Forget Exit Polls: City Facing New

BUSINESS WITH PERSONALITY
Neil was a successful commodities trader in the City. But he wanted more.
To book your place and read Neils story visit www.cassmba.com The Cass MBA. Inspiring stories. Cass MBA Evening Information Session:
Thursday 8 November 2012
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Inspiring stories.
America votes
in historically
tight election
VOTING is underway in one of the
fiercest US elections in history, with
the race likely to come down to
whichever candidates voters turn
out on the day.
Neither competitor holds a clear
lead: Barack Obama has the edge by
48 per cent to 46 in the final
Reuters/Ipsos poll but Mitt Romney
led in other surveys, including one
by Rasmussen.
Yesterday polling firm YouGov
called the race for Obama, saying
voter surveys would have to be
systematically wrong to allow a
Romney victory.
Such a tight race has led to the
very real prospect Obama could
receive fewer votes than his rival
but still take the presidency due to
the electoral college system.
The first states are expected to
declare their results shortly after
midnight UK time.
Barack Obama, left, and Mitt Romney, right
www.cityam.com FREE
CNBCS KELLY EVANS ON TRACKING THE
DOLLAR TO PREDICT A US WINNER
FTSE 100 5,839.06 -29.49 DOW 13,112.44 +19.28 NASDAQ2,999.66 +17.53 /$ 1.60 unc / 1.25 unc /$ 1.28 unc
FORGET EXIT POLLS
ISSUE 1,754 TUESDAY 6 NOVEMBER 2012
STOP SQUEEZING THE
PRIVATE SECTOR
Ryan Bourne in the Forum, See Page 28 See Page 32
HYHYHYHYHYHYHY: Page XX

Certified Distribution
27/08/12 til 30/09/12 is 128,785
BY JAMES WATERSON
LONDON'S FINANCIAL SECTOR SET TO SHRINK FURTHER
Number of people working in City-type jobs in London (Cebr calculations)
375,000
325,000
275,000
225,000
2
0
0
0
2
0
0
5
2
0
1
0
2
0
1
5
financial transactions, said
Douglas McWilliams, chief execu-
tive of CEBR.
The business model for many
firms in the City which was based
on taking a percentage from yields
of eight per cent plus has to
change in a world where low yields
are likely for many years to come.
CEBR predicts the number of
London financial services jobs will
bottom out at 236,000 in 2014
before returning to limited growth
in the following years.
However the organisation has
already had to substantially revise
down its prediction for 2013 and
warns that deeper cuts into the
muscle are on the horizon.
Much of the blame lies with a
downturn in City activity since the
middle of this year. Equity trading
is down by around 20 per cent, gilt
trading is down by a third and even
THE NUMBER of jobs in the City is
set to hit a 20-year low as London
firms continue to lay off staff in the
face of ongoing economic turmoil.
City A.M. has been given exclusive
access to figures from the Centre
for Economics and Business
Research (CEBR) and the progno-
sis for Londons financial services
industry is not good.
The consultancy estimates
237,000 people will work in City-
type jobs in 2013, down a third on
pre-crash levels. This represents the
lowest number of financial services
roles in the capital since 1993.
At the height of the boom years in
2007, the number of financial serv-
ices jobs in Canary Wharf, the West
End, the Square Mile and else-
where hit a record high of 340,000.
In a further sign that the econo-
my is still struggling, the figures
come the day after a survey of pur-
chasing managers showed slower-
than-expected growth in the
broader UK services sector during
October.
The fall in activity is partly a
function of the weak economy,
partly a hangover effect from the
financial crisis and partly caused
by increasing regulation which lim-
its access to bank cash to bankroll
EXCLUSIVE
BY JAMES WATERSON
CITY FACING NEW
JOBS BLOODBATH
the generally resilient foreign
exchange markets have seen a
reduction in activity.
But investment banks have suf-
fered most of all as M&A activity
has almost ground to a halt.
Total UK deal volume dropped 29
per cent between the second and
third quarters of 2012, according to
Thomson Reuters. This year there
has only been one major IPO on the
main London market insurer
Direct Line Group and that only
occurred because RBS was obliged
to dispose of the unit on orders
from the European Commission.
As a result of these market pres-
sures, last week UBS announced
substantial job cuts at its invest-
ment banking arm, with around
3,000 of the banks 6,600 London
staff facing compulsory redundan-
cy. Some traders at the banks
offices by Liverpool Street turned
up to work last Tuesday only to find
that their keycards had been dis-
abled and they had been put on
leave with immediate effect.
Nomura, Deutsche Bank and
Credit Suisse have also announced
substantial job cuts that will affect
the City. Not only will frontline
staff be affected, but back-office
admin roles will also go as leading
firms wield the axe.
ALLISTER HEATH: Page 4

SPOTLIGHT ON
US ELECTIONS
See pages 11, 28, 30, 32
GLOOMY PMI FIGURES: Page 5

DISCOVER JOHN HARDYS VIEWS
ON THE FEDS EFFECT ON THE
US CURRENCY #FXDEBATES
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another round of QE? Or will
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Bonuses of top
execs fall 4.9pc
FTSE 100 directors have seen their
bonuses crash over the last year,
according to new figures released
this morning.
Bonuses are down 4.9 per cent in
the last year for directors on the
boards of the top 100 companies on
the FTSE, Incomes Data Services
(IDS) unveiled today.
Pay growth was narrowly above
the rate of inflation, rising 3.5 per
cent, the report said.
The consumer price index level of
inflation was 4.8 per cent at this
time last year, but fell to 2.2 per cent
in September. The retail price index
was at 2.6 per cent in September.
Whether a reaction to govern-
ment pressure, shareholder con-
cerns or a worse than expected
business environment, it seems the
brakes have been applied to the
basic pay growth for FTSE-100 boss-
es, said Steve Tatton, editor of the
IDS Directors Pay Report 2012-13.
Yet top City earners will have been
relieved to see the value of their
long term share awards increase
considerably.
The value of long term incentive
plans (LTIPs) has soared, providing a
boost to the Citys high level execu-
tives. The worth of these long term
reward systems rose by 81 per cent
from a median of 519,625 in 2011
Italian police seize castle in tax probe
Italian police have confiscated 65m of
assets, including a 15th century castle,
from the Marzotto family for suspected tax
evasion connected to the 2007 sale of the
Valentino fashion brand. The Marzottos are
under investigation over the 2.6bn sale
of Valentino and its Hugo Boss subsidiary
in Germany to the UKs Permira.
VW to issue 2bn of debt
Volkswagen, Europes biggest carmaker
by sales, is set to replenish its capital
reserves following a spate of acquisitions
and planned investments by issuing at
least 2bn of debt that must be converted
to equity.
Stifel to purchase KBW for $575m
KBW, a boutique investment bank that
lost scores of employees in the World
Trade Center attack but managed to
rebuild in the years since, has been
acquired by Stifel Financial for $575m in
cash and shares. In the years since it lost
64 of its 224 employees on 11 September
2011, KBW has recovered with the support
of other banks on Wall Street.
Talking ATMs for the blind
Barclays has installed technology to make
three quarters of its cash machines talk
so they can be used by blind customers, it
was announced yesterday. More than
3,000 of Barclays ATMs now have audio
technology.
Amazon at your convenience
The introduction of collection lockers in
Britains biggest independent
convenience store chain is being hailed as
a breakthrough for Amazon.
Britons plan to work in retirement
One in three Britons doesnt plan to give
up work when they reach retirement age,
rising to four in 10 over-55s, according to a
survey by NOW: Pensions. It found one
third of Britons were not contributing to
any kind of savings plan.
David Cameron defends arms deals
Selling arms to Saudi Arabia and the
United Arab Emirates is legitimate and
right as autocratic countries have a right
to self defence, David Cameron said
yesterday on a three day visit to the region.
GM bolsters its credit line
General Motors disclosed yesterday that it
has secured a new $11bn revolving line of
credit, bolstering the auto maker's
liquidity as it grapples with a potentially
costly restructuring in Europe and
significant pension liabilities at home.
HarperCollins closes warehouses
HarperCollins Publishers said yesterday it
is closing its last two warehouses in the
US, a sign of how the growth of digital
books is prompting book publishers to
rethink how they distribute print books.
TODAYS prediction that the
number of City jobs will continue
to fall can be directly linked to a
recent collapse in trading activity
on the London markets.
Despite signs of green shoots
elsewhere in the economy the City
continues to struggle, causing
many leading firms to re-examine
their cost bases according to the
Centre for Economics and
Business Research.
Equity trading has suffered,
with volumes on the London Stock
Exchange and Alternative
Investment Market down by
around 20 per cent year-on-year.
Perhaps more worryingly, the
international order book on the
London Stock Exchange has fallen
even further, completely reversing
last years trend.
Meanwhile turnover in the
secondary market for gilts has
plummeted, as the Bank of
England now owns much of the
stock.
Even currency trading which
grew by around 25 per cent in the
twelve months to April 2011 has
fallen back this year.
But the main concern remains
M&A activity. The value of
domestic deals, which showed
signs of a small recovery in 2010,
fell by a more than 35 per cent last
year and is set to keep falling.
City job losses
due to fall in
trading volume
4
NEWS
BY JAMES WATERSON
BY JULIAN HARRIS
To contact the newsdesk email news@cityam.com
I
T is time to start worrying about
Londons financial and business
services industry. The City is in
crisis, with job cuts spiralling out
of control. As we report on our front
page, City-style jobs investment
banking, securities, corporate
finance, trading, research, derivatives
and forex, fund management
(including hedge funds and private
equity), insurance and professional
services, including corporate law,
accounting and related consulting in
the Square Mile, Canary Wharf, West
End, Southwark and other clusters
are collapsing at an even faster rate
than previously thought.
The number of City-style jobs
peaked at 354,134 in 2007; they are
now down to just 249,512, according
to the Centre for Economics and
Business Research (CEBR), and will fall
to 237,036 in 2013 and 236,494 in
EDITORS
LETTER
ALLISTER HEATH
City jobs bloodbath shows that backlash has gone too far
TUESDAY 6 NOVEMBER 2012
2014, the lowest since 1993. The num-
ber is then set to stagnate, according
to the CEBR, whose figures are widely
respected. One out of three posts will
have been axed since the height of the
bubble. The composition of the
remaining jobs has also changed,
with compliance roles on the rise.
Some, of course, will rejoice. But
those with more sense will realise
this bloodbath is no mere cyclical
retrenchment but something more
serious, and that fewer high-paying
jobs means reduced tax receipts, a
drop in exports and reduced con-
sumer spending. Everybody wants to
reform finance to make it more
resilient and more needs to be done
to make sure that bailouts and implic-
it subsidies are banished forever, and
crooks jailed but there is a differ-
ence between reform to strengthen
the system and wanton destruction.
As the CEBR notes, equity trading is
down 20 per cent year on year; inter-
national orders for equity trading
have collapsed by half; gilts trading is
down by a third; currency trading is
down 5 per cent the first fall since
2009; UK M&A activity has fallen by a
third during this year and interna-
tional M&A has fallen even more.
Company floats are a rarity and deriv-
atives are down by a fifth this year.
The carnage in the City is also being
reflected in the overall UK services
including collateralised debt obliga-
tions made out of sub-prime loans. All
of this is rightly being swept away;
tragically, some of the cuts at places
like UBS make economic sense.
But in other cases, capital require-
ments and other forms of regulation
have gone too far and activity that
ought to be viable is being wrongly
culled. The regulatory move away
from bonuses and towards higher
base pay has hiked fixed costs, which
are now having to be slashed; the old
system was more flexible in a down-
turn. We have gone from extreme
moral hazard to extreme risk aver-
sion. The former ended in a phenom-
enal bust; but the latter could cripple
London for years to come. We urgent-
ly need a more balanced approach.
sector: yesterdays purchasing man-
agers index fell to 50.6, a 22-month
low. The composite index which also
includes manufacturing and con-
struction is back below 50, suggest-
ing the economy is contracting again.
There are two reasons for the Citys
woes: the first is the state of the econ-
omy and the second regulation and
tax. Little can be done about the first
issue of course, the City had grown
far too bloated during the bubble
days. It is good (though sad for staff)
that economically unviable activities
that were only ever possible thanks to
leverage or excessive liquidity have
now been liquidated. Banks held too
little capital; their assets were insuffi-
ciently liquid tighter capital require-
ments means that some activities are
rightly being chopped. Daft mergers
were going ahead, fuelled by cheap
credit. Stupid products appeared,
to 938,888 this year, the report said.
And for chief executives, the value of
vested LTIPs reached a lucrative medi-
an of 1.6m.
When equity prices were low, as in
2008 and 2009, directors were allocat-
ed a large block of shares, Tatton
explained. When share prices have
subsequently risen, as they have since
the depth of the recession, directors
have had the potential to profit from
windfall LTIP gains.
The effect of the rise in LTIP value
means that total earnings are up by a
median rate of 10 per cent, according
to the figures. The median of FTSE
100 CEOs total earnings was 3.2m.
LTIPs are now used by more than
90 per cent of the FTSE-100 and are
designed to incentivise directors over
a longer term period, IDS explained.
They are typically granted in the
form of shares and are closely linked
to shareholder returns, with directors
typically having to reach a minimum
target before any shares are granted
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
UK foreign exchange turnover annual percentage change
30%
April 2009 October 2009 April 2010 October 2011 April 2011 October 2012 April 2012
20%
10%
0%
-10%
-20%
-30%
M&A activity in UK by domestic companies annual percentage change
-60
-40
-20
-80
0
20
40
60
50 %
2004 2006 2008 2010 2012
M&A activity in UK by foreign companies annual percentage change
2004 2006 2008 2010 2012
-50
0
-100
50
100
150
200
250 %
International order book on London Stock Exchange annual percentage change
Sep2007 Sep2008 Sep2009 Sep2010 Sep2011 Sep2012
-50
0
-100
50
150
100
200
250
300 %
Blue = Value
Red=Volume
3.5%
WAGES
4.9%
BONUSES
SHAREHOLDERS in UK Coal, the
biggest coal mining firm left in
Britain, yesterday accepted plans to
dilute their ownership of the
company in a bid to save the firm
and their investments.
UK Coal investors, including Peel
Holdings, UBS and Pelham Capital,
unanimously backed plans to
isolate the mining part of the
business and spin off its lucrative
property assets. Investors will get a
minority 24.9 per cent stake in the
separated property company,
forgoing their dominant ownership
of UK Coal in return for profiting
from sales of its extensive property
assets. The deal is a last ditch
attempt to salvage the firm which is
drowning under an ocean of debt.
Investors have seen shares in the
firm crash from nearly 6 to just 5p
since 2008. The firm also has a
heavily indebted pension scheme.
The plan gives the scheme majority
control of the rest of the property
business in a debt for
equity deal.
UK Coal hews
out a deal to
dilute owners
BY MICHAEL BOW
UK Coal boss
Jonson Cox
5
NEWS
cityam.com
A

D
a
i
m
l
e
r

B
r
a
n
d
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A FORMER City broker was locked
up for 13 years yesterday after
defrauding investors out of
millions of pounds to finance his
lavish lifestyle.
Nicholas Levene, 48, lost an
estimated 32m of investors
money between 2005 and 2009
after diverting funds given to him
by investors into his own accounts.
Levene used 18m of the cash
obtained to buy property in the UK
and Israel and spend on overseas
travel and holidays before he was
caught in 2009.
Levene pleaded guilty to 12
Former City stockbroker is sent
down for defrauding investors
BY MICHAEL BOW counts of fraud, one of false
accounting, and one of obtaining a
money transfer by deception ahead
of the start of a trial in September.
Yesterday he was sentenced at
Southwark Crown Court to 13
years.
Judge Martin Beddoe,
sentencing, said: It was a fraud
from the outset, where countless
lies were told. It was rank
dishonesty. There were separate
acts of individual moments of
betrayal.
The Serious Fraud Office, which
brought the case, said Levene had
used the money to finance a
lavish personal lifestyle.
Nicholas Levene pleaded guilty to 14 counts in September following an investigation
THE UK SERVICE sector made a weak
start to the fourth quarter, falling to
its slowest rate of growth in nearly
two years, according to a business sur-
vey out yesterday.
Analysts said the sharp slowdown
added to the likelihood that GDP will
move back into contraction in the
fourth quarter, and could boost the
case for more quantitative easing (QE)
at the Bank of Englands meeting on
Thursday.
Markits service sector purchasing
managers index (PMI) dived to 50.6 in
October, from 52.2 in September the
22nd consecutive month of growth,
but also the slowest of the stretch.
Combined with an accelerating
downturn in manufacturing, and
continued gloom in construction,
analysts forecast declining UK GDP
over the fourth quarter.
This is just the latest reminder that
we should not get too carried away by
strong GDP growth in the third quar-
ter, said Robert Wood at Berenberg.
With manufacturing output suffer-
ing from weak exports and domestic
demand and the service sector flirt-
UK services in
slowest growth
for 22 months
BY BEN SOUTHWOOD
ing with contraction, a fall in GDP in
the fourth quarter now looks most
likely, Wood added.
Though Wood thought the data, and
its worrying implications, would have
little effect on the Banks decision on
QE at the November meeting, when
the previous batch of stimulus comes
to an end, other analysts disagreed.
Even though recent speeches by
monetary policy committee members
have been against more QE, disap-
pointing results for Octobers PMI sur-
veys could mean the vote for further
asset purchases this month will be a
close one, said Nida Ali at Ernst &
Youngs Item Club.
UK service sector slows down to marginal growth
Jan12 Jan10 Jan08 Jan06
66
62
58
54
46
50
38
42
PMI ServicesActivityIndex
GLOBAL PMI FIGURES: Page 24

UBS has shaken up its investment
bank management just days after the
Swiss bank revealed it is winding
down its fixed income operations and
cutting 10,000 staff.
New investment boss Andrea Orcel
has led the reshuffle, months after
joining from rival Bank of America
Merrill Lynch.
Orcel has shifted former co-head of
the advisory business Simon
Warshaw into a new role in corporate
client solutions.
Warshaw is widely regarded as one
of the old guard, a veteran from SG
Warburg which UBS acquired in 1995.
He is now taking charge of client-
facing initiatives, the bank revealed
in a memo seen by City A.M., though
the exact nature of his projects are
not yet known.
The overall shake-up reforms the
whole structure of the investment
bank.
Instead of being organised by prod-
uct group, the arm is now arranged
into client groups with the aim of
offering a broader range of services in
a more unified fashion.
The two branches are corporate
client solutions and investor client
solutions.
The corporate arm is comprised of
operations including equity capital
markets, debt capital markets and
leveraged finance, and will generate
UBSs top tier
shaken up by
new boss Orcel
BY TIM WALLACE
one-third of investment banking rev-
enues, with David Soanes heading
EMEA, Steve Cummings the Americas,
Matther Grounds heading up Asia
Pacific and Rajeev Misra responsible
for financing solutions globally,
Investor client services includes trad-
ing, post-trade services and wider part-
nerships in fund investments.
Mike Stewart now heads equities
globally, Chris Vogelgesang and
George Athanasopoulos both head FX
and precious metals, while Chris
Murphy heads rates and credit.
All of those heads report to Orcel.
We are now positioned to excel on a
global stage in the businesses where
we have chosen to compete, and have
the resources to invest, from talent
through to technology, he told staff
in the memo. We will now be in a
completely new category to other
banks and financial services institu-
tions.
UBS AG
5Nov 30Oct 31 Oct 1 Nov 2Nov
14.80
14.60
14.40
14.20
13.80
13.60
14.00
CHF
14.40
5Nov
MORE BANKING: Pages 8 and 12

