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FREE ISSUE 1,765 WEDNESDAY 21 NOVEMBER 2012
GUILTY
BY CATHY ADAMS
Sir John Bond steps down as Glenstrata giant is born
MORE: Page 2

CITY grandee Sir John Bond
stepped down yesterday as
chairman of Xstrata, as
shareholders backed the
56bn mega-merger with
Glencore but snubbed
controversial remuneration
plans for senior executives.
The retention bonus snub
prompted Bond who was set
to become chairman of the
enlarged group and backed
the pay proposals as
fundamental to its future
success to announce he
would depart Xstrata once a
suitable replacement was
found.
Seventy-one-year-old Bond,
who has enjoyed a 50-year
career spanning the UK and
Asia, has been chairman of
the miner since March 2011.
Bond is a former chairman
and chief executive of HSBC
Holdings, and spent 45 years
at the bank.
The departing Xstrata
chairman also served as
chairman and non-executive
director of telecoms giant
Vodafone until his
appointment to the Xstrata
board.
Advisory roles that Bond
holds include with Northern
Trust and KKR Asia.
BUSINESS WITH PERSONALITY
Certified Distribution
01/10/12 til 28/10/12 is 129,297
www.cityam.com
FORMER bosses at British software giant
Autonomy were yesterday accused of
serious accounting improprieties, dis-
closure failures and outright misrepre-
sentation by the chief executive of
Hewlett-Packard (HP), after the US firm
wrote off $8.8bn (5.5bn) over last years
purchase of Autonomy.
Meg Whitman, who took the reins at
HP shortly before the $11bn deal was
completed in October last year, accused
Autonomys management most of
whom have left since the deal was com-
pleted of a willful effort on behalf of
certain former employees to inflate the
underlying financial metrics...in order to
mislead investors and potential buyers.
She said the matter had been referred
to the Serious Fraud Office and the US
Securities and Exchange Commissions
Enforcement Division for civil and crimi-
nal investigations, and that HP would
aggressively pursue various parties to
recoup as much of the money as possible
for shareholders.
Mike Lynch, the former chief executive
of Autonomy, denied the claims, saying
he was shocked to see this statement,
and flatly rejects these allegations,
which are false. He said he had not
heard the claims until HPs statement, or
been contacted by anyone at HP.
Lynch, who founded Autonomy in 1996
and pocketed around 500m from its
sale, was forced out of the software firm
in May. After his departure, an internal
whistleblower flagged up the alleged
accounting irregularities to HP manage-
ment, who then investigated
Autonomys accounts in tandem with
accountancy firm PwC.
The investigation led HP to believe that
Autonomy was substantially overval-
ued, that hardware sales were reported
as higher-margin software sales, the cost
of that hardware was booked as a mar-
keting expense, and that long-term deals
were recorded as short-term ones. These
supposed irregularities were responsible
for more than $5bn of the writedown.
HP said Autonomys accounts exaggerat-
ed revenues by 10 to 15 per cent.
Whitman yesterday denied that HP had
been careless in conducting due dili-
gence on Autonomys books, which had
been audited by Deloitte.
If the financials are fraudulent and it
is not caught by a company like
Deloitte... Deloitte is not exactly Brand
X accounting firm, it is a big account-
ing firm with worldwide operations. Its
a little challenging to go in and assume:
Hey weve got to double-check
Deloitte, she said.
Deloitte said in a statement yesterday:
We cannot comment further on this
matter due to client confidentiality. We
will cooperate with the relevant authori-
ties with any investigations into these
allegations.
The news pushed HP shares down 12
per cent to their lowest price in a decade.
BY JAMES TITCOMB
HP chief Meg Whitman alleged misrepresentation
Autonomy founder Mike Lynch denied the allegations
ROGUE TRADER
KWEKU ADOBOLI
HANDED
SEVEN
YEARS
FOR
FRAUD
See Pages
4-5
HP ACCUSES
AUTONOMY
OF $9BN LIE
MORE: Pages 2, 3, 8

allister.heath@cityam.com
Follow me on Twitter: @allisterheath
CRUNCH talks between Eurozone
finance ministers dragged into the
early hours of this morning as the
Eurogroup strives to find a face-
saving agreement over the next
tranche of Greeces bailout cash.
Ministers were considering
allowing Athens to buy back up to
40bn of its own bonds at a discount
as one of a number of measures to
cut Greek debt to 120 per cent of
GDP within the next eight years.
Going into the second ministerial
meeting in successive weeks, Jean-
Claude Juncker, the chairman of the
Eurogroup, was cautiously
optimistic of a deal being struck.
We must still reach an
understanding on several details and
I would expect that the chances are
good that we will come to a final
and joint solution, he said prior to
last nights talk. But Im not entirely
certain [of reaching a deal tonight.
His caution reflects the complex
options being discussed, ongoing
political differences and the sheer
scale of reducing Greeces debt pile.
Under a proposal discussed by
ministers, Greece would offer
private-sector bondholders around
30 cents for every euro of Greek debt
they hold, allowing Athens to pay
down some of its vast outstanding
obligations, a senior official involved
in the discussions told Reuters.
Finance chiefs
wrangle over
Greek aid talks
BY CITY A.M. REPORTER
Xstrata investors back
Glencore megamerger
THE 56bn soap opera between com-
modity giants Xstrata and Glencore
finally came to a head yesterday as
Xstrata investors approved the min-
ing mega-merger.
In a meeting lasting just over two
hours, investors green-lit the merg-
er whose twists and turns have
entertained the market since
Glencore first approached Xstrata in
February and paved the way for the
creation of what both sides hope will
be a trading and mining power-
house.
At shareholder meetings held yes-
terday in Zug, Switzerland, almost
79 per cent of Xstrata investors voted
the merger through, although they
vetoed the controversial pay pack-
ages for top executives.
The deal at a sweetened merger
ratio of 3.05 new shares for every
Xstrata shares is a victory for active
shareholders, including Qatar
Holding. The sovereign wealth fund,
Xstratas largest shareholder after
Glencore, said last week it would
back the deal but abstain from vot-
ing on the remuneration, essentially
scuppering the pay plans.
The resolution to back pay pack-
ages for around 70 executives that
Xstrata insisted was key to retain key
managers failed by about eight per
cent, and led to chairman Sir John
TNK-BP fails in London civil suit bid
TNK-BP, Russias third-largest oil
producer and the subject of a high-profile
sale, has failed in its attempt to sue a
former director for civil fraud in English
courts. A 39m (31m) freezing order
gained by TNK-BP on its former head of
logistics, Igor Lazurenko, his wife, former
business partner and a string of offshore
companies used to finance hotels in
Montenegro, must be discharged, the
High Court ruled, after it found that
Russian courts, not English ones, were the
proper venue to resolve any dispute.
Clinton seeks de-escalation in Gaza
Hillary Clinton, US secretary of state, has
called on Israel and the Islamist Hamas
group to de-escalate their week-long
bloody conflict, lending US support to the
intensifying international effort aiming to
end the conflict in the Gaza Strip.
Greenhouse gases hit record level
The amount of greenhouse gases present
in the atmosphere once again rose to
record levels last year, the UN has
reported, reinforcing scientists warnings
that the world may be on course for
dangerous global warming.
CofE votes against women bishops
The Church of Englands vote last night to
reject women bishops has thrust it into its
biggest crisis for decades. Justin Welby,
the next Archbishop of Canterbury, was
dealt a blow after speaking out in favour.
Reckitt ready for US vitamin boost
The withdrawal of a rival bidder has put
Reckitt Benckiser in the driving seat to
secure a $1.4bn (879m) takeover of
Schiff Nutrition, an American
manufacturer of vitamins.
France deplores Moodys downgrade
Frances foreign minister Pierre Moscovici
said yesterday he deplored the decision
of Moodys to strip the country of its AAA
credit rating but still dismissed the
downgrade as irrelevant.
Huawei donates to Tories/Lib Dems
The Conservatives and Liberal Democrats
have taken more than 18,000 in
donations from Huawei, a Chinese
communications company accused of
posing a threat to US national security.
News Corp buys 49pc of YES
News Corp has agreed to buy a 49 per
cent stake in New York sports network
YES. A price was not disclosed, but
sources said that the entire network is
valued at near $3bn (1.8bn).
Treasury official potential SEC chair
A US Treasury official who played a key
role during the debt-ceiling debate, Mary
John Miller, is under consideration to be
the next chairman of the Securities and
Exchange Commission.
2
NEWS
BY CATHY ADAMS
To contact the newsdesk email news@cityam.com
L
ET us hope yesterday wont
eventually be remembered as
another disastrous day for the
City of London. Hewlett Packards
inflammatory attack on the accounts
of Autonomy, the UK tech giant it
now owns, is either a wrong-headed
attempt by a struggling US firm to try
and justify why it failed to do its due
diligence properly and over-paid for
Autonomy or it is a damning
indictment of what was once the UKs
flagship tech giant and its blue chip
City advisers. Crucially, Autonomys
founder Mike Lynch emphatically
denies all the allegations.
On the plus side, however, Kweku
Adoboli, the former trader was sen-
tenced to seven years in jail for the
biggest fraud in British history. While
his behaviour dealt the City another
horrid blow, highlighting that con-
trols were too lax in some institu-
EDITORS
LETTER
ALLISTER HEATH
Fresh allegations overshadow welcome cultural shift in City
WEDNESDAY 21 NOVEMBER 2012
tions, and helped accelerate thou-
sands of job cuts at UBS, at least jus-
tice has now visibly been meted out. It
is vital for Londons battered reputa-
tion that those who engage in finan-
cial crime be punished. We now need
to see people jailed for Libor rigging.
It was also excellent news to see share-
holders defeat the executive pay pro-
posals that accompanied Xstratas
merger with Glencore; this exercise in
shareholder democracy and owner-
ship rights led Sir John Bond, one of
the Citys most distinguished
grandees, to resign as Xstrata chair-
man last night. During the good
years, shareholders failed to scruti-
nise their boards sufficiently; the fact
that this is now changing is an
extremely important shift.
But none of these improvements
will be remembered if the row
between HP and Autonomys
founders gets really ugly. We shall
soon find out what is to be.
PENSION TAX RAID
WE knew since the Tory party confer-
ence that George Osborne would be
launching another tax raid on the
rich next month. This may take the
form of limiting the size of contribu-
tions eligible for to tax relief to no
more than 30,000 or 40,000, down
from the present 50,000 (itself
slashed from 255,000).
Osborne is well on his way to finish-
ing Gordon Browns destruction of
the once great UK pensions market-
place a great paradox given that
auto-enrolment into the new official
pension system is just starting.
The alternative for the government
if it wants to continue providing tax-
privileged savings vehicles would be
to expand individual savings
accounts (Isas). These dont offer a tax
benefit at inception, unlike pensions;
but the tax benefit is continuous as
dividends and capital gains are
untaxed. It would reduce Osbornes
revenues very little in the first year or
two were he to double the size of Isas;
doing so at the same time as hammer-
ing pensions would at least lessen the
severity of the blow to taxpayers.
The tax system should be simple,
with no loopholes; but this simplifica-
tion should happen in a revenue neu-
tral manner, not as an excuse to
further hike taxes. It is a tragedy that
this government still thinks it makes
sense to increase the average and mar-
ginal tax rates of people who are
already toiling away to make a living.
That this would come as quid pro quo
for welfare reform is irrelevant, a sor-
did deal between Tories and Lib Dems.
Cutting the amount that can be put
tax free into a pension makes more
sense than further reducing the limit
on the value of the pot, now 1.5m.
But we are close to a tipping point for
these kinds of products: they only
exist because of tax breaks. Why
would you put any cash in a pension
and be unable to touch any of it, even
in an emergency, for many decades,
without a massive tax advantage?
Bond standing down from his position.
Mick Davis, chief executive of Xstrata,
said he was disappointed with the
decision not to approve the retention
agreements deemed crucial to the
success of the combined group.
In my view, this introduces unneces-
sary risks to the merged companys
future value proposition, Davis added.
Alexander Keepin, co-head of mining
partner at law firm Berwin Leighton
Paisner, said Bonds departure was not
without precedent.
The earlier shareholder spring saw
remuneration reports voted down and
executives stepping down, he said,
adding that Mick Davis position as
interim chief executive is not impact-
ed at all by the vetoing of the pay
packages. Davis will stay at the helm of
the merged firm for six months before
handing over to Glencore boss Ivan
Glasenberg.
The enlarged company will be called
Glencore Xstrata, and headquartered
in Zug. The tie-up, which is thought to
be one of the largest deals in the min-
ing sector, still needs approval from EU
antitrust regulators and the Chinese
authorities.
MORE EUROZONE: Page 14

