,000 barrels a
day by the end of the second quar-
ter,” said chief executive Osman
Shahenshah yesterday.
CITYA.M. 30 MARCH 2011
Brits sacrifice
holidays, says
Thomas Cook
▲
CONSUMER
BY HARRY BANKS
THOMAS Cook, Europe’s second
biggest travel firm, said UK bookings
had slowed as cash-strapped Britons
sacrifice their annual two weeks in
the sun.
“Cumulative summer bookings
remain ahead in most markets,
although the rate of booking intake
has slowed noticeably in the UK as a
result of continued economic uncer-
tainty,” the company said yesterday.
Thomas Cook said cumulative sum-
mer bookings in Britain were one per
cent ahead of last year, sharply down
from growth of six per cent when the
group last updated the market.
British consumers have been
increasingly unwilling to spend as
muted earnings growth and higher
inflation, fuelled by January’s rise in
VAT and hikes in oil and food prices,
bite into real incomes.
Historically Britons have been
reluctant to give up their hard-earned
News 17
FirstGroup buys
955 new buses
TRANSPORT
▲
FIRSTGROUP, the UK’s largest bus and
rail operator, yesterday said it was
ordering £160m of new vehicles over
the next two years.
Thomas Cook, run by chief executive Manny Fontenla-Novoa, said cumulative booking The order for 955 vehicles will
rates had slowed noticeably in the UK include 200 buses earmarked to trans-
port people to and from the London
2012 Olympic Games.
ANALYST VIEWS: WHY HAVE HOLIDAY FirstGroup said 40 hybrid buses,
BOOKINGS SLUMPED? Interviews by Elizabeth Fournier
part funded by the government’s
Green Bus Fund, form part of the
summer holiday even when they are order. FirstGroup said it hoped more
cutting back in other areas. customers would choose to travel by
Thomas Cook said cumulative sum- JONATHAN JACKSON | KILLIK & CO bus to escape soaring fuel costs.
“
mer bookings were up four per cent
in central Europe, which includes
Germany, Austria and Switzerland; The company has announced that the recent political unrest in north
Africa cost around £20m in the second-quarter, following the cancellation of Taxpayers’ group
”
up 11 per cent in northern Europe; up
nine per cent at Airlines Germany; 150,000 bookings. And the group cited continued concerns over the UK economy
but down one per cent in western and
eastern Europe.
Earlier this week Peter Long, the
as another factor behind slower summer booking rates.
slams rail plans
boss of TUI Travel said demand for MARK BRUMBY | LANGTON CAPITAL
“
annual holidays was proving
TRANSPORT
▲
resilient.
" Trading has been impacted by the disruption caused by unrest in
ANALYSIS l Thomas Cook Group Tunisia and Egypt and in the UK ‘recent trading has…been affected by fragile con-
”
THE government’s plans for a new
210 sumer sentiment’. Eyes will be on capacity and here Thomas Cook is proposing high speed rail line will not deliver
p
150.00 reductions in the UK and in central Europe and increases elsewhere. the capacity needed despite costing
200 29 Mar £30bn, the TaxPayers’ Alliance (TPA)
said yesterday.
190 NICHOLAS BATRAM | PEEL HUNT The government has justified the
“
180
hefty price tag by saying the project
will boost seats on trains and ease
170
Events outside the group’s control are largely to blame. The UK is weak overcrowding as demand for long-dis-
but central and northern Europe are in positive territory and the group has acted
”
tance rail travel increases, but the TPA
160 quickly to reduce capacity. There is clearly a risk to numbers but we feel this says many towns along and around
06:00 11:00 14:00 16:00 is in the price and on a 12-month view the shares represent good value. the route will in fact lose out.
 18 Economics
Slow rise in mortgage lending
▲
UK ECONOMY
BY JULIAN HARRIS
MORTGAGE lending rose by £1.2bn
last month, as the number of
approvals edged up to 46,967, the Bank
of England revealed yesterday.
The number of mortgage approvals
was up 1.2 per cent compared to the
previous six month average.
“The news is hardly encouraging,”
responded Nida Ali of the Ernst and
Young Item Club, “given that a level of
around 47,000 still reflects depressed
First drop in
real incomes
for 20 years
▲
UK ECONOMY
BY JULIAN HARRIS
DISPOSABLE income, allowing for
inflation, fell for the first time since
1981 last year.
Real household income dropped by
0.8 per cent over 2010, after a 0.5 per
cent fall in the final three months of
the year, the Office for National
Statistics (ONS) revealed yesterday.
The figures reveal the squeeze on
living standards that Bank of England
governor Mervyn King has described as
the most severe since the 1920s.
Meanwhile, the ONS revised its GDP
estimate for the fourth-quarter of 2010
to a 0.5 per cent contraction, up from
the previous estimate of -0.6 per cent.
Ignoring the effects of December’s
severe winter freeze, the economy
stood still in the last three months of
Inflation across OECD member states
hits new 27-month high of 2.4 per cent
WORLD ECONOMY
▲
BY ERIC WILKENS
CONSUMER prices across member
states of the Organisation for
Economic Co-operation and
Development (OECD) rose by 2.4 per
cent in February compared with 2.2
per cent in January -- the highest rate
since October 2008.
This increase was driven by food and
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065
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Featuring the world’s greatest flat race
Investec Derby Festival – 3rd & 4th June 2011
housing demand and is consistent
with falling house prices.”
However, consumer credit surprised
on the upside, rising by £0.8bn com-
pared to the previous six month aver-
age of £0.2bn, and a fall of £0.3bn in
January.
Meanwhile, there was a £7bn – 0.5
per cent – drop in the Bank of
England’s preferred measure of the
money supply (M4 excluding interme-
diate other financial corporations) –
saw its biggest monthly drop in a year.
“This was the result of money-hold-
2010, it said – an improvement on the
previous calculations, which showed a
slight contraction.
Nonetheless, the figures were seized
upon by opposition chancellor Ed
Balls. “The government is trying to cut
further and faster than any other
major economy in the world. Things
are heading in the wrong direction,”
Balls said.
Growth could be hit by impending
government cuts, said Markit’s Chris
Williamson, yet the economist added:
“Note that the fourth-quarter decline
in GDP occurred despite a boost from a
0.4 per cent increase in government
expenditure.”
Business investment was revised up,
from a previously estimated 2.5 per
cent fall to a quarter-on-quarter stagna-
tion, and 12.2 per cent annual
increase, the ONS revealed.
energy inflation which reached three
per cent and 10.1 per cent respectively.
Excluding food and energy, the
annual inflation rate remained at 1.3
per cent in February.
Inflation grew from 1.6 per cent in
January to 2.1 per cent in February in
the United States, and from four per
cent in January to 4.4 per cent in
February in the United Kingdom. Italy
and Germany also experienced fur-
ers switching into foreign currency
deposits, possibly in anticipation of
sterling weakness,” said Henderson’s
Simon Ward.
“Ignoring the foreign currency dis-
tortion, M4-ex rose by 2.2 per cent
annualised in the six months to
February, up from 1.6 per cent in the
prior six months,” Ward argued.
“While growth remains sluggish, it
is probably more than sufficient to
finance trend economic expansion
and two per cent inflation given a rise
in the velocity of circulation,” he said.
ANALYSIS l Global export trade has recently dipped as a share of world GDP
25
% of GDP
21
17
13
9 pared to the 3.2 per cent expected.
5
1950 1960 1970
International trade faces
threat from protectionism
WORLD ECONOMY
▲
BY JULIAN HARRIS
GLOBALISATION is at risk from
increasing political intervention pro-
voked by the global recession, a sen-
ior global economist said yesterday.
“The forces of protectionism are
probably enough to halt the recent
acceleration of global trade,” said
UBS’s chief worldwide economist,
Paul Donovan.
Global trade soared from a 12.5 per
ther increases in price levels.
Inflation slightly decreased in
Canada and France, and remained sta-
ble in Japan. Euro area annual infla-
tion rose from 2.3 per cent in January
to 2.4 per cent in February.
Meanwhile, another report from
Kantar Worldpanel said that grocery
price inflation increased to four per
cent in the UK, over a recent 12 week
period, the group said yesterday.
Book now: 0844 848 3256 epsomdowns.co.uk
Weale warns Bank of England’s
forecasts are too optimistic
▲
UK ECONOMY
GIVEN its recent track record of miss-
ing the inflation target, the Bank of
England should take inflation threats
more seriously, Bank policymaker
Martin Weale said yesterday.
Weale defended his vote for increas-
ing interest rates by 0.25 per cent.
“Continuing above-target inflation
could lead to inflationary expecta-
tions becoming entrenched,” Weale
told a meeting in London.
Global export volume
1980 1990
cent share of GDP in 1987 to a 24 per
cent in 2007.
“But 2007 may well mark the peak
of globalisation,” Donovan warned,
claiming that trade has dropped as a
percentage of GDP for the first time
since the 1930s. In 2009, world trade
fell by 12 per cent, UBS said.
“Since pledging there would be no
return to 1930s policy, G20 govern-
ments have introduced an average of
one new trade barrier every day,”
Donovan said.
ANALYSIS l Sector performances amid high inflation (Europe)
0.3 Correlation
since 1982
0.2 Outperform in low inflation environments
0.1
Travel &
Leisure
0.0
-0.1
Banks
-0.2
Retail
-0.3
CITYA.M. 30 MARCH 2011
Weale added that he was pessimistic
about the chances of inflation moder-
ating as fast as the Bank forecasted in
February.
There is “real risk” inflation would
rise towards five per cent from its cur-
rent 28-month high of 4.4 per cent,
Weale said.
The dangers of overshooting the
Bank’s two per cent target are more
grave than the risks associated with
inflation falling back below two per
cent, Weale argued.
NEWS | IN BRIEF
Morale slips on US high street
US consumer confidence fell from an
index score of 70 in February to 63.4 in
March, the Conference Board said yester-
day. Meanwhile, single family home prices
fell for the seventh straight month in
January, bringing prices to just above
April 2009 lows. Prices in 20 US cities
dropped 3.1 per cent year-on-year com-
Japan had jobs boost pre-quake
Source: UBS, Haver Japanese unemployment fell from 4.9 per
2000 2010 cent to 4.6 per cent in February and retail
sales rose 0.1 per cent from a year earlier,
according to a report released yesterday.
These figures pre-date the full impact of
the earthquake that struck on 11 March.
Inflation worries hits Germany
German consumer confidence will decline
for the first time in ten months in April,
researchers GfK said yesterday. Spiralling
energy and food price pressures were
cited for the uncertain outlook. However,
German inflation remained stagnant at 2.1
per cent in March, official data showed.
Fresh boost for French factories
French consumer spending grew 0.9 per
cent on manufactured goods in February,
official data showed yesterday.
Public deficits embedded amid G7
Current IMF forecasts show that no G7
countries will cut their structural budget
deficits by 2015, Lombard Street
Research claimed yesterday.
Chemicals
Oil &
Gas
Auto & Real Technology
Parts Estate
Industrial
Insurance Telecom goods services
Food &
Bev
Financial
Services
Outperform in high inflation environments
Source: UBS, Thomson Datastream
CITYA.M. 30 MARCH 2011 News 19