7
NEWS
cityam.com
PROFILE: SIMON WARSHAW
UBS was last night playing down rumours of
a power struggle in the investment bank,
insisting that the new management set up
simply reects the rms new focus around
the client.
Andrea Orcel a renowned deal-
maker and charismatic banker
is believed to polarise opinion
of other managers.
But sources at the bank denied
that is the reason for former
advisory co-head Simon
Warshaw to move away from
management and into a client-
facing position.
This is absolutely not a
demotion it is simply a change of focus for
Simon, said the source.
It is a completely normal progression. He
has had several years in his management
role and is moving to something he likes
doing on the client side.
Before he took the new position,
Warshaw was joint head of investment
banking and a member of the arms
executive committee.
Before that he was head of EMEA
investment banking, which came after
he jointly-headed the unit in the UK.
Previously he ran the media
investment banking busi-
ness for the division.
Osborne pledges joint action
over corporate tax avoidance
GEORGE Osborne vowed to clamp
down on corporate tax avoidance
yesterday, calling for concerted
international co-operation to
strengthen international standards
for corporate tax regimes.
The chancellors statement,
delivered in tandem with German
finance minister Wolfgang Schuble
at a G20 meeting in Mexico
yesterday, came as officials from HM
Revenue & Customs (HMRC) were
grilled by the Public Accounts
Committee over the Treasurys tax
BY JAMES TITCOMB
take. The committee is looking into
the tax affairs of large international
corporations.
Lin Homer, the HMRCs chief
executive, told the committee that as
things stand she was currently
unable to prevent multinationals
from paying minimal rates of tax in
the UK, an issue that has received
increased scrutiny of late.
The likes of Starbucks, Apple and
Google have come under fire for
diverting UK profits offshore to
countries with lower tax rates.
All HMRC can do is to apply the
laws, Homer said. In an
international setting multinational
businesses can choose to an extent
where some parts of their business are
based and where some of their profits
are based.
Homer was also accused by Labour
MP Austin Mitchell of focusing on
smaller firms less able to challenge
HMRC, a charge she denied.
Osborne said he wanted to see a
competitive UK tax regime, but that
firms must be required to pay those
taxes. That is best achieved through
international action in the G20 and
other relevant international fora to
ensure strong standards, he said. The chancellor has warned firms to expect concerted anti tax avoidance efforts
AUSTRALIAS Federal court issued a
landmark judgment yesterday that
Standard & Poors misled investors
by giving its highest rating to
derivatives that lost almost all their
value in the run-up to the 2008
global economic crisis.
The Australian case marked the
first time a ratings agency had
faced trial over the complex
financial products widely cited as
one of the factors that triggered the
crisis and could set a precedent for
future litigation around the world.
In a strongly worded judgment,
Justice Jayne Jagot said S&P and
ABN Amro had deceived 12 local
councils that bought the triple-A
rated CPDO, or constant proportion
debt obligation, notes created by
the bank.
The councils were assured the so-
called Rembrandt notes bought
from Australian Local Government
Financial Services (LGFS) in late
2006 had a less than one per cent
chance of defaulting. Within six
months, they had done just that
and the councils lost A$16m
(10.4m), or 90 per cent of the funds
they had invested.
Jagot awarded the 12 councils in
New South Wales state a total of
about A$30m for losses and
damages.
S&P said it plans to appeal the
ruling.
S&P is guilty
of misleading
investors in Oz
BY CITY A.M. REPORTER
8
NEWS
cityam.com
JP MORGAN and Morgan Stanley
both changed their top investment
banking teams yesterday, while
Goldman Sachs added a new
director to its board.
Morgan Stanleys Paul Taubman
stood down, ending a two-year
stint of co-heading the banks
securities division.
Colm Kelleher, the other co-
head, is staying in charge of the
trading and banking unit.
And former Credit Suisse
banker David Clarkson now heads
JP Morgans prime brokerage unit
in Europe, the Middle East and
Investment bank staff shake up
now spreads to Morgan Stanley
BY TIM WALLACE Africa.
He also used to work for
Deutsche Bank, in equity swaps,
and Arthur Henderson as a
chartered accountant.
Meanwhile Goldman Sachs said
Mark Tucker, the chief executive
of AIA, would be joining its board
as an independent director. It also
revealed 30 partners have left
since February, taking the total to
407. However, Goldman will
announce new partners and
managing directors later this
month in its biennial
appointments round, which will
allow a fuller analysis of how the
firms staff is changing.
Morgan Stanleys Paul Taubman resigned after two years as joint head of securities
HSBC might have to hike its provi-
sions for US fines for allowing money
laundering, the bank said yesterday,
as the final cost could rise well above
the $1.5bn (939m) it has set aside so
far.
Poor controls meant Mexican drug
dealers used HSBC without the
banks knowledge to launder
money. Chief executive Stuart
Gulliver warned the final bill could be
substantially higher than the
amount set aside so far.
HSBC also set aside another $353m
to cover payment protection insur-
ance (PPI) compensation claims, and
warned claims are not yet slowing.
Combined with a change in the
value of its own debt, those costs
dragged HSBCs profits down to
$3.5bn in the quarter, down more
than 50 per cent from $7.2bn in the
same period of 2011.
But the bank pointed to underlying
profits to $5bn, up 125 per cent on the
third quarter of last year.
Tougher cost controls helped the
bank has cut headcount by 21,300
HSBC warns bill
for laundering
may rise higher
BY TIM WALLACE from the end of 2011, to 266,700, and
is set to chop more in the coming year.
And the bank is also cutting its risky
lending. Interest margins fell as the
bank pushed ahead with its new strat-
egy of operating a low-risk business.
By selling its US credit cards business
earlier this year HSBC cut average
interest margins but also reduced its
exposure to bad loans, improving its
earnings figures as a result.
We are changing the business mix
to lower risk lending, which tends to
be secured, reducing the net interest
spread but gives a much reduced loan
impairment charge, said Gulliver.
HSBC Holdings PLC
625
620
615
610
p
617.80
5Nov
Nat Rothschild bought into Bumi in 2010
10
NEWS
cityam.com
Bumi PLC
280
270
260
250
240
p
279.00
5Nov
Bumi confirms Nat Rothschild
has offered alternative to break
COAL miner Bumi yesterday
confirmed it had received a letter
from co-founder Nat Rothschild
proposing an alternative to the
Bakries $1.4bn (877m) plan to
dismantle the London-listed
miner.
Last month, following an
investigation into alleged financial
irregularities at Indonesian arm
PT Bumi, the Bakrie family
proposed selling its stake in
London-listed Bumi and taking
back the coal assets it brought in
BY CATHY ADAMS
two years ago.
Bumi said yesterday that it had
hired investment bank Rothschild
Group to evaluate the proposal put
forward by Nat Rothschilds vehicle
NR Investments, as well as
considering the Bakries plan.
The Bumi board will also
consider the proposals, although
the FTSE 250 miner stressed that it
would wait until the legal
investigation into the irregularities
by law firm Macfarlanes was
appropriately advanced before
making any recommendations.
It is understood that Rothschild
has been speaking to Indonesian
investors with regards to the
proposals, but no further detail has
been made available due to
confidentiality agreements.
It is thought that the proposal
from Rothschild was a letter
detailing possible alternatives to
the Bakrie plan rather than a
formal offer, although an offer
could follow on going forward.
In a separate statement, Bumi
said that it had reclassified PT
Bumi as an investment, as recent
developments meant it was no
longer appropriate for Bumi to
account for its shareholding as an
associate company.
SIGNS of improved spending on the
high street have proved to be
something of a damp squib after
retail sales in October slowed to
their lowest growth in 11 months.
Following strong sales the
previous month, like-for-like retail
sales fell 0.1 per cent in October
compared with the same time last
year, the British Retail Consortium
(BRC) and KPMG sales monitor
showed this morning.
Total sales rose 1.1 per cent the
lowest growth since November last
year. With a three-month average
of 3.4 per cent, food proved more
resilient. But when stripping out
inflation, growth was stagnant.
It looks like the modest sales
revival we saw in September was
something of a false dawn,
Stephen Robertson, BRC director
general said. This underwhelming
showing means theres all to play
for as Christmas approaches.
Visas monthly figures also
showed household spending fell
2.9 per cent in October after two
consecutive months of growth.
UK retail sales
fizzle out after
spending falls
BY KASMIRA JEFFORD
THE PACE of expansion in the US
services sector slowed in October,
figures revealed yesterday,
depriving President Barack Obama
of a timely boost to his campaign
for re-election.
The Institute of Supply
Management (ISM) non-
manufacturing reports headline
index came in at 54.2 last month
compared to 55.1 in September,
disappointing economists.
With any reading above 50
indicating economic expansion in
the sector, the number reflected a
34th consecutive month of growth.
The index contained fuel for
bears, nonetheless, and was the
first time since June that the
measure had revealed a slowdown
in the sectors expansion.
Worryingly, the main indicators
of activity and demand fell
particularly sharply, with the
resulting drop in the composite
PMI softened by an improvement
in the employment index, said
Chris Williamson of Markit.
The concern is that, unless
growth of new business picks up,
the employment numbers could
fade again in coming months.
The forward-looking new orders
gauge fell to 54.8 from 57.7, while
the measure of employment gained
to 54.9 from 51.1. Business activity
fell from 59.9 to 55.4.
Slowdown for
growth in US
service sector
BY JULIAN HARRIS
A VICTORY for Republican candidate
Mitt Romney in todays US
Presidential election could cause the
Dow Jones to jump by a huge 500
points, it was suggested this morning.
Analysts and investors are expect-
ing incumbent Democrat Barack
Obama to retain the top seat in the
White House, with such an outcome
believed to be priced into markets.
A surprise Romney win could there-
fore cause a significant jolt.
There would be an initial market
bounce of perhaps 500 points on the
Dow because a Romney victory is not
priced in, said Douglas McWilliams,
chief executive of the Centre for
Economics and Business Research
(CEBR), today.
A President Romney has promised
a radical departure [from Obamas
fiscal policy], with bigger budget cuts
and tax cuts. And he would be per-
ceived as pro-business which might
boost the financial markets,
McWilliams added.
Yet Romney may be more hostile to
the Federal Reserves dovish chair-
man, Ben Bernanke, with the possi-
Economist says
Dow would soar
on Romney win
BY JULIAN HARRIS
bility of a Romney victory convincing
Bernanke to quit before his term is
due to end in January 2014.
A more hawkish Fed chief, less like-
ly to pursue its ultra-loose monetary
policy, could affect markets by lead-
ing to fewer asset purchase pro-
grammes, known as quantitative
easing (QE).
My guess is that Bernanke wishes
to step down anyway and that the
need for additional QE is diminishing
unless the world economy takes
another step downwards,
McWilliams said.
Despite its mammoth government
debts, the US economy appears to be
on a stronger road to recovery than
other wealthy regions. McWilliams
says this cannot be attributed to fiscal
stimulus across the pond.
The OECD shows that between
2009 and the estimated position for
this year the US has cut its structural
budget deficit by 2.3 per cent of GDP
compared with 2.6 per cent for the
UK, McWilliams said.
The difference is nowhere near
enough to explain the difference
between the rates of growth in the
two economies.
11
NEWS
cityam.com
HOW
MIGHT TONIGHTS US ELECTION RESULT AFFECT THE MARKETS?
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ASHRAF LAIDI
CITY INDEX
Traditionally bonds go one way and equities go
another, yet we could see a clean sweep if Romney
wins with equities, bonds and the dollar getting a lift.
Wall Street wants Romney to win and hed find it easier to
deal with the fiscal cliff. But he will cut taxes before he
cuts spending and may put a hawk in charge of the
Fed personally, I think that would be dangerous.

ALASTAIR WINTER
DANIEL STEWART
A Romney win would prompt a positive knee-jerk
reaction in global equities. Yet any negative
reaction from an Obama win would only be reactionary
and short term, because the incumbent would likely keep
Federal Reserve chief Ben Bernanke in his post (not
expected to finish until January 2014) thus
preserving market friendly asset purchases.

An Obama win would be best for the price of gold.
The evidence showing Democrats destroying the
dollar more than Republicans, and second-term
Presidents benefiting gold prices even more during their
second innings, is overwhelming. High second-term
spending devalues the currency and makes the
precious metal glisten even more.

This is more about the strength of the incoming
administration, as they need to get on top of the
fiscal cliff. If Obama wins it is highly unlikely that hell also
win the House, whereas Romney could retain the House.
So a Romney win could be dollar negative short term. But
medium term a business-friendly and Bernanke-
unfriendly Romney could be dollar positive.

THE QUICKER politicians finalise and
introduce new regulations, the quick-
er banks will be able to implement
them and move on with stabilising
the industry, the chairman of HSBC
and chief executive of Barclays said
yesterday.
The Financial Services Bill is cur-
rently going through parliament,
covering areas including the ring-
fencing of retail and investment
banking operations, and capital
requirements.
If we do not have detailed rules
until 2015, it is unlikely we can imple-
ment much before 2019, HSBC chair
Douglas Flint told the Parliamentary
Commission into Banking Standards
(PCBS).
When we have the final rules, we
will work as fast as we can.
Barclays boss Antony Jenkins
explained there is currently a lack of
detail on how the ring-fence will
work for example, if the aim is to
protect the retail bank, he said it
would make sense for the group to
Top banks call
for earlier start
for ring-fence
BY TIM WALLACE
transfer capital from the investment
bank to the retail entity if it is
required. But there are currently no
guidelines on how that capital could
be moved, and whether it could later
be moved back to the investment arm.
But Santanders UK head Ana Botin
warned MPs and peers against rush-
ing through the changes, arguing it is
better to have good rules than quick
rules.
She also identified uncertainties
with the proposals, around the prod-
ucts which will be allowed in the
retail banking arm.
Ninety-nine per cent of UK assets
are from individuals, families and
businesses, and it is our aspiration to
be the SME bank of choice, she told
the commission.
We offer certain products in inter-
est rate management and foreign
exchange management, simple prod-
ucts. We believe it is very important to
be able to service the customer from
the ring-fenced retail bank.
But currently she cannot be sure
which side of the ring-fence they will
fall into.
12
NEWS
cityam.com
THE WORLDS biggest banks are
not being properly supervised, a
global regulator claimed last night,
arguing authorities need to step up
efforts to monitor risk and manage
capital levels.
The Financial Stability Boards
(FSB) update into regulatory
progress found that national
regulators often lack the resources
to maintain a sufficient degree of
scrutiny.
And the FSB also warned that
statistics bodies are getting further
apart on key accounting standards,
rather than agreeing as planned.
In particular the US Financial
Accounting Standards Board
(FASB) and the International
G20 accused of failing to fully
monitor most important banks
BY TIM WALLACE
Accounting Standards Board (IASB)
are diverging on the impairment of
financial assets, or provisioning
and area the FSB calls critically
important to financial stability.
Final IASB and FASB standards
should result in improved
provisioning practices that
incorporate a broader range of
available credit information, so as
to recognise losses in loan
portfolios at an earlier stage, it
noted.
But the report did praise the
governments progress on
implementing reforms to increase
transparency in the over-the-
counter (OTC) derivatives markets,
as all FSB countries are moving
towards central clearing of
derivatives.
S
TUART Gulliver tried to
reassure the market yesterday
in his third quarter message
accompanying HSBCs interim
management statement. He ended
with an upbeat take on China,
where we continue to expect a soft
landing. That would be more
reassuring if it wasnt coming from
a bank that was admitting at the
same time how offbeam some of its
expectations have proven.
The amount of money HSBC set
aside in July for a possible anti-
money-laundering fine now seems
so over-optimistic that it has more
than doubled its provision, from
$700m (438.45m) to $1.5bn, and
reserved the possibility that the
financial penalties could end up
significantly higher.
The cost of customer redress in
the UK, mainly for the mis-selling of
payment protection insurance, also
continued to rise, with another
$357m required in the third quarter.
Not all the news was bad for
HSBC. Underlying profit before tax
in the third quarter was up 125 per
cent on the same period in 2011.
Reported profit before tax for the
quarter, however, was down 51 per
cent on 2011. Reported revenue for
the quarter was also down 27 per
cent compared with 2011, to
$14.566bn.
A more troubling measure was
return on equity, down from 14.6
per cent in the previous quarter and
13.2 per cent a year ago to just 5.8
per cent in the last quarter, well
below the groups medium-term
target of 12-15 per cent. With a cost
of capital in 2012 of 11 per cent, that
means HSBC was destroying value
rather than creating it in the last
quarter.
There was cold comfort for the
firms employees as well. After
30,000 jobs cut over the last two
years, the likelihood remains of
more by the end of 2013.
Unexpected costs aside, HSBC
would be doing much better. But
after Gullivers open-ended
statement on US fines and further
cuts, investors and employees must
now expect the unexpected. This is a
terrible indictment for the bank
that was supposed to offer the
height of predictability, but also
ominous for the future of the sector:
if even the once reassuringly boring
HSBC cant shake off such
uncertainties, who can?
MIXED SIGNALS
Superficially, things also werent
looking too bright for mobile
satellite communications services
firm Inmarsat, largely thanks to
wireless broadband venture
LightSquared, which filed for
bankruptcy in May.
Yet the massive 81.9 per cent
decline in Inmarsats revenue from
the division which includes
LightSquared only brought the
groups total revenue down by 10.5
per cent compared to the third
quarter of 2011, to $325.9m.
The pull-out of troops from
Afghanistan did affect land revenue,
down 7.3 per cent. However, a 25 per
cent rise in revenue from maritime
data services gave a robust signal
that in our data-hungry age demand
for the kind of services Inmarsat
offers looks set to remain something
of a rising tide.
BOTTOM
LINE
MARC SIDWELL
Nothing reassuring in HSBCs tale of the unexpected
Yes I do. Whichever way they
take the United States
economy and theres two quite diverse
opinions with the two candidates then
directly, rather than indirectly it will affect
the way the UK recovery will be required to
go. Their policy will drive how we recov-
er we have to respond to their policy.
These views are those of the individuals above andnot necessarily those of their company
JOHN WILLIAMS
ISG
I think it will. Its just because the

two countries have lots of powerful
links. The two economies are more interlinked
than you might think. Will the markets be
watching? Absolutely. I think this election is
going to affect funding for institutions and
affect doing business in Europe the two [can-
didates] programmes are rather different.
STEFANO CAVALLERI
GE CAPITAL
Not massively. Based on what Ive

been reading it looks as though
Barack Obama is fairly secure. While I sup-
pose he traditionally hasnt liked the UK due
to the Kenyan connection, I think that his
policies are probably not going to be that
different to Mitt Romney. I probably [will be
watching] but not that closely.
MICHAEL
WOODBRIDGE
BADENOCH & CLARK
DO YOU THINK THE RESULT OF THE US PRESIDENTIAL ELECTION