The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
John Bond, who was due to become chairman of the combined group, has stepped down
GLENSTRATA IN NUMBERS
THE CRUCIAL VOTES
For the merger with the retention
package: 67.85 per cent
For the deal without the retention
package: 78.88 per cent
Against the retention package:
78.43 per cent
A HUGE NEW FTSE 100 PLAYER
Rank Name Mkt cap (m)*
1. Royal Dutch Shell (A+B) 130,372.6
2. HSBC Holdings 108,207.2
3. BP 79,247.2
4. Vodafone Group 77,780.9
5. GlaxoSmithKline 65,932.8
6. Brit American Tobacco 61,143.4
7. Diageo 44,934.6
8. SABMiller 41,708.5
9. Rio Tinto 41,404.9
10. BHP Billiton 39,559.1
11. AstraZeneca 35,241.4
12. BG Group 33,985.5
13. GLENCORE-XSTRATA? TBC
14. Standard Chartered 33,841.2
15. Lloyds Banking Group 30,936.8
*Source: Morningstar
A GLOBAL COMMODITIES GIANT
Glencore-Xstrata will be the 4th
biggest commodities company in the
world by market capitalisation, after
BHP Billiton, Vale and Rio Tinto.
THE ADVISERS
The mega-merger pulled in some of
the Citys biggest names, with JP
Morgan Chase, Goldman Sachs,
Nomura Holdings and Deutsche Bank
advising Xstrata on the deal, while
Morgan Stanley and Citigroup
advised Glencore, and Lazard
advised shareholder Qatar Holding.
WHEN Autonomy was sold to
Hewlett-Packard (HP) for $11bn
(6.9bn) in October 2011, the deal
was hailed as a defining moment for
Cambridges technology scene and
chief Mike Lynch was made a poster
boy for British entrepreneurship.
But seven months later, Lynch was
out of HP, fired by the US giants new
boss Meg Whitman. It was an abrupt
end to his tenure at the company he
started in 1996, spun from an audio
hardware business Lynch founded in
the 1980s after being loaned 2,000
from a band manager in a pub.
Autonomys enterprise software,
which processes, understands and
archives information from sources
such as voice recordings or videos,
was a hit, and the company listed on
Nasdaq in 2000, at the height of the
dotcom boom, followed by a London
float six months later. It suffered
temporarily when the technology
bubble burst in 2001, but recovered
rapidly, and when HP came knock-
ing, Autonomy had retaken its FTSE
100 position and was still growing.
However, by the time it was bought,
UK technology
darlings rocky
road to HP deal
BY JAMES TITCOMB
the company had already seen some
financial controversies.
US IT giant Oracle alleged that
Lynch had tried to shop the busi-
ness to president Mark Hurd a few
months before the HP deal, a claim
Lynch denies. Oracle said that
Autonomys valuation, at $6bn, was
way too high, even at just over half
of what HP ended up paying.
In May, Lynch was shown the door
after Autonomys initial months at
HP disappointed. Other executives,
including chief financial officer Steve
Chamberlain, also left the firm.
As for HP, the fallout from the deal
has come at the worst possible time,
as the company tries to turn itself
around in the face of falling PC sales.
AVIVA, the UKs second-biggest
insurer, yesterday announced it had
appointed former AIA boss Mark
Wilson as chief executive.
The New Zealand-born insurance
veteran prepared AIA for its 2010
listing and was credited with
successfully steering the Asian firm
through the financial crisis in his
four-year tenure.
His appointment at struggling
Aviva comes six months after
shareholders forced out former
BY JAMES TITCOMB chief Andrew Moss in May.
The groups chairman John
McFarlane, who has been acting as
interim boss, said he was
delighted to have
secured Wilson.
He has an
outstanding track
record of leading a
major insurer, of
transforming its
performance and
culture, of
implementing a growth agenda and
of producing significant shareholder
value, all of which are essential for
Avivas success going forward,
McFarlane said.
The move was welcomed in the
City yesterday. This ends
uncertainty and means the
company can move forward,
Barnard Marcus, an analyst at Oriel
Securities, said.
Mark Wilson said it was a
privilege to lead Aviva
WEDNESDAY 21 NOVEMBER 2012
3
NEWS
cityam.com
Aviva appoints former AIA head
Mark Wilson as chief executive
A Silicon Valley legend, Quattrone advised
Autonomy on its $11bn sale to HP. He took
dozens of technology companies public in
the 1990s, including Amazon, but disap-
peared from investment banking after he
was accused of blocking a government
investigation into price-xing on otations.
He returned in 2008 to set up Qatalyst
Partners, which advised Autonomy on its
sale after apparently offering the rm
around to a number of other US companies.
Also advising Autonomy on the deal was an
unusually large collection of big investment
banks: Goldman Sachs, Citigroup, UBS, Bank
of America Merrill Lynch and JP Morgan.
HP was advised on the acquisition by
Barclays Capital in London, with the team
headed up by Richard Taylor, who was made
head of its European investment banking
arm on Monday.
However, more scrutiny may fall on the
deals auditors. Deloitte ran the numbers on
Autonomys side in Cambridge, with the
books signed off by senior manager Nigel
Mercer. KPMG were hired by HP to partici-
pate in the due diligence process.
Neither HP nor KPMG commented on the
alleged accounting irregularities yesterday,
citing client condentiality.
James Titcomb
ADVISERS HPS $11BN AUTONOMY ACQUISITION
FRANK QUATTRONE
QATALYST PARTNERS
HPS TWO CLASHING PERSONALITIES
MIKE LYNCH
FOUNDER, AUTONOMY
Lynch started Autonomy after running a series of technol-
ogy companies in the 1980s and 1990s, following his PhD
in mathematical computing at Cambridge. Though
described as an exceptionally bright and motivated indi-
vidual, Lynch had a tense relationship with the City, con-
tinually claiming it undervalued his business. Lynch
pocketed 500m from Autonomys sale, and was forced
out of HP in May this year.
MEG WHITMAN
CHIEF EXECUTIVE, HP
After stints at Procter & Gamble and Disney in her early
career, Whitman joined the ourishing startup eBay as
chief executive in 1998. She held the position for nine
years, turning the rm into a global giant. After a failed
campaign to be governor of California in 2010, Whitman
returned to Silicon Valley, joining HPs board in January
2011 and took over in September after ex-boss Leo
Apothekar was sacked.
Hewlett-Packard Co
20Nov 14Nov 15Nov 16Nov 19Nov
11.50
12.00
12.50
13.00
$
11.71
20Nov
Guilty: Adoboli
gets seven years
for trading fraud
BY MICHAEL BOW
WEDNESDAY 21 NOVEMBER 2012
4
NEWS
cityam.com
ROGUE former UBS trader Kweku
Adoboli, whose unauthorised trades
lost the bank Swiss bank $2.3bn
(1.4bn), was yesterday jailed for seven
years after being convicted of one of
the biggest frauds in British history.
Adoboli, once pegged as a rising star
on the Exchange Traded Fund desk at
the banks Finsbury Avenue offices,
was found guilty on two counts of
fraud by abuse of position. He was
cleared on four counts of false
accounting with a view to gain for
himself or another.
Sentencing Adoboli to seven years,
Justice Keith told the former City trad-
er: Whatever the verdicts of the jury
would have been, you would forever
have been known as the man who
was responsible for the largest trad-
ing loss in British banking history.
Your fall from grace as a result of
these convictions is spectacular.
Adoboli will serve half of his sen-
tence on licence. Adding in time
already spent in custody, it means he
is set to be freed within two-and-a-half
years.
Adoboli looked unmoved as the ver-
dicts were read out. He acknowledged
his father, a former United Nations
diplomat from Ghana, and uncle, sit-
ting behind him in the public gallery
as he was led away.
Adoboli was arrested by City of
London police last September at UBSs
offices after the bank uncovered huge
discrepancies in trades booked by
Adoboli.
In a bombshell email sent from
Adoboli the day before, he admitted
to fabricating counterparties in the
ETF ledger to cover up losses he was
making in off-book trades.
The losses to the bank were calculat-
ed at $2.25bn. Shares in the Zurich-
based bank subsequently dropped 10
per cent when the loss was
announced.
The amount of money involved was
staggering, impacting hugely on the
bank but also on their employees,
shareholders and investors, Crown
Prosecution Service deputy head of
fraud Andrew Penhale said. This was
not a victimless crime.
DCI Perry Stokes, from City of
London police, said: Rules put in
place to protect the banks position
and the integrity of the markets were
being bypassed and broken by a
young man who wanted it all and was
not willing to wait.
A UBS spokesman said it was glad
criminal proceedings had finished.
First of all, the ETF trades that you see on the ledger
are not trades that have been done with a
counterparty as I have previously described. I used
the bookings as a way to suppress the PnL losses
that I have accrued through off book trades that I
made. Those trades which were previously profit
making, became loss making as the market sold off
aggressively through the aggressive selloff days of
July and early August.
Initially I had been short futures through June and
those lost money when the first Greek confidence
vote went through in mid June. In order to try and
make money back I flipped the trade long through
the rally. Although I had a couple of opportunities to
unwind the long trade for a negligible loss, I did not
move quickly enough and the market weakness on
the back of the first bad macro data and then an
escalating Eurozone crisis cost me the losses you will
see when the ETF bookings are cancelled. The aim
has been to try and make the money back before
the September expiry came through, but clearly that
has failed. There are still live trades on the book that
will need to be unwound. Namely a short position in
DAX Futures (which have been rolled to December
expiry) and a short position in S&P 500 Futures that
are due to expire on Friday. I have nowleft the office
for the sake of discretion. I will need to come back in
to discuss the positions and explain face to face, but
for reasons that are obvious, I did not think it wise
to stay on the desk this afternoon.
I fully expect that questions will be asked as to why
nobody else was aware of these trades. The reality is
that I have always maintained that these were EFP
trades to the members of my team, BUC, trade
support and John DiBacco. I take full responsibility
for my actions and the shit stormthat will now
ensue. I amdeeply sorry to have left this mess for
everyone and to have put my bank, and my
colleagues at risk.
Thanks,
Kweku
THE BOMBSHELL EMAIL SENT BY ADOBOLI
Adoboli, seen by many at UBS as a rising star, was convicted at Southwark Crown Court
How one rogue traders actions
have inspired changes at UBS
THE UBS of today is quite a differ-
ent bank to the one that employed
Kweku Adoboli up to the time of
his fraud last year.
It has a different chief executive,
following the departure of Oswald
Grubel very shortly after the scan-
dal broke, and it has a finely tuned
strategy that now emphasises the
client-focused and advisory activi-
ties of the investment bank, rather
than the riskier and more complex
trading strategies that were some-
times a bit too prominent.
Chief executive Sergio Ermotti,
BY DAVID HELLIER
who joined UBS from UniCredit in
April last year, has brought in one of
his former allies, Andrea Orcel, from
Bank of America Merrill Lynch, where
he worked for 18 years. And Orcel, who
is very much a relationship advisory
banker, now leads an investment bank
that has put equity advisory at the top
of its focus.
I think the whole trading scandal
has tilted UBS in the right direction,
said a banker yesterday. It is best stick-
ing to the traditional activities the
bank was always so good at.
Recently UBS said it planned to trim
about SFr100bn of risk-weighted assets
by the end of 2017, after already cut-
ting a similar amount over the past
year. The investment bank said it
would focus on its advisory businesses,
equities, foreign exchange and pre-
cious metals, while keeping limited
capabilities in rates and credit.
Insiders say the Adoboli case did not
fundamentally impact on the banks
strategy. The strategy of the bank is
quite definitely not linked to this case,
it was in the process of being devel-
oped for some time, said one source
yesterday. But there is a feeling that
UBS has arrived at where it is today
quicker than it would have done if it
had not been for the fraud that at one
stage seemed to knock it off balance.
WEDNESDAY 21 NOVEMBER 2012
NEWS
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5
THE WORLDS BIGGEST TRADING LOSSES
1984-1995
Daiwa Bank bond
trader Toshihide
Iguchi (r) was respon-
sible for 1.1bn of loss-
es at the Japanese
bank over 11 years
Sentence: Four years
at Allenwood prison
camp
FEBRUARY 1995
Barings Bank
collapsed after
derivatives trader Nick
Leeson (r) lost $1.3bn
while working in its
Singapore ofce
Sentence: Six-and-a-
half years in Changi
Prison, Singapore
JANUARY 2008
Societe Generale
trader Jerome
Kerviel (l) lost 5bn
through unautho-
rised trades
Sentence: three
years in prison (plus
two suspended)
and a 4.9bn ne
1997 - 2002
Allrst (then part of
Allied Irish Banks)
currency trader John
Rusnak (l) hid
$691m of losses
Sentence: Seven-
and-a-half years
TIMELINE
SEPTEMBER 2012
Adoboli goes on trial at
Southwark Crown Court
on four counts of false
accounting and two of
fraud
14 SEPTEMBER 2011
Adoboli leaves UBS
building at 1.30pm and
sends bombshell
email disclosing trades.
He returns at 3.45pm
MARCH 2010
Adoboli becomes
director in role as a
trader on UBS ETF desk.
He earns 110,000 and
a bonus of 95,000
APRIL 2011
UBS re-organises divisions.
Adoboli earning 110,000
and a 250,000 bonus
DECEMBER 2005
Promoted to trader at
UBS. Moves to ETF desk
15 SEPTEMBER 2011
Adoboli is arrested by City
of London police at ofce
3am and charged.
SEPTEMBER 2003
Adoboli joins UBS
investment banks
operations department
as a graduate trainee
on 30,000 pa
A FORMER hedge fund manager who
worked for a fund affiliated with
Steven A Cohens SAC Capital was
arrested yesterday in what US
prosecutors are calling the most
lucrative insider-trading scheme
ever.
Mathew Martoma, who worked for
CR Intrinsic Investors in Stamford, a
unit of SAC Capital, has been
accused of making more than
$276m in illicit profits based on tips
about Elan Corp and Wyeth, which
was bought by Pfizer in late 2009.
Authorities contend Martoma and
SAC Capitals CR Intrinsic made
more than $276m in illegal profits or
avoided losses in July 2008 by trading
ahead of a negative public
announcement involving clinical
trial results for an Alzheimers drug
jointly developed by Elan and Wyeth.
Martomas lawyer, Charles
Stillman, said his client was an
exceptional portfolio manager and
he is confident that Martoma will be
exonerated. A spokesman for SAC
Capital and Cohen, who was not
charged, said he was not
immediately prepared to comment.
The criminal complaint filed by
federal prosecutors and a related
civil lawsuit filed by the US SEC
contend Martoma got insider
information from a doctor, who once
worked as a consultant for a so-called
expert network.
Ex-SAC hedgie
arrested in US
insider scheme
BY CITY A.M. REPORTER
Credit Suisse Group AG
20Nov 14Nov 15Nov 16Nov 19Nov
20.8
21.0
21.2
21.4
21.6
21.8 CHF 21.19
20Nov
WEDNESDAY 21 NOVEMBER 2012
6
NEWS
cityam.com
Private bank co-head Hans-Ulrich Meister Eric Varvel is joint investment bank boss
Americas wealth boss Robert Shafir Gael de Boissard is new to the exec board
CREDIT SUISSE shares slumped yes-
terday as new plans to streamline the
bank disappointed analysts and
investors who had hoped for tougher
cuts to fixed income operations.
The Swiss bank is part way through
a SFr4bn (2.67bn) cost-cutting plan,
and is now folding its asset manage-
ment arm into its private bank, as
well as reasserting its commitment to
fixed income and equities activity.
The rejig will see Credit Suisses
international investment bank opera-
tions separated from those in
Switzerland.
Four top members of staff saw their
roles change as part of the move.
The new private banking and
wealth management division will be
headed by Hans-Ulrich Meister and
Robert Shafir, with Shafir in charge
of the Americas and Meister responsi-
ble for other geographies.
The investment banking division
will be run by Eric Varvel who will
run equities and investment bank-
ing, as well as heading up Asia Pacific
and Gael de Boissard, who will head
Credit Suisse
cuts back asset
management
BY TIM WALLACE
up the fixed income department and
lead the Europe, Middle East and
Africa (EMEA) operations.
De Boissard joins the other three on
the executive board, which sits below
the board of directors and is responsi-
ble for the day to day operations.
But the reshuffle saw EMEA regional
head Fawzi Kyriakos and Asia Pacific
boss Osama Abbasi lose their jobs.
Despite the increased clarity on how
costs will be cut, the share price
dropped. Were disappointed Credit
Suisse did not follow UBS route and
chop back their fixed income arm,
said one analyst, who declined to be
named.
BUSINESS groups yesterday blasted
new government plans to ensure
lower energy bills for consumers.
Energy secretary Ed Davey
announced the proposals, intended to
be included in the forthcoming
Energy Bill, which will limit suppliers
to four core tariffs and ban so-called
dead tariffs, so that no consumer is
left on an out-of-date deal.
But business groups hit out at the
reforms, which followed regulator
Ofgems earlier proposals.
The Institute of Directors (IoD)
labelled the reforms as missing the
point. Clumsy regulation restricting
choice would simply allow energy
companies to increase their lowest tar-
iff, ensuring a higher minimum price
for consumers, said Corin Taylor, sen-
ior economic adviser at the IoD.
Issues over a lack of competition also
struck a note with corporations.
John Taylor, chairman at the
Federation of Small Businesses, said:
We need to see the detail since there
is a very real risk that forcing energy
companies to put customers on the
cheapest tariff could erode what little
competition there is in the market.
The IoD warned that the govern-
ment should be promoting competi-
tion and making it easier for new
companies to enter the energy
market.
Energy reform
plans slammed
by big business
BY CATHY ADAMS
Wim Dejonghe said market
conditions are challenging
WEDNESDAY 21 NOVEMBER 2012
8
NEWS
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ELIZABETH FOURNIER
HPs staggering accusations drag in Citys largest firms
T
HIS paper does its best to avoid
editorial hyperbole, but when
a firm takes an $8.8bn
writedown on an $11bn
acquisition barely 12 months after
the deal I might just make an
exception. Its completely
flabbergasting.
Analysts and shareholders alike
may have baulked at the steep price
that Hewlett-Packard shelled out for
UK tech darling Autonomy last year,
but surely even the staunchest crit-
ics couldnt have been expecting
this a net loss of almost $7bn at
the US computer giant and accusa-
tions (strongly denied) of serious
accounting improprieties at its
one-year-old albatross. And thats
not to mention a serious blow to the
perception of British start-ups
round the world.
Lets be clear, HP was hardly a glow-
ing example of success even before it
took on Mike Lynchs baby.
Its shares have fallen more than 55
per cent over the past year and theres
been something of a revolving door at
the top, with chief executive Meg
Whitman brought in to replace Leo
Apotheker, who was ousted after just
11 months in the job.
But its not just Lynchs name
and the judgement of the Hewlett-
Packard board thats being
dragged through the mud.
The multi-billion dollar deal
pulled in a host of big players on the
advisory side too not least
Autonomys auditor Deloitte (and its
own auditor KPMG) singled out by
Whitman on a damning conference
call yesterday afternoon, where she
implied it would have been a little
challenging to go in and be asked
to double check the work of a
respected big four firm.
No matter that HP brought on
another of the big four PwC to
investigate the irregularities, and no
matter that Deloitte has not actual-
ly been accused of any wrongdoing,
this could strike yet another reputa-
tional blow to the accounting
profession.
Its already under pressure over
competition, and with immacu-
late timing as of yesterday the sub-
ject of a review by the Financial
Reporting Council and the Institute
of Chartered Accountants of
Scotland into the competencies
and professional skills of auditors.
Being dragged into a transatlantic
fiasco of these proportions is the
last thing the industry needs.
LEGAL FIRMS RESULTS IN THE SPOTLIGHT
Meanwhile on the less under-scruti-
ny side of the professional services
world, Allen & Overy kicked off the
legal reporting season proper yester-
day with a 2.7 per cent fall in
turnover.
Law firms are yet another casualty
of the stagnant corporate and M&A
market that has dogged the City for
the past few years (bar the odd
$11bn takeover...)
Wim Dejonghe invoked every busi-
ness leader of recent months when
he called the tough outlook the
new normal. With A&Os Magic
Circle rivals also set to give an
overview of their first-half perform-
ance over the next few weeks, we
wont have to wait long to find out if
hes right.
Elizabeth Fournier is news editor of City
A.M. @ej_fournier
THE CITY was given its first hint of
how the upcoming round of law
firm results will look yesterday,
when Magic Circle stalwart Allen &
Overy posted a 2.7 per cent fall in
turnover for the first half.
Turnover fell to 566m from
582m in the same period last year,
though the firm said that with cur-
rency fluctuations stripped out
turnover actually grew by
one per cent.
Market conditions
will no doubt present
further challenges dur-
ing the second half, said
managing partner Wim
Dejonghe. But we are
confident that if we main-
tain our focus and stay
close to our clients,
the underlying
resilience of our
business will
Allen & Overy
revenues fall in
tough first half
BY ELIZABETH FOURNIER
n Limiting suppliers to four core tariffs per
fuel, aimed at ending the proliferation of
tariffs over the last few years. Collective
switching schemes will be able to
negotiate bespoke prices.
n Creating within the four core tariffs
one standard variable rate tariff and one
fixed-term price tariff, which account for
85 per cent of customers.
n The suppliers can choose the remaining
two tariffs as they please, such as offering
green energy deals.
n Suppliers must offer one single price for
each of the four tariff types.
n Banning so-called dead tariffs so
customers are not left with poor value, out-
of-date deals.
n Placing all customers on the cheapest
price available on the tariff of their choice
by summer 2014 at the latest.
n Households to have personalised
information from their supplier on bills,
detailing the cheapest tariff for their
payment method and the cheapest overall.
n Measures that require suppliers to
provide clearer information to help
consumers switch.
n Establishing a co-ordinated network of
voluntary organisations and groups to help
vulnerable households get a better deal.
n Proposals for the government to help
ensure energy consumers can benefit from
innovative technology that helps switching
through smartphones and other devices.
IN BRIEF: THE REFORMS
Proposals from energy secretary Ed Davey follow on from regulator Ofgems plans
stand us in good stead.
The firm has worked on several
big-ticket deals so far in 2012, advis-
ing Hitachi on its 696m purchase
of Horizon Nuclear Power, and
advising Hong Kong Exchanges &
Clearing Limited (HKEx) on its
1.39bn recommended offer for the
London Metal Exchange.
Meanwhile several mid-cap firms
reported more upbeat results, with
Wragge & Co announcing a revenue
rise of 4.5 per cent from last year to
60.6m.
Nabarro returned to growth
with full-year revenues of
52.3m up two per cent on
2010-11.
And DWF saw a massive 31 per
cent hike in revenues, after a
splurge of regional mergers
helped it lift turnover to
59.3m.
IN BRIEF
CBRE buys property firm EA Shaw
nCBRE has snapped up West End
property agent EA Shaw just two
months after buying Franc Warwick.
The group said the agency, which
provides services to clients including
Shaftesbury and Soho Estates, will
become part of CBREs central London
business led by head of central
London, Adam Hetherington. It will
continue to operate from its office in
Covent Garden. CBRE said the deal
would significantly enhance its
central London residential business.
Henderson sells 184m portfolio
nHenderson Global Investor has sold
24 remaining assets in its debt-laden
CMBS Caspar regional property fund
for 184m to buy-out firms
Mountgrange and Patron Capital, the
property asset manager announced
yesterday. Mountgrange and Patron
have in turn sold on seven of the
warehouses and sites based in London
and the south east, to CBRE Global
Investors for around 64m. The
properties include Pets at Home, B&Q
and Tesco retail warehouses.
L&G secures big retail lettings
nLegal & General Property yesterday
revealed it has secured Swedish retail
giant H&M and restaurants Wasabi
and Kim Chee Korean as tenants at its
Covent Garden estate on the Strand.
The group said it has also signed New
Look, Pandora and Sports Direct to its
Jackson Square shopping centre in
Bishops Stortford, which it bought
from Kandahar last year the first
deals at the mall in almost five years.
BRITISH Land, the UKs second-
largest property company by mar-
ket value, said yesterday that its
chairman will step down at the end
of December, as it reported a solid
growth in profits for the first half
of the year.
Underlying profit before tax at
the real estate investment trust
rose 3.8 per cent to 137m in the
six months to 30 September, as net
rental income grew by 1.1 per cent
to 272m.
The firm said that chairman
Chris Gibson-Smith, who has led
the board for the past six years,
would be replaced by senior inde-
pendent director and City veteran
John Gildersleeve.
In a headline-heavy update British
Land also announced it had
secured lettings at key West End
and City properties, with Aspect
Capital moving into 10 Portman
Square behind Bond Street, and
Hill Dickinson signed up at
Broadgate Tower.
British Land said that despite the
slow market, the group had made
New chair for
British Land as
profits increase
BY ELIZABETH FOURNIER
953,000 square feet of lettings and
renewals, while occupancy rates
had remained high at 98.3 per cent.
The value of its office develop-
ment portfolio increased by 6.9 per
cent in the period, with 56 per cent
of its sites now pre-let.
Chief executive Chris Grigg said
the results were a good set of num-
bers in what continues to be a
tough market.
Outgoing chairman Gibson-Smith,
who served as a non-executive direc-
tor before taking up the top spot in
2006, said: I have had a fascinating
10-year journey with British Land,
and the last six years as chairman
have been deeply rewarding.
British Land Co. plc
20Nov 14Nov 15Nov 16Nov 19Nov
514
516
510
508
512
518
520
522
524 p 515.00
20Nov
WEDNESDAY 21 NOVEMBER 2012
10
NEWS
cityam.com
Model shown is a Carrera 4S Coupe at 88,774.00 including first year road fund licence and first registration fee. Fuel consumption figures for the new 911 Carrera 4S Coupe in mpg (l/100km): Urban 19.9 (14.2);
Extra Urban 37.7 (7.5); Combined 28.5 (9.9). CO2 emissions (g/km) 234.
Two impressive red lines.
The new 911 Carrera models.
The redline of a Porsche 911 has always been impressive. For almost 50 years now, each new generation has pushed the boundaries
of performance further and further. The new 911 Carrera 4 models are no exception. As well as their legendary all-wheel drive handling,
they feature broad shoulders, making for a striking presence.
And the iconic red LED light strip across the rear, means other road users can now appreciate the red line of a 911 too.
To find out more visit www.porsche.co.uk/redlines
British Lands arguably overleveraged position constrains improvement
opportunities whilst Land Securities majors on medium-run developments...
Land Securities, despite the previous two dull results, offers relative
appeal and we think is the better stock over the medium and long term.
ANALYST VIEWS

You own British Land in the current environment because as we have


said in the past, it does what it says on the tin. Its stable portfolio and
predictable income stream continue to deliver IPD outperformance and a
predictable and attractive dividend yield (5.1 per cent). We remain Buyers.