Porridge
SuperGroup boost for
exec resigns Pret sales

▲
CONSUMER
RETAIL ing up its team steadily so it has the BY HARRY BANKS
▲

BY HARRIET DENNYS
DIANE Savory, chief operating officer
of SuperGroup, quit the fashion
retailer suddenly yesterday in a move
that surprised analysts and investors.
Savory (pictured) has worked at the
clothing group, which owns retail
brands Superdry and Cult, for more
than 20 years and played a crucial
role in preparing the company for
its £120m flotation last year.
She announced her resigna-
tion yesterday citing personal
reasons and sources close to the
firm would only add that she
wants to spend more time with
her family. She will leave on 6
May.
However, analysts said
Savory’s decision to leave
the business would not
“massively impact”
the company’s rapid
growth.
James Dilks-Hopper,
retail analyst at
Numis, said: “Savory’s
departure is a loss,
but Supergroup has
obviously been build-
people in place to step in and take
over her role.”
Supergroup intends to fill the chief
operating officer vacancy over time,
but in the short term Savory’s duties
will be shared between head of prop-
erty Nigel Jobson, head of legal
Romney Gray and head of HR Sue
Baldwin, who were all hired in the
last 12 months.
Five of the group’s man-
agement own 65 per cent
of the company’s shares,
with the remaining
equity held by external
investors including US
firm Capital Research,
Legal & General, AXA and
Standard Life.
Top 10 share-
holders were
not informed
of Savory’s
imminent
departure
prior to yes-
terday’s
s h o c k
announce-
ment to the
markets.
COFFEE and sandwich chain Pret a
Manger said sales of hot food such
as porridge were helping it to thrive
in a tough consumer environment
as it posted a 37 per cent rise in 2010
core earnings.
The chain, majority owned by pri-
vate equity firm Bridgepoint, said
yesterday it planned to open more
than 30 shops worldwide this year.
Pret a Manger, which runs 265
outlets in Britain, the US and Hong
Kong, said sales at shops open over a
year rose 9.8 per cent last year.
Double-digit percentage growth
in the first part of the year slowed to
about five per cent by the fourth-
quarter and has stayed around that
level. The chain saw particularly
strong demand for budget ranges
like filter coffer for 99p. But other
items were also selling well, with
customers snapping up around
50,000 bowls of porridge a week,
making it the firm’s top-selling new
product.
Earnings before interest, tax,
depreciation and amortisation
jumped to £46.1m last year on a 17
Pret boss Clive Schlee said 99p coffees and pots of porridge were selling well per cent rise in turnover to £327.5m.

News Corp in talks

over MySpace sale
MEDIA One of the firm’s most valuable
▲

BY STEVE DINNEEN assets is Myspace Music, a joint ven-

NEWS Corp has held early-stage talks
with US music video site Vevo over
exchanging its ownership of belea-
guered Myspace for a stake in a new
venture.
Rupert Murdoch’s firm has hired
Allen & Co to advise it on a sale or
spin-off of the former social network,
now branded as an entertainment
site.
It is understood representatives for
News Corp had initially contacted
Vevo to see if they would be interested
in purchasing all of Myspace a few
weeks ago but were rebuffed.
Since then, a joint venture has been
proposed which could see News Corp
spin off its stake into some sort of
joint venture.
ture between Myspace and the four
major music label owners including
Vivendi’s Universal Music Group, Sony
Music Entertainment, Warner Music
Group and EMI Music.
Vevo is currently only available in
the US and Canada, but the firm said
this month it will be up and running
in the UK “imminently”.
The firm, run by a record label, has
just under 60m video viewers per
month in the US.
According to recent statistics,
Myspace lost a staggering 10m users
in just a month at the start of this
year. Last year it lost 50m users after
being squeezed by Facebook, which
has more than 500m users. Rupert
Murdoch’s News Corp bought the
company for $530m (£377m) in 2005.

News International says paid-for GAUCHO BROADGATE BRINGS YOU A

SLICE OF ARGENTINE LIFE TO CELEBRATE
digital subscriptions are up 60pc WORLD MALBEC DAY THIS APRIL
MEDIA Times circulation falling 12 per cent
▲

BY STEVE DINNEEN
NEWS International says the number
of readers paying for its digital Times
and Sunday Times products has risen
60 per cent in the last four months.
The total now stands at 79,000 digi-
tal readers for both titles – up from
50,000 in October.
However, they come as print sales
have decreased sharply, with the
in the past year. PLEASE CONTACT 020 7256 6877 OR EMAIL
However, News Corp says the fig-
ures mean the total paid readership EVENTS.BROADGATE@GAUCHORESTAURANTS.COM
for the Times has risen three per cent FOR DETAILS OF OUR SPECIAL EVENTS
and says it expects the paid Sunday
Times readership to grow year-on-year
in 2011.
Numis analyst Lorna Tilbian told
City A.M. the figures “sound very posi-
tive”. She said: “It’s early days but this
sounds like a positive start.”
 20 News
Wolseley says
it will restart
its dividend
CONSTRUCTION
▲
BY HARRY BANKS
WOLSELEY, the world’s largest
plumbing and building merchant,
yesterday showed it was confident of
growing in patchy construction mar-
kets by reinstating its payout to
shareholders.
The company said although mar-
kets have broadly stabilised it faced
fragile economies in several regions
and pressure from competitors to
cut prices.
“The group expects to continue to
grow in the second-half of the year,
though the comparatives will now
be much more demanding,” chief
executive Ian Meakins said.
Wolseley said it would pay an
interim dividend of 15p per share,
which it expected to be one-third of
AssetCo faces new calls for
cash from unpaid suppliers
▲
SUPPORT SERVICES
TROUBLED fire engine provider
AssetCo admitted yesterday that its
unpaid bills had caused a “substan-
tial” creditor to present it with a
winding up petition.
AssetCo, which has seen its chief
executive, finance director and chair-
man replaced, and raised £16m in an
emergency share placement this
month, said it had paid the unnamed
creditor in full with the new funds.
But the petition was signed by a
number of its suppliers owed months
of unpaid invoices including AssetCo’s
the total for the year, having not
made a payout the year before.
Meakins said in Britain, VAT
increases and government spending
cuts left the outlook more uncertain
and it expected a slowdown in the
coming months. Public sector spend-
ing represents about 25 per cent of
its UK revenue.
Wolseley posted a five per cent
increase in like-for-like revenue to
£6.6bn in its financial first-half.
Trading profit which strips out
exceptional items, amortisation and
impairments, rose to £275m versus
£167m in 2010.
The company, which has redomi-
ciled to Switzerland to lower its tax
rate, said five of its businesses were
for sale.
Its shares closed up 3.1 per cent
yesterday at 2,154p.
long-time financial adviser Nabarro
and these still need payment, sources
told City A.M. yesterday.
Fired chief executive John Shannon
and finance director Scott Brown are
also reportedly signatories.
AssetCo said another creditor had
been substituted for the first at the
recent winding up hearing but its
board had to ensure due process was
followed to satisfy the new demands.
“The board confirms that the com-
pany is able and in a position to make
this payment but the new manage-
ment team is determined to ensure
full process and investigation is made
ANALYSIS l Mouchel Group
100
p 101.26
29 Mar
150
140
130
120
110
100
10 Jan 17 Feb 9 Mar 29 Mar
Mouchel chief executive Richard Cuthbert saw £60m wiped off its market cap yesterday
staff in London, Paris and Frankfurt.
This year it has acted as the lead
adviser for Moss Bros on its “transfor-
mational” £16.5m deal to sell 15 Hugo
Boss franchised stores to the German
MOUCHEL ADVISER fashion company.
Last year it advised utilities services
company Spice as it played hard-to-
get with buyer Cinven. Vice chairman
ADVISING Mouchel on the possible Christopher Kemball and managing
sale of “non-core” parts of the business director Chris Robinson eventually
are boutique investment banking out- achieved a price of £251m for the
fit Hawkpoint Partners and RBS. firm.
Hawkpoint advises corporates, It also advised Rugby Estates in its
financial institutions, private equity sale of its 8.5 per cent holding in
houses and governments throughout Rugby Estates Investment Trust to
Europe. The company employs 100 ING UK Real Estate Income Trust.
Babcock confident due to
improved order pipeline
▲
ENGINEERING
of any calls for payment, so the hear- BABCOCK International, the engineer-
ing has been adjourned for fuller ing support services company, said it
determination,” it said. was confident about the next finan-
cial year thanks to a strong order book
ANALYSIS l AssetCo and a growing bid pipeline.
70 The firm said the slowdown seen in
p
60 the first-half of the year, which saw
50
12.90 the number of new contracts coming
29 Mar up for tender drop, had reversed itself
40 in the previous six months.
30 The pipepline of bids at invitation
20 or pre-qualification questionnaire
stage yesterday stood at £7bn, £1bn
10
higher than at the time of the firm’s
0 interim management statement in
10 Jan 17 Feb 9 Mar 29 Mar
January. Shares in the firm rose 3.6
CITYA.M. 30 MARCH 2011
Mouchel tanks
after rejecting
two bidders
SUPPORT SERVICES
▲
BY STEVE DINNEEN
MOUCHEL’S shares tanked yesterday
after it announced it has rejected
overtures from two possible buyers.
Rival Interserve and construction
firm Costain were both kicked to the
curb by the Mouchel board, wiping
£60m off its already battered market
cap – more than a third of its value.
Mouchel said it rejected the offer
from Interserve, which valued the
firm at 135p a share, because it
undervalued the business. It rejected
Costain because it said there was too
much execution risk.
The company said: “the board has
decided it is not in shareholders’
interests to proceed with any further
discussions with Interserve or
Costain.”
Mouchel also announced its first-
half revenues slipped 13 per cent to
£270.3m, with underlying profits
falling 73 per cent to just £4.1m. It
pointed to the hammering it has
taken as a result of government
spending cuts. The firm will not pay a
dividend. Its shares closed 31.4 per
cent lower at 101.26p yesterday.
per cent to 598.9p on the news.
Key wins include a five-year con-
tract worth €200m (£176m) to run the
facilities at British army bases in
Germany and its selection as sole bid-
der for the Ministry of Defence’s 10-
year Maritime Equipment
Transformation programme, worth
£300m.
Cash generation in the financial
year so far has been strong, enabling
the company to pay down debt. Net
debt at the end of March is expected
to be less than £750m, and the result-
ing net debt to earnings ratio is
expected to be below the 2.8 times
reported at the end of September.

