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EXCLUSIVE INTERVIEW P31 FIVE YEARS P17
Issue 1,244 Tuesday 19 October 2010 www.cityam.com FREE

APPLE RIDES HIGH Critics slam


Labour bank

BUT iPAD FALTERS levy plans


POLITICS
BY DAVID CROW
ALAN Johnson’s plan to raise at least
£3.5bn by clobbering the banks with
TECHNOLOGY another levy was roundly dismissed

iPhones
BY STEVE DINNEEN 14.1m* yesterday, with critics claiming it was
unworkable and could encourage
APPLE last night smashed expectations firms to quit the UK.
to post record fourth quarter profits In his first major speech as shadow
and revenues, boosted by blockbuster chancellor, Johnson welcomed the
sales of its new iPhone 4. coalition’s plan for a £2.5bn levy on
However, its landmark iPad tablet iPad banks, but said they should make an
device lagged behind analyst forecasts 4.2m* even “greater contribution”.
as supply issues continued to dog the He added: “In terms of scale, the
world’s biggest technology firm. £3.5bn bill from Alistair Darling’s
Apple shifted 4.2m iPads in the bonus tax was absorbed with ease last
quarter, falling well short of analyst QUARTERLY year. In a time of rising profits they
predictions of up to 5m.
Steve Jobs’ firm now faces stiff com-
REVENUE Macs should be asked to maintain that
scale of contribution alongside the
petition in the tablet market, with
rivals RIM and Samsung both having
$20.3bn 3.9m* existing levy proposal.”
The Institute of Directors (IoD) hit
released credible alternatives in recent QUARTERLY out at the plans, insisting they would
months.
Jobs attempted to pour cold water
PROFIT force banks to consider relocating
overseas. “The chances of banking
iPods
on the iPad’s rivals, claiming their
smaller size meant they fell short of
$4.31bn 9m*
business disappearing overseas would
increase significantly if the bank levy
both a smartphone’s convenience and was increased by another £3.5bn,” a
an iPad’s functionality. spokesperson for the IoD said.
But Apple’s stock still tumbled more Steve Jobs attacked rival tablet computers, which he says are inferior to the iPad Picture: GETTY * 4th quarter sales Mark Littlewood, director general
than six per cent in after hours trading of the Institute of Economic Affairs,
on news of the iPad’s disappointing firm is now activating 275,000 iPhones completely redesigned range of prod- od. also warned that “bankers, stockbro-
sales. every day. This compares to 200,000 ucts, as well as 3.9m of its high-margin Apple now expects its first quarter kers and hedge fund managers will
However, sales of its new iPhone 4 phones a day being activated using Mac laptop and desktop computers. revenue – traditionally its strongest – continue to leave London if the tax
helped push the firm’s quarterly rev- Google’s rival Android software, It has now reported record revenues to hit $23bn as customers rush to buy burden becomes uncompetitive”.
enue up 67 per cent to $20.3bn according to the search giant’s latest and profits for every quarter since its products in time for Christmas. The Tories were quick to point out
(£13bn), ahead of Wall Street’s target of figures. 2007, before the onset of the recession Meanwhile, IBM reported a higher- that the bonus tax implemented by
$18.9bn. And it reported profits of The battle is key to both firms’ – a remarkable feat for a firm specialis- than-expected profit and raised its out- Darling was only ever meant to be a
$4.31bn, up from $2.53bn a year ago. plans to control the way we view the ing in high-end products. look for the year. Its quarterly profit “one-off” measure. They also claimed
Both figures are a record for the fourth mobile internet, one of the fastest The latest revenue figures are an rose to $3.6bn on revenue of $24.3bn. Johnson recently said a second levy
quarter. growing and most lucrative technolo- astonishing five times higher than the It was buoyed by strong sales in its core would need international agreement,
The firm shifted 14.1m iPhones in gy markets. equivalent figure in 2005, with earn- hardware business but was hit by slug- something which would be hard to
the period, and the Cupertino-based Apple sold 9m iPods, boosted by a ings rising 10 times in the same peri- gish trading in technology services. achieve. SPENDING REVIEW: P17-19

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2 News CITYA.M. 19 OCTOBER 2010

Facebook couldn’t have been British NEWS | IN BRIEF


New nuclear sites approved
Eight new sites for nuclear power sta-
tions were given the green light by the
today confirmed that it is bidding for Zuckerberg, who co-founded Facebook: chess grand master, the founder of a coalition government yesterday, putting
its rival Hardy. Meanwhile, CQS is he started programming when he was newspaper, the creator of an ultra-suc- the UK at the forefront of nuclear power
floating a fund on the stock exchange; in middle school, excelled in the clas- cessful hedge fund and a seed investor in Europe. In a remarkable U-Turn, Lib
the firm, one of London’s most suc- sics, specialised in latin and went on to in LinkedIn and others. Dem energy secretary Chris Huhne said
cessful hedge funds, was founded in study IT. While still at school, he For a variety of cultural, ideological, the new plants are vital. The list of
1999 by Michael Hintze, a brilliant designed and programmed an app to regulatory, economic and other rea- potential sites for hosting new nuclear
Australian-born ex-Goldman trader. help workers in his dad’s office; he sons, there is no way anybody could power plants had been cut to eight from
London is home not only to estab- built a version of the game Risk, as well deliver similar success stories here in 10. The government also dropped plans
EDITOR’S LETTER lished global giants, from the Synapse Media Player that used Britain. They used to in Victorian times to install a tidal barrage across the
GlaxoSmithkline to Barclays, but also artificial intelligence to learn the – but no longer. Polymaths don’t start Severn estuary. Bradwell, Essex;
ALLISTER HEATH to thousands of newer companies user's music listening habits. Microsoft their own firms while at UK schools; it Hartlepool; Heysham, Lancashire;
founded by self-starting, hard-working and AOL tried to buy him out and is taboo to drop out of universities, Hinkley Point, Somerset; Oldbury, South
IT is simply untrue that Britain doesn’t and visionary entrepreneurs. But there recruit him, but Zuckerberg instead which remain poor incubators; the VC Gloucestershire; Sellafield, Cumbria;
produce any wealth and job creating is one class of entrepreneurial firm we made the app available for free and infrastructure doesn’t work as well; Sizewell, Suffolk; and Wylfa, Anglesey
entrepreneurs any more. Take some of don’t have. The UK is completely use- went to Harvard. That is where he co- there is no UK equivalent to Palo Alto, have been approved.
the stories in today’s City A.M.; they less at producing truly revolutionary founded Facebook in 2004 with his where kids can rent houses, eat pizza
demonstrate that Britain retains a start-ups that go from nothing to glob- roommates, before dropping out to and change the world. Somehow, Rockhopper to raise £200m
vibrant start-up and growth culture. al domination in the space of a few work on it full-time that summer, mov- sometime, this needs to change. Oil explorer Rockhopper is hoping to
Hugh Willis, 50, and Mark Poole, 49, years. I’m thinking of the likes of ing the start-up to California, enlisting Britain too needs epoch-defining new raise about £200m in a placing of new
who founded BlueBay in 2001, are Facebook, Google, eBay or Amazon, the help of specialist venture capital- firms that revolutionise industries, shares to extend its drilling around the
today each £82m richer after they sold mass market, consumer firms set up ists and creating a fresh batch of tech change the way hundreds of millions Falkland Islands. Rockhopper said yes-
their firm to Royal Bank of Canada for by scientifically brilliant, idiosyncratic billionaires. A cursory look at the CVs of people live their lives and force the terday the money from the placing,
£963m. Many in the City were sad- and absurdly young geeks. of the founders of other revolutionary world to notice. In this week of austeri- which is under way, would help it fur-
dened last week at the premature The stories of many of the new gen- US firms shows similar backgrounds; ty and gloom, we can but dream – and ther appraise its oil find at the Sea Lion
death at the age of 57 of Andrew eration of Silicon Valley tech billion- Peter Thiel, the 43-year old billionaire reflect upon the fact that in some well, drill more exploration wells and
Beazley, who co-founded the epony- aires are astonishing; they just co-founder of PayPal and key investor countries, dreams often do become conduct further seismic tests across a
mous Lloyds insurer in 1986; his firm wouldn’t happen here. Take Mark in Facebook, has already been a US reality. allister.heath@cityam.com wider area.

7th Floor, Centurion House,


24 Monument Street, London, EC3R 8AJ
Tel: 020 7015 1200 Fax: 020 7283 5334
Citi and Hands
arrive in court
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
ENTERTAINMENT of the street at the same time,”

Business Features Editor Marc Sidwell


Lifestyle Editor Zoe Strimpel BY STEVE DINNEEN Hands’s lawyer, David Boies, told the Plans to raise the retirement age have caused massive unrest Picture: GETTY
Pictures Alex Ridley nine-member jury in a 45 minute-

France strikes cause chaos


A NEW York jury was yesterday asked long opening statement.
Commercial to decide who is lying in a dispute Boies said email evidence to be pre-
Sales Director Jeremy Slattery between Guy Hands and Citigroup sented by Terra Firma at the trial
Commercial Director Harry Owen over Hands’s £4bn buyout of embat- would show that Wormsley “secretly
Head of Distribution Nick Owen tled record label EMI in 2007. promised EMI to use his relationship
Hands and his onetime Citigroup with Guy Hands and Terra Firma to
banker David Wormsley sat feet away help EMI” obtain added value. EU ECONOMY ies and less than half of scheduled air-

Distribution helpline from each other as the trial, which is Citigroup backed the EMI acquisi- line flights will be running today.
If you have any comments about the distribution BY STEVE DINNEEN
of City A.M. Please ring 0207 015 1230, or email expected to last three weeks, began in tion with £2.6bn in loans. The £4bn Flights still arriving into France
distribution@cityam.com US District Court. deal came to epitomise the perils of FRANCE was this morning coming to have been warned to carry enough
Hands’s Terra Firma accuses highly-leveraged buyouts. terms with a sixth day of strikes over fuel for a return journey. Truck driv-
Editorial Statement Wormsley and Citigroup of duping Citigroup denies the allegations. President Sarkozy’s plans to raise the ers slowed traffic through the city
This newspaper adheres to the system of him into thinking there was a rival retirement age. centre and strikers staged sit-down
self-regulation overseen by the Press Complaints bid in the offing by private equity Hands alleges he was The nation ground to a halt as protests on train lines.
Commission. The PCC takes complaints about the firm Cerberus Capital Management train drivers, teachers, hospital staff Despite overwhelming public sup-
editorial content of publications under the Editor’s hoodwinked into
Code of Practice, a copy of which can be found at for the EMI company he coveted. and utility workers joined the mass port, the walkout appears to have
www.pcc.org.uk Both men are expected to testify, paying over the odds protest against Sarkozy’s austerity fallen on deaf ears, with the govern-
Printed by Newsfax International,
with Terra Firma founder Hands, 51, for EMI by bankers measures. ment refusing to back down and the
Beam Reach 5 Business Park, taking the witness stand today. at Citigroup Fuel pumps were already running senate expected to pass the bill
Marsh Way, Rainham, Essex, RM13 8RS Wormsley “was playing two sides dry after week-long strikes at refiner- tomorrow.

WHAT THE OTHER PAPERS SAY THIS MORNING


FORD TO SLASH MAZDA STAKE
Ford is preparing to sell most of its
remaining interest in Japan’s Mazda
CANDOVER POISED TO PULL PLUG ON in a move that would all but end the PREMIER MULLS $500M BID COWELL SECURES X FACTOR DEAL ISRAEL DRILLS BIG GAS PROSPECT
THEME PARK carmakers’ 31-year capital alliance. One of Britain’s biggest independent Hit reality television show The X Oil companies in Israel, led by Texas-
Candover, the private equity group, is Ford wants to reduce its 11 per cent oil explorers is mulling a $500 mil- Factor looks set to continue dominat- based Noble Energy Inc. this week are
on the brink of ditching plans to sell stake in Mazda to less than three per lion bid for BP’s gas production busi- ing Saturday viewing with the agree- expected to start drilling one of the
or float Parques Reunidos, the cent, according to people familiar ness in Pakistan in an attempt to ment of a new three year deal world's most promising natural-gas
Spanish theme park operator, after with the matter. The total stake bolster its position in the troubled between ITV, Simon Cowell's Syco prospects of recent years, according
offers from rival buy-out groups came would be worth about $372m at the South Asian nation. Premier Oil has Entertainment and the production to executives. Seismic surveys show
in below its €2bn ($2.8bn) price tag. current market price. The US carmak- expressed an interest in the unit group FremantleMedia. The broad- the Leviathan prospect, located 135
Apollo Management and a consor- er controlled 33 per cent of Mazda as alongside Mubadala, the Abu Dhabi caster said it has also secured The X kilometers, or about 84 miles, off
tium of Advent International and the recently as 2008 until collapsing sovereign wealth fund, according to Factor and the exclusive UK broadcast Israel's northern coast, may hold 16
Carlyle Group both submitted final motor industry sales forced it to sell people familiar with the talks. rights to the American version of The trillion cubic feet of natural gas,
bids for Parques on Friday. But the assets to raise cash. X Factor and America's Got Talent for enough to supply all of Israel's gas
two offers were below Candover’s ask- OBAMA SET TO RATTLE CAMPAIGN TIN ITV2. needs for 100 years.
ing price for the operator of 69 theme GE PLANS RETURN TO US-MADE PRODUCTS As fundraiser-in-chief for a party in
parks in Europe and the US. General Electric plans to invest dire need of money President Obama IPLAYER FOR RADIO COMING HUNGARY UNVEILS TAX PLAN
$432m in four US centres that design will embark tomorrow on a break- UK Radioplayer, the BBC-backed single Hungary’s populist leaders unveiled a
TERRA FIRMA SPENDS €670M ON and make refrigerators by 2014. The neck tour of the American West to online player for more than 400 UK new budget plan that singles out a
SOLAR ENERGY move will reverse a long-term trend of rattle the campaign tin for five pow- radio stations, will be made available handful of industries for large, tempo-
Terra Firma, the UK private equity outsourcing its appliance manufac- erful allies locked in races that on YouView and other internet-con- rary tax increases in an effort to raise
group, has sealed its third renewable turing to places such as China. GE Democrats cannot afford to lose. nected TV set top boxes, post launch. funds and cut the state deficit. Prime
energy deal by acquiring Italy’s argues that a combination of US pro- Republican fundraising has surged in The internet radio player, which will Minister Viktor Orban acknowledged
biggest solar power company from duction quality and rising transport, the third quarter of the year, erasing allow users to listen to more than 200 the proposed levies on telecom, energy
Terna, the Italian national grid opera- currency and labour costs have made the financial lead that Democrats radio stations, is set to go live in and retail companies would send a
tor, for as much as €670m (£588m). the moves practicable. enjoyed three months ago. February. “bad message” to investors.
CITYA.M. 19 OCTOBER 2010 News 3

Ackermann: Reform
US BANK Q3 EARNINGS FORECASTS
Bank Q3 earnings per
share forecast

costs could explode


Bank of America $0.16 /share

Bank of New York Mellon $0.54 /share

Goldman Sachs $2.28 /share

State Street $0.83 /share


currently being discussed,”


Morgan Stanley $0.15 /share BANKING
BY HARRY BANKS Ackermann told a banking regulation
conference yesterday. Ackermann said
Wells Fargo $0.55 /share THE economic cost of tougher global meetings with investors showed they
Source: Thomson Reuters capital rules for banks could explode if want banks to start meeting Basel III
further requirements on big banks are rules by 2013 – the start date leaders of
CEO Vikram Pandit not co-ordinated, Deutsche Bank chief the world’s top economies (G20) are set
said Citi has put in executive Josef Ackermann has said. to endorse next month.
place all the ele- “There can be no doubt that Basel III “While regulators have commend-
ments for contin- alone will have short- to medium-term ably set long transition periods for
ued profitability economic costs. These costs might attaining the new capital ratio, mar-
Picture: GETTY explode with all the add-ons that are kets... may not be quite so patient.”

Citi notches
up profits in “WHAT COULD
BE SIMPLER THAN
third quarter

the investment banking division,

BANKING
BY VICTORIA BATES
US BANK Citigroup yesterday gave the
which Citi said had recorded “signifi-
cantly higher” advisory revenues
from increased corporate activity and
SPREADS?
sector a much-needed fillip, as it beat strong debt underwriting revenues.
Wall Street expectations with a year- Vikram Pandit, the chief executive
on-year surge in third quarter net of Citi, which is still over 12 per cent
profits to $2.2bn ($1.4bn).
Citi’s third consecutive quarterly
operating profit – which translated
owned by the US taxpayer, said:
“Achieving our third straight quarter
of positive operating earnings is con-
NOTHING.
into earnings of seven cents per share tinued evidence that we are success-
– was mainly due to declining provi- fully executing our strategy and we
sions for credit losses, benefits and believe we have put in place all the
claims, which fell to $5.9bn, the low- elements for continued profitability.”
est level in over three years. Citi’s results – which came after JP
The results were also boosted by Morgan Chase last week also beat
the regional consumer banking divi- expectations with a $4.4bn net
sion, which saw earnings rise five per income haul – encouraged investors
cent on the previous quarter due to ahead of the rest of the US banking
strength in the Latin America and sector reporting results this week.
North America regions. Today sees figures out from Bank of
However, overall third quarter rev- America, Bank of New York Mellon,
enue declined by six per cent to Goldman Sachs and State Street,
$20.7bn and net income fell by a fifth while Morgan Stanley and Wells
when compared to the prior quarter, Fargo will report later in the week.
due to a one-off $800m pre-tax loss on Analysts had slashed their forecasts
the sale of the Student Loan for the banks’ earnings over the past
Corporation and weakness in the week as concerns over the depressed
securities and banking division, trading environment and the hous-
where fixed income markets trading ing foreclosure crisis in the US
slumped. weighed on expectations.
There was some positive news for BUSINESS FEATURES: P28

US industrial output unexpectedly


falls leading to calls for more QE
yet another reason for the Fed to

US ECONOMICS
unleash QE2,” said Paul Ashworth, a
US INDUSTRIAL output shrank last senior US economist at Capital
month for the first time in more than Economics.
a year, in a sign the economy is in a Industrial production fell 0.2 per
slow growth rut that appears certain cent, the first decline since June 2009,
to lead to more monetary stimulus the Fed said. Economists had expected
from the Federal Reserve. September’s industrial production to
Another report yesterday showed rise 0.2 per cent, the same as in
homebuilder sentiment rose this August.
month but remained at depressed lev- Separately, the National Association
els, fortifying views that the US cen- of Home Builders/Wells Fargo
tral bank would pump more money Housing Market Index rose three
into the economy at its 2 November points to 16 in October, beating econo-
meeting. mists’ expectations for a one-point rise
“The industrial production report to 14. A reading below 50 indicates
illustrates, if anything, economic that more builders view sales condi-
growth is still slowing rather than tions as poor than good. The index has
beginning to pick up again, which is not been above 50 since April 2006.
CITYA.M. 19 OCTOBER 2010 News 5

UKLA endorsed by City


as consultation winds up
ty had risen to 72 per cent compared had shown the performance of the

REGULATION
BY MATTHEW WEST to 69 per cent in 2007, when the sur- UKLA in a positive light.
vey was last held. But Tusa said he was concerned
THE UK Listing Authority (UKLA) The LAAC added 20 per cent of that the UKLA’s good work could be
received backing from the City yester- advisers said there had been an undermined by government plans to
day, just as the government consulta- improvement in the UKLA’s effective- merge it with governance body the
tion on its future closed. ness over the past three years. And Financial Reporting Council (FRC), as
The Listing Authority Advisory the report found the UKLA per- part of plans to reform Britain’s tri-
Committee (LAAC), the body which formed well against all three of its partite system of financial regula-
represents the investment communi- objectives as set out by the Treasury. tion.
ty in its dealings with the UKLA, said Andrew Tusa, chairman of LAAC, Most City bodies have already
overall satisfaction with the authori- said the group was pleased the survey voiced their opposition to the merger. Listing Authority Advisory Committee chairman Andrew Tusa

NEWS | IN BRIEF
Governance Code gains support corporate governance code and its prin-
Sixty-eight institutions have published ciples will include external reviewing of
statements of support for the new UK boardroom procedures and regular elec-
Corporate Stewardship Code, including tions for directors. As well as leading
48 asset managers, 12 asset owners UK institutions, the Code has attracted
and eight service providers. “A critical the support of range of international
mass of investors is coming through and investors, including Calpers. Business sec-
this is a very important first step,” said retary Vince Cable is one of its cheerlead-
Financial Reporting Council chairman, ers. The Stewardship Code aims to
Baroness Hogg. The Stewardship Code promote more active discussion between
is being introduced to replace the UK’s company boards and investors.