Whilst the group has the longest-dated income streams in the sector, an
above sector average 5.1 per cent dividend yield and a solid balance sheet, its high
level of gearing remains a risk in our view. The tough retail occupational
market, highlighted by the spate of tenant failures, remains a challenge.

WHAT IS YOUR OUTLOOK


ON BRITISH LAND AFTER
THESE RESULTS ? Interviews by Kasmira Jefford
KEITH CRAWFORD PEEL HUNT

MARK HUGHES PANMURE GORDON

ALISON WATSON LIBERUM


PROFILE: JOHN GILDERSLEEVE
BRITISH Lands incoming chairman John
Gildersleeve is a retail force to be reckoned
with. The City grandee grew up in south
London, where he attended a grammar
school until he was 18. After a year working
as a clerk at oil company Shell, Gildersleeve
spotted a newspaper advert for a trainee
manager role at Tesco. He joined the super-
market chain in 1965, working his way up
from shelf-stacking to become managing
director of retail operations in 1982. He was a
board member from 1985 until 2004, when
he left the group. Gildersleeve was closely
linked to Tescos overseas expansion and his
international credentials were key in his role
at the phone retailer Carphone Warehouse,
where he served as non-executive chairman
from 2005 and 2010. Gildersleeve took on a
different retail challenge in 2009 as chairman
of the fashion chain New Look, where he was
brought in to steer the group towards a oat.
He stepped down last year after a string of
prot warnings and aban-
doned otations. At
66, Gildersleeve is
showing no signs of
slowing down. He is
currently deputy
chairman of
Carphone
Warehouse and also
serves as a non execu-
tive director of
TalkTalk.
EASYJET is treating its shareholders to
a dividend twice as big as last year,
after posting a 28 per cent rise in pre-
tax profits to 317m.
The budget airline brushed off the
fuel cost and traffic concerns that dog
the rest of the industry to deliver an
11.6 per cent jump in revenues to
3.85bn for the year to 30 September.
Chief executive Carolyn McCall said
yesterday that EasyJet is in a unique
position to grow against the legacy
competitors such as British Airways.
Investors will get an ordinary divi-
dend of 21.5p, up from 10.5p a year
ago, when the carrier paid out for the
first time since its inception in 1995.
The payout was welcomed by Sir
Stelios Haji-Ioannou, the firms
founder and a major shareholder.
McCall said a trial of allocated seat-
ing had gone well, with families and
older passengers paying extra to
choose their seat alongside the busi-
ness travellers EasyJet had originally
targeted with the service.
Profit per seat increased to 3.87 in
the period, while passenger numbers
Divi doubles at
EasyJet thanks
to record profit
BY MARION DAKERS
rose 7.1 per cent to 58.4m.
Companies are being more cost con-
scious, which has helped us win more
corporate work, said McCall, adding
that the adoption and attitude of MPs
has been great since EasyJet struck a
deal with parliament to offer flights to
politicians earlier this year.
The airline is in talks to buy new
planes and plans to raise seat capacity
by up to five per cent a year.
Set against the difficulties which
the industry has been facing, typified
by the recent Iberia announcement,
EasyJet has managed to shoot the
lights out, said Richard Hunter, head
of equities at Hargreaves Lansdown.
DO YOU THINK YOU ARE BEING
UNFAIRLY TREATED BY YOUR ENERGY
PROVIDER? Interviews by Michael Bow
It could be better I think. It should be easier to
switch energy provider accounts. My company
that I run has 20 accounts and I think keeping
track of them must be made easier.
These views are those of the individuals above andnot necessarily those of their company
ADO MEDJEDOVIC
FIREZZA

My energy provider didnt give me a bill for a


whole year. Then they gave me a bill for
1,500 and they expected me to pay it within
just two months.
FARHEN ENVER
BANGKOK KITCHEN
In terms of the business, the church wont let
us use gas here, so our hands are tied when it
comes to energy costs and energy providers.
IAIN CAMPBELL
BURGER BARN