 

 
    

  


 
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CITYA.M. 30 MARCH 2011
BEST OF THE BROKERS
ANALYSIS l BT Group
195
182.10
p 29 Mar
185
175
10 Jan 28 Jan 17 Feb 9 Mar
BT GROUP
JP Morgan Cazenove (JPM) rates the
telecoms group “overweight” and has
cut its 12-month target price by 6p to
214p to reflect changes to the firm’s pen-
sions deficit. The broker thinks many of
BT’s short-term cost efficiencies might
be reinvested to achieve growth targets,
meaning slowing momentum before the
firm returns to sustainable growth. JPM
expects revenues to dip 3.7 per cent
when the firm reports full-year figures.
To appear in Best of the Brokers email your research to notes@cityam.com
FTSE rises after upbeat
Wolseley results outweigh
bank dips and debt worries
THELONDON
REPORT
T
HE FTSE 100 rose moderately
in light trade yesterday with
support from miners and
upbeat results from Wolseley
outpacing falls in banks on
European debt worries.
The FTSE 100 climbed 27.68
points, or 0.5 per cent, at 5,932.17.
The index regained more than 3
per cent the previous week follow-
ing losses sparked by the earth-
quake in Japan.
“The fact that the FTSE has
remained at these levels showing
little signs of weakness when there
is so much negative news out there
shows just how much underlying
strength there is in the market,”
Angus Campbell, head of sales at
Capital Spreads, said.
Trading volumes were 77 per
cent of the index’s average 90-day
volume as investors approached
the end of a tumultuous month
cautiously, hoping jobs data from
the United States on Friday will
provide a catalyst for the index’s
next move.
“It's a big data week with the (US
non-farm) payrolls on Friday and
that could see us get more positive
momentum,” Steven Bell, director
at the GLC hedge fund said.
The FTSE remains in a range
near its 50-day moving average of
around 5,933 and above its 20-day
moving average of around 5,791.
The index has traded below its 50-
day moving average since 4 March.
Investors bought into growth
stocks as Wolseley, the world’s
largest plumbing and building
merchant, gained 2.1 per cent after
posting a 64 per cent rise in half-
ANALYSIS l Diageo
1250 p
1163.00
1240 28 Mar
1220
1200
1180
1160
1140
1120
1100
10 Jan 8 Feb 28 Feb 9 Mar 18 Mar
DIAGEO
Nomura rates the drinks firm “buy”
with a target price of £15. The broker
continues to see improving trade in the
group’s main markets, especially in the
US, and expects European sales to
deliver single digit growth over the next
two to three years. Nomura also pre-
dicts further acquisition activity after
the firm’s deal in Turkey last month,
which will provide a further catalyst
for Diageo’s share price.
year trading profit and reinstating
its dividend.
Wolseley’s shares trade at a price
around 17 times the company’s
prospective earnings per share,
compared to the sector average of
around 12 times according to
Thomson Reuters data. Analysts
saw more upside potential.
“Wolseley has plenty of recovery
potential in terms of both earnings
and for further deleveraging of the
balance sheet,” Charles Stanley’s
analyst Tony Shepard said.
Miners were firmer after a weak
showing on Monday. Vedanta was
up 2.9 per cent with traders citing
recent upbeat broker comment
surrounding its pending purchase
of Cairn India, which they say
could be 30 per cent earnings
accretive.
Hedge fund firm Man Group
rose 0.7 per cent after it said it
expects $700m of net inflows in
the three months to March.
Clothing retailer Next added 1.9
per cent, with traders citing a bull-
ish note from Morgan Stanley.
ANALYSIS l FTSE
6,100
6,000
5,900
5,800
5,700
5,600
5,500
10 Jan 28 Jan
News 21
ANALYSIS l National Express
265
p
255
243.20
29 Mar
245
235
225
10 Jan 28 Jan 17 Feb 9 Mar
NATIONAL EXPRESS
RBS rates the transport group “buy”
with a target price of 270p. The broker
thinks the call for new non-executives
by activist investor Elliot Advisors will
help the investment case for National
Express, given previous speculation
about Elliot hoping to sell or break up
the company. However, RBS adds that
its rating is based on continued financial
recovery within the group and expects Sculptures,
p , rare graphics,
g p ,
£113.9m pre-tax profit for the year.
original
g colllages
g
Moor House Building
Opening April 1st
120 London Wall, City of London, EC2Y 5ET
Monday - Friday 10:00 am - 6:00 pm
Intercontinental Hotels
rebounded 4 per cent along with
hotel operator Marriott
Saturday 11:00 am - 5:00 pm
International after the US firm
gave a disappointing update on its
revenue outlook on Monday.
On the downside, the previous
T. +44 (0) 778 907 6340 | T. +44 (0) 207 614 0600
info@modernmastersgallery.com
sessions top gainers the banks www.modernmastersgallery.com
were lower after Italy’s UBI Banca
surprised markets by announcing
a €1bn capital hike to help repay a
government bond.
US trading volume
Analysts said UBI Banca had
reignited worries over Europe’s
debt crisis and there were concerns
other Italian banks could follow
suit.
low amid uncertainty
Ratings agency Standard &
Poor’s downgraded Greece’s debt
deeper into junk status and cut its
credit rating on Portugal by one
notch.
BP, down 2.2 per cent, took 8
points off London’s blue chip
index, with traders citing a down- president of Hackett Advisors in
grade to “sell” by Collins Stewart
and a media report that the com- THENEW YORK Boynton Beach, Florida. “When the mar-
ket doesn’t know what to do, it tends to
pany’s managers may face
manslaughter charges. REPORT go up on low volume and down on high-
er volume because when people get
nervous, they sell.”
Oil services stocks rose for a fifth ses-
S
TRENGTH in energy lifted US sion as investors continued to add to a
stocks yesterday as investors con- sector sitting at its highest since August
centrated on adding to winning 2008. The PHLX oil services sector index
5,932.17 positions as the quarter winds rose 1.9 per cent. All 10 of the S&P 500’s
29 Mar
down, but uncertainty kept trading vol- major sectors rose, with energy 1 per
ume light. cent. Volume was also weakened ahead
About 6.2bn shares traded in compos- of data on the labor front, including the
ite volume on the New York Stock ADP private-sector employment report
Exchange, NYSE Amex and Nasdaq, the tomorrow and the US government’s key
second-weakest of 2011 and below last non-farm payrolls report on Friday.
year’s estimated daily average of 8.47bn. The Dow Jones industrial average
Conviction has been weak as investors gained 81.13 points, or 0.67 per cent, to
assess the effect of Japan’s earthquake 12,279.01. The Standard & Poor’s 500
and turmoil in the Middle East on corpo- rose 9.25 points, or 0.71 per cent, to
rate results. 1,319.44. The Nasdaq Composite added
“I don’t think a lot of people know 26.21 points, or 0.96 per cent, to
what to do. They hear about how bullish 2,756.89. The S&P 500 index has risen
it is to reconstruct Japan but until the 4.9 per cent in the first three months of
disaster is quantified, they are not going the year, which would be its seventh pos-
17 Feb 9 Mar 18 Mar 29 Mar to do anything,” said Shawn Hackett, itive quarter in the last eight.
 Business Features
22
Why jet-setting
employees are a
legal headache
JULIET CARP
S
UPPOSE an employee – let’s call her
Snow White – works in Paris but
lives in London. How much “home”
or “train” work does White need to
do to be covered by English laws? In the
recent case of British Airways v Mak, the
Court of Appeal decided that English tri-
bunals have jurisdiction to hear discrimi-
nation claims from a Hong Kong-based air
stewardess who spent most of her time
working outside the UK. The case has res-
onance in the City, where “international
commuter” arrangements are common.
Mak’s time in Britain included time
spent landing and taking off, briefings,
resting and training. The court found that
she did enough “work” here to bring her
within scope of discrimination laws,
which only required that she work “part-
ly” in Britain. The Equality Act 2010 is
now in force and the reference to “partly”
is no longer there. It is not clear how
much work the employee needs to do
here to use our equality laws. Nor is there
clarity for other British employment laws,
such as the right to claim unfair dis-
missal.
The difficulty for multinationals is that
there are no consistently applied interna-
Tweeting in court could damage your business
OLIVER LAWSON
I
MAGINE that your business is in court.
And now imagine that some people in
that courtroom are sending out a con-
stant barrage of tweets about the pro-
ceedings – every accusation, every negative
claim and every judicial comment appears
instantly on the internet, in a context-
destroying 140-character form. And now
imagine the effect it could have on your
firm’s share-price.
The shudder running down your spine is
exactly why on 7 February the Judicial
Office for England and Wales launched its
consultation into “the use of live, text-based
tional rules for deciding when a particu-
lar country’s “mandatory” employment
laws apply – and more than one country’s
laws can apply at the same time. Suppose
White is pregnant. Will French or English
maternity laws apply? Her employer may
find it hard to comply with conflicting
rules and, in practice, it may be easier to
offer White the best of both worlds.
Technological changes accentuate the
challenge. While laptops and mobiles give
employees more freedom, employers may
not even know which country staff are
working in. And the worry is not just
about compliance with employment laws
– place of work can have significant tax
and social security implications too. This
may be a particular concern for employ-
ees who are mobile within the UK too, Mirror, mirror on
such as IT consultants. the wall, in which
Clearly the current uncertainty is bad jurisdiction does my
news for international businesses, but it employment case fall?
can also be difficult for mobile employees. Picture: REX
An employee facing redundancy needs to
know what his rights are so he can decide
whether severance terms are acceptable.
For highly paid employees, uncertainty
about mandatory employment laws may
not create significant difficulties, as the
financial consequences of termination
are more likely to be driven by their con-
tracts, for example by bonus terms.
However, if the reasons for dismissal
are discriminatory then the application
of mandatory employment laws may sig-
nificantly affect compensation for
employees at all salary levels. Suppose
White’s employer dismisses her because
she is pregnant. Could White make a dis-
crimination claim here or should she
claim in France or, if both, which would
forms of communications from court for
the purposes of fair and accurate report-
ing”, which looks into whether social
media such as Twitter should be permitted
in court. The consultation runs until 4 May,
and interim guidance is now in effect.
While the Lord Chief Justice has appar-
ently not joined the twitterati himself, his
notes to the consultation and a previous
speech show that he takes social media seri-
ously. The consultation focuses mainly on
the risks posed by Twitter use to jury inde-
pendence, as well as the potential for wit-
nesses who have yet to give evidence being
forewarned of evidence already given. The
main focus is on the effect on criminal tri-
als and the proper conduct of proceedings.
However, as the consultation itself recog-
nises, “very often, sensitive material
emerges in the course of a trial, the sensi-
tivity of which is not immediately appar-
ent”. Advocates are highly skilled
interrogators, and this combined with the
pressure on a witness to tell the whole
truth when isolated in the witness box cre-
ates a uniquely pressurised environment
expressly designed to get even the stiffest
| Law
be best? Following Mak, it seems likely
that the court would conclude that White
does some work in Britain, but does she
do enough work here to allow her to
make claims here? White and her employ-
er would need advice from both English
and French lawyers to understand the
options.
Discrimination laws are intended to
implement European directives. The
English Supreme Court is expected to
clarify the impact of European law on
employees’ rights to make claims here
shortly, when it hands down its decision
in Duncombe, a case about the rights of
fixed term teachers at international
schools. But that is unlikely to be the end
of Snow White’s story. Even if employees’
rights are clarified soon under English
law, the European Court of Justice, which
takes precedence over English courts,
could take a different view.
All this uncertainty is not good for
tongue wagging. In contrast with a press
briefing, no media minder can accompany
a witness into the box to manage sensitive
questions. As a result, there is considerable
scope for embarrassing, damaging and, in
appropriate circumstances, price-sensitive
information to be shaken loose in the
course of cross-examination.
Combine such inadvertent disclosure
with the “tweet before you think” ethos
that characterises many postings and the
speed with which posts can reverberate
around the world and you have a potential
corporate communications nightmare.
The full impact of a tweet might not be
immediately apparent, making efforts by
your own barrister to repair the damage
impossible. The court is also unlikely to
interrupt cross-examination, as this would
disrupt the trial and may adversely affect
the opposition’s case. Finally, trying to mit-
igate the effect of the witness’s comments
(which are made under oath) by casting
doubt on them undermines the individ-
ual’s credibility, both as to his evidence in
the case and generally.
A judge’s negative comment as to the
CITYA.M. 30 MARCH 2011
international business or employees and
creates unnecessary barriers to develop-