WILL AFFECT THE UK? Interviews by James Waterson CITYVIEWS
Johnson said paying the Living Wage helps firms build motivated, dedicated work forces
MAYOR Boris Johnson yesterday
announced that the London Living
Wage the amount required to meet
basic living costs has increased
from 8.30 to 8.55 per hour,
substantially higher than the national
minimum wage of 6.19 per hour.
But his call for all local authorities
to pay the higher sum could be
illegal, according to Downing Street.
There are EU procurement laws
Boris Johnson faces legal threat
to London Living Wage campaign
BY JAMES WATERSON
and forcing companies to pay a
particular wage wouldnt necessarily
be consistent with those procurement
laws, said the Prime Ministers
spokesman.
Last night the EU was disputing this
interpretation of the legislation.
Yesterday Labour leader Ed
Miliband said he could make the
Living Wage the legal minimum rate
of pay if his party wins the next
election.
THE FORUM: Page 29

13
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UK FIRMS are borrowing more
money from investors than at any
other time since the financial crisis,
a study out yesterday showed, as
companies increasingly turn to the
bond markets to access credit.
UK corporate debt issuances have
soared to $85.2bn (53.4bn) so far
this year, a record high and a 70 per
cent increase on the $50.1bn raised
by firms at the same point last year,
figures published by Dealogic yester-
day show.
A-grade corporate debt issues have
also soared 67 per cent compared to
last year, while issues of overall
investment grade corporate bonds,
rated BBB or above by credit agencies,
have surpassed the previous record
in 2009 by 16 per cent a further
sign of the booming corporate debt
market.
Firms have increasingly tapped the
bond markets to fill the void left by
traditional lending as banks delever-
age their balance sheets. Bond
UK corporate
borrowing hits
five-year high
BY MICHAEL BOW
investors have also been tempted to
access corporate bonds due to the
higher value for money they offer
compared to other fixed income
products such as UK gilts.
Yesterdays figures show the spread
on UK corporate debt the difference
between UK corporate debt returns
and gilt returns hit 204 basis points
this year. That is the highest level
since the historic highs of 2009 when
spreads widened to 294 basis points.
The UK accounts for 21 per cent of
European corporate investment
grade issue volumes in the current
year to date, down from its peak in
2008 when it accounted for 30 per
cent.
Despite the pullback in bank lend-
ing, the sector is still heavily involved
in the issue of corporate debt.
According to Dealogic figures,
Barclays is the leading UK corporate
bookrunner for the year so far with a
market share of 11.3 per cent. Second
is Royal Bank of Scotland with 10.6
per cent market share and third is
HSBC with 8.8 per cent.
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Ethical asset funds see highest
drop in retail sales on record
ETHICAL investment funds saw
the highest outflow of money on
record last quarter amid slower
retail fund sales, figures out
yesterday reveal.
Ethical funds, which account for
around 1.2 per cent of investment
funds, saw a 33m outflow in net
retail sales in the third quarter,
according to statistics from the
Investment Management
Association (IMA), versus a 46m
inflow of cash from investors at
the same time last year.
BY MICHAEL BOW
The drop is the highest since
1992, when the IMA, the fund
manager lobby group, started
recording sales of ethical funds.
It is in keeping with a general
outflow trend over the past year,
with 9m of outflows on average
for the previous three quarters.
Retail net sales have also slowed
across other funds, with fund of
funds down 151m versus the
figure for last year, while tracker
funds saw 323m less sales
compared to a year ago.
Hargreaves Lansdowns Mark
Dampier said ethical funds did not
perform as well against
unconstrained funds. The
problem with ethical funds is
youre asking a fund manger to
run a fund with one hand behind
his back, he said.
Figures show ethical funds,
which refuse to invest in
companies including tobacco or
arms firms, can perform worse
than traditional funds, with the
first ethical fund established, the
F&C Stewardship Growth fund,
underperforming returns on the
FTSE All Share by 490 percentage
points over 25 years.
AMOUNT BORROWED BY UK COMPANIES FROM CAPITAL MARKETS IN PAST FIVE YEARS
DATA SHOWS TOTAL ISSUANCE OF DEBT BETWEEN 1 JAN AND 2 NOV FOR EACH YEAR
2012 2011 2010 2009 2008 2007
$85.2bn
$50.1bn
$34.5bn
$73.3bn
$61.2bn
$52bn
SOURCE: DEALOGIC
TURKISH government debt is no
longer junk rated, credit ratings
agency Fitch said yesterday,
pushing down the countrys
borrowing costs.
The states falling budget
deficit and promising economic
growth outlook combined to
make the governments debt a
more attractive investment
prospect, the agency announced
as it raised the rating from BB+ to
BBB-, the lowest investment-grade
rating.
The countrys strong
sovereign, bank and household
Turkish governments bond
yields drop on Fitch upgrade
BY TIM WALLACE balance sheets, and economic and
exchange rate flexibility provide
important buffers against shocks
spreading into a wider financial
crisis, the upgrade noted.
Fitch estimates the general
government debt to GDP ratio
will be 37 per cent at end-2012,
down nine percentage points
since end-2009, while it projects
the BBB range median at 41 per
cent of GDP, up seven percentage
points since 2009.
The Turkish governments 10-
year bond yields fell 25 basis
points on the day to hit 7.82 per
cent, as investors flooded into the
debt.
INSURER Hiscox yesterday said it
would be able to manage the costs of
Hurricane Sandy, the devastating
storm that hit the US Eastern
seaboard last week, despite predic-
tions the storm could cost the insur-
ance industry up to $20bn (12.5bn).
The FTSE 250 listed insurer, which
underwrites personal and insurance
risks around the world, said it would
be able to pay out claims without a
significant hit to its balance sheet.
Hiscox chief executive Bronek
Masojada told City A.M. said: We
havent put a number on the figure
but its manageable for us.
We manage the business to payout
claims to meet things of this scale so
its in our expectations.
Superstorm Sandy, which blasted
New York and other Eastern states last
week, is set to be the third most costly
storm to the insurance industry on
record, with predictions it will cost
insurers between $10bn and $20bn in
payouts.
However, Hiscox said in its interim
management statement yesterday it
could absorb the claims partly due to
Hiscox is set to
ride out cost of
Hurricane Sandy
BY MICHAEL BOW
the fact it has been a relatively quiet
year for the firm.
The Bermuda-based firm posted
solid gains of 1.2 per cent on its 3.3bn
investment portfolio, giving a year to
date return of a healthy nine per cent.
But the firm said future returns would
be modest, as it anticipates lower
yields on its bond portfolio.
Masojada said the firm was already
at the upper end of equity holdings
compared to others in the insurance
sector, which had helped boost the
firms investment performance.
Yesterdays figures showed its retail
business in the UK remained broadly
flat with growth of 1.1 per cent to
283m, compared to 280m in 2011.
Kweku Adoboli has denied being a gambling addict
Hiscox Ltd
487.50
482.50
477.50
472.50
p
476.52
5Nov
15
NEWS
cityam.com

We recently upgraded our net tangible asset forecast by two per cent to
assume zero hurricane losses. We would expect this to reverse with the inclusion
Sandy losses. The impact may ultimately be somewhat offset by stronger
than expected investment earnings.
ANALYST VIEWS
We expect consensus to review forecasts for the investment income

beat. We expect the loss on Sandy to be material against one years earnings but
think the company will still build surplus capital this year, particularly in
the context of low losses in other areas, and a strong reserve position.
Solid progression in premiums and protability, but too early to esti-

mate Sandy losses. The company note it has been a relatively quiet year prior to
superstorm Sandy, which has put it in a good position to absorb losses. It
is too early to make meaningful estimates of claims.
WHAT IMPACT WILL THE

NEW YORK STORM HAVE
ON HISCOX? By Michael Bow
NICK JOHNSON NUMIS
BEN COHEN CANACCORD GENUITY
MARCUS BARNARD ORIEL SECURITIES