CITYVIEWS
EasyJet plc
20Nov 14Nov 15Nov 16Nov 19Nov
640
650
660
670
680
690 p
692.00
20Nov
WEDNESDAY 21 NOVEMBER 2012
11
NEWS
cityam.com
Bernanke says fiscal cliff could see US
topple back into depths of recession
FALLING over the fiscal cliff could shock
the US back into recession, Federal
Reserve chairman Ben Bernanke warned
in a speech yesterday evening.
The fiscal adjustment, though
necessary in the long run, would be too
much for the weak recovery to absorb in
one dose, Bernanke told an audience at
the New York Economic Club.
The realisation of all the automatic
tax increases and spending cuts that
make up the fiscal cliff, absent offsetting
changes, would pose a substantial threat
to the recovery, he said.
BY BEN SOUTHWOOD
By the reckoning of the Congressional
Budget Office and that of many outside
observers, a fiscal shock of that size would
send the economy toppling back into
recession, he added.
Bernankes warning came in a speech in
which he promised that the Feds
monetary stance will not return to
normal until a considerable time after
the economic recovery strengthens.
We want to be sure that the recovery is
established before we begin to normalise
policy, he said.
Since the Fed expects the economy to
remain weak until mid-2015, his
commitment means the unprecedented
asset purchase programme known as
QE3 and the close-to-zero federal funds
rate could persist for years longer.
Bernanke used the rest of his speech to
explain why he thought Fed policy was
working, despite the abnormally slow
economic recovery.
Research suggests that our previous
asset purchases have eased overall financial
conditions and provided meaningful
support to the economic recovery in recent
years, Bernanke claimed. He put weak
growth down to crisis in Europe, the
financial and housing crash and resultant
tight credit conditions, combined with
slowly tightening fiscal policy.
THE NEXT governor of the Bank of
England must speak to his own staff
more often than Sir Mervyn King has,
to include a wider range of views in
policymaking and to understand the
development of the Banks future
leaders, City grandee Bill Winters
said yesterday.
Winters wrote a review of the Banks
liquidity operations and found staff
are afraid to express honest opinions
to policymakers and senior managers
because they fear their ideas would be
shot down out of hand, and that their
careers may suffer if they disagree
with their superiors.
Future governors should show a
human touch, he told the Treasury
Select Committee of MPs, if they are
to understand the Bank and gain
insight into the risks facing the finan-
cial sector.
The governor should regularly
hold meetings in small groups with
staff two or three levels below the
deputy governors, to find out the
Threadneedle
Street needs a
human touch
BY TIM WALLACE
degree to which they feel able to
express their views, Winters said.
And it would also let him find out
more about the next generation of
senior staff.
In future, the Bank should also
ensure it promotes people based in
part on their skills as managers, not
just with technical skills.
Management skills are very impor-
tant in choosing the next governor,
he said.
Ex-JP Morgan banker Bill Winters said Bank
of England bosses should be more receptive
WEDNESDAY 21 NOVEMBER 2012
12
NEWS
cityam.com
Bank of Englands Weale warns
high inflation means end of QE
INFLATION will be too high for the
next two years, ruling out any more
quantitative easing (QE), top Bank
official Martin Weale said yesterday.
But he defended the policy from
complaints that it hurts pensioners,
and said that in future it may be
possible to argue QE actually
reduces inflation by raising
productivity.
Under QE the Bank prints money
to buy government debt, to push
down interest rates. This is meant to
stimulate the economy, but it also
drives up inflation.
BY TIM WALLACE
In addition, QE has been criticised
as it reduces the value of the
annuity retirees can buy with their
pension pots, attracting the ire of
the older generation.
Weale yesterday defended the
policy, arguing that young people
have been particularly badly hit by
the downturn and so need support
from the central bank.
In particular he noted that almost
10 per cent of young men have been
unemployed for more than six
months, compared with just over
three per cent for men aged 31 to 64.
As a result he feels hitting the old
with QE has been justified because
it helps the young.
However, Weale said high
inflation should rule out any more
QE for now.
It is more likely than not that
inflation will remain above target
for much of the next two years, he
told the Manchester Economics
Seminar. Additional stimulus
would, without any corresponding
improvement in productivity, add to
inflation.
But he added that he hopes QE
may one day be shown to improve
productivity, allowing the Bank to
print more money without fear of
inflation soaring.
BANKS and finance firms increased
their fundraising through bonds,
shares and commercial paper in
October, according to Bank of
England data published yesterday,
as improving financial market
conditions allowed firms to tap up
more investors.
Gross share issuance hit its
highest level in more than a year at
1.3bn in the month, up from
0.2bn in September. Bond issuance
rose from 14.5bn to 17.8bn, while
commercial paper issuance
increased from 14.1bn to 15.4bn.
By sector, monetary and
financial institutions raised
Bond and share issuance jump
on improved market conditions
BY TIM WALLACE
13.6bn, up from 12.1bn in
September, while other finance
firms raised 12.7bn up from 7bn,
though non-finance firms issuance
slid from 9.3bn to 7.7bn.
Schemes like QE3 in the US, the
European Central Banks plan to
buy Spanish bonds and sustained
low interest rates have all calmed
investors and improved
fundraising conditions.
However, net issuance fell 5.8bn
as not every maturing debt
instrument was rolled over, with
banks net issuance dropping
9.9bn, but other institutions
issuance turning positive at 1.2bn
and non-finance firms coming in
at 2.9bn.
Martin Weale defended the Bank of Englands purchase of 375bn in bonds
Roger Lambert, who led the 20m share
placing for Secure Trust, is chairman of cor-
porate broking at Canaccord Genuity.
Despite being a generalist, he has been
heavily involved in some of Canaccords
most recent fund raises in the nancial sec-
tor.
These include a 25m fundraising for pri-
vate wealth manager Rathbone Brothers,
and its 25m fund raising at the start of this
month.
Lambert came under the Canaccord
Genuity umbrella after it snapped up Collins
Stewart in March 2012, having worked for
the rm since 2010.
Before joining Collins Stewart he spent 26
years at stockbroker Cazenove, where he
worked in corporate broking.
Working alongside Lambert was Paul
Baines, chairman of Canaccord Genuity
Hawkpoint, who performed the advisory
and Nomad role for Secure Trust.
Baines joined Hawkpoint in 2001, which
was then was acquired by Collins Stewart in
2011.
He was previously head of corporate
nance at Charterhouse, which was
subsequently taken over by ING in 2006.
The Secure Trust deal is the third fundrais-
ing in as many weeks for Canaccords
Financial Services team.
Last week Canaccord was sole broker and
adviser to Brookes MacDonald on a 21.5m
placing.
ADVISERS CANACCORD GENUITY
ROGER LAMBERT
CANACCORD GENUITY
13
NEWS
WEDNESDAY 21 NOVEMBER 2012
Banks are pressing the BBA to
consider a trade group merger
SEVERAL UK banks want their
trade association to consider
merging with other industry
groups as part of a radical re-
think of the British Bankers
Associations (BBA) structure and
finances.
The BBA used to be able to
charge for the use of Libor data,
but the association has lost that
multi-million pound revenue
stream since the interest rate
fixing scandal broke over the
summer.
Now members are urging it to
BY TIM WALLACE
consider every avenue in
cutting costs and boosting
revenues.
We expect the BBA to think
about all sensible options to
manage the budget for
example, considering a merger
with one of the host of trade
bodies out there, said a banking
source.
A few of us have suggested
this, but it is down to the BBA to
pull together the options and
assess them, then put it to the
members.
The BBA is understood to be
considering a range of options
which could be put to its board
in the near future.
But rival industry bodies have
already poured cold water on the
idea.
We are not in discussion with
the BBA, said a spokeswoman
from the Council of Mortgage
Lenders yesterday, arguing the
pair would likely make a poor
match.
We are mortgage market
specific, covering a wide range of
lenders in the market. The BBA is
sector specific, covering
organisations of a particular
type, she added.
PAYDAY lenders must do more to
check borrowers can afford their
loans, delay more foreclosures and
moderate their debt collection prac-
tices, the Office of Fair Trading (OFT)
warned yesterday as it announced
investigations into several lenders.
But the bodys new report also
found most customers of payday
lenders are satisfied with the service
they receive, often using the credit
services as a lifeline when they are
short of funds.
Despite concern from con-
sumer groups, the OFT
report pointed to industry
evidence that 56 per cent
of customers used payday
loans to prevent a one-
off financial difficulty
becoming a wider finan-
cial crisis, while 54 per
cent felt the loans made it
easier to pay bills on time.
However, the OFT still
wrote to all 240 pay-
day lenders to
express concerns
Payday lenders
in trouble over
customer care
BY TIM WALLACE
over their behaviour.
We are concerned about the extent
to which advertising appears to target
people in financial difficulty and
encourage rolling over of loans, the
report said. For example, around one
third of websites [reviewed] included
statements such as no credit checks,
loan extension guaranteed and
extend loans up to four or five times.
That would suggest irresponsible
lending and failure to carry out
affordability checks.
And the OFT also fears that giving
the annualise interest rate on a loan is
insufficient to give a balanced view of
the service, as the full risks of tak-
ing on a loan are not always
explained clearly.
The organisation revealed sev-
eral investigations relate to wor-
ries over debt collection,
including allegations firms mis-
lead customers, pestered debtors
over the phone and threatened
excessive collection charges.
David Fisher heads
the OFTs review
THE FINANCIAL reporting
watchdog has kicked off a project
to try and help auditors to rebuild
trust in their profession.
On the same day that auditors
for Autonomy came under
scrutiny following Hewlett-
Packards $8.8bn (5.5bn)
post-acquisition writedown, the
Financial Reporting Council said it
wants to examine the skills and
responsibilities needed to publish
useful audits.
The regulatory body will also
consider allowing sector experts to
assist auditors in combing through
the accounts of particularly
complex firms such as banks or
insurers. The report will be
published by September 2013.
Plans to restore audit reputation
BY MARION DAKERS
SECURE Trust Bank, a subsidiary of
Arbuthnot Banking Group, yesterday
defied tough fundraising conditions
to place 20m of shares with new
and existing investors.
The bank, which is majority
owned by Arbuthnot Banking, said
it would use the funds to support
future growth and potential
acquisitions. It will also be used to
repay its existing subordinated debt
of 5m to Arbuthnot, reducing the
parent banks stake down from 75.5
per cent to 70.7 per cent.
The new shares were sold at
13.50, about twice the 7.20 price
paid for its shares when it floated
on the market one year ago.
This a 4.9 per cent discount to the
last closing price.
BY MICHAEL BOW
Secure Trust raises 20m
INVESTORS fear the Eurozone crisis is
not going away, despite European
Central Bank boss Mario Draghis
assurances that he will do everything
to help, according to a Fitch study
published yesterday.
And analysts from Swiss bank UBS
warned Draghis policies may be
making the crisis worse in the long
run by reducing the pressure for
troubled governments to reform
their damaged economies.
Draghi hopes to ease the massive
economic readjustment taking place
by holding down interest rates and
supporting banks but analysts fear
this simply postpones the inevitable
pain, dragging out the crisis.
Earlier this month Draghi insisted
his outright monetary transactions
(OMTs) which would see the ECB
buy Spanish government bonds if the
government asks for a bailout are
a fully effective backstop that is
devised to remove the tail risk for the
Eurozone while not removing
incentives for fiscal discipline.
But although 86 per cent of
investors told ratings agency Fitch
Draghi warned
his loose policy
worsens crisis
BY TIM WALLACE the OMTs and banking union are
important, 81 per cent say they are
not enough to bring an end to the
turmoil.
They still fear significant econom-
ic, financial and political risks
remain.
And UBS warned the policies could
even be making the crisis worse by
reducing incentives for vital reforms.
In Spain, the OMT has actually
reduced pressure to reform and
stalled a much needed aid request
from the government, said analyst
Matthew Mish.
Unfortunately, without market
stress tough decisions are rarely
enacted.
He added that the ECB is not alone,
as the Bank of Englands policies are
propping up inefficient zombie
firms those who cannot pay off
their debts and only survive thanks to
low interest rates thus slowing the
economy, and the US Federal Reserve
potentially fuelling a dangerous new
housing bubble with its loose
policies.
The inherent problem is that cen-
tral bank policies seem to reward
debtors, not creditors, he said.
Buzz
9Nov 10Oct 14Sep 17Aug 20Jul 22Jun
-20
-40
0
-10
-30
10
20
30
40
Amazon
Google
Starbucks
Index
9Nov 10Oct 14Sep 17Aug 20Jul 22Jun
10
-10
0
-20
20
30
40
50
60
70
Amazon
Google
Starbucks
WEDNESDAY 21 NOVEMBER 2012
14
NEWS
cityam.com
L
AST week executives from
Amazon, Google and Starbucks
appeared before the House of
Commons public accounts
committee to discuss the issue of
tax avoidance, which led to some
calls for consumers to boycott big
brands that are accused of not
paying their fair share.
But how is brand perception actu-
ally impacted by these sort of accu-
sations and subsequent political
grilling?
Back in April 2011 I looked at five
brands that had been targeted by
protesters over their tax arrange-
ments, such as Vodafone, Boots,
Tesco, BHS and Topshop.
The figures showed that there had
been no big change in their corpo-
rate reputations as a result of those
public protests.
Looking at the three US brands
questioned by the public accounts
committee, however, we see a more
mixed reaction from consumers.
Firstly, on buzz (which measurers
whether people have heard good or
bad news) there is a big drop for
Starbucks, from +1 to minus 29 in
the wake of the tax avoidance story
in the UK media.
The brand had slowly started to
recover before falling back again
after the appearance before parlia-
ment, and now stands at around
minus 33.
There was less of a drop for
Amazon and Google, however.
The biggish Google dip is largely
related to the premature release of
their financial results in October,
which also prompted a brief col-
lapse in the firms share price,
rather than any concerns about its
tax status in the UK.
We see a similar pattern on the
Index, which is a composite of six
key image measures including that
of corporate reputation. Starbucks
suffered a relatively steep decline
after the story broke, Amazon expe-
rienced a smaller dip while
Googles scores barely moved.
So why is there a difference
between the brands?
It could be down to the coverage,
it could be that Google fares better
because it doesnt so obviously have
a product that the average con-
sumer pays for, or it could be
because of the levels of built-up
brand equity.
Its possible that Starbucks suffers
more from the publics wrath
because it hasnt yet earned the
right to be given the benefit of the
doubt.
Stephan Shakespeare is the chief executive
of YouGov
BRAND
INDEX
STEPHAN SHAKESPEARE
Google is spared the publics anger over UK tax spat
SPAIN successfully shifted 5bn
(4.02bn) worth of short-term debt
yesterday, but a bond sale for the
Eurozone rescue fund was delayed
by Frances Monday night
downgrade.
The Spanish treasury sold
4.2bn worth of 12-month debt at
a yield of 2.797 per cent, down
from 2.823 per cent at the last
auction, but 713m of 18-month
bills went for 3.034 per cent,
marginally up on 3.022 per cent
last time. Still, the auction beat
the governments 3.5bn to 4.5bn
target, and the auctions were
heavily over-subscribed.
However the European Financial
Spain enjoys bond success but
rescue fund hit by France woe
BY BEN SOUTHWOOD Stability Facility (EFSF) suffered a
setback when its three-year euro
benchmark was delayed, after
France its second largest
guarantor was downgraded from
Aaa to Aa1 by Moodys.
EFSF chief financial officer and
deputy chief executive Christophe
Frankel played the delay down as a
technical error.
The timing of the EFSF three-
year euro offering is currently
subject to a technical issue related
to EFSFs deeds of guarantee, he
said in a statement.
Apparently agreeing that the
problem is not fundamental,
Moodys has kept its rating for the
benchmark at Aaa, maintaining its
existing negative outlook.
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VALUE fashion retailer New Look posted a 25 per cent rise
in underlying first half earnings yesterday, as it removed
costs and improved margins as part of a recovery plan
following a slump in earnings in 2011-12.
The firm, owned by private equity groups Apax,
Permira and founder Tom Singh, also said that its current
sales performance is now showing year-on-year growth. A
spokeswoman for New Look said the firm hoped to
refinance its net debt of 1.05bn within the next 18
months.
The firm reported earnings before interest, tax,
depreciation and amortisation of 86.9m in the 26 weeks
to 22 September, up from 69.4m last year.
New Looks earnings
rise by 25 per cent as
recovery plan pays off
BY CITY A.M. REPORTER
PREMIER Foods, the maker of Hovis
bread, announced yesterday it is to
close two bakeries and axe 900 jobs
as part of plans to overhaul its trou-
bled bread division and pay off debt.
The company said bakery sites in
Birmingham and Greenford will
close during the course of next year,
on top of the previously announced
planned closure of another Hovis
bakery in Hampshire.
It is also preparing to shut distribu-
tion sites in Birmingham, Greenford,
Mendlesham and Plymouth, result-
ing in a total of 900 jobs being cut
across its bread business.
Chief executive Michael Clarke said
decisions will not be taken lightly
but they are necessary if we are to
build a strong and successful future
for the bread division.
Premier, which also makes Mr
Kipling cakes and Loyd Grossman
sauces, said the restructuring will
help offset margin pressure caused
by the loss of a 75m contract with
Premier to axe
900 jobs across
bread division
BY KASMIRA JEFFORD
the Co-op.
The bread arm, which the group
separated into a new division in
August, has proved tricky for Premier,
which has had to manage high wheat
prices, costly logistics, and also
Britons eating fewer sliced loaves
prompting retailers to drop prices.
Premier said the closures will result
in a 28m charge that should be
recovered through site disposals.
The group has been selling non-core
businesses such as Hartleys jams and
its pickles and sauces arm to help cut
its debt pile.
The 1973 Hovis advert, directed by Ridley Scott, was once voted an all time favourite
Premier Foods PLC
20Nov 14Nov 15Nov 16Nov 19Nov
88
86
90
92
94
96
98 p 94.75
20Nov
WEDNESDAY 21 NOVEMBER 2012
15
NEWS
cityam.com
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Available at
BRITISH utility Telecom Plus
reported an eight per cent rise in
first-half profit yesterday as it
added more customers and said it
expects to post a record profit and
turnover for the year.
The company, which provides
gas, electricity, fixed line telephone
and broadband internet services,
said customer numbers rose by
22,657 to 438,146 during the six
months ended 30 September.
For the first half, Telecom Plus
reported a pre-tax profit of 12.1m,
up from 11.1m a year earlier.
Revenue increased 30 per cent to
210m. The company raised its
interim dividend to 13p from 10p a
year earlier.
Telecom Plus in
revenue jump
BY CITY A.M. REPORTER
BIG Yellow, the self-storage provider,
yesterday posted a 20 per cent jump
in half-year profits but warned that
the addition of VAT to storage costs
wil continue to weigh down
earnings growth in the short term.
Chairman Nicholas Vetch said the
group focus on London and the
south east, where it operates 58 of its
66 facilities, had helped it meet
challenges in the period including
higher interest costs and a subdued
economic environment.
Adjusted pre-tax profits rose to
13.9m in the six months to 30
September, up from 11.6m a year
earlier, as store revenues grew 11.5
per cent to 35.5m. Occupancy rose
to 68.5 per cent from 63.5 per cent.
Profits surge
at Big Yellow
BY KASMIRA JEFFORD
TO the Marriott hotel in Grosvenor
Square last night for the seventh
annual Women of the Future
awards.
The Citys fairer sex were celebrat-
ed at the black tie drinks and din-
ner do, and unsurprisingly there
was no shortage of both men and
women turning out to show their
appreciation for Britains outstand-
ing ladies aged 35 and under.
The Capitalist spotted dashing
Dragon and entrepreneur James
Caan chatting to one lovely lady
during business secre-
tary Vince Cables
speech.
Cable told the
room full of gath-
ered women that
he felt extremely
humbled to be
there when he
saw the vast
pool of talent
in the room.
Awards were
dished out to
g e o l o g i s t s
and doctors
but among our lovely banking ladies
being honoured it was Natwest port-
folio manager Lucy Ellidge winning
the Young Star award, Barclays small
business cards managing director
Lucy Johnson as highly commended
Businesswoman of the Future and
RBS taking the Corporate award.
Patron Cherie Blair was a no-show,
citing other commitments, however
founder of the awards Pinky Lilani
summed the night up best when she
said: These awards are incredibly
special because they celebrate
women still at the begin-
ning of their careers and
with the potential to go
even further. The
Capitalist could not
agree more.
The Movember boys in the lead from Bank of America Merrill Lynch: Credit structurer Ben
Spitfire Lanning (left) and senior vice president Matt Lip Luggage Lee (right)
Left to right: Lucy
Ellidge, portfolio
manager at
Natwest and
Barclays small
business cards
managing
director Lucy
Johnson
16
cityam.com
cityam.com/the-capitalist
THECAPITALIST
After the final approval
yesterday from shareholders to
merge commodities trader Glencore
and mining giant Xstrata into Glencore
Xstrata International, The Capitalist
has been pondering on other big firms
boasting tongue-twistingly long
names. Bank of America Merrill Lynch
rolls off the tongue a good deal
quicker than law firm Skadden, Arps,
Slate, Meagher & Flom LLP. However
neither can compete with Pittsburgh-
based law firm Holly, Kraft, Jacobs,
Wainwright, Deunster, Chattersworth,
Cravens, Zymbrowki, Langston,
Johnson, Tillerskein, Quoss,
Thompson & Dudley. Apparently the
partners were: Tired of trendy and
vacuous-sounding law firm names.
After a disappointing result for
Englands rugby boys last
weekend in their match against
Australia, the rugby Autumn
International series continues this
Saturday as England take on South
Africa at Twickenham. However eager
City betters could be warned about
taking on the spreads at bookmakers
Spreadex. The Capitalist hears the
firms latest addition to the sports
trading room is a new rugby trader. The
name of the gentleman in question just
happens to be Jonny Wilkinson. In a
case of double coincidence the firm
also has a Jon Terry among their staff,
unfortunately not a football trader -
nevertheless it has been cause for a
good chuckle on the trading floor.
WEDNESDAY 21 NOVEMBER 2012
EDITED BY CALLY SQUIRES
Got A Story? Email
thecapitalist@cityam.com
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BARELY more than a week left in
The Capitalists hunt to source
the fairest and furriest
moustache in all the City land.
As we are now past the halfway
point in our hairy little challenge,
it is time for an update.
The Bank of America Merrill
Lynch boys, who have banded
together on the fundraisers
official website as team Julios
Movembrs are shaping up well,
as photographic evidence of self-
styled Matt Lip Luggage Lee
Calling all Mo Bros - one week
left to send your best specimen
and Ben Spitfire Lanning
suggests.
Our Mo Bros sporting
handsome handlebars from
across the City have already
raised almost 90,000 in
sponsorship on
uk.movember.com
Remember it is not just for fun,
there are prizes to be won
courtesy of Lockonego Salon so
please send all entries to
thecapitalist@cityam.combefore
close of play on 30 November.
Cable and Caan
cheer City ladies
DAVID Camerons former media chief
Andy Coulson and Rebekah Brooks,
the former boss of Rupert Murdoch's
UK newspaper business, will be
charged with conspiring to pay
officials for private information on
the royal family, prosecutors said
yesterday.
The charges against Coulson relate
to his time as editor of the Murdoch-
owned News of the World tabloid.
Coulson and Brooks to be charged
over illegal payments to the MoD
BY CITY A.M. REPORTER
Since resigning from his Downing
Street post in 2011, Coulson has been
charged with conspiracy to hack into
phone messages, and perjury. He said
in a statement he would fight the latest
charges in court.
Brooks, 44, was charged with
conspiring to authorise payments of
around 100,000 to a member of the
Ministry of Defence to generate stories
and will appear at Westminster
Magistrates Court on 29 November. Her
lawyers were not immediately available.
WEDNESDAY 21 NOVEMBER 2012
17
NEWS
cityam.com
Rebekah Brooks and Andy Coulson deny the charges and are appealing
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Property magnate Uri Heller
calls for shareholder backing
URI Heller, the chief executive and
founder of real estate developer
Ablon Group, yesterday issued an
impassioned plea to shareholders
urging them to vote against plans
to remove him from the firm.
One of the companys major
shareholders and lender to the
firm, Volksbank Group, has
proposed removing Heller as
director from the company and
has won the backing of activist
investor Laxey Partners for the
plan.
BY MICHAEL BOW
Shareholders will vote at a
meeting to remove Heller, who
founded the firm in 1993 and
owns 28.65 per cent, next month.
Yesterday he issued a letter to
shareholders urging them to keep
him at the firm.
It is my duty to act in the best
interests of the company and its
shareholders and I believe that I
have always done so, he said.
But my devotion to the company
is even more fundamental than
that. I founded the company
nearly 20 years ago and I have
worked for it ever since.
Heller also accused Volksbank,
which owns 24.3 per cent of
Ablon, of making an offer to take
control of the firm without
making a takeover offer. It wants
to appoint different directors to
lead the firm.
On 12 November Laxey
Partners, which owns three per
cent, issued a call to arms to
fellow shareholders to remove
Heller from the company, citing
conflicts of interest between his
role as a shareholder and chief
executive. The vote is due to take
place on 5 December.
IN BRIEF
Baker & McKenzie looks to Korea
nLaw firm Baker & McKenzie said
yesterday it had applied to Korean
authorities to be allowed to open an
office in the countrys capital, Seoul.
South Korea opened its doors to
foreign law firms for the first time
earlier this year after agreeing trade
deals with the EU and the US. Pending
regulatory approval, Bakers office in
Seoul will be led by M&A partner Nam
Hung Paik.
Lottery runner sees record sales
nNational Lottery operator Camelot
said yesterday that ticket sales had
risen by eight per cent in the six
months to the end of September. The
privately-owned company put the
success down to online and mobile
gaming. Camelot lost a high court
case against Richard Desmonds
Health Lottery asking for its gaming
licence to be revoked in August, but
continues to pursue the matter.
Pensions minister attacks EU plan
nNew capital rules for final salary
pension schemes would add 150bn to
UK firms costs, pensions minister Steve
Webb warned yesterday. The European
Commission plans to regulate pensions
in the same way as insurers, making
funds hold more capital against
adverse events. But critics say the two
are not comparable, as insurers pay out
on sudden events, while pensions are
long-term products. The costly rules
would harm businesses ability to
invest, grow and create jobs, and many
more schemes could be forced to
close, Webb warned.
HOMESERVE, the home repairs
group currently being investigated
by UK regulators, yesterday stormed
to a 25.6m half year profit after
swivelling its focus off the UK market
towards selling to people overseas.
The group announced in May it
was being investigated by the
Financial Services Authority over its
UK telephone sales and marketing
tactics. Yesterday it said profits had
surged nine per cent on the back of
229.6m in revenues over the half
year ending 30 September as it
turned away from the UK market.
HomeServe, which offers emer-
gency home insurance, yesterday
reported that customer numbers in
the UK had plunged 500,000 to 2.5m
in the past six months and would
carry on falling.
Chief executive Richard Harpin
said: HomeServe is making progress
in transitioning its UK business to a
smaller, more customer focused
operation and has delivered good
growth in its international business-
es in the first half of the year.
The fall off in UK activity was offset
HomeServe up
after pivoting
away from UK
BY MICHAEL BOW
by strong growth in the US where
customer numbers increased 20 per
cent.
The company also boosted its bal-
ance sheet by taking over French firm
Domo last December, buying out the
remaining 51 per cent stake from
Veolia Environnement.
The purchase increased net debt to
78.1m, up from 36.6m over the six
months, but it also helped improve
HomeServes cash flow, sending free
cash flow from 2.3m to 10.3m at
the end of September.
HomeServe jumped more than ten
per cent on the FTSE yesterday clos-
ing up at 247.9p on the back of the
results.
Homeserve PLC
20Nov 14Nov 15Nov 16Nov 19Nov
230
220
225
235
240
245
250
255 p
247.92
20Nov
MORTGAGE firm Paragon
increased profits by 22.5 per cent
in the last 12 months, according
to full-year results published
yesterday.
The specialist buy-to-let and
consumer finance group
reported record pre-tax profit of
95.5m, up from 80.8m in the
previous year.
Paragon benefited from bigger
lenders cutting back credit,
allowing it to expand.
The results allowed it to up the
final dividend to 4.5p per share,
up from 2.65p last year. Added to
Paragon profits soar as bigger
lenders cut back on buy-to-let
BY TIM WALLACE the 1.5p given out earlier this
year, that takes the total to 6p.
But despite rising profits and
dividends, analysts warned
Paragon is still not a healthy
investment prospect.
Paragon is a high risk business
that has become effectively if not
technically insolvent twice, said
Numis James Hamilton, slapping
a sell rating on the firm.
Paragon is highly leveraged
and despite this it generates a
low return on equity (ROE). The
underlying ROE is now just under
nine per cent which we believe is
dramatically below the cost of
equity.
WEDNESDAY 21 NOVEMBER 2012
19
NEWS
cityam.com
Paragon chief Nigel Terrington said the firm is well funded for further lending growth
BUSINESS research and development
boomed in the UK between 2010 and
2011, according to data out
yesterday, despite the countrys slide
back into recession by the end of the
year.
Total business R&D spending was
17.4bn in 2011, eight per cent
higher in cash terms than in 2010,
and six per cent higher in real
terms, the Office for National
Statistics said.
The biggest gains came from a 19
per cent boost to the IT sector, and a
23 per cent hike in car industry R&D
spend, as the country made its way
toward becoming a net exporter of
cars for the first time in decades.
Spending in the defence and
pharmaceutical sectors also
accounted for a large portion of the
increase.
The data provided a clear picture
of how important foreign
investment has been for recent UK
economic success, with non-UK-
owned firms spending more than
half of the total on R&D for the first
time ever. UK firms spent 6.4bn
out of the total 8.7bn spent in 1993,
while foreign-owned firms made up
8.8bn of the total 17.4bn spent in
2011 ahead of the 8.6bn spent by
businesses with UK-resident owners.
UK firms hike
R&D spend in
export sectors
BY BEN SOUTHWOOD
MORTGAGE lending climbed to an
11-month high in October, according
to data out yesterday, as the Funding
for Lending Scheme (FLS) entered its
third full month of activity.
Gross mortgage loans hit 12.9bn
in October, data from the Council of
Mortgage Lenders (CML) showed, up
13.3 per cent on September, and up
4.2 per cent on October last year.
House purchase and remortgage
activity both appear to have picked
up recently, and this should be sup-
ported by an improvement in the
availability and pricing of mort-
gages, said CML chief economist Bob
Pannell, who put this improvement
down to the governments scheme.
FLS is likely to have made an early
positive impact, he claimed, help-
ing to counter some of the negative
pressures associated with a protract-
ed and weak economic recovery.
This means gross lending is run-
ning at an average of 11.9bn per
Mortgage loans
see Funding for
Lending boost
BY BEN SOUTHWOOD
month so far this year, up from
11.7bn over the whole of last year,
and 11.3bn during 2010.
But the Bank of England has consis-
tently forecast that FLS would only
have its full impact on the mortgage
market by the beginning of 2013.
Mark Harris, boss of SPF Private
Clients, a mortgage broker, said he
expected the mortgage market to
ease further and further over the
coming year. This bodes well for next
year as lenders saturate the low
loan-to-value (LTV) market with a
plethora of rock-bottom rates, they
will be forced to turn to the higher
LTV bracket, he predicted.
But Howard Archer at IHS Global
Insight disagreed, warning that the
pick-up could be illusory. Any signs
of a pick-up in housing market activi-