ment of global mobility and flexible
working practices. Most employers and
employees are likely to take a practical
approach to resolving their differences.
However, the relatively small number of
cases about jurisdictional issues that
reach the courts belie the depth of the
problem. High legal costs associated with
dealing with technical jurisdictional
points discourage both parties from liti-
gating but still create significant extra
costs. Clear understanding of the value of
legal claims is essential for efficient set-
tlement of disputes – and for both parties
to make rational decisions about appro-
priate arrangements at the start of the
employment.
Juliet Carp is a UK and international employ-
ment law specialist at Speechly Bircham LLP
and the author of Drafting Employment
Documents for Expatriates
validity of a particularly important patent,
for example, might hit a company’s share
price hard, even before any judgment has
been given. Accredited journalists will
hopefully phrase such reports carefully, but
bloggers (some of whom are very influen-
tial) may not, and an activist with an axe to
grind may be expressly looking for com-
ments supporting their particular angle.
Whilst some of this applies equally to
comments that could be put online by leav-
ing the courtroom, tweeting from the
courtroom itself permits an ongoing “ball
by ball” commentary on a case which may
not always accurately indicate the judge's
eventual decision.
In an appropriate case, quoted compa-
nies may well face an application for court-
room tweeting. Given the potential
complications that tweeting in court
would create, they should ensure that they
oppose such an application in order to pro-
tect themselves and their business from
reputational and consequently, share price
damage.
Oliver Lawson is an associate in the Dispute
Resolution department of Stevens & Bolton LLP
 Wealth Management Foreign Exchange
CITYA.M. 30 MARCH 2011
IRELAND MAY
BE ENDING THE
RISK TRADE
BORIS SCHLOSSBERG
DIRECTOR OF CURRENCY RESEARCH, GFT
J
UST take that castor oil and swallow it. It’s good
for you.” That prescription no longer seems to be
working in the periphery economies of Europe.
From Portugal to Ireland, the public is starting to
rebel against the fiscal austerity measures imposed by
the EU and the IMF and the politicians are responding.
Last week, the Portuguese parliament rejected an
austerity budget, triggering the resignation of the
Prime Minister Jose Socrates, while putting the
country in financial limbo just as it faces its largest
issuance of sovereign debt this year. Little wonder
that the credit rating agency Standard & Poor’s
warned it may downgrade Portugal for the third time
in a week. Meanwhile, Irish government officials
roiled the currency markets over the weekend when
the minister of agriculture Simon Coveney stated
that the government wants “a sustainable and com-
prehensive solution that involves recapitalisation, but
also an element of burden sharing as well as a fund-
ing package for Irish banks.”
Under the agreement reached last year, Ireland
can impose losses on a bank’s junior debt, but the cur-
rent Irish government is seeking to amend that
arrangement by imposing new debt restructuring
terms on senior unsecured bondholders.
The government is awaiting the results of new
stress tests due tomorrow, which are expected to
show a capital shortfall of another 25bn euros on the
banks’ balance sheets. The Irish economy contracted
1.6 per cent in the fourth quarter of 2010. As its citi-
zens suffer, the government is under pressure to cur-
tail its seemingly never-ending bank bailout program.
UK and German banks are likely to be the biggest
losers in any possible restructuring proposal. Any
move by the Irish could trigger a chain reaction that
would instantly weaken UK and European banks and
force another infusion of capital from their respective
governments. The currency markets have ignored
this possibility, with speculators ploughing head on
into the risk trade. However, the risk-on dynamic can
change rapidly if the European banking sector comes
under threat. Long euro-dollar and sterling-dollar
positions are very vulnerable at the moment to a
steep sell-off.
WAITING BY THE PHONE.
LOSING SLEEP.
CANCELLING DATES.
You could say GFT customer service reps are a bit obsessed.
That’s why they’re always available to answer your questions—even if you need to ask them at 3 AM.
What else would you expect from a world-class spread bet dealer?
When trading CFDs, spot forex, or spread bets, you can lose more than your initial deposit.
Visit gftuk.com to open an account and put them to the test.
23
Watch out for Osborne’s
foreign currency plans
INVESTMENT COMMENT
PHILIP BOOTH
FEW ears pricked up on budget day
A when George Osborne announced a
surprising and potentially expensive
plan to rebuild Britain’s foreign cur-
rency reserves.
There are two methods of executing this
plan. The first is to print sterling to buy for-
eign currency. This could be regarded as
quantitative easing (QE) by another
method. Indeed, it might have been an
effective way to execute QE in 2009,
though it would probably have caused a
riot in the Eurozone as other govern-
ments – ignorant of the fact that a fall in
the exchange rate caused by loosening
monetary policy brings no lasting effect –
would have accused us of indulging in
competitive devaluations.
The second method is that the Debt
Management Office (DMO) or possibly the
Bank of England (BoE) could issue bonds Traders should pay attention to what he does next Picture: Micha Theiner/CITY A.M.
and use the funds raised to buy foreign
exchange reserves for the government. One of the great benefits of floating advice from the DMO or the BoE that we
This is expensive. The government pays exchange rates is that Britain no longer need more reserves? The £18bn of reserves
interest on the bonds and earns no interest needs foreign exchange reserves. Such he wants to buy might cost £900m a year
on the foreign exchange. It is possible that reserves benefit the foreign currency when interest rates return to normal.
Osborne is intending that we buy foreign issuer through seignorage and cost the Personally, I would prefer another penny
currency bonds rather than cash reserves. buyer the interest on the debt issued to off corporation tax.
In that case, interest would be earned on finance the purchase. If the government’s Perhaps there are ulterior motives. Is the
those bonds but there would then be inter- intention is to keep the value of sterling chancellor coming under pressure from
governmental credit risk: today’s high down, then issuing bonds to buy foreign the Liberal Democrats to prepare to fix
quality asset is not necessarily tomorrow’s. currency assets would have a relatively rates against the euro? Is his admiration of
One gets the impression from the debt slight effect and a large potential cost. low income, manufacturing economies
management reports that Osborne propos- Apparently the decision was taken after such as China such that he wants to copy
es the second route – however, it is possible intervening in the market to keep the their banking and monetary systems too?
that they were written before he decided to value of the yen down. It is also motivated It is a very strange position to take. Of all
make the announcement. by Osborne’s decision to rebuild reserves the problems the UK faces, a lack of for-
But this still leaves a big question: why from historically low levels. But reserves eign currency assets does not seem to be
are we rebuilding foreign exchange should be at historically low levels – on a one of them.
reserves at all, given that we have been on floating exchange rate, we do not need Philip Booth is editorial and programme direc-
a floating exchange rate since 1992? them. Has the chancellor taken technical tor for the Institute of Economic Affairs
SPREAD BETS | CFDs | FOREX
free phone 0800 358 0864
gftuk.com
GFT Global Markets UK Ltd. is authorised
and regulated by the Financial Services
Authority. CD03UK.142.020411.
 24 Wealth Management | Foreign Exchange
HOW TO MAKE
MORE OUT OF
EVA MENDES
TOM HOUGAARD
CONSULTING ANALYST, INTERTRADER
I
N MY last article I defined a superb trading
strategy called the Eva Mendes Reverse
Divergence strategy. Let me very briefly recap
it for you: you trade in the direction of the
trend, defined by a 50-period moving average, and
when the stochastics indicator has made a lower
low, but price is making a higher low, you have a
buy setup.
The discerning day or swing trader will natural-
ly ask when you buy. Do you just buy indiscrimi-
nately, or do you wait for some sort of
confirmation? How can you increase your chance
of success for this particular setup?
There are several solutions, and I will discuss a
couple of them here. One of them is proactive,
while the other is reactive. The difference comes
down to risk versus reward.
PROACTIVE
If the stochastics indicator is making a lower low
while price is making a higher low, you as a trader
are on the alert for a reversal back in the direction
of the trend, and you are looking to buy. One solu-
tion is to watch the key Fibonacci levels, such as
the 61.8 per cent or 78.6 per cent retracement
level. If you can get into the market at a “Fib”
level, while stochastics is setting up an Eva
Mendes, you are looking at a strong set-up, with
small risk.
REACTIVE
The other entry method is to wait for confirma-
tion. By doing so, you will essentially wait for the
market to move back in the direction of the trend,
but you will by its very nature not be in at the
turn. I use what is known as a 4-bar fractal on my
chosen time frame. A 4-bar fractal reversal is a
solid set-up, but it will never get you into the mar-
ket at key levels. The definition of it is to look at
the last four bars in your time frame, and when
the current bar closes above the high of the previ-
ous and the fourth bar, you have a buy signal.
Happy Trading.
The views and comments in this article are not
the views of InterTrader.com. The provision of this
information should not be construed in any cir-
cumstances as a recommendation or solicitation
to buy or sell any security or financial instrument.
Peking over
the top of
China’s Great
Currency Wall
Almost 50 per cent of the world’s currencies
are still controlled in come way, so investors
have to be creative, writes Craig Drake
T
HOUGH there is constant talk of
China’s rise, currency investors often
find themselves frustrated by the
apparent wall between them and the
Chinese currency. However that doesn’t
mean that those wishing to take a position
on China’s currency, the renminbi (RMB)
are without options.
On first inspection, the Chinese currency
seems as rigidly controlled as that of an oil
exporter pegged to the dollar. However, the
restrictions enforced by the People’s
Republic have relaxed significantly over the
last 40 years. From the 1970s until 1997,
non-Chinese nationals were not even
allowed to use the RMB and its denomina-
tion the yuan. They were instead issued
with foreign exchange certificates which
remained in circulation until the mid
1990s. From 1997 until 2005, the yuan was
pegged at 8.28 to the dollar. Since then it
has appreciated by just over 17 per cent in
small, tightly controlled increments.
These small increments aren’t enough
for some, who plead that the Chinese
should “responsibly balance” the exchange
rate and further revalue its currency. They
point to the boom in Chinese exports, espe-
cially those to the US and argue that there
would not be such a large trade imbalance
between the two economic giants were it
not for China’s manipulation of its
exchange rates. Despite this, China doesn’t
appear to be in any real hurry. According to
Michael Hewson, market analyst at CMC
Markets: “I don’t foresee currency relax-
ation in the near future. Although there is
CITYA.M. 30 MARCH 2011
pressure to revalue the exchange rate from
the US, they will do so in their own time.
You could argue that they will want to let
the currency appreciate. China has histori-
cally been running a surplus against which
it has faced pressure from the G20 to ‘sort
out the trade imbalance’. However, with it
running a deficit last year, China will be
more resistant to pressure to float the cur-
rency.”
Craig Farley, investment manager for the
Ashburton Chindia Equity Fund plays
down talk of rapid deregulation “I would
love to be able to say that China will open
up soon, however that talk is more hype
than reality. It is a process that will take
decades rather than happening tomorrow.
We are seeing some movement in the cor-
porate bond market, however this market
is an immature one, with most financing
in China coming through bank loans or
retained earnings.”
CORPORATE MCBONDS
Despite the lack of signs that the RMB will maturity date of September 2013.
become a free-floating currency soon, The launch of McDonald’s RMB corpo-
there are still options for investors to get rate bond could well signal the beginning
exposure the Chinese currency. of a new funding channel for foreign
Last year, Standard Chartered launched investors wishing to access renminbi expo-
from Hong Kong an RMB corporate bond sure.
for McDonald’s. They declared that it was Previous to the RMB bond, the bank has
the first RMB bond launched for a foreign already introduced RMB denominated
multinational corporate in the Hong Kong structured investments. Stating that he
debt capital market. hoped that the bond issued would help
The notes, with a 3 per cent coupon rate accelerate Hong Kong’s development as a
and an issue size of 200m yuan, were tar- RMB offshore centre, Benjamin Hung, the
geted at institutional investors and had a bank’s chief executive officer in Hong Kong
CITYA.M. 30 MARCH 2011 Wealth Management | Foreign Exchange 25