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CITYA.M. 19 OCTOBER 2010 News 7

BLUEBAY’S FOUNDERS SET FOR the fixed income management groups part of the RBC deal - after tax - back
BUMPER PAYDAY FROM DEAL of both Banca della Svizzera and Daiwa into Bluebay's funds. Following the
WITH ROYAL BANK OF CANADA Securities Trust and Banking. deal, if either man leaves the company
Poole, 49, spent several years at Credit within three years, 40 per cent of the
Suisse First Boston and JP Morgan. He money they have invested under the
also held senior positions within the agreement will be "subject to forfei-
THE founders of BlueBay Asset global credit arbitrage group of ture". Both men have also agreed to
Management stand to make £81m Kleinwort Benson. increase the proportion of their future
each from their remaining 8.5 per cent Willis and Poole cut their stakes in pay that will be deferred in bonuses
stakes in the business if the sale of the Bluebay in February this year when from 40 per cent to 60 per cent.
fund manager goes through as expect- they each raised £21m by selling 6.5m Other investors likely to do well from
ed. shares at 325p, although the firm said the sale include Aegon Asset
Chief executive Hugh Willis, and chief the proceeds of that sale have been Management, which owns over 4 per
investment officer Mark Poole are ploughed back into the company cent of Bluebay and stands to make
already very wealthy men featuring in through new fund launches. around £39m from the sale, and Ignis
the Sunday Times Rich List regularly. Today's cash takeover bid at 485p a Investment Securities, which owns
Prior to founding Bluebay Willis, 51, share, is at a 29 per cent premium on over 3 per cent and stands to make at
spent eight years at JP Morgan, where Friday's closing price and a 49 per cent least £29m. Willis and Poole founded
he was co-head of its European credit premium on the founders' previous the company in 2001 and floated it on
arbitrage group. He also held senior share placing in February. The two the London stock exchange in 2006
positions within the global credit arbi- directors will be obliged to reinvest a with an initial valuation of £517m mak-
trage group of Kleinwort Benson and quarter of the money they receive as ing their stakes then worth £30m each.

Hugh Willis stands to make £81m from the sale of Bluebay

RBC makes
£963m offer
for Bluebay
collectively own 20.5 per cent of the

BANKING
BY MATTHEW WEST company, have given RBC irrevocable
undertakings to vote in favour of the
BLUEBAY Asset Management has deal. Assuming the other sharehold-
accepted a takeover offer from Royal ers accept the offer at the company’s
Bank of Canada (RBC), it said yester- annual general meeting on 23
day, in a deal which values the fixed November, RBC should take owner-
income investment firm at £963m ship of the fund manager in early
($1.5bn). December.
Bluebay shareholders, if they agree George Lewis, group head of RBC
to the deal, will receive 485p per wealth management, said: “This
share representing a premium of 29.1 acquisition will further RBC's strategy
per cent on the fund manager’s clos- to leverage our position as a top 10
ing price of 375.70p on 15 October global wealth manager, and continue
and a 57.7 per cent rise on the average to expand our asset management
closing price of Bluebay shares of solutions for the benefit of our clients
307.63p for the previous three around the world. Bluebay is an ideal
months. fit with RBC’s growing asset manage-
Investors that register for Bluebay ment business.”
shares by 5 November will also Separately, Bluebay reported pre-
receive the proposed dividend of 7.5p tax profit increased some 118 per cent
per share for the financial year end- to £50m on assets under manage-
ing 30 June 2010 meaning the total ment (AUM) which increased 41 per
price per share would be 492.5p. cent to $34.3bn for the year ending 30
Bluebay’s share price shot up near- June.
ly 30 per cent, or 111.6p per share, on It also reported a 17 per cent – or
the announcement to 487.30p per $5.7bn – increase in AUM to $40bn for
share. the three-month period to the end of
The fund manager’s directors, who September.

JEREMY SILLEM firm offers strategic advice and will


often take equity stakes in companies.
CO-FOUNDER Prior to establishing SHP, Sillem was
SPENCER HOUSE the chairman of Bear Stearns
PARTNERS International from May 2000 until
January 2004. Before joining Bear
Stearns, he spent a 28-year career
with investment bank Lazard. In 2007
SHP advised a consortium including
Spencer House Partners (SHP) has Crestview Partners, RIT Capital
acted as Bluebay’s financial adviser for Partners and interests of Lord
over four years. During this time it Rothschild, on the acquisition of a 24.9
advised Bluebay on strategic direction per cent interest in fund manager
including the decision to list on the Martin Currie with Sillem appointed
London stock exchange in 2006. It has to the board as a non-executive direc-
also advised on talks with Royal Bank tor. A year earlier SHP acquired a
of Canada. SHP was established in minority stake in investment advisers
2006 by Lord Rothschild and Jeremy Partners Capital. It still plays an
Sillem to provide banking services to active role assisting the management
companies in the financial services with the strategic development of the
industry, with a particular focus on company. Sillem is a member of the
asset management businesses. The advisory board of Partners Capital.
8 News CITYA.M. 19 OCTOBER 2010

Grant Thornton reports 40pc


surge in annual pre-tax profit
was down by 6.2 per cent to £135.5m “Our overall performance has been


PROFESSIONAL SERVICES
and Tax by 4.8 per cent to £93.0m. excellent in these conditions. We
BUSINESS and financial adviser Grant Chief executive Scott Barnes said acted earlier than some others and
Thornton yesterday said annual pre- Grant Thornton’s profitability and this is reflected in our 40 per cent
tax profits grew by 40.2 per cent to cash position had created a platform growth in pre-tax profits for the year
£77.6m following its merger with for growth as the firm emerges from and, against the backdrop of the
Robson Rhodes and a period of the difficult economic environment. recession, we have done well to main-
restructuring and cost-cutting. Grant Thornton’s strategy is focused tain our overall level of revenue,”
In the year to 30 June the firm’s on acquisitions to build on its organic Barnes said. “We need to increase our
revenue rose 0.4 per cent to £379.7m. growth. This week it acquired litiga- profitability further but this was the
Advisory revenue grew 11.1 per cent tion support consultancy Legal Inc for start I was looking for in my first full
Scott Barnes took over as chief executive at Grant Thornton in January 2009 to £151.2m but Assurance revenue integration into its forensic practice. year leading the firm.”

Insurer Hardy
rebuffs offer
from Beazley
because of low interest rates – if the

INSURANCE
BY HARRY BANKS deal goes ahead.
Consolidation among Lloyd’s insur-
LLOYD’S of London insurer Beazley ers, which offer cover against large-
yesterday said it still hoped to clinch a scale risks such as natural disasters,
takeover of Hardy Underwriting after has long been mooted as cyclically
its smaller peer rejected an initial low insurance prices weigh on their
300p per share approach this month. shares, although deals can be diffi-
Dublin-based Beazley said its pro- cult to secure. Brit Insurance agreed
posed cash offer on 6 October valued to a £850m offer from buyout firm
Hardy at about £155m. The approach, Cinven Capital Partners and Apollo
which represented a 36 per cent pre- Management last month.
mium to Hardy’s closing share price Beazley, which in July said its first-
on 5 October, was rejected by the half profit nearly quadrupled, said on
Bermuda-based insurer in a letter Monday it would continue talks with
dated 8 October. Hardy’s board and shareholders with
Hardy said the offer substantially the aim of agreeing a recommended
undervalued the company and its deal.
board had rejected it unanimously as
an opportunistic attempt to buy the ANALYSIS l Beazley
group. Hardy’ s shares rose 17 per
cent to 285p in early trading, before 124 p
closing at 290p. Shares in Beazley 118.00
rose 4.7 per cent to 119.9p making the 120 18 Oct
company the second-biggest riser in
the FTSE 250 share index. They closed
at 118p. 110
Analysts said the rise reflected
prospects that Beazley would earn a 112
positive return on its cash reserves –
generating almost no returns now 19 Jul 6 Aug 26 Aug 16 Sep 6 Oct

AIA to close IPO books early as


investors jump to buy the shares
biggest ever IPO, leaving its American

INSURANCE
parent with a stake of just 32.9 per
THE PLANNED Hong Kong initial pub- cent.
lic offering of AIA, the Asian life AIA is understood to have easily
insurance business of American covered the share sale at the top of
International Group (AIG), is set to the range after a two-week roadshow
close two days earlier than anticipat- with investors, prompting plans to
ed after institutional investors rushed close its books today rather than
to pledge their interest in buying the Thursday.
shares, it emerged yesterday. Among those investors lapping up
AIA has indicated that it will price the offer are thought to be $300bn
the IPO later this week within a range Chinese state sovereign wealth fund
of HK$18.38 (£1.49) and HK$19.68 per China Investment Corp and corpo-
share, raising up to $15bn (£9.43bn) as rates such as China Life Insurance.
a base scenario before the option to AIA yesterday also began its retail
release more shares is exercised. If offering, marketing the shares to the
that happens, the firm could raise up public prior to the stock market
to $20.6bn in the world’s third- debut.
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CITYA.M. 19 OCTOBER 2010 News 11

Qatar Holding snaps up 5pc


stake of Santander in Brazil
that are convertible into old or new string of deals this year and in the


FINANCIAL SERVICES
BY HARRY BANKS shares in Banco Santander Brazil face of tougher new capital rules.
after three years. The conversion “This deal makes sense for
QATAR will take a five per cent stake price is 23.75 Brazilian reales (£9) per Santander since its latest buys have
in the Brazilian unit of Spanish share and the bonds have an annual eaten into capital, but considering
lender Banco Santander, with a yield of 6.75 per cent in dollars until the benefit is still three years away, it
$2.7bn (£1.7bn) investment that adds converted. looks like they also wanted funds to
to its big bank deals in recent years. The bonds will bolster Santander’s keep expanding in Brazil,” said Nuria
Santander, the Eurozone’s biggest capital by about 25 basis points when Alvarez, analyst at Rent Four.
bank, will issue bonds to Qatar converted. Analysts have said the Qatar bought a £1.75bn stake
Holding – the direct investment arm Spanish bank may need to raise capi- Barclays in 2008 when the bank was
of the Qatar Investment Authority – tal to boost its balance sheet after a seeking to avoid a taxpayer bailout.

Eurotunnel is also bidding for the UK’s High Speed 1 rail link Picture: GETTY

Summer hols
give a lift to
Eurotunnel
despite intense competition,” said

TRANSPORT
Eurotunnel boss Jacques Gounon.
BY MARION DAKERS
Eurotunnel made a joint bid with
EUROTUNNEL, the operator of the Goldman Sachs and M&G earlier this
Channel Tunnel, said yesterday a year for High Speed 1, the railway
bumper summer helped boost rev- development between London and
enues for the year so far by 10 per Folkestone being sold off by the gov-
cent. ernment and valued at £2bn.
The Paris-based firm said core rev- Gounon said the consortium was
enue for the three months to the end working hard but wanted to “pay the
of September grew eight per cent right price for the asset”. “We believe
compared to last year to €181.3m we can generate synergies and can
(£159m). This rose to €212.1m when bring additional traffic” to the high
sales from Eurotunnel’s recent rail speed line, he added.
freight acquisitions were included,
the firm said in an update. ANALYSIS l Eurotunnel
The company said truck shuttle 6.25
6.5 € 18 Oct
traffic rose 50 per cent in the third
quarter of the year, as commercial
transport began to recover. Sales of
5.5
Eurostar tickets rose three per cent to
2.66m in the quarter, despite the vol-
ume of passenger trains falling by 23
4.5
per cent compared to last year.
“The advantages the tunnel offers
made the difference in a market
which remained challenging and 19 Jul 6 Aug 26 Aug 16 Sep 6 Oct

Northeast Utilities will buy rival


Nstar for $4.2bn in all-stock deal
shareholders. “Bigger is better” for

UTILITIES
the two companies, NStar chief execu-
NORTHEAST UTILITIES will buy rival tive Thomas May said. “The deal
NStar in a $4.17bn (£2.63bn) all-stock allows both of our shareholders to
deal to create a utility that will pro- enjoy higher earnings and dividend
vide power and gas to more than half growth than if we were alone.”
of the customers in New England, the The deal calls for the exchange of
companies said yesterday. 1.312 common shares of Northeast
The firms said the increase in scale Utilities for each NStar share. That
would allow them to better shoulder translates to around $40.28 for each
their investment plans, and would NStar share, a roughly two per cent
also be beneficial to the company’s premium on its pre-approach price.
The Capitalist
12 CITYA.M. 19 OCTOBER 2010

PETROFAC’S AYMAN ASFARI NAMED


AS UK ENTREPRENEUR OF THE YEAR
IN A climate where repairing the fraz- upon the country’s wealth creators tional, if somewhat cheesy, advice for
zled economy is paramount, it each year – the overall UK entrepre- his fellow entrepreneurs.
seemed fitting to see hundreds of the neur of the year – this time round “Aim high, stick the course and
UK’s most successful company bosses went to Petrofac chief executive shoot for the stars,” he told the guests.
and their advisers, bankers and Ayman Asfari, a name which has had “There’s no limit to what you can
friends gather at the Park Lane Hilton eagle-eyed stockpickers foaming at achieve.”
last night to celebrate the heroes of the mouth for years.
the recovery – entrepreneurs – at the Having built Petrofac into a £5bn
Ernst & Young Entrepreneur of the
Year Awards.
business since its £750m flotation in
2005, Asfari is always hungering for
PROUD AS PUNCH
Equally stirring, if less poetic, was last
The most coveted gong bestowed more – and had the following inspira- year’s winner Michael Spencer, the

Above: Petrofac chief executive Ayman Asfari collects his award after being named EY’s
2010 UK entrepreneur of the year

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CITYA.M. 19 OCTOBER 2010 13
EDITED BY
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GOT A STORY? EMAIL
thecapitalist@cityam.com

boss of inter-dealer broker Icap. in absentia by the CBI’s director-gener-


Spencer went on from the UK al Richard Lambert.
awards last year to clinch EY’s World
Entrepreneur of the Year gong in
Monaco in June, from the jaws of 49
rivals from across the globe.
IN STYLE
Julian Dunkerton, the chief executive
“When they announced that I’d of retailer Supergroup, won the retail
won, we went crazy,” Spencer chuck- entrepreneur gong, after floating his
led. “We danced around the place company on the stock exchange in
with the Union Jack; you’d all have March and more than doubling its
been proud as hell!” share price in half a year.
Spencer’s girlfriend Sarah “There’s great product and then
(Marchioness of Milford Haven) was there’s fashion and they’re two differ-
undoubtedly proud as hell as well, ent things,” Dunkerton insisted,
especially as her man paid special shunning the cult status imposed
tribute to her influence last night. upon his brand by the unofficial
“I went over [to Monaco] with my patronage of image-conscious stars
Above: Lauren girlfriend, who’s also here tonight,” like David Beckham. “It’s not all
Davey of Ernst & the incurable romantic quipped. “She about the catwalk – we’re about creat-
Young with Sam has certainly been a talismanic ing the enduring classics.”
Rossiter and Tina success, I must say…” Meanwhile, James Benamor,
Sen from the chief executive of Richmond
London Stock Group, won the consumer prod-
Exchange, catch- GOLDEN OLDIES ucts and services category – fitting-
ing up over a Leading the pack in the rest of ly in the current climate, since his
glass of bubbly this year’s awards, presented by company provides funding
before the dinner BBC news stunner Fiona Bruce, to those who’s been
were a pair of old-timers refused credit by the large
from the corporate world. banks; Telecity Group’s
Lord Young of Graffham, the Michael Tobin took the
former president of the IT services gong; Nick
Institute of Directors, was Jenkins, founder of per-
given a special award in sonalised greeting card
recognition of his contribu- site Moonpig, win the
tion to entrepreneurship over digital and innovation
the past 50 years (“this is the award; and the social
very first award I’ve ever entrepreneur category
Above: SuperGroup chief executive Julian Above: Michael Spencer, chief executive of won”, Young smiled, went to Sophi Tranchell,
Dunkerton receives his award from Ishbel Icap and winner of last year’s UK and global cradling the trophy to his founder of Divine
Macpherson, a board director at Speedy entrepreneur of the year awards chest); while Brian Souter of Chocolate – which is 45 per
Hire and Game Group Stagecoach won the master cent owned by the
Left: Award winner James Benamor, boss of entrepreneur of the year Ghanaian farmers which
Pictures: Alex Ridley/ CITY A.M Richmond Group, and partner Tina Patterson award, bestowed upon him produce its cocoa.
14 News CITYA.M. 19 OCTOBER 2010

Rio Tinto and BHP Billiton to


abandon iron ore joint venture
assets, and strengthens the hand of and would have reaped more than

RESOURCES
BY HARRY BANKS steel mills which feared the pair would $10bn in savings from combining rail
gain too much pricing control. and port operations.
BHP BILLITON and Rio Tinto yesterday The long-expected news also left A number of City firms including
confirmed they were ditching a plan BHP focusing squarely on a $39bn Credit Suisse, Morgan Stanley and
to form the world’s biggest iron-ore (£24.5bn) hostile bid for fertiliser Macquarie will miss out on fees from
joint venture, in a victory for steelmak- group Potash, no longer distracted by Rio, while Lazards and Gresham
ers that could prompt both miners to the $116bn marriage of the two min- Partners were signed up to advise BHP.
step up competing expansions. ers’ mammoth Australian iron ore BHP and Rio had a fall-back option
The announcement marked the sec- operations. A joint venture between to share some iron ore infrastructure
ond failed attempt in three years by Rio and BHP, the world’s second and in the event the full joint venture
BHP chief executive Marius Kloppers third largest iron ore miners, would failed, but this “Plan B” is also in doubt
to buy into Rio’s superior iron ore have eclipsed Brazil’s Vale, the largest, following the strength of opposition.
New BP boss Robert Dudley has sold a string of assets since he took the top job Picture: REX

BP links bonus
pay to safety
40,000 boe per day. The sale allows


ENERGY
TNK-BP to expand beyond its tradi-
BY MARION DAKERS tional Russian base.
FOURTH quarter bonuses for staff at “The acquisitions in Venezuela and
embattled oil major BP will be based Vietnam mark a milestone in TNK-
entirely on safety, chief executive Bob BP’s strategic expansion in the global
Dudley has said. energy market,” said Mikhail
Dudley has sent an email to all staff Fridman, TNK-BP executive chairman
members saying their performance and one of the four Russia-connected
in terms of safety and risk manage- billionaires who own the other 50 per
ment would be the only factor used to cent of TNK-BP.
work out bonuses. Dudley, who replaced Tony
“We are taking this step in order to Hayward after the Deepwater
be absolutely clear that safety, compli- Horizon oil spill, said: “Today’s agree-
ance and operational risk manage- ment is further evidence of the rapid
ment is BP’s number one priority, progress BP is making towards the
well ahead of all other priorities,” he divestment target we set out in July.”
added. The company said in July it aims to
Meanwhile, BP’s multi-billion dol- raise up to $30bn in cash over the
lar asset sale continued yesterday as it next 18 months to help pay for the
offloaded its oil and gas fields in aftermath of the Gulf of Mexico oil
Vietnam and Venezuela to its Russian spill in April.
joint venture TNK-BP for $1.8bn BP had already offloaded more
(£1.13bn). than $11.5bn of assets before yester-
BP said yesterday the assets repre- day’s deal, the biggest of which was
sented reserves of 270m barrels of oil the sale of $7bn of North American
equivalent (boe), with production of assets to Apache Corp late last month.

ANALYST VIEWS: WHAT DO YOU MAKE OF


BP’S ASSET SALES SO FAR? Interviews by Marion Dakers

TONY SHEPARD | CHARLES STANLEY

“ It seems to be going well for BP, with this sale fol-


lowing on nicely from the Apache deal. BP offloads non-core


assets regularly, so has had some practice. TNK would like to
expand too, so it’s a good move for it.

MARK PRIEST | ETX CAPITAL

“ BP doesn’t particularly want to be making these


sales, but it doesn’t have much choice. On the other hand,


the company doesn’t seem in as much trouble as it did a few
months ago, and it is managing to raise cash.

GREG SMITH | FAT PROPHETS

“ By selling to TNK-BP, BP still has an interest in the


assets it has offloaded. It doesn’t feel like it has sold the


crown jewels of the company just yet, and BP is getting fair
prices without a sense of urgency in the deals.
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CITYA.M. 19 OCTOBER 2010 Spending Review 17

Maude in bid to find savings


by delivering services online
lastminute.com, to see if some services savings achieved so far.

