BUSINESS WITH PERSONALITY

GUY HANDS’ BATTLE MUMBAI

MAGIC
WITH CITI GETS SERIOUS BOMBED OBEROI
HOTEL GLEAMING
EMI CASE DUE IN COURT P7 ONCE MORE P26
Issue 1,243 Monday 18 October 2010 www.cityam.com FREE

ITEM: CUTS WON’T AIA listing

values firm
CAUSE DOUBLE-DIP at $20bn

▲
INSURANCE
BY MATTHEW WEST
POLITICS AIA Group could raise up to $20bn
▲

BY MATTHEW WEST (£12.5bn) when it launches an initial

THE UK faces a slow economic recov-
ery but fears of a double dip recession
are overdone, one of the UK’s top fore-
casters will say today.
The Ernst & Young Item Club –
which uses the Treasury’s own eco-
nomic model to make its predictions
– also suggests that far from hurting
the economy, Wednesday’s
Comprehensive Spending Review will
stimulate activity with investment to
grow nine per cent next year. The
news will come as a boost to
Chancellor George Osborne, who yes-
terday vowed to keep to his schedule
for cutting the deficit.
The Item Club report says current
uncertainty over where Osborne’s axe
will fall has led businesses to hoard
cash. However, once the scale of
spending cuts is known, companies
will start spending.
In a further boost to Osborne, 35
business leaders will today urge him
not to slow down the cuts. They
include Andy Bond, chairman of
Asda, Gordon Frazer, boss of
Microsoft UK, Ian Livingston, boss of
BT, and Charles Dunstone, chairman
of Carphone Warehouse.
Peter Spencer, Item’s economic
advisor, said GDP growth would be 1.4
per cent this year and 2.2 per cent in
2011. Spencer said exports were likely
to pick up from mid-2001. Inflation
would also begin to ease towards the
Chancellor George Osborne will unveil his Spending Review on Wednesday
second half of 2011 and come below
target from January 2012, while the
Bank of England’s base rate was
unlikely to change. But wage growth
remains below 2 per cent, with real
income to fall one per cent next year.
Some departments will suffer
much more than others. The Ministry
of Defence will see real cuts of 8 per
cent, with troop numbers cut to
95,000. The NHS will see its funding
go up in real terms, as will foreign
aid. The schools budget appears to
Picture: REUTERS
have been largely protected. It is
believed that the Ministry of Justice
could lose up to 30 per cent, hitting
courts and prisons, while the Home
Office will also be slashed.
But yesterday Osborne confirmed
funding of major infrastructure proj-
ects such as Crossrail – giving Boris
Johnson a boost – Mersey Gateway,
the science project Diamond synchro-
tron and universal broadband.
He also announced plans for a
three strikes rule, which would mean
cheats would be denied benefits for
three years following three convic-
tions for benefit fraud. There are also
likely to be other large cuts to welfare
and social spending.
The Transport Department is also
likely to be hit by large cuts. There is
talk of massive, 40 per cent rises in
train fares over the next few years.
Other departments such as Energy,
the Foreign Office and Culture will be
slashed.
ALLISTER HEATH: P2; NEWS: P3
public offering (IPO) later this month
in Hong Kong, making it the world’s
third largest IPO in history.
US insurer AIG’s Asian unit said it
would initially offer 5.86bn shares at
between HK$18.38 (£1.48) and
HK$19.68 each, or up to $15bn.
But it could still issue up to 8.08bn
shares if the listing proves popular,
with investors exercising a so-called
“greenshoe” option which would
bring the total to $20.6bn and leave
AIG with a stake of 32.9 per cent.
Meanwhile, it also revealed the sale
would result in $308m in fees for the
11 banks involved, making it a
bumper year for Asian investment
banks. Shares in AIA will be offered
this week with trading expected to
begin on 29 October. AIG, is looking to
repay US taxpayers after a govern-
ment bailout in 2008.
It was forced to look again at listing
AIA in Hong Kong after the collapse
in June of Prudential’s $35.5bn
takeover bid for the company.
Earlier this year, Agricultural Bank
of China raised a total of $22.1bn
from an IPO, exceeding the previous
record set by the Industrial and
Commercial Bank of China, which
raised $21.9bn in 2006.
“This IPO serves as a great catalyst
for the next and exciting phase in the
AIA’s history,” Mark Tucker, group
executive chairman and chief execu-
tive officer, said.

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 2 News
Corporate spending set to rescue UK
EDITOR’S LETTER
ALLISTER HEATH
THANK goodness for the private sec-
tor. With the exception of parts of the
property investment industry, it is
now in reasonably good shape.
Contrary to what many believe, this
means that Wednesday’s
Comprehensive Spending Review –
and the all too necessary spending
cuts it will detail – won’t derail the
UK economy. Sure, a chunk of public
sector demand will disappear – but a
raft of little-noticed data suggests that
extra spending in the rest of the econ-
omy will more than compensate.
The I/B/E/S equity analysts’ consen-
7th Floor, Centurion House,
24 Monument Street, London, EC3R 8AJ
Tel: 020 7015 1200 Fax: 020 7283 5334
Email: news@cityam.com www.cityam.com
Editorial
Editor Allister Heath
Deputy Editor David Hellier
News Editor Ben Griffiths
Night Editor Katie Hope
Associate Editor David Crow
Business Features Editor Marc Sidwell
Lifestyle Editor Zoe Strimpel
Pictures Alex Ridley
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Commercial Director Harry Owen
Head of Distribution Nick Owen
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Beam Reach 5 Business Park,
Marsh Way, Rainham, Essex, RM13 8RS
WHAT THE OTHER PAPERS SAY THIS MORNING
THE SUNDAYS TODAY
LORD LAWSON URGES OSBORNE CUTS
Lord Lawson of Blaby, the former
Chancellor and a man used as a sound-
ing board by George Osborne, has
urged his successor to “be bold” when
making cuts to expenditure in this
week’s Comprehensive Spending
Review. Lord Lawson said that in spite
of fears of an economic downturn, “It
is absolutely imperative that George
makes a start now”.
KAUPTHING CHIEFS REFUSE FSA DEAL
The former joint chief executives of
Kaupthing, the failed Icelandic bank,
are planning to reject the offer of a
plea bargain from the Financial
Services Authority, which would have
seen them fined £35,000 each. The FSA
has always refused to confirm that it is
investigating the £2.5bn collapse of
Kaupthing’s UK arm, which was placed
into administration in October 2008.
sus earnings forecasts for UK compa-
nies have surged from growth of 4.2
per cent year on year 12 months ago
to 15.9 per cent now. Analysts are the
most optimistic since records began
more than 20 years ago; this is the
first time since the early 1990s that
the consensus expects UK profit
growth to outpace the global average.
I know that equity analysts are an
irrationally exuberant bunch and
that UK firms are enjoying growing
overseas sales. But the analysts’ mood
undoubtedly reflects greater confi-
dence among the firms they talk to.
Plenty of other clues suggest that
things are going all right (though cer-
tainly not superbly) for UK Plc and
that it is about to spend a lot more,
boosting growth and creating private
sector jobs to replace those lost in the
state sector. Take corporate bank
accounts: many firms are flush with
cash. Fewer are saying they are find-
ing it hard to borrow. The British
Chambers of Commerce quarterly
survey suggests capacity use in firms
Cable ups the
heat on banks
BANKING
▲
BY VICTORIA BATES
BRITAIN’S biggest banks are today set
to face up to small business organisa-
tions and business secretary Vince
Cable in an attempt to show that they
are committed to rebuilding trust
between the sector and smaller firms
struggling to get access to credit.
Cable will chair the first meeting of
the Small Business Economic Forum,
which will also be attended by repre-
sentatives from HSBC, Barclays, Lloyds
Banking Group, the Royal Bank of
Scotland, Standard Chartered and
Santander, as well as the Federation of
Small Businesses, the Bank of
England, the IoD and the CBI.
The business secretary said the
measures agreed last week by the
banking taskforce – including a new
£1.5bn funding facility for small busi-
MEERKAT MAKES MILLIONS
It’s a huge payout — simples!
Aleksandr Orlov, the talking meerkat
who stars in television ads for com-
parethemarket.com, the insurance
comparison website, has helped to
generate a £42.3m dividend for its
parent company. The campaign, and
strong performance from sister
brands such as Budget and Dial
Direct, helped raise revenue six per
cent at BGL Group.
DEBENHAMS BOSS IN LINE FOR TOP
BINGO ROLE
Rob Templeman, boss of Debenhams
department stores, has emerged as a
surprise contender to become chief
executive of Gala Coral. He is one of sev-
eral businessmen shortlisted to replace
Dominic Harrison. Templeman’s pres-
ence on the list may prove embarrass-
ing for Debenhams, which presents its
financial results this week.
continues to rise, and is above average
in both manufacturing and services.
It also finds that competitive pres-
sures are not unusually severe (they
tend to be pronounced when there is
a lot of excess capacity around, as
rivals engage in price wars).
So what is happening? Firms
slashed their investment spending
when the crisis hit – and because so
much capex nowadays is on IT on a
three-year cycle, productive capacity
has fallen. Recent CBI and Bank of
England agents’ surveys give a similar
message: plants and offices are run-
ning at much closer to full capacity
than many people realise.
This is great news for the economy.
With profits bouncing back, invest-
ment still low, limited capacity,
demand that is still growing (albeit at
a weaker rate) in part because of ster-
ling, business investment is likely to
rebound. Deloitte’s most recent sur-
vey of chief financial officers (CFOs)
revealed a strong rise in those who
say that expanding investment is one
nesses and a new code on lending
which will allow firms to independ-
ently appeal banks’ decisions – repre-
sented a “modest” start to reforms.
Cable is also privately calling on
banks to show restraint in the
upcoming annual bonus season,
warning unadulterated excesses from
the banks will not be tolerated amid
a wider culture of austerity.
Chancellor George Osborne also
yesterday called on banks to sign up
to a code of practice on tax avoidance
by November. Only four of the 15 big
UK banks have signed so far.
The Small Business
Forum is chaired by
Vince Cable (left) and
led by small business
minister Mark Prisk
FED URGED TO TAKE ECONOMY ACTION
A senior member of the Federal
Reserve has warned that the US econ-
omy is in a “liquidity trap” and sig-
nalled support for more action to
boost the recovery. Charles Evans,
president of the Chicago Fed, said
that “in my opinion, much more pol-
icy accommodation is appropriate
today” because “the US economy is
best described as being in a bona fide
liquidity trap”.
VARLEY PRAISES BASEL III
John Varley, Barclays’ chief executive,
has broken ranks with the rest of the
global banking industry, arguing that
the availability of credit should be
unaffected by tough new capital rules
for banks, which he regards as fair. He
praised both the “substance and
timetable” of the Basel III proposals.
of their top three priorities for the
year ahead.
Again, one shouldn’t exaggerate
this positive trend. But I suspect that
Michael Saunders, Citigroup’s excel-
lent chief European economist, is
right to be predicting a 10 per cent or
so recovery in corporate capital
spending by the end of 2011. A similar
argument helps to explain why the
Ernst & Young Item Club expects GDP
growth of 1.4 per cent this year and
2.2 per cent next year (the latter fig-
ure still sounds a little high to me,
which ought to be proof that I’m no
deluded optimist, merely a realist).
The simple truth is that no serious
forecaster is predicting a double-dip
recession in the UK as their central
outcome next year, even though
everybody knows that spending cuts
are coming. There is plenty of evi-
dence of an economic slowdown
since the spring but none of another
collapse. Economists often get it total-
ly wrong – but not this time.
allister.heath@cityam.com
The rescue of the trapped miners became a globally-televised event
Miners get City Freedom
CITY
▲
BY VICTORIA BATES
CHILEAN president Sebastian Pinera
and the 33 miners rescued last week
after over two months trapped under-
ground in a collapsed mine are set to
be awarded the Freedom of the City
of London.
Pinera will today attend a lunch at
the Mansion House hosted by Lloyd’s
of London chairman Lord Levene,
standing in for absent Lord Mayor
Nick Anstee, as part of the UK leg of a
FRANCE’S PUMPS COULD RUN DRY
France’s petrol pumps could run dry
by Wednesday, industry experts have
warned, as airlines told pilots to refu-
el abroad and the stand-off over pen-
sion reform reached crunch point.
The country’s oil industry association
UFIP said that if strikes continued at
all 12 of France’s refineries then there
would be national shortages.
BARACK OBAMA POISED TO LOSE
HOUSE OF REPRESENTATIVES
Barack Obama could struggle to drive
through his political reforms in the
second half of his term as polls predict
a landslide Republican victory that
will see the party seize control of the
House of Representatives. Democratic,
Republican and independent pollsters
agree that Obama’s party will lose its
39-seat majority in the House of
Representatives in the 2 November
midterm election.
CITYA.M. 18 OCTOBER 2010
NEWS | IN BRIEF
Apple taking big bite at profits
Apple is set to affirm this week that its
six-month-old iPad tablet computer is
selling well despite a shaky consumer
market, while the iPhone continues to
fend off a strong challenge from rival
Google. Analysts expect fourth-quarter
earnings to showcase Apple’s powerful
one-two punch of the iPhone and the
iPad, although some still question
whether, with a plethora of rival prod-
ucts set to hit store shelves, Wall Street
can justify Apple’s stratospheric valua-
tion. The shares of the second largest
corporation in the S&P 500 jumped
more than four per cent on Friday as
anticipation mounted ahead of today’s
report.
Half public workers could strike
Some 49 per cent of state workers say
they are prepared to strike over pay cuts
and pension changes, a new study
reveals. Nearly half the state workers
surveyed by the Chartered Institute of
Personnel and Development agreed with
the statement “workers have to do
what’s necessary to protect their jobs” –
even if that meant disrupting public
services.
Picture: GETTY
European tour. At the lunch, Levene
will make a speech proposing the
president and the miners for the
Freedom of the City award, in recogni-
tion of their bravery before and dur-
ing the rescue, during which the men
were hoisted over half a mile to safety
from the depths of a Chilean mine.
Levene and Pinera will also discuss
infrastructure and renewable energy
resources at the lunch.
Pinera is also due to meet the
Queen and Prime Minister David
Cameron today.
RBS TAKES £30M HIT ON LIVERPOOL
Royal Bank of Scotland cleared the
way for the sale of Liverpool Football
Club last week by writing off £30m
of fees it was owed. The taxpayer-
owned bank stomached the loss —
more than the £20m Liverpool paid
for Spanish striker Fernando Torres
in 2007 — as John Henry, head of
New England Sports Ventures
(NESV), which controls the Boston
Red Sox baseball team, emerged as
the new owner.
BANKERS ‘SHUN LONDON’
Senior bankers are refusing to move
to London because of its “eroding”
position as a global financial centre,
according to Peter Sands, chief execu-
tive of Standard Chartered. Sands said
London has become the “least pre-
ferred” location for his senior direc-
tors who have freedom to work from
a number of locations.
CITYA.M. 18 OCTOBER 2010 News 3

Chi-X courts possible bidders

with eye on £300m price tag
though sources close to the company Nasdaq OMX is also among those

▲
FINANCIAL SERVICES
BY VICTORIA BATES
EQUITY trading platform Chi-X is
courting interest from a number of
potential bidders, as speculation
around a takeover of the upstart
bourse intensifies in the wake of an
approach in August.
Chi-X is thought to be eyeing a sale
worth up to £300m after sending out
information to interested parties,
insist that it is not definitively
“putting itself up for auction” and
would be happy to stay independent
if a suitable deal cannot be reached.
Interest in Chi-X, owned by a con-
sortium of banks including Credit
Suisse, Citi, Goldman Sachs and
Morgan Stanley, has escalated after
the bourse received an unidentified
approach in August from a suitor,
thought to be rival BATS.
interested in a potential deal, after its
chief executive Robert Greifeld admit-
ted in an interview earlier this month
that the company “would be a willing
recipient of the Chi-X book”.
Chi-X, which has around a 25 per
cent share of the market in FTSE 100
company trading, has appointed inde-
pendent corporate advisory firm
Lexicon Partners and Deutsche Bank
to advise it on the sale process.

Clockwise from top left: John Connolly (Deloitte), John Griffith-Jones (KPMG),
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Big Four set to NICE.

face the Lords BusinessFirst . 5 times daily ®

The FRC used its Lords paper to urge Heathrow to New York with 180º flat bed seats.
▲

PROFESSIONAL SERVICES
BY MARION DAKERS
THE HEADS of the Big Four auditors
are likely to face an influential House
of Lords committee next month, in a
probe into the lack of competition in
the audit market and the role the
firms played in the financial crisis.
Watchdogs including the Financial
Services Council (FRC) have submitted
papers to the Lords’ Economic Affairs
Committee, claiming the biggest
financial services firms are able to
command inflated fees through their
dominance of the market.
A House of Lords spokesperson con-
firmed yesterday that Deloitte, KPMG,
Ernst & Young and
PricewaterhouseCoopers have been
asked to appear before the committee,
with a hearing pencilled in for mid-
November. “We would expect the big
four to provide a representative to give
evidence,” he told City A.M.
the government to bar the big four
from taking the Audit Commission’s
workload once the quango is axed in You’ll notice the details in every aspect of our BusinessFirst service. Like more
2013, in an effort to give work to connectivity, a larger LCD video screen, a wide range of On Demand
smaller auditors. entertainment, gourmet food, fine wine and 180º flat bed seats.
Mid-sized firms Grant Thornton, We know a little difference makes all the difference. All this
Mazars and Baker Tilly have also asked
could give you a new angle on business class. Welcome
the House of Lords to consider directly
altering the market in favour of small- to BusinessFirst. Flying from Heathrow to Newark
er companies. Liberty International Airport, our New York area
Deloitte, KPMG, Ernst & Young and hub. For reservations and information,
PricewaterhouseCoopers all declined go to continental.com
to comment yesterday.
A spokesperson for the Audit
Commission declined to comment on
the whether the quango’s workload
would be offered to smaller firms, say-
ing: “Ministers have made clear their
intention that the audit practice of
the Commission should continue and
be transferred to the private sector.
We are working hard to make that a
reality, including pursuing the option
of an employee-owned business.”

Osborne gets boost from 35 top

business leaders over spending cuts
to back away from its tough plans to
▲

UK ECONOMY
DOZENS of business leaders have
backed George Osborne’s swingeing
spending cuts, saying hesitation could
cost £100bn in extra debt, more taxes
and an increase in the rate of interest.
A total of 35 captains of industry,
including BT chief executive Ian
Livingston and Asda chairman Andy
Bond, penned a letter to the Daily
Telegraph urging the government not
tackle the budget deficit.
The letter reads: “The cost of delay
is enormous, and would result in
almost £100bn of additional national
debt by the end of this Parliament
alone. In the end the result of delay
would be deeper cuts, or further tax
rises.”
The backing of the City is a wel-
come boost to Osborne ahead of
Wednesday’s spending review. Flat bed seats may not be available in the event of aircraft substitution. Fifth daily service begins on 31 October, 2010. © 2010 Continental Airlines. Inc.
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CITYA.M. 18 OCTOBER 2010 News 5

Satellite broadcaster BSkyB

nears key 10m subscriptions
also forecasts that BSkyB will unveil an tycoon does not already own, but the
▲

MEDIA
BY PHILIP WALLER
SATELLITE broadcaster BSkyB is tipped
to say it is edging closer to its target of
10m subscribers when it reports first
quarter trading on Friday.
Broker Numis Securities expects the
group to reveal that it picked up
53,000 subscribers in the three
months to September, leaving it with
more than 9.9m customers. Numis
eight per cent rise in revenue to
£1.49bn, driven by a 14 per cent
increase in retail revenue to £1.27bn,
and pre-tax profit of £227m.
Investors will also be interested in
anything the broadcaster says about
shareholder Rupert Murdoch’s
attempt to seize full control of the
company. BSkyB has rejected
Murdoch’s offer of £8bn for the 61 per
cent of the company that the media
pair have agreed to start work on the
regulatory details of a potential deal.
BSkyB’s media rivals have got
together to oppose the deal, writing to
business secretary Vince Cable to
express concerns that it could threat-
en competition and give Murdoch too
much political influence. Signatories
to the letter include publishers of
newspapers including the Daily
Mirror, Guardian and Daily Telegraph. BSkyB boss Jeremy Darroch took home around £2.7m last year Picture: REX

GMG’s review UNSEEN

DESTINATION
could see sale AT UNHEARD S
OF PRICES
of Autotrader Flying p assengers to
over 70 des
tin
in Asia, in 19 ations
▲

MEDIA Apax and GMG are believed to have

BY PHILIP WALLER
THE owner of the Guardian newspa-
per and a private equity group are
considering selling the business
behind car buyers’ magazine Auto
Trader for £2bn, it emerged yesterday.
Guardian Media Group (GMG) and
Apax Partners are understood to have
begun work on a strategic review that
could lead to the disposal or flotation
of Trader Media Group (TMG).
Apax acquired a 49.9 per cent stake
in Trader Media group (TMG) from
GMG in March 2007, which valued
TMG at £1.35bn.
GMG has owned TMG for several
years, either solely or in partnership
with others. As well as the flagship
publication Auto Trader, the business
also includes titles such as Boat
Trader and Farmers Trader.
Former Guardian
Media Group finance
director Andrew Miller
took over as CEO from
Carolyn McCall in July
held early-stage talks with several countries.
banks including Moelis, Merrill
Lynch, Deutsche Bank and JP Morgan,
according to a Sunday newspaper.
No-one from Apax Partners was
available to comment, but a GMG
spokesman said: “Trader Media
Group is a very strong business and
well advanced in its digital transition,
which makes it a valuable asset for
GMG.
“No decisions have been made
about either the timing or nature of
our exit from this investment.”
It is thought the appointment of a
bank could lead to a sale or float as
early as next year or in 2012, but a div-
idend re-capitalisation could also be
an option.
The strategic review is thought like-
ly to consider four possibilities: a sale,
a float and two dividend re-cap
options.
The dividend recap could either
see up to £300m more debt added to
the group’s balance sheet or the
introduction of a third private equi-
ty investor which may purchase a
stake of up to 40 per cent from Apax
and GMG.