The People’s Republic

is still some way from
said “We are delighted with the pace of the
RMB market development process in Hong
the Chinese currency versus the dollar.
Based on the non-deliverable forward THE
allowing outsiders
past their exchange
Kong and will continue to expand our RMB
product offering.”
derivatives market, the fund tracks the
expectation of an increase or decrease in TIPSTER
wall the renminbi around a 0.5 per cent trading
CHINESE DENOMINATED ETFS band. US DOLLAR
Picture: GETTY Though RMB-backed corporate bonds are in China’s conservative policy of currency
their infant stages, they are not the only
way of gaining exposure.
management may actually serve as a posi-
tive for investors. According to Martin
CREEPING UP
According to Nick Beecroft at Saxo Bank,
for the near future, exchange-traded funds
Arnold, analyst at ETF Securities, “if you
look at previous periods of this policy, we
ON THE YEN

(ETF) could be the best way forward: “We
are on a gradual path towards a relaxation
of currency restrictions in China. The
decoupling of the offshore renminbi in
Hong Kong from the onshore equivalent
was a step along that road, but it will be at
least 5 years before we will be contemplat-
ing convertibility. When the market does
open up, it will be as big as any other in the
world. In terms of gaining exposure to the
Chinese currency, the best approach is via
ETFs and funds. The Chinese currency-
denominated funds are based on non-deliv-
erable forwards and seek to replicate
physical exposure to the RMB.”
ETF Securities offers one of the market’s
only renminbi-denominated ETFs. They
give the option of going short or long on
have seen increases of 5 to 7 per cent per
annum of the dollar-RMB exchange rate.
Since the middle of last year, we have seen
the pace of revaluation return to pre-2008
levels of around 4 per cent. Given this,
there is not a lot of expectation of revalua-
tion of the currency over the next 12
months. For this reason, now could present
an attractive time for investors to get into
the NDF-based ETF market while expecta-
tions are low and then profit on the
upturn.”
While we may be a while off a free-float-
ing currency in the country that is expect-
ed to emerge as the world’s largest
economy, now seems like it could be a
cheap time to buy RMB-backed ETFs and
gain from Chinese growth.
T
HE dollar is continuing to regain lost
ground against the yen, eyeing a move
back above ¥82.00, which hasn't been
sustained since the wider implications of
the earthquake and tsunami were priced into
the market around two weeks ago. The repa-
triation risk for the yen still needs to be taken
into account, but coordinated central bank
intervention has been effective so far. Dollar
bulls will now be eyeing a sustained move
higher. IG Index offers ¥81.91-¥81.94.
Stress tests on Irish banks, a political wob-
ble in Portugal, and the possibility of an offi-
cial announcement on bond restructuring
have all added severe volatility to euro pairs.
This will continue as traders wait for a con-
crete resolution. Speculation of a Portuguese
rescue is already taking euro pairs higher.
Portugal accessing the EFSF is unlikely to be
euro negative, although political complica-
tions and mandatory discounts on existing
debt would be. Alpari (UK) offers a spread for
euro-Swiss franc of SFr1.2964-SFr1.2966.
At $1.4150, euro-dollar looks a little near
the top. However, we could still see the euro
gain further against the dollar. Middle
Eastern sovereign names diversifying
petrodollars continue to buy dips in reason-
ably big size and M&A flows like the
AT&T/Deutsche Telekom deal will be euro
positive in the short-run. So with a strong
uptrend in place and moving average support,
any dips towards $1.400 should be used as a
buying opportunity. Spread Co offer a spread
of $1.40883-$1.40891.
Last week sterling reached $1.64 against
the dollar. However, cable has now fallen
every day for a week, with the immediate
outlook potentially bearish. Weak UK retail
sales for February and protests against cuts
have put the pressure on. The dollar has been
gaining in strength on the back of interest
rate rise expectations and fourth quarter
GDP being revised upwards. Capital Spreads
quotes $1.5994-$1.5996.
Philip Salter