ty need to be treated with consider-
able caution, he said. As firstly there
have been previous false dawns
recently, and secondly housing mar-
ket activity remains very low com-
pared to long-term norms.
WEDNESDAY 21 NOVEMBER 2012
21
NEWS
cityam.com
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Open
Evening
Thursday 29
November
47.30pm, Royal National Hotel,
Bedford Way, London WC1H 0DG
Find out more about
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you choose your speed of study
Q January 2013 start: modules
and Foundation degrees
A TOP Federal Reserve official
yesterday challenged an idea that is
gaining traction at the US central
bank, arguing that adopting so-
called thresholds to guide policy
would be a risky move that fails to
take account of broader economic
conditions.
Richmond Fed president Jeffrey
Lacker also floated the idea that
legislation might be necessary to
limit the Feds emergency lending
activities, if the central bank cannot
limit itself.
But Lacker spent much of his
speech pouring cold water on an
idea publicly endorsed by a few Fed
policymakers, including influential
vice chair Janet Yellen: setting
specific rates for unemployment and
inflation as markers for when the
Fed would consider lifting rates.
Feds Lacker pours cold water on
monetary policy thresholds plan
BY CITY A.M. REPORTER Crisp numerical thresholds may
work well in the classroom models
used to illustrate policy principles,
but one or two economic statistics
do not always capture the rich array
of policy-relevant information about
the state of the economy, Lacker
told the Shadow Open Market
Committee.
Lacker, an inflation hawk who has
dissented at every Fed policy-setting
meeting this year, said placing great
weight on the jobless rate alone can
easily lead you astray, given the
complexity of factors that influence
the labour market. Adopting an
inflation threshold, in particular,
essentially requires that we lose a
measure of credibility before it can
be invoked, he said. This is because
even if the unemployment rate
remains stubbornly high, a rise in
inflation would be necessary to
reverse monetary policy, he added.
Bank of Japan hits out at critics
of its hard-won independence
THE BANK of Japan yesterday stood
resolute against calls to flood the
economy with money in order to
achieve its inflation target, stressing
the importance of its political
independence.
It kept its asset buying
programme steady after last
months increase to 91 trillion yen
(0.7 trillion), dismissing calls for
unlimited quantitative easing from
the Bank from opposition leader
Shinzo Abe, widely tipped to
become the countrys next premier
BY BEN SOUTHWOOD
in Decembers election. Abe, leader
of the Liberal Democratic Party, had
also proposed reviewing legislation
surrounding the central bank.
Central Bank independence is a
system created upon bitter lessons
learned from the long economic
and financial history in Japan and
overseas countries, said Bank
governor Masaaki Shirakawa at a
news conference.
Any debate on revising
something like the BOJ Law, which
lays the foundations of Japans
economic and financial system,
must be done carefully, spending a
good amount of time.
Shirakawa has not just had to
face down opposition critics the
government has joined Abe in
calling for more intervention,
though it has not gone as far as
recommending the radical policies
favoured by the opposition leader,
which include boosting the
inflation target to three per cent
and guaranteeing bonds to fund
fiscal stimulus.
But analyst Yasuo Yamamoto at
Mizuho Research Institute predicted
the pressure would force the BOJ to
act in their next meeting.
RESEARCH AND DEVELOPMENT ROCKETS DURING 2011
COMPUTER
PROGRAMMING & IT
MOTOR VEHICLES
& PARTS
PHARMACEUTICALS
INDUSTRY
293m 19% 288m 23% 169m 4%
FOREIGN-OWNED BUSINESSES SPEND MORE THAN UK-OWNED FIRMS FOR THE FIRST TIME
RESEARCH AND DEVELOPMENT SPENDING BOUNCES BACK FROM CRASH
10
9
8
7
6
5
4
3
2
1
0
Cash spending on R&D in the UK, bn
SOURCE: OFFICE FOR NATIONAL STATISTICS
SOURCE: OFFICE FOR NATIONAL STATISTICS
1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
4
6
8
10
12
14
16
18 R&D spending by UK-located firms, bn
CASH TERMS
REAL TERMS
UK REST OF THE WORLD
2011 2009 2007 2005 2003 2001 1999 1997 1995 1993 1991 1989 1987
BUILDING permits, housing starts
and housing completions in the
United States grew rapidly into
October, according to statistics out
yesterday, signalling continued
recovery in the US housing market.
Permits were up 29.8 per cent in
the year to October, the data from
the US Housing Department and
Census Bureau showed, even after
a 2.7 per cent fall into September.
Housing starts grew some 3.6 per
cent between September and
October, hitting a four year high of
894,000, to cap off the 41.9 per
cent boost seen since October last
year. And to finish the picture,
US housing market continues
to bounce back from collapse
BY BEN SOUTHWOOD
housing completions rocketed up
14.5 per cent between September
and October, making them 33.6
per cent higher than just a year
ago.
The Commerce Department said
very little of the boom could be
attributed to the impact of
superstorm Sandy which made
up just eight per cent of overall
housing starts, and where new
building actually fell 6.5 per cent.
This came as weekly chain store
sale data also revealed an
improvement on last years
figures. Sales were up 2.5 per cent
on the year, the data from an
industry body revealed, but down
0.3 per cent over the week.
GERMANY and France have reached
an agreement under which each gov-
ernment will hold a 12 per cent stake
in aerospace and defence group
EADS, a German newspaper reported
yesterday.
Citing government sources,
Handelsblatt said that the agree-
ment would mean governments,
including Spain which owns 5.5 per
cent, would in the future hold rough-
ly 30 per cent in the parent of plane-
maker Airbus.
Germany, which has never held a
substantial direct stake in EADS, has
been preparing the purchase of
shares held by carmaker Daimler
after talks on a $45bn (28.3bn)
merger between EADS and BAE
Systems collapsed last month.
Already concerned about the
French gaining a step up on them
within Airbus, the Germans vetoed
the defence and aerospace deal out
of concern that their influence
would be reduced further in the
Germany and
France to hold
12.5pc in EADS
BY HARRY BANKS
combined group.
Daimler currently controls a 22.5
per cent voting stake in EADS, hold-
ing 15 per cent directly and a further
7.5 per cent belonging to a consor-
tium of private and public sector
investors.
Under the current shareholder pact
between France and Germany, this is
counterbalanced on the French side
by a 15 per cent government holding
and 7.5 per cent stake owned by
media firm Lagardere.
EADS declined to comment on the
report.
IN BRIEF
Reckitt close to Schiff takeover
n Reckitt Benckiser said yesterday it
looked forward to clinching a deal to
buy US vitamin maker Schiff Nutrition
after rival bidder Bayer announced it
would not increase its offer. Reckitt last
week trumped Bayer's $1.2bn (754m)
agreed deal to buy Schiff with a higher
offer of $1.4bn. Our original tender
offer still stands and we look forward to
reaching an agreement, a
spokeswoman for the UK consumer
goods group said. We are in
communication with them (Schiff), she
added, while declining to go into further
details.
Diageo tender offer next year
n Diageo will launch a mandatory share
tender offer to buy up to 26 per cent
additional stake in India's United Spirits
from public shareholders on 7 January,
the manager to the offer said in a notice
to the Bombay Stock Exchange. Earlier
this month, Diageo agreed to buy a
majority stake in United Spirits,
controlled by Indian businessman Vijay
Mallya, for $2.1bn, fuelling a push by the
world's biggest spirits group into fast-
growing markets. The tender offer will
close on 18 January, JM Financial said in
a notice to the exchange.
ITC to review Samsung v Apple
n Samsung was handed a boost in its
ongoing patent dispute with Apple
yesterday when the US International
Trade Commission (ITC) said it would
review a judges decision earlier in the
year that Apple did not copy Samsung
technology in its products. The ITC has
the power to ban sales of products if
they are found to infringe on intellectual
property, so could potentially order the
iPhone and iPad to be removed from US
shelves. It will report back on 14
January.
Dialight leaps on new LED orders
n Shares in LED maker Dialight rose
more than six per cent yesterday as the
Newmarket-based company said it had
won a major contract with a US power
plant operator for more than 1,000 LED
lighting fixtures. The order has a value
of around 400,000. This order signals
further penetration of the clean energy
market and is a clear illustration of how
our lighting fixtures can be used in the
most diverse of environments,
Dialights chief executive Roy Burton
said yesterday.
WEDNESDAY 21 NOVEMBER 2012
22
NEWS
cityam.com
SINGAPORE commodities trader Olam International yesterday defended its accounting
practices after attacks by short-seller Muddy Waters. We are dismayed at the nature and
lack of substance of these assertions and opinions about Olam's financial position,
particularly as we were not contacted in advance by Carson Block or anyone else from Muddy
Waters," Olam, led by Sunny Verghese, said in a statement.
OLAM BATTLES MUDDY WATERS ACCOUNTING CLAIM
TECHNOLOGY group Halma hiked
its dividend seven per cent
yesterday, marking the 34th
consecutive year it has raised the
shareholder payout by more than
five per cent.
The group reported a six per
cent jump of adjusted pre-tax to
60.8m for the six months to
September, on revenues up six per
cent to 298.1m.
FTSE 250-listed Halma was
boosted by strong growth in Asia
Pacific, with revenue up 17 per
cent. Weak demand in the UK and
Europe was offset by US growth.
Halma hikes
its dividend
BY CATHY ADAMS
INDUSTRIAL chain supplier Renold
yesterday appointed a new chief
executive as it reported falling
revenue and profits.
Robert Purcell will take the role
of chief executive from 1 May,
following the retirement of Bob
Davies at the end of the year.
Underlying revenue fell six per
cent to 96.7m over the six months
to September, down from 105.5m
in the previous half year, as the
firm was hurt by falling demand
from Europe.
Pre-tax profit fell to 2.1m from
3.7m.
Renold hires
a new chief
BY CATHY ADAMS
European Aeronautic Defence and Space Company
20Nov 14Nov 15Nov 16Nov 19Nov
25.2
25.0
25.4
25.6
25.8
26.0
26.2
25.49
20Nov
WEDNESDAY 21 NOVEMBER 2012
23
LONDONREPORT
Bernanke and
HP woes halt
rally in stocks
W
ALL Street halted its two-day
rally yesterday, after Federal
Reserve Chairman Ben
Bernanke said the central
bank lacks tools to cushion the US
economy from the impact of the
fiscal cliff.
The days biggest disappointment
was Hewlett-Packard shares, which
sank to a 10-year low after the comput-
er and printer maker swung to a
fourth-quarter loss and announced a
$8.8bn charge related to accounting
improprieties. The stock slid 12 per
cent to close at $11.71.
Bernanke, in comments before the
Economic Club of New York, said the
Fed does not have the ability to offset
the damage that would result if politi-
cians fail to strike a deal to prevent a
series of mandatory tax increases and
spending cuts scheduled to go into
effect early next year.
The statement caused a downdraft in
the market, though the equity market
cut most of its losses before the end of
the day.
Stocks had rallied for the last two ses-
sions after Washington politicians
sounded an encouraging note that a
deal to avoid the US fiscal cliff could be
reached. The gains followed two weeks
of sharp losses that pushed the S&P
500 down through the 200-day moving
average, a key benchmark of the mar-
ket's long-term trend.
The S&P ended yesterday near that
level, which was 1,382.68.
The Dow Jones industrial average
slipped 7.45 points, or 0.06 per cent, to
12,788.51 at the close. But the
Standard & Poors 500 Index edged up
0.93 of a point, or 0.07 per cent, to fin-
ish at 1,387.82.
The Nasdaq Composite Index inched
up 0.61 of a point, or 0.02 per cent, to
close at 2,916.68.
U
K shares reversed early losses
yesterday, helped by the
completion of the long-awaited
takeover of miner Xstrata by
commodities trader Glencore which
boosted both stocks.
Xstrata led the risers, adding 3.1 per
cent, after its shareholders approved the
$31bn deal which had been on the cards
ever since Glencore listed last year.
Mining stocks, which were down 0.5 per
cent at their session low at 2.45pm,
rebounded to finish 0.5 per cent up fol-
lowing the news.
We consider the long-term investment
case for the merged Glencore Xstrata to
be compelling, analysts at Jefferies said
in a note, reiterating their buy recom-
mendation on both stocks. Glencore
gained 1.6 per cent, with both stocks trad-
ing over double their average 90-day
volume.
At the close, Britains FTSE 100 was up
10.44, or 0.2 per cent, at 5,748.10, despite
hitting an intraday low of 5,706.70 in
morning trading.
While the materials sector was support-
ed by Xstrata and Glencore, other main
gainers were defensive sectors.
Telecoms led sectoral risers, pulled up
by heavyweight Vodafone, which rose 1.1
per cent. It added 3.5 points to the index,
the most by a single contributor.
Its got an eight per cent yield, and the
fact that its one of the outperformers
today I think is quite telling, that people
are starting to feel comfortable with it
again, Nick Xanders, head of European
equity strategy at brokerage BTIG, said.
The stock had lost 18.8 per cent in three
months between the middle of August
and the middle of November.
Glenstrata merger boosts mining
stocks as FTSE pares early losses
BESTof theBROKERS
Exor SpA
14Nov 15Nov 16Nov 19Nov 20Nov
19.75
19.25
19.50
18.75
19.00
18.50
18.37
20 Nov
EXOR
UBS has downgraded the
Fiat majority-owner from
buy to neutral on the
back of a downgrade to
Fiat. Its target price for
Exor is now 20, from
22.40, as Fiat raises
cash to buy Chrysler.
DASHBOARD CITY
NEW YORK
REPORT
YOUR ONE-STOP SHOP FOR JOB MOVES,
BROKER VIEWS AND MARKET REPORTS
cityam.com
FTSE
20Nov 14Nov 15Nov 16Nov 19Nov
5,800
5,775
5,750
5,725
5,675
5,650
5,625
5,700
5,748.10
20 Nov
Compass Group PLC
14Nov 15Nov 16Nov 19Nov 20Nov
p 710
700
705
685
690
695
709.00
20 Nov
COMPASS
Investec has thrown its
weight behind the
catering giant, raising its
target price to 800p
while reiterating a strong
buy recommendation.
Further growth still lies
ahead, Investec reckons.
Blinkx PLC
14Nov 15Nov 16Nov 19Nov 20Nov
p 82.5
77.5
80.0
70.0
72.5
75.0
65.0
67.5
67.75
20 Nov
BLINKX
Citi has downgraded the
video search engine to
neutral with a price
target of 90p. Citi is still
upbeat about Blinkxs
medium run prospects
but feels that valuation
is up with events.
State Street
Simone Vroegop has been
appointed head of consultant
relations for Europe, the Middle
East and Africa at the financial
services provider. She was
previously vice president and
head of business development
for the companys global services
business in the Amsterdam
office.
Charles Russell
Shahram Taghavi has been appointed head of immigration
at the law firm. He joins from Lewis Silkin, the law firm,
where he was deputy head of immigration. Taghavi has
also worked at Doughty Street Chambers, and held a
teaching post at the School of Oriental and African Studies.
Actis
Adiba Ighodaro has been made a partner in the private
equity firms investor development group. She has held a
number of roles in CDC Group, Actiss parent company,
including head of West Africa.
Withers
Graham Elliot has been appointed as a VAT consultant at
the law firm. He joins from Haysmacintyre, the accountancy
firm, where he was a partner. Elliot has a particular
specialism in issues affecting the real estate and charities
sectors.
Stephenson Harwood
Marta Garcia has been appointed as a competition partner
in the law firms corporate practice. She joins from Clifford
Chance, where she was a senior associate. Garcia has also
worked at Baker & McKenzie.
SNR Denton
Nilo Effori has been made an associate in the law firms
sports group. He joins from Biazzo Simon Avogados, the
Brazilian law firm, where he was head of sports law.
WHOS SWITCHING JOBS Edited by Chris Harlow
+44 (0)20 7092 0053
morganmckinley.com
SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
To appear in CITYMOVES please email your career updates and pictures to citymoves@cityam.com
in association with
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W
HAT is the connection
between executive pay,
petty crime, and
plagiarism by students?
Economics can help us
with the solution. It all links back to
the concept of externalities.
To illustrate the idea, economists
use the example of a factory, which
imposes costs on others through
pollution. But Thomas Schelling, a
Nobel Prize winner, extended it to
the social domain 40 years ago in his
paper Hockey Helmets, Concealed
Weapons and Daylight Saving Time:
Binary Choice with Externalities. The
idea is that the impact of a social
W
HEN The Whos Roger
Daltrey first sang I hope I
die before I get old, he was
probably not planning on
receiving the winter fuel
allowance. Yet 47 years later, at some
stage this month a 200 cheque from
the UK taxpayer will drop through his
letterbox.
Daltrey is one of a growing number of
people born since the mid-1940s who
are at or are approaching the official
retirement age. There are so many baby
boomers that, between 2010 and 2015,
the number of people over the age of
65 will have increased by 1.3 million. By
2050, for every retired person there will
be two and a half people of working
age, down from four today.
Demographic changes provide some
benefits. People now entering retire-
ment are healthier, wealthier and
more active than previous generations.
But there are also costs. Ageing makes
cityam.com/forum
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.
24
WEDNESDAY 21 NOVEMBER 2012
PATRICK NOLAN
Lesson from Australia: Retirement
benefits dont have to bankrupt us
much of the existing welfare state
unaffordable. Money is already a prob-
lem for the government. An older pop-
ulation will make this problem worse.
The welfare state was designed for a
young and growing population. Like a
pyramid scheme, retiree entitlements
would be funded by younger workers,
who would in turn receive benefits
funded by the next generation. But,
with an increasing share of the popula-
tion receiving benefits and a decreas-
ing share paying for them, the pyramid
is being turned on its head.
The situation is not hopeless, howev-
er. Experience of reform in countries
like Australia shows that the UK could
build a welfare state that not only pro-
vides for its citizens but also future-
proofs the economy against
government deficits and debt.
Like the UK, Australia guarantees all
citizens health cover and a secure
retirement income. But unlike the UK,
the cost of welfare is more evenly
shared between Australian citizens and
the government. Australian citizens
pay for nearly a third of health care
themselves. They contribute nearly 10
per cent of their income towards pri-
vate pensions. Four in five Australian
pensioners receive a targeted pension.
More even sharing of costs has many
advantages. It makes public pro-
grammes more affordable and can
increase the options available for help-
ing people in retirement. It also has
important political effects. Stronger
private programmes create a more
durable consensus that funding wel-
fare is not just the job of government.
Without this consensus, the UK will
continue to face pressure to expand its
welfare state. Australias broader fund-
ing base allows it greater flexibility to
introduce pro-growth policies, like a
more competitive tax system.
The government has ducked the issue
of long-run affordability. A more gener-
ous indexation of the state pension has
offset savings from bringing forward
the increase in the retirement age. The
challenge of funding long-term care
remains elusive and poor value for
money spending like the winter fuel
allowance, free bus passes and TV
licences remains off limits for this
Parliament at least.
The temptation for David Cameron
will be to put off dealing with these
challenges, but this will only make
reform harder. Not only is the number
of people over 65 increasing, but the
elderly are by far the most likely to
vote. This gives the grey lobby immense
power, and this power is only going to
increase. As Reform has shown, while
41 per cent of the voting population
was aged over 55 in 2010, based on cur-
rent turnout rates this will grow to 45
per cent by 2020.
The changes required to make the
welfare state affordable are not easy:
people saving more for retirement,
scrapping the winter fuel allowance,
free bus passes and TV licences, greater
use of equity in homes to fund long-
term care, health services being moved
out of hospitals and a greater require-
ment for private health insurance. But,
as Australia shows, these changes
would put the welfare state on a more
sustainable footing.
Dr Patrick Nolan is the chief economist at
the independent think tank Reform. Its report
Entitlement Reform is available at
www.reform.co.uk
choice can be magnified. Behaviour,
whether good or bad, may be copied
and generates social externalities.
In this vein, two Italian
economists, Claudio Lucifora and
Marco Tonello, have just published a
study on cheating in exams. They
found that the more people do it,
the more likely it is that yet more
will follow the example. A snowball
can turn into an avalanche.
The authors trace the origins of a
wave of plagiarism back to the
classroom, to things which by
themselves seem innocuous, like
teachers tolerating minor homework
copying. Its the same thing as the
broken window effect on petty
crime. Most crime takes place in
poor neighbourhoods, which tend to
be a run down. But rigorous
enforcement of standards, like
mending broken windows quickly,
can help reduce much more serious
levels of crime.
Another example is the executive
pay boom that began in the 1980s.
One notable case was Cedric Brown,
chief executive of the newly-
privatised British Gas, who increased
his pay to the then outrageous level
of 400,000 a year. Despite public
opprobrium, he got away with it and
other executives saw that he had.
Politicians may now demand
companies be more socially
responsible. But we are now a very
long way down the track. Virtually
the only focus of corporations is to
maximise shareholder value and
executive rewards.
Once the genie is out of the bottle,
it is difficult to put back in. As such,
the instinct of government to do
more and to regulate more is wrong.
We dont need more government.
We need smarter government, using
the waves of information on the web
and modern tools of analysis to
identify potentially harmful trends
at an early stage. Fixing the broken
window does not need armies of
bureaucrats. It just needs to be done
early enough.
Paul Ormerod is an economist at
Volterra Partners, a director of Synthesis
and author of Positive Linking: How
Networks Can Revolutionise the World.
AGAINST
THE GRAIN
PAUL ORMEROD
Cheating students hold the key to better government decision-making
Your c
25
WEDNESDAY 21 NOVEMBER 2012
The Forum is open for you to take part. Got a sharp comment on
one of todays columns? Do you have another subject you want
to share your opinion on? We want to hear your views.
Email theforum@cityam.com or comment at cityam.com/forum
Practical pensions
[Re: The Ostrich Generation, yesterday]
I imagine that one of the main reasons
young people are not placing much faith in
the future of their pensions is their lack of
confidence and certainty about the future
more generally. If someone is in their mid-
20s, three or four decades is a long way
ahead. And it is highly like that current
young professionals will see their statutory
retirement age go up significantly. This
could mean that a person working in, for
example, financial services today will end
up working for 10 or 15 years longer than
anticipated. Its also very difficult to save at
the moment. Current incomes are stagnat-
ing, and once individuals have writen off
necessary expenses, there is hardly any-
thing left for the following year, let alone
for retirement. So perhaps a current lack of
saving is just a case of young people trying
to be practical.
Krishnan Unni Madathil, KPMG
M
OODYS downgrade of
France this week was
hardly a surprise. Although
blamed on the risk of
Greece leaving the
Eurozone, Frances structural
challenges its declining
competitiveness, high
unemployment, public debt and
market rigidity have long been
worsening.
The Eurozone crisis has only high-
lighted a more gradual decline in the
countrys ability to compete interna-
tionally. Frances current account
has deteriorated since 2000 from a
surplus of almost 3 per cent of GDP
in 2000 to a deficit of 2 per cent in
2012. And even when many peripher-
al European countries improved
their trade balance sharply after
2007, Frances has worsened.
The countrys rigid and complex
regulatory and fiscal environment
has done little to fix this. According
to a recent study by the IFRAP
Foundation, a French company is
now subjected to 153 different direct
or indirect taxes and levies, com-
pared to only 55 in Germany.
And worse, Frances politicians
have failed to make the difficult deci-
sions needed to resolve the situation.
Francois Hollandes government (like
that of his predecessor, Nicolas
Sarkozy) has been reluctant to carry
out vital labour market reforms.
Opening up closed professions,
reducing high taxation of labour and
introducing some flexibility into the
market have all been avoided. In his
imposition of punitive wealth taxes,
Hollande has in some ways made
Frances situation worse.
Although, market reaction to
Moodys downgrade has been muted,
TOP TWEETS
Ive always found the cheapest energy tariff
by looking at them all choosing the cheapest.
@robinbogg
Remember that within the rules is accept-
able for MPs expenses, but immoral for pri-
vate tax arrangements.
@obotheclown
France levies a 75 per cent per cent tax on high
earners. Unsurprisingly growth is slow.
@GenNerd
Should the government consider lowering
the level of tax relief on private pensions?
YES
Britain could raise up to 1.5bn by limiting tax relief on the very
largest personal pensions those built on lifetime savings of more
than 1m. This would affect only very wealthy savers and seems
necessary in these straitened times, when deep welfare cuts are
underway. The money saved from pension tax relief could help
people on lower incomes fund extra childcare that allows them to
work more, helping them earn a greater share of national growth.
This option was recommended last month by the Commission on
Living Standards, whose members included the chairman of Lloyds
Bank and the managing director of British Gas. The commission
agreed that such generous relief is no longer fair or efficient in an
economy where the poorest are falling behind and where every
penny of public spending must be justified.
Vidhya Alakeson is deputy chief executive of the Resolution
Foundation.
Vidhya Alakeson
NO
Jason Hollands
Egged on by the wealth tax enthusiasts in the coalition, George
Osborne is mulling a further reduction in the annual pension
contribution allowance from 50,000 to 40,000. Should he do
so, he will reduce one of the few legitimate avenues for easing the
burden of what are currently highly punitive income tax rates.
While 50,000 per annum is undoubtedly a sizeable sum for
most, the reality is that many middle class professionals have to
make sizeable contributions in the years running up to retirement,
simply to catch up after years of funding children through
education and paying off mortgages. Pulling the door even tighter
will do little to encourage saving at a time when investing in
pensions is already at its lowest level for a decade. Constantly
changing the rules simply undermines confidence in the pension
system.
Jason Hollands is managing director at Bestinvest.
RAPIDresponses
French downgrade
wasnt unexpected
previous instances suggest that such
inaction is dangerous. It took 10
years for Finland to regain its
AAA/Aaa rating, while Sweden strug-
gled for 11, Denmark for 15 and
Australia for 17 years. And they were
only able to do so by implementing
serious structural reforms, adopting
heavy-handed pension changes,
across-the-board cuts to social bene-
fits and reduced capital spending.
There is no shortage of advice.
Louis Gallois, former chief executive
of EADS, recently argued that the
French economy is in need of a com-
petitiveness shock. He proposed a
30bn (24.1bn) reduction in the
social charges paid by corporations
in order to improve Frances interna-
tional competitiveness. While
Hollande has since unveiled a 10bn
tax credit for companies in 2013,
with a further 5bn promised in the
next two years, the government is
still displaying none of the required
urgency.
The sad truth is that the French
people are not yet prepared for diffi-
cult decisions. This rating down-
grade could present the government
with a good opportunity to really
push through difficult decisions. But
only if it chooses to do so.
Yannick Naud is a portfolio manager at
Glendevon King Asset Management and a
former parliamentary candidate for the
Mouvement Democratique (MoDem) party.
YANNICK NAUD
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W
HEN a stagnant economy
meets a turbulent political
environment, expect
volatility. Traders spying an
opportunity might want to cast their
eyes to the Land of the Rising Sun,
Japan.
Over the last two decades, yen bears
have been brutally battered as the cur-
rency has soared. Since 2007, dollar-
yen has fallen by over 60 per cent.
However as the economy enters anoth-
er period of gloom, and the Bank of
Japan moves towards even looser mon-
etary policy, the yen bears may yet still
have their day.
JAPANS TROUBLED ECONOMY
The outlook for the worlds third
largest economy looks glum: output
contracted by 0.9 per cent in the third
quarter (3.5 per cent contraction,
annualised), and Japan is likely to fall
into its fifth recession in 15 years.
The country has a gargantuan
national debt, around 230 per cent of
GDP the largest in the world.
Channelling funds from the private
into the sovereign sector has created
deflation, according to a note from
Morgan Stanley. Deflation has allowed
Japan to sustain this debt. A combina-
tion of low interest rates and a defla-
tionary environment has created
positive real yields attractive to
investors. This, however, comes at the
expense of making the total burden of
Japans debt mountain even worse.
And demand for yen has inevitably
soared due to Japans role as a funding
currency and safe-haven, as traders
fled from the euro and more risky
assets. This has added to the pressure
facing export dependent corporates,
whose goods and services have become
more expensive to foreign buyers.
Consequently, exports have slumped,
and Japan posted a current account
deficit in September the first since
modern records began in 1985. Some
of this slump can be attributed to ten-
sions with China, a key trading part-
ner, over the sovereignty of the
Senkaku Islands (Diaoyu Islands).
Chinese consumers subsequently boy-
cotted Japanese goods.
TSUNAMI OF STIMULI
But things could soon change. Caving
to pressure from the opposition, Prime
Minister Yoshihiko Noda has called a
general election for 16 December. If, as
polls suggest, Shinzo Abe of the Liberal
Democrat Party triumphs, he will be
the eighth Japanese Prime Minister in
the last 10 years.
Abe, himself a former Prime
Minister, is basing his campaign on a
pro-inflation platform, favouring an
activist monetary policy. He has hinted
that he will strong-arm the Bank of
Japan into targeting 3 per cent infla-
tion, as well as pushing the base rate
towards or below zero. The upshot
could be tsunamis of potentially
unlimited monetary easing, adding to
the 91trn (691bn) that the Bank of
Japan has injected into the economy
via asset purchases.
A weaker yen could help to turn
Japans election
is likely to bring
weakness in yen
around the Japanese economy, boost-
ing exports as well as domestic
demand. However, Abes comments
have cast a long shadow over the Bank
of Japans independence, and there
are questions whether such policies
can work. The Banks governor
Masaaki Shirakawa said that a policy
targeting 3 per cent inflation is unre-
alistic and would have a negative
impact on the economy. But Kathleen
Brooks of Forex.com says the markets
are ignoring that.
As it is, the Bank has struggled to
meet its current target of 1 per cent
inflation. Although it remains com-
mitted to overcoming deflation, this
week it announced that it would keep
its base rate and asset purchase pro-
gramme where it is.
Japans economy has a mountain to climb
Japanese Economic Growth
2006 2008 2010 2012
-4.0
-3.0
-2.0
-5.0
-1.0
0.0
1.0
2.0
3.0
%GDP
S
o
u
r
c
e
: M
a
r
k
i t
/
E
c
o
W
i n
A devalued currency may help the Japanese
economy to grow, says Yogesh Chandarana
WEDNESDAY 21 NOVEMBER 2012
26
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Brooks thinks there is scope for fur-
ther easing. They havent thrown the
kitchen sink at it, she says. It seems
to be quantitative easing in incremen-
tal steps, rather than the wham, bam,
thank you maam of the Fed, which is
what we could get with Abe.
SHORTING YEN
So with the yen lurking towards seven-
month lows against the dollar.
Uncertainty over the role of the Bank
of Japan could have the impact of
increasing yen volatility. Morgan
Stanley has said that additional pres-
sure on the central bank to act more
aggressively should catalyse sustained
yen weakness, and their target is for
dollar-yen to reach 92 next year.
Brooks has a medium-term price tar-
get of 84, but she warns that a lot still
depends on the US. In the near term,
the outlook for dollar-yen is based on
how the dollar moves. If the US
Federal Reserve took a hawkish tone,
for example, by hinting at a slowing of
its easing programme, we could see
the yen trading within a range.
Therefore, it is important to manage
risk, potentially by placing a stop loss
at the 79.50 level.
The road to Japan is littered with the
bloody corpses of yen bears who have
fallen on their on swords over the last
two decades. The yens relentless
strengthening has punished them all.
However, the prospect of Abe in the
premiers seat could sharpen their
resolve. The yen bear may yet have his
day.
Dollar-yen, 10 years
Sep2012 Sep2003 Sep2006 Sep2009
80
70
90
100
110
120
130