Rightmove: October jump saves

London from a year-on-year fall
prices, buoyed by the scrapping of
▲

PROPERTY
AN eleventh-hour price jump in the
London housing market saved it from
a year-on-year fall, according to the
latest Rightmove House Price Index.
Asking prices spiked five per cent
in October compared to the previous
month – from £399,019 to £418,778
– as sellers aim to capitalise on the
traditionally lively run-in to
Christmas. This was down from a 6.5
increase last October.
The average London asking price
increased by 0.6 per cent year-on-year,
Home Information Packs in May.
However, the Comprehensive
Spending Review to be announced on
Wednesday is likely to have a negative
effect on housing market sentiment.
On a nationwide basis, the average
asking priced increased 3.1 per cent
to £236,849.
The general market remained poor,
with the number of properties per
branch rising from 69 in October last
year to 78 now, and mortgage avail-
ability continuing to deteriorate. WORLD’S BEST
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CITYA.M. 18 OCTOBER 2010 News 7

Hands set for

day in court
over EMI deal
▲

MEDIA Citigroup denies all allegations as

BY ALISON DEELEY
AN explosive court case brought by
Guy Hands, founder of buyout house
Terra Firma, against Citigroup over
indebted record label EMI opens in
Manhattan today.
Hands is suing Citigroup for up to
£7bn in damages to cover equity lost
since it bought EMI for £4.2bn in 2007,
alleging that David Wormsley, a sen-
ior Citigroup banker and former close
friend, misled him about another bid-
der to rush him into an inflated bid.
Hands specifically alleges that in
three telephone calls made during
May 2007, Wormsley told him rival
firm Cerberus Capital Partners was
interested and Terra Firma would lose
the deal unless it bid 265p per share
by 9am the following day.
Citigroup, which was also advising
EMI on finding a buyer, offered to pro-
vide £2.6bn debt at short notice to
fund the buyout. Hands says the bank
made £92.5m in fees from the deal.
“categorically untrue”.
Terra Firma has written down 90
per cent of the investment’s value
since the financial collapse, but EMI is
still burdened with $3bn Citigroup
debt bound by strict loan covenants
that forced Hands to raise a further
£105m equity from investors in May.
Reports suggest the lawsuit is
Hands’ attempt to push Citigroup to
agree a settlement to swap up to £1bn
of debt for equity or give the bank a
minority stake in EMI in return for
reducing the debt.
Terra Firma has reportedly been in
talks with Citigroup for some weeks
to halt the case in exchange for a set-
tlement, though sources say a deal
remains unlikely. Hands has tried to
restructure both the size and terms of
the debt repeatedly since 2007 but
Citigroup has refused to renegotiate.
As EMI’s sole creditor, Citigroup
would gain control of the music
group if Terra Firma defaulted and
rendered EMI bankrupt.
Terra Firma boss Guy Hands could be called into the Manhattan courtroom as a witness as early as this afternoon
TIME LINE | TERRA FIRMA’S OWNERSHIP OF EMI
● May 2007: Terra Firma Capital
Partners III fund closes at €5.4bn
($7.55bn; £4.72bn).
● 21 May 2007: David Wormsley
allegedly makes three phone calls to Guy
Hands encouraging Terra Firma to bid
265p a share for EMI by 9am the next
day to close the deal.
● May 2007: Terra Firma borrows
£2.6bn from Citigroup to buy out EMI for
£4.2bn.
● October 2008: EMI posts a full-year
loss of £757m.
● March 2009: Terra Firma writes
down the investment by 50 per cent and
its entire portfolio by 45.5 per cent.
● July 2009: Hands attempts to negoti-
ate the terms of the debt with Citigroup.
● September 2009: Citigroup publishes
an analyst report responding to Hands’
proposal to inject £1bn new equity into
EMI if Citi will write off £1bn debt. It
concludes that by rejecting the deal, Citi
could force Terra Firma to declare EMI
bankrupt and gain control of the label.
● 11 December 2009: Hands files law-
suit at the New York Supreme Court
accusing Citi of tricking Terra Firma into
buying EMI. Case seeks to recover “lost
equity of billions of dollars” and damages.
● February 2010: Terra Firma proposes
selling London’s Abbey Rd studios to
reduce the debt. English Heritage desig-
nates the site protected.
● 25 March 2010: Citi’s bid to dismiss
the US case, on grounds that the dispute
should be heard in a UK court, is thrown
out.
● June 2010: Hands raises £105m from
investors to save EMI from debt default.
● August 2010: EMI achieves 2010 rev-
enues of £1.65bn and a net loss after
restructuring costs and fair value adjust-
ments of £512m. It still has £3.04bn debt
outstanding due for repayment between
2014 and 2017.
● October 2010: Court case opens in
Manhattan.

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CITYA.M. 18 OCTOBER 2010 News 9

ECB should stay silent about monetary policy

makers seem determined to talk that 1.50 or even 1.60 can be ruled bank would allow itself options. By the sidelines, keeping its own council
about pushing policy back onto a out. The gamble that the ECB is tak- saying nothing the ECB might not see while the economic fog clears. If it
more “normal” footing. Just last ing by simply talking about a move to the euro rise at such a dramatic pace. turns out that a tighter monetary
week, the Bundesbank’s Axel Weber, the monetary policy exit sign is a And by saying nothing, the ECB environment is required in 12
in a speech given in New York, indi- huge but unnecessary one. While the wouldn’t run the very real risk of months then it hasn’t lost anything
cated his desire to see monetary poli- likes of Weber may be convinced that damaging its credibility again by per- by saying nothing now. However, if it
cy quickly and effectively tightened. it’s the right thing to do, with such an forming a policy U-turn. turns out that economic growth it
This very open desire to get policy opaque macroeconomic environment Don’t get me wrong; I am not say- still likely to remain sub-par then
CNBC COMMENT back onto a more normal footing is a why does he feel the need to talk ing that other central banks around those at the ECB would still be able to
GUY JOHNSON mistake for the simple reason that it
is going to push the euro higher and
about it? Why take the risk? It’s not as
if there is a near-term inflation issue
the world are not taking big risks as
well. The Fed’s headlong rush towards
provide assistance without anybody
questioning their competence.
make exports less competitive at a to tackle. QEII could well be extremely reckless. This is especially true for Axel

J
EAN Claude Trichet and his col-
leagues at the ECB are playing a
dangerous game. Despite the
Eurozone’s recovery still looking
fragile, the central bank’s key play-
time when Europe is producing little The ECB has tightened inappropri- But the fact that the Fed is getting Weber. If the Bundesbank boss wants
domestic demand of its own. Foreign ately in the past and could make the ready to move in the opposite direc- to take over from Jean Claude Trichet
exchange traders have already moved same mistake again. The best tion to the ECB should give those in next year, he can’t make mistakes.
the Euro/Dollar exchange rate past approach now would be to say noth- Frankfurt pause for thought. Guy Johnson co-anchors European
1.40 and there is no reason to think ing. By saying nothing the central It’s not too late for the ECB to sit on Closing Bell weekdays on CNBC.

US banks set NEWS | IN BRIEF

BAE pushed to cut contract prices
Defence contractor BAE Systems is set
to be forced to slash the price of its con-

to suffer from tracted services with the government in

the future, as part of the Ministry of
Defence’s drive to cut costs. Ministers
are this week poised to announce a
strategic defence review which will aim
to cut the department’s annual budget

trading slump by around £37bn.

Travelport seeks easing on debt

Travel services group Travelport has
approached its lenders to ease the
requirements on its debt covenants to
prevent a possible breach next year,
BANKING according to weekend reports. The move
▲

over the summer will have dispropor-

BY VICTORIA BATES
ANALYSTS have slashed their fore-
casts ahead of the slew of US banks
reporting third quarter earnings this
week, as concerns over a steep fall in
trading activity and the housing fore-
closure ruckus in the States weighed
on expectations.
Wall Street bank shares had rallied
last week after JP Morgan topped ana-
lysts’ consensus earnings forecasts of
90 cents per share with $1.01 per
share.
But the sector has since taken a bat-
tering at the hands of investors as it
suffers a probe into illegal mortgage
foreclosure practices and fears over
the earnings impact of a slowdown in
Wall Street securities activity.
The banks reporting next week are
widely expected to record an uptick
in profits due to lower one-off impair-
ment charges, though analysts are
concerned that the trading slump
tionately hit investment banking rev- comes after Travelport earlier this year
enues. had to cancel a planned $1.78bn
Citigroup, which reports third Wall Street trading activity slumped over the summer Picture: GETTY (£1.11bn) London IPO due to poor
quarter earnings today, is expected to demand. The firm’s advisers had tried to
post earnings of 5.7 cents per share, rescue the deal, slashing the price range
down from an analyst consensus of by a quarter to between 180p-190p per
6.25 cents per share just a week ago, share, but to no avail. Travelport is
according to Thomson Reuters data. owned by private equity firm Blackstone.
Predictions for Goldman Sachs
earnings per share, revealed tomor- British Gas shuffles seasonal work
row, have also dropped sharply over British Gas engineers will get a pay rise
the week to $2.28 per share, while of more than a tenth in return for work-
Bank of America, also reporting ing longer hours in the winter to tackle
tomorrow, is now thought likely to higher numbers of gas and electricity
post earnings of under 10 cents per problems, it emerged yesterday. The par-
share. ent company of British Gas, Centrica,
Morgan Stanley is expected to earn and the GMB union have negotiated a
between 15 and 20 cents per share, deal under which the firm’s 8,000 engi-
down from 38 cents a year ago. neers will receive an 11.3 per cent rise in
Wall Street has been hit with a bar- exchange for working a 45-hour week.
rage of gloomy predictions in recent The deal means the engineers will work
weeks, including renowned analyst longer between November and February,
Meredith Whitney’s prediction that but will work only 28 hours a week
80,000 investment bankers are likely (Clockwise from top left): Lloyd Blankfein of Goldman Sachs, Citi’s Vikram Pandit, between May and August when there is
to be culled in the next two years. Morgan Stanley chief executive James Gorman and Bank of America’s Brian Moynihan less pressure on the power network.

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 10 News
Crunch time
for BHP and
Rio venture
MINING
▲
BY MARION DAKERS
BHP BILLITON and Rio Tinto’s $116bn
(£72bn) iron ore joint venture is hang-
ing by a thread after the European
Commission has told the companies
it will object to the deal.
The EU’s competition commission-
er Joaquin Almunia is preparing to
send a list of objections to Rio and
BHP this week, which will ask the
world’s second- and third-largest iron-
ore producers for heavy concessions.
“I cannot anticipate how this docu-
ment will be finally written but it is
obvious that we have concerns on
this joint venture and they have to
react to this statement of objections,”
Almunia said at the weekend.
The blow comes on top of the
German regulator’s announcement
last Thursday that it intended to
object to the plans. Watchdogs in
Australia, Japan and Korea are also
due to rule on the venture.
The plan to share iron ore opera-
tions in Australia would save the com-
Gulf Keystone raises £109m
OIL
▲
BY STEVE DINNEEN
GULF Keystone Petroleum yesterday
announced is has raised £109.2m
through an oversubscribed share
placing.
The Kurdistan focused independ-
ent oil and gas exploration company
says it will use the proceeds to accel-
erate its active drilling programme
across its four blocks in Kurdistan.
This will involve contracting a
third Gulf Keystone operated deep
drilling rig, as well as adding three
panies $10bn, but has been beset by
complaints from the steel industry
and shareholders since the idea was
proposed in June 2009.
It is likely to feature high on the
agenda at BHP’s annual general meet-
ing in London on Thursday.
The proposal and its commitments
are due to lapse at the end of 2010. It
was yesterday reported that the com-
panies are now looking for ways to
break the deal without suffering
$250m penalties.
Rio Tinto and BHP were unavail-
able for comment yesterday.
ANALYSIS l BHP Billiton
p 2,199.50
15 Oct
2,200
2,000
1,800
19 Jul 6 Aug 26 Aug 16 Sep 6 Oct
new wells to its drilling programme.
In addition, it will continue
drilling two previously delayed wells
in the region.
Executive chairman Todd Kozel
said: “This strengthening of our bal-
ance sheet marks another important
Executive chairman
Todd Kozel says the
share placing strength-
ens Gulf Keystone’s bal-
ance sheet.
German insurer Allianz is said to be eyeing a bid for the 68-mile high-speed rail link
step towards our full understanding
of the true scale of the world class
Shaikan Field. With access to a third
dedicated drilling rig, we will now be
able to complete the appraisal
drilling campaign earlier than previ-
ously envisaged.
“Furthermore, we are looking for-
ward to continuing our exploration
work across the Ber Bahr and Akri
Bijeel Blocks.”
The shares were placed by the
firm’s broker, Mirabaud Securities,
with both new and existing institu-
tional investors snapping them up.
Company name disputes
increase by 43 per cent
▲
LEGAL
LEGAL disputes over company names
have shot up 43 per cent this year
according to new research by Sweet &
Maxwell.
Companies being taken to tribu-
nal over the registration of a similar,
or misleading company name has
leapt from 54 last year to 77.
Disputes typically occur when one
company is thought to be using the
CITYA.M. 18 OCTOBER 2010
Eurostar strikes
to hit services
as Allianz stalks
TRANSPORT
▲
TRAVELLERS bound for Brussels face
chaos today after Eurostar was forced
to axe train services due to industrial
action on the Belgian railways.
The cross-Channel train operator
said it would fail to run any services
between the UK and the Belgian capi-
tal due to a 24-hour walkout by
Belgian rail workers. The strike started
last night at 10pm local time in
Belgium and was due to last until
10pm tonight. Belgium rail workers
are protesting against a deadlock in
talks with state railway SNCB over an
unpaid bonus to workers.
Eurostar said the action would sig-
nificantly disrupt the Belgian rail net-
work and it was advising people
against making non-essential journeys
to Belgium. For those people unable to
avoid travelling, Eurostar is running a
coach service between Lille in France
and Brussels, extending journey times
by about two hours.
Meanwhile, German insurer Allianz
is understood to be planning a £2bn
bid to buy the high-speed rail link
between London’s St Pancras station
and the Channel Tunnel from the UK
government, which owns it through
London & Continental Railways.
The government is selling off the 68-
mile link as part of several privatisa-
tions to help cut the budget deficit.
name of another in order to cash in
on its fame. Once discovered, the
original company’s owner can take
the copy-cat company to a Company
Names Tribunal and force them to
change it.
Sweet & Maxwell says that a huge
proportion of these cases are brought
by major blue chip organisations who
take steps to protect their brands
from opportunistic start-ups who reg-
ister similar names.
CITYA.M. 18 OCTOBER 2010
Insurers face new wave of regulation
CITY COMMENT
MAGGIE CRAIG
T
HE business agenda has been
dominated by the latest develop-
ments in the regulation of
banks. From Basel III to new
European banking regulations on cap-
ital, much has been said on how
much capital banks should hold.
Much less focus has been on
Solvency II, the European Directive
which will dramatically change the
way insurers are regulated, due to be
implemented at the end of 2012. This
is, of course, to be expected. Attention
will always focus on where the great-
est problems occur. However, there is
much to be learned in both the princi-
ples and development of Solvency II
for all regulators and politicians.
Indeed the crisis has reinforced the
key messages of Solvency II – that by
itself capital cannot protect against all
risks and all negative outcomes. At
the heart of Solvency II is the message
that if you understand and manage
your risks you can run your business
effectively and receive the benefits of
a lower capital requirement. This will
ultimately benefit consumers.
Coal India set for £2bn float
ENERGY
▲
BY MARION DAKERS
THE INDIAN government is due to
open the country’s largest ever initial
public offering (IPO) today, in which it
hopes to raise 150bn rupees (£2.1bn)
by selling a 10 per cent stake of state-
owned Coal India.
The company is the largest coal
miner in the world, producing 80 per
cent of India’s coal in 471 mines and
holding around 22bn tonnes of coal
in extractable reserves.
The sale share is set to top the mas-
However, there is a very real risk
that the ripple from the banking crisis
is still creating difficult waves across
the whole financial services sector. I
see two major risks. First, that insur-
ers will be over-regulated, either
because regulators will insist on gold-
plating requirements, or because of
inappropriate read-across from the
banks. The second, connected risk, is
that consumers will simply lose faith
in the products we provide. This is not
because they believe insurers will fail,
but because we are forced by Solvency
II to change the products we provide
to such a degree that they no longer
meet the needs customers at a price
they can afford. The ABI is working
with the Treasury and European part-
ners to push back hard on this. We
cannot let the fallout from banking
regulatory failures drive insurance
regulation.
There is still much to play for.
Recognition of the benefits of holding
assets over the long term (the liquidity
premium), how Solvency II recognises
subsidiaries of European insurers
based abroad and how groups are
treated are some of the main areas of
focus. There is time to solve these and
I remain optimistic we will – with the
support and cooperation of the
Commission, governments and
European insurance regulators.
As an industry we have been work-
ing on Solvency II since 2000. It is
already rightly recognised as poten-
tially a leading global standard for
prudential regulation. It is far in
sive $70bn rights issue undertaken by
Brazilian energy firm Petrobras in
September. Retail and institutional
investors have until Thursday to sign
up for shares, and the company is due
to list on the Mumbai stock exchange
from 4 November.
India hopes to attract overseas
investment with the sale, which the
government has said will help fund
social programmes and reduce the
budget deficit. The divestment is part
of the government’s plan to raise
£5.3bn by March by selling holdings
in state-owned companies.
advance of the Basel II requirements
and already includes many of the
tools needed to address the risks iden-
tified following the financial crisis. It
is attracting attention from around
the world, as other countries realise
The IPO has already affected the
Indian economy, with the rupee gain-
ing 5.3 per cent in the last month in
part due to the expectation of foreign
investment.
The Indian government strength-
ened the company’s position on
Friday, when the Prime Minister’s
office said Coal India is free to fully
exploit its coal reserves. The firm’s
future expansion had been uncertain
after the environment minister
declared around 40 per cent of its
reserves out of bounds in order to pro-
tect the country’s forests.
the advantages it will give to
European insurers.
The danger is that insurance regula-
tors read across from what is happen-
ing in the banking world and try to
squeeze in banking rules for insurers.
COAL INDIA
SHARE SALE
ADVISERS
Coal India seems to have spared no
expense for its £2.1bn rights issue,
having hired six banking giants to
manage the record share sale. Only
two of the firms are based in India,
though all the institutions have a large
presence in the country.
Citigroup was part of a conglomer-
ate that earlier this month lent $1.2bn
to coal firm New World to aid its
takeover bid for Poland’s only public-
News 11
Lloyd’s of London
(building pictured)
and its host of
insurance names
face the danger of
the market becom-
ing over-regulated
or consumers los-
ing faith in their
services.
Picture: Micha
Theiner/ CITY A.M
Solvency II was designed to go beyond
this. Despite the crisis, we must keep
on that road for the benefit of insur-
ers and consumers alike.
Maggie Craig is acting director general,
Association of British Insurers.
traded coal producer. Citi, alongside
fellow Coal India adviser Merrill
Lynch, were hired to help a group of
Australian coal producers including
BHP Billiton in their doomed $6.4bn
bid to prevent the privatisation of
Queensland’s railway lines.
Morgan Stanley, also advising, has
a $4bn Indian-based investment fund
with a focus on companies in the
region.
Enam Securities is an Indian-based
underwriter, best known for working
with Middle East Coal in 2009 when
the firm went in search of partner-
ships in India.
Deutsche Bank and Indian invest-
ment bank Kotak Mahindra Capital
make up the remainder of the advising
team.
 12 News
FASHIONABLE WEST END

If

lif e RETAILERS in London’s West End have reported an 8.5 per cent year-on-year sales surge in
September thanks to fashion-conscious shoppers seeking out new clothes for the Winter
season. The New West End Company, which represents stores on Bond Street, Oxford Street
and Regent Street, said revamped stores and new lines were behind the sales.