POLITICS
BY DAVID CROW can be delivered through an online- The coalition has saved £402m by
only model to reduce costs. axing ID cards, he said, while a further
FRANCIS Maude, the cabinet office He said: “In an age when 96 per cent £18m had been saved by vacating 20
minister, yesterday said the govern- of all 25-34 years olds are internet government buildings, Maude said.
ment would cut waste and introduce users, just 13 per cent of our contact Around £27m has been cut from the
radical reforms in a bid to protect jobs with citizens is currently carried out government advertising budget.
and frontline public services from online.” Meanwhile, plans to renegotiate
swingeing cuts. The coalition will leave “no stone contracts with suppliers have “pro-
Maude has drafted in Martha Lane unturned” as it seeks to root out waste gressed quickly”, Maude said, result-
Fox, the government’s digital adviser and find efficiencies in the public sec- ing in an estimated £800m of savings
and founder of travel site tor, Maude said, as he laid out a raft of by the end of this year. Francis Maude said more services will be delivered over the internet Picture: PA

Replacement
of Trident set
to be delayed
the most high priority security risks

POLITICS
BY STEVE DINNEEN facing the UK are now terrorism, cyber
attacks and natural disasters.
DAVID Cameron will today unveil the This means stockpiles of traditional
most drastic cuts to the defence budg- military hardware such as tanks and
et in a generation, including plans to fighter jets could eventually become
delay the replacement of the sub- superfluous to requirements.
marines that can launch Britain’s Altogether the defence budget will
nuclear deterrent by up to five years. be cut by around eight per cent over
Putting off the Trident replacement the parliament.
will save an estimated £750m but puts The coalition is expected to give the
Cameron on the back foot after criti- go-ahead to a £5.2bn programme to
cising the Lib Dems before the election build two new aircraft carriers.
for failing to back the programme. However, for up to eight years there
His government’s defence review is will be a “capability gap” where there
also expected to slash the number of will be no available jets for the first
army troops by 7,000 and scrap the carrier. Cameron will put this down to
iconic Harrier jump jet. Labour’s legacy of debt and poor man-
However, he will argue that the agement of military contracts.
changing national security landscape There will also be more cooperation
means that the billions saved on with British allies, especially the
defence spending will not leave the UK French, who will be granted limited
vulnerable. According to the National use of the aircraft carriers and take
Security Strategy released yesterday, part in joint training exercises.

CITY VIEWS: DOES ALAN JOHNSON HAVE THE


RIGHT IDEA ABOUT HOW TO CUT SPENDING?
Interviews by Marion Dakers

IAN RANKIN | CANOPIUS


“I do think the cuts need to be intro-
duced more slowly, as Labour have sug-
gested. I’m worried that the
Conservatives will undo the
work done on the NHS and
schools by cutting too soon.”
JITENDRA BAKSHI | XL INSURANCE
“I believe the Conservatives are correct in
their approach. It’s the same as in people’s
own finances – you need to pay off debts
as soon as possible. I’m from India,
where they are also cutting the
deficit.”
18 Spending Review

Alan Johnson gave his first major speech as shadow chancellor yesterday Picture: PA

@ @ MORE NEWS
ONLINE AT
www.cityam.com
Johnson: tax
bankers to
soften cuts But the centrepiece of his speech

POLITICS
BY DAVID CROW was a plan to raise a further £3.5bn
from the banks, either through a
ALAN Johnson yesterday unveiled repeat of Darling’s bonus tax or via
Labour’s strategy for reducing the some kind of levy on remuneration


deficit, backing his predecessor’s plan and profits.
to halve it within four years but argu- That amounts to an extra £7.5bn of
ing for higher taxes on banks to soften tax rises on top of those set out by


the blow of spending cuts. Labour before the election, meaning
Speaking to an audience of account- the party would now only cut spend-
ants at KPMG’s headquarters, the shad- ing by in real terms £44.5bn com-
ow chancellor said Alistair Darling was pared to £52bn. The coalition is
²
%DQNWR/HZLVKDPLQPRUQLQJ
     right to plan to halve the deficit by planning real terms spending cuts of
2014-15, but that he had “looked again £83bn.
SHDNKRXUV
 at the way in which we deliver that Aides to Johnson said he was agnos-
reduction”. tic about how to raise the extra rev-
       He added: “My view is that specific, enue from banks, but that the entire
targeted tax changes need to do more £7.5bn package would be spent on cap-
     of the work”. ital projects. He would cut capital
 Proposing a split of around 60 per spending by 17 per cent, compared to
cent spending cuts to 40 per cent tax the 33 per cent pencilled in by Darling.
hikes, Johnson said Labour would raise Like Darling, chancellor George
       £7.5bn more in taxation than Darling Osborne has adopted a ratio of around
  had planned, but that it still wanted to 70 per cent cuts to 30 per cent tax
achieve an overall fiscal consolidation rises, although he wants to achieve a
of £83bn in real terms by 2014-15. much larger consolidation of £113bn
Johnson said he would back the by 2014-15.
coalition’s £2.5bn banking levy, as well Johnson said his plans implied cuts
as £1.5bn of further tax increases, such to departmental expenditure of £34bn
as freezing the income tax threshold or eight per cent, almost half of the
for higher rate payers from 2013 and coalition’s 14 per cent or £61bn of
increasing capital gains tax. departmental cuts.

QUOTES FROM ALAN JOHNSON’S es in personal taxation beyond those


FIRST MAJOR SPEECH AS already announced.”
SHADOW CHANCELLOR On another banking levy:
“The government, which claims ‘fair-
On the deficit: ness’, has put itself in the absurd posi-
“The government suggests that the tion of saying that children should play
deficit was avoidable and the emer- a bigger role in getting the deficit
gency Budget unavoidable. The truth is down than the banks. The banking sec-
actually the reverse. The deficit was tor is contributing £2.4bn, while child
'/5$EULJKWHUFRPPXWH
'/5$EULJKWHUFRPPXWH ZZZGOUFRXN
ZZZGOUFRXN unavoidable and the Budget was not benefit freezes and cuts will raise sub-
only avoidable, but wrong.” stantially more. So families take the
strain while bankers grab the bonuses.”
On taxation:
“We will support the rise in Capital On Labour’s plans for cuts:
Gains Tax in the emergency Budget. “We’re not in the business of doing a
There is also a case for freezing the shadow spending review. But we will
basic rate limit in 2013-14 as proposed. be clear on the scale of cuts we think is
And let me be clear – we are not pro- necessary. And it is significantly less
posing to halve the deficit with increas- than the government believes is right.”
CITYA.M. 19 OCTOBER 2010 Spending Review 19

NHS should not be shielded from the axe


was during the mid-1980s boom ringfences to NHS and international would prove necessary to meet a 35 than we thought” relevant to the
when unemployment was falling and development spending, meaning that per cent target — such as cutting the question of whether NHS spending
so benefits costs dropped. The largest non-ringfenced spending must fall local government grant by a quarter could be cut? Refusing to cut in the
inflation-adjusted cuts achieved since about 25 per cent. Given that to a third; the prisons budget by a areas where spending had risen most
WWII were those imposed by the IMF Defence appears to have settled for blunt 20 per cent; and policing budg- – health and education – is bound to
in the mid-1970s – four per cent – but about eight per cent cuts and the ets by as much as 20 per cent. result in avoidable unpalatable cut-
these only lasted two years before schools budget has been ringfenced, ting.
spending rose again, whereas the that means cuts elsewhere are likely NO EASY CHOICES That leaves the welfare budget.
COMMENT coalition cuts programme will to need to be around 35 per cent. There are no easy choices here, but This was clearly too high – principally
ANDREW LILICO involve cutting for four straight years. That will mean some combination of
pruning back right to the base in
some decisions have made matters
harder. What justification is there,
because having five million people on
out-of-work benefits at the height of
DEEPER THAN THATCHER’S CUTS those departments such as Business, really, for protecting the bloated NHS the boom was a huge policy failure of

S
EVERAL commentators recently So the coalition cuts are going to be Local Government, and Energy, budget – up one third in real terms the last administration.
have noted that public spending deeper than Thatcher’s, without the where there is considerable discre- over the last parliament alone – from Can the coalition produce credible
is set to rise in cash terms. Even benefit of a boom, and much longer- tionary spend, and fundamentally any cuts while cutting budgets enor- plans to reduce the numbers of wel-
after adjusting for inflation, lasting than the IMF’s. But this only unpalatable cuts elsewhere. mously that had not risen at all over fare recipients, to limit the pain for
total managed expenditure is set to scratches the surface of the challenge. Imagine the political reaction even the last parliament? departments that had not previously
fall by only 3.6 per cent. Can this real- For a start, the UK’s recent deficits to plausible cuts such as to budgets Obviously the Conservatives made had large spending rises while still
ly be so tough? have been unprecedented, meaning for after-school and breakfast clubs, pre-election promises to ringfence ringfencing spending where the
Answer: emphatically, yes. Even at that debt interest costs will surge, so science research, the Olympics, high- NHS spending, but the Liberal spending rises before were the
the overall level, a fall of 3.6 per cent cuts in the rest of spending will be er education teaching, the Democrats made pre-election promis- largest? Only George Osborne can tell
is very significant. The maximum much larger. Cuts in departmental Technology Strategy Board, and the es not to support tuition fees. What is us.
peak-to-trough cuts Mrs Thatcher spending will be about 13 per cent. policing budget. And that is before the difference? Why weren’t the • Andrew Lilico is the chief economist of
achieved were 3.1 per cent, and that Then, of course, there are the we consider the unpalatable cuts that arguments that “matters were worse Policy Exchange.

HOW THE DEFICIT REDUCTION PLANS COMPARE | CONSOLIDATION BY 2014-15 IN REAL TERMS

£113bn
Total
£83bn
Spending cuts
£29bn
Taxation
consolidation
GEORGE OSBORNE, CHANCELLOR George Osborne’s
73% 27%
emergency
Budget outlined
£83bn of spend-
ing cuts

£73bn
Total
£44.5bn
Spending cuts
£28.5bn
Taxation
HOW THE FISCAL FORECASTS COMPARE
LABOUR
consolidation 2010-11 2011-12 2012-13 2013-14 2014-15

Public sector 10.5 8.3 6.6 5.0 3.9


ALAN JOHNSON, SHADOW CHANCELLOR net borrowing*
61% 39%
Public sector 62.2 68.2 71.8 73.7 74.4
net debt*

£73bn
Total
£52bn
Spending cuts
£21bn
CONSERVATIVES
2010-11 2011-12 2012-13 2013-14 2014-15
Taxation
consolidation Public sector
net borrowing*
10.1 7.5 5.5 3.5 2.1

Public sector 61.9 67.2 69.8 70.3 69.4


ALISTAIR DARLING, EX-CHANCELLOR net debt*
71% 29% *as a share of GDP

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20 Consumer News CITYA.M. 19 OCTOBER 2010

Pernod Ricard sells Lindauer Philips returns to profit


market. Riverlands, Saints and Timara.
as cost cutting pays off

CONSUMER
Indevin operates wineries in Pernod Ricard New Zealand manag-
BY HARRY BANKS Marlborough and Hawke’s Bay. ing director Fabian Partigliani said


PERNOD Ricard has sold its Lindauer Meanwhile, elsewhere in the New the company would continue in New RETAIL growth ahead.
New Zealand sparkling wine brand Zealand wine industry, Delegat’s Zealand with the Brancott Estate, Generic Electric had heightened
to a consortium composed of brewer Wine Estate is reported to be in the Stoneleigh, Church Road, Deutz, PHILIPS Electronics took a cautious fears about the recovery last week
and drinks distributor Lion Nathan process of buying out the remaining Boundary and Triplebank brands. view of fourth-quarter sales growth when it reported a sharper-than-
New Zealand and contract winemak- shares it doesn’t already own in Some experts speculated that the yesterday given fragile consumer expected drop in revenue on slack
er Indevin. Oyster Bay. It already has a 54.9 per sale could make it more difficult for confidence, overshadowing third- demand for heavy equipment.
The NZ$88m (£42m) sale cent stake. The sale is subject to Fosters to offload its wine division. quarter operating profit that beat Sales were up 10 per cent to
includes a number of other minor Overseas Investment Office approval. Analysts have said that the compa- forecasts on cost cuts. €6.16bn (£5.7bn).
wine brands from Gisborne and The sale includes the sparkling ny will be unwilling to accept less The Dutch company, which com- “We do see two levels of uncertain-
Hawke’s Bay. brands Aquila, Bernadino, Chardon, than its book value of around petes against the healthcare and ties. Patchy consumer confidence
Lion Nathan produces Steinlager Lindauer and Verde and seven $3.1bn. Foster’s last month rejected lighting units of General Electric and an uncertain economic climate,”
and Speight’s beers and distributes brands in Pernod Ricard’s still wine an indicative offer from New York- and Siemens said economic uncer- Philips chief financial officer Pierre-
leading brands including Smirnoff portfolio, including Bensen Block, based Cerberus Capital for between tainty and brittle consumer senti- Jean Sivignon. “I don’t see a double
and Bacardi in the New Zealand Corbans, Huntaway, Jackman Ridge, $2.3bn (£1.4bn) and $2.7bn. ment made it hard to see robust dip right now.”

Europe lager
NEWS | IN BRIEF
1%
Half year
volume rise New Bond Street ‘best in world’
The head of Piaget, one of the world's
2% leaders in jewellery yesterday said New

sales tumble 5%
Rise in soft
drink sales
Bond Street the world’s premier shop-
ping street for jewellery. Speaking as he
opened a new flagship store in the
street, Philippe Léopold-Metzger said:
“No other street in the world matches it
for the watches and jewellery industries

at SABMiller 80%
Fall in European
Lager sales
— not even New York's Fifth Avenue.”
Piaget fought off four other retailers for
the site, which opened on Friday. Cartier,
Chanel and Louis Vuitton, are also on the
street. Property agent Cushman &
Wakefield said Piaget, owned by Swiss
luxury giant Richemont, had paid the
Cazenove, the company’s own Company’s profit from biggest rent ever on the street, where

CONSUMER
broking adviser. emerging markets prices have risen by 19.4 per cent in the
BY JOHN DUNNE
Webb left his earnings per share last 12 months. Sienna Miller fronted
BREWER SABMiller yesterday report- forecast unchanged at 186 cents for Paiget’s last advertising campaign.
ed a recovery in beer sales boosted by the year to March 2011.
the emerging markets of Africa and The brewer, which earns over 80 SABMiller is trading in line with forecasts Picture: GETTY Facebook apps ‘leak’ details
Asia – sales of lager dipped by five per per cent of its profits in emerging Facebook was yesterday thrown into a
cent in Europe. markets Colombia, South Africa, new privacy row after it emerged the
Overall the company beat forecasts
with a slim one per cent rise in half-
year volumes.
Poland and China, is seen by analysts
as interested in buying Foster’s
Group’s beer interests or the African
Emerging markets offer hope site is passing on details of millions of
users and their friends to internet firms.
An investigation found the social net-
The London-based brewer of
Peroni, Grolsch and Miller Lite said
yesterday growth in these markets
beer business of France’s Castel.
Meanwhile, the company said it
had resumed reporting results from
as European profit dries up working site is giving details of users
who use apps and games such as the
hugely popular FarmVille. The issue
and also in South Africa helped offset its 36 per cent stake in Delta Corp, the affects tens of millions of Facebook
volume dips in Europe and North biggest brewer and soft drinks bottler SABMILLER yesterday painted a well placed to jump on the opportu- users, including people who set their
America in April to September. in Zimbabwe. SABMiller had stopped mixed picture with Europe lagging nities being planned for in Asia and profiles to Facebook’s strictest privacy
On Europe SABMiller said: “The including Zimbabwe results in 2006 behind emerging economies – par- Africa. According to Sam Hart at settings. The site’s bosses today pledged
industry continued to be affected by because of the country’s shattered ticularly in Africa – with lager sales. Charles Stanley “the current valua- to fix the problem, and said the informa-
weak economic conditions across the economy. The company has even resumed tion suggests that good future tion was being shared “inadvertently”.
region. Poland, the Czech Republic reporting results in Zimbabwe after prospects are fully discounted in the “Our policy is very clear about protect-
and Romania suffered particularly ANALYSIS l SABmiller the stabilisation of the currency. share price”. ing user data, ensuring that no one can
poor sales. p 2,069.00 On an organic basis volumes were That synopsis seems to ring true, access private user information without
2,100 18 Oct
Beer volume growth, price rises in up 14 per cent in Africa while drop- with the shares a hold for now. explicit user consent,” said Facebook’s
the prior year, some raw material cost 2,050 ping five per cent in Europe. It is a The breadth of the company’s Mike Vernal. “Recently, it has come to
cuts and the strengthening of key 2,000
trend which has been showing up assets make it vulnerable to political our attention that several applications
operating currencies against the US on the data for some time now. The upheaval across the globe but it has built on Facebook Platform were passing
dollar helped SABMiller’s results to 1,950 company has been busy buying up strong localised management. the User ID, an identifier that we use
meet its own expectations. 1,900
local brands and planning for the within our APIs, in a manner that violat-
“We see this statement as a small future as the UK market, and oth- ed this policy. In most cases, developers
positive for SABMiller and retain our
‘overweight’ recommendation,” said
1,850 ers, go flatter. As the world economy
picks up the drinks giant should be
BOTTOMLINE did not intend to pass this information,
but did so because of the technical
19 Jul 6 Aug 26 Aug 16 Sep 6 Oct
Analysis by John Dunne
analyst Matthew Webb at JP Morgan details of how browsers work.”

London hotels see rises after summer Puma sets up new unit as
brings tourists flocking into the capital it hunts for acquisitions
10.8 per cent to £49 after a six per two per cent. man and chief executive, who is cur-

LEISURE

RETAIL
BY JOHN DUNNE cent increase in occupancy to 74.9 per Marvin Rust, hospitality managing rently Puma’s supervisory board
cent and a rise of 4.5 per cent in the partner at Deloitte, said: “There are PUMA’S chief executive Jochen Zeitz chairman.
AVERAGE room rates in London average price charged to £65. clearly a number of challenges for will head a new “sports and lifestyle” “The sport and lifestyle division
hotels have increased for the first Demand for rooms in the capital hoteliers in 2011, the year before the division at parent company PPR, the will be, in my view, more important
time in two years, as the summer grew thanks to an influx of Arab trav- Olympics and the supply of luxury French luxury goods and retail con- in size, in turnover, because we are
weather boosted trade. ellers in the lead up to Ramadan, as hotels in the capital expanding with glomerate said yesterday. operating in mass-market segments,
Revenues per available room well as London Fashion Week and the reopening of The Savoy and the Zeitz will also become executive but not in terms of profit,” Pinault
(revpar) jumped by 19.8 per cent to London Design Festival towards the Four Seasons.” chairman at Puma and oversee the said.
£117 in the quarter to 30 September – end of the quarter. Regional hotels are expected to see search for a new chief executive for PPR, which also owns the Yves
fuelled by a 15.6 per cent increase in However, Deloitte predicted revpar gains next year, rising 4.5 per the company. And PPR said it will con- Saint Laurent fashion brand and the
average room rates, according to sur- London’s revpar will fall 5.2 per cent with both occupancy and aver- tinue to hunt for acquisitions. Gucci group, saw its shares drop 2.8
vey by accountants Deloitte. cent next year with occupancy and age room rates experiencing growth Puma new board will also include per cent to €116 (£102) on the Paris
Across the country revpar jumped room rates falling 3.2 per cent and across the board. François-Henri Pinault, PPR’s chair- stock exchange.
In association with

SPENDING REVIEW
SPECIAL THIS THURSDAY IN CITY A.M.
WITH EXTENDED COMMENTARY FROM OUR EXPERTS

FIND OUT WHAT


GEORGE OSBORNE’S
SPENDING REVIEW
MEANS FOR YOU
FURTHER NEWS, COMMENT AND
ANALYSIS IN FRIDAY’S PERSONAL
FINANCE SECTION, ONLY IN CITY A.M.

EXPERT ANALYSIS FROM

ALLISTER HEATH DAVID CROW


EDITOR POLITICAL EDITOR

VICTORIA BATES DAVID JONES


DIARY EDITOR OF
22 News CITYA.M. 19 OCTOBER 2010

Assets bounce back in 2009 Germany pays €1.5m for


the fastest growing firms had done so AUM to around four per cent in the
Julius Baer clients’ data

BANKING
in a primarily organic way, with the last decade, the report said. In con-
BY MATTHEW WEST other half doing so by merger or trast Japanese fund managers’ share
ASSETS under management (AUM) at acquisition, the report said. of AUM fell from over 13 per cent to summer and the person who sold the


FINANCIAL SERVICES
the world’s largest 500 fund man- Carl Hess, global head of invest- under 7 per cent in the same period. CD asked that the proceeds be donat-
agers jumped by 16 per cent in 2009 ment at Towers Watson, said last year Some fund managers have seen GERMAN prosecutors paid around ed to a charity, the spokeswoman
to $62 trillion (£39 trillion), the sec- was “almost the exact opposite of exceptional growth in the last five €1.5m (£1.3m) for client data from said. Baer would not comment.
ond highest rise on record, a report 2008” as most fund managers posted years, including BlackRock, which has Swiss bank Julius Baer, as part of a Germany, along with Italy, the US
said yesterday. strong results. But he warned that risen from 41st in the league table to campaign to clamp down on and France, has been one of the most
The rise was in sharp contrast to while markets were recovering they top with $3.4bn AUM. BNP Paribas has untaxed German wealth held in fervent critics of Switzerland’s bank-
the 23 per cent loss in AUM seen in remained fragile, reflecting “weak risen 26 places to seventh in the last Switzerland. ing secrecy laws and has paid in the
2008, the Pensions and Investments/ underlying economic fundamentals five years with $1.3bn AUM, A spokeswoman for the prosecu- past for stolen data from Swiss banks
Towers Watson World 500 ranking and the oscillating risk appetites There were 12 US-based investment tor’s office in the German city of in order to catch tax cheats. Pressure
report said. among institutional investors”. managers in the top 20 last year, up Muenster said the state of North has already prompted Switzerland to
However, total AUM were still well Fund managers from developing from ten in 2008, while the other Rhine Westphalia had bought a CD relax its cherished bank secrecy and
below the previous high seen in 2006. countries continued to grow, more eight managers are all based in containing data on 200 accounts. comply with international disclosure
During the past five years only half of than doubling their share of global Europe, according to the report. The sale happened earlier this standards.