S
o
u
r
c
e
: F
T
S
E
C
u
r
e
x
I
F YOURE prepared to spend up
to 5,000, theres still time to get
front row seats to a celebration
of 50 years of the greatest rock
and roll band in the world the
Rolling Stones are playing at the O2
at the end of November. But you
may be unaware of an arguably
more significant anniversary that
has already been celebrated in the
City this month.
KEY TO THE CODE
While comply or explain might
not be as catchy as Brown Sugar or
Satisfaction, these three words are
the principle on which the
Corporate Governance Code which
was first issued in 1992 and turned
20 years old this month operates.
They have had a significant impact
on the way in which UK listed com-
panies have functioned during their
lifetime.
The Code the result of pioneer-
ing work by a committee chaired by
Sir Adrian Cadbury in 1992 came
about as a response to the major cor-
porate scandals of Polly Peck and the
Bank of Credit and Commerce
International, along with the Robert
Maxwell fraud case.
ESSENTIAL RECOMMENDATIONS
The final report, which covered
financial, auditing and corporate
governance matters, made three key
recommendations: that the role of
the chief executive and chairman of
companies should be separated; that
boards should have at least three
non-executive directors, two of
whom should have no financial or
personal ties to executives; and final-
ly that each board should have an
audit committee composed of non-
executive directors.
While the recommendations were
initially controversial, the principles
were appended to the Stock
Exchanges listing rules in 1994. It
was stipulated that companies need
not comply with the principles, but
had to explain to the stock market
why not if they did not.
Two decades on, the Association of
Chartered Certified Accountants
(ACCA) views the voluntary code as,
by and large, a success.
IMPROVEMENTS IN THE BOARDROOM
But there is scope for progress. One
of the key areas of development is on
the issue of diversity on company
boards. ACCA supports greater diver-
sity in the composition of company
boards, not exclusively in terms of
gender but also in terms of back-
ground and experience.
On the issue of gender, the proof
may be in the pudding. There is now
a considerable body of evidence to
Being good helps business prosper
suggest that the presence of women
on company boards actively pro-
motes the cause of good governance
and sound management. There is
also evidence to suggest that compa-
nies with a high number of women
on their boards benefitted from
enhanced business performance.
Indeed, a major report by Lord Davies
for the UK Government referenced
research that indicated high stock
market growth in companies where
there was a preponderance of female
executives.
Companies should also seek to pur-
sue diversity in the boardroom
because it discourages groupthink,
whereby the decision-making process
is led by a desire for agreement
rather than the pursuit of alterna-
tives. For this reason, diversity has
the potential to create more produc-
tive boards. ACCA is not a supporter
of boardroom quotas, although we
do appreciate that they may be the
only route to desirable change if
some companies fail to achieve
greater levels of diversity of their own
accord.
TRANSPARENCY MATTERS
And while comply or explain
known as if not, why not by
Australian regulators has improved
transparency, investors are still call-
ing for more information. Their need
for more integrated information cre-
ates its own challenges for business.
Clearly, while the Corporate
Governance Code is established in
the UK, there are different approach-
es elsewhere and there is a need for
an improvement in standards in
some markets. Indeed there may
even be a case for a minimum global
standard on corporate governance to
reinforce comparability and market
confidence.
ONE SIZE DOESNT FIT ALL
We firmly agree with the Cadbury
Committees 1992 statement that
there cannot have one solution to fit
all companies.
For example, there should be differ-
entiation between large financial
institutions and other listed compa-
nies. There is a need for specific legis-
lation for large institutions due to
the potential risk they pose to other
businesses and to society. On the
other hand, some companies are so
diverse that it would be difficult to
find rules that would apply to all.
There also needs to be a recognition
of the value that strong corporate
governance can bring in other sec-
tors, such as the public sector. But
while much effort has been focussed
on action by business, there are two
sides to corporate governance.
INVESTOR CONTRIBUTION
It is equally important that investors
take an active role in making gover-
nance work in practice.
We relished the development of the
Shareholder Code in 2010, which
encourages institutional sharehold-
ers to appreciate their responsibili-
ties to their own stakeholders. To do
this, shareholders were encouraged
to monitor risky corporate behaviour,
disclose how they vote and press for
management or strategic change,
and think seriously about using the
voting muscle that they have to influ-
ence investee companies. There is
still too little direct involvement by
shareholders and it shouldnt be
left to fund managers to hold busi-
nesses to account over governance.
THE NEED FOR COOPERATION
But the key to any code is to ensure
that it does not become a box-ticking
charter. Organisations cannot be sat-
isfied simply by issuing carefully
crafted, self-congratulatory spin on
how they meet all criteria, but must
instil real change and activity within
the company. Organisations should
be compelled to improve perform-
ance, rather than complying with
codes.
While compliance with Cadbury
does not give immunity from prob-
lems, there is evidence to show that
being good is good for business.
The challenge now is to ensure the
shareholders follow their own code
and spend an more than one hour
each year holding management to
account.
Sue Almond is technical director at the
Association of Chartered Certified
Accountants (ACCA).
ACCA
COMMENT
SUE ALMOND
The Stones are not the only ones celebrating an anniversary this year
How the Corporate
Governance Code had
some positive results
Companies should
be driven by a desire to
improve performance
rather than box-ticking