ACCUSED UBS rogue trader Kweku
Adoboli denied yesterday that he was
addicted to gambling, saying that losses
on his personal betting accounts were
due to his life spiralling out of control.
Adoboli also told a London court that
he had been lying to protect his
colleagues when he said in an email to
the Swiss bank on 14 September 2011
that he was the only person responsible
for trading losses of $2.3bn.
Adoboli, 32, was arrested at UBS
offices in the early hours of 15
September 2011. He denies charges of
fraud and false accounting.
Prosecutor Sasha Wass has described
Adoboli tells court he lied to protect
colleagues and was not an addict
BY CITY A.M. REPORTER him throughout the trial as a gambler.
You were an addicted gambler. You
were spending every penny that you
had to feed your addiction. Thats what
addicts do, she told Adoboli.
There was not an addiction,
Adoboli said, arguing spread-betting
was common among traders and that it
helped them to keep in touch with the
market and to be better traders.
In a separate strand of evidence
Adoboli said many of the details in his
email of 14 September 2011, and in
meetings later that day, were untrue.
I was trying to protect everybody,
not just the desk, not just the senior
guys, but also the back office, Adoboli
said. The trial continues.
G
OLDMAN Sachs boss Lloyd
Blankfein may be no stranger
to popular criticism, but
decided enough was enough
after his firms robust rebuffing of
hurricane Sandy attracted scorn.
With the banks New York building
sandbagged to high heavens and bask-
ing in the glow of its generator-fuelled
lights last week, Blankfein took some
stick on Twitter. The fact that the
NYU hospital is dark but Goldman
Sachs is well-lit is everything thats
wrong with this country, wrote one.
But speaking at the Business Book of
the Year awards, Blankfein refused to
apologise for being well prepared:
When we built our building, we built
it with a lot of redundancy and backup
power. The day before the hurricane,
we put 25,000 sandbags around our
building, and the front of our building
looked ridiculous, but it worked.
He continued: Im not going to take
it that someone is going to scorn us for
doing what we did. We worked hard
and did sensible things. And by the
way, having done that, it put us in a
position to help other people in the
neighbourhood.
And with that it was back to the cere-
mony where, unsurprisingly, Greg
Smiths scathing tome Why I Left
Goldman Sachs was not shortlisted.
Left: The
Goldman
Sachs
building
on West
Street in
New York
and chief
executive
Lloyd
Blankfein
REGULAR readers of this page will
be familiar with ex-Bank of
England MPC member and now
PwC economist Andrew Sentances
second career as a part-time rock
star. He has been putting his
musical credentials to good and
public use, making a charity
appearance with his band
Revelation. The concert, which
Sentance told The Capitalist raised
over 500 for his two chosen
charities, was in aid of BuildIt
International and Chikupira
Foundation. Sentance said
afterwards: I am a trustee of
BuildIt and singer Bryan Adams is
the patron. My wife Anne, who
plays keyboards in the band, is a
trustee of Chikupira, a charity that
supports a school in Malawi. It
seems that Adams was not the
inspiration for the setlist though,
which included decidedly un-rock
covers including as Kelly Clarksons
Since Youve Been Gone. Revelation
fans will have to be patient to catch
the next gig Sentance tells The
Capitalist the next show isnt until
the summer of 2013.
Economist Andrew Sentance, lead singer and bass guitarist of rock band Revelation
16
cityam.com
cityam.com/the-capitalist
THECAPITALIST
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
THE first working distillery
to open in the City for over 200
years threw open its doors last night
to the delight of vodka and gin
connoisseurs across the Square Mile
and beyond. The new City of London
Distillery is both a working distillery
and bar, offering tastings and the
chance to watch master distiller Jamie
Baxter in action as he works from the
two traditional copper stills housed in
the basement of the building. With
over 90 gin varieties on offer The
Capitalist is sure G&T seekers will
discover a blend to tickle even the
most refined tastebud. The distillery
can be found at 22-24 Bride Lane,
EC4Y 8DT and contacted on 0207 936
3636. Cheerfully, admission is free.
Blankfein ends
sandbag saga
AT the Parliamentary
Commission on Banking
Standards yesterday afternoon, HSBC
chairman Douglas Flint was proudly
explaining how his firm gives
investment banking staff a strict code
of conduct to abide by. But Flints
words did not go down well with Mark
Garnier MP, a member of the
Commission and former investment
banker himself. Garnier was quick to
share his opinion that, had he been
given such a behavioural guide when
he was a banker: I would have folded
it up into a paper dart, thrown it across
the dealing room and got back to
trying to make some business. So
much for improving the perception of
banks not to mention politicians.
Former Bank of England rocker
plucks his way to charity stardom
Visit
Were an FSA regulated Forex broker with a
head office here in London.
We provide MT4, one of the leading trading
platforms. But, we also provide a dedicated
Client Services team, fluent in our platforms
as well as 14 languages. Which is sensible, as
we look after traders in 128 countries around
the world.
Forex, spread bets and CFDs are high risk
and losses can exceed your initial deposit.
language
your
speak
We
15 if you include
AN UNSUCCESSFUL venture into US
mobile broadband and the departure
of troops from Afghanistan hit satel-
lite internet operator Inmarsat in the
third quarter of the year, the compa-
ny revealed yesterday.
Inmarsat saw total revenues fall
10.5 per cent year-on-year in the peri-
od, largely due to its ill-fated
LightSquared US mobile network, a
bid to launch a 4G service which saw
expansion blocked by the US Federal
Communications Commission and
went bankrupt in May.
Revenues from the venture fell
from $64.5m (40.4m) in the quarter
last year to $11.7m.
Inmarsat, whose core business is
providing satellite broadband to
remote areas and ships, also estimat-
ed it lost $8.1m in turnover from
reduced troop operations in
Afghanistan.
However, Inmarsat did see improve-
ments in sales to shipping compa-
nies. The companys FleetBroadband
service added 2,128 terminals in the
BY JAMES TITCOMB
quarter, bringing the total up to
32,000. Turnover in the maritime
business was up 17 per cent on last
year.
Revenues excluding LightSquared
rose five per cent to $322m, but with
the venture included they fell from
$364m to $326m. Shares fell around
three per cent yesterday.
Overall, the third quarter contin-
ues to demonstrate improved and
more stable revenues from our core
wholesale operations and positions
us well, despite the challenging
macro-economic environment, chief
executive Rupert Pearce said.
Inmarsat PLC
590
580
570
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p
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5Nov
18
NEWS
cityam.com
US troubles hit
remote internet
firm Inmarsat
LANGUAGE translation software
firm SDL yesterday revealed that its
chief executive John Hunter was
leaving the firm to pursue other
business interests.
Hunter, who stepped up to the
role in February last year after a
stint as chief financial officer, had
seen SDLs shares fall to a two-year
low last month after a less than
positive trading update.
City A.M. understands that
Hunter departed by mutual
agreement, with both parties
understanding that he was
struggling getting to grips with the
technical aspects of the software
business.
The company needed someone
with a bit more technical detail,
there was an understanding that it
BY JAMES TITCOMB
wasnt working, one person with
knowledge of the boards plans
said yesterday. Theres an element
that needs to be improved upon.
Hunter will be replaced by
executive chairman Mark
Lancaster, who served as chief
executive before Hunter, while SDL
searches for a replacement.
The City cheered Hunters
departure yesterday, sending SDL
shares up three per cent.
Canaccord Genuity moved SDL
from a hold to a buy, saying:
Although a capable chief financial
officer, Hunter never matched the
vision and authority of Lancaster.
The relationship between the
two as chief executive and
chairman always had the look of a
Medvedev/Putin balance of power,
the former keeping the seat warm
for the latter.
John Hunter took the reins last February but failed to improve performance
Translation technology firm SDL
sees chief John Hunter depart
APPLE sold 3m iPads in the first
three days that the new iPad mini
and fourth-generation model went
on sale, the technology giant
revealed yesterday.
This figure was double the sales
of the previous iPad launch in
March, and chief executive Tim
Cook said the company was already
practically sold out of iPad minis.
Were working hard to build
more quickly to meet the incredible
demand, Cook said.
Apples sales figures boosted the
BY JAMES TITCOMB
company yesterday just
hours after the latest
research from IDC
showed that its share of
the tablet market had
slipped to just over 50
per cent in the third
quarter of the year.
Although Apple
shifted 14m iPads a
26 per cent increase
year-on-year this
counted for 50.7 per
cent of all tablet sales
compared with 59.7 per cent
last year and 65.5 per cent in
the previous quarter.
Smaller-sized tablets from
Amazon, Google and
Samsung gained on Apple,
highlighting the need for
the company to introduce
the iPad mini.
Meanwhile, Google said
yesterday that a US court
has thrown out a lawsuit
by Apple alleging that
Google-owned Motorolas
patent licensing was
unfair.
Apple is almost sold out of iPad minis
iPad mini sales break records as
Apples competition heightens
BSKYB has signed an exclusivity deal
with the company behind Hollywood
giant Universal Studios, maintaining
its lead in movie channels as it fends
off increasing competition from the
likes of Netflix and BT.
The renewed agreement with
NBCUniversal (NBCU), due to be
announced today, allows Skys movie
channels to screen films including
recent hits Anna Karenina, The
Bourne Legacy and Ted, as well as the
upcoming Les Miserables.
With the deal, Sky has retained its
grip on the pay-TV film market. It
currently has exclusivity deals with
Hollywoods so-called Big Six studios,
meaning it can show around 70 of
the top 100 grossing movies at least a
year before rivals and a few months
after they are released on DVD.
Skys position has angered rivals BT
and Virgin Media, especially after the
Competition Commission ruled in
August that Sky did not have a
monopoly on the market.
Upstarts such as on-demand inter-
net streaming services Netflix and
Universal movie
deal keeps Sky
in the front row
BY JAMES TITCOMB
Lovefilm have vowed to make things
more difficult for Sky by aggressively
bidding for movie rights, while BT is
buying up football and rugby rights
to challenge Sky Sports dominance.
However, Sky is often able to offer
multi-faceted deals that give it the
edge over rivals. In a separate agree-
ment with NBCU, Sky has also
renewed the rights to broadcast chan-
nels such as E! Entertainment
Television and Syfy.
The combination of NBCUs hit
movies with Skys innovation will
give customers an unrivalled in-home
movies experience, Ian Lewis, the
director of Sky Movies, said.
Universals films to be shown on Sky include Anna Karenina, starring Keira Knightley
British Sky Broadcasting Group PLC
760
750
740
710
720
730
p
754.21
5Nov
19
NEWS
cityam.com
Shares in Foxconn arm leap 35
per cent on iPhone speculation
SHARES in the worlds biggest
manufacturer of mobile phones,
Foxconn International Holdings
(FIH), rose as much as 35 per cent
yesterday on speculation that it
would win a contract to make
Apples iPhone 5 from its affiliate
Hon Hai.
FIH and Hon Hai are both listed
units of Foxconn Technology Group,
the Taiwanese industrial giant that
makes many of the worlds most
popular consumer electronics
devices. Hon Hai is currently the
BY JAMES TITCOMB
main supplier of the iPhone, but has
struggled to keep up with demand
for the latest version, the iPhone 5.
Citigroup yesterday said it expects
FIH to begin assembling iPhones
before the end of the year, having
already begun to produce the metal
casing for the device.
Citigroup upgraded FIH stock to a
buy, the first positive rating in
years, leading to mass-buying of
shares. FIH has seen shares fall in
recent months as the companies it
makes phones for, such as Nokia,
have stumbled.
FIHs shares had been sliced in
half since April, and the company
posted its worst-ever first-half loss in
August.
TELECITY, the British data centre
operator, yesterday announced it
had bought Finnish company
Academica for 28m (22.4m) in a
bid to expand its operations in the
Nordic market.
Data centres in Finland are a
valuable commodity, since much
of the growing internet traffic
from Russia uses it.
However, the acquisition
disappointed the City, with
analysts saying Telecity had
overpaid. At 28m for 1MW of
operational capacity, todays
Telecitys Finnish purchase met
with hostile reception from City
BY JAMES TITCOMB
(admittedly small) deal seems very
expensive, Investecs James
Goodman said. Telecitys shares
fell 7.5 per cent yesterday.
Numis downgraded the stock
from add to hold as Telecity
also put out a trading update that
the bank called cautious.
The company said trading has
remained robust and said the
years performance would be in
line with expectations.
Telecity management put their
faith in the company yesterday,
however. Chief executive Michael
Tobin bought 16,872 in shares
after the price fell.
Foxconn International Holdings Ltd
4.00
3.80
3.60
3.40
3.00
3.20
2.80
HKD
3.60
5Nov
RYANAIR, Europes biggest budget
airline, yesterday raised its full-year
profit forecast after higher fares,
lower than expected fuel costs and a
surge in demand after the Olympics
helped it beat first-half expectations.
The Ireland-based airline, waiting
to hear whether EU regulators will
approve its takeover of domestic
peer Aer Lingus, also said it was ben-
efiting from the demise of European
rivals such as Spanair and
Hungarian firm Malev.
Many airlines have been hit hard
by Europes struggling economy and
high fuel costs. Ryanair has fared
better than most, thanks to its size
and focus on low costs and low
prices.
It was a strong performance after
the Olympic Games, we certainly
saw an upward rise in average fares.
Many people who appeared to stay at
home ... came back in force post the
Olympic Games, finance chief
Howard Millar said.
Ryanair said its fares rose six per
Ryanair raises
forecasts after
strong demand
BY HARRY BANKS
cent in the six months ended
September, while passenger numbers
surged seven per cent.
As a result, it lifted its profit fore-
cast for the year ending March 2013
to 490-520m (392m-416m) from
its previous guidance of 400-440m.
Ryanair said its first-half net profit
rose to 596m from 544m a year ago
and ahead of analyst expectations at
564m. Revenue jumped 15 per cent
to 3.1bn.
Ryanair makes most of its money
from leisure travellers and normally
records a loss in its seasonally quieter
second half.
Ryanair boss Michael OLeary is bidding to take over Aer Lingus
Ryanair Holdings PLC
5.00
4.90
4.80
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4.60
4.88
5Nov
20
NEWS
IN BRIEF
IFG Group returns sale proceeds
n IFG Group, the financial group
offering administration services,
yesterday announced it would give back
37.3m (30m) to investors through a
share buyback programme. The firm,
which trades on the London Stock
Exchange, is returning funds to
shareholders after it sold its
international division for 70m in July.
The rest of the money is being used to
pay down the firms debts. The company
yesterday put forward a tender offer to
shareholders at 1.65 a share, equivalent
to a 17.9 per cent premium on its closing
price last week, or a 13.9 per cent
premium to the price on a three month
average. The payments to investors will
complete by December.
Panmure starts RAB share buyback
n RAB Special Situations Company
yesterday authorised its new nominated
adviser and sole broker Panmure
Gordon to snap up 750,000 as part of
a share buyback programme.
Rab, which invests all its cash in its Rab
special situations strategy, switched its
broker two weeks ago from Fairfax to
Panmure. Yesterday it told investors
Panmure would take on the mandate to
pursue the buyback. It is the second
buyback by RAB this year, after it
bought 1.1m of shares back from
investors in February, which was done
through Fairfax. The company is buying
back shares from investors to help
support the share price and give the
firm more capital flexibility.
COMMODITIES exchange
IntercontinentalExchange
yesterday reported a dip in third-
quarter profit as over-the-counter
(OTC) North American natural gas
and power contracts declined.
However the results topped
analyst expectations, helped by a
lower tax rate and a drop in
expenses.
Net income attributable to the
Atlanta-based exchange was
$131.1m (82m), or $1.79 a share,
in the third quarter, down from
$132.6m, or $1.80 a diluted share,
ICEs profit dips but exchange
performs better than expected
a year earlier. Analysts had
forecast earnings of $1.72 a share.