UK dividends
bounce back
g i ve s at long last
quarter last year.
▲

UK ECONOMY
BY JOHN DUNNE
UK DIVIDEND payouts bounced back
in the third quarter with the forecast
for the year lifted to £55.7bn.
Investors had suffered five consecu-
So far this year UK dividends have
hit £46.1bn, down from £47.8bn for
the first nine months of 2009.
Capita Registrars chief executive
Charles Cryer said: “Investors can
finally breathe a sigh of relief after a

yo u
tive quarters of falls, according to the
latest Capita Registrars Dividend
Monitor.
The index analyses every dividend
paid in the UK market.
The strong showing in the third
quarter means Capita Registrars
upgraded its forecast for the year by
£1bn, and now expects £55.7bn in UK
dividends. It still means UK compa-
nies will pay out 17 per cent less to
investors than at the peak in 2008
and five per cent down on 2009.
However, if BP had not been forced
to cancel its dividend, the total
amount returned to investors by UK
companies would have risen four per
cent. UK-listed companies paid out
£17.6bn, up from £17.3bn in the third
long and painful period of shrinking
dividends.
“Seeing corporate UK in better
health will give the Treasury some
cheer ahead of the impending spend-
ing review that the economy can
withstand the cuts. This year will still
end lower than last year, but with BP
promising to turn on the dividend
taps again next year, 2011 should see
income growth accelerate.”
According to the research the
underlying position is strengthening.
It found 200 companies paid a divi-
dend in the third quarter – equal to
last year. The number was reduced by
firms who moved their third quarter
payouts into the 2009/10 tax year to
beat the new 50 per cent tax band.

ANALYSIS l UK Dividends
£ billions

54

o n s
52

lem 50

48

46

44

42

40
Q1 - Q3 07 Q1 - Q3 08 Q1 - Q3 09 Q1 - Q3 10
CITYA.M. 18 OCTOBER 2010 News 13

Workers of French
oil giant Total and
the SFDM Society,
and SNCF railway
ID fraud costs UK
economy £2.7bn
workers block the
entrance of the
deposit of the socie-
ty SFDM near the
oil refinery of
Donges

Picture: birth certificates, passports and driv-

▲
FRAUD
REUTERS BY JOHN DUNNE
UK identity fraud costs more than
£2.7bn and affects over 1.8m people
every year, according to new figures.
On average, fraudsters gain over
£1,000 from every stolen identity,
according to the National Fraud
Authority.
Criminals often look to fraudulent-
ly obtain genuine documents such as
ing licences.
However, they also intercept utility
bills and steal online passwords, to
use to plunder accounts
National Fraud Authority chief
executive Dr Bernard Herdan said:
“Stolen and false identities are a sig-
nificant enabler of crime and this
issue demands a co-ordinated
response across government and the
private sector.”

French step
up strikes in
pensions row
public that feels it is being unfairly
▲

INDUSTRIAL ACTION
BY HARRY BANKS
FRENCH truck drivers vowed to block
key roads from last night and rail
unions announced new strikes from
today, putting fresh pressure on
President Nicolas Sarkozy over his
unpopular pension reform.
New action by truckers and rail
workers, continuing strikes by refin-
ery workers and the threat of more
street marches in the drive to force
Sarkozy to scrap the reform before a
crucial Senate vote, make this a make-
or-break week for him.
Sarkozy has vowed not to give in
throughout months of opposition to
his plan to raise the retirement age
and rein in a ballooning pension
deficit. The powerful unions, which
have a history of crushing reform,
have vowed to match his resolve.
“If we do nothing... the system will
explode,” interior minister Brice
Hortefeux told LCI television, as the
government kept up its appeal to a
punished for failures in the social
security system.
Petrol pumps are drying up, truck-
ers said they would block key roads
from last night, and after a day of dis-
rupted trains, rail unions agreed new
strikes today that could halt two-
thirds of regular trains and half the
express TGV services.
A fresh nationwide march against
the pension reform – which would
raise the minimum and full retire-
ment ages by two years to 62 and 67
respectively – was set for tomorrow,
testing Sarkozy’s determination to
stand by a key policy.
“The right to strike is not the right
to prevent access to a fuel depot. This
is an illegal action,” said Prime
Minister Francois Fillon.
The UFIP oil industry lobby
warned that strikes running at all
France’s 12 refineries could cause
serious fuel supply problems by mid-
week, and the government may have
to tap emergency reserves.

Christmas retail sales

could be best since 2007
said. Online will account for 9.5 per
▲

RETAIL
SHOPPERS will spend more on the
high street in the run up to Christmas
than they have for at least three years,
a report has claimed.
Retail analysts Verdict Research
said high street sales were likely to
increase by £1.6bn in the three
months to Christmas, a 1.9 per cent
rise on last year, to £85.2bn.
But it warned some of this had
already been “priced in” as a result of
the rise in VAT since last year, from 15
per cent to 17.5 per cent, and infla-
tion, which currently stands at 3.1 per
cent, leading prices higher in certain
retail sectors already.
Online sales were likely to take the
lion’s share of the increase account-
ing for a predicted £1.2bn of sales, it
cent of all sales at £8.1bn rising by
17.6 per cent overall.
The forecast suggested people will
spend more on clothing, food and
health and beauty products rather
than big ticket items such as televi-
sions and other electrical goods,
which usually rely on Christmas to
boost sales but where competition
was already pushing prices lower.
The new iPad, along with video
games and accessories, will continue
to sell well in the run up to Christmas
but at the expense of smartphones,
iPods and digital cameras, the report
said.
The DIY sector would also suffer as
a weak housing market would hurt
sales of furniture and floor covers,
Verdict added.
 The Capitalist
14
WOLF WHISTLES FOLLOW STYLISH
CITY LADIES DRESSED FOR SUCCESS
WHERE does a City woman go when
she needs to out-dress her TM-Lewin-
clad male counterparts? Designer
Britt Lintner – who is also still a full-
time professional at hedge fund GLG
– is making a new bid to make her
clothes the ultimate go-to items, and
she has recruited a line-up of swanky
femme fatales from the City to help
her.
The women to be featured include
Alexandra Palace MD Rebecca Kane,
British Property Foundation chief
executive Liz Peace and Boster Group
founder Susan Boster.
But first up is Rothschild Debt
Advisory MD Ranjit Munro, pictured,
who agreed to a profile to promote
the designs for high net-worth work-
ing ladies. Munro reportedly keeps a
wardrobe of more than a dozen Britt
Lintner dresses on hand and claims
EDITED BY
JULIET SAMUEL
GOT A STORY? EMAIL
thecapitalist@cityam.com
that one of them has even garnered
her wolf whistles on the way in to
the office: “It proves that age-appro-
priate dressing can be alluring,
which I find rather reassuring now
that I am the wrong side of 40,” she
claims. As to how she balances the
pressures of three kids with life in
the City: “I like being busy and pro-
ductive and I also have a really sup-
portive husband, who has never
Rothschild Debt Advisory MD Ranjit Munro gets wolf whistles out and about
expected cooked meals and is a great
believer in outsourcing domestic
tasks.” Here’s to outsourcing. But
Munro needn’t attribute the wolf
whistles wholly to her dress sense.
BACCHUS JOHNSON
The Wine Investment Fund held an
art auction for charity last week, with
an unusual set of paintings on offer.
Unfortunately not everything was in
order: one painting by Terence
Gilbert entitled Wines of Bordeaux
shocked wine aficionados with its
unrealistic depiction of a rather-too-
ancient 1963 Chateau Haut Brion and
a red, instead of a white, Cheval
The London mayor as Bacchus
Blanc. The offending painting was
swiftly retouched.
But the star attraction included a
most bizarre proposition: a colourful
oil depicting none other than
London mayor Boris Johnson as
Bacchus, Roman god of wine, ecstasy
and general partying. Alas, Boris was
not available to view the portrait, pic-
tured, but he would doubtless
approve, having once labelled the
Tories “the funkiest, most jiving
party on Earth”.
SCHOOL’S OUT
Power down at Barclays
on Churchill Place,
where the office
was preparing
for a full
switch-off of
electricity on Friday to
allow for maintenance. The
power down was due to take
place at 6pm, giving Barclays’
busy bees ample time to finish
off their week’s number crunch-
ing.
But one sly worker just
couldn’t wait another two
hours to troop over to All Bar
One. Logging on to his out-
look email, he created a fake
email that seemed to be for-
warded from IT support,
informing computer users
across several floors
CITYA.M. 18 OCTOBER 2010
that they had exceeded their electric-
ity use and that if they did not turn
their machine off for the weekend by
4pm, it would start losing data.
Surely no tech-savvy Barclays pro-
fessional could fall for such a trick?
Not so, according to The Capitalist’s
eyes and ears in the building. Several
confused – but rather happy – folks
were spotted bar-bound at four, leav-
ing their station’s lights on, but
nobody home. Just in time to start
the weekend in style.
SLIPPERY MATTERS
A mixed blessing for square mile
commuters – already used to regular
shut-downs on the Tube (and, appar-
ently, on their computer systems).
The bad news is that the millennium
bridge will be closed to pedestrians
today and everyday until Friday this
week between 10am and 4pm – for
“routine maintenance”. The good
news is that one very civic-minded
individual at a local wealth manager
has been on the city of London’s case
to fix the real problem with the ill-
fated bridge: its slippery panels that
have a tendency to dump innocent
City folk on their arses at the slight-
est touch of rain.
Our hero’s persistent – and rather
wry – emails to the City finally won
him a response after a fortnight. He
has been promised a rigorous run of
“grip and slip testing on the bridge”
(which we assume means more than
repeated falling over) alongside the
“deep clean” of the structure and
some added “texturing” of the steps.
Hopefully enough to keep com-
muters’ brogue-clad feet firmly on
the ground.
DAILY GRINDR
Red faces all round in one City bank
due to a far-too-clever mobile app
called Grindr. The helpful pro-
gramme lets gay and bi men
connect to other similarly orient-
ed individuals in the area – you just
download the app and set your
availability to whatever you’re look-
ing for, whether it’s a relationship
or just sex. The app uses Bluetooth
to find other like-minded individ-
uals in the area and hey presto.
Unfortunately, according to
The Capitalist’s sources, the device
proved a little too helpful in one
City bank client meeting, where
the electronic matchmaker tried
to pair up one guy from each side.
But what happened to the love-
birds after they left the meet-
ing? Do get in touch with
this column
thecapitalist@cityam.com
if you know…
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CITYA.M. 18 OCTOBER 2010
Firms hiring
again to boost
future growth
UK ECONOMY
▲
BY JESSICA MEAD
WIDESPREAD recruitment freezes are
now a thing of the past and firms are
cautiously planning targeted hiring
in the areas that will maximise
growth, according to a survey pub-
lished today by the CBI and recruit-
ment consultants Harvey Nash.
The survey of more than 2,000 busi-
nesses revealed that only seven per
cent of firms are currently operating a
recruitment freeze compared to 61 per
cent in the spring. Those that are not
hiring are concentrated in the public
“
sector and in construction.
Furthermore, almost a quarter are
planning targeted recruitment in
areas such as management, technical
and sales. But businesses are still keep-
ing a tight rein on costs despite a thaw
EU says Ireland needs to find ECB’s Trichet rejects view
consensus on its budget plan
▲
WORLD ECONOMY
THE European Union (EU) has warned
the Irish government and opposition
parties there must be political consen-
sus on budget measures to ensure
international markets continue lend-
ing to the country next year, accord-
ing to an Irish newspaper report.
An agreement in cross-party talks
involving Prime Minister Brian
Cowen; the leader of junior coalition
partner, the Greens; and the leaders
of the two main opposition parties,
Fine Gael and Labour, would increase
international confidence in Ireland’s
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in pay freezes.
Businesses are now more worried
about a deterioration in employee rela-
tions. John Cridland, deputy director-
general of the CBI, said: “During the
recession, private sector employees
adopted a can-do attitude, accepting
that measures such as pay and recruit-
ment freezes were the alternative to
companies going under, and further
” ”
job losses. Sustaining that spirit of co-
operation will be more challenging
now the immediate threat appears to
have passed.”
According to Harvey Nash chief
executive Albert Ellis Britain’s flexible
labour market has protected the coun-
try from the worst possible effects of
the recession and boosted demand for
”
recruitment. In his view, the private
sector will benefit from the increased
supply caused by public sector churn.
ability to bring its €18bn (£15.7bn)
budget deficit back within Eurozone
guidelines, according to a spokesman
for Olli Rehn, the EU economics com-
missioner.
“From a political point of view,
there is no doubt that strong political
support of the plan will inspire more
credibility,” said Amadeu Atlafaj
Tardio told the paper.
“It is not about convincing the
European Commission or even the
member states of the euro area which
will also discuss these issues. It is
about convincing all the market
WHAT CHALLENGES DOES THE UK LABOUR MARKET FACE?
MICHAEL SAUNDERS | CITI
“ “
Last week’s BCC survey implied that
there is less labour market slack than would be
expected given the surge in the jobless rate. The
share of firms reporting recruitment difficulties
also rose slightly. It is possible that the shift
towards export-oriented manufacturing is
exacerbating skill mismatches.
HOWARD ARCHER | IHS GLOBAL INSIGHT
There are likely to be significant job losses in private firms supplying services or goods to the public sector.
Many will try to meet any increase in business through greater use of existing workers or use of part-time staff. They are
likely to be reluctant to take on any more permanent staff unless they are convinced of a sustained improvement.
forces beyond the European institu-
tions, which will have a determining
role to play.
“One of the lessons of the sovereign
debt crisis that we have learnt is that
the referee is not only the European
institutions; there are other referees in
the game that play a major role... the
rating agencies, the market players.”
Cowen wrote to the leaders of the
main opposition parties on
Wednesday inviting them to talks
about a possible consensus on how to
tackle the worst budget deficit in the
European Union.
Economics 17
Employers now
starting to hire
again.
Picture:
Micha Theiner/
CITY AM
By Jessica Mead
IAN JERMIN | MERCHANT SECURITIES
The recovery in demand for staff during
2010 has been stronger than expected. But there
is little correlation between GDP growth and
demand for staff. More important is the general
level of confidence, both corporate and consumer,
and this has been deteriorating over
recent months.
of Weber on bond buying
▲
WORLD ECONOMY
whelming majority,” he said, accord-
EUROPEAN Central Bank (ECB) presi- ing to an English transcript of the
dent Jean-Claude Trichet has taken interview published on the ECB’s web-
issue with recent comments on ECB site. “This non-standard measure, like
policy by Bundesbank chief Axel all other such measures, was designed
Weber, saying they did not represent to help restore a more normal func-
the views of the central bank’s govern- tioning of our monetary policy trans-
ing council. mission mechanism. And we are
In an interview with an Italian withdrawing all the liquidity, euro for
newspaper yesterday, Trichet said the euro, that is supplied through this pro-
governing council as a whole did not gramme,” he said.
agree with Weber’s remark last week He also struck a less hawkish note
that the ECB’s government bond-buy- on interest rate policy than Weber, an
ing programme had not worked and influential member of the governing
should be scrapped. council and one of the top candidates
“No! This is not the position of the to take over when Trichet’s own ECB
Governing Council, with an over- term expires next year.
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 18 News
Tax deal has yet to be agreed
▲
TAXATION
BY HARRY BANKS
GERMANY and Switzerland have
rejected a report they had agreed to a
landmark tax deal that would reap
€30bn (£26.2bn) from tax evaders but
said they still aimed for a deal this
month. Germany, along with Italy,
the US and France, has been one of
the most fervent critics of
Switzerland’s banking secrecy laws.
Berlin has paid for stolen data from
Swiss banks to catch tax cheats and
raided the German offices of
Switzerland’s number two bank
Credit Suisse.
Aim needs UK
companies to
aid recovery
▲
STOCK MARKETS
BY MARION DAKERS
THE ALTERNATIVE Investment Market
(Aim) is showing signs of a revival, but
the junior market needs to attract
more UK-based firms to support this
return to growth, according to
research out today.
The market has raised £2.8bn in the
first eight months of 2010, said busi-
ness advisory firm
PricewaterhouseCoopers (PwC) in a
report released today, though the
number of firms incorporated in the
UK is now below 1,000 for the first
time since 2004.
Fewer than 100 companies have
joined the market so far this year,
down from a peak of 500 in 2005.
However, PwC claimed these drops
are signs of a new vigilance in the mar-
ket, which has prevented unsuitable
companies from listing. “The big test
of this prudent resolve and with it
Aim’s credibility will come when
growth begins to accelerate again,’
said Simon O’Brien, a partner at PwC.
Around one in six newly-listed busi-
ness are from overseas, compared to
around a third before the downturn.
“[What] is clear is that Aim can no
longer rely on an international pres-
Astaire Securities sold off to Canada’s
Northland Capital Partners for £2.45m
▲
FINANCIAL SERVICES
BY VICTORIA BATES
EMBATTLED stockbroker Astaire on
Friday agreed to divest itself of its
main Astaire Securities division for
£2.45m, bringing to a close a tumul-
tuous period for the group which
included the failed takeover of rival
Hoodless Brennan, directors’ resigna-
tions and a lawsuit against the firm.
Astaire sold the securities unit to
Canadian group Northland Capital
Partners (NCP) for £2m in cash and
Both the German and Swiss
Finance Ministries dismissed as “spec-
ulation” a report that finance experts
had agreed a withholding tax on
German assets hidden in secret Swiss
accounts that would yield €30bn for
Berlin public coffers.
“Speculation about billions flow-
ing back to the German tax authority
is completely unfounded,” said min-
istry spokesman Michael Offer.
Talks about solving the issue of an
estimated €200bn of untaxed
German wealth were constructive, he
added, but both parties had agreed to
maintain silence about the details.
“The working group has contin-
ence to drive it forward and will there-
fore need to renew its domestic focus,”
said David Snell, Aim market leader at
PwC.
Aim, which has raised £70bn in the
fifteen years since it began, has outper-
formed the FTSE index this year, in
part due to a return from a starker
drop during the recession. Aim All-
Share has gained 22 per cent in the
year to 30 September, compared to a 11
per cent rise in the FTSE All-Share.
Trades in the year to September
were worth £21.68bn, according to fig-
ures from by the London Stock
Exchange, suggesting trading value is
on course to match 2009’s level of
£33bn. However, trading volumes are
set to fall below 2009’s record high,
when 205.7bn shares changed hands.
PwC also claimed that Aim’s low liq-
uidity still means investors are more
likely to gain through a takeover than
share price movements.
IN THE 12 MONTHS TO
30 SEPTEMBER 2010: |
AIM 100 rose by 21%
AIM All Share rose by 22%
FTSE Small Cap rose by 4%
FTSE All Share rose by 11%
£450,000 to be placed into an escrow
account against the firm’s continued
eligibility for nominated adviser
(Nomad) status and against any war-
ranty claims or shortfall in the sale of
assets below their book value.
Edward Vandyk, who
took over Blue Oar last
year and renamed it
Astaire, resigned as
chief executive in May
ued to do its work. This will now go
to the level of ministers,” said Swiss
Finance Ministry spokeswoman
Tanja Kocher.
The two countries’ finance minis-
ters hoped to agree on the key points
of a new agreement by the end of
October, when Swiss finance minister
Hans-Rudolf Merz will leave office.
But German finance minister
Wolfgang Schaeuble had to be hospi-
talised for a month at the beginning
of October, putting question marks
on this time frame.
Offer said the countries were still
aiming to clinch the deal by the end
of October, “if possible”.
3i debates offloading stake in Norman
Foster’s indebted UK architecture firm
▲
PRIVATE EQUITY
PRIVATE equity provider 3i is under-
stood to be considering selling its
stake in architect Norman Foster’s
design house Foster & Partners.
3i is believed to have contacted
investment banks about a possible
exit, as one of the options it looks
into three years after buying the
stake. It is yet to appoint an adviser
and is considering other strategies.
It bought a 40 per cent stake in the
consultancy, which has designed
Astaire said that a lawsuit by Izodia
against Corporate Synergy Holdings
(CSH), an intermediate holding com-
pany within the group, had damaged
staff morale and client relationships,
both key to its business. The majority
of the £2m cash proceeds from the
sale will be retained by CSH pending
the outcome of the litigation.
Under new owner NCP, Astaire
Securities will be renamed and
chaired by current head of corporate
finance Stuart Lane. It is still adviser
and broker to over 40 Aim clients.
CEBR predicts £100bn in
QE and no rates change
▲
UK ECONOMY
NEW CEBR forecasts taking into
account Wednesday’s Comprehensive
Spending Review show growth slow-
ing in 2011 but increasing thereafter
as the recovery speeds up.
It has forecast growth of 1.6 per
cent in 2010, 1.3 per cent in 2011, 1.4
per cent in 2012, 1.8 per cent in 2013
and 2.4 per cent in 2014.
Its forecasts include an additional
£100bn in quantitative easing and the
base rate of interest remaining at 0.5
London landmarks such as City
office building the Gherkin, for an
undisclosed amount in May 2007.
But Foster & Partners has faced a
challenging environment since, and
while estimates valued the business
at £300m in 2007, it had amassed a
debt burden of £340m by the year
ending April 2009.
It managed to reduce this to
£327m by the April 2010 year-end,
but interest payments dragged a
£25m underlying operating profit to
a pre-tax loss of £15m.
NEWS | IN BRIEF
Equitable Life prepares for payout
Mutual insurer Equitable Life is in discus-
sions with the government over the finer
details of the £1.5bn compensation pot
earmarked for the policyholders who lost
money when the firm nearly went under a
decade ago. It is not yet clear whether the
payout, which will be detailed in the com-
prehensive spending review later this
week, is to include distribution costs or
whether it is liable for tax.
Hermes pressures Infineon chair Court is likely to give its ruling on the
UK fund manager Hermes has upped the
pressure on management at German chip- BT’s pension fund and agreed when the
maker Infineon to put a succession plan in company was privatised in 1984. The pen-
place in the next fortnight, it emerged last sion fund’s trustees, who brought the case,
night. Hermes’ head of corporate gover-
nance Hans Hirt said the firm was worried and pensioners including those who joined
about speculation mounting that
CITYA.M. 18 OCTOBER 2010
per cent until at least late 2012.
The CEBR says that, given the nor-
mal margin of forecasting error,
these forecasts imply a one in ten
chance of negative growth for the UK
economy in 2011.
However, it remains confident that
the strength of emerging economies
will prevent a double dip recession.
The chance of negative growth in the
first quarter of 2011, directly after the
Vat hike, stands at 50 per cent, with
the CEBR forecasting growth of just
0.1 per cent.
Norman Foster’s
firm had become a
global brand by
2007
Picture: REX
Sales fell 13 per cent to £134m in
2010 and it set about a restructuring,
shedding about 400 staff.
Foster founded the consultancy in
1967, growing it into a global brand
with more than 1,000 staff in 18
offices worldwide by 2007.
The 3i deal was the group’s first
external equity sale, designed to
fund international expansion.
3i has assets under management
of £7bn and a host of investments
including Interflora, HSS Hire
Service and Travelex among others.
Infineon’s chairman Klaus Wucherer may
not propose a successor at the next share-
holder meeting early next year. Hirt sent a
letter to Wucherer outlining the concerns
and urging him to reveal a timetable for
his departure and details of the process.
BT to hear pension fund ruling
Telecoms giant BT will find out this week
the size of the bill the taxpayer would have
to shoulder for bailing out its pension fund
if the company ever collapsed. The High
scope of the Crown guarantee covering
claimed the guarantee covered all BT staff
the firm after 1984.
CITYA.M. 18 OCTOBER 2010
Portugal sees
no scope for
further cuts
▲
WORLD ECONOMY
BY HARRY BANKS
PORTUGAL’S finance minister said in a
newspaper interview yesterday he did
not know what additional austerity
steps could be introduced if market
scepticism about the country’s ability
to cut its deficit persists.
The minority Socialist government
included deep spending cuts and tax
hikes in the 2011 budget that it pre-
sented last week, but must win the
support of the opposition for the bill
to pass in parliament.
Finance minister Fernando Teixeira
dos Santos said in a separate TV inter-
view that Portugal would have to ask
for a bailout from the European Union
and IMF if the budget did not receive a
green light from parliament. He was
asked whether the austerity measures
in the budget would be the last and
replied: “I don’t see very well what else
can be done.”
“I hope and I am confident that
these (measures) will have an immedi-
ate impact,” he said. “But we have to
look at what is going on. Markets are
nearly insatiable over austerity meas-
ures of this kind.”
Portugal announced spending cuts
in May, but then came under pressure
from financial markets and Brussels to
do more. The risk premiums on its
bonds hit euro lifetime highs at the
end of last month on concerns about
its ability to cut the budget deficit. The
government is aiming to trim the
deficit to 4.6 per cent of GDP next year
from a projected 7.3 per cent in 2010.
Teixeira dos Santos said the biggest
concern in the markets was that the
measures contained in the budget
may not pass.
The opposition Social Democrats
(PSD), who object to tax hikes, have
remained silent on whether they will
back the budget in parliament. They
are expected to make their position
known after a meeting on Tuesday.
Failure to pass the budget would
likely lead to political paralysis and
send bond yields spiralling higher.
Kate Barker has joined Electra Private Equity as a non-executive director
Ex-MPC member Barker
takes private equity role
PRIVATE EQUITY
▲
BY VICTORIA BATES
FORMER Bank of England Monetary
Policy Committee member Kate
Barker has snapped up her second
high-profile corporate appointment
in just a few weeks, having agreed to
take up a role as a non-executive
director on the board of Electra
Private Equity.
Electra, which has investments in
household names such as insurer
Picture: PA
Esure and feminine hygiene group
Lil-lets, is this morning set to
announce the appointment of Barker
to its board, effective from November.
The move comes after Barker earli-
er this month accepted a post as a
senior adviser to banking giant Credit
Suisse. She stepped down from the
MPC in May this year after nine years
in the position.
Electra is chaired by Colette Bowe,
the chairman of communications
regulator Ofcom.
News 19
Chemical giant
boosts profits
in third quarter
PETROCHEMICALS
▲
SAUDI Basic Industries Corp (SABIC)
beat forecasts with a 46 per cent rise
in third-quarter profit on higher plas-
tic and petrochemical sales, and
looked set for at least the same profit
level in the fourth quarter.
The world’s largest chemical firm
by market value made a net profit of
5.33bn riyals (£889m) in the three
months to 30 September, up from
3.65bn riyals a year earlier, and
5.02bn riyals in the second quarter.
SABIC’s earnings are a yardstick for
rivals such as Dow Chemical and
Germany’s BASF.
The earnings exceeded by close to
five per cent the 5.09bn riyals average
forecast by analysts earlier this
month.
“We benefited from a rise in prices
in the second quarter and the first
month of the third quarter... Prices
rose in the last two months of the
third quarter as oil prices rose...
Demand was stable on a global level,”
said chief executive Mohamed Al-
Mady.
High oil prices are positive for
petrochemical firms because they
increase petrochemical product
prices, and SABIC usually does better
in terms of profitability than rivals
because it purchases feedstock at
lower prices.
 20 News CITYA.M. 18 OCTOBER 2010