First Quantum REHN CALLS FOR TOUGH REFORMS


EUROPEAN Union
monetary affairs

acquires new
chief Olli Rehn yes-
terday urged mem-
ber states to agree
on tough budget
reforms after some
countries said

Peruvian mine
enthusiasm for far-
reaching change
was waning. He
made his comments
before Eurozone
finance ministers
met in Luxembourg
to complete an over-
in the first 10 years, and will account haul of EU budget

MINING
for just less than a third of First’s total rules and agree on
BY MARION DAKERS
copper production by 2015, Newall a report for EU
FIRST Quantum Minerals said it has said. leaders on how to
paid C$460m (£285m) for Antares The purchase was not just a result make the rules
Minerals yesterday, in a move to diver- of the loss of the company’s tougher to prevent
sify following the confiscation of its Congolese assets after the govern- a new sovereign
copper mine in the Democratic ment seized its Kolwezi mine, Newall debt crisis.
Republic of Congo. said, adding: “It has been part of our
Antares’ principal asset is the strategy to look for the right project Picture: GETTY
Haquira copper project in southern in Latin America.”
Peru, which contains around 3.7m First Quantum is in arbitration

UniCredit reaches a deal with unions


tonnes of copper equivalent. It also with FTSE 100-listed miner ENRC,
lies next to Xstrata’s Las Bambas cop- after the Congolese government can-
per-gold project, and First Quantum celled First’s licence at the Kolwezi
chairman Clive Newall said the two mine and later sold it to ENRC.

as it seeks to cut domestic operations


companies could work together. ENRC has said it carried out exten-
“There are some potential syner- sive due diligence and it would vigor-
gies in the region with Xstrata. The ously challenge First Quantum’s legal
infrastructure in the area is relatively claim to the $750m project.
undeveloped,” he said yesterday. “It’s
unlikely that we would be sharing a ANALYSIS l First Quantum
pipeline, but we could share power 5,030.00 union said. This comes on top of quit abruptly last month following a

BANKING
supplies.” 5,500 p 18 Oct planned lay-offs for 600 staff and a power clash with shareholders.
First Quantum paid investors in UNICREDIT has reached a deal with further group of 1,100 employees, “Negotiations were difficult,” said
Canada-based Antares a 41 per cent unions over thousands of lay-offs in who are expected to leave the bank in FABI secretary general, Mauro
premium on Friday’s closing share 4,500 Italy, ending a protracted struggle 2014-15, it said. UniCredit has agreed Morelli. “We are sure Federico
price. The Peruvian mine will not be over a plan by the country’s biggest to hire more than 2,000 new staff by Ghizzoni will not hinder the impor-
ready for mining for around 18 bank to streamline domestic opera- 2013. tant results achieved.” Profumo, who
months, Newall said, but engineers tions. The breakthrough comes a few turned the bank into a pan-European
will be on the site soon after the sale. 3,500 Under the deal, 3,000 UniCredit weeks after Federico Ghizzoni was player through a string of acquisi-
The mine can produce 230,000 employees will get access to early appointed at the helm of the bank, tions, had laid out the cuts as part of
tonnes of copper concentrate a year 19 Jul 6 Aug 26 Aug 16 Sep 6 Oct retirement plans, the FABI banking replacing Alessandro Profumo, who a plan to boost efficiency.

Clipper Windpower agrees to £139.5m NEWS | IN BRIEF

takeover offer from American rival UTC Royal Mail asks to hike prices holders to acquire a further 51.65 per
Royal Mail has asked the postal regulator cent stake in German pharmaceutical
for permission to hike prices on business wholesaler Andreae-Noris Zahn
mail products for one year only, in order (ANZAG). At the same time, Boots
to generate extra revenue of up to launched a voluntary tender offer for the
£100m. Royal Mail chief executive Moya outstanding 18.4 per cent of the compa-
flow ahead of the transaction. Falling gas prices in the US and Greene said the firm was asking for the ny it does not yet own, at €26 per share.

ENERGY
BY HARRY BANKS Connecticut-based UTC will pay government austerity measures are chance “to charge a fair price to other
65p-a-share, a 48 per cent premium likely to weigh on demand for wind companies who use our network to carry Profits soar at Vertu Motors
WIND turbine maker Clipper on Clipper’s pre-bid closing price. energy in the US over the coming mail and to end what is, in effect, the Car dealership group Vertu Motors saw
Windpower has agreed a £139.5m “For Clipper right now this buyout years, analysts said. very substantial built-in subsidy which pre-tax profits soar by three quarters to
buyout by United Technologies by UTC is phenomenal. It gives it a But Mark Chaichian, Clipper’s our rivals have enjoyed for years”. The £4.9m over the first half of its financial
Corporation in a deal which will significant cash injection to fight business development director, said firm made a £157m operating loss last year after acquiring a number of new
buoy its finances ahead of a choppy against some of its peers in this he was confident the deal would year on “access mail”, collected by rivals sales outlets. Vertu, which will commence
outlook for the US wind energy sec- tough environment,” said Libertas make good sense for UTC in the long but delivered by Royal Mail, amounting dividend payments in January, added that
tor. Capital analyst Titus Menzies. term. to an average loss of 2.5p per item. it beat management expectations for new
UTC will gain control of the 50.1 Shares in Clipper jumped 30 per “The outlook for the sector if you car performance in September, gaining
per cent stake in Clipper it does not cent to 64p by mid-morning yester- believe the markets is going to be a Boots takes control of ANZAG market share with new car retail volumes
already own and will provide an addi- day, making them one of the biggest little rough in the short term,” said Retail giant Alliance Boots yesterday said declining only 2.6 per cent versus a
tional loan facility to assist with cash gainers on the Aim market. Chaichian. it had reached agreement with share- broader market fall of 19 per cent.
CITYA.M. 19 OCTOBER 2010 News 23

KKR tables bid


RBS may sell BEST OF THE BROKERS
ANALYSIS l Smiths Group
1,300
p
1,251.00
18 Oct
SMITHS GROUP
Charles Stanley says strong free cash gen-
eration continues to support longer-term
for Australian
£1bn Spanish 1,250

1,200

1,150
growth through increased R&D, targeted
acquisitions and expansion in emerging
markets. The broker thinks speculation
about an eventual break-up of the group is
likely to persist. Despite Smiths’ sluggish
fund manager

property unit
ASSET MANAGEMENT


1,100
sales performance, operating margins
US PRIVATE equity firm Kohlberg
1,050
improved to a 10-year high of 17.8 per cent. Kravis Roberts (KKR) has offered up to
19 Jul 6 Aug 26 Aug 16 Sep 6 Oct Charles Stanley says “hold”. $1.73bn (£1bn) for Australian fund
manager Perpetual, reigniting merg-
ANALYSIS l Tullet 413.90 TULLETT er interest in Australia’s $1 trillion
420
p 18 Oct Numis points out that Tullett received a bid wealth management sector.

BANKING £3bn British portfolio in early October, approach earlier this year. The broker says Australia’s wealth management
BY HARRY BANKS although RBS said at the time it had 400
industry is the world’s fourth largest
not decided whether to sell or not. given the discount valuation and global and is expected to grow at 12 per cent
ROYAL Bank of Scotland (RBS) is under- The Spanish portfolio is mainly 380
market leading position we see the possi- a year, but mergers have dried up over
stood to be considering selling a £1bn made up of debt secured on commer- bility that not only could a bid resurface, the past year, with the sole exception
Spanish property loan portfolio after cial real estate. RBS was a big lender to 360 but it could well end up being contested. of National Australia Bank’s (NAB)
hiring Morgan Stanley to advise on its Spanish developers in the run-up to failed $12bn bid for wealth manager
options. the financial crisis, and has ended up Terry Smith has repeatedly said he would AXA Asia Pacific.
340
The Spanish commercial property as a stakeholder in property company sell the business if an offer that valued the KKR’s indicative bid of between
loans add to a £3bn portfolio of British Inmobiliaria Colonial after a debt-for- 320
business fairly was made. Numis says now A$38 and A$40 a share, a premium of
real estate loans also on the block. equity swap. The real estate sales are 19 Jul 6 Aug 26 Aug 16 Sep 6 Oct is the time to buy the stock. up to 29 per cent on Perpetual’s clos-
Private equity firms and specialised part of RBS’ five-year plan to clear ing price on Friday, took investors by
investors looking to pick up the assets £250bn of non-core assets off its bal- ANALYSIS l BSkyB BSKYB surprise, triggering a rally in shares of
at a discount would be the likely buy- ance sheet, as it capitalises on improv- p
Perpetual and rivals.
ers. Part-nationalised RBS is attempt- ing loan prices to sell at a small 720 706.00 Jeffries International expects Sky to con- Perpetual shares surged to A$39.39,
18 Oct tinue to post strong financials going into
ing to shrink its “non-core” division discount. a nine-month high, before easing
and has said it may sell assets. RBS last week sold €250m worth of 715 the first quarter of 2011 as the focus turns back to A$37.78, up 22 per cent. Fund
There were £44bn of real estate European mezzanine debt, a riskier from subscriber growth to cross-selling manager Platinum jumped 5.4 per
assets in its non-core division at the type of loan ranking further down the 710 cent, Challenger Financial rose 4.3
end of June, down from £63bn at the capital structure and typically used to into the existing base. It says to expect per cent, AMP climbed 2.4 per cent
end of 2008. At the end of last year 42 back leveraged buyouts. That portfolio 705 near term share performance to be corre- and AXA Asia Pacific added two per
per cent of the non-core portfolio went to about 25 different buyers, lated to developments on the News Corp cent.
assets were in Britain, and a quarter according to one distressed debt fund 700 “The bid certainly shows the finan-
bid. The broker said a bid of 760p-a-share
were in Continental Europe. manager. The bank also disposed of is what it will take to persuade investors to cial sector, especially funds manage-
At least three potential bidders – another big chunk of its leveraged 695 ment, will see consolidation in the
Goldman Sachs, distressed debt fund loan exposure in August, when it sold
19 Jul 6 Aug 26 Aug 15 Sep 5 Oct part with their stock. It says “buy”. coming year,” said Simon Burge, exec-
Lone Star and private equity group a €1.4bn portfolio of senior loans to utive director at ATI Asset
Blackstone – were said to be eyeing the Intermediate Capital Group.
To appear in Best of the Brokers email your research to notes@cityam.com Management.
24 News WORDS BY ROGER BAIRD CITYA.M. 19 OCTOBER 2010

The accountant who sees EU rules


as a chance to transform his firm
BDO head Dermot
Mathias hopes he has
brought his firm
closer to joining the
industry’s global elite

F
OR a man less than three months
away from retirement, BDO’s policy
board chairman – in effect, the
firm’s international chairman –
can’t wait to get into the issues. And to be
fair, there is much for Dermot Mathias,
who joined the accountancy giant 37
years ago, to discuss.
What excites him most is the possibility
of a Brussels-inspired regulatory revolu-
tion. The European Union’s financial serv-
ices commissioner Michel Barnier
released a two-month consultation paper
last week about the industry. As one
would expect, it raised questions about
audit quality in light of the financial cri-
sis, where accountancy firms passed the
accounts of banks like Northern Rock,
Lehman Brothers and the Royal Bank of
Scotland that then went bust or had to be
rescued by government.
The Big Four global accountancy firms –
PricewaterhouseCoopers (PwC), Ernst &
Young, Deloitte and KPMG – audit 70 per
cent of Europe’s largest 350 firms. Barnier
wonders whether they may have too cosy a
relationship with their clients, at the
expense of investors who may therefore be
presented with financial statements that
lack rigour or at least relevance. says Mathias, taking off his jacket and Dermot Mathias and last year reported worldwide sales of went under. And in 2007 and 2008 audi-
Barnier asks a number of questions, hanging it on the back of a chair in a outside the firm’s $26.6bn. And despite the hundreds of tors passed the accounts of a string of
including whether auditors should bright first-floor meeting room in BDO’s London headquarters clients BDO has, it does not audit any banks that turned out to have been highly
remain with the same clients for decades, Baker Street headquarters. “In other areas in Baker Street bank. Audit works accounts for 60 per exposed to changes in market conditions,
whether regulators should pick auditors of business, having four dominant compa- cent of the group’s revenue. Mathias says: especially the money markets. Defenders
for very big firms, whether internal con- nies is not too much of a problem. But in “It is clear that market forces have not of the profession argue that there are lim-
trol assessments ought to be added to our industry, because of the conflicts of Picture: been sufficient to fill the gap. We have its to what can ever be included in an
financial statements, and whether small- interest that often arise out of the range of Micha Theiner grown, but I can’t say that we have rapidly audit statement – and that nobody could
er audit firms should face less onerous work professional service firms perform, /City A.M. closed the gap on the Big Four.” forsee how practices that were signed off
rules than their big rivals. clients may only be faced with a choice of However, critics say that second tier by regulators, experts and everybody else
But Barnier is clear things should two or just one firm to choose from. Now, firms like BDO and Grant Thornton are suddenly turned out to have been so disas-
change. He said: “The status quo is not I would say this, because its in my interest, crying wolf – and that they are actually trously misguided. Others blame mark-to-
going to be an option for the EU. We want but there are others in the market who not prepared to take on the enormous market accounting rules.
to strengthen this profession and its cred- say this also.” amounts of high quality staff they would Aside from the EU’s paper, the UK’s
ibility.” Mathias, 61, does not agree with Mathias last week handed over his UK need to audit the world’s biggest compa- Financial Reporting Council is also investi-
everything Barnier proposes, but he obvi- senior partner role to audit partner Simon nies. Instead, the critics argue, they are gating Ernst & Young’s role in auditing
ously welcomes the general thrust of Bevan, and at the end of the year will quite happy to earn a decent living from Lehman Brothers, which failed in 2008.
opening up the Big Four to competition, hand over his international chairman’s lucrative restructuring, tax and other Mathias’ final worry is that audit state-
as his firm BDO along with rival Grant role to BDO’s German head Holger Otte. advisory services, while not really trying ments, which are already overcomplicat-
Thornton occupy the two spots just out- BDO’s network of 95 firms employs 46,000 that hard to grab the largest clients with ed, will become more so as a result of new
side the elite quartet. in 110 countries and last year posted sales subsidiaries all over the world. regulation that is bound to come as a reac-
“Having four big players is unhealthy,” 2.3 per cent down at $5bn (£3.1bn). But Mathias rejects this. He says: “We tion to the financial crisis. He says:
Mathias agrees with Barnier that inter- have grown significantly over the last “Financial statements are governed by
nal controls and corporate governance three years. And we are ready to take on strict rules and have become increasingly
CV | DERMOT MATHIAS issues should be included in audit reports. the audits of more complex businesses.” complex. They have almost become
The impetus for this comes from recent Some radical critics of the accountancy opaque, and a barrier to communication
probes into bank failures where it profession say that one or more of the Big with investors.”
Age: 61 emerged that senior staff were nominally Four should be broken up to allow more The BDO chief adds: “We need to con-
in charge of more junior workers who con- competition. But Mathias does not agree. verge international reporting standards,
Work: Mathias joined the firm in 1973 and structed complex financial instruments The move might lead to market instability, and then simplify them. There has been a
qualified in 1976. He was made partner in that their line managers could not under- he says, cutting down the options of big lot of hard work done on this already
1980 and after a period in management stand, and in some instances even
destroyed the firm. The BDO boss also
Financial firms. Going from a Big Four to a Big
Three would simply mean less competi-
since International Financial Reporting
Standards were introduced some eight
consultancy, joined the corporate finance
group, becoming head of corporate thinks that having regulators choose the
auditor for key companies and having lim-
statements tion. And, Mathias adds, a break up would
be simply be impractical.
years ago. If the will is there, this could
happen in two to three years. The issues
finance in 1990. He has been involved with
the firm’s strategic development and man- its on the amount of audit work the Big
Four can do among Europe’s biggest 350
have become He explains: “It is very difficult to see
how this could work. These units are sepa-
are well understood. However, new regula-
tions may make statements even more dif-
agement for the last fifteen years.
Became senior partner in 2002 firms are “ideas worth considering”.
What Mathias is admitting to here is
very opaque, rate legal entities in the countries they are
incorporated in. If the EU were to break up
ficult to read.”
For a man who is getting ready to pack
Education: University of Surrey
that despite efforts to grow the business in
the six years he has been in charge, it still
a barrier a Big Four firm over here, they could still
operate in the US and in fast growing
up his tent, Mathias has a lot to say. He has
moved his firm on greatly in the last few
Family: Married, two daughters
lags far behind the Big Four in scale as
well as elite clients. In the last three years
to economies in Asia.”
Some observers say the accountancy
years, but there is still a lot for his succes-
sor to do. Yet just as a regulatory
Lives: Homes in Oxfordshire and Cornwall
BDO has tripled its staff in China to 5,000
and has moved into number five positions
conveying profession has come up seriously short
twice in the last ten years. First, in 2001
onslaught destroyed Arthur Andersen, a
fresh revolution instigated this time by
Hobbies: Walking in the countryside,
in other fast growing markets like Russia
and Brazil. Overall, since 2007 the group
information and 2002, through its role in the
WorldCom and Enron accounting scan-
the EU authorities might give BDO the
chance to grab the brass ring. And from
skiing and national hunt racing has boosted its staff from 31,500 to 46,000.
By contrast PwC employs 161,700 staff
to investors dals. Indeed, the latter turned the Big Five
into the Big Four when Arthur Andersen
his easy chair, no one will be cheering
harder for his old firm than Mathias.
CITYA.M. 19 OCTOBER 2010 News 25

StanChart
Dubai firm to and AgBank
retain Europe deepen JV
units for 2011


BANKING
BY HARRY BANKS
AGRICULTURAL Bank of China
(AgBank) and Asia-focused lender
Standard Chartered have deepened a
FINANCIAL SERVICES Dhabi conference on private equity. strategic alliance under which the two

BY HARRY BANKS He added that even 2011 would be banks plan to set up a joint venture,
too early to sell any European assets: AgBank said yesterday.
DUBAI International Capital (DIC) will “Now is not the right time,” he said. Earlier this year, Standard Chartered
not sell any European assets before the DIC’s assets include UK hotel chain invested $500m (£315m) as a corner-
end of 2011, its chief investment offi- Travelodge and European aluminium stone investor in AgBank’s initial pub-
cer said yesterday, as it waits for their maker Almatis Holdings. lic offering in Hong Kong. AgBank,
value to rise. “We see 2011 as a time when we will China’s third-largest lender by assets,
The private equity arm of Dubai return to growth,” Smoot said. had raised a combined $22.1bn from
Holding, the investment vehicle Last month Almatis said it had its dual-listing in Shanghai and Hong
owned by the ruler of Dubai, is under- emerged from US bankruptcy proceed- Kong in the world’s biggest ever IPO.
going a debt restructuring. ings earlier than initially planned. The The planned joint venture will pro-
“It’s fair to say that our expectation company filed for bankruptcy earlier vide support to China’s fast-growing
is that our companies will continue, this year with more than $1bn small and medium businesses,
appreciate in value, over the next sev- (£629m) in debt, which stemmed from AgBank said. Under the tie-up,
eral years, so why sell now?” CIO David a 2007 leveraged buyout by DIC. AgBank will give priority to Standard
Smoot said on the sidelines of an Abu Months of wrangling ensued Chartered as its partner for its trade
between DIC and Oaktree Capital and cash management businesses.
DIC’s chief investment Management, which invests in ailing The two banks will also kick off a col-
companies, over how to reorganise laboration for cross-border business. A
officer David Smoot Almatis. strategic alliance team had been set
has indicated the The current plan will pay off up to implement those plans, the
investor will retain its Oaktree and other senior lenders in Chinese lender said. No financial
UK stakes until 2011 full. Dubai Holding faces challenges to details of the planned joint venture
meet some $14.8bn in obligations. Standard Chartered boss Peter Sands last week launched a £3.2bn rights issue Picture: REX were given.