FOREX ANALYST PICKS

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

My pick: Short euro-dollar, long euro-yen, short sterling-dollar
Expertise: Fundamental and Technical Analysis with Risk Management
Average time frame of trades: 1 day to 1 week
My short Australian dollar-Canadian dollar wouldn’t keep traction
from last week as the market-wide risk aversion effort was snuffed
out by the rebound in Japanese markets. However, going forward
there seems plenty of potential for a larger and more consistent
effort to wind down risk. Contingent on such a fundamental shift, I’d
consider a euro-dollar break below $1.40 and sterling-dollar move
below $1.5950 a clear signal with restrained size and 150-pip stops.
My pick: Short euro-dollar
Expertise: Global Macro
Average time frame of trades: 1 week to 6 months
Euro-dollar is showing a strong inverse correlation with 5-year Spanish CDS
spreads, hinting the single currency is trading on the perceived likelihood of
sovereign stress beyond the scope of the existing EFSF. This argues for a
bearish bias after the failure to expand the bailout fund and Moody’s down-
grade of Spain’s banking sector. Technically, the pair stands at key resistance,
marked by a trend-defining falling trend line set from the record high above
$1.60 (July 2008). I will look for a daily close below $1.4036 to enter short.
My pick: Long euro-Australian dollar at Au$1.3755
Expertise: Technical Analysis
Average time frame of trades: 1 week to 6 weeks
A monthly reversal from deeply oversold levels in January forced a
shift in the overall outlook for the cross, with our bias turning
aggressively bullish. As such, we view the latest inter-day pullback as
a formidable opportunity to buy back into the newly established up-
trend, with market declines stalling by some shorter-term rising
trend-line support off of the early February lows. Position: long at
Au$1.3755 for a Au$1.5000 objective.
 26 Wealth Management | Markets CITYA.M. 30 MARCH 2011

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 Lifestyle
CITYA.M. 30 MARCH 2011
Stylish and discreet, but
the food isn’t perfect yet
A swanky Italian...
with a few wrinkles
5 Pollen Street
5 Pollen St, W1S 1ND
Tel: 020 7629 1555
FOOD hhhII
SERVICE hhhII
ATMOSPHERE hhhhI
Cost per person without wine: £45-£50
W
ITH Jason Atherton’s much-
hyped Pollen Street Social to
open next month, this miniscule
back-alley behind Hanover
Square has been getting more attention
than one might expect of such a street.
And now – pipping Atherton to the
post – comes another restaurant here, also
touting the tiny little street in its name.
It’s a discreet sort of place, 5 Pollen
Street – dimly lit, dark-doored and relative-
ly un-hyped. Which is probably why Chris
Martin and Gwyneth, Gemma Arterton
and Andrew Lloyd Webber have been fre-
quenting the place.
I can see why it would be a favourite
with the very well-heeled. Never mind that
the chef is Stefano Cavalllini, who gar-
nered a Michelin star while at the Halkin.
More striking is how lovely to look at it is:
small and jewel-like, with wallpaper that’s
half botanical and half something that
could be of a more sexual nature (erotic
wallpaper seems to be the vogue – have
you looked closely at the walls of the Dean
Street Townhouse? You’ll blush).
The bar is small and inviting; the kind
where you’d shelter from a rainstorm after
hearing tragic news and order a succession
of the strongest cocktails its neat bottles
can provide. I wasn’t sheltering or in need
of anything hard, so plumped for a pink
fizz. Within seconds a bowl of enormous
glossy green olives had appeared. It was
just so.
The dining room also appeared promis-
ing because within seconds of sitting down
| Restaurants
WORDS BY
The suggestive wall-
we had a cleansing ZOE and STRIMPEL
delicious little
bowl of spring vegetables placed before
paper in the dining
room of 5 Pollen
us – fennel, radish, celery and more olives,
to dip into a little pot of oil and vinegar.
Street. But once the meal began in earnest,
things lost their spot-on-ness. As seems to
be the vogue now, starters are main-course
prices: £11-£18. So they need to be really,
really good. Yet mushroom flan with
cheese fondue and black truffle, which
sounded terrific, tasted bland; like ricotta
and mushrooms that had been simply
moulded and presented lukewarm. The
burrata salad was great, though – a big
wad of the delicious, mozzarella-style
cheese with a mound of roast veggies. At
£13 pounds, it certainly needed to be good.
We’d wanted a carby interlude of pump-
kin and chestnut ravioli with butter and
sage (£14) but they’d run out of it so - not
tempted by the waiter’s well-meaning but
slightly condescending suggestion of a
pasta and tomato sauce instead (we want-
ed chestnuts, damnit!) – we ploughed on to
mains, perhaps missing out.
And then: more disappointment. My
veal loin (a special) came “slow-cooked”
with porcini mushrooms. Usually veal is
sensational in good Italian restaurants:
pink and juicy. This was dry and severely
overcooked, like a chop my mother (a
THREE OTHER MAYFAIR ITALIANS
BY ZOE STRIMPEL
BABBO MURANO
One of Mayfair’s few homely restaurants, it’s one of the Angela Hartnett’s baby was a smash hit from the
area’s best Italians, providing rustic elegance instead of moment it opened. For my money it’s a little sterile, but
gloss and high design. The menu is rich and impressive, the food is spot on if a bit over-refined. One of the menu’s
with lots of regional favourites. Think beef carpaccio, hits is the peach and fresh almond salad with basil and
parmesan cheese, mustard sauce and capers from broad beans and the seasonal risottos are consistently
Pantelleria Island and a great big seabass in salt crust. great. A good lunch menu mitigates the expensive a la
39 Albemarle St, www.babborestaurant.co.uk carte. 20-22 Queen Street, www.angela-hartnett.com
WORDS BY
ZOE STRIMPEL
reluctant cook) might have produced
when we were growing up and she’d had a
long day at work.
On the plus side, my friend’s beef filet
with radicchio and a rich purple sauce was
very good but also a bit dry. Perhaps
they’re better at fish – there is certainly a
handsome selection of it.
For the final course, things looked up –
but again, one or two details struck us as
odd. For one thing, my cheese came with
“special breads”, which I was rather look-
ing forward to, but they turned out to be
more of the Sardinian crisp-breads we had
with our vegetable nibbles. Then there was
a plate with a pile of Jacob’s cream crackers
and other supermarket cheese crackers.
The cheese itself was a lovely selection of
Italian soft and hard, but it deserved a
more elegant accompaniment. The yogurt
mousse was flawless, though, and I don’t
doubt the other sweets would be very good
too – particularly the iced soufflé tiramisu.
At the table next to us a group of elegant
Italian sophisticates were clearly enjoying
their food. So perhaps my failure to enjoy
all aspects of the meal is my fault, not the
restaurant’s.
But so long as I’m eating top-dollar
Italian cuisine in London, not Milan, I’m
afraid I’ll be expecting a little bit better.
RISTORANTE SEMPLICE
How does homemade egg pasta with venison ragout and
black cabbage sauce sound to you? Or perhaps, squid ink
gnoccheti with sauteed cuttle fish and spinach sauce?
Well, let me tell you they’ll be as delicious as the life-
changing risotto Milanese that made the place famous.
Seriously elegant too, this is my favourite Italian in town.
9-10 Blenheim Street, www.ristorantesemplice.com
27
FOOD & BOOZE
NEWS
ZOE STRIMPEL
CELEBRATE THE ROYAL WEDDING WITH AN
ENORMOUS HESTON TRIFLE
In case you were worried about what to feed
your guests at your royal wedding party (and
who isn’t? Honestly) – Waitrose has swept to the
rescue with a cake, “created” by Heston
Blumenthal and big enough to feed 10 people.
The Royal Trifle (pictured below) is certainly a
patriotic dessert, borrowing from two British
favourites, trifle and Eton Mess. It’s also royally
delicious: layers of strawberry compote scented
with orange zest and decked with crumbed
amaretti biscuits. Marc de Champagne has
replaced traditional trifle sherry and classic cus-
tard has been swapped for cream infused with
saffron strands. Crowning it all is a ring of
meringue sprinkled with an edible confetti of
rose petals, caramel almonds and dried straw-
berry jewels. Panic most definitely over.
Available from 20 April, from £13.99.
MET BAR’S NEW BELLE EPOQUE COCKTAILS
Park Lane’s dark red and very sexy Met Bar is
relaunching forgotten classic cocktail recipes to
pay homage to “post-Victorian decadence”.
Fewer ingredients and oft-overlooked alcohol
(think vermouth, fino and port) are the lynchpin
of the new cocktails. The Mayfair Stinger com-
bines Disaronno amaretto and port; the Fino
Royal blends sherry with champagne and the
Secret Formula pairs Johnnie Walker Black
together with antica formula. New menu launch-
ing on 5 April. 19 Old Park Lane, W1K 1LB,
www.metropolitan.london.como.bz.
ANNA HANSEN’S POPS UP WITH MEZA
The Modern Pantry’s famously innovative chef
Anna Hansen has opened a pop up called Meza,
in Soho. It’s a four week treat for those who
don’t normally go to her Farringdon flagship,
with a mixture of her signature dishes, such as
the sugar-cured prawn omelette with sambal,
and okra and feta fritters, and new ones like
roast cod, chorizo, clams, squid ink mash and
samphire. There’s a pre-theatre menu of three
dishes for £15, which strikes us as an absolute
steal. Until 16 April, 100 Wardour Street, W1F
0TN. www.themodernpantryatmeza.co.uk
SAVOY GRILL PRIVATE DINING ROOM
The Savoy Grill has launched its private dining
room in partnership with Bombay Sapphire.
Decorated in silk in the gin’s famous blue, the
table seats eight and has a Baccarat crystal
decanter at the centre. Opulence incarnate.
28 Lifestyle | Motors WORDS BY
RYAN BORROFF
CITYA.M. 30 MARCH 2011