Investors want clarity on tax and regulation

industry. The City understands and
fully supports the government’s com-
mitment to cutting the fiscal deficit.
However, whilst increasing taxes and
cutting spending will raise vital funds
in the short-term, such measures do
not provide long term answers.
The only way to generate a strong,
CITY OF LONDON COMMENT sustainable and diverse economic
STUART FRASER recovery is to ensure UK plc is globally
competitive and to provide the requi-
site support for our leading industries.
dictability of the UK tax regime is hav-
ing a significant impact on percep-
tions of those who make the decisions
as to where to base new, or expand
existing, operations.
We have reached a tipping point.
Some financial firms have already left,
citing recent tax increases as the over-
whelming factor in their decision.
Many others are simply planning to
put their best people, those generating
the business, elsewhere.
with lower taxes than Switzerland.
There are however few places with a
more predictable tax regime; and
here-in lies the major attraction.
The government has said it wants to
put in place a competitive tax regime –
we all support that aim. But we must
also create a perception that the UK
wants business to be based here and to
flourish here. We need a change in the
political rhetoric from one of a nega-
tive attitude to high earning individu-
sage to those who would like to invest
in the UK but are deterred by the
unpredictability of the tax and regula-
tory regime. The government has sent
a positive message with regards to
Corporation tax we also need similar
messaging on other aspects of our tax
regime.
Of course given the fiscal back-
ground nobody expects immediate
action but setting out a direction of
travel and providing guarantees on

A
HEAD of this week’s This report – produced on behalf of
Comprehensive Spending the International Regulatory Strategy
Review, the City of London has Group (an organisation that helps
published a report looking into shape international regulation, led by
the predictability and competitiveness the City of London in partnership with
of the UK tax regime and how this TheCityUK) – shows that the uncer-
impacts upon the financial services tainty of interpretation and the unpre-
Although the scale of overall tax
burden is obviously a key considera-
tion, the top priority must be to restore
the perception of predictability and
certainty that has for so long under-
pinned the UK tax regime.
After all, there are many centres
als to a focus on the wealth created
and the taxes paid to our Treasury.
If we are to achieve our shared objec-
tives of delivering fiscal balance whilst
also helping to create new jobs across
the country we need a joined up
approach that sends out the right mes-
predictability will certainly help our
competitive offering with regards to
international firms as well as UK-based
firms based who are growing their
international business.
Stuart Fraser is Policy Chairman at the
City of London Corporation.

Enel IPO could BEST OF THE BROKERS

ANALYSIS l Barclays
350 p
285.00
ANALYSIS l Tesco
450 p
1,389.00
14 Oct
ANALYSIS l Carrefour
42 €
38.51
15 Oct

signal return
15 Oct
330 40
430

310 38
410

290 36

of fundraising
390

270 34
19 Jul 6 Aug 26 Aug 16 Sep 6 Oct 19 Jul 6 Aug 26 Aug 16 Sep 6 Oct 19 Jul 6 Aug 26 Aug 15 Sep 5 Oct

BARCLAYS TESCO CARREFOUR

According to Evolution, the UK is most likely Shore Capital says that with annual trading S&P Equity Research maintains its strong sell
to follow Switzerland and implement higher profit growth of around 10 per cent fore- recommendation. The broker sees greater
▲

ENERGY
BY HARRY BANKS
ITALY’S Enel has valued its green
energy arm at up to €10.5bn (£9.1bn),
putting it on track to launch
Europe’s biggest IPO in three years
and signalling a possible recovery in
equity issues.
Enel, Europe’s most indebted utili-
ty, said it expects to bank up to
€3.4bn from the listing of Green
pick-up in European equity issuance
which had seen a sluggish first half
of the year, when a run of IPOs were
postponed or had their targets cut,
but investors continue to drive hard
bargains.
Investors have welcomed EGP’s
diversified energy mix, strong cash
flow and broad geographic footprint
but expressed concern about slower
growth versus peers and still fragile
minimum Core Tier 1 ratios. Barclays will
have a roughly 8.7 per cent Core Tier 1 by
2012: if the “UK finish” is a 10 per cent ratio,
Barclays will be £7bn short of capital. The
broker warns a “deal-cum-rights-issue” is the
most likely option but it could be very dilutive.
cast in the medium term, coupled with the risk to the downside, believing it is 12 months
ongoing extraction of working capital ben- away from seeing tangible evidence of opera-
efits and the continuation of the sale and tional initiatives working. S&P says it has
lease programme, its analysis points to operationally deteriorated, with its focus
Tesco being an increasingly cash generative back on France leaving the 25 per cent P/E
business. It says “buy”. multiple premium to peers unwarranted.
To appear in Best of the Brokers email your research to notes@cityam.com

Warning over Blackberry timewasting

Power (EGP), which it will use to cut
its debts and protect its credit rating.
However, Enel cut its price target
on Friday to €1.8-€2.1 a share from a
preliminary range of €1.9-€2.4 a share
and investors said the new valuation
remained ambitious, with one pledg-
markets, clamouring for a discount.
They worry that cash-strapped states
could slash crucial support for green
energy.
Selling EPG shares at the top end
of the range would value it just about
in line with peers, with an enterprise But bosses are now beginning to downgrade their staff’s company
▲

ing not to apply for shares in the IPO
but wait until after the float and buy
them more cheaply on the market.
“We have given our views to
bankers dealing with the IPO and
this pricing is way too high... It will
be tough to get institutional
investors into this deal at this price,”
one European fund manager said,
asking not to be named.
The deal comes on the heels of a
value of just over 10 times core earn-
ings, Thomson Reuters data show.
At €1.8 a share, EPG’s enterprise
value would drop to 9 times EBITDA,
well below its peers. Enterprise value
is the value of a company’s shares
plus its net debt. According to Enel
the unit’s P/E 2009 multiple at €1.8 a
share is 19.9 times compared to 27.7
times for IBR and 31.7 times for
EDPR.
COMMUNICATION
BRITISH bosses are banning
Blackberries and other smart-phones
over fears they cost more in lost pro-
ductivity than they gain, according to
employment law experts.
Employers initially rushed to buy
smartphones for staff as they allow
users to send and receive emails
when away from the office – keeping
them in contact at all hours.
turn their backs on the devices,
including Apple’s iPhone, for fear
that the amount of time staff waste
on them when they should be work-
ing far outweighs the benefits of 24
hour access to e-mails.
Peter Mooney, of Employment Law
Advisory Services, said the curse of
the “Crackberry” – so named for its
addictive quality – started a run earli-
er this year on employers looking to
mobiles. Many worried the change
might constitute a change in their
remuneration package.
He said: “What started as a trickle
is certainly building up to a stream as
more and more employers start look-
ing at what they really need from
their employers.”
The distraction of social network-
ing sites and internet shopping were
among the drawbacks, he said.

CITY MOVES | WHO’S SWITCHING JOBS Edited by Victoria Bates in association with

ICAP
The inter-dealer broker has appointed Iain
Torrens as group finance director, after incum-
bent Matthew Lester, pictured, said he would
leave to take up a role as the next chief finan-
cial officer of Royal Mail.
Torrens joined ICAP in 2006 and has been
group financial controller since July 2008.
Lester, who also formerly held senior finance
roles at drinks giant Diageo, will join Royal Mail
after ICAP’s half-year results on 17 November.
JO Hambro Williamson to its board as non-execu-
The investment management firm has tive directors.
appointed Jim Leng and Sir Brian Leng is currently the European chair-
man of US private equity group AEA
and sits on the board of Russian oil and
gas group TNK-BP and French engi-
neering firm Alstom.
Williamson has 40 years of experi-
ence in the banking and investment
industry, having formerly established
and chaired the London International
Financial Futures Exchange for many
years. He is a non-executive at HSBC
and also spent 12 years as a director of
the FSA.
Lincoln International
The mid-market investment banking
group has hired Jonathan Broome to
lead its newly-launched UK debt adviso-
ry business, effective from January
next year.
Broome joins from DC Advisory (for-
merly Close Brothers Corporate
Finance), where he was a managing
director in the debt advisory group. His
experience includes advising Graphite
Capital on its acquisition of U-POL from
AAC Capital, advising LGV on its acqui-
sition of Snow & Rock, and advising
Warburg Pincus on its acquisition of
Survitec from Montagu Private Equity.
Ernst & Young
The accountancy firm has hired a new
partner to lead its advisory practice in
Scotland.
Stephen Farrell joins from consulting
and business services group Mouchel,
where he was managing director of the
international consulting business, advis-
ing on business transformation pro-
grammes across a number of industry
sectors, including government, utilities,
life sciences and financial services.
Stephenson Harwood
Sara George has joined the law firm’s
financial services contentious regulato-
ry practice as a partner.
She was previously at Allen & Overy,
specialising in advising clients under
investigation by the Financial Services
Authority and the Serious Fraud Office.