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

held positions as head of central bank Olivetree Securities as its new finance director.
Matrix sales at the likes of Merrill Lynch, The equities intermediary brokerage Cotton joins from Forum Partners,
The financial services group has appointed Deutsche Bank and BNP Paribas. firm has appointed Ian Brenner to its where he was a managing director.
Simon Elvidge as its new group head of compli- distribution group to cover key institu- Prior to that, he was head of real estate
ance and assurance. Axa Real Estate tional and hedge fund accounts. at JP Morgan Cazenove. Price was pre-
Elvidge has over 20 years of experience in The European real estate manager has Brenner joins from cash and deriva- viously finance director of Pillar
the sector and joins from Numis Securities, appointed Laurent Vouin as head of tives broker MF Global, where he spent Property and is currently a non-execu-
where he was head of compliance. opportunistic funds, based in Paris and the past seven years, latterly as deputy tive at London and Stamford Property.
Prior to that, he spent time working at reporting to the firm’s global chief head of European equities. Prior to that, Lowes has been chief financial officer
HSBC, Société Générale and at Newedge investment officer Dennis Lopez. he was at Dresdner Kleinwort at Hansteen since 2006.
Group, the joint venture between SocGen and Vouin will be responsible for oversee- Wasserstein for 16 years.
Calyon. ing the management of all of the firm’s Mercer
opportunistic funds, including the Hansteen Holdings Roslin Wright has rejoined Mercer as a
Development Venture III fund, The UK and continental European real principal and client relationship manag-
Rabobank London-based general financial team. launched in July this year. He originally estate investor has appointed Richard er in the outsourcing business, having
The bank has hired Rick Corbisiero as Corbisiero began his banking career joined Axa Real Estate in 2002 as head Cotton and Humphrey Price as non- spent a stint as a client development
head of central bank sales in its in the early 1980s and has previously of asset management in France. executive directors and Richard Lowes director at Aon Consulting.

To appear in CITYMOVES please email your career


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

NETWORKING.
SOCIALISING.
CELEBRATING.
You, too, can be a part of the inaugural City A.M. Awards dinner and ceremony on Thursday 28 October 2010
at the Grange St Paul’s Hotel. Meet the City’s personalities, join in the applause of some of the finest companies
and individuals in the business and financial community, enjoy an excellent dinner and leading entertainment,
renew old acquaintances and make new friends. Tables are limited, so book your places early.

Full details can be found on the Awards website: www.CityAMAwards.com


If you have any questions, please contact Jo Pead on 020 8267 4043 / jo.pead@cityamawards.com
Markets&Investment
26 CITYA.M. 19 OCTOBER 2010

LONDON’S TOP 250 Trade these shares from £1.50 with Interactive Investor - www.iii.co.uk
Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low Company Name Closing Price Price Change 52wk High 52wk low
(p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p) (p)
3i . . . . . . . . . . . . . . . . . . . . . . . .302.30 +7.90 310.00 246.90 Compass . . . . . . . . . . . . . . . . . .527.50 +7.00 574.50 382.00 Jupiter Fnd Mgmt . . . . . . . . . . . .260.00 +2.10 264.00 180.00 Sage . . . . . . . . . . . . . . . . . . . . . .273.00 +2.70 286.80 208.20
3i Infrastructure . . . . . . . . . . . . . 113.60 –0.40 115.00 97.00 Cookson . . . . . . . . . . . . . . . . . . .577.50 +8.00 616.00 347.60 Kazakhmys . . . . . . . . . . . . . . . .1359.00 –25.00 1634.00 955.50 Sainsbury(J) . . . . . . . . . . . . . . . .385.80 +1.70 397.00 307.60
A.B. Foods . . . . . . . . . . . . . . . .1047.00 +5.00 1096.00 790.00 Croda Intl . . . . . . . . . . . . . . . . .1501.00 +30.00 1540.00 692.00 Kesa Electricals . . . . . . . . . . . . .161.50 –0.90 172.40 98.45 Schroders . . . . . . . . . . . . . . . . .1491.00 +11.00 1500.00 1056.00
Aberdeen Asset Man . . . . . . . . . .170.00 –0.10 172.80 111.00 Daily Mail ‘A’ . . . . . . . . . . . . . . . .518.50 –1.50 539.00 381.00 .LQJÀVKHU . . . . . . . . . . . . . . . . . .241.10* +1.50 255.00 196.50 Schroders N/V. . . . . . . . . . . . . . 1195.00 +13.00 1211.00 864.00
Admiral. . . . . . . . . . . . . . . . . . .1618.00* +2.00 1695.00 1003.00 Dana Petroleum . . . . . . . . . . . .1799.00 — 1817.00 968.50 Ladbrokes . . . . . . . . . . . . . . . . .134.10* — 164.60 114.60 Scot. & Sthrn Energy. . . . . . . . . 1115.00 +3.00 1206.00 1006.00
Aegis . . . . . . . . . . . . . . . . . . . . .128.20 — 137.30 103.10 Davis Service . . . . . . . . . . . . . . .421.40 –1.60 442.30 356.00 Lamprell . . . . . . . . . . . . . . . . . . .362.90* –2.30 372.30 157.30
Afren . . . . . . . . . . . . . . . . . . . . . 115.50 +0.80 121.80 76.50 Debenhams . . . . . . . . . . . . . . . . .72.85 +1.35 90.00 51.95 Lancashire Hldgs . . . . . . . . . . . .575.00 +5.00 582.50 416.70 Scottish Mortgage. . . . . . . . . . . .649.00 –1.00 661.00 475.00
African Barr Gold . . . . . . . . . . . .570.00 — 685.00 520.50 Derwent London . . . . . . . . . . . .1545.00* –5.00 1633.00 1174.00 Land Securities . . . . . . . . . . . . . .673.00* –6.50 743.50 543.00 SEGRO . . . . . . . . . . . . . . . . . . . .297.60 +1.10 389.30 244.00
Aggreko . . . . . . . . . . . . . . . . . .1683.00* +3.00 1689.00 727.50 Dexion Absolute . . . . . . . . . . . . .138.50 –1.50 148.00 131.20 Legal & General . . . . . . . . . . . . .105.70 +1.60 107.50 69.05 Serco . . . . . . . . . . . . . . . . . . . . .630.00* +2.00 656.50 491.20
Alliance Trust . . . . . . . . . . . . . . .349.10* +1.90 352.70 292.80 Diageo . . . . . . . . . . . . . . . . . . . 1135.00* +11.00 1176.00 951.50 Lloyds Banking Gp . . . . . . . . . . . .72.20 +2.02 79.15 45.30 Severn Trent . . . . . . . . . . . . . . .1333.00 –1.00 1404.00 939.50
AMEC . . . . . . . . . . . . . . . . . . . .1056.00 +18.00 1066.00 728.00 Dixons Retail . . . . . . . . . . . . . . . .27.12 –0.28 39.75 23.07 Logica . . . . . . . . . . . . . . . . . . . .133.40* +1.40 149.10 100.80 Shaftesbury . . . . . . . . . . . . . . . .454.80 –5.30 465.00 348.00
Amlin . . . . . . . . . . . . . . . . . . . . .397.20 –0.60 437.60 350.80 Domino’s Pizza . . . . . . . . . . . . . .458.70 –2.50 484.70 278.20 London Stk Exchange . . . . . . . . .698.50 +9.00 949.50 540.50 Shire. . . . . . . . . . . . . . . . . . . . .1501.00 +1.00 1532.00 999.00
Anglo American . . . . . . . . . . . .2846.50 –20.00 3015.50 2153.00 Drax . . . . . . . . . . . . . . . . . . . . . .374.60* +0.90 478.00 321.50 Lonmin . . . . . . . . . . . . . . . . . . .1808.00 –23.00 2198.00 1344.00 Smith & Nephew . . . . . . . . . . . . .554.00* +11.50 700.50 525.50
Antofagasta . . . . . . . . . . . . . . .1288.00 –19.00 1344.00 755.50 Dunelm . . . . . . . . . . . . . . . . . . . .458.40 –11.60 482.00 319.40 Man . . . . . . . . . . . . . . . . . . . . . .269.90 +5.90 373.60 199.60 Smith(Ds) . . . . . . . . . . . . . . . . . .164.30 +0.90 168.20 103.00
Aquarius Platinum . . . . . . . . . . .382.00 –1.40 490.00 211.50 Easyjet . . . . . . . . . . . . . . . . . . . .453.90 +0.10 499.90 339.80 Marks & Spencer. . . . . . . . . . . . .413.70 +1.20 419.10 321.90 Smiths . . . . . . . . . . . . . . . . . . .1251.00 –10.00 1297.00 885.00
ARM Holdings . . . . . . . . . . . . . . .399.10 +11.10 419.50 143.00 Edinburgh Inv Tst . . . . . . . . . . . .440.00 +8.60 440.60 338.00 Meggitt . . . . . . . . . . . . . . . . . . . .304.10 –1.00 331.00 229.80 SOCO Intl . . . . . . . . . . . . . . . . . .345.10 +2.60 510.00 333.30
Ashmore . . . . . . . . . . . . . . . . . . .381.60 +5.50 400.50 215.00 Electrocomponents . . . . . . . . . . .241.70 +1.20 251.00 144.80 Melrose . . . . . . . . . . . . . . . . . . .295.70 +0.70 302.00 160.00 Spectris . . . . . . . . . . . . . . . . . . 1101.00 +12.00 1128.00 653.00
Astrazeneca . . . . . . . . . . . . . . .3359.00 +36.50 3389.50 2668.00 EnQuest . . . . . . . . . . . . . . . . . . .131.20 +0.80 133.50 87.35 Mercantile IT . . . . . . . . . . . . . . . .977.00* +5.50 1002.00 822.50
Atkins(Ws) . . . . . . . . . . . . . . . . .777.50 –5.00 801.00 532.50 Essar Energy . . . . . . . . . . . . . . .494.00 –1.00 510.00 358.50 Michael Page Intl. . . . . . . . . . . . .479.50 –7.00 495.40 316.70 Spirax-Sarco Eng . . . . . . . . . . .1816.00* –4.00 1859.00 1060.00
Autonomy Corp . . . . . . . . . . . .1419.00 +71.00 2012.00 1278.00 Eurasian Nat Res . . . . . . . . . . . .930.00 –12.50 1276.00 801.00 Micro Focus . . . . . . . . . . . . . . . .384.80 –0.20 550.00 272.20 Spirent Comms . . . . . . . . . . . . . .144.50 +0.90 148.20 86.50
Aveva . . . . . . . . . . . . . . . . . . . . 1411.00 +12.00 1504.00 856.50 Euromoney Inst Inv . . . . . . . . . . .601.50 +4.00 630.00 371.80 Millen & Copthorne . . . . . . . . . . .567.00 +1.50 572.50 321.40 Sports Direct Intl . . . . . . . . . . . . .149.20 –0.30 154.30 89.85
Aviva . . . . . . . . . . . . . . . . . . . . .397.70* +1.90 466.50 290.20 Experian . . . . . . . . . . . . . . . . . . .709.00 +1.50 713.00 550.00 Misys . . . . . . . . . . . . . . . . . . . . .288.60 +0.50 298.00 196.60 SSL Intl . . . . . . . . . . . . . . . . . . . 1158.00 — 1190.00 616.00
Babcock International . . . . . . . . .592.50 +15.50 660.50 489.00 Ferrexpo . . . . . . . . . . . . . . . . . . .339.90 –8.70 396.20 140.70 Mitchells & Butlers . . . . . . . . . . .309.00 +2.10 343.90 228.30 St James’s Place . . . . . . . . . . . . .275.70 +1.70 298.00 203.40
BAE Systems . . . . . . . . . . . . . . .369.90 +4.10 389.90 288.10 FirstGroup . . . . . . . . . . . . . . . . .375.70 +1.20 428.40 331.20 MITIE . . . . . . . . . . . . . . . . . . . . .200.00 +0.90 256.80 187.60 Stagecoach. . . . . . . . . . . . . . . . .187.10 +2.10 204.90 137.00
Balfour Beatty . . . . . . . . . . . . . . .266.30* –0.10 304.80 228.60 Foreign & Col Inv Tst. . . . . . . . . .293.80 +1.50 297.20 248.70 Mondi . . . . . . . . . . . . . . . . . . . . .548.00 +2.00 550.00 304.70 Standard Chartered . . . . . . . . . .1921.00 +21.50 1946.00 1366.50
Barclays . . . . . . . . . . . . . . . . . . .289.25 +4.25 394.25 253.40 Fresnillo . . . . . . . . . . . . . . . . . .1291.00 –8.00 1333.00 647.00 Monks Inv Tst . . . . . . . . . . . . . . .333.10 +1.70 333.80 265.00 Standard Life . . . . . . . . . . . . . . .232.20* +5.20 238.00 170.00
Barratt Development . . . . . . . . . . .89.70 +2.70 172.50 85.75 G4S . . . . . . . . . . . . . . . . . . . . . .267.00* +0.40 285.70 238.70 Morrison Wm . . . . . . . . . . . . . . .297.50* +3.50 307.10 255.00 SuperGrp . . . . . . . . . . . . . . . . . 1112.00 +16.00 1312.00 499.00
BBA Aviation . . . . . . . . . . . . . . .197.40* +1.00 220.00 145.90 Genesis Emerging Mkts Fd . . . . .528.00 +2.50 536.00 370.00 Murray Intl Tst . . . . . . . . . . . . . . .930.00* +8.00 931.50 720.00 TalkTalk . . . . . . . . . . . . . . . . . . .133.50 –0.20 153.80 106.60
Bellway. . . . . . . . . . . . . . . . . . . .601.50 +15.00 842.50 510.00 GKN . . . . . . . . . . . . . . . . . . . . . .174.80 –2.70 183.30 100.40 National Express. . . . . . . . . . . . .237.60 +3.40 258.60 155.86 Talvivaara Mining . . . . . . . . . . . .530.00 +2.00 547.50 341.40
Berkeley . . . . . . . . . . . . . . . . . . .836.00 –4.50 932.50 735.00 GlaxoSmithKline . . . . . . . . . . . .1304.00 +16.00 1347.00 1088.00 National Grid . . . . . . . . . . . . . . .572.00 +2.50 607.65 474.80 Tate & Lyle . . . . . . . . . . . . . . . . .503.00 +3.40 509.00 388.00
BG . . . . . . . . . . . . . . . . . . . . . . 1194.50 +27.00 1248.00 966.90 Great Portland Estates . . . . . . . .349.70 –0.30 368.60 236.60 Next . . . . . . . . . . . . . . . . . . . . .2254.00 +1.00 2360.00 1733.00
BHP Billiton . . . . . . . . . . . . . . .2185.50 –14.00 2346.00 1618.50 Greene King . . . . . . . . . . . . . . . .415.00 — 484.00 372.50 Northumbrian Water . . . . . . . . . .338.00 — 353.00 225.20 Taylor Wimpey . . . . . . . . . . . . . . .26.11 +0.52 46.34 24.29
BlackRock Mining . . . . . . . . . . . .679.50 –6.50 695.00 475.00 Halfords . . . . . . . . . . . . . . . . . . .405.00 –0.10 562.50 370.10 Ocado Grp . . . . . . . . . . . . . . . . .131.40 +6.40 169.00 120.90 Telecity . . . . . . . . . . . . . . . . . . . .498.00 +6.60 546.00 323.50
BlueBay . . . . . . . . . . . . . . . . . . .487.00 +111.30 495.00 251.00 Halma . . . . . . . . . . . . . . . . . . . . .334.90 +1.80 345.50 218.40 Old Mutual . . . . . . . . . . . . . . . . .138.50* +0.20 146.90 95.30 Templeton Emrg Mkts . . . . . . . . .649.00 –2.00 657.50 455.00
Bluecrest Allblue GBP . . . . . . . . .172.50 +1.00 172.90 151.00 Hammerson . . . . . . . . . . . . . . . .415.30 –3.70 460.30 332.20 Partygaming . . . . . . . . . . . . . . . .271.30 –3.60 339.70 205.80 Tesco . . . . . . . . . . . . . . . . . . . . .432.95* –2.15 454.90 368.40
Booker . . . . . . . . . . . . . . . . . . . . .53.75 +0.25 55.10 37.50 Hargreaves Lansdown . . . . . . . .452.50 +2.50 478.00 259.40 Pearson . . . . . . . . . . . . . . . . . . .986.50 –6.50 1069.00 805.00 Thomas Cook . . . . . . . . . . . . . . .187.20 –0.10 277.20 167.50
BP . . . . . . . . . . . . . . . . . . . . . . .432.15 +6.70 658.20 296.00 Hays . . . . . . . . . . . . . . . . . . . . . . 118.60 –4.10 125.30 82.50 Pennon . . . . . . . . . . . . . . . . . . . .594.50 +1.00 616.50 440.40 Travis Perkins . . . . . . . . . . . . . . .853.50 –7.00 915.00 647.50
Brit Insurance . . . . . . . . . . . . . .1035.00 +3.00 1045.00 709.00 Henderson . . . . . . . . . . . . . . . . .137.60 +6.20 157.80 112.10 Persimmon . . . . . . . . . . . . . . . . .386.20 +7.70 520.00 335.90 TUI Travel . . . . . . . . . . . . . . . . . .226.10 +1.90 313.90 189.20
British Airways . . . . . . . . . . . . . .282.50 +5.70 282.50 172.40 Heritage Oil. . . . . . . . . . . . . . . . .341.90 –6.00 585.00 295.90 Petrofac . . . . . . . . . . . . . . . . . .1469.00* +14.00 1492.00 900.00 Tullett Prebon . . . . . . . . . . . . . . .413.90 +3.40 436.20 261.20
British Amer. Tob . . . . . . . . . . .2447.00 +31.00 2448.00 1832.00 Hikma Pharma . . . . . . . . . . . . . .736.00 –5.50 813.00 452.20 Petropavlovsk . . . . . . . . . . . . . .1036.00* +4.00 1370.00 834.00 Tullow Oil . . . . . . . . . . . . . . . . .1264.00* +9.00 1375.00 979.50
British Empire Tst . . . . . . . . . . . .480.90 –2.10 490.60 338.50 Hiscox . . . . . . . . . . . . . . . . . . . .347.10 +5.60 371.60 299.60 Phoenix Group . . . . . . . . . . . . . .690.00* +3.50 775.00 550.50 UK Commercial Prop. . . . . . . . . . .77.30 –0.60 84.90 71.00
British Land . . . . . . . . . . . . . . . .501.50* –3.00 515.00 416.00 Hochschild Mining . . . . . . . . . . .491.60 –17.40 516.50 220.00 Premier Farnell . . . . . . . . . . . . . .280.00* +0.70 283.80 140.60 Ultra Electronics . . . . . . . . . . . .1815.00 +21.00 1850.00 1198.00
Britvic. . . . . . . . . . . . . . . . . . . . .466.80 +5.80 518.00 341.50 Home Retail . . . . . . . . . . . . . . . .220.00 –1.20 326.30 201.70 Premier Oil . . . . . . . . . . . . . . . .1635.00 +10.00 1717.00 984.00 Unilever . . . . . . . . . . . . . . . . . .1814.00 –4.00 2024.00 1662.00
Brown(N.) . . . . . . . . . . . . . . . . . .280.40 –1.80 284.30 204.80 Homeserve . . . . . . . . . . . . . . . . .480.00 –1.70 502.00 422.00 Provident Financial . . . . . . . . . . .813.50 +7.50 986.00 795.00
BSkyB . . . . . . . . . . . . . . . . . . . .706.00 –1.00 732.00 521.00 HSBC Hldgs . . . . . . . . . . . . . . . .660.40 +7.10 766.80 595.20 Prudential . . . . . . . . . . . . . . . . . .623.50 +11.00 665.00 475.70 United Utilities . . . . . . . . . . . . . .584.50 +4.00 620.00 429.00
BT . . . . . . . . . . . . . . . . . . . . . . .149.60 +2.20 153.00 108.40 Hunting . . . . . . . . . . . . . . . . . . .642.50 +2.50 661.00 429.10 PZ Cussons . . . . . . . . . . . . . . . .372.40 –0.80 383.00 231.70 Utd Business Media . . . . . . . . . .632.50 –1.50 656.50 408.30
Bunzl . . . . . . . . . . . . . . . . . . . . .772.00 +4.00 784.50 614.00 ICAP . . . . . . . . . . . . . . . . . . . . . .482.30 +5.70 485.20 291.70 Qinetiq . . . . . . . . . . . . . . . . . . . . 110.60 +1.10 179.10 103.50 Vedanta Resources . . . . . . . . . .2253.00 –35.00 2967.00 1795.00
Burberry . . . . . . . . . . . . . . . . . . .971.50 — 1065.00 513.00 IG . . . . . . . . . . . . . . . . . . . . . . . .543.50 +5.00 550.00 291.00 Randgold Resources. . . . . . . . .6420.00 –145.00 6755.00 3930.00 Victrex . . . . . . . . . . . . . . . . . . .1312.00 +11.00 1355.00 726.50
Cable & Wire Comms . . . . . . . . . .54.30 +1.10 150.00 52.30 Imagination Tech Gp . . . . . . . . . .430.00 +4.20 431.90 193.70 Reckitt Benckiser . . . . . . . . . . .3452.00 –14.00 3667.00 2971.00 Vodafone . . . . . . . . . . . . . . . . . .168.40 +1.40 169.10 126.50
Cable & Wire Wwide . . . . . . . . . . .73.20 +2.20 94.80 60.05 IMI . . . . . . . . . . . . . . . . . . . . . . .824.50* –4.00 836.50 410.00 Reed Elsevier . . . . . . . . . . . . . . .557.00 +2.50 566.00 454.60 Weir . . . . . . . . . . . . . . . . . . . . .1589.00* +6.00 1614.00 639.00
Cairn Energy. . . . . . . . . . . . . . . .431.40 +2.40 497.60 306.80 Imperial Tobacco. . . . . . . . . . . .1934.00 +29.00 2159.00 1728.00 Regus . . . . . . . . . . . . . . . . . . . . . .86.15 –0.75 125.50 64.05 Wellstream Hldgs . . . . . . . . . . . .755.00 +2.00 810.00 429.70
Caledonia Invs . . . . . . . . . . . . .1775.00 +5.00 1775.00 1496.00 Inchcape. . . . . . . . . . . . . . . . . . .342.00 +5.20 347.00 235.00 Renishaw . . . . . . . . . . . . . . . . . 1185.00* –3.00 1215.00 479.00 WH Smith . . . . . . . . . . . . . . . . . .482.10 +3.10 551.00 392.20
Capita . . . . . . . . . . . . . . . . . . . . .792.50 –2.00 829.50 693.00 Informa . . . . . . . . . . . . . . . . . . . .423.00 –2.60 439.40 263.30 Rentokil Initial . . . . . . . . . . . . . . .101.40 +1.60 140.20 91.15 Whitbread . . . . . . . . . . . . . . . . .1693.00 +6.00 1704.00 1215.00
Capital & Counties . . . . . . . . . . .145.50* +3.90 146.60 99.60 Inmarsat . . . . . . . . . . . . . . . . . . .616.50* –3.50 831.00 535.50 Resolution . . . . . . . . . . . . . . . . .258.00 +4.20 264.80 220.10 William Hill . . . . . . . . . . . . . . . . .164.30 +0.10 217.80 160.50
Capital Shopping Centres . . . . . .385.60* –2.50 533.50 300.10 Intercontl Hotels . . . . . . . . . . . . 1189.00 +17.00 1244.00 762.50 Rexam . . . . . . . . . . . . . . . . . . . .323.10 +0.70 348.80 271.40 Witan Inv Tst . . . . . . . . . . . . . . . .481.90 +5.20 487.00 396.30
Carillion . . . . . . . . . . . . . . . . . . .342.00* –1.80 361.90 272.00 Intermediate Capital . . . . . . . . . .317.70 –2.30 331.50 233.50 Rightmove . . . . . . . . . . . . . . . . .763.50* –4.00 796.50 456.90
Carnival . . . . . . . . . . . . . . . . . .2590.00 +18.00 2937.00 1876.00 Intertek . . . . . . . . . . . . . . . . . . .1867.00 +1.00 1881.00 1136.00 Rio Tinto . . . . . . . . . . . . . . . . . .4080.00 –63.00 4165.00 2631.00 Wolseley . . . . . . . . . . . . . . . . . .1647.00 +24.00 1742.00 1155.00
Catlin . . . . . . . . . . . . . . . . . . . . .336.50 +2.60 394.60 303.20 Intl Personal Fin . . . . . . . . . . . . .299.20 +7.90 310.00 181.40 RIT Capital Partners . . . . . . . . . 1134.00 +2.00 1215.00 940.00 Wood Group (John). . . . . . . . . . .436.50 +0.20 452.90 279.60
Centamin Egypt . . . . . . . . . . . . .176.30 –3.10 194.40 103.50 Intl Power . . . . . . . . . . . . . . . . . .403.40* –1.80 408.60 248.20 Rolls Royce . . . . . . . . . . . . . . . .624.00 –11.00 643.50 434.50 WPP . . . . . . . . . . . . . . . . . . . . . .732.00* +11.00 744.00 528.00
Centrica . . . . . . . . . . . . . . . . . . .321.90* –2.40 347.00 236.30 Invensys . . . . . . . . . . . . . . . . . . .312.70 +7.70 350.30 224.90 Rotork . . . . . . . . . . . . . . . . . . .1828.00 +16.00 1906.00 1101.00 Xstrata . . . . . . . . . . . . . . . . . . .1305.50 –6.00 1349.00 832.50
Charter Intl . . . . . . . . . . . . . . . . .782.00 –1.50 855.50 563.50 Investec . . . . . . . . . . . . . . . . . . .510.50 +1.00 565.00 411.50 Royal Bank Of Scot . . . . . . . . . . . .46.31 –0.09 58.95 28.25 LONDON TOP 250 BY MARKET CAPITALISATION
Chemring . . . . . . . . . . . . . . . . .3018.00 –1.00 3711.00 2551.00 ITV . . . . . . . . . . . . . . . . . . . . . . . .65.50 –1.20 71.75 41.04 Royal Dutch Shell A . . . . . . . . .2006.00 +26.50 2068.50 1621.00
Close Bros . . . . . . . . . . . . . . . . .773.00* +13.50 803.50 657.00 Jardine Lloyd Thompson. . . . . . .579.50 +3.00 604.50 420.70 Royal Dutch Shell B . . . . . . . . .1954.50 +28.00 1997.50 1550.00 * Ex-Dividend † Suspended
Cobham . . . . . . . . . . . . . . . . . . .237.70* –0.30 278.60 205.50 Johnson Matthey . . . . . . . . . . .1927.00 +1.00 1935.00 1397.00 RSA Insurance . . . . . . . . . . . . . .132.90* +1.10 137.40 114.10
COLT Group . . . . . . . . . . . . . . . .120.50 +0.60 144.20 107.70 JPMorgan Emerg Mkts . . . . . . . .605.50* +7.50 618.00 443.00 SABMiller . . . . . . . . . . . . . . . . .2069.00 +9.50 2091.50 1571.00 www.interactivedata.com