French for “bend, turn, curve”

Aston’s gorgeous us. We’re a little frazzled. Thankfully, the
new Aston Martin sat nav system – made
The Virage is elegant
but muscular with a
Virage can be both by Garmin – has got us here a treat.
The Virage has proven itself a comfort-
fulsome interior.
brutal and refined able, reliable and exhilarating compan-
ion. Not to mention versatile. Created to
slot in the gap between the DB9 and the
work out who the car is for. It’s only once
we’re into the quiet, twisty hill roads
manage to be both soothing and sup-
portive even when you’re throwing the
approaching Ronda with the Sport but-
ton on that the Virage makes utter
car around. The result is a car that can
be far more brutal than it looks yet far
sense. It’s a wonderful tourer. In Sport
mode – which adrenalises the throttle
more refined than we’ve seen in such a
package from Aston. It is also great fun;
response, quickens the gear changes more exciting than the DB9 and more

V
IRAGE is French for “bend, turn,
curve” and we’ve been testing
Aston Martin’s latest GT on the
roads of Andalucia, roads so twisty,
bendy and curvy that my co-driver has
just been sick. Later he will blame my
driving, but for now we’re trying to work
out how to wash the vomit off of the
beautiful exterior of our borrowed £150k
Aston Martin using less than 100ml of
Evian water, which is all we have left.
We are also fantastically lost. So lost
that we are driving about 45 miles across
the narrowest and twistiest road I can
remember, high up in the hills. It’s just us
plus a ragbag assortment of locals all driv-
ing white Nissan Navarros on the wrong
side of the road. I lose count of the num-
ber of times we wait stationary in the
Virage as yet another Andalucian goat
farmer edges past us within millimetres
of the car, making it all the more remark-
able that our orange Virage arrives at the
rendevouz without a scratch on it. Unlike
DBS, the car somehow effortlessly blends and sees the Virage hang on to a gear for subtle than the DBS, the Virage is a two-
the best parts of both. The Virage has the longer – the car becomes an agile, fast seat Rapide that provides first class
same 6.0-litre V12 engine found in the and exciting vehicle indeed. The gear- refinement to get you to the Alps quick-
DB9 and the DBS but tweaked to produce box is direct and quick. Changes via the ly and comfortably and then delivers on
490bhp. A six-speed Touchtronic II auto- paddle shifters see the transmission rev its promise of speed and agility when
matic gearbox is the only transmission up and down to ease the gear you get there.
option, but the car has a new change. The result is that even
Adaptive Damping System (ADS) the most average driver sounds
which can read the road condi- and feels far more heroic THE FACTS:
tions to optimise the car’s han- than he actually is. It also ASTON MARTIN VIRAGE
dling by changing the stiffness means that you get even
settings. The Virage also has more opportunity to hear PRICE: £150,000
carbon ceramic brakes which the sound of the engine, a 0-60MPH: 4.6secs
massively improve braking – roar so seductive that I TOP SPEED: 186mph
and thus confidence too. find myself driving the
All of which feels a little car with the Sport setting CO2 G/KM: 349g/km
incongruous when we’re just about anywhere. MPG COMBINED: 18.8mpg
driving on the motorway in Looks-wise, the Virage is
near silence. Aston Martin has more elegant and under- THE VERDICT:
spent a great deal of time ensur- stated than the DBS, yet still DESIGN hhhhi
ing that the refinement levels of somehow manages to be both PERFORMANCE hhhhi
the Virage emulates the levels of its beautiful and muscular. Inside PRACTICALITY hhhhi
four seat limousine, the Rapide. So the car has glass switches, beauti- VALUE FOR MONEY hhhhi
much so that it takes me a while to ful leather and seats that somehow

^^^HIHY[OSVUKVUJVT BOOK YOUR

TEST DRIVE
TODAY!
DON’T TURN YOUR BACK ON ME
I’M TALKING TO YOU!
0HHWWKH$EDUWK$VFKDUPLQJDQGSROLWHDVD
         
KRUPRQHIXHOOHGWHHQDJHU6RPXFKSURPLVHDQG
      
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RQWKHULJKWWUDFN$QGLI\RXWKLQN\RXFDQKDQGOHWKH
           
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()(9;/365+65

A WORLD OF
>0.469,:;9,,;365+65><8@
    
EMPOWERMENT 
  ABARTH 500 - WITH ATTITUDE
CITYA.M. 30 MARCH 2011 Lifestyle | TV& Games 29

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

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QUICK CROSSWORD
   

SUDOKU KAKURO
31 4 17 8 12 23 
15 10
7 9  
13 30
Place the numbers from 1 to 9 in each empty cell so that each 40  
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 13 6 11
29
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 4 8

above or to the left of it. 13 14 36 3
You can only use the digits 1-9 21 11  
    and you must not use the
10 6
45   
same digit twice in a block.
  The same digit may occur 15 22 
11 21
    more than once in a row or
column, but it must be in a 10 20
22
11
17

6 5 9
  separate block.
16 12 
27 10
  19 24
 

  ACROSS DOWN
1 Ride the waves of the 1 Father
   
  WORDWHEEL I W
sea on a board (4)
3 British snake (5)
Christmas (5)
2 Be earlier in time,
precede (6)
Using only the letters in the Wordwheel, you have 6 Probabilities (4)
    ten minutes to find as many words as possible,
O E 3 Enquire as to the
7 Close by (4)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters A 9 Variety of peach (9)
wellbeing of (3,5)
4 Belittle (9)
LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
R D 11 Mexican comrade (5)
5 Watercourse (5)
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
C C 12 Colossus (7)
8 General activity
15 Ordain (5) and motion (9)
QUICK CROSSWORD 2 8 1 5 2 3 7

T H R I L L F A
1 3 2 9 3 4 9 SUDOKU         
17 Translate (9) 10 In an opposing
direction (8)
Y O U S U R P S
7 9 8 1 9 5
         18 Keep in check (4)
P A M P A S S R 3 6 7 4 8 79 13 Enterprising or
        
E A C H A S S I S 5 8 9 4 21 19 Encircle (4)
         ambitious drive (6)
C Y N I C C Y C L E 2 9 6 4 8 7 5 13
20 Cher’s former singing
WORDWHEEL
        
A T U R O A 1 6 4 3 2 1 14 Married women (5)
S W I S S O G R E S
7 8 9 5 6 8 9
         partner (5)
T I C K E T S P H
7 2 3 2 1 7 The nine-letter word was          16 Projection shaped to
G E A S P I R E 21 Involuntary intake of
C H A I N S O L 1 5 2 8 9 2 6          fit into a mortise (5)
T N K E R N E L 4 3 1 2 6 3 8
PREACHING         
breath through a wide
open mouth (4)
 Sport
30
England boss Capello Picture: REUTERS
FA admit to
errors over
Capello deal
FOOTBALL
▲
ENGLAND chiefs have admitted they
should not have controversially
removed an exit clause from manag-
er Fabio Capello’s contract on the eve
of last year’s World Cup without con-
sulting the whole Football
Association board.
Senior figures at the FA hurriedly
amended Capello’s deal amid fears he
could walk away straight after the
tournament, only for England to suf-
fer a hugely disappointing second-
round elimination to Germany.
FA general secretary Alex Horne
said: “In hindsight, it was a whole
board decision and should have gone
to the whole board. It did not go to
the whole board.”
Horne appeared to blame former
FA chairman Lord Triesman, who
resigned for other reasons before
Capello signed the amended deal.
Horne added: “David [Lord
Triesman] was the senior member
involved as chairman of the associa-
tion and clearly felt he had the
authority to make that commitment.
It was only after he left that the board
questioned the decision.”
But Triesman hit back last night:
“It is wrong to say I made changes to
Capello’s contract without the
board’s approval. Changes to his con-
tract were negotiated after I had left
the FA and I know only what every-
one read in the newspapers.”
Murray splits with Corretja
and mulls big name mentor
TENNIS
▲
BY FRANK DALLERES
BRITISH No1 Andy Murray
has paved the way for the
appointment of a big-name
coach by parting company
with consultant and long-
term ally Alex Corretja.
The split comes after a
woeful series of defeats
since the Australian Open
final in January, most recent-
ly at the Sony Ericsson Open
in Miami, which have con-
tributed to a sense of crisis in
the Scot’s camp.
Murray (right) has been
increasingly urged to hire a
CARROLL SMILEY
Liverpool’s £35m man breaks his England duck but Gyan spoils the party with late strike
Carroll’s goal was his first at any
level since December
Pic: PA
ENGLAND
GHANA
▲
FOOTBALL
BY JAMES GOLDMAN
ENGLAND striker Andy Carroll scored
his first goal for his country last night
in emphatic style and then declared:
I’m here to stay.
The 22-year-old, making only his sec-
ond appearance for his country, pro-
duced the highlight of the night from
an England perspective with a thun-
derous left-footed strike three minutes
before half-time.
His overall display may not have been
high-profile, full-time mentor as he
looks to end his quest for a first grand
slam title, although concerns have
been raised over his willingness to
take advice.
However, the world No5’s
separation from Corretja
will be seen as a welcome
step towards addressing
concerns about the lack of
title-winning experience
in Murray’s corner.
He said: “I’ve had
a really good rela-
tionship with
Alex over the
past three
years. I have
learned so much.”
1 as impressive as on his debut against
France back in November, but by find-
ing the net so early in his
1 England career, Carroll
feels he’s lifted a sig-
nificant monkey
from his back.
“I’m coming back
fit now,” said
Carroll, who has
made just four
appearances for
Liverpool since his
£35m move from
Newcastle in January.
“Getting the goal proved
I’m here and ready to score goals
for England.
“It was great to get the goal. The lads
MURRAY MENTORS | COACH OPTIONS
Ivan Lendl: The Czech eight-time slam winner
has a no-nonsense temperament that could suit
Murray, but lacks experience as a coach
Jimmy Connors: Another hugely decorated ex-
player, the American coached his compatriot
Andy Roddick for 18 months
Darren Cahill: Australian was an unremarkable
player but became a hugely successful coach of
Lleyton Hewitt and Andre Agassi, among others
Bob Brett: Another Australian who has worked
with stars Boris Becker and Goran Ivanisevic
Mats Wilander: Swedish former world No1 has
coached Marat Safin and Paul-Henri Mathieu
CITYA.M. 30 MARCH 2011
played well, we’re disappointed they when the Aston Villa man hit the
scored in the last minute.” woodwork from six yards.
England were denied victory in a But Carroll broke the deadlock with
genuinely competitive friendly,
enhanced by the contribution
one of his already trademark powerful
finishes after Stewart Downing had
of around 20,000 Ghana fans, flicked Young’s lofted pass into his
when Asamoah Gyan (left) path.
struck a fine individual goal Despite the concession of a late
on the stroke of 90 minutes. equaliser, manager Fabio Capello was
The away fans were made encouraged by the progress of his sup-
to wait for their champagne porting cast.
moment by England goal- He said: “The players played without
keeper Joe Hart, who pro- fear, with confidence and the perform-
duced two excellent saves early ance was fantastic.
on, both from the lively Dominic “Carroll scored a goal and he’s an
Adiyiah. important player for England. He needs
At the other end Blackpool’s Richard more time and games to improve but
Kingson saved well from Ashley Young it’s always important for a striker to
and then had the crossbar to thank score goals.”
Government refuses to help BOA
in row over London 2012 profits
▲
OLYMPICS in its row with Locog over the propor-
tion of profits it receives from next
THE BRITISH Olympic Association suf- year’s Games.
fered a major blow in its battle with But Robertson said: “The
London 2012 organisers Locog yester- Government is not and cannot be a
day when the Government snubbed mediator in a dispute between two
their plea for help. private companies and I reiterated
Under-fire BOA chairman Lord that there was no additional
Moynihan (above) met sports minister Government money available to help
Hugh Robertson to ask for assistance solve the dispute.”
CITYA.M. 30 MARCH 2011 31