To appear in CITYMOVES please email your career

updates and pictures to citymoves@cityam.com SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT +44 (0)20 7557 7245
morganmckinley.com
CITYA.M. 18 OCTOBER 2010
China’s Mr Private Equity explains
the new frontier’s hopes and risks
China’s planners are
riding high, but here
comes the next great
experiment with the
free market economy
V
ICTOR ZHIKAI Gao is staying at the
Langham Hotel, down the road
from the Chinese Embassy. Just off
a plane from Beijing, and sipping
green tea to stay ahead of his jet lag, he is
in London to brief an investment bank on
China’s rapidly developing private equity
sector. Although jaded, he manages to be
simultaneously charming and provoca-
tive.
Gao started life as a diplomat, so he feels
at home close to the Embassy on Portland
Place. Between 1983 and 1989 he worked
as an interpreter to Deng Xiaoping, before
being posted to the United Nations
Secretariat in New York. “I was in London
in 1985 with the Chinese Premier when
Margaret Thatcher was your Prime
Minister. I met your Queen.”
He has spent the last two decades work-
ing in business. A former China policy
adviser to the Hong Kong Securities and
Futures Commission (1999-2000), he is cur-
rently an executive director of the Beijing
Private Equity Association, he chairs an
investment firm, and he is director of the
China National Association
International Studies, a think tank affiliat-
ed to the Ministry of Foreign Affairs.
Despite his international experience,
Gao retains a distinctly Chinese perspec-
tive. He is a regular guest on CNN and BBC
because of his ability to explain Beijing’s
true intentions to western audiences. He is
back in London to talk about what he calls
“the next step in China’s experiment with
the market economy”. China’s financial
sector has come a long way. “In the 1970s
we didn’t have any commercial banks. In
the 1980s we didn’t have a stock market.
This year the Agricultural Bank of China
was floated on the Shanghai and Hong
Kong Stock Exchanges for $20bn
(£12.45bn). Onshore,” he emphasises. “No
US involvement whatsoever. Not long ago
this would have been unthinkable.”
For the Chinese, geopolitics and busi-
ness are interdependent; and at the heart
of this is an obsession with America. Gao
reminds me that Goldman Sachs has pre-
dicted China could overtake America as
CV | VICTOR ZHIKAI GAO
Age: 48
Education: Bachelor's degree from
Soochow University (Taiwan); Master's
degree from Yale University; J.D. from
Yale Law School.
Career: Gao served with the Chinese
Foreign Service in Beijing and at the
United Nations, and was an English inter-
preter for the late Deng Xiaoping. He has
held senior positions with Morgan Stanley
(like Goldman Sachs, one of the few west-
ern banks allowed to operate on the main-
land), PCCW and CNOOC, where he served
as a senior vice president, general counsel
and company secretary. He is a former
China policy adviser to the Hong Kong
Securities and Futures Commission. He is a
regular guest on CNN and the BBC.
WORDS BY ALEX HICKMAN
of
the world’s largest economy as early as
2027. He concedes that China will remain
the junior power: its per capita GDP a frac-
tion of America’s, and still no match for
America’s military power. But the
prospect is nonetheless a distracting one
for China’s elite, and Gao suggests that
many in the Chinese leadership worry
whether Washington will stand idly by.
We track back to 1978, when Deng
Xiaoping realised that China couldn’t get
rich on its own and began to open the
economy to foreign capital. Since then,
Gao argues, China has survived a series of
challenges which have left it stronger and
increasingly self-confident. In 1989, the
Chinese Communist Party survived the
collapse of the USSR, becoming the
world’s leading communist regime. In
1997-1998 the Asian financial crisis
washed up against the Chinese economy;
when the waters receded China was left
relatively stronger than its neighbours.
And then there was the global financial
crisis. “This time it was the blue chips
which suffered tragedy” says Gao, shaking
his head. “The US, UK, Germany!” He
accepts that China suffered seriously too,
but argues that the swift action taken by
the Chinese state compares favourably
with western governments.
“In America the banks and the govern-
ment were waving their dirty washing in
public. In China the state just got on with
it”. China’s bank managers received
phone calls at the height of the crisis giv-
ing them a deadline in which to lend as
much as quickly as they could, prioritising
China’s stressed manufacturing base. The
crisis left Beijing feeling vindicated that
The centre of gravity state intervention, Chinese style, trumped
for Chinese equities capitalism’s invisible hand.
will move to Shanghai Two years on, and China’s otherness is
and Beijing demonstrated by its $2.5 trillion of forex
reserves. “Our banks and insurance com-
Picture: panies are sitting on huge amounts of
REUTERS money and they want somewhere more
attractive to invest it”. Which brings us to
private equity. Companies like China Life
Asset Management with RMB1.5 trillion
(£140.65bn) under management and the
Social Security Fund, a national pension
fund managing RMB0.8 trillion, will short-
ly be allowed to invest 5 to 20 per cent of
their cash in private equity funds.
There has been venture capital and
some private equity in China since the
early 1990s, when international firms
arrived to pursue emerging technology,
media and telecommunications (TMT)
opportunities. The model was American,
China was the playing field and the exits
Domestic and were all offshore (there are 125 mainland
Chinese companies listed on NASDAQ).
international Few Chinese entities bothered to under-
stand the intricacies of the underlying
markets are structure and the modus operandi of pri-
vate equity funds. Now US and European
integrating. firms are coming to China to fundraise as
they build out their international and
China will be Chinese portfolios, and China is regarded
as private equity’s new frontier. The
one of the Beijing Private Equity Association has
more than 100 members. Similar organi-
world’s top sations in Shanghai and Tianjin have over
100 members between them. Around 80
private equity funds are headquartered in Hong Kong;
their fund managers commute to the
centres. mainland to avoid China’s 30 per cent
income tax rate. But Gao expects the cen-
Interview 21
I was with
the Chinese
Premier in
London in
1985, when
Margaret
Thatcher was
PM. I met
your Queen.
tre of gravity to move to Beijing and
Shanghai: “if you are based in Hong Kong
you may struggle to raise a renminbi
fund; you will miss opportunities.”
What we are beginning to see, explains
Gao, is private equity with Chinese charac-
teristics. China’s abundant and liquid cap-
ital is unique, as are the many, constantly
diversifying investment opportunities:
consumer products, TMT, health, educa-
tion. “And just about anything with the
potential to grow a nation-wide franchise”
he adds. “As China’s domestic market just
keeps growing, and there is increased inte-
gration of domestic and international
markets, China will become one of the
world’s top private equity centres.”
Before I leave him to sleep off his jet lag
we touch again on geopolitics. I ask Gao
about the pressure on Beijing to allow the
renminbi to appreciate. “It will clearly be
in China’s interests to one day have a fully
convertible currency” he concedes, but
not yet. “In China we are good at building
walls, and China is not yet ready to reduce
the walls around its economy.” Gao tells
me about an op-ed he has just read, which
estimates the massive economic, geopolit-
ical and military price the US would pay if
the dollar ceased to be the world’s reserve
currency. “Isn’t that the inevitable conse-
quence of appreciation?” asks Gao, fixing
me with an owlish stare. “Why would this
be in America’s interests?” And it strikes
me that history’s emerging winners in the
East are just as confused about what the
future holds as us has-beens in the indebt-
ed, anxious democracies of the West.
Alex Hickman was a foreign affairs adviser to
David Cameron, 2006-2007.
 22 Business Feature CITYA.M. 18 OCTOBER 2010

Enter the corporate entrepreneur:

Britain’s best hope for real recovery
Big companies need
innovators to build
their future success,
and innovators need
the freedom to grow

CO-FOUNDER, MARKET GRAVITY

PETER SAYBURN

T
HE UK’S recovery from the deepest
recession in eighty years is depend-
ent on sustained private sector
growth. Corporate earnings may be
recovering, but too much is due to cost
cutting, not real growth, and this trend is
not sustainable.
Recent analysis from Market Gravity
illustrates that while 75 per cent of FTSE
100 companies posted double-digit profit
rises last quarter compared to a year ago,
only 35 per cent of these firms grew rev-
enues by more than 10 per cent during the
same period. British executives are relying
on efficiency measures to prop up poor
sales; this will not translate into future
shareholder returns.
Enter the corporate entrepreneur. I am
not talking about obnoxious contestants
from The Apprentice or the millionaire
tycoons on Dragons’ Den. Corporate entre-
preneurs can be found in the corridors
and meeting rooms of all of our largest
companies. They are the unsung heroes of
British business and they are building the
foundations of our recovery.
There are five major benefits that corpo-
rate entrepreneurs bring. First, they speed
up the core business, delivering results
faster and with greater customer focus.
Second, they help to create the future
business, finding effective ways to enter
new markets without exposing the com-
pany to excessive risk. Third, they inspire
talent and change cultures, drawing in
exceptional people with similar mindsets.
Fourth, they have an unrelenting focus on
customers, are intuitive about what mat-
ters and often act as the customer champi-
on. Finally, they take full accountability
for delivering results, acutely aware of the
commercial dynamics of their business.
As a co-founder of business growth con-
sultancy Market Gravity, I have worked
with dozens of corporate entrepreneurs in
companies such as Lloyds Banking Group,
npower, Barclays, Centrica and RBS and I
believe passionately in the positive role
that they play.
For example, Andy Hulme is exploiting
consumers’ lack of confidence in major
lenders by launching mortgages at Tesco
Bank. If his team can satisfy the FSA’s
and entrepreneurial approach. There are
thousands of aspiring business-builders in
UK corporations, but all-too-often large
companies make it difficult for them to
fulfil their potential.
These people have the determination
and talent to overcome internal barriers
and unlock the inherent strengths of a big
business. Organisations need to create the
environment for them to excel. This often
means separating new ventures from the
core business to give them the freedom to
grow. It is incredibly difficult to build a
new business in an adjacent market if
your focus is on hitting this month’s sales
targets.
Defying Gravity is fictional but is also
punctuated with real-life insights and
advice. We’ve tried to make it both enter-
taining and brutally honest. We wanted to
illustrate the human side of business and
inspire others to take on ambitious new
challenges. The trials of our hero will be
familiar to anyone who has battled to
deliver a new project in a big company.
In our story, lead character Tony Sharp
is tasked with turning round a struggling
CHECKLIST: ARE YOU A CORPORATE ENTREPRENEUR?
See if you have the right traits to be an effective Corporate Entrepreneur
q It’s more important to lead my own project than receive a job promotion
business unit in a major telecoms compa- Gideon Hyde (L), Peter
ny. Six weeks into the job, his division is Sayburn and Polly
under threat, his staff won’t take responsi- Courtney (R), authors
bility and his attempts to improve efficien- of Defying Gravity
cy have had little effect. He soon realises
that a more radical approach is
required… But can he convince
those around him to take the
risk?
Back in the real world, the
bigger question is whether the
thousands of managers in
companies across the UK can
do the same. I believe that in
the face of global competition,
they have no choice.
The UK’s recovery is
dependent on the success of
corporate entrepreneurs. No
longer can large companies
rely on cut-backs to prop up
their profits; they must seek
new revenue streams to
remain competitive and secure their
future.
Defying Gravity launches tomorrow, pub- BUSINESS HEROES | REAL-LIFE CORPORATE ENTREPRENEURS
lished by Troubador, £8.99.
l RACHEL SHERIDAN
Sheridan established new ways of working at game-changing
fashion retailer Cocosa, a Bauer Media brand.
Mantra: “Think like a competitor”
Sheridan advises: “Once you’ve dealt with the internal politics and
got the board onside, think like a start-up because that’s who
you’re going to be competing with.”

tougher line on authorisations, they will

start lending in the first half of 2011. By
designing products that are “simple, trans-
parent and reward customer loyalty”,
Hulme and team aim to challenge the big
four and become a full service retail bank.
Our experience has now inspired us to
q I find ways to get around internal barriers rather than working within the rules
q
I’m happier when mapping out the direction than I am when getting into the detail
q I’m more interested in leaving a legacy than in climbing the corporate ladder
l LEE CLARKE
Clarke oversaw the creation of npower hometeam, the energy
company’s new home service business.
He is now General Manager of Forewind, a joint venture that is
building the world’s largest off-shore wind farm in the North Sea,
with the potential to generate 10 per cent of the UK’s energy.

l VEERA JOHNSON
q
join forces with author Polly Courtney, to
write Defying Gravity, a business novel I persuade others to help me work on problems rather than going it alone Johnson led a self-selecting group of hard working risk-takers to
that charts the journey of a new venture build ProcServ, a spin-off from PA Consulting.
inside a FTSE 100 company and celebrates
the role of the corporate entrepreneur.
q I get impatient when things don’t happen fast enough rather than remaining calm and collected
Mantra: “No rules, no rank, no status”
When something needs to be done, the whole team just get stuck
Coming out of recession, it is vital that in together to solve the problem.
our largest companies apply an innovative The more boxes you ticked, the more likely it is that you are a true corporate entrepreneur.
 Markets&Investment
23

LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk
Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p)
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A.B. Foods . . . . . . . . . . . . . . . .1042.00 –10.00 1096.00 790.00 Croda Intl . . . . . . . . . . . . . . . . .1471.00 –9.00 1540.00 692.00 Kesa Electricals . . . . . . . . . . . . .162.40 –2.60 172.40 98.45 Schroders . . . . . . . . . . . . . . . . .1480.00 — 1500.00 1056.00
Aberdeen Asset Man . . . . . . . . . .170.10 –1.70 172.80 111.00 Daily Mail ‘A’ . . . . . . . . . . . . . . . .520.00 –1.00 539.00 381.00 .LQJÀVKHU . . . . . . . . . . . . . . . . . .239.60* +0.10 255.00 196.50 Schroders N/V. . . . . . . . . . . . . . 1182.00 –7.00 1211.00 864.00
Admiral. . . . . . . . . . . . . . . . . . .1616.00* –10.00 1695.00 1003.00 Dana Petroleum . . . . . . . . . . . .1799.00 –2.00 1817.00 968.50 Ladbrokes . . . . . . . . . . . . . . . . .134.10* –1.60 164.60 114.60 Scot. & Sthrn Energy. . . . . . . . . 1112.00 –4.00 1206.00 1006.00
Aegis . . . . . . . . . . . . . . . . . . . . .128.20 +0.10 137.30 103.10 Davis Service . . . . . . . . . . . . . . .423.00* +6.00 442.30 356.00 Lamprell . . . . . . . . . . . . . . . . . . .365.20* +6.80 372.30 157.30
Afren . . . . . . . . . . . . . . . . . . . . . 114.70 –2.30 121.80 76.50 Debenhams . . . . . . . . . . . . . . . . .71.50 +0.60 90.00 51.95 Lancashire Hldgs . . . . . . . . . . . .570.00 –6.50 582.50 416.70 Scottish Mortgage. . . . . . . . . . . .650.00 –3.50 661.00 475.00
African Barr Gold . . . . . . . . . . . .570.00 +6.00 685.00 520.50 Derwent London . . . . . . . . . . . .1550.00* –28.00 1633.00 1174.00 Land Securities . . . . . . . . . . . . . .679.50* –4.00 743.50 543.00 SEGRO . . . . . . . . . . . . . . . . . . . .296.50 –2.80 389.90 244.00
Aggreko . . . . . . . . . . . . . . . . . .1680.00* +11.00 1686.00 727.50 Dexion Absolute . . . . . . . . . . . . .140.00 +1.20 148.00 131.20 Legal & General . . . . . . . . . . . . .104.10 –1.00 107.50 69.05 Serco . . . . . . . . . . . . . . . . . . . . .628.00* +3.50 656.50 491.20
Alliance Trust . . . . . . . . . . . . . . .347.20* –1.50 352.70 292.80 Diageo . . . . . . . . . . . . . . . . . . . 1124.00* –11.00 1176.00 951.50 Lloyds Banking Gp . . . . . . . . . . . .70.18 –0.29 79.15 45.30 Severn Trent . . . . . . . . . . . . . . .1334.00 –11.00 1404.00 939.50
AMEC . . . . . . . . . . . . . . . . . . . .1038.00 +1.00 1043.00 728.00 Dimension Data . . . . . . . . . . . . .120.00 — 125.50 68.75 Logica . . . . . . . . . . . . . . . . . . . .132.00* +0.60 149.10 100.80 Shaftesbury . . . . . . . . . . . . . . . .460.10 +2.90 465.00 348.00
Amlin . . . . . . . . . . . . . . . . . . . . .397.80 –3.20 437.60 350.80 Dixons Retail . . . . . . . . . . . . . . . .27.40 –0.70 39.75 23.07 London Stk Exchange . . . . . . . . .689.50 –10.50 949.50 540.50 Shire. . . . . . . . . . . . . . . . . . . . .1500.00 +16.00 1532.00 999.00
Anglo American . . . . . . . . . . . .2866.50 +3.00 3015.50 2153.00 Domino’s Pizza . . . . . . . . . . . . . .461.20 +5.40 484.70 278.20 Lonmin . . . . . . . . . . . . . . . . . . .1831.00 –5.00 2198.00 1344.00 Smith & Nephew . . . . . . . . . . . . .542.50* –8.00 700.50 525.50
Antofagasta . . . . . . . . . . . . . . .1307.00 –6.00 1344.00 755.50 Drax . . . . . . . . . . . . . . . . . . . . . .373.70* –4.40 478.00 321.50 Man . . . . . . . . . . . . . . . . . . . . . .264.00 +0.30 373.60 199.60 Smith(Ds) . . . . . . . . . . . . . . . . . .163.40 –2.10 168.20 103.00
Aquarius Platinum . . . . . . . . . . .383.40 –15.40 490.00 211.50 Dunelm . . . . . . . . . . . . . . . . . . . .470.00 –5.50 482.00 319.40 Marks & Spencer. . . . . . . . . . . . .412.50 +0.90 419.10 321.90 Smiths . . . . . . . . . . . . . . . . . . .1261.00 –13.00 1297.00 885.00
ARM Holdings . . . . . . . . . . . . . . .388.00 –0.20 419.50 143.00 Easyjet . . . . . . . . . . . . . . . . . . . .453.80 +3.20 499.90 339.80 Meggitt . . . . . . . . . . . . . . . . . . . .305.10 –6.10 331.00 229.80 SOCO Intl . . . . . . . . . . . . . . . . . .342.50 –2.00 510.00 340.00
Ashmore . . . . . . . . . . . . . . . . . . .376.10 –3.50 382.90 215.00 Edinburgh Inv Tst . . . . . . . . . . . .431.40 –0.70 436.20 338.00 Melrose . . . . . . . . . . . . . . . . . . .295.00 –1.00 302.00 160.00 Spectris . . . . . . . . . . . . . . . . . .1089.00 –21.00 1128.00 653.00
Astrazeneca . . . . . . . . . . . . . . .3322.50 –15.00 3389.50 2668.00 Electrocomponents . . . . . . . . . . .240.50 –1.10 251.00 144.80 Mercantile IT . . . . . . . . . . . . . . . .971.50* –8.50 1002.00 822.50
Atkins(Ws) . . . . . . . . . . . . . . . . .782.50 +7.50 801.00 532.50 EnQuest . . . . . . . . . . . . . . . . . . .130.40 –0.60 133.50 87.35 Michael Page Intl. . . . . . . . . . . . .486.50 –5.50 495.40 316.70 Spirax-Sarco Eng . . . . . . . . . . .1820.00* +14.00 1859.00 1060.00
Autonomy Corp . . . . . . . . . . . .1348.00 –41.00 2012.00 1278.00 Essar Energy . . . . . . . . . . . . . . .495.00 +1.20 510.00 358.50 Micro Focus . . . . . . . . . . . . . . . .385.00 –12.50 550.00 272.20 Spirent Comms . . . . . . . . . . . . . .143.60 –0.40 148.20 86.50
Aveva . . . . . . . . . . . . . . . . . . . .1399.00 –5.00 1504.00 856.50 Eurasian Nat Res . . . . . . . . . . . .942.50 +1.50 1276.00 801.00 Millen & Copthorne . . . . . . . . . . .565.50 +4.50 572.50 321.40 Sports Direct Intl . . . . . . . . . . . . .149.50 +1.50 154.30 89.85
Aviva . . . . . . . . . . . . . . . . . . . . .395.80* –2.80 469.90 290.20 Euromoney Inst Inv . . . . . . . . . . .597.50 –5.00 630.00 371.80 Misys . . . . . . . . . . . . . . . . . . . . .288.10 –0.70 298.00 196.60 SSL Intl . . . . . . . . . . . . . . . . . . . 1158.00 +1.00 1190.00 616.00
Babcock International . . . . . . . . .577.00 –4.00 660.50 489.00 Experian . . . . . . . . . . . . . . . . . . .707.50 +5.50 710.00 542.50 Mitchells & Butlers . . . . . . . . . . .306.90 — 343.90 228.30 St James’s Place . . . . . . . . . . . . .274.00 –0.50 298.00 203.40
BAE Systems . . . . . . . . . . . . . . .365.80 –0.70 389.90 288.10 Ferrexpo . . . . . . . . . . . . . . . . . . .348.60 –1.50 396.20 140.70 MITIE . . . . . . . . . . . . . . . . . . . . .199.10 +0.30 256.80 187.60 Stagecoach. . . . . . . . . . . . . . . . .185.00 +2.00 204.90 137.00
Balfour Beatty . . . . . . . . . . . . . . .266.40* –1.40 304.80 228.60 FirstGroup . . . . . . . . . . . . . . . . .374.50 +3.50 428.40 331.20 Mondi . . . . . . . . . . . . . . . . . . . . .546.00 +0.50 550.00 304.70 Standard Chartered . . . . . . . . . .1899.50 +11.50 1946.00 1366.50
Barclays . . . . . . . . . . . . . . . . . . .285.00 +5.05 394.25 253.40 Foreign & Col Inv Tst. . . . . . . . . .292.30 –1.20 297.20 248.70 Monks Inv Tst . . . . . . . . . . . . . . .331.40 –0.20 333.80 265.00 Standard Life . . . . . . . . . . . . . . .227.00* –7.60 238.00 170.00
Barratt Development . . . . . . . . . . .87.00 –1.10 172.50 86.40 Fresnillo . . . . . . . . . . . . . . . . . .1299.00 –12.00 1333.00 647.00 Morrison Wm . . . . . . . . . . . . . . .294.00* –1.50 307.10 255.00 SuperGrp . . . . . . . . . . . . . . . . .1096.00 +20.00 1312.00 499.00
BBA Aviation . . . . . . . . . . . . . . .196.40* –0.90 220.00 145.90 G4S . . . . . . . . . . . . . . . . . . . . . .266.60* –0.30 285.70 231.20 Murray Intl Tst . . . . . . . . . . . . . . .922.00* +3.00 930.00 720.00 TalkTalk . . . . . . . . . . . . . . . . . . .133.70 –6.10 153.80 106.60
Bellway. . . . . . . . . . . . . . . . . . . .586.50 +9.50 842.50 510.00 Genesis Emerging Mkts Fd . . . . .525.50 –7.50 536.00 370.00 National Express. . . . . . . . . . . . .234.20 –1.20 258.60 155.86 Talvivaara Mining . . . . . . . . . . . .528.00 –2.00 547.50 341.40
Berkeley . . . . . . . . . . . . . . . . . . .840.50 +0.50 948.50 735.00 GKN . . . . . . . . . . . . . . . . . . . . . .177.50 –2.10 183.30 100.40 National Grid . . . . . . . . . . . . . . .569.50 –5.00 607.65 474.80 Tate & Lyle . . . . . . . . . . . . . . . . .499.60 –2.90 509.00 388.00
BG . . . . . . . . . . . . . . . . . . . . . . 1167.50 –6.50 1248.00 966.90 GlaxoSmithKline . . . . . . . . . . . .1288.00 –14.50 1347.00 1088.00 Next . . . . . . . . . . . . . . . . . . . . .2253.00 +22.00 2360.00 1733.00
BHP Billiton . . . . . . . . . . . . . . .2199.50 –15.50 2346.00 1618.50 Great Portland Estates . . . . . . . .350.00 +0.80 368.60 236.60 Northumbrian Water . . . . . . . . . .338.00 –3.00 353.00 225.20 Taylor Wimpey . . . . . . . . . . . . . . .25.59 –0.34 46.34 24.29
BlackRock Mining . . . . . . . . . . . .686.00 +0.50 695.00 475.00 Greene King . . . . . . . . . . . . . . . .415.00 –4.60 484.00 372.50 Ocado Grp . . . . . . . . . . . . . . . . .125.00 +1.50 169.00 120.90 Telecity . . . . . . . . . . . . . . . . . . . .491.40 –5.60 546.00 323.50
BlueBay . . . . . . . . . . . . . . . . . . .375.70 — 393.00 251.00 Halfords . . . . . . . . . . . . . . . . . . .405.10 –12.30 562.50 370.10 Old Mutual . . . . . . . . . . . . . . . . .138.30* –6.90 146.90 95.30 Templeton Emrg Mkts . . . . . . . . .651.00 –4.50 657.50 455.00
Bluecrest Allblue GBP . . . . . . . . .171.50 –0.50 172.90 151.00 Halma . . . . . . . . . . . . . . . . . . . . .333.10 –0.10 345.50 218.40 Partygaming . . . . . . . . . . . . . . . .274.90 –2.10 339.70 205.80 Tesco . . . . . . . . . . . . . . . . . . . . .435.10* +0.85 454.90 368.40
Booker . . . . . . . . . . . . . . . . . . . . .53.50 –0.45 55.10 37.50 Hammerson . . . . . . . . . . . . . . . .419.00 –1.70 460.30 332.20 Pearson . . . . . . . . . . . . . . . . . . .993.00 +2.00 1069.00 791.50 Thomas Cook . . . . . . . . . . . . . . .187.30 –0.50 277.20 167.50
BP . . . . . . . . . . . . . . . . . . . . . . .425.45 –4.25 658.20 296.00 Hargreaves Lansdown . . . . . . . .450.00 –1.20 478.00 259.40 Pennon . . . . . . . . . . . . . . . . . . . .593.50 –6.50 616.50 440.40 Travis Perkins . . . . . . . . . . . . . . .860.50 –3.50 915.00 647.50
Brit Insurance . . . . . . . . . . . . . .1032.00 +2.00 1045.00 709.00 Hays . . . . . . . . . . . . . . . . . . . . . .122.70 –0.40 125.30 82.50 Persimmon . . . . . . . . . . . . . . . . .378.50 –3.70 520.00 335.90 TUI Travel . . . . . . . . . . . . . . . . . .224.20 –1.90 313.90 189.20
British Airways . . . . . . . . . . . . . .276.80 +3.10 280.00 172.40 Henderson . . . . . . . . . . . . . . . . .131.40 –3.10 157.80 112.10 Petrofac . . . . . . . . . . . . . . . . . .1455.00* –6.00 1492.00 900.00 Tullett Prebon . . . . . . . . . . . . . . .410.50 –2.60 436.20 261.20
British Amer. Tob . . . . . . . . . . .2416.00 –0.50 2446.50 1832.00 Heritage Oil. . . . . . . . . . . . . . . . .347.90 –5.10 585.00 295.90 Petropavlovsk . . . . . . . . . . . . . .1032.00* +5.00 1370.00 834.00 Tullow Oil . . . . . . . . . . . . . . . . .1255.00* –27.00 1375.00 979.50
British Empire Tst . . . . . . . . . . . .483.00 –2.20 490.60 338.50 Hikma Pharma . . . . . . . . . . . . . .741.50* –4.50 813.00 452.20 Phoenix Group . . . . . . . . . . . . . .686.50* +8.50 775.00 550.50 UK Commercial Prop. . . . . . . . . . .77.90 +0.30 84.90 71.00
British Land . . . . . . . . . . . . . . . .504.50* –1.00 515.00 416.00 Hiscox . . . . . . . . . . . . . . . . . . . .341.50 –5.90 371.60 299.60 Premier Farnell . . . . . . . . . . . . . .279.30* –0.70 283.80 140.60 Ultra Electronics . . . . . . . . . . . .1794.00 –13.00 1850.00 1198.00
Britvic. . . . . . . . . . . . . . . . . . . . .461.00 +0.70 518.00 341.50 Hochschild Mining . . . . . . . . . . .509.00 +2.00 516.50 220.00 Premier Oil . . . . . . . . . . . . . . . .1625.00 –29.00 1717.00 984.00 Unilever . . . . . . . . . . . . . . . . . .1818.00 –7.00 2024.00 1662.00
Brown(N.) . . . . . . . . . . . . . . . . . .282.20 +2.10 284.30 204.80 Home Retail . . . . . . . . . . . . . . . .221.20 +0.50 326.30 201.70 Provident Financial . . . . . . . . . . .806.00 –4.50 986.00 795.00
BSkyB . . . . . . . . . . . . . . . . . . . .707.00 — 732.00 521.00 Homeserve . . . . . . . . . . . . . . . . .481.70 –2.50 502.00 422.00 Prudential . . . . . . . . . . . . . . . . . .612.50 –6.50 665.00 475.70 United Utilities . . . . . . . . . . . . . .580.50 –4.50 620.00 429.00
BT . . . . . . . . . . . . . . . . . . . . . . .147.40 +4.20 153.00 108.40 HSBC Hldgs . . . . . . . . . . . . . . . .653.30 –9.00 766.80 595.20 PZ Cussons . . . . . . . . . . . . . . . .373.20 –0.80 383.00 231.70 Utd Business Media . . . . . . . . . .634.00* +3.50 656.50 408.30
Bunzl . . . . . . . . . . . . . . . . . . . . .768.00 –9.00 784.50 614.00 Hunting . . . . . . . . . . . . . . . . . . .640.00 –5.50 661.00 429.10 Qinetiq . . . . . . . . . . . . . . . . . . . .109.50 –1.90 179.10 103.50 Vedanta Resources . . . . . . . . . .2288.00 –14.00 2967.00 1795.00
Burberry . . . . . . . . . . . . . . . . . . .971.50 –16.50 1065.00 513.00 ICAP . . . . . . . . . . . . . . . . . . . . . .476.60 –1.30 481.60 291.70 Randgold Resources. . . . . . . . .6565.00 –30.00 6755.00 3930.00 Victrex . . . . . . . . . . . . . . . . . . .1301.00 –17.00 1355.00 726.50
Cable & Wire Comms . . . . . . . . . .53.20 –1.45 150.00 52.30 IG . . . . . . . . . . . . . . . . . . . . . . . .538.50 –5.00 550.00 291.00 Reckitt Benckiser . . . . . . . . . . .3466.00 +14.00 3667.00 2971.00 Vodafone . . . . . . . . . . . . . . . . . .167.00 +0.50 167.85 126.50
Cable & Wire Wwide . . . . . . . . . . .71.00 –2.45 94.80 60.05 Imagination Tech Gp . . . . . . . . . .425.80 –2.70 431.90 193.70 Reed Elsevier . . . . . . . . . . . . . . .554.50 +3.00 566.00 454.60 Weir . . . . . . . . . . . . . . . . . . . . .1583.00* +3.00 1614.00 639.00
Cairn Energy. . . . . . . . . . . . . . . .429.00 –11.40 497.60 306.80 IMI . . . . . . . . . . . . . . . . . . . . . . .828.50* –1.50 836.50 410.00 Regus . . . . . . . . . . . . . . . . . . . . . .86.90 +0.45 125.50 64.05 Wellstream Hldgs . . . . . . . . . . . .753.00 –5.00 810.00 429.70
Caledonia Invs . . . . . . . . . . . . .1770.00 +20.00 1772.00 1496.00 Imperial Tobacco. . . . . . . . . . . .1905.00 –5.00 2159.00 1728.00 Renishaw . . . . . . . . . . . . . . . . . 1188.00* +13.00 1215.00 479.00 WH Smith . . . . . . . . . . . . . . . . . .479.00 –1.00 551.00 392.20
Capita . . . . . . . . . . . . . . . . . . . . .794.50 +1.50 829.50 693.00 Inchcape. . . . . . . . . . . . . . . . . . .336.80 –2.90 347.00 235.00 Rentokil Initial . . . . . . . . . . . . . . . .99.80 –0.50 140.20 91.15 Whitbread . . . . . . . . . . . . . . . . .1687.00 +10.00 1697.00 1215.00
Capital & Counties . . . . . . . . . . .141.60* — 145.00 99.60 Informa . . . . . . . . . . . . . . . . . . . .425.60 –3.80 439.40 263.30 Resolution . . . . . . . . . . . . . . . . .253.80 +2.30 264.80 220.10 William Hill . . . . . . . . . . . . . . . . .164.20 –0.90 217.80 160.50
Capital Shopping Centres . . . . . .388.10* –1.80 533.50 300.10 Inmarsat . . . . . . . . . . . . . . . . . . .620.00* –14.50 831.00 535.50 Rexam . . . . . . . . . . . . . . . . . . . .322.40 –2.20 348.80 271.40 Witan Inv Tst . . . . . . . . . . . . . . . .476.70 –1.90 487.00 396.30
Carillion . . . . . . . . . . . . . . . . . . .343.80* +0.30 361.90 272.00 Intercontl Hotels . . . . . . . . . . . . 1172.00 +11.00 1244.00 762.50 Rightmove . . . . . . . . . . . . . . . . .767.50* +3.50 796.50 456.90
Carnival . . . . . . . . . . . . . . . . . .2572.00 –25.00 2937.00 1876.00 Intermediate Capital . . . . . . . . . .320.00 –4.10 331.50 233.50 Rio Tinto . . . . . . . . . . . . . . . . . .4143.00 +8.50 4165.00 2631.00 Wolseley . . . . . . . . . . . . . . . . . .1623.00 –10.00 1742.00 1155.00
Catlin . . . . . . . . . . . . . . . . . . . . .333.90 –0.30 394.60 303.20 Intertek . . . . . . . . . . . . . . . . . . .1866.00 — 1881.00 1136.00 RIT Capital Partners . . . . . . . . . 1132.00 –11.00 1215.00 940.00 Wood Group (John). . . . . . . . . . .436.30 –7.70 452.90 279.60
Centamin Egypt . . . . . . . . . . . . .179.40 –3.40 194.40 103.50 Intl Personal Fin . . . . . . . . . . . . .291.30 +0.60 310.00 181.40 Rolls Royce . . . . . . . . . . . . . . . .635.00 +7.00 643.50 434.50 WPP . . . . . . . . . . . . . . . . . . . . . .721.00* +5.00 744.00 528.00
Centrica . . . . . . . . . . . . . . . . . . .324.30* –3.40 347.00 236.30 Intl Power . . . . . . . . . . . . . . . . . .405.20* –0.20 408.60 248.20 Rotork . . . . . . . . . . . . . . . . . . .1812.00 –32.00 1906.00 1101.00 Xstrata . . . . . . . . . . . . . . . . . . . 1311.50 –30.50 1349.00 832.50
Charter Intl . . . . . . . . . . . . . . . . .783.50 +8.00 855.50 563.50 Invensys . . . . . . . . . . . . . . . . . . .305.00 –4.80 350.30 224.90 Royal Bank Of Scot . . . . . . . . . . . .46.40 +1.10 58.95 28.25 LONDON TOP 250 BY MARKET CAPITALISATION
Chemring . . . . . . . . . . . . . . . . .3019.00 –30.00 3711.00 2551.00 Investec . . . . . . . . . . . . . . . . . . .509.50 –3.00 565.00 411.50 Royal Dutch Shell A . . . . . . . . .1979.50 –8.00 2068.50 1621.00
Close Bros . . . . . . . . . . . . . . . . .759.50* +0.50 803.50 657.00 ITV . . . . . . . . . . . . . . . . . . . . . . . .66.70 +3.75 71.75 41.04 Royal Dutch Shell B . . . . . . . . .1926.50 –6.00 1997.50 1550.00 * Ex-Dividend † Suspended
Cobham . . . . . . . . . . . . . . . . . . .238.00* –1.90 278.60 205.50 Jardine Lloyd Thompson. . . . . . .576.50 –3.00 604.50 420.70 RSA Insurance . . . . . . . . . . . . . .131.80* –4.40 142.00 114.10
COLT Group . . . . . . . . . . . . . . . . 119.90 +0.50 144.20 107.70 Johnson Matthey . . . . . . . . . . .1926.00 +34.00 1926.00 1397.00 SABMiller . . . . . . . . . . . . . . . . .2059.50 –24.50 2091.50 1571.00 www.interactivedata.com

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Positive start forecast as rosy US results expected

bers from the US by way of the third- expected in the financial sector, with talk of QE2 and further pressure on
MARTIN ON quarter earnings season.
GFT is quoting the FTSE 100 index to
Citigroup results out today and Bank
of America, Goldman Sachs, JP Morgan
the dollar. Finally, commodity of the
week is likely to be cotton, with the

THEMARKETS open up 22 points from Friday’s close,

at a level of 5,725. The German DAX 40
is expected to open up 23 points at
and Wells Fargo also all due out later
this week, and the overall consensus
for the sector seems to point towards
futures at all-time highs on supply
fears as a result of poor weather and
strong demand from China.
6,515, and the French CAC 40 index is some expectation-beaters. Martin Slaney, Director, Global Dealing
forecast to open up 14 points at 3,841. Also expect more “Fed speak”, more Operations, GFT
Traders will have to contend with a
barrage of market influences in the ANALYSIS l FTSE 5,703.37 ANALYSIS l DAX
coming days. In addition to digesting 15 Oct 6,492.40
the news out from corporate America, 15 Oct
there are concerns over the banking 5,600
6,300
sector’s need to raise capital to cope
with new Basel III regulations, a la
Standard Chartered, as well as worries 5,400
MARTIN SLANEY over China reigning in spending, and
the on-going developments in the cur-
6,100

rency markets, and whether the pres- 5,200

B
LUE chips are set for gains on the ent international forex skirmishes
5,900
open this morning, as investors evolve into an all-out war of interven-
are expected to focus on the tion where everyone loses.
prospect of some healthy num- The largest earnings gains are 19 Jul 6 Aug 26 Aug 16 Sep 6 Oct 19 Jul 6 Aug 26 Aug 16 Sep 6 Oct
 24 Investment | Spread Betting
The Fed’s new
wave of easing
could help the
Vix rise higher
High price correlation should lead to a
surge in the fear index, says Juliet Samuel
S
HARP drop-offs in the volatility or
“fear” index of the S&P 500 sparked
a flurry of commentary last week
as the indicator fell 11.5 per cent
over one week to hit a six month low. The
index (known as the Vix) is calculated by
the Chicago Board Options Exchange
using data from a range of S&P put and
call options prices and is a measure of the
market’s expectations of volatility over
the coming month or “implied volatility”.
The index’s movement has prompted
some analysts to predict a rise based pure-
ly on its unusually low level. But there are
more concrete reasons why punters
should place a long bet on this measure
of uncertainty.
One is the sharp gradient of the volatil-
ity curve – that is, the price of volatility
futures contracts. In fact, the spread
between the volatility index’s spot price
and the price of a February contract
spiked to over 11 almost in tandem with
the Vix hitting its lows. This means that
although the markets might be calm
right now, those who hedge by buying the
Vix are anticipating a sharp rise in volatil-
ity over the coming months.
And there could also be a mathemati-
cal reason why the Vix should rise. In part
of a recent letter to investors, Artemis
Capital’s managing partner Christopher
Cole theorised a connection between
price correlation, volatility and quantita-
tive easing that he dubbed a “unified risk
theory”. According to the theory, the
influx of liquidity that the Fed is soon
expected to pump into the US markets
should also lead to a sharp rise in volatili-
AMPLIFY
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CITYA.M. 18 OCTOBER 2010
ty – but the timing of the events remains
uncertain.
Cole reasons that periods of high price
correlation between asset classes result
in greater volatility: “Correlations typi-
cally rise sharply with volatility during
financial crashes (like in 2008) as
investors panic and sell all assets result-
ing in less information being embedded
in prices”. Instead of buying based on the
individual pros and cons of an invest-
ment, investors either buy in “risk on”
mode (equities and commodities) or in
“risk off” mode (bonds and gold). This
means that an asset’s class, rather than in all asset classes rising together, with lit- A flood of cash could commodities, equities and bonds all ris-
fundamentals, determines whether it is tle differentiation for the quality of the boost volatility ing together over the last month. Coupled
bought or sold. asset in question. Of course, the timing with other sources of uncertainty such as
It is not only the cases that asset class- and scale of QE are not yet clear, but even Picture: GETTY currency wars and sluggish growth, high
es are more correlated than ever; large just the expectation of it seems to have correlations and QE should push the Vix
US equities are also more likely to move prompted a spending spree, with gold, up in the coming months.
in lockstep. The correlation of the stocks
that comprise the S&P 500 Index (pic- ANALYSIS l Implied S&P 500 Correlation Index
tured on the chart) has surged. This peri-
od of high correlation means that 80
investors are liable to buy and sell all at
Correlation (12 Months)
S&P 500 Index Implied
once, meaning it should fall off and rise
more unpredictably and more sharply. As 70
Cole writes: “The implied volatility of an
index, such as the S&P 500, is more sensi-
tive when the average correlations 60
between the components of the index are
greater.” 50
So how does this relate to QE? Cole sug-
gests that QE actively boosts correlations,
because when the market is flooded with 40
a one-time freebie of new cash (or when
an influx is promised), buyers immediate- Source: Artemis Capital Management
30
ly try to spend their money as quickly as Mar 07 Sep 10
Sep 07 Mar 08 Sep 08 Mar 09 Sep 09 Mar 10
possible before it is devalued. This results
OPEN AN ACCOUNT WITH GFT
AND WE’LL MATCH
5% OF YOUR DEPOSIT.*
Offer ends 31 December.
Get started now at gftuk.com.
CITYA.M. 18 OCTOBER 2010 Investment | Spread Betting 25

More QE will support the FTSE 100

UK equities ought to respond
well to any stimulus measures
in the US, writes Jessica Mead

S
INCE traders returned to work at the There’s further ground
start of September, the FTSE 100 to climb for the FTSE
index has been climbing steadily
higher. Having fallen to as low as Picture: GETTY
4,805 in early July, the blue-chip index is
now trading around the 5,700 mark and
there is every expectation among market
participants that equities could continue
to gain ground. However, spread betters
should not expect to make a fast buck
from going long on the FTSE 100. As
Capital Spreads’ Simon Denham says: “We
get to a new level and then spend a week or
two just meandering around until a piece
of news (generally from the United States)
takes us to a new region.” This has been
happening since about the middle of July.
But analysts are still positive about the
outlook for UK equities in spite of the risks
to the British macroeconomic environ-
ment. For example, Citigroup European
equity strategists maintain their target for
the end of 2010 of 6,000. This provides
almost 300 points of upside from Friday’s
closing level of 5,703.37. Spread betters
should be watching out for resistance lev-
els at 5,740-5,745 and then at 5,760-5,765.
Near-term support levels where stop-losses
could be placed are at 5,705-5,710 and at
5,680-5,685, according to Denham.
There are three reasons why the FTSE
100 should continue to rise despite the possibly here in the UK – is expected to sup-
uncertainty about Western growth. First, port asset prices. For a start, this “Bernanke reached parity. It looks likely to edge a little
and perhaps the most well known, is the put” will boost the market’s appetite for THE TIPSTER higher before selling pressure turns it round.
index’s exposure to emerging markets. risk. With bond prices suggesting that the WorldSpreads offers a one-point spread to
More than 70 per cent of FTSE 100 rev-
enues are generated overseas so the index
market is pricing in deflation, even a mod-
est uptick in price trends would have sig-
GOLD CLIMBS WHEN FED’S ordinary accounts and a zero-point spread to
platinum ones.
should – at least in theory – remain
resilient to any renewed downturn in the
nificant implications for asset allocation
and equities would be the biggest gainer,
BEN BERNANKE SPEAKS When IG Index started its grey market on
Betfair a week ago the quote was 1,250p-
domestic economic outlook. However, it says Morgan Stanley’s Graham Secker. 1,275p. But a buoyant equity market, bullish
has been increasingly clear that markets “The huge amount of liquidity sloshing sentiment from institutions and positive sen-
are still extremely sensitive to economic around the global financial system right timent among spread betters has meant

data and speeches and have the capacity to
surge or drop if the figures are not precise-
ly as expected. Ahead of Wednesday’s
spending review, this should be an obvious
risk to any long FTSE 100 trades.
Second, there are positive expectations
for the ongoing corporate earnings season
both this side of the Atlantic and in the US.
This should boost stock markets – or at
least minimise the downside risk by pre-
venting them from falling further.
Third, the growing likelihood of a sec-
ond round of QE – at least in the US and
now is predominantly sitting in bonds;
while this is understandable in a world
worried about deflation, such a position is
much harder to justify if investors start
worrying about rising, not falling, infla-
tion,” he explains. He concludes that if
inflation does ultimately starts to rise, it
will be good news for equities initially.
A poor earnings season or a Federal
Reserve U-turn on further QE could derail
equity performance, but in the absence of
these materialising, the FTSE 100 should
continue its climb in the fourth quarter.
G
OLD showed signs of a top last Friday
when it first broke a four-day uptrend
support, but it then shot higher when
Ben Bernanke spoke about the economy.
However, it failed to take out Thursday’s record
high of $1,387 and promptly dropped $15 to
$1,370. Spread Co offers a four-point spread on
spot gold of $1,373.4-$1,373.8.
Much like sterling-dollar a few years ago,
which broke through the $2.000 level and
wiped out numerous stops above before turn-
ing round, US dollar-Australian dollar has
that IG Index has revised its grey market
price upwards to 1,360p-1,385p.
Traders saw Autonomy plunge earlier
this month when they shocked the market
with a profit warning. But the stock is look-
ing oversold and could be due for a rebound.
Investors are eagerly awaiting third quarter
numbers on Thursday and any positive
announcement could be the catalyst to pile
back in. ETX Capital is quoting 1,376.6p-
1,381.4p for the daily rolling contract.
Donata Huggins

the currency. Consequently, countries lose

SPREAD BET their international independence and strug-
GURU gle to export successfully. This has been par-
ticularly relevant over the past few years
JOSHUA since China has kept its currency artificially
weak. This is why we have seen Japan and
RAYMOND other key export-dependent nations look to
MARKET devalue their own currencies to support
STRATEGIST growth prospects.
Many states are now seeing the act of
josh@cityindex.com devaluing their currencies as a new weapon
to boost their recovery efforts. On the plus
side it is making holidays to the US cheaper
for us Brits. The pound hit a new nine-month
high against the US dollar last week of just
below $1.61.