FTSE 100 bounces back after a strong Wall Street is lifted by


performance from the financial sector robust Citigroup earnings
may have reaffirmed hopes that we ly after ditching plans to form the gish sales of technology services.

THELONDON will receive some additional meas-


ures by central banks going forward
and that might have pushed the mar-
world’s biggest iron-ore joint venture.
“The announcement that Rio Tinto
and BHP Billiton won’t be proceeding
THENEW YORK “Both stocks have kind of gone par-
abolic into the earnings,” said Nick
Kalivas, an analyst at MF Global in

REPORT ket further,” said Keith Bowman,


equity analyst at Hargreaves
Lansdown.
with their joint venture, combined
with broker downgrades
Antofagasta, Vedanta and Xstrata,
for REPORT Chicago. “My fear is we’re going to get
a buy the rumor, sell the fact trade.”
In regular trading, Citigroup
“We saw above-expectation results has unsurprisingly left the mining gained 5.6 per cent to $4.17 after it
In association with from Citigroup, which also added to sector struggling," said Anthony In association with reported its third consecutive quarter-
sentiment. But going forward, we are Grech, head of research at IG Index. ly profit.
likely to see the same level of volatili- Anglo American, Antofagasta, Last week JPMorgan Chase and Co’s
ty that we have seen, with a signifi- Xstrata and ENRC fell 0.5 to 1.5 per profits beat estimates. The KBW Bank
cant level of uncertainty still likely in cent. index rose three per cent, recovering

B U
ritain’s top shares rebounded the coming months.” Retailers were weak as investors S stocks advanced yesterday as some of the losses banks had in the
yesterday after falls in the past Citigroup reported a stronger-than- awaited the British government’s stronger-than-expected profit last few days.
two sessions, boosted by oils expected quarterly profit as credit Comprehensive Spending Review on from Citigroup helped finan- The Dow Jones industrial average
and banks, with better-than- losses slowed. Wednesday, which is expected to cial shares shake off worries rose 80.91 points, or 0.73 percent, at
expected results from Citigroup and Financial stocks were among the involve a swathe of cuts to the public that the foreclosure mess could 11,143.69.
hopes of more US economic stimulus top gainers, with Standard Chartered, sector that could hit consumer spend- threaten the stability of the housing The Standard & Poor’s 500 Index
improving sentiment. HSBC, Barclays and Lloyds rose 1.1 to ing hard, traders said. market. gained 8.52 points, or 0.72 per cent, at
The FTSE 100 index ended 39.15 2.9 per cent. Tesco was off 0.4 per cent, while Apple, which hit an all-time high 1,184.71. The Nasdaq Composite Index
points, or 0.7 per cent, higher at “Investors have understood that Home Retail, the owner of Argos during the regular session, disap- added 11.89 points, or 0.48 per cent,
5,742.52 after falling last Thursday the worst case scenario is no longer which reports results on Wednesday, pointed investors after reporting at 2,480.66.
and Friday. The index is up six per the most likely,” Societe Generale said was down 0.5 per cent. gross margins and iPad shipments. Its Citigroup said it is looking at the
cent so far this year. in a note, referring to the risk of shares skidded five per cent in after- home loans it bundled into bonds
Energy shares featured among the recession in the United States and ANALYSIS l FTSE 5,742.52 hours trading while stock index and sold to investors. So far, it has not
top gainers, tracking a jump of 1.5 per deflation in Europe having been all 5,800 18 Oct futures fell, suggesting a weak market found any problems.
cent in crude prices on strikes at but ruled out. opening this morning. The largest US bank, Bank of
French refineries. Royal Dutch Shell, “Blue chip companies are flourish- 5,600
Shares in IBM also fell after the America, reports earnings this morn-
BG Group and Tullow Oil added 0.7 to ing and earnings outlook remains closing bell, losing 3.5 per cent to ing. Bank of America’s shares rose
2.3 per cent. Risky assets such as equi- positive. All of these factors should $137.84. three per cent to $12.40.
ties were also helped by economic give heart to investors and incite 5,400 The stock had reached a 52-week Before the close yesterday, around
numbers. Data showed US industrial them to move progressively back high during the regular session. 10 per cent of S&P 500 companies had
production unexpectedly fell in towards equities.” 5,400 International Business Machines reported earnings, with 84 per cent of
September, while capacity utilisation But miners extended Friday’s falls, Corp reported a higher-than-expected those beating expectations, according
eased slightly. with BHP Billiton and Rio Tinto 5,000 profit and raised its outlook for the to data compiled by Thomson
“US industrial production report falling 0.6 and 1.5 per cent respective- 19 Jul 6 Aug 26 Aug 16 Sep 6 Oct full year, but the shares fell on slug- Reuters.
CITYA.M. 19 OCTOBER 2010 In association with 27

Chile’s business-minded president


calls for free trade and innovation
Economic leadership
means Chile is on the
up, says Marc Sidwell

T
HE daring rescue of 33 miners
against apparently impossible odds
under the full glare of global media
attention has helped Chile to cap-
ture the world’s imagination. The ques-
tion for Sebastian Pinera yesterday was
whether his country’s economic
prospects are also bold and bright enough
to make Chile attractive to European
investors. The Chilean President’s long-
planned visit to London presented him
with the chance not only to meet David
Cameron but to talk up his nation’s wider
potential.
After just seven months in office,
Pinera has already had to confront not
only the mining accident but the after-
math of the colossal earthquake which
struck Chile in February, when he was
already president-elect, causing hundreds
of deaths and damaging one house in
every ten in the area affected. Despite
these high-profile disasters, Chile’s funda-
mentals remain strong. Pinera inherited
18 years of steady economic growth, and Sebastian Pinera, the
an economy that escaped the worst of the President of Chile, is a
global economic crisis. Pinera comment- self-made billionaire
ed: “We had a very huge crisis in our
banking sector in the 80s and we learnt Picture:
our lesson. We were able to face the new PA
crisis in a very solid way.”
Chile is also currently the beneficiary
of high demand for commodities from in office, saying “We will double or triple explain his commitment to economic Chile is a democratic beacon in its
China, with 45 per cent of Chilean investment in science and technology principle rather than the damaging pop- region, offering a rival Latin American
exports in 2009 going to Asia. That is and promote entrepreneurship” and “By ulism beloved of other South American vision that stresses free markets, open
notably true for copper, of which Chile 2014, we plan to create 1m jobs”. leaders. He stresses that: “Free trade is the trade, optimism, technology and econom-
produces 34 per cent of global output. In Pinera’s business credentials are impec- best answer; protectionism would be the ic growth. Pinera speaks of creating “a
2009, Chile’s GDP was $164.615bn cable, a self-made billionaire who found- wrong way to follow.” One of the boldest society of opportunities”, a rhetoric of
(£103.531bn) and GDP grew by 6.5 per ed Chile’s credit card giant, Bancard, and plans on his domestic agenda is a vouch- hope that aims unashamedly at making
cent in the second quarter of 2010. whose cabinet includes a foreign minister er-based education programme that will his country wealthy and strong. Investors
But Chile is not a country content to who was previously the director of Chile’s allow students to attend the private may feel that a kind economic inheri-
rest on its laurels, and Pinera was keen to largest retail chain. He is also a Harvard- school of their choice, an innovation still tance and a keen business mind give him
stress his ambitions for his four-year term educated economist. Both facts help to too radical for Britain’s conservatives. every chance of succeeding.

ANALYSIS l Chilean Trade SEBASTIAN PINERA | CV CHILE | GLOBAL RANKINGS


70
US$bn
Age: 61 • 10: Index of Economic Freedom 2010 (183 countries)
60 Family: Married, with four children • 18: Enabling Trade Index 2010 (125 countries)
Exports Education: Undergraduate degree in engineering and • 28: World Competitiveness Yearbook 2010 (58 countries)
50 Imports economics from the Pontifical Catholic University of Chile, • 25: Corruption Perception index 2009 (180 countries)
40 graduating top of his class; masters and doctorate in • 49: Ease of Doing Business 2010 (183 countries)
economics, Harvard University • 40: Networked Readiness Index 2009-2010 (133 countries)
30 Career: After gaining his doctorate, Pinera returned to Chile • 27: IT Industry Competitiveness 2009 (66 countries)
where he worked as an economics professor and a consultant • 44: Human Development Index 2009 (182 countries)
20 to the World Bank. He also pursued a successful career as an • 30: Global Competitiveness Index 2010 (139 countries)
10
entrepreneur, founding Bancard S.A. in 1976 and also invest- Chile scores first in its region on all of the above rankings
ing in LAN airlines and a Chilean television company. He ran except for Ease of Doing Business 2010, which places it
0 unsuccessfully as a presidential candidate in 2005. second for Latin America behind Colombia
1995 2005 2008 2009

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28 Markets & Investment | Contracts for Difference CITYA.M. 19 AUGUST 2010

QE2 IS LIKELY
TO BE ABOVE Foreclosures dominate
$1 TRILLION
DAVID MORRISON
CFD MARKET STRATEGIST, GFT
bank earnings season
US financials’ better
F
EW analysts now doubt that the Federal
Open Market Committee (FOMC) will
announce another round of quantitative credit has failed to
easing (QE) at its November meeting. In
fact, speculation has turned to the harm that Fed impress stock traders,
inaction could cause to the markets. After all,
equities have been a one-way bet ever since QE2 writes Juliet Samuel
became a possibility in late August. US Treasuries

J
have also benefited, the dollar has plunged and UST before third-quarter earnings
precious metals, crude oil and other commodities season kicked off in the US, JP
have soared. If the Fed is desperate to boost Morgan released a research note on
price inflation, it is going the right way about it, the US banking sector calling bank-
even though the CPI – its favourite inflation ing stocks “attractively valued”. Pointing to
measure – suggests a more benign outlook. improved credit conditions this year, the
Speculation has switched from whether QE2 note was cautiously upbeat, revising near-
happens or not, to its likely size, scope and term estimates upwards. But there was one
duration. Since the markets absorbed $1.7 tril- word missing from the note: foreclosures.
lion in the first round, anything below $1 trillion In the past couple of weeks, the foreclo-
is likely to be a disappointment. Conversely, sures (repossessions, in UK terms) scandal
anything much above this could panic investors has earned its own “-gate” suffix, with
as it would point to an economy on life support. some suggesting that a worst-case scenario
Some analysts believe that the Fed will trickle could renew the financial crisis. Banks are
stimulus in without stating an upper limit. in trouble for allegedly trying to speed up
But it’s not just the Fed contemplating fur- the process of foreclosing and selling on
ther asset purchases. Tomorrow, we will see homes by ramming them through “foreclo-
the minutes of the last Monetary Policy sure mills” – firms where unqualified, low-
Committee (MPC) meeting, which might give level employees supposedly rubber-stamped
some clues as to the likelihood of additional QE hundreds of vital court documents.
in the UK. The MPC is dealing with a stubborn- Bank shares have sunk across the board
ly high inflation rate, so Thursday’s inflation since attorney generals in all 50 states
report hearings will be important, particularly opened a joint inquiry into the matter. Nearly a quarter of homes currently sold in the US are foreclosures Picture: GETTY
as they follow hot on the heels of Wednesday’s Bank of America has fallen 3 per cent,
comprehensive spending review. Citigroup 6.8 per cent, Wells Fargo 9.2 per regional banks such as Huntingdon foreclosures not just for their effect on
We have US housing starts and building per- cent and JP Morgan Chase 8 per cent. This is Bancshares, Comerica and Fifth Third banking stocks, but more broadly. Oja
mits today, the Fed’s Beige Book tomorrow and despite earnings per share for both JP Bancorp, which contract-for-difference points out: “If the foreclosures halt contin-
the first look at Chinese third-quarter GDP and Morgan and Citi coming in at the higher (CFD) traders can bet on from the UK. These ues, that will have a serious impact on exist-
CPI on Thursday. Rounding off the week, we’ll end of analysts’ forecasts, at $1.01 and $0.09 banks, like their national counterparts, ing home sales, which will affect
have the German Ifo Business Climate survey respectively (BoA reports today and Wells should see credit quality improvement and everything from growth to credit quality.”
and the first day of the G20 meeting of finance Fargo tomorrow). reduced loan loss reserve ratios (see chart), The risk for traders of bank stocks is that
ministers and central bankers. The problem is that the markets are fix- but be less tainted by the crisis. there are further hangovers from the finan-
Meanwhile, the US third-quarter earnings ated on the foreclosures issue – with good Even so, it will pay to keep a keen eye on cial crisis still to emerge.
season gathers pace. Although there have been reason. Currently, nearly a quarter of US
some positive reports in the tech space, the home sales involve repossessed houses and ANALYSIS l Loan loss reserves continue to be released (median for large-cap banks)
financial sector remains under pressure. With many of these have now been paused: BoA
140
growing unease about the unwinding foreclo- has suspended foreclosure sales in all 50 % Reserves to annualized NCOs (RHS) Basis points 3.60
sure debacle and worries that further fall-out states while JP Morgan has put 116,000 on
and JP Morgan estimates
Source: company reports

135 Reserves to loans (LHS) 3.58


from the subprime crisis is about to emerge, hold. And this will be an ongoing
US banks will continue to struggle. headache, potentially with multiple class- 130 3.56
action lawsuits to resolve.
Of course, if the foreclosures problem 125 3.54
turns out to be relatively limited, stocks
could rebound and traders willing to make 120 3.52
a risky bet could go long now. But a more
sensible approach might be to look at 115 3.50
banks not directly affected by the issue, but
which have been dragged down by it. S&P 110 3.48
1Q10 2Q 10 3Q10E 4Q10E
Equity Research’s Erik Oja is positive on

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30 Investment | Contracts for Difference CITYA.M. 19 OCTOBER 2010

When weaving
a commodities
basket, traders
must be skilful
Prices will depend on metric tons in China this year. This is a
substantial increase if you believe the
whether the dollar China Gold Association’s claim that last
year’s production reached 314 tons. The
can hold its rebound, technical analysts at Barclays Capital also
warn that gold prices could decline.
says Donata Huggins Gold’s failure to extend its rally at the end
of last week created a “shooting star” pat-
tern. This indicates near-term indecision
and warns of a downside correction. But