WINNERS &
LOSERS
Waugh: Outgoing Ponting is SPORT | IN BRIEF
Ferguson’s warning for London

one of the great captains

Having controversially opted to make
seven changes from last weekend’s win
in Wales, Fabio Capello found out a lot
about some of the men on the periphery
of his England team last night. Much of
it was encouraging, some of it, however,
was familiarily worrying.
LEIGHTON BAINES
It’s commonly per-
FOOTBALL: Manchester United manag-
er Sir Alex Ferguson has predicted
“absolute chaos” in the capital when
four teams from the north west con-
verge on Wembley for next month’s FA
Cup semi-finals. United face rivals
Manchester City on 16 April and Bolton
Ashes defeats won’t play Stoke the following day, on the
same weekend Liverpool visit Arsenal
take gloss off former and the London Marathon takes place.

ceived that Kieran Neymar dreams of Chelsea move

Gibbs will be the natu-
ral successor to Ashley
Cole as England’s left-
back, but nobody
appears to have told
skipper’s reign, says FOOTBALL: Brazil starlet Neymar
admits it would be “a dream” to join
fellow Aussie legend long-term suitors Chelsea. The Blues
failed in a bid for the teenage forward
last summer but are thought to remain
CRICKET interested, despite his hint that he would
▲

Baines. The Everton

star, like Cole, is as reli-
WINNER able in defence as he is
in attack.
GARY CAHILL
Looked by far the most
assured of England’s
back-up centre-halves.
One superbly timed
second-half slide tackle
was the highlight, but
for a player stereo-
typed by his associa-
tion with Bolton, it was
WINNER uplifting to note his
smart use of the ball.
ASHELY YOUNG
If Fabio Capello’s move
to 4-3-3 is going to suit
anyone, on the early
evidence Young is look-
ing like being the main
beneficiary. It’s a sys-
tem he’s used to playing
in at club level and his
appreciation of when to
WINNER move in off the wing
BY JAMES GOLDMAN
FORMER Australia batsman Mark
Waugh believes outgoing skipper
Ricky Ponting will go down as one of
his nation’s great captains, despite
him overseeing three Ashes series
defeats.
Ponting, 36, stood down from the
position he had held for eight years
yesterday but announced his inten-
tion to stay on as part of a side he
expects to be led by Michael Clarke.
The Tasmanian’s major achieve-
ments, chiefly two World Cup suc-
cesses and an unprecedented win rate
of 47 victories from 77 Tests at the
helm, are often overlooked as a result
of three tumultuous series defeats
against England.
But Waugh, who played alongside
Ponting during his early days as cap-
tain, argued: “His record as captain is
very good. His winning ratio is
extremely high. Statistically he’s
going to go down as one of Australia’s
great captains, no doubt about it.
“He’s a great leader of men, he’s got
Ponting won 47 of his 77 Tests as Australia’s captain
prefer a move to Italy. “Chelsea’s a great
club,” he said. “It’s a dream of every
player to play at Chelsea. If one day it
happens, I will be very happy to come.”
Olympic Stadium work finished
OLYMPICS: London 2012 chiefs yester-
day declared building work on the
Olympic Stadium complete after the
final piece of turf was laid by former
sprinter Frankie Fredericks and organis-
ing committee chairman Lord Coe. The
track has not been finished, however,
and the surface will only be laid later
this year in order to protect it.
Results
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was impressive.
JOLEON LESCOTT
Looks less an interna-
tional footballer with
each passing appear-
ance. Lucky not to con-
cede a penalty and
made to look foolish by
Asamoah Gyan for the
equaliser. Surely it
would be more produc-
LOSER tive to promote Chris
a lot of respect from the players and
he’s a great player. You’ve got to say
that he’s going to look back with
great pride and adulation at what
he’s done as captain.”
Defending his own record, Ponting
added: “It’s funny how we talk about
losing the Ashes series three times.
Playing on three World Cup winning
teams doesn’t come up very often,
winning 16 consecutive Test matches
doesn’t come up very much, winning
30-odd consecutive World Cup match-
es doesn’t come up very often.
Sri Lanka set up perfect send-off for Murali
SRI LANKA captain Kumar
Sangakkara hailed bowler Muttiah
Muralitharan as an “icon” as his side
cruised into their third World Cup final
with a five-wicket win over New
Zealand.
The match, played in Colombo, was
the last to be played by Muralitharan
on home soil before he retires from the
game after Saturday’s final against
Mohali today. The spinner, far from
fully fit, took two for 42 as the Kiwis
were restricted to 217 all out and Sri
Lanka eased home with 13 balls left.
Sangakkara, who scored 54 and
won the man-of-the-match award,
said: “Murali is the icon of Sri Lanka -
as a champion, a cricketer and a
human being He is the ultimate team
man. You cannot ask for anything more
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England star
Foden arrested
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familiar face back in 2013

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after night out >IFLG@

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ENGLAND full-back Ben Foden is
being investigated by his club
Northampton after being arrested on
suspicion of causing criminal damage
on a night out in London.
Foden and a 23-year-old man were
held in the early hours of Monday
morning and bailed later in the day
following an alleged incident involv-
ing a taxi driver on Old Park Lane.
The Saints star is thought to have
his low points, notably against
England, he’s never hidden and
always stood up for his team.
Those who think he’ll slope off into
the sunset will be mistaken though. I
don’t think he’ll have any problem
slotting back into the team and he
remains his side’s best batsman.
CRICKET COMMENT If anything, relieved of the pres-
sures of captaincy, Ponting may well
ANDY LLOYD be given a new lease of life. It depends
on his attitude and his desire, but
PS TOUGH DILEMMA FOR STRAUSS
WHILE Ricky Ponting’s tenure came to
a natural end, I don’t believe the time
is right for England’s Andrew Strauss
to relinquish the one-day captaincy.
With Paul Collingwood’s interna-
tional career seemingly over, there is
no natural safe pair of hands to pass
the responsibility to. Stuart Broad is
too young and although I’d like to see
Ian Bell given the job, he’s not certain
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been celebrating his side’s emphatic
win over Wasps on Sunday afternoon.
Governing body the RFU said it
would monitor the outcome of the
police investigation before deciding
whether to take action.
A
S AN international cricket cap-
tain you can only hope that
when your time is up you can
leave the position with dignity.
Thankfully, Ricky Ponting had the
benefit of that when he announced
his retirement and although he’s had
from everything we know about him,
I’m sure he’ll have his eye on an Ashes
series in England in 2013.
I wouldn’t be surprised one bit if he
was still an integral part of Australia’s
batting line-up when that series
comes around.
of his place. Jk\e_flj\dl`i%%%%%'  ) ;ldYXikfe%%%%%%%%%%%%%%%%'  )
Strauss’s relationship with coach K?@I;;@M@J@FE
Andy Flower and the ECB is strong, 8eeXe8k_c\k`Z%%%%%'  ' :cp[\%%%%%%%%%%%%%%%%%%%%%%%%%%%(  )
and if they want him to stay on, 9\in`Zb%%%%%%%%%%%%%%%%% )  * JkiXeiX\i%%%%%%%%%%%%%%%%%% )  *
although it may not suit his priorities, Hl\\ejGXib%%%%%%%%%%'  ( Dfekifj\%%%%%%%%%%%%%%%%%%%'  '
he may be forced into a tough position.
email sport@cityam.com
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