Q. Q.
Dear Josh, what exactly are these Dear Josh, just how important has
currency wars? the US dollar been for equity

Q.
markets? Gekko returns in the a cheaper US dollar makes these commodi- Dear Josh, I have read that City
new Wall Street film: ties more attractive. Mining and energy Index has partnered up with the

A.
The recent currency wars are essen-
tially a result of key governments
attempting to manipulate the
strength of their own currencies to suit
A.
Movements in the dollar have been
absolutely crucial for equity mar-
kets. Plot a chart of the US dollar
index and the FTSE 100 index side by side
Money Never Sleeps stocks have a key weighting on the FTSE 100 new Wall Street Money Never
Index, which means that they have a large Sleeps film. So what’s your favourite
influence over whether the blue-chip index Gekko quote?
rallies or falls depending on the strength on

their economic needs. The move by Japan
last month to sell a reported ¥2 trillion was
a prime example of this.
The currency wars are just one element
of a wider problem – low growth. A strong
currency poses a significant risk to exports,
which become more expensive the stronger
and you will note that there has been an
inverse correlation for a number of years
and this correlation has strengthened even
more so of late. This is because the strength
of the US dollar is one of the key drivers
behind demand for dollar-denominated com-
modities such as copper, gold or crude oil as
A.
their share prices. “Lunch is for wimps!”
The dollar has been severely weak of late,
with the US dollar index falling to a new 10-
month low just last week. This has therefore
helped to boost commodity prices and in turn You can learn more about the markets
the key energy and mining stocks on the and spread betting with Josh at his free
FTSE 100. City Index seminars.
 Lifestyle
26 CITYA.M. 18 OCTOBER 2009

| Travel

The past lives

on as Agatha
Christie’s top
hotel reopens
The completion of the Pera Palace revamp
was the biggest travel event of the year.
Zoe Strimpel went to Istanbul to celebrate

O
NCE you’ve been to Istanbul, Paris,
Berlin and even London seem some-
how paltry, a bit small-scale and
even a touch banal. The enormity
and seductiveness of the Bosphorous, espe-
cially at sunset, and the mesmeric mixture
of ancient history, Ottoman splendour and
Islamic architecture beguile every traveller.
Its appeal was just as strong for the most
discerning Victorians. And so in 1892 work
began on the Pera Palace, to house guests
who arrived in Istanbul off the Orient
Express, and was completed in 1895, when
a glamorous inaugural ball was held.
Indeed, the symbols of both the Orient
Express and the hotel are the same.
The Pera Palace is special. For one thing,
it was Agatha Christie’s choice when she
stepped off the train. Hemingway,
Hitchcock, Greta Garbo and the great and
the good of the British Empire favoured it
too, along with spies across the Orient. Its
appeal sprung from its exquisite refine-
ment, its Europeanness, with its high ceil-
ings, French paintings and elegant tea
salons. Known as the “oldest European
hotel” in Istanbul, the Palace boasts
Europe’s second elevator and Turkey’s first.
(The lift is a beautiful work of mahogany
and wrought iron that we rode quite com-
fortably settled on velvet benches, drawn
by a pulley anchored in the basement).
And, located with a jaw-dropping perch
over the Golden Horn (the city’s natural
harbour) in the heart the picturesque
Tepebaşı neighbourhood of Pera, no won-
der everyone who was anyone stayed there.
But what worked for the Victorians was-
n’t working for us. And so the Pera
Palace closed in 2006 for a refur-
bishment costing $29m, reopen-
ing on the first of September
this year, with 115 rooms and
16 suites. It still feels old,
almost antique and
absolutely oozing
grandeur (touches like the
sedan chair in the foyer
set the historical scene),
but also glossy. It is this
combination that gives it
a deeply fashionable touch
– the weekend we were
there, there was a celebrity
wedding held in the ball-
room, with Istanbul’s glitterati
swanning about in haute cou-
ture swilling champagne in front of
the paparazzi assembled outside.
Turkish Vogue has also already held shoots
and parties here.
Despite its modishness, this is historical
hostelry as it should be (The Four Seasons
Florence, set in a Medici palace, is another
archetype). It’s subtle but striking; muse-
um-like but not austere. Artfully placed
throughout the hotel are 300 pieces of orig-
inal furniture. My favourite exhibit (apart
from the sedan chair, which prompts fan-
tasies of a new kind of a decadent airport
pick-up) was the cabinet of Christofle silver
cutlery (5,000 pieces) used at the hotel’s
inaugural ball. Architecturally, the refurb
is stunning. The hotel’s extraordinary sex-
tet of indoor domes has been given a new
glass roof to let in more light and now
makes a beautiful place to
have afternoon tea. The
Grand Hall – which was
bombed during WWII –
glints with Murano chande-
liers, while marble and gold-
leaf embellish the heavily
guarded foyer. Mother of pearl-
inlaid bookcases are another fea-
ture throughout the hotel.
In the rooms are hand-woven
Oushak carpets, gold-embroidered bed-
spreads and heated marble showers. Rather
Clockwise from than catnapping after my early start, I
above: the Pera Palace opened the French doors to my balcony
exterior; the hotel’s and stepped onto a platform with a little
foyer, a guest room table and chairs from which I ogled the
and a vintage poster. expanse of river, houses and the mosques
of the old town. I could have stayed there
all afternoon.
Instead I went downstairs for a snack in
either the French patisserie or the Grand
Despite its modishness, this is historical
hostelry as it should be. It’s subtle but
striking; museum-like but not austere
Hall where a table with cakes and sand-
wiches took centre stage. We couldn’t resist
the majesty of the Hall so perched on some
richly upholstered sofas and commenced
to nibble and sip. There is an outdoor ter-
race, too, and although the weather was
impeccable, the Pera Palace sadly looks out
on a four-lane motorway that’s choked
with traffic from dawn till night so we
rejected it. (The rooms also look out on the
motorway but the ones in the back focus
the eye on the Golden Horn, not the road.
Beware some corner rooms which – howev-
er beautiful inside – stare straight at the
highway’s billboards, in a disturbing con-
trast with the hotel’s historical interior.)
Next came a stroll round the Pera area
with its hilly streets, trendy bars, music
shops and sleeping cats, and the famous
Medieval Galata tower is a five minute walk
from the hotel. Back at the Palace, we had a
sneak preview of the Ataturk museum in
room 101 where the founder of the mod-
ern Turkish Republic first stayed in 1917.
It’s filled with his clothes, an Indian tapes-
try said to predict the time of his death,
and newspaper clippings after his sudden
death in 1938 that brought actual tears to

HOTEL REVIEW | by Roger Baird HHHHH

The Oberoi – Mumbai the chance to rethink his 287-room hotel

perched on Marine Drive (where the city's
hotel’s courtly American general manager
Steven Kalczynski. “But the tragedy has given
beautiful people like to promenade), which us the opportunity to think deeply about how

T
HE GLEAMING five-star Oberoi hotel
has spent a lot of time and money try-
ing to forget the past.
The Mumbai landmark, a playground for
the megacity’s elite as well as foreign VIPs
like former US President Bill Clinton, was
reopened in April following an 18-month,
$40m renovation after being at the centre
of the Islamist terror attacks in November
2008.
Of the 170 people who were killed as a
result of three days of shootings and bomb-
ings across the city, 32 staff and guests died
at the Oberoi.
The nearby Taj Mahal hotel, also at the
heart of the attacks, decided to restore
everything exactly the way it was.
But Indian billionaire P.R.S. Oberoi took
overlooks the Indian Ocean.
Not only have the tastefully light and airy
rooms been revamped, but new air condition-
ing and IT systems have been put in between
the walls.
The hotel has also had to take more practi-
cal measures like installing bomb-proof win-
dows and increasing its daily security detail
from 25 to 65.
Many of the names and themes of the bars
and restaurants have also been updated to
reflect a more modern feel. The traditional
Kandahar is now an Indian nouvelle cuisine
eatery called Ziya, run by Michelin-starred
head chef Vineet Bhatia. And the international
restaurant in the foyer has changed its name
from Tiffin to Fenix, for obvious reasons.
“It sounds terrible to say this,” says the
we cater for our guests in the new century.”
Each of the 73 suites and all of the rooms
have their own butler assigned to them.
However, the service I received throughout
the hotel from the man who took my bags,
the barmen, waiters, pool attendants and the
chap in the business centre was always help-
ful and friendly.
The Taj has built a plaque to commemorate
the fallen; the Oberoi has not. The closest
thing it has is a new bright red piano, which
stands in the middle of its cream 14-storey
high atrium. They sometimes play jazz on it in
the evenings and after a few drinks it
becomes a frivolous symbol of hope. It’s hard
not to raise your glass to it.
Rooms start from £230 per night; Presidential
Suite £4,280 per night. www.oberoihotels.com
CITYA.M. 18 OCTOBER 2009 CAMINO COMES TO 27
CANARY WHARF
TAPAS RESTAURANT:
REVIEWED TOMORROW

TRAVEL NOTES | by Zoe Strimpel

CULTURE VULTURE’S ISTANBUL

the eyes of our guide. History buffs can also
ask to see – or stay in – Christie’s suite
(room 411), which contains bookshelves of
her novels in several languages, as well as
opulent, blood-red antique furniture.
One thing Christie and friends missed
out on was a spa – the hotel’s new one is a
tastefully luxe affair with lots of pale
wood, minimalist treatment rooms and a
deep blue pool and jacuzzi (you can swim
against a jet in the pool to simulate lane
swimming – ingenious).
As for dinner – German chef
Maximilian Thomae lords it over a beauti-
ISTANBUL is this year’s
European Capital of Culture,
but that title hardly captures
its essence, which is super-cool
and magically historical at
once. The city is also a plain old
eyeful of colour, hustle and bus-
tle and extraordinary buildings.
It is as loaded with bars and
restaurants as with palaces
and mosques – but for those
who appreciate history, a good
dose of sightseeing is neces-
sary. Here are the must-dos.
l The Blue Mosque: Designed
and even partly built by Sultan
Ahmet I (ruler from 1603-
1617) to eclipse the neight-
bouring Aya Sofia, the mosque
has one of the most extrava-
gant exteriors in the former
Ottoman Empire, with its
intense curves, six
minarets (the only
other mosque at
the time with six
minarets was at
Mecca), blue tiles
and an enormous
courtyard.
ing from four corners of the
massive central dome, endless,
intricate mosaic-work and an
upstairs balcony that offers still
more mixed religiosity requires,
a good deal of time and
thought. It’s a central symbol of
Istanbul’s multi-cultural past.
l Topkapi Palace: One of the
most opulent palaces in the
East. It has been home to a sul-
tan who drowned in the bath
after drinking too much cham-
pagne as well as several others
with colourful ends. Don’t miss
the jewel museum to see just
how well the sultans and their
friends lived.
l Grand Bazaar and Spice
Market: The first is a must-
do for anyone who likes
trinkets, jewellery, tex-
tiles and watches. Be
prepared to bargain.
The second is a
wonder for the
senses.
“I arrived at the hotel by heliport.”
London’ s helipad hotel Luxury
Take that, Claridges. The new Hotel Verta in The much-hyped new Alila Luang Prabang
Battersea (of all places) comes with a heli-
pad for those who don’t want to deal with
traffic. The 70-room Von Essen hotel is locat-
ed within the London Heliport complex, and
is the first of its type in Europe. Aside from
the Bond-style arrival possibilities, there’s a
spa and good food too. Rooms from £175;
hotelverta.com.
The Tchuggen occasionally rents out slopes.
Private skiing in Arosa
Eager skiers in Arosa for the first Saturday of
the season should stay at the Tschuggen
Grand, where the nearby slopes will be
reserved for exclusive use by guests on that
day. There’s also a giant slalom; a race dinner
that night and a jazz brunch the next day. 27
November: two nights from £363,
www.tschuggen.ch.
hotel opens in Laos
opened this week, featuring 23 spacious vil-
las, many with private pools and fireplaces, a
spa and a traditional Laotian restaurant and
cooking school. Built on a heritage site, it
preserves existing colonial buildings as dis-
tinctive resort features alongside comple-
mentary new structures.
www.alilahotels.com/luangprabang.

l Galata Tower
SAVE up to 20%* on *Kid
stay an s
d eat
ful, checked-floor dining room, producing
posh (and frankly somewhat confused) l Aya Sofia: To
(left): Built in 1358
as a fortifaction for Autumn / Winter Rates FREE
modern European. With such exciting enter this once- the Genoese
things happening in Istanbul’s culinary Byzantine church, colony in
scene, I’d advise you to eat elsewhere. For now mosque, is to Constantinople, Small Hotel Group of the Year 2010-2011
everything else, though, the hotel is com- lose yourself the tower offers
plete Turkish delight. physically and superb views.
Zoe travelled with Cox & Kings (0207 873 mentally. Echoing
5000, www.coxandkings.co.uk), which offers spaces, a quartet l Bosphorous
three nights at the Pera Palace of enormous river cruise: A
(www.perapalace.com) from £685 pp including black discs cov- glorious way to
breakfast daily, flights from London with British ered in Arabic see Istanbul. Go
Airways and transfers. Deluxe rooms at Pera scripture hang- at sunset. ZS
Palace from £205 per night.

ISTANBUL | Eating and drinking

Kebabs, pide (the local speciality of
fried dough for a pizza-style dish),
dips and veggies form at least
some of the backbone of basic
Turkish food. But in Istanbul these
days you can go way, way beyond
these to have a plethora of dining
experiences ranging from the
super-cool to the fine to the local –
all of them totally tasty. There are
places you can take your biker
boyfriend, your Euro playboy, your
local lover – or your mother.
Perhaps the greatest joy of eating
and drinking in Istanbul is partak-
ing of the plentiful rooftop venues
spread around the city. Favourites
include the seriously hip NuTeras
(Tepebaşı Mesrutiyet Caddesi 147-
149), on the roof of an old apart-
ment building in Pera, with a bar

 

edge of the building – and great
food. Mikla (Meşrutiyet Caddesi
Tepebaşı) has a 360-degree view
of the city and is one of the great
“it” places to go just now for the
trendy set. 360 Istanbul (Istiklal
Caddesi) is a bar/club up among
the rooftops, with incredible views
of the “big four”: Topkapi Palace,
the Golden Horn, Aya Sofia and the
Bosphorous. Zoe (Tomtom
Mahallesi, Yeniçarşı Caddesi 58/5)
is another draw for the hip and
once you’re past the bouncers you
can expect a great rooftop party in
summer and a laid back vibe
indoors at other times.
For great Bosphorous action, head
to Angelique (Muallim Naci
Caddesi, 109), where the city’s rich
and model-esque (and their hang-
Whether you’re looking for a school holiday break, a city stopover or
Sokak 1) is an established restau-
rant where suits and movers and a Spa weekend, we can help. Book now and take advantage of our
shakers come to eat like Ottoman Autumn/Winter Advance purchase offers.
sultans; Middle Eastern food is also
served. Beşinci Kat (5th floor,
Book at least 7 days Book at least 28 days Book a 3 night stay
Soĸancı Sokak 7) has one of the
city’s most striking interiors, with in advance and in advance and in advance and
velvet and a floor-piece of a naked
Norma Jean Baker. SAVE 10%* SAVE 15%* SAVE 20%*
For the boho French vibe, head to
Brasserie Nişantaşı (Abdi Ipekçi
Caddesi 23/1), which has a mir- Visit apexhotels.co.uk
rored ceiling and a huge chandelier. and book online using our
For bang-on and affordable Turkish
fare, try Gani Gani (Kuyu Sokak 13, New Lowest Rate Calendar
Taksim), where seating is cosy and
the food rocks, particularly the T 0845 365 0000
✓
çiĸköfte (steak tartare made with
cracked wheat and chili), mantı * Discount off the Best Flexible rate. Offers subject to availablity.
(ravioli with yoghurt sauce), pide Terms and conditions apply. Kids stay and eat free at selected Apex hotels.
and kebabs. Apex Hotels  
 



that feels as if it’s hanging off the ers’ on) congregate. Ulus 29 (Yol ZS
 28 Lifestyle | TV& Games CITYA.M. 18 OCTOBER 2010

BBC1 BBC2 ITV1 CHANNEL4 CH FIVE TV PICK

TERRESTRIAL
6pm BBC News
6.30pm BBC London News
7pm The One Show
7.30pm Inside Out; BBC News
8pm EastEnders
8.30pm Panorama
9pm Spooks: The US
president’s life comes under
threat on a visit to the UK.
10pm BBC News
10.25pm Regional News
10.35pm Ask Rhod Gilbert
11.15pm Damages
12am Damages; Weatherview
12.45am Sign Zone: The
Apprentice
1.45am Sign Zone: The Great British
Bake Off 2.45am Out of the Frying
Pan 3.45am-6am BBC News
6pm Eggheads
6.30pm Strictly Come Dancing
– It Takes Two
7pm Michael Wood’s Story of
England
8pm University Challenge
8.30pm CHOICE MasterChef:
The Professionals: Four
contestants compete for a
place in the quarter-final.
9pm Horizon: Is Seeing
Believing?
10pm Genius with Dave Gorman
10.30pm Newsnight; Weather
11.20pm Dambusters
Declassified
12.20am BBC News
3.45am Close 4am-6am BBC
Learning Zone
6pm London Tonight
6.30pm ITV News
7pm Emmerdale
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COFFEE BREAK
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk

QUICK CROSSWORD
    

SUDOKU KAKURO
9 15 23 11 32 6 8 12 
12 10
  
29 27
Place the numbers from 1 to 9 in each empty cell so that each 10   
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 11 17
16 9 14
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 11 4 15
 
above or to the left of it. 16 38 18
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1 Guarantee that an 1 Con (4)
   