The outcome was the result of
financial discipline, a lean
operating model, and the ability to
concurrently execute on multiple
strategic growth opportunities,
Scott Hill, ICEs chief financial
officer, said in a release.
Revenue fell five per cent to
$323.2m, while analysts had
expected it to be $325.1m. This was
largely due to softer market data
revenues than expected, UBS
analyst Alex Kramm said.
Operating expenses fell six per
cent to 129m.
21
NEWS
cityam.com
GREECES government presented a
new austerity package to parlia-
ment yesterday as a week of strikes
and protests kicked off over propos-
als that politicians must approve if
the country is to secure more aid
and stave off bankruptcy.
The process is also complicated by
reports that Brussels may not strike
a new agreement over Greeces next
tranche of bailout cash next week,
as had been expected by observers.
The 12 November meeting will
not be the final stage. Were not so
much under the gun as it may
seem, a senior EU official said yes-
terday. A deal is still likely in
November, but not necessarily on 12
November.
There will be no deal until there
is a deal on all the different strings
of the package. We will not disburse
the next tranche until all details are
in place, the official added.
Back in Greece, parliament is
expected to vote on Prime Minister
Greek coalition
sets out latest
austere budget
BY CITY A.M. REPORTER Antonis Samarass 13.5bn (10.8bn)
package of cost cuts and tax hikes on
Wednesday along with measures
making it easier for firms to hire
and fire workers.
Greeces powerful main public and
private sector unions will launch a
48 hour strike against the legislation
today and plan marches in the cen-
tre of Athens. Journalists, doctors,
transport workers and shopkeepers
also plan stoppages.
We promised to avert the coun-
trys exit from the euro and this is
what we are doing, Samaras said
yesterday. We have given absolute
priority to this because if we do not
achieve this everything else will be
meaningless.
Without the aid, Greece will not be
able to redeem a 5bn treasury bill
falling due on 16 November.
The bulk of the new aid tranche,
some 25bn, is earmarked to recapi-
talise Greeces struggling banks and
jump-start moribund lending, a pre-
requisite to climbing out of reces-
sion.
MARKS & Spencer has hired Janie Schaffer (left), Victorias Secrets chief creative officer and
the founder of lingerie chain Knickerbox, to be its director of lingerie and beauty. Schaffer,
known as The Knicker Queen, is to join the retailer early next year and will succeed Frances
Russell, who has been promoted to director of womenswear, the retailer said yesterday.
M&S HIRES KNICKER QUEEN JANIE SCHAFFER
IN BRIEF
Shanta increases production
nExplorer Shanta Gold yesterday said
it was ramping up production at its
flagship New Luika gold mine in
Tanzania, as it forecast output of
6,000 ounces of gold in the fourth
quarter. The miner also reiterated gold
production for next year of 70,000
ounces. Shanta also said that Luke
Leslie would join the board as a non-
executive director.
OLYMPICS and Shard structural
steel giant Severfield-Rowen yester-
day saw shares plunge nearly 25 per
cent after the firm posted a profit
warning and said redundancies are
likely.
It forecast its profit this year will
be materially lower than last
year down from a 6.8m pre-tax
profit in 2011 to around 1m this
year.
The drop follows the companys
announcement it will merge three
of its businesses Severfield-
RowenStructures, Watson Steel
Structures and Steelcraft Erection
Services into Severfield-Watson
Structures at the end of 2012.
The reorganisation is likely to see
a headcount reduction in these
businesses of around 50 positions,
Olympics steel
firm Severfield
warns on profit
BY JENNY FORSYTH the firm said in a trading update.
Severfield-Rowen said its profit had
been hit by pricing pressures, drawn
out contractual settlements and
some cost overruns.
The restructuring is expected to be
completed by the start of next year,
with one-off organisational costs of
below 1m. The changes are expect-
ed to make savings of around 2m.
To celebrate INGs continuing association with arts charity The Discerning Eye,
ING Commercial Banking has teamed up with CityAM to offer you the chance
to win up to 1,000 of art. The ING Discerning Eye, with its slogan new artists,
new audiences, showcases the work of unknown artists alongside their more
established contemporaries.
This year a total of 485 pieces of art, representing the work of 184 artists, has
br clo|d by crorirr| qurc ror |l ur| world |o qo or clow. Euol
selector will use their own dedicated gallery space to display their choices, pro-
viding a unique range of themes which has earned the exhibition an enviable
reputation among art lovers and collectors alike. All the art on show is for sale.
For a chance to win 1,000 to spend on the artwork of your choice from the ING
Discerning Eye exhibition, simply answer the question below:
What is the slogan of the ING Discerning Eye Exhibition?
Please send your answer to win@cityam.com
Terms and conditions
The winner will be entitled to choose a painting from the ING Discerning Eye exhibition up to the value of 1,000. The prize is
non transferable, non negotiable and no cash alternative is offered. Entry to the prize draw is free and is open to anyone aged
18 years and over resident in the UK, except employees of ING, their families, agents or anyone else professionally associated
with the draw. Only one entry per person. The closing date is midnight on Sunday 11 November 2012. The winning answer
will b druwr u| rurdor ror ull liqibl r|ric roivd urd |l wirrr will b ro|id by clor or Morduy 1. Novrbr.
The winner must be available on Tuesday 13 November at the Mall Galleries in London to choose their painting. ING assumes
no responsibility and is not liable for any costs, charges or expenses which the winner may be required to pay at any time in
connection with the prize. The winner, by accepting the prize, agrees to participate in non paid publicity accompanying or
rcul|irq ror |lic druw i rquird. Tl Edi|or'c doicior ic rul ir ull ru||rc oororrirq |lic croro|ior. No oorrccordro
will be entered into about a decision regarding eligibility. ING reserves the right to suspend, cancel, or amend this promotion
and/or review and revise these terms and conditions at any time without giving prior notice and by continuing to take part in the
promotion subsequent to any revision of these terms and conditions, entrants shall be deemed to have agreed to any such new
or amended terms. These terms and conditions are governed by and construed in accordance with the laws of England and
Wales and the English Courts will have exclusive jurisdiction to determine any proceedings in connection with this competition
ING Discerning Eye, Mall Galleries,
London SW1Y 5BD 15-25 November,
10am to 5pm, entrance free.
Follow us on Twitter : INGDiscEye
and join our Facebook group : ING Discerning Eye
Balam l
North Light, Clear blue-green
(detail)
Nick Amey,
Topiary and black and white house 4 (detail)
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22
NEWS
cityam.com
ANGLO-AUSTRALIAN copper miner
Rio Tinto yesterday said it is set to
start production in the next three
months on the Oyu Tolgoi mine in
Mongolia, after signing a deal with
a Chinese power company to supply
electricity to the site.
Within the next few weeks, the
flagship $6bn (3.8bn) copper and
gold mine will start a seven-week
commissioning of ore-processing
equipment. First concentrate
production is expected after a
Rio Tinto ramps up its Mongolia
mine with Chinese power deal
BY CATHY ADAMS month, and the start of commercial
production will begin three to five
months later.
The FTSE 100 miner expects
group copper production to
increase from next year, due to
improving grades at existing mines
and the start of production at Oyu
Tolgoi. It forecasts an annual
growth rate of 13 per cent from
until 2015.
Once it reaches production, Oyu
Tolgoi will be a top-five copper
producer with significant gold
production, said Rio.
Tom Albanese joined Rio Tinto in 2006 and was appointed chief executive in 2007
Centamin confident on gold
mine lease as shares surge
SHARES in Egyptian gold
miner Centamin regained
some lost ground yesterday, as
it said it was confident it
would win an appeal to prove
its right to mine in the
country was valid.
Last week, an Egyptian
administrative court said the
companys right to operate the
flagship Sukari mine was
invalid, sending the shares in a
downward spin that knocked
off almost a third of their
value and sparked a temporary
trading suspension.
However, the miner said that
the concession agreement,
which allows Centamin to
explore gold from the Sukari
mine, is part of law and the
court did not have jurisdiction
to cancel it.
Centamin said yesterday
that it was confident the
BY CATHY ADAMS
matter could be resolved during
the appeal process, as it has the
original lease documentation
that shows approval from the
Egyptian minster of petroleum
and mineral resources to mine
at Sukari. Centamin said the
administrative court had not
seen this document previously,
and therefore had deemed its
licence to mine invalid.
The company continues to
work in close co-operation with
the Egyptian Mineral Resources
Authority and both parties are
currently in the process of
initiating the necessary vigorous
action to defend our rights to
continue to extract gold from
the Sukari mine and to appeal
this decision, Centamin said
yesterday.
Normal mining operations are
continuing in the interim until
a final judgement from the
appeal process has been made.
No date has yet been set for
the appeal.
This certainly provides clarity
and appears to look like Centamin
may be in good standing. We await
the appeal process, which may drag
on, said Cailey Barker, mining
analyst at Numis Securities.
We expect the shares to bounce,
but weakness to persist until a
successful appeal is made, he
added.
Shares closed up 24.13 per cent
yesterday at 75.2p, after closing 35
per cent down last Tuesday.
Weir Group warns on slowing
growth but confirms targets
ENGINEERING firm Weir Group
yesterday said orders fell in the
third quarter, although it
confirmed its full year profit
guidance.
Revenue and profit growth at
the Glasgow-based pumps and
valves maker edged down over
the third quarter, largely due to
a reduced order book, Weir
said.
Orders for the group fell
BY CATHY ADAMS
eight per cent in the three
months to September, thanks to
lower US and Canadian drilling.
Despite this, it said it was on
track to hit full-year pre-tax
profits of between 440m and
450m.
Trading conditions remained
mixed across Weirs core
markets, impacted by economic
uncertainty and falls in
commodity prices.
Orders in its oil and gas
division were particularly hurt,
and fell 28 per cent over the
period. Weir said full-year
upstream revenues are forecast
to be $800m (501m), in the
middle of previous expectations.
Engineering analyst Scott
Cagehin at Numis Securities said
yesterday that Weirs long-term
growth prospects are strong,
and driven by both structural
end market demand and organic
initiatives, adding that the firm
is a high-quality business with
leading market positions.
Centamin PLC
110
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Leni sells Gulf of Mexico assets
nLeni Gas & Oil has signed a deal
worth $1.625m (1m) to sell its assets
in the Gulf of Mexico to an American
group. The proceeds will allow Leni to
accelerate the development on its
Trinidad portfolio, particularly on the
Goudron field, which has proven
reserves of around 7.2m barrels of oil.
The sale is expected to complete this
week.
Leakage shuts Talvivaara plant
nShares in Talvivaara sank yesterday
as it said a leakage from a pond on a
mine site closed a metals recovery
plant in Sotkamo, eastern Finland. The
Finnish miner anticipated the plant
being reopened tomorrow, after it has
strengthened basin ponds on the site.
In August, Talvivaara slashed its nickel
forecast to 17,000 tonnes for 2012,
blaming heavy rain over the summer.
Severeld-Rowen PLC
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THE BUSINESS, Innovation and
Skills committee has called on the
government to simplify and clarify
its apprenticeships scheme in
order to deliver better results and
value for money.
The committee, chaired by
Adrian Bailey MP, said the
government must formally define
an apprenticeship, and that this
definition must include developing
skills not just consolidating or
validating existing skills.
Policymakers, including policy
architect Vince Cable, must also set
an overarching strategy and clear
purpose for the programme in
order to make judging its success
or failure more transparent, they
said.
Money does not guarantee
success, Bailey said. The
apprenticeship programme needs
clarity, oversight
and, in these
straitened
times, to
demonstrate
that its
providing
value for
money.
MPs demand
clarity on job
training policy
BY BEN SOUTHWOOD
ECONOMIES across Asia failed to
fight themselves out of the dol-
drums that have endured for
months, data showed yesterday,
with index levels improving only
marginally into October.
Business surveys recorded
improved but marginal output
growth in China and Hong Kong,
while output in Australia and Japan
continued to contract, while Indias
expansion slowed down. Only oil-
rich Saudi Arabia and the United
Arab Emirates managed to expand
output.
China registered a score of 50.5 for
October on its composite output
purchasing managers index (PMI),
released by Markit and HSBC yester-
day, only a touch above the 50 mark
that separates growth from contrac-
tion.
Hongbin Qu, chief HSBC econo-
mist in China called the result evi-
dence of Chinese bottoming out,
and predicted that authorities
would ease monetary policy further,
in order to sustain recovery in the
Asia stagnates
as China fights
for new growth
BY BEN SOUTHWOOD
Asian juggernaut.
The situation in Asias second
biggest economy was gloomier.
Japans composite PMI for output
rose from 48.9 in September to 50
last month, Markit said. While this is
an improvement, it continues
months of scrappy results close to
the all-important 50 level.
Australia fared even worse, at least
in its service sector, with a PMI of
42.8 in October pointing to a ninth
consecutive month of decline,
according to data from the
Australian Industry Group and
Commonwealth Bank.
And even though India continued
to grow modestly, with a composite
output PMI of 53.5 in October, this
was down from a more optimistic 55
in September.
But the Arabic oil states seemed to
be going from strength to strength
even in non-oil sectors. The United
Arab Emirates posted composite out-
put at 53.8, unchanged on
September, while Saudi Arabia was
expanding healthily, with a PMI of
59.8. However, this was slightly lower
than Octobers 60.3.
Taxpayers face rapidly growing
public sector pensions burden
TAXPAYERS will face the bill for
public sector pension deficits, the
Centre for Policy Studies (CPS) said
yesterday, eventually putting in 4
out of every 5 invested in the
schemes.
Public sector pension shortfalls
will hit 15.4bn in 2016-2017,
according to Office for Budget
Responsibility forecasts 77 times
higher than in 2005-06 when they
totalled just 200m, the think-
tank notes, a gap that taxpayers
BY BEN SOUTHWOOD
will eventually have to fill.
The annual burden on taxpayers
will rise to over 32bn to fund
these defined benefit schemes, the
CPS predicts, equivalent to 1,230
for every household in the country
with those enjoying the schemes
paying in only around a fifth of the
total. CPS calls for a shift towards
defined contribution schemes, in
line the private sector, claiming
the public see the current system
as unfair and unaffordable.
Separate research showed that
deficits in private firms defined
benefits schemes were impacting
on financial performance.
Some 57 per cent of firms
surveyed by the Institute of
Chartered Accountants in England
and Wales (ICAEW) and Mercer said
their defined benefit pension
funds would negatively impact
their business over the next three
years, especially after quantitative
easing (QE) helped to widen deficit
gaps.
The ICAEW said defined benefit
schemes are under unprecedented
pressure.
THE NUMBER of officially
unemployed people in Spain rose
by 2.7 per cent in October from a
month earlier, data revealed
yesterday, reflecting the countrys
ongoing economic crisis.
Labour ministry figures showed
an extra 128,242 people being out
of work, with the total number
reaching 4.8m.
This was the third straight
month the jobless figures rose
after a respite during the summer
tourism season.
Monthly jobless data records the
number Spaniards registered as
Unemployment in Spain edges
towards the five million mark
out of work, while the
unemployment rate, which hit a
record high of 25 per cent in the
third quarter, is an official survey
and considered a more reliable
gauge of the jobs market.
Private-sector employment will
continue to be squeezed at an
alarming pace with deteriorating
domestic demand conditions
encouraging firms to extend their
labour shake-out, said Raj Badiani
of IHS Global Insight.
Badiani added that the hike in
VAT, brought in on 1 September,
could squeeze private spending in
coming months, further harming
the jobs situation.
THE FORUM: Page 29