WEDNESDAY 21 NOVEMBER 2012


28
cityam.com
ACCOUNTINGBUSINESS
H
ow much is too much? How
much should a flagship
luxurious saloon car cost?
What about the worlds most
luxurious Jag?
At 120,000, Jaguars XJ Ultimate
isnt cheap. Powered by JLRs 5.0-
litre V8 supercharged petrol engine,
this limo is capable of 0-62mph in
just 4.9 seconds and a top speed of
155mph. From the outside it has the
coolest, darkest 20-inch grey alloy
wheels, oval tailpipes and unique
Ultimate badging. But none of
that matters, because this car is
made for passengers.
Its a bit like stepping into the kind
of nightclub thats frequented by
supermodels, F1 drivers and cheeky
royals, naked or otherwise. The
cabin is dark and glossy and illumi-
nated with a cool phosphor blue
lighting.
Theres a halo of beautiful, glossy
dark wood veneer, which runs
around the car, across the dash and
along the top of the doors. The but-
tons and controls are framed with
chrome so polished my wife was
able to use one of them as a mirror
to put her lipstick on. Everything
else is trimmed in smooth, black,
semi-aniline leather and machined
aluminium.
The VIP room is in the back. And
so it should be this car was
designed as a limo for the kind of
people who keep their own aero-
planes. As a place for unwinding
between stressful meetings or stadi-
um gigs, its quite a haven.
The centre console gives you more
control over your environment than
your average five-star hotel room.
You can direct the aircon to just
about anywhere you like. Pull on a
lever on the side of the centre con-
sole to reveal a mini bar: what looks
like a shiny, piano-black, lacquered
centre panel rises up then swivels
around to become a table, revealing
two champagne flutes. Your bottle
of vintage Pol Roger? Its slowly
revealed when you slide down the
chiller door behind the seat back.
The champagne bottle is bathed in
blue neon, chilling in its purple vel-
vet-lined cooler cabinet. And it does-
nt even feel too hip hop or bling.
Each rear passenger is provided
with an iPad. When youre finished
reading the latest breaking financial
news on City A.M.s website, you can
start working straight away. The key-
board is housed and charged in a
dedicated leather-trimmed dock in
the rear of the front seats. So, when
the day is done, you can kick back
with a TV or a movie while the seat
massages your back.
If youre still into your music, as
the ageing rock star this car is aimed
at will be, then theres a Meridian
audio system with a 15-channel
amplifier. Twenty loudspeakers with
digital sound processing technology
keep you centre stage.
The XJ Ultimate is the kind of car
that youd expect Bono to hop into
after a gig. Is it expensive? You bet it
is. But its packed with gadgets that
mark it out against its competitors.
And its so cool its sub-zero. Just
dont forget your shades.
The Jaguar XJ Ultimate is the ideal status symbol for an ageing rock star
Ultimate luxury but at what cost?
The Jaguar XJ Ultimate comes with all the trims and toys you would expect from a car this expensive
29
WEDNESDAY 21 NOVEMBER 2012
LIFE&STYLE
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WEDNESDAY 21 NOVEMBER 2012
30
cityam.com
LIFE&STYLE ONE NEW CHANGE
L.K.BENNETT
LOWER GROUND FLOOR, 6.30PM AND 7.30PM
PUT ONTHOSE PARTY SHOES:
This class promises to provide the essential tips for women this festive
season. Remember, a lady must always walk gracefully in high heels
and wishful Cinderellas should be aware that statement shoes should
never be taken off in public.
T.M.LEWIN
GROUND FLOOR 6PM AND 7PM
HOWTOCHOOSE THE PERFECT SHIRT ANDTIE:
Different occasions demand a different look, and there are many different ways
to wear and fashion a tie or bow tie. Where should the blade reach? How
should you keep your tie after wearing it, rolled up or hung? All your questions
can be answered here, including whether it is ever okay to wear a Hawaiian
shirt at your Christmas party.
HERSHESONS
GROUND FLOOR 6PM AND 7PM
TURNING HEADS:
This class is geared around ensuring that you turn heads for all the right
reason this party season. Learn how to master quick hair xes and classic
up and down looks and lots more. Unkept hair does not atter an LBD and
this class is essential for every budding society high ier who wants to
know a hair do from a hair dont.
OLIVER BONAS
GROUND FLOOR 6PM AND 7PM
PRESENTING YOUR PRESENTS:
This class looks at how to wrap perfectly as well as the perils of re-
gifting, making sure that you get it right every time. Receiving a lov-
ingly wrapped gift is nearly as special as the gift itself, so make sure
that your well thought out present looks good enough to be judged
by its cover.
KAREN MILLEN
LOWER GROUND FLOOR 6PM AND
7PM
LOOKING THE PART:
Discerning ladies know that looking
the part means leaving the right
impression. This class promises to give
you the skills to select the perfect
party dress, as well providing valuable
advice on how to tackle hemline eti-
quette, making sure there are no last
minute panics in front of the mirror.
W
ORKING THE Christmas
party circuit like a
professional this festive
season could give your
career, social life and even
relationship a helping nudge along
if done with grace, style and
panache. But lets face it, its tough
out there. The discerning society
high flyer needs to look super sleek,
knowing their Mot & Chandon
from their Laurent-Perrier, and only
engaging in the most sophisticated
of conversations. So, to avoid
committing the cardinal society
sins as we prepare for the busiest
time of the year, head down to One
New Change and have all of your
social etiquette dilemmas
answered.
Today, One New Change is teaming
up with Debretts, the authority on
modern manners and etiquette, to
bring contemporary etiquette to life
through a series of free masterclass-
es ahead of the party season.
Debretts will be lending their
expertise in etiquette to inform the
free masterclasses, which will be
run by a range of stores and restau-
rants at the shopping destination.
To ensure you come out on top
after weeks of champagne sipping
and canap nibbling, come and take
advantage of the etiquette experts
on hand on the night. With a little
help, youll stylishly sidestep any
faux pasand cruise through the sea-
sonal scene with confidence.
And thats not all. Throughout the
evening Madison will provide a
bespoke cocktail bar and live DJ on
the lower ground floor. For every
drink sold, including decadent
champagne cocktails and mojitos, a
1 donation will go to The Princes
Trust, One New Changes charity
partner. When youve finished your
masterclasses, what better way to
end the evening than by practicing
all that youve learnt whilst enjoy-
ing cocktails and taking in the stun-
ning London skyline in Madison
Restaurant, perched on top of One
New Changes roof terrace?
So be sure to drop by and enjoy
free in-store masterclasses and a fan-
tastic prize draw to win a track day
for six people with Ginetta Cars and
Shirtstream dry cleaners worth over
6,000, plus a 500 One New Change
gift card thrown in for good
measure.
One New Change, London, EC4M 9AF
The event will take place between 6-
9PM Findout moreabout the event
andmasterclasses at
onenewchange.com
Tis the season at
One New Change
Bid farewell to party season faux pas with etiquette experts
Debretts at the Citys favourite shopping destination. Prepare
to leave transformed into the ultimate seasonal socialite
In association with
WEDNESDAY 21 NOVEMBER 2012
31 LIFE&STYLE ONE NEW CHANGE
SEARCYS
CHAMPAGNE BAR
FIRST FLOOR 8PM
FESTIVE FIZZ:
Everybody indulges and enjoys over
the Christmas season but remember
your limits and ensure that you are
not the talk of the party in the ofce
the next day. Learn when to drink
pink or white, how to pour and chill,
what to do with your pinky, and how
to hold a champagne glass correctly.
BANANA REPUBLIC
GROUND FLOOR 6PM AND 7PM
DAY TONIGHT:
The party season means the
social calendar is full to the
brim, and not every occasion
will allow for a change of outt
after work. This class demon-
strates simple tricks to take
your outt from day to night
with ease, and how to ensure
you're always looking stylish,
even if on a budget.
DERMALOGICA
GROUND FLOOR 6PM AND 7PM
SKINSURVIVAL:
We all love festive fun but our
skin can suffer and show all of
our sins. This class demon-
strates how to cheat your way
to looking like you have had
eight hours sleep and how to
always look as fresh as a daisy,
and gives a run-down of skin
rituals that must never be
ignored.
BARBECOA
BUTCHERY
GROUND FLOOR 7PM & 8PM
THE ART OF CARVING:
Without a perfect knowledge of
the art of carving one should not
perform the honour of serving
meat. This class, hosted by Paul
Kelly from the renowned Kelly
Turkeys, demonstrates how to
masterfully carve and serve
elegantly. Nobody wants a
butchered turkey at Christmas.
BREAD
STREET KITCHEN
GROUND FLOOR 6PM AND 7PM
CONCOCTING COCKTAIL PARTIES:
When you are hosting a cocktail
party it is your obligation to make
sure that the right atmosphere is
created, and that rst and fore-
most everyone has enough to eat
and drink. Canaps and cocktails
are perfect for the party season,
and this class demonstrates how to
create a ve star party at home
and be a hostess with the mostess.
TOP TEN
COMING
RULES
Etiquette
A
S MUCH as the office
Christmas party is
something to look forward
to, it can often be a bit of a
mine field as far as etiquette is
concerned but dont worry,
Debretts has every eventuality
covered.
Established in 1769, Debretts has
long been recognised as the
authority on British etiquette and
its publications cover everything
from letter writing and body
language to romance and rites of
passage.
Although festive celebrations
can seem intimidating, the office
party is the perfect place to
impress, Jo Bryant, etiquette
advisor for Debretts, said. There is
the opportunity to talk to those
hard-to-reach people, as well as
socialise with colleagues outside of
the confines of the office. Join in
the camaraderie and indulge in the
Christmas spirit, but know when to
draw the line. It is important to
maintain your professional gloss at
all times.
Take note: these are Debretts top
dos and donts for the office
Christmas party:
1. Domake an effort to look smart
and well groomed, and ensure
you adhere to the dress codes, if
specified.
2. Do circulate and socialise, but
keep it upbeat and general. Ask
about families, children and
holidays.
3. Do make the most of the
opportunity to network with
your colleagues and clients. Use
small talk as a pleasurable way
of making contact and
cementing relationships.
4. Do ensure that youre
democratic in your mixing: this
isnt the place to schmooze
your bosses and ignore your
team.
5. Do your best to keep it upbeat
and convivial this isnt the
time of year to skulk moodily in
corners and leave early
6. Dont gossip, spread rumours
or confess your sins.
7. Dont let bonhomie turn into
sleaze and keep goodnight
kisses innocent.
8. Dont hit the bar with a
vengeance and remember to eat
well and alternate drinks with
water. Have a few glasses, but
dont be the casualty everyone
is talking about (and sniggering
at) the next day.
9. Dont outstay your welcome. If
you feel the drink is taking its
toll, heed the warning signs
and hail a taxi before any late-
night lasciviousness or
boisterousness comes back to
haunt you.
10. Dont crawl in hung over and
late (or worse, pulling a sickie)
the following day. Its
unforgivably unprofessional.
CHRISTMAS IN THE CITY
From 10am 6pm on Saturday 1
December, the City of London will
open its doors for a seasonal
shopping spectacular.
One New Change has joined forces
with Cheapside, Leadenhall Market,
Bow Lane and Paternoster Square to
create a day that will please the
whole family.
There will be festive fun that will
please the whole family, including ice
skating, carol singers and Santa Claus
and his sleigh and reindeers.
One New Change will be offering
special discounts for one day only as
well as sprinkling festive cheer with
family entertainment ranging from
street shows and face painting to
balloon modelling and bubble mak-
ing stiltwalkers.
School choirs at One New Change
Local school choirs will be performing
at selected times from 10 15
December on the lower ground oor
collecting money for charity.
www.onenewchange.com
For timings and further details
FRASER HART
GROUND FLOOR 6PM AND 7PM
PROPOSAL ETIQUETTE:
This class takes you through the dos and donts so all you
have to do is remember your chosen words. Factors such
as whether you still have to ask permission, if you can ask
for your beaus hand at a family Christmas dinner, and
whether it is a sin to propose without having chosen a
ring will all be covered. If youre a newly engaged couple
on the hunt for the perfect ring, experts are on hand to
help you tell the cut from the carat.
REISS
LOWER GROUND FLOOR 6PMAND 7PM
BESPOKE SUIT SERVICE:
Suit wearing etiquette is as vital as
design and colour. This class focuses on
everything from what suit should be
worn on what occasions, to whether you
should have your jacket open or closed.
Important considerations are demystied
like double verses single breasted suits,
when to wear a cravat, and whether it is
ever okay to take off your tie.
***
32
TV & GAMES
cityam.com
T
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BBC1
SKY SPORTS 1
7pmTotal Rugby 7.30pmSoccer
Special 10pmTotal Rugby
10.30pmSporting Greats 11pm
A League of Their Own
11.55pm-6amLive Test Cricket
SKY SPORTS 2
7pmLive UEFA Champions League
10pmUEFA Champions League
Goals 11pmFIFA Futbol Mundial
11.30pmEuropean Tour 12am
UEFA Champions League Goals
1amPowerboating 2amAngling
3am-4amTrans World Sport
SKY SPORTS 3
7pmWatersports 8pmDTM Motor
Racing 9pmPowerboating 10pm
Cage Fighter 10.30pmTrans World
Sport 11.30pmCage Fighter 12am
NFL Midweek Special 1amTotal
Rugby 1.30amDTM Motor Racing
2.30am-3.30amWatersports
BRITISH EUROSPORT
6.45pmEquestrian 7.45pmRiders
Club 7.50pmPGA Tour Golf
8.50pm European Tour Golf. The
Hong Kong Open. 9.15pmGolf Club
9.20pmYacht Club 9.25pm
Wednesday Selection 9.45pm
Olympic Magazine 10.15pm
Snooker 11.30pm-12.30am
Strongest Man
ESPN
7pmESPN Kicks: Brasileirao
7.15pmESPN Kicks: Extra 7.30pm
ESPN Kicks: MLS 7.45pm
International GT Open 9.15pm
Snowboard FIS World Cup
Magazine 9.45pmPremier League
World 10.15pmESPN Kicks: MLS
10.30pmGoal! Special 11pmESPN
FC Press Pass 11.30pmESPN
Kicks: Extra 11.45pmESPN Kicks:
Brasileirao 12amLive International
Football 2amUFC: The Ultimate
Fighter 3am-6amUFC 154:
St-Pierre v Condit
SKY LIVING
7pmCriminal Minds 8pm
Elementary 9pmChicago Fire
10pmGreys Anatomy 11pmBones
12amCriminal Minds 3.30am
Bones 4.20amMedium
5.10am-6amPassport Patrol
BBC THREE
7pmYoung Apprentice 8pmGavin
& Stacey 9pmI Hate My Body:
Skinny Boys & Muscle Men 10pm
Unzipped 10.45pmFamily Guy
11.30pmAmerican Dad! 12.15amI
Hate My Body: Skinny Boys &
Muscle Men 1.15amUnzipped 2am
Impractical Jokers 2.30amRussell
Howards Good News 3am-4am
Him & Her
E4
7pmHollyoaks 7.30pmHow I Met
Your Mother 8pmThe Big Bang
Theory 8.30pm2 Broke Girls 9pm
The Big Bang Theory 9.30pmThe
Work Experience 10pm
Inbetweeners 11.05pmRude Tube:
Ultimate Champions 12.10amThe
Big Bang Theory 1.10amHow I
Met Your Mother 1.35amScrubs
2amMisfits 2.55amThe IT Crowd
3.20amBalls of Steel Australia
4.05am90210 4.50am-6am One
Tree Hill
HISTORY
7pmStorage Wars 7.30pmPawn
Stars 8pmStorage Wars 8.30pm
Storage Wars: Texas 9pm
American Restoration 10pm
Mankind: The Story of All of Us
11pmStorage Wars 11.30pm
Pawn Stars 12amAmerican
Restoration 1amMankind: The
Story of All of Us 2amAmerican
Pickers 3amAx Men 4amSwamp
People 5amPawn Stars
5.30am-6amStorage Wars: Texas
DISCOVERY
7pmBear Grylls: Born Survivor
8pmAmerican Guns 9pmFast n
Loud 10pmThe Devils Ride 11pm
Wheeler Dealers 12amFast n
Loud 1amThe Devils Ride 2am
Sons of Guns 3amFast n Loud
3.50amThe Devils Ride 4.40am
Raging Planet 5.30am-6am
Meerkat Manor
DISCOVERY HOME &
HEALTH
7pmDr Oz. The causes of a low
libido in women. 8pmI Didnt
Know I Was Pregnant 9pmIm
Pregnant and Addicted to Crystal
Meth 9.30pmIm Pregnant and I
Sniff Toxic Fumes 10pmTrauma:
Life in the ER 11pmThe Bubble
Man 12amIm Pregnant and
Addicted to Crystal Meth 12.30am
Im Pregnant and I Sniff Toxic
Fumes 1amWanted Down Under
2amTrauma: Life in the ER 3am
The Bubble Man 4amA Baby
Story 5am-6amBabys Room
SKY1
8pmThe Glee Project 9pmLast
Resort. Sam and Marcus discover
they have been charged with
treason. 10pmFringe 11pmTrollied
11.30pmRoad Wars 12amA
League of Their Own 1amRoad
Wars 1.55amMiami SWAT
2.55amRoad Wars 4.10am-6am
Stargate SG-1
BBC2 ITV1 CHANNEL4 CHANNEL5
S
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6pmBBC News
6.30pmBBC London News
7pmThe One Show: BBC News
8pmCHOICE Supersized Earth
9pmCrimewatch
10pmBBC News 10.25pmRegional
News 10.35pmNational Lottery
Wednesday Night Draws 10.45pm
Crimewatch Update 10.55pm
Would I Lie to You? 11.25pmFilm
2012: National Lottery Update
11.55pmFILMShank 2010.
1.25amWeatherview1.30amSign
Zone: See Hear 2amSign Zone: Ian
Hislops Stiff Upper Lip An
Emotional History of Britain 3am
Sign Zone: Paul Martins Handmade
Revolution 3.45amSign Zone: Cash
Britain 4.15am-6amBBC News
6pmEggheads
6.30pmStrictly Come Dancing
It Takes Two
7pmCelebrity Antiques Road
Trip: Laila Rouass and Charles
Dale compete.
8pmMasterChef: The
Professionals: The remaining
five chefs prepare and cook a
beef kidney.
9pmThe Hour
10pmThe Culture Show
10.30pmNewsnight: Weather
11.20pmGreat Continental
Railway Journeys
12.20amBBC News
4am-6amBBC Learning Zone
6pmLondon Tonight
6.30pmITV News
7pmEmmerdale
7.30pmCoronation Street
8.30pmCHOICE Im a
Celebrity Get Me Out of Here!
10pmITV News at Ten
10.30pmLondon News
10.35pmExposure Update
11.45pmThe Great Train
Robbery
12.40amJackpot247; ITV
News Headlines
3amFILMColumbo: Uneasy Lies
the Crown: Crime drama, with
Peter Falk. 1990. 4.40am-5.30am
ITV Nightscreen
6pmThe Simpsons
6.30pmHollyoaks
7pmChannel 4 News
7.55pm4thought.tv
8pmCHOICE Sarah Beenys
Selling Houses
9pmGrand Designs
10pmSecret State
11.05pmRory Peck
Awards 2012
11.10pmThe Town That
Caught Tourettes
12.15amMusic on 4
1.40amFILMLas Acacias 2011.
3.10amSt Elsewhere 3.55amDeal
or No Deal 4.50amCountdown
5.35am-6amMake Do & Mend
6pmHome and Away
6.30pm5 News at 6.30
7pmEmergency Bikers:
5 News Update
8pmThe Removal Men:
5 News at 9
9pmFILM
The Transporter 2002.
10.55pmFILM
Attack Force 2006.
12.45amRicky Hatton:
The Comeback
1.35amSuperCasino 3.55am
HouseBusters 4.20amHouse
Doctor 4.45amDivine Designs
5.10amWildlife SOS 5.35am-
6amWildlife SOS
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6
7 8
9
10 11
12 13 14 15
16 17
18 19
20
21
22
11 10
45
16 27
30 30
9 6 7
28
5 12 21
27 15
14 4
45
26 29
35
4
17
39
3
10
10
22
12
37
11
6
17
38
16
28
23
16
3
36
4
15
15
ACROSS
1 Elastic straps that
hold up trousers (6)
6 Ever (6)
7 Delivered a
blow to (6)
9 Elongated
dirigible powered
balloon (7)
10 Vertical part
of a stair (5)
12 Small axe with a
short handle (7)
17 Addictive narcotic
extracted from
poppies (5)
18 Strategy (7)
20 Device that
supplies warmth (6)
21 Decoration along
a wall (6)
22 Large northern
marine mammal (6)
DOWN
1 Small informal
restaurant (6)
2 Again but in a new
or diferent way (6)
3 South American
monkey with a
long bushy tail (4)
4 Ballroom dance in
double time (3-4)
5 Meant to be
sung (5)
8 Heavy open
wagon (4)
11 Made of clay (7)
13 Flexible pipe
for conveying
a liquid (4)
14 Laugh nervously (6)
15 Stings (6)
16 Iraqs second
largest city (5)
19 Gnaw (4)
T
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4