G
OLD bullion was down 0.7 per cent Manoj Ladwa of ETX Capital remains fair-
to $1,361 while the dollar gained ly confident that gold holds more upside
ground against all major currencies until the US quantitative easing (QE) issue
except the yen yesterday. Talk of the is resolved. This is likely to hold until at
inverse link between these safe havens is least November, the earliest realistic occa-
not new and the chart below shows it in sion it could be announced.
action over the last four days. But this rela- Copper for delivery in December
tionship is not only true of gold; dollars dropped 3.4 cents, or 0.9 per cent, to
have been pouring into commodities in $3.805 a pound at 8.00am on the Comex
general over the past few months, grow- in New York and 0.5 percent to $8,360 a
ing every time the dollar weakened. metric ton on the London Metal Exchange
The dollar rebound has certainly shaved yesterday. Many have started to say that
off some of the commodity prices upside. copper has strayed into overpriced territo-
The price of gold, corn, copper, sugar, oil ry on the back of dollar weakness. The
and wheat all fell in immediate reaction. prospects for copper price are also weak-
Traders will no doubt be asking if the fate ened by the fact that it looks like Chinese
of commodities is entirely tied up with companies have been stockpiling the
the dollar or whether the much-lauded metal to the extent of 103,510 tons,
emerging market demand will prop up according to the Shanghai bourse. That is
the prices. City A.M. has turned its atten- the highest level since the week ending 3
tion to three of the last month’s most September 2010. But some are still posi-
favoured commodities: gold, copper and tive about copper’s growth potential.
sugar to help traders weigh up whether Ladwa says: “It is riding 30-year highs and
they should keep them in their basket. China is going to continue its upside over
Many analysts seem to think gold has the longer term.” lation that India, the world’s second- Traders must pay choice: do they believe that emerging
lost its shine. Some cite a claim from a sec- Sugar is not just suffering from dollar largest producer, may have more to attention to detail market demand is enough to prop up
tion chief in China’s Ministry of Industry recovery at the moment, it has had a export. India’s biggest refiner Shree commodity prices or are they at the
that gold production will increase to 340 tough two weeks in London due to specu- Renuka Sugars said that it may have 26m Picture: GETTY mercy of the dollar?
metric tons this year starting 1 October.
COMMODITIES | PRICE CHANGES AS OF YESTERDAY This is a 0.5m increase on the Indian ANALYSIS l A comparison of the gold and the dollar index price
Sugar Mills Association forecast. But over the last four days
GOLD 100oz: CORN: Ladwa says that sugar is the soft commod- 2
Year to date: +30.06 per cent Year to date: +49.80 per cent ity outperformer and Coca Cola’s earning
data due today could show a substantial Dolar index 77.383
Monday’s change: -0.02 per cent Monday’s change: -0.89 per cent 1 Gold: price 102.2
increase in emerging market consump-
tion.
COPPER: SILVER 5000oz: The activity over the last five days has
Year to date: +35.95 per cent Year to date: +36.63 per cent certainly been negative, but the longer- 0
Monday’s change: +0.40 per cent Monday’s change: -0.65 per cent term picture might not be so grim.
Traders should move cautiously, keeping -1
WHITE SUGAR: COFFEE (Arabica): a firm eye on emerging markets since it
Year to date: -0.13 per cent Year to date: -0.59 per cent looks like they will be calling the shots.
Monday’s change: +15.71 per cent Monday’s change: +34.67 per cent While there are no simple answers for
the near-term, traders do have a clear 12/10 13/10 14/10 15/10

THE bined with comments from the IMF’s John


Lipsky suggesting that QE2 would “depend
across the trading bloc. Germany alone might
avoid the worst of these issues but the risk of
on data” helped keep the euro under pressure demand slowing from key trade partners cer-
TIPSTER on Monday. Spread Co offer a 0.8 pip spread tainly needs to be considered. Current IG
on euro-dollar of $1.39520–$1.39528. Markets price on the Germany 30 is 6521-
LOOK FOR GOOD But it’s the pound that will be in the spot- 6522.
NEWS ON HOME light this week due to tomorrow’s fiscal
review. CMC Markets’ spread on euro-ster-
Mining stocks have been in focus this week
after Rio Tinto and BHP Billiton had to scrap
RETAIL GROUP ling is £0.87432-£0.87450.
Tomorrow’s Bank of England meeting min-
their joint iron ore venture and early yester-
day the sector suffered from a bout of selling.
utes could move stocks around. Although But there is still a strong upwards trend for

H
OME Retail Group has seen its share there are calls for more cheap money to be miners and yesterday’s sell-off could prove a
price underperforming the market and pumped into the system, relatively high infla- buying opportunity, especially with Anglo
its sector this year: the share price is tion weighs against the decision. Signs of a American reporting on Thursday. Capital
down a whopping 30 per cent year-to- hawkish stance developing in the Monetary CFDs quotes 2843.5p-2847.5p for Anglo’s
date. Wednesday’s interims, however, should Policy Committee could see traders looking share price.
provide us with some good news and investors to book gains in the near term. Current IG With Citigroup’s figures coming in slightly
might look favourably on the stock as the Markets price on the FTSE is 5723-5724. better than expected, interest in the other
Christmas period approaches. Capital CFDs German economic sentiment data is due financials over the rest of the week has been
quotes 219.2p-219.9p. this morning in the ZEW survey and expecta- raised. WorldSpreads offers a
Euro-dollar blasted up to $1.4158 on tions are that the situation will again worsen $24.99–$25.05 spread on Morgan Stanley,
Friday before closing some 180 pips lower at in October. European debt concerns still which reports on Wednesday.
$1.3977. But industrial unrest in France com- linger and strikes seem to be spreading Juliet Samuel Home Retail Group might be oversold Picture: GETTY
Lifestyle RENAULT WIND 31
ROADSTER
| Poker IN TOMORROW’S
MOTORING SECTION

High-rollers
The West End’s smart get charitable
new club for card sharps for sick kids
Timothy Barber visits
the London venue
taking tournaments
and cash games
to the masses

F
OR poker enthusiasts who don’t
want to play for thousands of
pounds, finding a comfortable envi- Les A: the most exclusive card room in Europe.
ronment to get stuck into a live
game of poker isn’t easy. You can dabble HEN you’re trying to win chips off
in piddling pub tournaments (maximum
buy-in: £5), try your luck in the rather
daunting atmospherve of the few lower-
stakes casinos offering poker, or in the
hardly-less intimidating private gaming
W your opponents at the poker table,
charity’s the last thing on your
mind. That would particularly be
the case if you were slinging chips around in
the cardroom of Les Ambassadeurs casino in
clubs offering poker tournaments along- Mayfair, which hosts the biggest (by which I
side games like kalooki and backgam- mean highest stakes) poker games in Europe.
mon (it’s illegal for poker to be their There’s often over £1m at play here – I once
primary offering). met a Wall Street hedge fund mogul whose
That unsatisfactory landscape is set to hobby is to hop over to London for a couple of
change. The Fox Poker Club, which days at a time just to play at “Les A”, as regu-
opened last week on Shaftesbury Avenue lars call it – and it’s about the plushest poker
in the heart of the West End, is the new environment most folk will never see.
kid in town. Unlike the aforementioned However, there was nothing at play there but
members’ clubs, it has a full casino goodwill and some strangely huge poker chips
license, meaning it doesn’t have to offer (it’s that exclusive – even its chips are bigger)
other games to justify the poker. Instead, when the gaming and business communities got
a never-ending stream of tournaments The Fox Poker Club to anyone who’s ever felt the stress of However, with packed tournaments over together for a good cause last month. Black ties
with buy-ins ranging from £20 to £300, Shaftesbury Avenue having to self-deal in a card club while the first week – London Calling, a PKR- were donned and deep pockets delved in aid of
and cash games with blinds (minimum playing – but it hasn’t been plain sailing backed tournament festival, is running Great Ormond Street children’s hospital.
betting stakes) of £1 upwards are taking for North. With backers including British for the first month – North is confident Ladbrokes CEO Richard Glynn, Irish billionaire
place in a plush room with seating for up poker legend Barney Boatman and US about the future. and former City airport owner Dermot
to 180 players. star player Phil “Unabomber” Laak, and “It’s never been about having just one Desmond, PR overlord Matthew Freud and gam-
“We’re creating a good environment an official sponsor in poker website PKR, club,” he says, “it’s about building a ing entrepreneur Dermot Smurfit were a few of
for people who have played at home or it’s nevertheless taken him five years to brand and expanding on that – hopeful- the names gathered – along with invited gaming
have only played online and want to try it get the club off the ground, navigating ly, internationally.” industry insiders, hedgies, bankers, bettors and,
live,” says founder and managing director tricky licensing and planning areas. Kalooki’s loss is undoubedly poker’s gain. er, Barbara Windsor – to launch Raising the
Chris North, a businessman with a back- Stakes, an initiative generating funds for a new
ground in the online gaming industry. facility in the hospital’s cardiac unit.
The space was formerly occupied by THE FOX POKER CLUB | DETAILS Raising the Stakes has already raised four
the swanky private members’ club fifths of its £500,000 initial target, of which
Teatro, and affords the possibility of sit- £270,000 was raised on the night. Next year
ting by floor-to-ceiling windows over-
Games spread at the club can include hold’em, available, starting at £60 per person. it’ll be coming to the City – no doubt in equal-
looking the buzz of theatreland while Omaha, 7-card stud, hi-lo, razz, horse and dealer’s The London Calling tournament festival runs ly opulent style – with an event to coincide
playing poker. Its large, smart bar area choice. The club currently has a 3am license but at the club until the end of this month, with with the Cheltenham races. Whoever said
can be hired out for corporate poker is applying for an all-night license. tournaments every day. gamblers weren’t generous?
events, while single tables can be hired Timothy Barber
for stags and birthday parties [see box]. Areas can be hired for corporate hospitality Fox Poker Club, 93-107 Shaftesbury Avenue, For more information on Raising the Stakes
It’s a neat, highly professional place – events or parties (contact the club for prices), W1D 5DY. Tel: 020 7494 3020 see www.gosh.org/raisingthestakes
the fact that there are trained dealers for while birthday, stag and hen packages are all ww.foxpokerclub.com For information on Les Ambassadeurs, visit
every table will make a huge difference www.lesambassadeurs.com

The English queen of the felt


Astrophysicist, model, Boeree’s major success came in April
when she won the San Remo leg of the
Manchester University, and was consider-
ing a masters when she entered a poker-
European Poker Tour, scooping $1.2m by themed TV show in 2006. “It was advertised
hold’em genius – and winning out over 1,240 entrants. She’s now as using your skill and powers of deception
joined the team of pros sponsored by to win £100,000,” she says with a grin, “so
Liv Boeree’s won $2m, PokerStars, the biggest poker website, put- perfect for me.”
ting her alongside some of the most The programme saw novices get trained
says Timothy Barber renowned players in the game.
She’s admirably unphased by plying her
in poker before competing with each other.
With her maths skills giving her edge,
trade in a poker world that, despite its glob- Boeree proved a natural and never looked

I
S LIV Boeree too good to be true? An al popularity, has failed to attract many back, earning over $2m over all since then.
astrophysics grad and sometime female players. “I’m a very competitive per- “I’m not a gambler in the slightest, but I
model with the looks of a Bond girl son, and anything where you can challenge get my buzz from the side of poker where
and a penchant for heavy metal – a the boys and beat them at their own game you’re trying to out-psych your opponents,” Liv Boeree: she’s
YouTube video she’s uploaded proves she’s is perfect,” she says. “I’ve always thrived in she says. “My friends from my pre-poker more talented
no mean guitarist –  she’s also the sixth male-dominated environments – the days think it’s hilarious, but this is a job for than you.
biggest winner in tournament poker this physics world was actually pretty similar.” life, and I love it.”
year, with $1.8m from the last ten months. Well yes, though hardly as lucrative. For information on Liv Boeree and the UK &
Not bad for a 26-year-old from Kent. Boeree got her degree in astrophysics from Ireland Poker tour, see www.pokerstars.com/ukipt
32 Lifestyle | Restaurant Review WORDS BY
JEREMY HAZLEHURST
CITYA.M. 19 OCTOBER 2010

Spanish favourite hits mark again


Canary Wharfers
have a hot new
place to drink and
dine a la West End

Camino
28 Westferry Circus, Canary Wharf, E14 8RR.
www.camino.uk.com/canarywharf
Tel: 020 7239 9077

FOOD hhhhi
SERVICE hhhhi
ATMOSPHERE hhhhi
Cost per person without wine: £35

I
T MUST be tricky designing a Spanish
restaurant. One route is to go rustic,
with wine barrels, crates, bull-fight-
ing memorabilia and castanets every-
where, and instructions to staff to wipe
their hands on their aprons at every
opportunity. This approach always seems
too kitsch by half to me, suggesting that
you genuinely think that a grizzly old
geezer called Pepe might drop in at any
moment, order a massive glass of anis and
set about demolishing a packet of those
dusty, dirty Spanish cigarettes, periodical-
ly hawking onto the floor.
The other approach is to totally ignore ing back some post-work beers and wines. de Corullon and so we decided to keep it Camino gets the
the temptations of the Spanish clichés, That gives it a pleasantly rambunctious meaty with Solomillo, a fillet steak served balance between old- FOOD & BOOZE
and to go spaceship. By this I mean that atmosphere. The choices of drinks are on spinach and with a red wine reduction, world Spanish and
you deck the place out in minimalist, good, too, with a selection of unusual and chuleton a la parilla, sliced Basque- modernity quite right. NEWS
highly-polished metallic surfaces, compli-
cated modernist chandeliers and employ
beers – a porterish stout and a pale ale,
both from Zaragoza – and ciders that
style steak. But when I go again I’ll try the
monkfish with white bean stew and Picture: Matt
ZOE STRIMPEL
staff who you half recognise from Dolce & knock the socks off the industrial swill sausage, and piquillo peppers stuffed with Cheetham
Gabbana ads. Such a choice might work you get in pubs. Wines are chosen with morcillo black pudding. And the Dorset IN CONVERSATION WITH FERRAN ADRIA
with some sorts of foods – say, the ones care, and they venture well lamb cutlet with Jerusalem artichoke If you’re one of the many foodies that is fasci-
that rely heavily on foams, reductions, beyond over-oaked Riojas. puree. And the pig shoulder blade with nated by El Bulli chef Ferran Adria, then don’t
emulsions and infusions – but it feels a lit- Over in the restaurant, the garlic puree. miss this chance to hear him in conversation
tle odd with Spanish food, which tends to food is bang on. We started with That all makes it sound quite heavy, but with acclaimed food author Colman Andrews at
be what people call “honest”, meaning a plate of mixed charcuterie, there is a solid selection of tapas as well, the Royal Geographical Society. The event is in
that it tastes of what it is and where it with several types of jamon, and a nice choice of classic seafood includ- celebration of the chef’s first biography, pub-
comes from. Spaceships are for space food, lomo, salchichon, and fuet – ing grilled baby squid or prawns, and a lished by Phaidon – stick around afterwards for
and I never saw a fat jamon in the Starship Catalan sausage. It was subtle, gratinated scal- a book signing. 24 Oct, Royal Geographical
Enterprise. salty and smoky, just as it should lop with saf- Society, 1 Kensington Gore, SW7 2AR. Tickets
At the new Camino in Canary Wharf, be. We were told that we had to fron, which sounds £24; book at www.seetickets.com.
they have got the balance just about try the grilled octopus tentacle, fantastic.
right. It’s in a modern building, right and they were right. A whole, fat The great thing about this VENETIAN FEAST AT PORTRAIT GALLERY
by the waterfront and it’s clean and tentacle with black grill-lines place is that you could drop in To coincide with the much-hyped Canaletto
swanky, but with reassuringly rustic served on a splodge of olive oil for a beer and a tapa, or you show, the National Portrait Gallery has brought
touches – barrels to rest your drink mash, it was the best dish of the could have a belly-tightening in Venetian chef Riccardo de Pra to create a
on, antlers on the walls. In fact, it is night. chow-down. The views of the menu for gallery guests. The two-course dinner
pretty similar in feel to the original As a nod to the bankers and water sparkling outside and the will cost £28 and include the likes of Venetian-
Camino up at King’s Cross, which brokers of Canary Wharf, which up-market wine list mean that it style sardines, veal liver and onions with polen-
has been swooned over ever since it sounds even better translated as would even work for informal ta, and tiramisu. Great Venetian wines from the
opened. Just like the original “Puerta de Canaria” – they have a client entertainment. That makes it Masi vineyards will also be provided to wash it
branch, the new place is also divid- “Big Guns” wine-list with cham- sound like I’m looking for an all down. Is this the future of art appreciation in
ed between drink and food, and pagnes and some serious excuse to go back. I London? Hope so. Until 16 Jan at The National
the evening we went in was very Spaniards. We were drinking a won- think it’s safe to Café, East Wing, The National Gallery, WC2N
busy, with a youngish crowd knock- derful biodynamic wine called Villa say that I am. 4DN. Tel: 020 7747 4792.

THREE OTHER SPOT-ON TAPAS RESTAURANTS


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Goodge Street has become like mini- From the people behind Salt Yard, this Close to the Square Mile but very
THE WIMPOLE CLINIC Madrid, with two great tapas bars a
stone’s throw from each other – Salt
is another stylish and utterly scrump-
tious spot in which to commune with
Shoreditch, this is an award-winning
tapas bar that combines a buzzy atmos-
Registered 0000061435
Yard and this one. Everything is deli- jamon, wonderfully cooked fish and an phere (there’s a DJ bar) with seriously
Hannah House, 1 1-16 Manc hester Stre et, London W1U 4DJ
cious here, from the melty pork loin to array of exciting cheeses, potatoes and good food. Fans love the pimentos

IT CAN BE RESTORED! the whole juicy courgettes with


almonds and lemon. 62 Goodge Street,
W1T 4NE. Tel: 020 7436 9448.
vegetables. Great wine too, but no
bookings taking. 25 Ganton St, W1F
9BP. Tel: 020 7494 4170.
stuffed with salt cod mousse and the
grilled Iberian pork fillet. 2-5 Carthusian
St, EC1M 6EB. Tel: 020 7253 6009.
CITYA.M. 19 OCTOBER 2010 Lifestyle | TV& Games 33

BBC1 BBC2 ITV1 CHANNEL4 CH FIVE TV PICK


TERRESTRIAL
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Golf 8pm Polocrosse 9pm LIVING the Hill 12am Scrubs 1am The Quest 4.40am Days That Shook Oops TV 3.30am Lost 5.10am- how to take photographs, giving them
Polo 10pm PGA Grand Slam of 7pm Four Weddings 8pm Cleveland Show 1.50am The the World 5.30am-6am How 6am Are You Smarter Than a advice on how to transform ordinary
Golf 1am Golfing World America’s Next Top Model Ricky Gervais Show Does That Work? 10 Year Old? pictures into something memorable.

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

QUICK CROSSWORD
   

SUDOKU KAKURO
10 28 22 10 12 30 15 10 
34 15
   
16 23
Place the numbers from 1 to 9 in each empty cell so that each 27  
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 11 12
27 35
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 16 27
 
above or to the left of it. 3 29 29
You can only use the digits 1-9 6 17 8 
   and you must not use the
17 6
45    
same digit twice in a block.
   The same digit may occur 13 11 8  
13 19
    more than once in a row or
column, but it must be in a 18 21
11
7
14
 
16 19
   separate block.
17 11
19 18
  24 33
 

   ACROSS DOWN
1 Bringing death (5) 1 Apartments (5)
   
   WORDWHEEL L P
3 Periodically repeated
sequence (5)
7 Gifted, competent (4)
2 Structure for
open-air sports (5)
4 Property that
Using only the letters in the Wordwheel, you have
   ten minutes to find as many words as possible,
I R 9 Not established by
defines one’s
individual
conditioning or learning (6)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters L 11 Combine (5)
nature (9)
5 Lament for
LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
E A 13 Country, capital
Khartoum (5)
the dead (5)

SOLUTIONS KAKURO is at least one nine-letter word in the wheel.