24
NEWS
cityam.com
With the tourist season over, many Spaniards have lost their service sector jobs
Industry wants coalition to look
again at property rates change
RETAIL and property groups
yesterday demanded the
government consider axing part of
the coalitions Growth and
Infrastructure Bill, which
postpones the next property
revaluation upon which rates are
based.
The last ratings revaluation used
values from 2008 at the height of
the housing boom which
industry bodies say is penalising
firms in the areas hit hardest by
the slump.
Areas where rents fell more than
average would face reduced bills
BY BEN SOUTHWOOD
under a revaluation, while without
one rates will rise in line with the
retail prices index whether or not
the property value has changed.
Under the bill currently before
parliament, firms would be stuck
with 2008 rates until 2017, rather
than 2015 as planned.
But the process would have both
winners and losers. A shift would be
likely to hike rates liabilities for
firms occupying property in
London, where house price growth
has been strong despite the
downturn.
The Association of Convenience
Stores, Action for Market Towns, the
Association of Town Centre
Management, the British Council of
Shopping Centres, the British
Independent Retailers Association,
and the British Property Foundation
(BPF) have all weighed in to demand
an open and evidence-based debate
on the implications of the delay for
UK retailers.
Business rates are currently paid
in England and Wales at a rate
between 45 and 45.8 per cent of a
propertys rateable value which is
an estimate of the annual rent the
property could have attracted on
the market. Any rate changes are
designed to be revenue neutral.
THE COST of renting a property in
London will continue to soar over
the next decade, according to an
academic paper released yesterday.
Professor Michael Ball of the
University of Reading found that
the supply of housing will keep
failing to keep up with the needs
of the capitals workers.
While the government claims
that London will benefit from
between 34,000 and 38,000 new
households each year until 2028,
the report says the number will in
fact be a more modest 21,000.
This will result in a significant
housing shortage, with people
either paying more, crowding into
existing homes or being priced out
Weak housing supply to stoke
higher rental costs in London
BY JULIAN HARRIS
of the city, until effective demand
matches supply, said chartered
surveyor Cluttons, which
commissioned the research.
Rents are thus on course to rise
by five per cent each year for the
next decade, Professor Ball
estimates, exceeding house price
growth of around four per cent
per year.
The private rented sector feels
the strong pressures of a growing
population and workforce, being
both the first point of contact and
the safety option for many people
searching for housing, said
Cluttons Lynn Hilton. The
demand from tenants wanting to
live in the city will underpin
rental growth at a level ahead of
the historic long term trend.
THE OLYMPIC Games put a big
dent in tourism in London over
the course of the summer, an
industry group said yesterday.
Two thirds of tourism firms
surveyed by UKinbound said that
visitor numbers for the July to
September period were down
compared to a year earlier.
And while some commentators
have suggested that the Olympics
could boost tourism to London in
the long run, UKinbound says that
government policies are blocking
any likely progress.
Worryingly, over 50 per cent of
Olympics combine with heavy
taxes to knock tourism outlook
BY JULIAN HARRIS
members surveyed agreed that UK
tourism optimism is evaporating
due to the governments tourism
policy being at a standstill, it said,
citing high levels of air passenger
duty (APD) and VAT.
Optimism in the industry is
delicate and dependent on the
governments treatment of
barriers to entry and therefore it
would be good to see action in
areas where there has only been
stagnation thus far, said Mary
Rance, CEO of UKinbound.
Last month the Association of
Leading Visitor Attractions
reported a 15 per cent drop in
visitors from June to August.
Vince Cable spear-
headed the
apprentice
scheme
TOYOTA Motors nudged its full-year
net profit forecast up to $9.7bn yester-
day, even as it put the cost of recent
anti-Japanese protests and a slowing
economy in China at lost sales of
200,000 cars.
Sales at Toyota and its two Chinese
joint ventures almost halved in
September and October amid often
violent protests in a dispute over own-
ership of islets in the East China Sea.
Honda Motors China car sales more
than halved last month, while Nissan
Motors fell 41 per cent.
Toyota said the impact of the drop in
sales would cost it 30bn off its full-
year net profit. It sold around 900,000
vehicles in China last year.
While Honda last week cut its full-
year net profit forecast by a fifth to
take account of the China damage,
and Nissan is expected to follow suit
when it releases its July-September
results today, Toyota has found room
to revise its forecasts higher as it tradi-
tionally gives more conservative earn-
Toyota profit
outlook raised
amid China hit
BY HARRY BANKS
ings guidance and relies less heavily
on China sales.
Toyota increased its net profit fore-
cast for the year to end-March to
780bn, up 2.6 per cent from its previ-
ous guidance. It said full-year operat-
ing profit would be 1.05 trillion, up a
touch from its earlier forecast for 1
trillion. July-September net profit
more than trebled to 257.9bn on solid
sales in North America and Southeast
Asia, beating an average estimate of
228.8bn. A year ago, Japanese manu-
facturers were still reeling from the
March earthquake and tsunami.
IN BRIEF
BG Group agrees credit facility
n Energy firm BG Group has agreed a
new five-year $3bn (1.9bn) credit
facility, to replace an existing $2.3bn
credit facility. The new facility was
coordinated by Bank of America Merrill
Lynch and HSBC, and includes a variety
of banks, BG Group said. The new
facility will stand alongside the $2.2bn
five-year line of credit agreed last year,
taking BG Groups undrawn committed
bank borrowing facilities to $5.2bn.
Last week the energy firm warned that
2013 production would be flat, largely
due to delays to projects. A scaling
back of US drilling would also hurt
output next year, BG Group said.
However, production over the three
months to September grew by five per
cent.
LOreal exec says Asia is slowing
n L'Oreal, the world's biggest cosmetics
group, is feeling the effects of the
slowdown in China and brutal trading
conditions in South Korea and Taiwan,
the company said. The groups turnover
from luxury goods in South Korea is
down two to three per cent this year
after achieving eight per cent growth
last year, L'Oreal's Asia-Pacific
managing director Jochen Zaumseil told
Reuters on the sidelines of a press event
yesterday. South Korea and Taiwan are
among Asia's most export-dependent
countries, making them vulnerable to
weakness in global demand. China, the
main driver of demand for luxury goods
in recent years, has suffered a slowdown
this year, though L'Oreal was still gaining
market share, Zaumseil said.
Netflix defends against Icahn
n US-listed Netflix has adopted a
poison pill defense to prevent a hostile
takeover, acting just days after activist
investor Carl Icahn disclosed he had
bought a stake in the streaming video
and DVD-by-mail subscription service.
The move is meant to prevent an
outsider who lacks Netflix board
approval from accumulating a stake of
10 per cent or more, the company said in
a statement yesterday. The measure,
approved by the board on Friday,
remains in effect for three years. Last
Wednesday, Icahn disclosed that he had
amassed control of 9.98 per cent of
Netflix shares. Most of his purchases
were in the form of call options that
expire in September 2014. The billionaire
is known for shaking up management.
RENAULT AND CATERHAM TO BUILD SPORTS CARS
Toyota Motor Corp
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25
NEWS
cityam.com
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The directors of Londons oldest outtter cordially invite you to an intimate
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SEADRILL, the worlds biggest
offshore rig group by market
value, is to sell part of its Asian
business to Malaysias
SapuraKencana in a deal worth
$2.9bn (1.8bn), freeing up cash to
expand in high-growth deep-water
drilling.
The company, the crown jewel in
billionaire John Fredriksens
empire, is selling its tender rigs
division rigs for drilling in
waters up to 6,500 feet to the
Malaysian firm, which will get an
established business with
expertise to help its Asian
expansion.
Fredriksen, known as Big Wolf
for his bold business deals, has
Seadrill sells its Asian rig unit
to SapuraKencana for $2.9bn
BY CITY A.M. REPORTER been the dominant player in the
tender rig business and analysts
said he is now cashing in at the
top, before competition begins to
eat into his market share.
He said Seadrill would use the
proceeds from the deal to expand
its deep-water fleet and also invest
in the resurgent jack-up drilling
sector shallow-water rigs with
legs that can be jacked up and
down.
The $2.9bn price tag on
Seadrills deal includes up to
$1.4bn in cash, $363m in capital
expenditure, around $800m in
debt plus up to $350m worth of
new shares in SapuraKencana.
Seadrills stake in SapuraKencana
will rise to 12.5 per cent from 6.4
per cent.
FRENCH automaker Renault and British sports-car maker Caterham unveiled plans yesterday to
develop affordable racers for introduction by 2016. The vehicles will put racecar engineering in
reach of more customers than current Formula One-derived offerings from rivals, Renault chief
exec Carlos Ghosn (left) and Caterham chair Tony Fernandes said at a joint news conference.
27
US shares rise
in light trade
as vote looms
U
S stocks advanced modestly
yesterday in light trading in
one of the years quietest
sessions on the day before the
US presidential election.
Whatever the outcome of the race
between incumbent President Barack
Obama and Republican challenger
Mitt Romney, the elections resolu-
tion will finally end the uncertainty
that has kept the market stagnant for
the past few weeks.
No ones going to make big bets
today, said Perry Piazza, director of
investment strategy at Contango
Capital Advisors in San Francisco.
Just 5.16bn shares changed hands
on the New York Stock Exchange, the
Nasdaq and the NYSE MKT, below
this year's average daily volume of
6.5bn.
[The market] has been directionless
over the last few weeks because of
what fiscal and tax policy looks like
next year. You could argue that just
having the uncertainty behind us
could lead to a bit of a relief rally,
Piazza said.
Another drag on trading volume
was the residual impact of Hurricane
Sandy, which has left about 30,000 to
40,000 Americans homeless. The
storm wreaked havoc on infrastruc-
ture and housing in the Northeast.
The Nasdaq was the strongest of the
three major US stock indexes, helped
by a rally in Apple. Apples stock rose
1.4 per cent to close at $584.62.
The Dow Jones industrial average
advanced 19.28 points, or 0.15 per
cent, to end at 13,112.44.
The Standard & Poors 500 Index
rose 3.06 points, or 0.22 per cent, to
1,417.26.
The Nasdaq Composite Index
gained 17.53 points, or 0.59 per cent,
to close at 2,999.66.
B
RITISH blue-chip firms fell
yesterday as investors eased back
on risky plays ahead of US
elections, with miners among the
top fallers as they continued to suffer
from the low price of copper.
At the close, the FTSE 100 was down
29.490 points, or 0.5 per cent, at
5,839.06, in thin trading volumes of 70
per cent of the average 90-day volume.
The US election weighs, because clear-
ly the result is still so uncertain. People
are really looking for more direction on
that front before deciding whether to
become more risk-tolerant or not, Ed
Shing, equity strategist at Barclays, said.
Sectors that are exposed to the econom-
ic cycle and move with risk sentiment
such as banking, mining and energy,
took the most points off the FTSE.
Four of the five biggest fallers were
miners, with ENRC shedding 3.7 per
cent as the price of copper hit two-
month lows, reaching 7,609.50 and down
nearly 10 per cent in the past seven
weeks.
HSBC shaved six points off the FTSE
100, the biggest loss to the index, drop-
ping 1.2 per cent despite a solid earnings
update after it said it would need to set
aside another $800m (501m) to cover a
potential fine from US regulators for
breaches in its anti-money laundering
controls in Mexico.
Although HSBCs earnings saw a fall in
bad debts, it also said it would take
another $353m charge for mis-selling in
Britain, mainly of payment protection
insurance.
In all, banks took over 10 points off the
index, making it the biggest sectoral
drag on blue chip shares.
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and Playtechs stake in
William Hill online.
DASHBOARD CITY
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
cityam.com
FTSE
5,900
5,875
5,850
5,800
5,825
5,839.06
5 Nov
Millennium & Copthorne Hotels PLC
p 520
510
500
490
480
470
476.81
5 Nov
MILLENNIUM AND
COPTHORNE
Credit Suisse has
downgraded the hotel
group from to neutral
from outperform and
said with trading risks
increasing it remains
cautious on prospects.
Talktalk Telecom Group PLC
p 194
193
192
191
190
189
188
187
190.55
5 Nov
TALKTALK
Espirito Santo raised its
target from 135p to 140p
and kept its sell rating
ahead of its results next
week. Espirito said
growth will depend on
YouViews success, which
is far from certain.
Caledonia Investments
Sally Flanagan has been
appointed associate director for
the investment trust companys
unquoted pool. She joins from
Permira Advisers, where she was
global head of healthcare.
Flanagan is an experienced
private equity investor, and will
report to head of unquoted
investments Duncan Johnson.
Capco
The business consultancy has appointed professor
Damiano Brigo to lead Capco Institute, its research unit. He
is head of the mathematical finance research group at
Imperial College, and has held industry roles at Fitch
Solutions and Banca Intesa.
SJ Berwin
Alex Woodfield has been appointed partner in the law
firms London corporate group. He joins from Field Fisher
Waterhouse, where he founded its Commonwealth of
Independent States group. Woodfield specialises in high
value mergers and acquisitions.
Opinium Research
The research firm has appointed Alexa Nightingale as head
of research for its financial services division. She joins from
TNS, where she managed accounts in its finance division.
Nightingale also previously spent five years in market
research at GfK NOP.
McLaren Construction
The property developer has announced two director-level
appointments. Graham Sturge joins as a divisional director
from Sisk, where he was regional director for London.
Richard Eager joins as London operations director from
Laing ORourke.
Premier Gold Resources
Richard Nolan has been appointed chief executive of the
central Asia-focused gold exploration firm. He has served
as chief operating officer of Premier Gold Resources since
September 2011.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
morganmckinley.com
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LONDONREPORT
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REPORT
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FTSE falls on uncertainty over US
election and fall in price of copper
A
MONTH tomorrow, George
Osborne will deliver his
Autumn Statement. On
current policies, the Office
for Budget Responsibility will
suggest he will fail to meet his target
of a falling debt-to-GDP ratio by the
end of the parliament. This leads to a
question: should Osborne announce
further fiscal consolidation or should
he abandon the target?
Nick Clegg has nailed his colours to
the second mast sticking to existing
spending plans. On cuts, Clegg has
said, not a penny more, not a penny
less.
Alongside him are those who think
that austerity is self-defeating and
that the government should just
spend more. Recent National
A
FTER the victory celebrations
have ended, whoever wins
tonights US presidential
election will face a nasty,
prolonged, economic
hangover. And, as Britains closest ally,
what happens in the US will have firm
implications for this side of the
Atlantic.
It has been a bitter and unpleasant
campaign and, unless a tribal and
divided Congress can reach a budget-
ary deal, about $600bn (375.6bn) in
tax rises and spending cuts will come
into effect at the beginning of January.
The omens for successful resolution
are not good and the impact remains
uncertain. The US is close to the fiscal
cliff and may not avoid falling off.
The basic problem is that the US fed-
eral government is spending more as a
proportion of GDP than at any time
since the Second World War. At the
same time, revenues are their lowest
since 1950. Federal spending is expect-
ed to be 24 per cent of GDP this year,
only marginally below 2009s figure of
25 per cent the highest since 1945.
Revenues are expected to drop to 14.8
cityam.com/forum
In the four years of
Barack Obamas term
of office, debt has
reached $11.12 trillion
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.
28
LIAM FOX
A bitter US campaign has failed to
find consensus on menacing debt
per cent of GDP in 2012.
This combination of low revenues
and high spending has inevitably led
to the highest annual deficits since
the Second World War. As a conse-
quence, the US government is now
borrowing roughly 40 cents of every
dollar spent.
Debt has spiralled. Over the eight
years of George W. Bushs presidency,
it rose from $3.339 trillion in 2001 to
$6.369 trillion by the end of 2008. And
in just four years of Barack Obamas
presidency debt has reached $11.12
trillion, while showing no sign of slow-
ing. Put another way, debt per US citi-
zen was $6,435 in 1970. By 2001 it was
$14,534 and by 2012 it had reached
$36,267. On current trends it will
reach $100,000 per citizen by 2030.
The interest on this debt accounts
for $227.1bn, or 5.7 per cent of all gov-
ernment spending. This is more than
is spent on education, homeland secu-
rity and veterans affairs combined.
There are those who say it doesnt
matter that the US is too big to fail.
But they should think again.
Researchers have identified 26
episodes of public debt overhang,
when debt to GDP ratios exceeded 90
per cent, since 1800. They discovered
that, in 23 of these 26 episodes, coun-
tries experienced lower growth than
the average across other years. Across
all 26 episodes, growth was lower by
1.2 per cent. If this effect sounds mod-
est, consider that the average duration
of debt overhang episodes was 23
years.
This is not a short-term problem,
and recent administrations have sin-
gularly failed to tackle it. US govern-
ment debt peaked at 121 per cent of
GDP in 1946, the highest level in the
countrys history. A period of rapid,
stable economic growth during the
1950s and 60s meant that debt fell by
the end of 1975 to 33 per cent of GDP.
But the Reagan tax cuts, Cold War
defence spending, the Gulf War and
the recession of the early 1990s all
pushed debt to a 40 year high in 1993.
Surpluses during the early Clinton
years may have brought debt down to
a 15 year low by 2001 but, by early
2009, it had risen again 80 per cent.
Based on the 2010 US budget, total
national debt will almost double in
dollar terms between 2008 and 2015,
to nearly 100 per cent of GDP.
To reach a debt level in peacetime
that was last encountered during total
war should send alarm bells ringing
everywhere. It is unsustainable and
will have profound economic, politi-
cal and strategic consequences. It is in
Britains interests that the problem is
resolved soon.
In June 2009, the Brookings
Institution assessed that the US
accounted for more than a third of
the growth in global consumption
between 2000 and 2007. Americas
spend and borrow spree supported
global demand. Recession in the US
has been, of course, accompanied by
GDP falls in Europe and Japan. But the
global economy has risen in value
from $30 trillion in 2000 to $69 tril-
lion in 2012 (a real rise of at least 55
per cent). Too big to fail is a risky
argument to push to its extreme.
Whoever wins the White House will
have to work for a consensus with
Congress that Obama has conspicu-
ously failed to achieve. He might
change in a second term. Who knows?
But when Americans go to the polls
today, they should know that difficult
times lie ahead. We all hope they get
this one right.
Dr Liam Fox is a former secretary of state
for defence, and Conservative MP for North
Somerset.
Institute of Economic and Social
Research work, for example, suggests
that coordinated EU austerity is
depressing growth so much that the
UKs debt-to-GDP ratio will be 5 per
cent higher in 2013 than if no
country was cutting.
But this is a straw man argument.
The government has no control over
Eurozone policy, where the euro is
the underlying problem. And even if
you think stimulus does improve
growth today, theres scant evidence
that government spending generates
a self-sustaining recovery. At best it
can bridge a point recognised by
stimulus champion Paul Krugman in
1999. Collective can kicking is futile.
So what about cutting more?
Between 2009-10 and 2011-12, tax
revenues increased in real terms by
31bn compared to an increase in
real GDP of just 40bn. Real
government spending fell by only
16bn (capital spending fell by 24bn
and current spending rose by 8bn).
Weve seen more private sector
austerity than public sector austerity.
Yet our deficit targets require much
stronger revenues still.
According to Harvard economist
Alberto Alesina, the optimal way to
close a deficit is through spending
cut-based contractions (where
spending cuts account for more than
50 per cent of the consolidation),
alongside pro-growth reforms.
Examining 17 deficit reduction
episodes between 1980 and 2005, he
finds spending cut-based
consolidations less damaging for
output growth than tax-based
consolidations. The former lead to
either no recession or a short
recession. The latter lead to plunging
confidence and investment, and
usually no recovery within three
years.
Though the UK deficit reduction
plan is cut-based consolidation
overall, its tax hikes were heavily
front-loaded 80 per cent of the
planned increase in the tax-to-GDP
ratio by 2014-15 has already occurred,
compared to 23 per cent of the fall in
current spending. Private investment
and confidence have indeed
struggled.
Deeper cuts to current expenditure
now to meet the target and free-up
funds for tax cuts would divert
more resources for private sector
enterprise and investment. Having
been reliant on cheap credit and
public spending, our economy must
rebalance. The more the private
sector is squeezed through tax and
regulation, the more difficult this
adjustment becomes.
Ryan Bourne is head of economic
research at the Centre for Policy Studies.
FRONTLINE
ECONOMICS
RYAN BOURNE
Public sector cuts arent depressing growth but private sector austerity is
29
The Forum is open for you to take part. Got a sharp comment on
one of todays columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email theforum@cityam.com or comment at cityam.com/forum
Green shoots
I took it as a sure sign that we were in the
grip of a severe bear market when your
regular Monday feature Bill of the
Week was quietly canned. So it was with
interest that I saw a green shoot in
yesterdays edition, with the Capitalist
reporting on a thundering bill chalked up
at Raffles. Is the Bill of the Week really
back? If so, its time to fill our boots.
Eric Moore
[Re: US energy policy is thriving despite
a quiet campaign, yesterday]
Matthew Sinclair advocates that the UK
should seek to emulate the energy policy
of the US by becoming more dependent
on coal, oil and gas. But he fails to
mention that its fossil fuel industries
receive annual financial support from
taxpayers through tax cuts and subsidies
of nearly $13bn (8.14bn), according to a
recent analysis by the OECD. By
comparison, Britains taxpayers provide
support of more than 3bn per year to
coal, oil and gas companies, not
including the enormous implicit subsidy
for greenhouse gas pollution from fossil
fuels. Given that fuel bills for both
households and businesses have been
ever driven higher over the past few
years, primarily by the UKs dependence