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obligation will be met (6)
5 Engrave (4)
7 Depend (4)
2 Flat floating platform
for swimmers (4)
3 Government department
Using only the letters in the Wordwheel, you have 8 Professional charges (4) responsible for
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F E 9 Extremely wicked (4) economic strategy (8)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters O 11 Compulsory annual
roadworthiness
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5 Calm central region

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SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
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& 5 , 6 3 6 : $ 5 0
8 3 5 7 9 6 2 1 4 SUDOKU         
18 Boy (3)
19 Miscellaneous (8)
by which things are
measured (8)
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6 1 2 3 1 4 1 20 Inflated feeling of 15 Savoury taste
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 Sport
29
“GOLIATH HAS JUST WALKED
OFF WITH ALL THREE POINTS”
BLACKPOOL BOSS HOLLOWAY TAKES
AIM AT REF AFTER CITY DEFEAT: P31

Results
Murray caps return to form Chamakh 47
BARCLAYS PREMIER LEAGUE
Arsenal ...........................(1) 2 Birmingham......................(1) 1
Nasri 41 (pen) Zigic 33
Att: 60,070
Aston Villa...................(0) 0 Chelsea................................(0) 0
Att: 40,122
Bolton ..............................(1) 2 Stoke.....................................(0) 1
Lee 22 Delap 48
Klasnic 90 Att: 22,975
Fulham.............................(1) 1 Tottenham .........................(1) 2
Kamara 30 Pavlyuchenko 31
Att: 25,615 Huddlestone 63
Man Utd.........................(2) 2 West Brom........................(0) 2
Hernandez 5 Evra 50 (og), Tchoyi 55
Nani 25 Att: 75,272
Newcastle....................(0) 2 Wigan ...................................(2) 2
Ameobi 72 N’Zogbia 22, 23
Coloccini 90 Att: 44,415
Wolverhampton.......(1) 1 West Ham..........................(0) 1
Jarvis 10 Noble 53 (pen)
Att: 28,582
Blackpool .....................(0) 2 Man City.............................(0) 3
Harewood 78 Tevez 67, 79, Silva 90
Taylor-Fletcher 90 Att: 16,116
Everton...........................(1) 2 Liverpool............................(0) 0
Cahill 34, Arteta 50 Att: 39,673
P W D L F A GD Pts
Chelsea 8 6 1 1 23 2 21 19
Man City 8 5 2 1 12 5 7 17
Arsenal 8 4 2 2 18 10 8 14
Man Utd 8 3 5 0 18 11 7 14
Tottenham 8 4 2 2 10 7 3 14
West Brom 8 3 3 2 11 14 -3 12
Bolton 8 2 5 1 12 12 0 11
Aston Villa 8 3 2 3 9 12 -3 11
Murray’s victory Stoke 8 3 1 4 9 11 -2 10
Blackpool 8 3 1 4 13 18 -5 10
clinched his second Everton 8 2 3 3 8 7 1 9
title of the year. Fulham 8 1 6 1 9 9 0 9
Wigan 8 2 3 3 6 15 -9 9
Newcastle 8 2 2 4 12 12 0 8
Picture: ACTION Sunderland 7 1 5 1 7 7 0 8
IMAGES Blackburn 7 2 2 3 7 8 -1 8
Birminghm 8 1 4 3 8 12 -4 7
Wolves 8 1 3 4 8 13 -5 6
Liverpool 8 1 3 4 7 13 -6 6
West Ham 8 1 3 4 6 15 -9 6
NPOWER CHAMPIONSHIP
Barnsley.........................(1) 3 Nottm For ..........................(0) 1
Doyle 4, Gray 56 (pen) McGugan 68
Butterfield 87 Att: 12,844
Cardiff.............................(1) 3 Bristol City........................(2) 2
Bothroyd 12 Caulker 6, Stead 8
Whittingham 46, 78 Att: 22,444
Crystal Palace...........(0) 0 Millwall ...............................(0) 1
Att: 16,693 T Robinson 53
Derby...............................(2) 3 Preston................................(0) 0
Moxey 21, Bueno 32, Savage 90 (pen) Att: 26,117
Ipswich..........................(0) 1 Coventry .............................(1) 2
Scotland 58 Platt 19
Att: 19,100 Jutkiewicz 56 (pen)
have to go after it early. I returned his shine since.
▲

TENNIS Leicester........................(1) 1 Hull .........................................(0) 1

BY FRANK DALLERES
BRITAIN’S Andy Murray completed
an emphatic return to form and
maintained his superb record against
serve well and got a lot of free points
on my first serve and my second serve
But in the last few days he has
proved that blip is over, also beating Scot’s mastered King 3 Koren 52
Att: 23,766
Middlesbrough.........(0) 1 Leeds......................................(1) 2
has improved so much since the start Jo-Wilfried Tsonga and Juan Monaco
of the year that he wasn’t really able
to take many chances on it.
on his way to a sixth Masters title.
Murray wasted no time in estab-
beating Federer Boyd 53
Att: 23,550
Portsmouth.................(1) 3 Watford ..............................(0) 2
Mullins 17, Kitson 72 M Taylor 67, Brown 80
Somma 12
Becchio 63

Roger Federer by winning the
Shanghai Masters.
World No4 Murray clinched his
16th career title and his second of the
year with a 6-3, 6-2 victory in which
he seized the initiative instantly. The
triumph followed the Scot’s win over
Federer at the Toronto Masters in
August and means he now boasts an
8-5 head-to-head record against the
16-time Grand Slam winner.
“Against Roger you can’t let him
“I hit a lot of great shots on the run
and you need to come up with great
shots against Roger if you want to
beat him.”
Victory capped a superb week in
which Murray did not drop a set and
rediscovered the touch that he dis-
played before a disappointing US
Open. The 23-year-old – still looking
for his first Grand Slam – suffered a
surprising third-round defeat last
month at Flushing Meadows to
lishing the upper hand, breaking
Federer in the opening game and
never ceding the momentum until
the match had been won less than an
hour and a half later. He took the first
set with a flourish, whipping a cross-
court winner after Federer’s drop-
shot, and wrapped up the second
when the Swiss netted.
Murray’s successful week in China
has also secured his place at the ATP
World Tour Finals, to be held next
Att: 16,606
QPR ...................................(0) 0 Norwich ..............................(0) 0
ANDY MURRAY has now beaten Att: 18,059
Reading..........................(0) 0 Swansea..............................(1) 1
Roger Federer eight times in their 13 Att: 18,418 Sinclair 35
meetings, including six times at Scunthorpe..................(1) 1 Doncaster...........................(1) 3
Woolford 11 Sharp 31, 59 (pen)
Masters series tournaments. But Att: 7,005 O’Connor 72
Federer still boasts a 3-2 record Sheff Utd......................(0) 3 Burnley................................(0) 3
against Murray in finals, despite Bogdanovic 57 Marney 49
Lowton 82, Yeates 90 Eagles 54 (pen)
back-to-back losses in Toronto and Att: 22,936 Rodriguez 90
Shanghai, and is 2-0 up at Grand
Slams. Remarkably, all 13 of their
clashes have been on hard courts. SPORTS EDITOR FRANK DALLERES

@
get out in front,” said Murray. “You Stanislas Wawrinka, and has failed to month at London’s O2. email sport@cityam.com

SPORT | IN BRIEF
Fears of World Cup vote Make Money from
delay amid bribery claims
Irvine tipped to land Lions role
RUGBY UNION: British and Irish Lions
chiefs are expected to name their latest
EVERY
manager today, with Scotland legend
Andy Irvine tipped for the role. The for-
mer full-back, 59, toured three times as
PREMIER LEAGUE
a Lions player and will be tasked with The US pulled out of the race on
Match!
▲

picking a coach for the 2013 trip to
Australia.
Green wonder-round nabs title
GOLF: Australian Richard Green shot 11
birdies in a scintillating final round of 65
to overcome a seven-shot deficit and
win the Portugal Masters. Green ended
on 18 under par, two clear of a group of
FOOTBALL
GLOBAL governing body Fifa has
launched an investigation into claims
of a cash-for-votes scandal surround-
ing England’s fight to host the 2018
World Cup.
A Sunday newspaper alleged that
two of the 24 members of Fifa’s execu-
tive committee, who will decide in
Friday, leaving England up against
Spain/Portugal, Russia and
Holland/Belgium.
Fifa president Sepp Blatter yester- The 7 bets
day wrote to executive committee
members amid fears the vote may be
postponed. He said: “Fifa will... open
an in-depth investigation, which we
will start immediately together with
Downurload

repo
yo

FRrt EtodaEy... “
the bookies
DON’T WANT
you to know
four players that included Italian Ryder December who is to stage the tourna- the Fifa ethics committee and the
Cup star Francesco Molinari and ment, offered to sell votes. Nigerian Fifa secretary general.” about!
Sweden’s Henrik Stenson.

West Indies sack captain Gayle

CRICKET: West Indies have sacked cap-
tain Chris Gayle and replaced him with
all-rounder Darren Sammy. Batsman
Gayle, appointed in 2007, retains his
place in the squad for the upcoming tour
of Sri Lanka.
Amos Adamu, president of the West
African Football Union, and Tahiti’s
Reynald Tamarii, president of the
Oceania Football Federation, are the
two individuals named in the report.
Undercover reporters posed as lob-
byists for a consortium of American
companies who wanted to secure
votes for the United States’ campaign.
Chuck Blazer, the US committee
member, said the allegations’ origins
in an English paper would not dam-
age this country’s chances. “I don’t
think this is an issue which will have
Generating 129 winners
from 152 bets last season
”
an anti-English backlash in the execu-
tive committee,” he said. “If it had MORE NEWS
been in a Spanish paper, would that
www.cityam.com
www.FootballOffer.co.uk/CAM
damage their bid? I don’t think so.”
 30 Sport CITYA.M. 18 OCTOBER 2010

WINNERS &
LOSERS
A WEEKEND is a long time in sport –
Leicester fight back to thrash Scarlets
as this lot will attest. But while for
some it was one to remember, others early on for the Welshmen. Benetton Treviso 35-14 in France. included some quality bits of rugby.”

▲
RUGBY UNION
may wish they had never set foot out But when the teams resumed after Scarlets lie third on five points. In Pool Four, Biarritz kept up their
of the house. Here are this weekend’s
BY FRANK DALLLERES the break Leicester cut loose, Ben “I felt we needed more points out 100 per cent record with a bonus-
heroes and villains. LEICESTER blew Scarlets away with a Youngs, Thomas Waldrom and Tom of the first half. At half-time they point 35-15 triumph at home to
second-half salvo in a five-try 46-10 Croft all going over in a frantic 10- were very much in the game,” said Ulster. Wing Takudzwa Ngwenya
PADRAIG victory that tightened their grip on minute spell, before Croft and Matty Tigers director of rugby Richard scored two tries for last season’s run-
HARRINGTON Heineken Cup Pool Five. Smith grabbed further tries to earn a Cockerill. “They took their try well ners-up, while scrum-half Dimitri
The three-time Major A try from Martin Castrogiovanni bonus point. and we’d have liked to have scored a Yachvili contributed 15 points.
winner ended a two- and eight points from the boot of The emphatic win left Premiership couple more of our own but we didn’t Elsewhere, Leeds Carnegie lost 13-
year trophy drought Toby Flood gave the Tigers a slender champions Leicester with 10 points take our opportunities. But we kept 22 at home to Stade Francais as the
13-10 half-time advantage, with from two matches, four clear of sec- the intensity and composure and French side held onto top spot in Pool
that stretched back to Morgan Stoddart touching down ond-placed Perpignan, who beat those five tries in the second half Four of the Amlin Challenge Cup.
the 2008 USPGA with
a three-stroke triumph
at the Johor Open in

Four-try win
Malaysia yesterday.
WINNER
VITALI KLITSCHKO
One half of Ukraine’s
heavyweight double

lifts Wasps’
act, Vitali successfully
defended his WBC title
for the fifth time with
a unanimous points
victory over American
Shannon Briggs in
WINNER
Euro hopes
Hamburg on Saturday.

GLOUCESTER
The Premiership side
filled their boots when
Italian outfit Rovigo
came knocking in the
Amlin Challenge Cup every game, that’s what people talk
on Saturday, runnning
in 14 tries in a 90-7
WASPS 38 about because it’s the x-factor he’s
got. He’s had a run of games after
drubbing. Jonny May struggling with injury and he’s

WINNER (pictured) got three. GLASGOW 26 grown in maturity. His game manage-
ment is really growing. Glasgow will
be disappointed because Joe did that
KEVIN PIETERSEN to them twice in pre-season.”
▲

RUGBY UNION
The hemisphere might Hanks added: “We’re rapt. This was
have changed, but KP’s BY FRANK DALLERES
a huge game that we had to win to
struggle with the bat WASPS boss Tony Hanks hailed Joe stay in the pool.”
remains the same. The Simpson after the scrum-half’s won- Glasgow battled manfully to get
England star, back in der-try helped kick-start their something from the game, Ruaridh
his native South Africa Heineken Cup campaign with a Jackson contributing a try and five
in a bid to find form, bonus-point victory over Glasgow. kicks, but Wasps held on in a hard-
was out for a duck for Tom Varndell, Ben Jacobs and fought climax to deny the visitors a
the Dolphins on Friday. Dominic Waldouck also went over as losing bonus point. Coach Sean
LOSER the Londoners climbed to second in Lineen admitted they struggled to
Pool Six, two points behind reigning recover from a first half that saw
JACK WILSHERE champions Toulouse. them concede three tries.
Arsenal’s midfield But it was man-of-the-match “We had a poor first 20 minutes
prodigy has enjoyed a Simpson who caught the eye in the collectively. They weren’t doing any-
dream start to the sea- eighth minute, breaking from a thing special and we were hanging
son but his fortunes scrum near the Glasgow 22 before off them,” he said. “The tries were too
turned on Saturday darting through their defence. soft. We showed more spirit in the
when he was shown a “That was probably Joe’s best game second half and scored a couple of
straight red card for a for us. Defensively he was very good tries ourselves. To come away with
dangerous-looking and kicked well generally,” said direc- nothing is very disappointing, espe-
lunge on Birmingham’s
LOSER Nikola Zigic.
tor of rugby Hanks.
“Joe does things like that try in
cially given all the ball we had in the
last 20 minutes.” Joe Simpson scored a wonder-try in the eighth minute. Picture: GETTY

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CITYA.M. 18 OCTOBER 2010 Sport 31

Rooney tipped
Reds second to quit United
bottom after over row with
boss Ferguson
derby defeat

▲
FOOTBALL
BY FRANK DALLERES
MANCHESTER United striker Wayne
Rooney looks increasingly likely to
Town, and, although he refused to leave the club amid suggestions his
EVERTON 2 give up on Champions League qualifi-
cation, he conceded it would demand BOTTOM FOUR relationship with manager Sir Alex
Ferguson has deteriorated beyond
a huge swing in fortunes. TEAM PLD W D L F A PTS repair.
LIVERPOOL 0 “There are 30 games to go, 90
points to play for, so we’d have to start
Birmingham
Wolves
8
8
1
1
4
3
3
4
8
8
12 7
13 6
The prospect of one of the most
sensational transfers in the history of
doing something special I suppose,” Liverpool 8 1 3 4 7 13 6 British football has increased dramat-
▲

FOOTBALL
BY FRANK DALLERES
LIVERPOOL manager Roy Hodgson
admits finishing in the top four
might already be an unrealistic aim,
just eight games into the Premier
League season, after defeat in the
Merseyside derby soured the feel-
good factor created by the club’s
takeover.
Thumping strikes from midfielders
Tim Cahill and Mikel Arteta lifted
Everton clear of the relegation zone
and plunged Liverpool into 19th place
in front of the watching John Henry,
kingpin of Anfield’s latest owners
New England Sports Ventures (NESV).
It was yet another setback to
Hodgson’s troubled tenure, which
has also seen the Reds dumped out of
the Carling Cup by Northampton
he said. “But I don’t know I would
write that off necessarily. It would
take a really good run on the spin but
I thought there were signs in the
game today that the quality of foot-
ball was there.”
Henry finally completed a £300m
buyout of the much-maligned Tom
Hicks and George Gillett on Friday,
and Hodgson had hoped to start
NESV’s reign on a high note by regis-
tering a first win in six fixtures. “The
dream was we would come here on
the back of new owners and win the
game but there is no point in
attempting to analyse dreams,” the
former Fulham manager said.
Under-fire Hodgson insisted he was
happy with Liverpool’s performance,
but it was Everton who posed the
more serious threat, with defenders
Phil Jagielka and Sylvain Distin both
West Ham
firing wide in the first half. All the
visitors could muster in response was
a flicked Fernando Torres header that
Tim Howard tipped over, and the
Toffees made their superiority count
in the 34th minute when Cahill
lashed Seamus Coleman’s near-post
cut-back into the roof of the net.
Liverpool’s Maxi Rodriguez tried to
spark a comeback with a fizzing, low
drive that Howard saved comfortably,
and Everton soon put paid to a revival
with a second goal.
Just five minutes into the second
period, a half-cleared corner fell to
Arteta on the edge of the penalty
area, and the Spaniard snapped a
swerving punt through a crowd and
past Pepe Reina.
8 1 3 4 6 15 6
Hodgson backed
by new owners
LIVERPOOL’S new owners have
promised to give under-fire manager
Roy Hodgson time to improve results.
Tom Werner, second in command at
New England Sports Ventures, said
before yesterday’s game: “We have
confidence in Roy. Nobody will be
pleased with the start of the season
but the club ought to gel and Roy
needs to be given time.”
ically with Rooney said to have told
United he will not resume contract
talks and wants to move clubs.
Ferguson will come under increas-
ing pressure to sell the England star
in January or risk his value in the
transfer market dropping by the
month as his contract approaches its
expiry in summer 2012.
Wealthy Manchester City are
tipped as the most likely domestic
bidders for a player who would be
expected to fetch more than £50m,
but a move abroad may be more
appealing to United, with Spanish
giants Barcelona and Real Madrid
both strong candidates.
Rooney, 24, has received unwel-
come media attention in recent
months following allegations of infi-
delity, while his form has dipped dra-
matically. He has not scored a goal in
open play for United since March and
endured a miserable World Cup cam-

Silva the hero as City cut Chelsea’s lead to two points

leaders Chelsea.
BLACKPOOL 2 Holloway accused referee Phil
Dowd of getting three major deci-
sions wrong: disallowing a Gary
MANCHESTER CITY 3 Taylor-Fletcher strike while the game
was scoreless and missing offences in
FOOTBALL
the build-up to City’s first two goals.
▲
sive decisions wrong, which cost my
team against one of the so-called big
teams,” Holloway said of Dowd, after
a match in which City substitute
David Silva set up two and scored the
decisive third. “The big decisions
swung the game their way and
Silva harried Ian Evatt – illegally,
Holloway felt – and the Argentina
striker rifled a low show. Silva capped
his cameo by slaloming past two chal-
lenges and curling into the far corner.
TOP FOUR
paign with England over the summer.
He has been dropped by Ferguson,
who blamed his absence on an ankle
injury. Rooney then publicly contra-
dicted that version of events last week
while on international duty, saying
he had never had a problem with his
ankle. That only served to increase
suspicions he was dropped by
Ferguson as punishment for his off-
field behaviour. Rooney joined United
from Everton for £25m in 2004.

The outspoken Tangerines boss Goliath has just walked off with all
TEAM PLD W D L F A PTS Rooney is said to have
BLACKPOOL manager Ian Holloway watched the game from the stands three points.” told United that he does
risked landing himself in more hot owing to a one-match ban he City led when Tevez deftly touched Chelsea 8 6 1 1 23 2 19
water after a controversial defeat to incurred for comments made to offi- home Silva’s cross in the 67th want to renew his con-
Man City 8 5 2 1 12 5 17
Manchester City which saw the big- cial Mike Dean after last month’s loss minute. Marlon Harewood equalised tract and would like to
Arsenal 8 4 2 2 18 10 14
spending Eastlands outfit close to to Blackburn, but did not hold back with a glancing header but City leave Old Trafford
within two points of Premier League again yesterday. “He’s got three mas- instantly responded when Tevez and Man Utd 8 3 5 0 18 11 14
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