S D 14 Affected with insanity (5)
6 Small insectivorous
bird (3)
15 Encountered (3) 8 Idiotic, farcical (9)
QUICK CROSSWORD 2 1 6 3 4 2 1 3 16 Bedtime beverage (5)
6 8 5 ( 7 < ( 7 & +
7 5 9 8 8 3 7 9 SUDOKU          17 Modify (5)
10 Liquid produced
by a flower (6)
3 8 7 9 1         
& $ 5 ( / < (
9 2 1 3 6 9 20 Cardinal number (5) 12 Convict (6)
$ ) ( ( 6 ( 9 , /         
0 2 7 $ % ( 3 7 4 9 8 2 1 6 3 5
         22 Point in orbit (6) 16 Muscular spasm (5)
1 ( 6 & $ / $ 7 ( 2 5 5 8
         23 Dull, dreary (4) 18 Narrow shelf (5)
3 ( 7 8
$ 6 6 2 5
6
7 ( '
/ $ '
1
3 1 5
1 5
7 9
9 8
2 4 6 8
7 9
WORDWHEEL          24 Tagliatelle or ravioli, 19 Picture puzzle (5)
7 $ < / ( * 2         
2 8 5 6 % , 1 ' 9 9 1 4 1 8 The nine-letter word for example (5) 21 Adult female
7 9 8 6 8 4 9 7         
, ( / $ 1 * 8
was BOOKSHELF         
25 Second planet from bird (3)
6 3 $ 7 5 ( ' ( ( 0 1 3 7 2 1 2 5 3
the sun (5)
34 Sport CITYA.M. 19 OCTOBER 2010

Results
FOOTBALL
BARCLAYS PREMIER LEAGUE
Blackburn.....................(0) 0 Sunderland.......................(0) 0
Fifa widens World Cup bribery probe
Att: 21,894
P W D L F A GD Pts ple in their organisation could be statement. Nigerian Amos Adamu, Therefore, an investigation has also


Chelsea 8 6 1 1 23 2 21 19 FOOTBALL
Man City 8 5 2 1 12 5 7 17 BY FRANK DALLERES implicated and are also looking into president of the West African Football been opened into the member associ-
Arsenal 8 4 2 2 18 10 8 14 suggestions that countries bidding to Union, and Tahiti’s Reynald Tamarii, ations in question as well as their bid
Man Utd 8 3 5 0 18 11 7 14 THE CRISIS enveloping the bidding host the World Cup, which included president of the Oceania Football committees.”
Tottenham 8 4 2 2 10 7 3 14 process for the 2018 World Cup deep- England, may be guilty of collusion. Federation, are the two individuals England are one of the leading can-
West Brom 8 3 3 2 11 14 -3 12 ened last night when governing body “Fifa has opened proceedings under the microscope. didates to host the 2018 World Cup,
Bolton 8 2 5 1 12 12 0 11 Fifa revealed it had widened its inves- against two current members of the Fifa’s statement added: when the tournament is set to return
Aston Villa 8 3 2 3 9 12 -3 11
Stoke 8 3 1 4 9 11 -2 10 tigation into claims of corruption. Fifa executive committee to ascertain “Investigations are also ongoing in to Europe, but face competition from
Blackpool 8 3 1 4 13 18 -5 10 Two members of Fifa’s executive whether they have violated the Fifa relation to other Fifa officials who Russia and joint bids from
Everton 8 2 3 3 8 7 1 9 committee, which will in December code of ethics, and has asked the may have been involved in the issue Spain/Portugal and Holland/Belgium.
Fulham 8 1 6 1 9 9 0 9 decide who hosts that 2018 and 2022 chairman of the ethics committee to in question. Fifa also confirms that A vote will take place on 2 December.
Sunderland 8 1 6 1 7 7 0 9 tournaments, are being probed over act without delay to take all possible the alleged agreements between United States withdrew from the
Blackburn 8 2 3 3 7 8 -1 9
Wigan 8 2 3 3 6 15 -9 9 claims they offered to sell their votes steps, including the possibility of pro- member associations would also be a race last week, but are vying for the
Newcastle 8 2 2 4 12 12 0 8 to an undercover reporter posing as a visional measures, should the rele- clear violation of the bid registration 2022 event with Australia, Qatar,
Birminghm 8 1 4 3 8 12 -4 7 businessman. Fifa now say other peo- vant conditions be met,” read a document and the code of ethics. Japan and South Korea.
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

McGeechan
AMERICAN FOOTBALL
NFL: Chicago 20 Seattle 23, Denver 20 NY Jets 24, Green
Bay 20 Miami 23, Houston 35 Kansas City 31, Minnesota 24
Dallas 21, New England 23 Baltimore 20, NY Giants 28
Detroit 20, Philadelphia 31 Atlanta 17, Pittsburgh 28
Cleveland 10, San Francisco 17 Oakland 9, St Louis 20 San
Diego 17, Tampa Bay 6 New Orleans 31, Washington 24

mulls Irvine’s
Indianapolis 27
BASEBALL
NATIONAL LGE—Ch’ship Series: Philadelphia 6 San
Francisco 1 (Series tied 1-1).
GOLF
FRYS.COM OPEN (San Martin, California)— —Final rnd (USA

Lions offer
unless stated): 269 R Mediate 73. 270 B Van Pelt 71, A
Prugh 69. 271 R Fowler 69. 272 C Tidland 69.
CVS/PHARMACY LPGA CHALLENGE (Danville, California)— —
Final rnd: 274 B Recari (Spa) 70. 275 G Nocera (Fra) 70. 276
M Redman 72 (USA), K Icher (Fra) 70.
ICE HOCKEY
NHL: Anaheim 3 Phoenix 2, Vancouver 5 Carolina 1.

TODAY’S DIARY Fellow Scot Irvine also admitted


RUGBY UNION
(Football 7.45pm unless stated)
BY FRANK DALLERES interest in Warren Gatland, but his
UEFA Champions Lge new contract with Wales makes
Group E BRITISH and Irish Lions icon Sir Ian McGeechan the clear favourite.
Bayern Munich v CFR Cluj-Napoca ......................................................................
Roma v Basle ................................................................................................................ McGeechan has hinted he could be “His record speaks for itself, he’s
Group F tempted to go back on his word and Lions through to the core and did a
Marseille v MSK Zilina.............................................................................................. return for another stint as coach. fantastic job on the last tour,” said
Spartak Moscow v Chelsea (5.30) ...................................................................... McGeechan, a veteran of seven Irvine. “He has to be a consideration.
Group G Lions tours, insisted after coaching in If Ian throws his hat into the ring
Ajax v Auxerre ............................................................................................................
Real Madrid v AC Milan............................................................................................ last year’s hard-fought expedition to we’d seriously have to look at it.”
Group H South Africa that his long association
Arsenal v Shakhtar Donetsk .................................................................................. with the team was at an end.
Braga v Partizan Belgrade ......................................................................................
npower Football League Championship
But Andy Irvine, installed yesterday
as Lions manager for the next tour, to
Australia tour to begin
Bristol City v Reading................................................................................................
Burnley v Barnsley......................................................................................................
Australia in 2013, has made no secret
of the fact that McGeechan is his pri-
with Hong Kong date
Coventry v Cardiff ......................................................................................................
Doncaster v Derby ...................................................................................................... mary target for the role. And the Scot,
Hull v Sheff Utd............................................................................................................ 63, currently in a low-key position as
Leeds v Leicester ........................................................................................................ performance director at Bath, last HONG KONG will stage a British and
Millwall v Portsmouth .............................................................................................. night admitted the lure of the Lions Irish Lions match for the first time as
Norwich v Crystal Palace ........................................................................................
Nottm Forest v Middlesbrough..............................................................................
might be too strong to resist. a curtain-raiser to the team’s next
Preston v Scunthorpe................................................................................................ “Your enthusiasm for the Lions tour. The Lions will kick off their voy-
Swansea v QPR ............................................................................................................ doesn’t change,” said McGeechan. age to Australia in 2013 with a fix-
Watford v Ipswich...................................................................................................... “I’ve yet to speak to Andy about this. I ture against the Barbarians on the
need to have those sort of conversa- island. Bank HSBC, meanwhile, has
tions. I know what I said at the time extended its sponsorship of the team
SPORTS EDITOR FRANK DALLERES but here we are, talking about it, and until after the tour.
email sport@cityam.com it all starts to look exciting again.” Irvine (above) wants fellow Scot McGeechan to coach the Lions again. Picture: GETTY

SPORT | IN BRIEF
Gatland signs up until 2015 Merritt banned for 21 months
No fear: Murray reveals how
to get the better of Federer
RUGBY UNION: Wales coach Warren ATHLETICS: American Olympic and
Gatland has extended his contract, com- world 400m champion LaShawn Merritt
mitting himself to the job until the end of has been handed a 21-month ban for
the 2015 World Cup. The New doping. Merritt tested positive three
Zealander’s new deal ends speculation he times for testosterone and accepted a
could return home to Waikato Chiefs and provisional suspension earlier this year.
appears to rule out any major role with His ban has been backdated to his first
the 2013 British and Irish Lions tour to positive test in October 2009, meaning “I enjoy playing him. I to England yesterday and has almost

TENNIS
Australia. Gatland has named uncapped all results since than have been annulled don’t find it easy at all. two weeks before his next tourna-
BY FRANK DALLERES
Scarlets teenager George North in his but opening the door for him to make a It’s incredibly difficult ment, the Valencia Open, in which to
squad for the autumn Tests against Tri- controversial return at the next Worlds in BRITAIN’S Andy Murray has revealed every time,” said the 23- reflect on a welcome return to top
Nations opposition. August 2011. the secret of his superb record against year-old. form.
16-time Grand Slam winner Roger “But I love the Murray had looked out of sorts
Carroll bailed to live with Nolan Graham named England captain Federer: playing without fear. challenge of since a surprise third-round
FOOTBALL: Newcastle striker Andy RUGBY LEAGUE: St Helens prop James Murray triumphed over the Swiss playing against defeat to Stanislas
Carroll has been bailed on a charge of Graham has been named Adrian Morley’s superstar yet again on Sunday as he him. I don’t fear Wawrinka at
assault – on the condition that he lives replacement as England captain for the clinched his second title of the year at playing him. the US Open
with team-mate Kevin Nolan. England Four Nations. Coach Steve McNamara the Shanghai Masters. Every time I go last month, his
Under-21 star Carroll appeared in court turned to Graham, 25, to lead the side That took the Scot’s head-to-head on, I know I need latest Grand Slam
yesterday accused of attacking an ex- against New Zealand on Saturday after record against Federer to 8-5 in his to play great tennis to win disappointment.
girlfriend early on Sunday morning. He Morley injured his bicep in the weekend favour, second only to Rafael Nadal in against him. But he swept to a straight-
was granted conditional bail on the provi- warm-up match against New Zealand the world’s top 10. “I don’t know if my game sets victory over Federer on
so he stays with captain Nolan until a Maori. “When Steve offered me the cap- And gutsy Murray insists that his matches up well against his or Sunday to cap a week in which
further appearance on 10 January. taincy I had no hesitation in saying yes,” refusal to be intimidated is the reason not. But I’ve played some of my he also booked his place at the
Carroll does not have to stay at Nolan’s said Graham. “It’s a great honour and I he often produces his best against the best tennis against Roger.” ATP Tour World Finals in
home on nights when Newcastle play. am deeply proud that I have this chance.” world No2. World No4 Murray flew back London next month.
CITYA.M. 19 OCTOBER 2010 Sport 35

Rooney has picked the wrong time


to demand Man City-style wages
FOOTBALL COMMENT
TREVOR STEVEN
PICTURE the scene: Wayne Rooney
holding up a Manchester City shirt in
January after crossing town from
their most hated rivals. It couldn’t
happen, could it?
Right now it seems like anything
could happen. The impasse over
Rooney’s new contract is a massive Rooney appears to
issue and his relationship with the be at odds with the
club seems to be in ruins. Both he and United hierarchy
Sir Alex Ferguson are strong charac- over contract nego-
ters who appear to be at odds, and the tiations that have
longer no-one says anything the more broken down.
the issue will be magnified.
Rooney’s advisors have probably Picture:
seen City paying Yaya Toure around ACTION IMAGES
£200,000 per week and thought
they’d ask for one penny more. was in the blistering form of last sea- furious with all his players, not just enjoy in Spain. But Rooney does not to resolve this deadlock. Ferguson
But now is not a good time for the son he could strike while the iron was Rooney, at being fourth in the seem the best suited to living abroad, should not do anything rash; he let
striker to demand club-record wages. hot; at the moment it’s stone cold. Premier League and behind City. where he would have to learn the lan- Jaap Stam go in a hurry and I think
He has been in woeful form since Besides, United would have to dig guage and mingle with the media. he still regrets it.
injuring his ankle in March, has off- extremely deep to be able to offer VERY BIG BUCKS And David Beckham was still fol- Someone should sit Rooney down,
field issues playing on his mind and Toure-level wages, even to Rooney. A move might seem attractive: the lowed by paparazzi when he joined meanwhile, and give him some
he looks like he’s carrying the weight And this hardly represents the best mind-boggling money at City, the dis- Real Madrid. advice: rediscover your best form
of the world on his shoulders. If he time to cajole Ferguson, who will be tance from the tabloids he would Clearly something needs to happen before demanding very big bucks.

Ancelotti unfazed by Terry mindset in Moscow


good reason to fear his side’s visit to believe Terry or his team-mates will you can have revenge. Chelsea lost Lampard and full-back Jose Bosingwa,
SPARTAK MOSCOW the Luzhniki Stadium this evening. be haunted by bad memories when the final in 2008 but I don’t think but forwards Salomon Kalou and
Last time the Blues played there the Group F pacesetters meet in the they will have a psychological prob- Daniel Sturridge could return.
John Terry ended the night in tears Russian capital. lem with that tomorrow, it is a differ- “I can say nothing about this
CHELSEA after the captain’s penalty shoot-out “John has great experience so I ent story now.” because we haven’t tried this kind of
Sky Sports 2, kick-off 5:30pm miss denied them a first Champions think what happened two years ago The Italian also dismissed concerns pitch,” he said. “We want to try it this
League title. If that were not enough, has no effect on him, he has experi- about the pitch but admitted he evening in the training session and

FOOTBALL Spartak Moscow have since restored ence,” he said. “Everyone knows in would not decide on his team until after that we can have an opinion
BY FRANK DALLERES their home’s all-weather artificial sur- football you can sometimes lose seeing how players reacted to train- about this. We don’t have a problem
face, the kind on which Tottenham games. I lost a final in 2005 but you ing on the surface last night. Chelsea to play here, I hope, but it is different,
IF recent history is anything to go by, toiled miserably against Young Boys have to look forward. If you look for- are without striker Didier Drogba, it is one of the best artificial pitches.

@
Chelsea manager Carlo Ancelotti has just weeks ago. But Ancelotti does not ward with enthusiasm and character defender Alex, midfielder Frank We don’t complain about this.”

Strachan tears Rovers cling on for draw Make Money from


up contract on
Boro departure despite Samba red card EVERY
PREMIER LEAGUE
FOOTBALL BLACKBURN 0
missing their best chance.
“We can’t keep relying on Benty to Match!

score us a goal,” said Bruce. “We’ve


MANAGER Gordon Strachan waived a got to come up with some goals from
pay-off by ripping up his contract SUNDERLAND 0 someone else. We should be taking The 7 bets
after parting
Championship
company

Middlesbrough yesterday.
with
strugglers
some of the chances we’ve created.”
Striker Bent has scored five of
Sunderland’s seven Premier League
Downurload
yo

FRrt EtodaEy... “
the bookies

FOOTBALL DON’T WANT


Strachan left the Riverside after a BY FRANK DALLERES goals this season, and ought to have
disappointing start to the season in added to that tally when he found
repo you to know
which Boro have won just three SUNDERLAND manager Steve Bruce himself one-on-one and shot straight
about!


games and slumped to 20th. berated his toothless side after they at Paul Robinson. Morten Gamst
“Gordon has torn up his contract were held by 10-man Blackburn in tor- Pedersen went closest for Blackburn,
and walked away without compensa- rential conditions at Ewood Park. his free-kick from 40 yards forcing
tion because he felt it was in the best Rovers defender Christopher Steve Mignolet to tip over. Generating 129 winners
interests of this football club,” said Samba was dismissed in first-half The result keeps both sides just MORE SPORT from 152 bets last season
chairman Steve Gibson.
“He knew first-team results weren’t
stoppage time for bundling over
Danny Welbeck on the edge of the
three points off the relegation zone
and Blackburn boss Sam Allardyce
ONLINE
anything like as good as we had penalty area. But the Black Cats could was grateful Samba’s foul was not
hoped they would be and he agreed not take advantage of their numeri- also punished with a penalty, given
www.cityam.com
www.FootballOffer.co.uk/CAM
that the change had to be made.” cal superiority, with Darren Bent Welbeck fell inside the box.
Sport
36 CITYA.M. 19 OCTOBER 2010

GEECH SET FOR SHOCK


LIONS RETURN
SCOT TARGETED FOR
2013 TOUR: P34

Keane sides
Saracens in with Rooney
transfer talks in striker’s
United row
with Wales
star Henson


FOOTBALL
BY FRANK DALLERES
MANCHESTER United great Roy
Keane has told unsettled striker
Wayne Rooney to “look after No1” in
any dispute with the Old Trafford
hierarchy.
Saracens director of rugby Brendan Rooney is being tipped to leave

EXCLUSIVE
Venter has not shied away from bold United after six years at the club amid
BY FRANK DALLERES
signings, such as that of Matt Stevens, rumours that his relationship with
SARACENS have held talks with the England and ex-Bath prop set to manager Sir Alex Ferguson has deteri-
Wales star Gavin Henson and will join up with the club in January orated beyond repair.
decide whether to swoop for the when his two-year ban for cocaine use Keane, Ferguson’s trusted captain
Ospreys star by tomorrow, City A.M. expires. However, Henson’s availabili- before a falling-out led to the mid-
can reveal. ty is complicated by the fact that he fielder leaving under a cloud in 2005,
Henson is one of a handful of play- remains contracted to Ospreys, who believes Rooney should put his own
ers Sarries chiefs have identified as would demand compensation and interests before the club’s.
possible recruits after fly-half Derick from whom he is on unpaid leave. “Players and managers fall out all
Hougaard was ruled out for six Henson wants to resume his career the time. It’s part of life,” said Keane.
months. with a London club in order to be “If I was to offer advice to Wayne, who
“We have had some contact [with closer to his children, who live with is a good lad, I would tell him to make
Henson’s camp] but it would be much their mother, singer Charlotte sure he looks after No1. Players are
too early to decide. We have got three Church, in the capital. He has also pieces of meat; that’s how I look at it.
or four players we have identified, or cited public knowledge of his break- When your time’s up, your time’s up.
we could stick with what we’ve got,” up with Church as a reason for his Luckily for Wayne he’s at a good age
Saracens chief executive Edward reluctance to return to the Ospreys and he’s fit.”
Griffiths told City A.M. last night. dressing room. He has been invited to Real Madrid have been mooted as
“When you lose a player like play for the Barbarians against South possible bidders for Rooney, who is
Hougaard you have to look at all the Africa at Twickenham on 4 said to have told United chiefs he will
options. We are looking at all the December, but his appearance not discuss a new contract and wants
options. One option is not bringing depends on his Strictly commitments to leave. But Real manager Jose
anybody in. We will decide within the with the BBC. Mourinho yesterday played down the
next 48 hours.” Hougaard limped off during prospect of a move for the England
Henson, 28, would be a controver- Saturday’s narrow Heineken Cup star, predicting he would patch up
sial signing, having been out of the defeat to Leinster after hurting his any differences with Ferguson.
game since March 2009 due to injury Achilles. The South African under- “I don’t think he will [become avail-
and personal issues. The celebrity cen- went surgery on the injury yesterday able],” said Mourinho. “I think the big
tre is keen to make a comeback, after in London, after which doctors were man will persuade him to stay.”
his stint on television’s Strictly Come due to outline his recovery schedule. Ferguson is set to be pressed on
Dancing reaches an end, and is still But Premiership runners-up Saracens Rooney when he faces the media
hopeful of forcing his way back into are preparing to be without him for today ahead of United’s Champions
the Wales team for the Six Nations six months. Youngster Alex Goode is League clash with Bursaspor.
and next year’s World Cup. in line to replace him in the interim. Henson is one of “three or four” players on Saracens’ shortlist. Picture: ACTION IMAGES TREVOR STEVEN ON ROONEY: P35

Fabregas and Walcott ready Strauss: Australia off the


mark with KP criticism
to return for Shakhtar test who has gone 18 months without a

CRICKET
Test century, would not be dropped
been sidelined by injury for a month, Shakhtar arrive in London second ENGLAND captain Andrew Strauss before the series starts.
ARSENAL both trained yesterday ahead of the behind the Gunners in Group H, but has hit back at Australian claims that “I couldn’t see that happening,” he
Champions League fixture at only on goal difference after both misfiring batsman Kevin Pietersen added. “We all know what sort of
Emirates Stadium. teams started their campaigns with could be a disruptive influence dur- character he is, we know these sort of
SHAKHTAR DONETSK “Cesc is available,” said Wenger. two wins. Among their ranks will be ing the Ashes. big Ashes series tend to bring out the
“He had a little setback but got over ex-Arsenal striker Eduardo, who left Ex-Aussie coach John Buchanan best in him and to me that’s very
Sky Sports 2, kick-off 7:30pm the hurdle and is ready to play at full for Russia earlier this year after injury called Pietersen “fragmentary and encouraging. He’s been out of form,
fitness. I do not know yet whether I derailed his career in north London. individualist” and warned he could that happens to all of us, and anyone

FOOTBALL
BY FRANK DALLERES start him or not but he is available. It “I will be happy and sad to see upset the squad during the series, who’s played international cricket for
will be whether I take a gamble or Eduardo,” Wenger added. “I will be which starts next month. any length of time knows it only takes
ARSENAL boss Arsene Wenger will not, because he has been out for a happy because he was always a fantas- But Strauss said: “Kevin Pietersen one innings to get yourself back in
make a late decision on whether to long time. I have to make up my mind tic boy with a fantastic mentality. I has never been a problem for the form. For Kevin it might be one of the
throw captain Cesc Fabregas and [on Tuesday] but physically he is will also be sad because I worked very England cricket team. Buchanan is off first-class games that precede the
winger Theo Walcott back into action ready, fit and wanting to play. Theo hard to get him and he left with the the mark to say that. I’m sure Kevin Ashes, it may be in the first Test
against Shakhtar Donetsk tonight. has a toe problem. But his ankle is all feeling he could not completely fulfil will come to the party.” match, but he’ll come right; he’s too
Fabregas and Walcott, who have right and he is in the squad.” the promise of his first season.” Strauss also insisted that Pietersen, good a player not to.”