on imported gas, it is not clear why
Sinclair is so ideologically opposed to a
shift to domestic low-carbon sources of
energy.
Bob Ward, London School of Economics.
T
HERE IS nothing sexy about
business rates. They dont
have much globe-trotting
glamour and perhaps thats
part of the problem. As taxes
go, theyre more a cup of tea than a
caf au lait.
One of the governments flagship
business pledges is to make the UK
the most competitive tax regime in
the G20. Its a great ambition but
one that has put much of the focus
on internationally mobile compa-
nies that can move their capital from
country to country.
The end result is corporation tax
cuts down from 28 per cent in 2010
to 24 per cent now, and heading for
22 per cent by 2014. Its very welcome
progress. But high street taskforces
and warm words cant obscure the
governments failure to do anything
similarly positive with dull, old, hard
to escape business rates.
Remember, corporation taxes are
levied on profits, so little is paid in
lean years. But business rates fall on
property and rise relentlessly regard-
less of company results. Theyre even
paid on empty premises.
The convention is to base each
Aprils annual increase on the previ-
ous Septembers retail price index
inflation figures. That means busi-
ness rates rose dramatically in both
2011 (4.6 per cent) and 2012 (5.6 per
cent), adding more than 500m to
retailers rates bills. The threat is
now a further 2.6 per cent increase
next year, which would hit the sector
with another 175m in new costs.
I accept the that government needs
to bring in revenue rates are the
third largest business tax, and prop-
erty is an easy target because it cant
move or hide. But thats missing the
point. Increasing business rates hits
investment too.
We recently conducted a snapshot
survey of retail chief executives
TOP TWEETS
Re-electing Barack Obama is like theTitanic
hitting the iceberg again. Electing Mitt
Romney is like hitting a different iceberg.
@RapGenius
Between them Obama and Romney have
spent $1.6bn trying to convince America that
they know how to deal with debt.
@boobygraffoe
Ryanair profits are up again. Michael OLeary
is an airline genius, and its a scandal that
they wont give him Aer Lingus.
@JoFoley8
If the living wage will raise people out of
poverty, why not make it 1,000 an hour and
we can all be rich?
@Old_Holborn
As the mayor announces a rise in Londons
Living Wage, does it make economic sense?
YES
Since its introduction in 2005 an estimated 11,500 workers have
benefited from the London Living Wage rate. Over a full year, this
years rise will put around 4.5m into the pockets of lower-paid
Londoners. Recent research from Queen Mary University showed
that introducing the London Living Wage improves staff retention
rates for firms and more than half of employees feel happier
about their place of work. By building motivated, dedicated
workforces it helps businesses to boost the bottom line and
ensures that hard working people can enjoy a decent standard of
living. Despite challenging economic times, its clear that more
employers are waking up to the benefits that paying the Living
Wage delivers. From banks and insurance companies, to charities
and leading universities, there are now close to 200 employers in
London who are supporting the campaign to pay the Living Wage.
Boris Johnson is the mayor of London.
Boris Johnson
NO
Sam Bowman
Voluntary adoption of the Living Wage by businesses is great. But
if it really did increase worker productivity, they wouldnt need
the government to tell them to do it. The only thing worse than
having a low-paid job is having no job at all. Raising the minimum
wage to the living wage level would destroy jobs for exactly the
people we want to help. The empirical data is clear: putting a floor
on the price of labour creates unemployment, especially among
young and unskilled workers. Instead, we should stop taxing the
poor so much. The pre-tax earnings of a worker on the minimum
wage (12,875 per annum) are almost as high as the post-tax
earnings of a worker on the Living Wage (13,069.32 per annum).
The surprising fact is that we could give nearly everyone a living
wage without creating any unemployment. All we need to do is
stop taxing the poor.
Sam Bowman is policy director at the Adam Smith Institute.
RAPIDresponses
Why the coalition
must freeze rates
on retail premises
employing 900,000 people, and rep-
resenting 32 per cent of the UK retail
market. It showed that 70 per cent
fear a rates increase would force
them to cut back on job creation and
investment in new or existing stores.
And 15 per cent said it would even
force them to close stores.
Thats why were asking everyone
with a stake in successful retailing to
join us and Retail Week in calling for
fair rates for retail. The government
should accept that retail has already
shouldered more than its share of
increases. It should freeze business
rates in 2013, and bring in a fairer
formula for the future.
This week, were stepping up the
campaign. By joining with the
TaxPayers Alliance, were urging
everyone who wants to stop high
taxes from thwarting growth to
write to their local MP asking for sup-
port.
Regardless of party, MPs who care
about local jobs and communities
will recognise the importance of
their high streets and the need to
take action to prevent more retailers
failing and premises from falling
empty.
Politicians should support our
campaign because the employment
and services that shops provide are
spread across every constituency in
the UK. The damage will be wide-
spread if they fail to act.
Stephen Robertson is director general of
the British Retail Consortium. Visit
www.freezebusinessrates.org to sign up to
the campaign.
STEPHEN ROBERTSON
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30
cityam.com
T
HREE ghosts have haunted
the global economy in 2012:
the Eurozone crisis; the
looming US fiscal cliff; and
decelerating growth in Chinas
economy. But as worries over
China lessen, traders will be
relieved that one of these ghosts
may soon be exorcised.
After the speed of GDP growth
began to decline towards the end
of 2011, the question was whether
China would face a hard land-
ing. Recent data seems to dispel
that notion. Mark Ingram of BGC
Partners says macroeconomic
data suggests that China is engi-
neering a soft-landing. Last
weeks manufacturing purchasing
managers index (PMI) a leading
indicator is at an eight-month
high, rising to 49.5 from 47.9 in
September. Crucially, new orders
grew for the first time in a year.
Non-manufacturing PMI also
picked up, rising to 55.5 from 53.7.
Add increased momentum in
industrial production, expanding
at its fastest rate in four months;
and retail sales, growing at the
fastest rate since April, and a bull-
ish case emerges.
Bears point to a fall in employ-
ment and annual GDP which, at
7.4 per cent, has slowed to its weak-
est pace since 2009. However, the
governments target for 2012
growth is 7.5 per cent, and this is
easily within reach. Loose mone-
tary and fiscal policy will also sup-
port growth in the medium-term.
Traders will be closely watching
upcoming data, released on
Friday, to see whether it gives cre-
dence to the bullish case.
Attention will also be on
Thursdays National Party
Congress, when Chinas new gen-
eration of leaders will be present-
ed (although exact positions may
be announced on 15 November).
Incoming central committees
have historically bolstered eco-
New leaders may help
China to boost growth
Follow the leading indicator
The economic giant
can reawaken, says
Yogesh Chandarana
TRADING MANAGEMENT WEALTH
THE TIPSTER
COME FLYBE WITH ME
E
UROPEAN carrier FlyBe
Group has been punished
by high fuel prices and
cooling demand from
business passengers. Shares
have slid by almost 30 per cent in
the last 12 months, and traders will
be looking to Thursdays interim
statement for guidance on how the
company expects to benefit from its
partnership with the Nordic carrier
Finnair. GFT Markets quotes a price
of 49.94p-51.06p for FlyBe Group.
Considering the disastrous public
relations it has had over the last few
months, it is surprising that shares in
G4S are up 3 per cent this year. Its
share price was routed after the
Olympic security fiasco in June, but
has since been trading between
260p and 270p, and currently sit
towards the bottom of that range.
Traders will be looking to
tomorrows interim statement for
clear direction. ETX Capital quotes a
price of 260.59p-261.21p for G4S.
Burberry has struggled to
recover since it issued a profit
warning in September. Shares have
bounced back after falling sharply,
surging by 24 per cent in October
alone; but it is still down by almost
10 per cent in the last year. The
luxury retailer announces its interim
results tomorrow, and investors will
hope that they will be strong enough
to sustain the recent momentum.
Capital Spreads quotes a price of
1,238.3p-1,240.7p for Burberry.
SuperGroup has had an
impressive run since a nadir in June,
when shares hit a record low around
250p. Since then, the share price has
powered ahead, but has petered out
just below 700p. A third consecutive
quarter of growth could provide
reassurance that the worst is now
behind the trendy retailer. IG quotes
a price of 664p-670p for
SuperGroup.
YOGESH CHANDARANA
side of China and positioned well.
Ingram believes that areas
which are geared into Chinas
growing middle class, like health-
care, travel and the entertainment
sector, are worth a look. He points
out that there have been strong
fund flows into China from
exchange traded funds, which
may appeal to some traders.
A potential risk is if Mitt Romney
were to win todays US presiden-
tial election, after he declared that
he would label China a currency
manipulator. Ingram says that it
could open the doors to a trade
war and may result in tariffs
being imposed on China, hitting
exporters and growth. Also, the
Eurozone crisis and US fiscal cliff
have potentially global ramifica-
tions, and could throw a spanner
in the works.
Although Chinas growth has
slowed, it is still enough to make
most nations envious. It certainly
has the potential to resume its role
as the engine for world growth. A
rejuvenated China would improve
confidence and help to reduce
global risk. Come the end of the
week, traders could be saying:
one down, two to go.
nomic growth by splurging on
investment spending. But given
the excess capacity in Chinas pri-
vate sector, the new cohort may
not be gung-ho: many regions have
already announced ambitious
investment programmes on the
back of a 100bn infrastructure
stimulus programme. This could
contribute to a boost in domestic
demand and ease unemployment.
Given well-publicised bickering
in the run up to the Congress, one
question lingers over the ability of
Chinas leaders to push through
much-needed economic reform.
The economy relies on investment
and exports, and desperately
needs rebalancing. Enhanced
domestic consumption and an
expansion of its services sector
could offset weak export demand.
Martha Wang of Fidelity thinks
that the leadership change will
remove the political shackles
holding back markets. Companies
with strong fundamentals that
have been indiscriminately pun-
ished by political uncertainty will
benefit. She cites the Nasdaq-listed
search engine Baidu as an exam-
ple. Companies like Diageo and
Michael Page are also listed out-
fx360.com
THE ECONOMIC OUTCOMES
OF A CLOSE CALL ELECTION
Quest Diagnostics Share Price
Nov 12 Sep 12 Jul 12 May 12 Mar 12 Jan 12
66
64
62
60
58
56
54
Supreme Court Decision
twitter.com/fx360 facebook.com/fx360
The contents of this column are provided for general information purposes only. One should consider the appropriateness
of the information in light of their own objectives, financial situation or needs before trading. CD11UK.074.010612
NEAL GILBERT
SENIOR MARKET STRATEGIST, GFT
A
S AMERICANS go to the polls to
decide their President for the next
four years, the race is at deadlock,
with both candidates still in
pursuit of every possible vote.
Once the ballots have been counted in the
early hours of tomorrow morning, it is hard
to imagine that there wont be some
degree of momentum injected into bonds,
the dollar, and a select band of stocks that
stand to win or lose depending on the
policies that will be rolled out by the next
administration.
History has shown that the US economy
and Wall Street do better under a Democrat
government. But there are also plenty of
corporates that would benefit if the
Republican challenger Mitt Romney comes
out on top. Consider the railroad firm CSX,
which published a mixed bag of results just
last month, with tumbling shipments of
coal the biggest contributing factor. Barack
Obamas green policies are likely to make it
harder for operations like coal-fired power
stations to function economically in the
future, meaning that shipping volumes in
this market will continue to slide. A more
hands-off approach from Romney, however
based on the lowest cost solution to
driving US economic recovery and his
public declaration that he likes coal
would arguably put the likes of CSX very
much back in favour.
The future size of the US military is
another key area of contention. President
Obama wants to scale back the size of the
Army and Marine Corps by 100,000,
whereas Romney wants to increase the
military budget by $2 trillion (1.2 trillion)
over the next decade. Thats a huge
investment and one that would directly
benefit a whole raft of US defence
manufacturers, including Boeing,
Honeywell, Northrop and Lockheed Martin.
If theres one single policy that has
defined the Obama presidency so far,
however, it must be his signature
healthcare laws, commonly referred to as
Obamacare. When they were challenged
and subsequently upheld by the Supreme
Court in the summer, the market reaction
couldnt have been more telling. The major
listed healthcare companies, like Quest
Diagnostics and Laboratory Corp of
America, saw their shares jump sharply off
the back of the news. In contrast, insurance
companies faced with added burdens
saw their share prices tumbling. Romney
has made it quite clear that, on day one, he
will act to repeal the Affordable Care Act
(to give Obamacare its proper name). So
again, theres a swathe of listed entities
that will stand to see definitive price action
depending on who emerges victorious on
Wednesday.
Looking beyond specific equities, theres
also that looming question of the fiscal cliff.
If a Romney wins, it is likely that Bush-era
tax breaks will be extended. And although
mounting debts cannot be eradicated, the
risk of the fiscal cliff happening will at least
be deferred. Tax breaks should also prove
attractive for corporate USA as a whole. So
at least in the short term, equity markets
should continue to find favour. Bond
markets, however, concerned about
continuing debt, would likely start
demanding a higher premium.
The greenback flies in the face of the
obvious correlation with deficits; in the
event of his election Romney would be
expected to take a more hawkish tone over
monetary policy. Clearly this would do little
for boosting exports or discouraging
consumers from importing more but the
longer term path for the greenback is
harder to call.
Despite the assumption among some
pundits that the presidential race is over,
the majority seem to agree that it is still far
too close to call. One thing is clear
however regardless of which way the
American people vote, the potential
trading opportunities will abound.
GDP vs PMI
2006 2007 2008 2009 2010 2011 2012
15 66
55
50
45
40
13
11
3
5
7
9
China GDP, annual % change HSBC/Markit PMI
GDP
PMI
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The US wont go over the fiscal cliff regardless of the election outcome
straightforward as some suggest rally-
ing on a win by fiscal tough-talker
Romney or selling off on victory for big-
spending Obama. The opposite may be
true; that US government bonds sell off
on a Romney victory, as he would likely
preside over a more hawkish Fed. That,
as Citigroup strategist Steven Englander
points out, is precisely what happened
the moment Romneys surge began
after the first presidential debate on 3
October until his odds peaked on 25
October. The benchmark ten-year U.S.
Treasury yield rose during that period
from 1.62 per cent to 1.83 per cent.
The ten-year yield is worth watching
tonight, as exit polls start rolling in. A
small jump would likely indicate that
Romney is pulling ahead, given that the
market currently appears to be discount-
ing an Obama win. This is reflected in
the political odds as well, which on
Monday implied a 67 per cent chance
How the dollar could
predict the US victor
T
USCAWARAS. Volusia.
Arapahoe. Investors looking
for early signs of the outcome
of the US presidential election
tomorrow will want to scrutinise
results from these three swing
counties in Ohio, Florida, and
Colorado respectively.
Or they could just watch the dol-
lar. The dollar, rather than equities
or the US government bond yield,
may offer the best proxy for the out-
come of one of the closest presiden-
tial races in history with its major
ramifications for global investors.
Growth prospects, Fed action, tax
rates, defence spending, cash repa-
triation; all these hinge on whether
Mitt Romney or Barack Obama
emerges victorious.
And the dollar may offer the clean-
est real-time read as to which candi-
date has the edge. US equities could
benefit regardless of the outcome,
so long as it is quickly determined.
Based on precedent from other tight
races, JP Morgan strategist Thomas
Lee says the S&P 500 is likely to add
3.3 per cent if President Obama is re-
elected, and 6 per cent if Romney
takes the White House instead.
As for Treasuries? Its not as
MANAGEMENT WEALTH
cityam.com
that the President would be re-elect-
ed. Still, movements up or down of
just a couple of basis points on the
ten-year may be too vague to be use-
ful.
More telling could be the reaction of
the US dollar. Romney strength has
typically moved in tandem with dol-
lar strength. This was also observed
from the 3 Oct to 25 Oct period. Of
course, the dollar has to be watched
against a range of other currencies to
make sure it, and not, say, the euro, is
the protagonist. And it is worth cross-
checking moves against other assets
sensitive to the election outcome;
small-cap stocks, for example, which
Lee says would benefit under a
Romney win from a friendlier tax
code, and more mergers and acquisi-
tion activity. Gold too has moved
inverse to Romneys election odds.
As for the all-important fiscal cliff
which looms just after election day?
Defence contractors like ManTech
International have jumped, even as
Obamas odds recovered; a vote of
confidence, perhaps, that regardless
of the outcome of this vote, the US
wont be going over the edge.
Kelly Evans is a CNBC anchor. You can fol-
low her on Twitter @Kelly_Evans
TRADING
32
CNBC
COMMENT
KELLY EVANS
Forget the exit polls and track how the greenback reacts tomorrow
Who says fitness isnt fun? Bounce
yourself slim with these exo-stilts
34
cityam.com
FIT IN
THE CITY
LAURA WILLIAMS
LIFE&STYLEHEALTH & GROOMING
www.laurawilliamsonline.co.uk
Twitter: @laurafitness
D
R HOWARDMurad is not your
run-of-the-mill dermatologist.
Despite the fact hes amassed
quite the skincare empire,
hes a firm believer that time spent
away from your email, eating
healthily and exercising is far more
important than splashing out on the
latest must-have cream. It should
come as no surprise, then, that he
recently announced a partnership
with Reeboks new sports club, Re:
Spa, where a selection of his
products are now available.
Do you think exercise helps keep
skin in good condition?
Yes, exercise builds muscle and
muscle contains 70 per cent water
compared to the 10-15 per cent water
content of fat tissue. So from a re-
hydration point of view, its easy to
see why exercise, which helps to
build muscle tissue, helps give you
glowing skin.
Do you think any particular
exercise helps?
As far as building muscle tissue is
concerned, resistance exercise
(where you are lifting weights, using
bands or tubes or even your own
body weight) is key, but aerobic
exercise is equally as important. It
helps boost circulation and the
delivery of nutrients to skin cells,
plus it helps with the production of
collagen, which helps to keep lines
and wrinkles away.
Do you think facial exercise is a
good idea?
Not really. More often than not, its
not done properly.
How much of a role does good
nutrition play in skin?
Eat your water is what I always
say to my patients. By that I mean
Nuts and seeds vs nip and tuck
The real secrets of beautiful skin
you can do wonders for the skins
appearance by eating water-rich
foods. This internal re-hydration is
actually more important than the
stuff youre putting on your skin.
Watermelon, tomatoes, cucumber,
and courgettes these foods
contain around 95 per cent water.
Is there such thing as a superfood
as far as the skins concerned?
Actually, yes. Eating pomegranate
can increase your SPFs
effectiveness and the goji berry is
definitely worth the hype. Ive
been saying for decades that it is
probably the most nutritionally
dense food on the planet, with its
high antioxidant content and anti-
ageing vitamin A.
What are the most damaging
things a person can do for their
skin?
Well, youve got the obvious things
like UV, but I actually think cultural
stress poses the greatest threat to
our skin. Its a silent killer. Being
permanently on the go, constant
pervasive stress and lack of sleep all
play a part in everything from water
loss to our skins cells to obesity and
depression. We need to learn how to
nurture ourselves more. Its so
important to take an inclusive
approach to skincare by looking at
your emotional wellbeing too.
Why Reebok Re:SPA for Murad?
The Reebok Club is a perfect fit for
the brand as it has all of the
elements from our inclusive
health philosophy. The concept
includes internal care, which
Reebok addresses with information
on nutrition. We also believe its
important to look after your
emotional wellbeing and Re:SPA
provide a relaxing environment to
help relieve stress. Finally, theres
obviously topical care, the third
prong in our inclusive health
concept, which is addressed at the
spa with Murad products and
facials.
So what is the secret to beautiful
skin?
I tell my patients three things:
Eat your water: Stick to those
high-water foods mentioned above,
and dont dehydrate yourself with
excessive amounts of salt.
Eat your sunscreen: Eat plenty
of bright, colourful, antioxidant-
rich fruit and veg.
Become the most important
person to yourself: Embrace
yourself, believe in yourself, be
thrilled to be yourself, treat
yourself like royalty... Or at least be
comfortable with yourself.
Murad products and treatments
(www.murad.co.uk) are available at
Reeboks Re:SPA in Canary Wharf
www.reebokclub.co.uk/spa. Call
020 7970 0912 for more
M
USTERING THE motivation
to get out for a run during
the winter months can be
tough. Running through
rain, sleet and sub-zero
temperatures just isnt any fun, no
matter how hard you try to
convince yourself otherwise.
Enter the Kangaroo Jumps: the
more-than-faintly-ridiculous keep-
fit method that is slowly carving
out a niche in London. Keep a
look-out in Hyde Park for long
enough and you will, eventually,
between the skaters and roller-
bladers, spot groups of people who
appear to have taken inspiration
from the moon landing footage.
There is no denying they look a
bit silly, lolloping along at a fair
clip like an accelerating
hippopotamus but there is
method to the madness: bouncing
can burn off 20 to 30 per cent
more calories than jogging. They
also have another major
advantage over running: the boots
absorb as much as 80 per cent of
the stress that your knees usually
take.
The entry level bouncer will
probably want to start with a pair
of Kangaroo Jumps (pictured
right), which will put a spring into
your step but wont launch you
into orbit.
A seasoned jumper, though,
might want to try something a
little more hardcore: the Pro-Jump
EXO CZ80 Jumping Stilts. These
look similar to 200m runner Oscar
Pistorius blades and can generate
a crazy amount of power in each
stride. Knee, elbow and head
protection is a must if youre using
them on concrete or attempting
any tricks.
Kangaroo Jumps are 166 from
kangoojumps.com.
Exo Stilts are 159.99 from
Amazon.co.uk.
Kangaroo Jumps burn 20-30 per cent more calories than jogging
I
M
A
G
E
:

G
E
T
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Y
cityam.com
35 LIFE&STYLE FOOD & DRINK
AMUSE
BOUCHE
BRUCE WILSON
Mutton doesnt have to dress like lamb: its just fine as it is
I
DONT KNOWwhy but people
have started asking me about
mutton. Maybe its because I
run a British restaurant and I
have big mutton chop sideburns
but whatever: its got me thinking.
Why dont we eat more mutton in
this country, and could there be a
demand for it? Ive never seen it in
the supermarket and you rarely
come across it on menus. We love
our lamb but mutton, which used to
be far more common on British
dinner tables, has really fallen out
of favour.
There doesnt seem to be any
good reason for this, other than
changing trends in the way we
produce and eat our food.
According to the great Mrs Beeton,
writing 150 years ago, Mutton is
undoubtedly the meat most
generally used in families and by
connoisseurs it stands first in
flavour. Today people seem to think
that mutton is just tough old lamb,
but that assumption doesnt do it
justice. After all, we dont think of
beef as just tough old veal.
So what is mutton? Well, it comes
from a sheep that is more than two
years old (lamb tends to be anything
up to a year after that its
technically called hogget), and
because of its age and the fact that it
tends to have spent longer outdoors
it has more inter-muscle fat, known
in the trade as marbling. Although
this makes the meat less sweet and
tender than lamb, it also gives it a
deeper flavour. It does take more
(slower) cooking, but to my mind,
the rewards are there.
Thanks to its stronger taste, dishes
such as stews, hotpots, pies, tagines
or curries come alive when you
substitute lamb with mutton. It goes
perfectly with sharp, spicy or other
robust flavours, which is perhaps
one reason why it is popular in
Middle Eastern and Asian cookery.
One of the easiest ways to eat it is in
a simple Shepherds pie, throwing in
a few capers at the end to give it
another dimension.
If you can find it, nows a good
time to try it, as the animals have
had all summer to fatten up and
enhance their flavour but thats
the problem. While some TV chefs
and food writers have started
challenging negative perceptions of
mutton, the lack of availability is
the biggest hurdle. If more chefs do
our bit for the poor old sheep by
offering mutton chops, roasting
joints, pies and stews, Im sure the
appetite would be there. Mrs Beeton
would be proud.
Try some wild boar on Bruces menu.
Visit paternosterchophouse.co.uk for
more.
Head chef, Paternoster Chop House
I
VE ALWAYS been convinced
that Id fit in pretty comfortably
in Argentina. After all, it is
known for its meat, beef
especially, and as a self-confessed
steak junkie, the idea of visiting
Garufin, the new Argentinean
restaurant in WC1, was a treat.
If the name rings a bell, youre
probably familiar with its elder sib-
ling, the much-loved Garufa steak-
house in Highbury. Following on
from its success, Alberto Abbate and
Gustavo Vasquez, the men behind
the successful restaurant, have
opened Garufin with the intention
of making it central Londons
answer to easy, traditional food and
drink.
When I arrived, a week after open-
ing, it wasnt particularly busy.
Aside from my partner and I, there
were only about four other couples,
which wasnt particularly a bad
thing. The basement dining area,
the lower of two floors, feels inti-
mate, the type of place you feel in
the know for knowing about, and
are reluctant to tell people about for
fear of it becoming too popular. The
exposed brick walls, low lighting
and black and white tiled floors,
alongside the wine cellar housed at
the back, serve as the perfect back-
drop.
The starters include several region-
al favourites and much of the menu
comes in tapas style portions,
encouraging you to try different
things. Empanadas, a popular dish
in South America, came in several
different combinations, like spicy
tripe with ox cheek (Mondongo) and
scallops and tomatoes with olives
(Patagonica). Pre-empting the fact
that the main would be quite a
meaty affair, I opted for the sweet-
corn and goats cheese (Veruda)
empanadas, which was a hit; the
softness of the filling providing a
good counterpoint to the crispy exte-
rior. They made no mistake with the
delicious sour dough bread and
steamed butter (pan).
The upstairs space is currently the
home of a caf during the day but
has the intention of turning into a
wine bar at night, offering an array
of Argentinean wines by the glass or
carafe (thanks to an enomatic
preservation system). As a result, the
wine list is quite extensive the per-
fect excuse for me to break away
from my usual Rioja. My partner
and I opted for a 2008 Malbec on rec-
ommendation from the owner, a
wine made in the vineyards in San
Juan. Great choice. At only 25, it
quickly had us both writing the
name down to pick one up on the
way home to enjoy over the week-
end.
For the main course I went straight
for the sirloin steak and chimichurri
(bife de chorizo) with roasted baby
potatoes. Rather disappointingly, the
meat was only marginally better
than you would get from any decent
high street grill succulent and well
seasoned but missing that X factor.
Completely full from the second
course, it took us nearly 45 minutes
to even consider looking at the
desert menu. However, determined
to try the sweets, we decided to
share a quinoa cream pudding with
vanilla and cinnamon ice cream.
While I was initially disappointed
that the menu was limited to ice
creams and fondants, we were won
over. The lightness of the quinoa
cream pudding, which was a bit like
a less dense rice pudding, was the
perfect palette cleanser after the
heavy meal.
The affordable prices and intimate
setting means Garufin will no doubt
be just as successful as its North
London counterpart. Ive already
booked my next trip and if you want
to experience the intimate setting,
Id advise you to do so too, before
everyone jumps in on the action.
RESTAURANT
GARUFIN
8b Lambs Conduit Passage, WC1R 4RG
Tel: 020 7430 9073
FOOD hhhii
SERVICE hhhhi
ATMOSPHERE hhhhi
Cost for two people with wine 60
The new tapas-style eatery is definitely one to tick off your list, says Naomi Mdudu
Enjoy a taste of Argentina
at Garufas sister restaurant
How to really
booze like Bond
W
HENHE had his clothes on and
wasnt chasing baddies, there is no
doubt that James Bond was a noted
oenophile. You only have to have a
passing knowledge of Ian Flemings books or
the films to know that 007 was a full-on
connoisseur. Forget the vodka Martini, that was
just the aperitif; when it came to business it
was a diet of vintage champagne, claret, sherry
and everything in between.
You only have to list Bonds wine
consumption to marvel at the fact he managed
to shoot straight. Little wonder that in Skyfall
Bond struggles to pass his medical. Now an
enterprising wine advisory firm called Wine
Chap has done the research and put together a
rather entertaining James Bond tasting, which
takes its guests through all of the mans
favourites. Be warned though, this is not for the
faint hearted you would need the
constitution of a secret agent to make your way
through them all.
Of course, there were occasions where wine
saved 007s bacon. In Diamonds are Forever he
susses that the wonderful Mr Wint and Mr Kidd
are about to blow him up when they dont
know the difference between Bordeaux and
Claret (there is none). And there is that great
moment in From Russia with Love where the
thuggish Red Grant gives the game away when
he orders Chianti with his fish in the dining car.
Later, Bond grimaces: Red wine with fish, that
should have told me something.
Grant replies: You may know the right
wines, but youre the one on your knees.
Before, of course, Bond (fuelled with the right
sort of wine) sorts Grant out.
But back to Wine Chaps tasting. Bond was
partial to his champagne but was always
promiscuous in his tastes. So, we start with the
sublime Taittinger Comte de Champagne
2000. Not the Blanc de Blancs 43 from Dr No,
sadly (if it still exists), but still wonderful. Then
comes Dom Perignon
2003. Allegedly Dom
Perignon used to send
Fleming a case on his
birthday and was
rewarded by some
early product
placement. After that
comes, or course, the
intense and rich
Bollinger, beloved in
later films.
To shock the
audience there is
then a change of pace to some warm Sake, a
homage to You Only Live Twice. I will draw a
veil over this bit. Then a high speed swerve into
the clarets. Chateau Angelus, the St Emillion
from Casino Royale and the Chateau Batailley
a bit of an imposter this list, since it only
appeared in Sebastian Faulks Bond book Devil
May Care. But since Batailley is a regular in the
Bennett cellar, it is nice to see it there.
And then the finale. An Oloroso Sherry, a nod
to the vinous tussle between 007 and M at the
end of Diamonds are Forever over the 1851
Solera. Now, frankly, all this is a bit too much
and hardly what one would call evidence of a
balanced palate. It shows he was a prolific
boozer, says Tom Harrow, founder of Wine
Chap. And his wine taste was not so much
deep as infinitely shallow. But you have to hand
it to him. My lingering question is: how did he
manage it all on a civil service expense
account?
One for the weekend: Isole e Olena Chianti
Classico 2009, 18.69 at thewineshop.com.
One to impress: Chateau Batailley 1998,
42.00 at Berry Bros.
One to keep: Dom Perignon 2003, 510 for
six in bond at Lay & Wheeler.
To organise a tasting with Wine Chap, call
020 7720 2024 or visit winechap.com.
THE BOTTLE
OPENER
NEIL BENNETT
bottleopener@cityam.com
36
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Fill the grid so that each
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Place the numbers from 1 to 9 in each empty cell so that
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Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
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KAKURO
WORDWHEEL
SUDOKU
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QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6 7
8
9
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13 14 15 16 17
18 19
20 21
22
23
24
4 7 7
45
11 28
9 11
39 13
10 24 15
3 25
8 8
27 23
45
5 18 6
20
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28
11
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30
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12
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29
39
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ACROSS
3 Difusing warmth
and friendliness (7)
6 Movies (5)
8 At a convenient or
suitable time (9)
9 Japanese rice
dish (5)
10 Peninsula of Ukraine,
on the Black Sea (6)
13 As a result (4)
16 Fit of shivering
or shaking (4)
18 Greeny, blacky,
etc (6)
20 House for
travellers (5)
22 First regiment of
household infantry,
___ Guards (9)
23 Cooks in fat or oil (5)
24 Beetroot soup (7)
DOWN
1 Counterbalance (6)
2 At short
range (5,2)
3 Savoury jelly (5)
4 Respiratory
disorder (6)
5 Four-wheel
covered
carriage (6)
7 Rate of travel
(inits) (3)
11 Colour (3)
12 Image boost (3-4)
14 Coifure (6)
15 Gleams brightly (6)
17 Join the
military (6)
19 Budge (5)
21 Throughout a
period of time,
poetically (3)
L
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4
H S E A S O N I N G
A E T R N
R E T R O B R A I D
V T E N S I O N I
E L O P E T E E N S
S L D H
T A L E S R E C T O
E A T E L I E R N
D O P E D D R A P E
E G G N S
G O L D E N E Y E T
9 6 8 4 7 4 1 2
4 3 7 2 1 7 3 1
2 9 1 6 9 8 7
9 7 3 4 2 8
6 5 3 6 9 6 8
8 4 2 7 3 1 6 5 9
3 1 9 1 1 2 3
4 8 2 1 1 7
2 4 1 5 2 8 3
8 9 6 6 5 9 8 7
6 2 3 1 3 5 4 2
4
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The nine-letter word was
UNDERDONE
T
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R
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E
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&
C
A
B
L
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
IMAGINE
BBC1, 10.35PM
Profile of Ian Rankin, following him
over six months as he writes his new
novel, which brings back dour
detective Rebus after his retirement.
DARA O BRIAINS SCIENCE CLUB
BBC2, 9PM
The comedian is joined by a team of
experts to investigate a subject each
week, beginning with reproduction
and inheritance.
ROLFS ANIMAL CLINIC
CHANNEL5, 8PM
Neil Townsend operates on a horse
that has seriously infected sinuses,
two pythons are given MRI scans, and
Helen Williams has to treat a pet pig.
TVPICK
UNCAPPED batsman Nick Compton
insisted laughter proved the best
medicine for his early-tour struggles
after finally finding form with a half-
century as England drew their
warm-up match in India against
Mumbai A.
Somersets Compton, vying with
Joe Root of Yorkshire for the right to
partner captain Alastair Cook at the
top of the order, hit a painstaking 64
not out from 162 balls as England
reached 149-2 in their second
innings. It followed unflattering
stints of 0 and 1 in his previous two
appearances on the tour, with one
match left to impress before the first
Test, although he stressed his shaky
start had not troubled him unduly.
I knew I needed to just spend
some time out there and thats gen-
erally my process. The first two
[innings] probably couldnt have
gone any worse and you can either
over-analyse it or just go back and
have a laugh, said Compton.
It wasnt the way I intended it to
go but today was just about getting
Compton finds
form in opener
duel with Root
back into stronger positions, especial-
ly on the front foot. Ive worked really
hard behind the scenes and Im glad
a little bit of that work has paid off.
Its just nice to tick over get the feet
going and get a not out score there.
Its natural in a squad that every-
one is vying for a place, and Id be
lying if I said that I didnt have an eye
on that opening spot.
Root notched 24 to add to his first-
innings 28, with Jonathan Trott con-
tributing a characteristically steady
30 and Ian Bell weighing in with 28
not out.
Earlier, spinners Monty Panesar
and Samit Patel pressed their Test
claims by finishing with three wick-
ets apiece as England tore through
Mumbai As tail end. The hosts were
232-4 overnight but swiftly collapsed
for the addition of just 54 more runs,
with Patel, who has already
impressed with the bat on this trip,
claiming figures of 3-44.
Fast-bowler Stuart Broad fielded
but did not bowl after scans revealed
a bruised heel, a diagnosis that raises
hopes he will recover for the first Test
in Ahmedabad on 15 November.
R
YDER Cup star Ian Poulter
reminded everyone that he is
far from being just a great
matchplay competitor with a
fantastic win at the WGC Champions
event in China on Sunday.
Poulter had some catching up to
do after the first two days but
produced successive rounds of 65 to
overtake the likes of fellow
Englishman Lee Westwood and
finish on 21 under par.
That sort of performance, like
those when he inspired Europe to
success at the Ryder Cup earlier this
year, are testament to his
tremendous confidence and self-
belief and of course that he is a
great player.
Victory has moved him up to 15th
in the world rankings and I expect
that he will soon be back in the top
10, while his consistent
improvement means I wouldnt be
at all surprised if he won a Major
next year.
The other person grabbing the
headlines at the weekend was 14-
year-old Chinese prodigy Guan
Tianlang, whose win at the Asia-
Pacific Amateur Championship
earned him a place at next years
Masters. Its a magnificent
achievement, one that means he is
set to become the youngest player
ever at Augusta, and further
evidence of the enormous pool of
incredible talent coming through
in Asia.
Another 14-year-old from China,
Andy Zhang, made his Major debut
at this years US Open, while Japans
Ryo Ishikawa and South Korean Noh
Seung-Yul also emerged while still at
school. Last year at the China Open
some of us played nine holes with
groups of juniors. Afterwards we
could not stop talking about how
brilliant some of the technique was
in kids aged eight or nine.
Ive said before that the mens
game will soon be dominated by
Asian players in the same way the
womens circuit is. They are
catching up with Europe and they
are going to be huge in 10-15 years.
DODGY
Finally, an old subject that I have
been asked about for 25 years has
reared its head again, with some
leading players upset at suggestions
that long putters, which I have used,
could be banned. Im loath to get
into it too much until that actually
comes about, but what I think will
happen is that long putters will be
allowed, while those that sit against
the belly could be outlawed.
Id agree with that move. Belly
putters are dodgy because they give
you an advantage. Its like holding a
pencil against a wall when drawing
a semi-circle if you have a fulcrum
then you are more likely to get an
even drawing each time than by
going freehand. Belly-putters,
anchored against the body, offer the
same help.
Sam Torrance OBE is a multiple Ryder
Cup-winning golfer and media
commentator. Follow him on Twitter
@torrancesam
ENGLAND head coach Stuart
Lancaster is facing a deepening
injury crisis before Saturdays clash
with Fiji, after London Irish centre
Jonathan Joseph became the sixth
player to be ruled out.
Joseph missed training yesterday
due to an ankle problem and is
rated unlikely to practice today,
leaving him no chance to prove his
fitness with tomorrow being a day
off and Lancaster naming his team
on Thursday.
Lancaster has already had to plan
for the first of this months four
international matches without key
Joseph set to miss Fiji match as
England call Wasp Launchbury
winger Chris Ashton, who is
suspended, prop Alex Corbisiero,
hooker Dylan Hartley, flanker
Courtney Lawes, full-back Ben Foden
and centre Jordan Turner-Hall.
Wasps lock Joe Launchbury has
also joined the squad as temporary
cover for Tom Palmer, following the
addition of Gloucester pair Freddie
Burns and Billy Twelvetrees on
Sunday. None of the three are likely
to face Fiji.
Tom didnt train last week with a
tight calf, said Lancaster.
I just want to make sure I have all
the bases covered. We were also keen
to get Joe in, particularly in light of
his recent form.
BY FRANK DALLERES
BY FRANK DALLERES
Results
SPORT
37
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Nick Compton boosted his hopes of starting the first Test with 64 from 162 balls
BRITISH distance-running hero Mo
Farah has been overlooked for world
governing body the IAAFs male
athlete of the year award.
Farah won 5,000m and 10,000m
gold at the London 2012 Olympics,
joining a select list of athletes to
achieve the double in a single
Games. But he did not make it onto a
three-man shortlist that includes
sprint king Usain Bolt, Kenyan 800m
star David Rudisha and American
110m hurdler Aries Merritt.
Farah Tweeted: Congratulations
@usainbolt David Rudisha and Aries
Merritt! All had great season!!
Farah snubbed
for top award
BY FRANK DALLERES
IN BRIEF
Boss Levein sacked by Scotland
nFOOTBALL: Scotland last night
sacked manager Craig Levein
following a disappointing start to their
World Cup 2014 qualifying campaign.
The Scots have taken just two points
from their four games, leaving it
unlikely they will reach a first major
finals since Euro 96. Former
Middlesbrough manager Gordon
Strachan was installed as the early
bookmakers favourite last night.
Flanker Qera may face Red Rose
n RUGBY UNION: Gloucesters
Akapusi Qera could face England on
Saturday after the flanker was called
into Fijis squad for the international
at Twickenham.
GOLF
COMMENT
SAM TORRANCE
Poulter for a Major and why Id ban belly putters
WORLD No1 Novak Djokovic began
his campaign to win the ATP World
Tour Finals in London with a
straight-sets victory over Frances
Jo-Wilfried Tsonga.
The win was the Serbs fifth over
Tsonga this season and took him to
the top of Group A with each player
having played a game, but he had to
overcome a difficult first set before a
more convincing second in securing
the 7-6 (7-4), 6-3 outcome.
It means a lot, especially here
when youre taking part in an
event with the best eight players
in the world, said Djokovic, who
hopes to end the year in the same
successful fashion that it began
when he won the Australian Open
but will remain the worlds No1 for
the second season in succession
regardless of this tournaments
outcome. There are no easy matches
and no favourites really.
That the Serb saved three break
points in the opening set was
crucial in winning it, and had an
obvious eventual impact on Tsonga
who before then had tested his
opponent and played the sort of
game that required Djokovic to
repeatedly cover much of the court
who appeared very deflated in
the second.
Only 20 minutes in to the second,
however, Djokovic had secured a
match point, and when Tsonga
responded by slicing a backhand
volley into the tramlines it was over.
He tomorrow faces Andy Murray.
Djokovic downs
Tsonga with
straight set win
US OPEN champion Andy Murray
revealed that the memory of last
weeks surprise defeat to Polands
Jerzy Janowicz at the Paris Masters
inspired him to yesterdays 3-6, 6-3,
6-4 victory over Tomas Berdych at the
ATP World Tour Finals in London.
In his first fixture in Britain since
becoming a Grand Slam winner,
Murray had dropped the opening set
to the world No8 who began with
impressive consistence and he wasted
10 break points throughout the
course of the two hour, eight minute
long affair before assuming the
matchs momentum midway
through the second. His dominant
serve reappeared to secure the course
of the third, and with it the opening
singles match of the tournament.
I was thinking the reasons why
that had happened, said Murray,
when reminded of the way he had
avoided succumbing to a defeat simi-
lar to that which he had experienced
last week in Paris. The match against
[Novak] Djokovic in Shanghai [when
Murray lost 5-7, 7-6 (13-11), 6-3 to the
final of the Shanghai Masters], again,
I didnt really feel like I did loads
wrong in that match. The one last
week, I said I was disappointed with. I
rushed, didnt concentrate and focus
as hard as I needed to. That was why I
got broken.
So I focused on every point. I got
myself pumped up. I took my time
and served it out well.
It was perhaps in that period of
play in the second set when the
match was lost and won. Berdych,
who had on Sunday spoken of a
desire to avenge his semi-final defeat
to Britains No1 during Septembers
US Open, appeared the more confi-
dent of the two with the second set
underway and Murray a stuttering,
frustrated figure at 1-1 and with a
break point to the former. Had it
been taken a route back into the
match would have been difficult for
Murray to find but Berdych wasted
his opportunity to push on and the
Scot thereafter played with a convic-
tion to leave his opponent to rue an
ultimately decisive point.
I think the biggest moment was
in the second set, Berdych said. 1-1,
that I had that breakpoint. I just hit a
forehand return, and it was just like
small out. Who knows, it could be 2-1,
early break after winning the first
set. There was a pretty good chance,
but it didnt happen.
Murray must still negotiate match-
es with Novak Djokovic and
Jo-Wilfried Tsonga to advance to the
tournaments semi-final.
Murray learns
his lesson to
recover and
beat Berdych
Novak Djokovic is the mens world No1
REFEREE Mark Clattenburg will sit
out another week of Premier League
fixtures following Chelseas
complaint that he racially abused
John Obi Mikel in last months
match against Manchester United.
Clattenburg is due to meet the
Metropolitan Police and the Football
Association this week, and Mike
Riley, general manager of referees
body Professional Game Match
Officials, said he had opted to sit out.
PGMOL was fully prepared to
appoint Mark to matches this
weekend, said Riley. However,
having discussed this with him, we
both consider that it is in Marks best
interests that he has this week away
Race row ref Clattenburg opts
out of another weeks fixtures
from officiating duties while he
prepares to help the FA and police
with their enquiries.
Chelsea lodged a formal complaint
with the FA on Wednesday that
Clattenburg used inappropriate
language towards Nigerian Mikel in
the 3-2 league defeat to United at
Stamford Bridge on Sunday 28
October. They dropped another
allegation that he also verbally
abused Spain forward Juan Mata.
The police opened an investigation
after receiving a complaint from a
member of the Society of Black
Lawyers. That followed Chelsea
reporting initial concerns to the
Premier Leagues match delegate.
Clattenburg is thought to deny the
claims but is yet to speak publicly.
38
SPORT
cityam.com/sport
BY SPORTS DESK STAFF BY DECLAN WARRINGTON
AT THE O2 ARENA
BY FRANK DALLERES
SOUTHAMPTONS sorry return to
the Premier League continued as
the concession of the 27th and 28th
goals of their league season last
night at West Brom ensured that
they remain bottom of the table.
Pressure had already unfairly
been mounting on manager Nigel
Adkins, who had overseen two
consecutive promotions and about
who it had strangely been reported
that the highly unproven Alan
Shearer is in line to replace, but if
someone had taken particular
satisfaction from the result it is
former player Mark Hughes, whose
QPR side would have instead gone
bottom of the table if Southampton
had managed to take even a point.
With four points from 10 games
Adkinss side has at least managed a
win but with them averaging one
goal for every two conceded it is
difficult to envisage any change,
managerial or otherwise, inspiring
them away from a long and
ultimately difficult season.
West Brom have thus far been
the leagues greatest surprise
package and lie fifth in the table
with five wins from the same
number of games and in being
level on points with Everton and
Tottenham all are a total of two
above Arsenal they continue
to impress.
Peter Odemwingie gave the home
side a 36th-minute lead with low,
driven shot from outside of the area
before completing a fine attack with
a header in the 60th.
@cityam_sport
TODAYS SCHEDULE
Singles
Roger Federer v Janko Tipsarevic,
1.45pm; David Ferrer v Juan Martin
del Potro, 7.45pm
Doubles
M Bhupathi/R Bopanna v J Marray/
F Nielsen, 12pm; L Paes/R Stepanek v
A Qureshi/J Roger 6pm
Odemwingie double leaves Southampton
fighting for life after hitting rock bottom
Sunderland 9 1 6 2 6 9 9
Aston Villa 10 2 3 5 8 14 9
Reading 9 0 5 4 12 18 5
QPR 10 0 4 6 8 19 4
Southampton 10 1 1 8 14 28 4
BOTTOM FIVE
TEAM PLD W D L F A PTS
WEST BROMWICH ALBION.........2
SOUTHAMPTON.........................0
BY DECLAN WARRINGTON
PREMIER LEAGUE
39
Ramsey out but
Wilshere set to
play at Schalke
ARSENAL manager Arsene Wenger
admits his sides slump in form is
worrying him but has challenged the
Gunners to summon a change in
fortunes in their hardest Champions
League fixture so far this season.
Wengers men face Schalke tonight
having lost three of their last five
Premier League games and after
needing a comeback of Biblical
proportions to squeeze past Reading
in the Capital One Cup last week.
Their latest defeat was Saturdays
2-1 surrender at Manchester United,
where the scoreline did no justice to
the hosts dominance, while they also
lost at home to this evenings
opponents a fortnight ago.
It is a concern because we had a
very promising start and of course
we have gone through a difficult
spell, said Wenger. We want to
respond to that and rectify that very
quickly because it is not only the fact
we lost the [United] game but the way
we lost it.
Schalkes win in north London was
only Arsenals second home defeat in
45 home Champions League group
games but means they need three
points from the Veltins-Arena in
order to boost their chances of
finishing top.
In terms of the group, the fact
that we lost against Schalke means it
is important that we win and finish
the job well, Wenger added. We are
still in a strong position in this group
but of course we want to come out
with a good result.
Contract rebel forward Theo
Walcott is a doubt with illness and
midfielder Aaron Ramsey is out with
a groin strain suffered at Old
Trafford, but Wenger said fit-again
Jack Wilshere was likely to start.
I think I will play him tomorrow,
said Wenger. Then we have a block
of three games [Wilsheres
suspension] and maybe the fact that
he gets a period of recovering will be
just right for him. He gets better in
every game.
Wenger was criticised for not
substituting Wilshere before the
combative midfielder collected a
second yellow card at United, but
noted wryly yesterday that even
opposite number Sir Alex Ferguson had
offered sympathy. I think the sending
off was very harsh, the Frenchman said.
Even Ferguson after the game thought
he didnt deserve to be sent off. Hes
usually a good referee.
Id agree with banning belly putters. Theyre
dodgy because they give you an advantage
cityam.com
MANCHESTER City manager
Roberto Mancini lashed out at
perceived disrespect yesterday as
the Italian prepared for tonights
must-win Champions League visit
of Ajax.
Mancini banged his hand on
the table and admonished
reporters who asked about a
mooted deal for him to take
charge of Monaco in the
summer, had he been
forced out of City.
I dont understand
why you continue to
ask me [about] last year, last
month. This is finished. Why? For
which reason? Mancini said,
before defending his three-year
reign at Eastlands.
I stay here because my work is
here. I worked for two years. I built
with the chairman and the owner,
this team. We won three
trophies in two years. For 50
years we didnt win. Never.
You need to have respect
for the people sometimes. I
think you should have
respect for this, for
me, for the club, for
the players.
I dont
understand why
every time we talk
about this.
City welcome Ajax, who beat
them 3-1 in Amsterdam two weeks
ago, with just one point from
three games and realistically
needing a win this evening to
maintain their hopes of avoiding
a successive group-stage exit.
BY FRANK DALLERES
Wenger worried by Arsenal slump with
hopes of revival hit by Walcott illness
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PRE-MATCH POINTERS
n Arsenal have their work cut out if
they are to end their recent troubles at
Schalke, where the German side are
unbeaten in their last 12 Champions
League fixtures
n History does not bode well for the
Gunners either, with Schalke winning
3-1 on the only previous occasion the
teams have met in Gelsenkirchen
n Arsenal are not in great form on the
road in Europe, with the 2-1 win at
Montpellier in September only their
third in 13 away matches in the
competition proper
n The Germans are looking to bounce
back themselves, having seen their
eight-match unbeaten run ended on
Saturday with a 3-2 defeat to
Hoffenheim in the Bundesliga
n Schalkes 2-0 victory two weeks ago
made them the first foreign outfit to
win at Arsenal in the Champions
League since Inter Milan in 2003
nArsenal managed just one shot on
target in the defeat to Schalke, and
have just 12 from three group games
a joint lowest total shared with CFR
Cluj and Anderlecht
Arsene Wenger is aiming to avenge a 2-0 defeat by Schalke at Emirates Stadium two weeks ago
You should respect me, blasts Mancini,
as City face European night of destiny
BY FRANK DALLERES
Roberto Mancini had
held talks with Monaco
B Dortmund 3 2 1 0 4 2 7
Real Madrid 3 2 0 1 8 5 6
Ajax 3 1 0 2 4 6 3
Man City 3 0 1 2 4 7 1
GROUP D
Schalke 3 2 1 0 6 3 7
Arsenal 3 2 0 1 5 4 6
Olympiacos 3 1 0 2 4 6 3
Montpellier 3 0 1 2 4 6 1
GROUP B
Sam Torrances golf column: Page 35

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