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4

S M E L T B L O G S
P O B E L
L I T T E R A R I A
A I O A T Y
S I L D A H O D
H D E A D S E A S
C E P C R S V P
H L E A I O
A B L E S E A S O N
R T T S G
T O W E L S H A R E
7 9 2 5 6 9 8
6 7 9 4 8 4 3 9
2 3 8 1 3 2 1 5
3 5 3 8 9 5 7 6
4 8 9 4 2 1
1 6 2 8 9 5 3 4 7
6 9 7 8 7 9
8 1 4 6 5 7 2 6
6 2 1 3 9 2 5 8
9 6 8 2 5 1 3 4
7 4 3 4 8 1 3
4
4
4
4
4
4
4
4
4
The nine-letter word was
OBSERVING
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
WEDNESDAY 21 NOVEMBER 2012
SUPERSIZED EARTH
BBC1, 8PM
New series. Dallas Campbell travels
the globe to explore how humans have
transformed the planet in a single
generation.
IMA CELEBRITY GET ME OUT OF
HERE! ITV1, 8.30PM
Ant and Dec present the latest
celebrity happenings Down Under as
the group struggles through another
day of hardship in the wilderness.
SARAH BEENYS SELLING HOUSES
CHANNEL4, 8PM
Sarah is in Hove, helping three
homeowners with a few
improvements, including toning down
one mans eclectic style.
TVPICK
SPORT
33
WEDNESDAY 21 NOVEMBER 2012
cityam.com
ENGLAND fast bowler Steven Finn
has been ruled out of the second Test
against India on Friday after
aggravating a thigh injury.
Finn picked up the injury during a
warm-up match earlier in the tour
and subsequently missed Englands
disastrous first Test defeat in
Ahmedabad.
England lacked potency in their
bowling attack and Finns extra
height and pace could have been a
major asset, especially as fellow
bowlers James Anderson, Tim
Bresnan and Stuart Broad took just
one wicket between them.
Instead England coach Andy
Flower confirmed that Finn will be
absent from duty until he has fully
recovered.
Steven has been working hard to
get back to full fitness, said Flower.
He has unfortunately hurt his leg
again and is having another scan. We
dont think hes got any structural
damage, but it would be careless to
suggest that he might play the
second Test.
Finn will have another scan today
and may play for Englands
performance programme team in a
three-day match next week.
If he comes through that well,
hell be available for the third and
fourth Tests, Flower added.
Another confirmed absentee for
England in the second Test is
batsman Ian Bell, who has flown
home to be with his family following
the birth of his son.
Finn ruled out
of second Test
after setback
Cook showed way, now Panesar must play
IN BRIEF
Teenage jockey gets blunder ban
n HORSE RACING: Jockey Brendan
Powell has been banned for 14 days
after a spectacular blunder at Fakenham
yesterday. The 17-year-old, aboard 5-4
favourite Benny The Swinger, took the
wrong course when poised to win,
veering right and jumping another
fence when he needed to stay left and
pass the winning post. Peak Seasons
won the race from Roc De Guye.
Youngs bros renew Tigers deals
n RUGBY UNION: Leicester have tied
England brothers Ben and Tom Youngs
to new long-term contracts. Hooker
Tom, 25, joined scrum-half Ben, 23, in
Stuart Lancasters side this month,
making his Test debut against Fiji.
Gatland shake-up for All Blacks
n RUGBY UNION: Wales head coach
Warren Gatland has made five changes
as they look to avoid a sixth straight
defeat on Saturday against world
champions New Zealand. Lions boss
Gatland, who resumes the reins from
assistant Rob Howley, has recalled
captain Sam Warburton, centre
Jonathan Davies, fly-half Rhys
Priestland, hooker Matthew Rees and
lock Luke Charteris.
CRICKET
COMMENT
ANDY LLOYD
JOCKEY Frankie Dettori may have to
wait until next month to learn
whether he faces a six-month ban for
failing a drug test at a meeting in
France earlier this year.
Dettori gave evidence yesterday by
telephone at a hearing convened by
French horse racing chiefs into his
positive test for a non-performance
enhancing substance.
A further hearing likely to take
place in two weeks time is necessary
if France Galop deem the case to be a
disciplinary matter. A suspension of
six months from competing in
France likely to be reciprocated by
racing bodies worldwide is the
most likely outcome if the 41-year-
old is found guilty.
Dettori, the sports most high-
profile jockey of the last 20 years,
returned the positive test at
Longchamp on 16 September. The
British-based Italian had four rides
on a day of trials for the Prix de lArc
de Triomphe the following month.
Dettori split with stable
Godolphin last month after 18 years.
BY ALEX SHARP
BY FRANK DALLERES
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ETS start with the good news,
such as it is. While England
managed only a barely
respectable result in the first
Test in India, their captain provided a
shining example of what theyll need
to get back into this series.
Talk about leading from the
front. Alastair Cooks outstanding
second-innings 176 was arguably
the best by any England skipper so
early in their tenure. If only he had
team-mates of similar quality, then
we might have had a Test match.
Top sportsmen from all
disciplines need many ingredients
but what sets the true elite apart
are attitude and dedication, and
Cook has those qualities in spades.
Jonathan Trott is the only one in
that side who comes close to Cook
in that regard. Ian Bell and Kevin
Pietersen have more talent, but
neither has the depth of mental
strength to make the most of their
gifts like Trott does.
As awesome as Cook was, Matt
Prior deserves credit too for his 91. If
he had fallen as quickly as most of
his colleagues it could have become
embarrassing for England, but he
proved what a great team man he is
and salvaged a modicum of pride.
Until we see the Mumbai pitch it
is hard to be sure who should be
picked for the second Test on Friday,
but its safe to assume it will yield
the kind of turn against which
England batsmen struggle.
With that in mind, and the
toothlessness of the seamers, Monty
Panesar has to start. There is no
point in a balanced attack if the fast
bowlers are not producing, and
while Graeme Swann did well
enough, he could use some help
from another spinner.
WHITEWASH
Steven Finn remains unavailable so
Id keep James Anderson and Stuart
Broad as the seamers and omit Tim
Bresnan. If there is any bounce with
the new ball Broad has the
aggression to get it.
Ian Bells absence opens the door
for Jonny Bairstow. I like Eoin
Morgan, hes a left-hander and plays
spin well, but looking to the future
Bairstow makes sense.
Itll be a hugely important toss to
win again. Once India had got in
and piled on 400-odd runs there
seemed a resignation to England,
and that contributed to some of the
crazy shots that cost wickets.
England can get back into this
series. I wouldnt put any money on
it, but if they bat well in the first
innings and Panesar plays they have
a chance. India will be scenting a
whitewash, though. England beat
many of that side 4-0 here last year
and they will be pretty keen to
return the favour.
Andy Lloyd is a former England Test
cricketer. He has also acted as captain
and chairman of Warwickshire.
Dettori sweats on verdict after
hearing into positive drug test
Finn has aggravated the thigh injury that kept him out of the first Test and will miss the second match, starting in Mumbai on Friday
CELTICS chances of qualifying for
the last 16 of the Champions League
are out of their hands after they
blew the chance to progress in
Lisbon last night.
A score draw would have been
enough for the Hoops but Benfica
were dominant from the start and
took the lead after seven minutes
through Ola Johns angled strike.
Georgios Samaras levelled for
Celtic against the run of play, rising
unmarked from a corner and
heading in on 32 minutes.
The hosts piled on the pressure
after the break, and forced Adam
Mathews to clear off Celtics line,
before Ezequiel Garay volleyed in the
winner after 71 minutes.
As a result the two sides are level
on seven points in Group G.
The Portuguese drew 0-0 in
Glasgow, meaning they have a better
head-to-head record. Therefore Celtic
must better Benficas result on the
final match day to progress.
Barcelona host Benfica as Celtic
entertain Spartak Moscow, who lost
3-0 at home to Barca last night.
Celtic blow the
chance to seal
knockout place
BELEAGUERED Chelsea manager
Roberto Di Matteo tempted fate last
night by admitting he is to blame for
a loss that leaves the Champions
League holders on the brink of crash-
ing out at the first hurdle.
Juventus goals from Fabio
Quagliarella, Arturo Vidal and
Sebastian Giovinco piled further
pressure on Di Matteo, who is in dan-
ger of being sacked just six months
after lifting the European Cup.
Chelsea will become the first win-
ners to be eliminated at the group
stage in the competitions history
unless they beat Nordsjaelland and
Juve lose to Shakhtar Donetsk in the
final round of matches.
Im responsible for the result. Im
responsible for the performance. Its
a negative evening for us. If anyone
has to take the blame, its me, said
Di Matteo. I selected a team I was
convinced was the right team to win
against Juventus, or get at least a
draw, so the blame belongs to me. At
the moment, I think, with the team
we are all in it together. At the
moment I am here and I think I will
be for the future.
Defeat on Sunday in the Premier
League against Manchester City
would cap a disastrous five weeks in
charge for the Italian, in which he
has lost four times. Former
Barcelona boss Pep Guardiola is
believed to be owner Roman
Abramovichs long-term target, while
ex-Liverpool coach Rafa Benitez has
been linked with a short-term role.
Di Matteo took a huge tactical gam-
ble, dropping misfiring 50m striker
Fernando Torres and deploying attack-
ing midfielder Eden Hazard as a cen-
tre forward in a cautious formation.
Hazard forced a point-blank save
from Gianluigi Buffon in the opening
skirmishes but most of the action
was at the other end, where Petr Cech
saved from Stephan Lichtsteiner,
Claudio Marchisio and Quagliarella.
Juventus led on 38 minutes when
Quagliarella nimbly adjusted his feet
to divert Andrea Pirlos drive past a
wrong-footed Cech, and only Ashley
Coles goal-line clearance prevented a
second in a breathless spell before
half-time. The Chelsea goalkeeper
had to stop another Pirlo drive and
smother Quagliarellas attempt to
round him before Vidal slotted the
second, via a deflection off Ramires,
from Kwadwo Asamoahs pull-back.
Di Matteo threw on Victor Moses
and Torres but substitute Giovinco
rubbed salt into the wound in stop-
page time when he ran clear and
poked past the on-rushing Cech, who
had hared 25 yards off his line.
Henry in line for shock third Gunners spell
ARSENAL manager Arsene Wenger
has hinted Thierry Henry could
make a shock return on loan from
New York Red Bulls in January for a
third spell at the club.
The Gunners record goalscorer
enjoyed a brief spell back at Arsenal
last season, scoring in a 1-0 win over
Leeds in the FA Cup and hitting a
last minute winner at Sunderland.
Wenger is set to lose forwards
Gervinho and Marouane Chamakh
to the Africa Cup of Nations in the
New Year and insists the 35-year-old
Henry, who has been training with
Arsenal during the American close
season, still has something to offer.
He has been practising with us.
Will I sign him again in January? I
dont know. I dont rule it out. He is
sharp, said Wenger.
He gives you hope, especially
when he comes on. That is the most
important thing. He is a
communicator, an extrovert, very
intelligent. He can only give good
advice to players because he was in
their position when he arrived here.
Forward Theo Walcott,
meanwhile, is out of tonights
Champions League fixture against
Montpellier with a minor shoulder
injury sustained in a heavy fall
during Saturdays derby win over
Tottenham. Left-back Andre Santos
has a stomach strain but Kieran
Gibbs is back in the squad following
a thigh injury while winger
Gervinho is available after an ankle
problem as Arsenal look to clinch a
last 16 place.
Wengers men will seal their
qualification from Group B if they
beat the French champions at
Emirates Stadium and Schalke win
at Olympiacos.
First of all we want to qualify,
then try to top the group. Lets just
win the game, Wenger added. It is
important on the back of the
Tottenham game that we put in
another good performance.
Giovinco completed a miserable night for Chelsea by scoring Juventuss third in injury time
WEDNESDAY 21 NOVEMBER 2012
34
SPORT
cityam.com/sport
BY ALEX SHARP
BENFICA.....................................2
CELTIC .........................................1
BY ALEX SHARP
CHAMPIONS LEAGUE
MANCHESTER United were punished
for fielding a weakened side last
night, losing their 100 per cent
record in the Champions League
group stages this season in Istanbul.
Sir Alex Ferguson left out a string
of first team regulars for the trip to
Turkey, including Wayne Rooney
and Robin Van Persie, having already
guaranteed top spot in Group H.
Galatasaray took the lead early in
the second half when Burak Yilmaz
leaped highest from a corner to head
in his fifth goal in five games.
The home side dominated a
second string United but Anders
Lindegaard kept the score close,
palming Hamit Altintops ferocious
long-range strike onto the bar.
Teenage midfielder Nick Powell
was superb on his first Champions
League start, and produced Uniteds
best chance when his strong header
struck the woodwork.
Galatasaray had to win to stay in
contention as Cluj beat Braga last
night. The Turkish side are level with
Cluj on seven points, vying for
second spot behind United, who
remain on 12 points.
United stung
for leaving the
stars at home
GALATASARAY............................1
MANCHESTER UNITED...............0
BY ALEX SHARP
CHAMPIONS LEAGUE
JUVENTUS..................................3
CHELSEA....................................0
BY FRANK DALLERES
CHAMPIONS LEAGUE
@cityam_sport
Juve nudge
Chelsea and
Di Matteo to
brink of exit
THE GIBBS FACTOR
nWith Kieran Gibbs in the side this
season Arsenal have won 56 per cent
of Premier League and Champions
League games, without him it has
fallen to 29 per cent
nHe has been missed in defence;
they average just 0.78 goals conceded
per game with Gibbs but 1.71 without
nHis attacking impact should not be
underestimated though; with him
theyve scored 2.11 goals and created
11.2 chances per game but netted 1.71
and fashioned shots 9.6 without
Shakhtar 5 3 1 1 12 7 10
Juventus 5 2 3 0 11 4 9
Chelsea 5 2 1 2 10 9 7
Nordsjaelland 5 0 1 4 3 16 1
GROUP E
TEAM PLD W D L F A PTS
35
MANCHESTER City boss Roberto
Mancini has told wayward striker
Mario Balotelli he can be as good
as superstars Cristiano Ronaldo
and Lionel Messi if he matures and
devotes himself to football.
Balotelli is in contention for a
recall for tonights Champions
League visit from Ronaldos Real
Madrid, which City must win to
preserve gossamer-thin hopes of
avoiding another group stage exit.
Sometimes he doesnt
understand what the job is and
how important the job is for your
life. I hope for him that he can
understand this quickly, Mancini
said yesterday.
As a player he could be like
Cristiano or Messi if he
understands that you should work
hard. Your mind should always be
on your job, not other things that
are not important. Im very sorry
for him because of this. Its not
easy to work with him every day.
Only victory over the Spanish
champions and then German title
holders Borussia Dortmund will
see City progress to the last 16.
I wouldnt put money on it, but if England
bat well and Panesar plays they have a
chance

cityam.com
WEDNESDAY 21 NOVEMBER 2012
BY FRANK DALLERES
Mario can be as super as Messi
and Ronaldo, declares Mancini
WEST Ham face competition from
mega-rich Paris Saint Germain if
they revive their efforts to lure
former England captain David
Beckham to Upton Park in January.
Hammers chairmen David
Sullivan and David Gold are long-
standing admirers of the evergreen
East End-born midfielder, who is
quitting Los Angeles Galaxy next
month. But Qatar-backed PSG have
expressed interest in making
another offer to the 37-year-old,
who almost joined them last winter.
Clubs in Australia notably
Melbourne Heart as well as Russia,
Brazil and China are also ready to
offer Beckham huge deals to join
their developing leagues.
Sullivan said in 2010: Id love
David Beckham. He has massive cult
status in east London and has a
house near our training ground.
Hes from Chingford, which is our
heartland. We are the club of east
London and Essex.
First-team football, something
West Ham could offer, is high on
Beckhams list of priorities as he
weighs up a host of offers.
BY FRANK DALLERES
Hammers bid for Beckham may
be dashed by Paris megabucks
QPR could be forced to hurry a deci-
sion on the future of under-fire man-
ager Mark Hughes after it emerged
Ukraine want to hire the man tipped
to replace him at Loftus Road, Harry
Redknapp.
Hughes remains in charge despite
crisis talks with chief executive
Philip Beard on Monday, 48 hours
after their season lurched to a new
low with defeat to fellow strugglers
Southampton.
The Welshman is on thin ice, how-
ever, with the west London club yet
to achieve a single win from their 12
Premier League games this term and
anchored to the bottom of the table.
Former Tottenham boss
Redknapp, who has been out of work
since his acrimonious departure
from White Hart Lane in June, is the
clear bookmakers favourite to
replace Hughes, should he be sacked.
But QPR chiefs may need to act
quickly if they want Redknapp, after
the Ukrainian Football Federation
(FFU) revealed him to be their sur-
Clock ticking on
QPR as Ukraine
eye Redknapp
prise choice to take charge of the
national team.
He has lots of experience, coach-
ing talent and knows how to moti-
vate, said the FFUs Mikhail
Fomenko. In whatever team he led
Redknapp very quickly improved the
quality of the play and achieved sig-
nificant progress. Today he is an
expert in the game and one of the
best English coaches.
Redknapps representatives con-
firmed last night that FFU officials
had made contact over the vacancy,
after former Chelsea striker Andriy
Shevchenko rejected the chance to
succeed Oleg Blokhin.
Former West Ham and Portsmouth
manager Redknapp was linked with
the Blackburn job earlier this season
but rejected their advances. He is
thought keen to work in commuting
distance from his Hampshire home.
Beard yesterday dismissed
Mondays summit with Hughes as
no different to usual, but chairman
Tony Fernandes is believed to still be
mulling whether to remove the ex-
Manchester City boss this week.
BY FRANK DALLERES
Haskell and Morgan set for England recalls
ENGLAND head coach Stuart
Lancaster will make at least four
changes to the starting line-up for
the Test against South Africa at
Twickenham on Saturday.
Winger Charlie Sharples, flanker
Tom Johnson and No8 Thomas
Waldrom have all been axed from
the 23-man squad as England look
to respond to their frustrating 20-14
loss to Australia last weekend.
Loosehead prop Joe Marler misses
out with a knee ligament injury,
with Alex Corbisiero expected to
return in his place.
Back-row forwards Ben Morgan
and James Haskell have both been
included in the squad for the first
time this autumn, replacing Johnson
and Waldrom.
Sharples has been supplanted by
London Irish centre Jonathan Joseph,
who has shaken off an ankle injury
to return to the squad.
Lancaster will confirm his starting
line-up tomorrow and will be hoping
they can improve Englands recent
record against South Africa.
They have not won against the
Springboks since 2006, losing 22-17
and 36-27 in South Africa during the
summer before regrouping to draw
14-14 in June.
Fly-half Owen Farrell, meanwhile,
believes his rivalry with Toby Flood
for the No 10 jersey can benefit the
side. Farrell has made an impressive
start to his international career,
debuting against Scotland in
February, and scoring 83 points in 10
Tests. However the 21-year-old has
been overlooked for the last four
Tests, filling different roles off the
bench, with Leicesters Flood getting
the nod at fly-half.
It is a competitive environment,
with lots of good players pushing to
be involved. What we have, though,
is a group of players who are putting
the team first rather than any
individual goals. Everyone
encourages each other, said Farrell.
I think there is a healthy
competition between Toby and
myself. We are constantly talking on
how to break teams down and how
to better the team. He is a world-class
player and it is great to be able to
learn off him. We push each other.
Despite losing to Australia on
Saturday, Farrell insists the squad
should remain upbeat.
There were lots of positives to
come out of the Australia game, but
we know that there is stuff we need
to work on too, he added.
We know it will be a massively
physical game against South Africa
and that is what our focus is now on.
We had those three games against
them in the summer and I felt we
got better as the series went on. It is
just those fine margins when two
good teams go head to head.
BY ALEX SHARP
ENGLAND and Liverpool rising star
Raheem Sterling, 17, has been
questioned by police over an alleged
assault of a 27-year-old woman.
The winger was quizzed earlier
this month under caution after
attending a police station by
appointment but was not arrested.
Merseyside police said the
investigation was ongoing.
Former QPR product Sterling
became the fifth youngest player to
represent England when he made
his debut last week in Sweden.
Cops quiz Reds
starlet Sterling
BY FRANK DALLERES
Redknapp has been approached by the Ukrainian Football Federation
Andy Lloyd on cricket: Page 33

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