Cityam 2013-02-05 PDF

BUSINESS WITH PERSONALITY
S&P agency
faces suit
over ratings
RATINGS giant Standard & Poors
yesterday said it faced a civil
lawsuit from the US Department of
Justice (DOJ) over grades it gave
prior to the credit crunch.
Shares in McGraw-Hill, S&Ps
parent company, collapsed 13.8 per
cent to hit $50.30, their worst fall
since the October 1987 crash.
Shares in rival Moodys also fell 11
per cent yesterday despite no sign it
will be named in the suit.
The DOJ, which may be joined by
several state prosecutors, is
expected to hit S&P with charges
relating to the assessments it gave
mortgage-backed security financial
instruments. This civil lawsuit
comes after talks between S&P and
prosecutors broke down, reportedly
over the size of the payoff.
S&P has maintained that ratings
are effectively opinions, and are
hence protected under the First
Amendment to the US
constitution, which guarantees free
expression.
A DOJ lawsuit would be entirely
without factual or legal merit, S&P
claimed in a statement. The DOJ
would be wrong in contending that
S&P ratings were motivated by
commercial considerations and not
issued in good faith.
It would disregard the central
facts that S&P reviewed the same
subprime mortgage data as the rest
of the market including US
officials who in 2007 publicly
stated that problems in the
subprime market appeared to be
contained and that every security
that the DOJ has cited to us also
independently received the same
rating from another agency.
The DOJ was unavailable for
comment.
Chancellor Angela Merkel gave her backing to Spanish premier Mariano Rajoy after graft allegations
THE EUROZONE crisis returned with
a bang yesterday, with shares sliding
and bond yields soaring, as fresh
political troubles engulfed the bloc.
Yields on Spanish 10-year bonds
rocketed up 23 basis points a 4.42
per cent rise on the day while their
Italian equivalents added some 14
basis points a 3.21 per cent jump.
The euro lost almost a percentage
point versus the dollar, falling from
$1.3648 to $1.3517 and reversing
much of its recent gains. It lost 1.39
per cent against sterling, bringing it
from 0.8692 to 0.8574.
The FTSEurofirst 300 index sank 1.5
per cent and the Euro STOXX 50 dived
3.1 per cent, both erasing all of their
gains for the year. Spains Ibex dipped
some 3.8 per cent, while the Italian
FTSE Mib was down 4.5 per cent. The
FTSE 100 fell 1.58 per cent.
Particularly hard hit were Italian
banks, with five suffering such steep
slides that trading was halted. These
five banks were Unicredit, whose
shares plummeted 8.29 per cent,
along with Intesa Sanpaolo, UBI
Banca, Banca Popolare Milano and
Monti dei Paschi di Siena, which all
lost over five per cent of their value.
These moves came after the German
Chancellor was forced to come out in
favour of embattled Spanish premier
Mariano Rajoy, whose party was hit
with a series of allegations.
Reports had alleged that Rajoys
Peoples Party operated a slush fund
with money donated by construction
www.cityam.com FREE
industry bosses allegations the
Spanish PM flatly denies.
Markets were also spooked by a new
surge in the polls for former Italian
leader Silvio Berlusconi, after the 76-
year old media tycoon promised a
swathe of tax cuts if he was elected.
Recent polls suggest the AC Milan-
owner is five or six percentage points
behind his main centre-left rivals.
But JP Morgans Alex White said in a
note that Berlusconis support tends
to be understated by around three
percentage points. White said the
effect could be even more pro-
nounced in an election cycle with
such heightened tensions. This
would leave the centre-lefts lead
well below the margin of comfort.
Mario Monti slammed Berlusconi
as a snake charmer and said the
former premier was with his tax cut
plans trying to sell a dream more
fantastic than Alice in Wonderland.
BY BEN SOUTHWOOD
FTSE 100 M6,246.84 -100.40 DOWM13,880.08 -129.71 NASDAQM3,131.17 -47.93 /$ 1.58 +0.01 / 1.17 +0.02 /$ M1.35 -0.02
BY BEN SOUTHWOOD
ISSUE 1,812 TUESDAY 5 FEBRUARY 2013
HOW TO SOLVE
THE RBS RIDDLE
Ryan Bourne, The Forum Page 20
Frances Coppola, The Forum Page 20
Certified Distribution
from 26/11/12 to 30/12/12 is 127,678
BY MICHAEL BOW
High street in hedge fund crosshairs after retail meltdown
HEDGE fund managers are betting
millions of pounds on a gloomier
UK high street this year after
figures yesterday showed a sharp
spike in the shorting of some of
Britains biggest retail names.
Hedge fund borrowings are used
as a proxy for bets against
companies those for high street
stalwart WH Smith, electrical
giant Dixons Retail and
department store Debenhams all
leapt in January as investors
digested a torrid start to the year
for the high street, which saw
HMV, Jessops and Blockbuster all
fall into administration.
Short positions against WH
Smith now the most shorted
stock on the FTSE have surged 63
per cent in the past four weeks,
while Dixons increased close to 45
per cent and Halfords almost 90
per cent, according to figures
from data supplier Markit.
The average amount of retail
stocks out on loan among those
listed on the FTSE All Share has
now hit 3.72 per cent more than
three times over the FTSE average.
Further data from the UK
Financial Services Authority
collated last week shows several
hedge funds, including secretive
investor Fest NV, and two New
York firms, Merchants Gate
Capital and Eminence Capital, all
upping their bets against WH
Smith over the last month, with
Fest borrowing almost four per
cent of the firms entire share
capital. Dixons Retail has also seen
increased short interest from Fest
and Lone Pine Capital, according
to the FSA data.
FTSE
4Feb 29Jan 30Jan 31 Jan 1 Feb
6,280
6,300
6,260
6,240
6,320
6,340
6,360
6,246.84
4Feb
Ibex (Spain)
8,300
8,400
8,100
8,000
7,900
8,200
8,500
8,600
8,700
7,919.60
4Feb
FTSE MIB (Italy)
17,000
17,250
16,750
17,500
17,750
18,000
16,539.00
4Feb
MARKETS DIVE ON
EUROZONE FEARS
THE TRUE COST OF SEPARATING BRITAINS BANKS
RINGFENCE MYTHS
MORE HMV: Page 15

TOP FIVE INCREASES IN
MOST SHORTED RETAIL
STOCKS LAST MONTH
Company %increase (Jan)
Halfords Group 89.90
WH Smith 63.33
Debenhams 50.33
Dixons Retail 44.56
Darty Plc 36.25
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
COMMERZBANK, Germanys
second largest bank, yesterday
posted a surprise net loss of 720m
(617m) for the fourth quarter.
The lender said it booked an
extraordinary depreciation on
deferred tax accruals of 560m
and charges of 185m related to
the sale of its Ukrainian Bank
Forum unit.
According to StarMine, analysts
had on average expected a net loss
of 295m.
The bank further said it expects
restructuring charges of
approximately 500m in the first
quarter of 2013 in connection with
the reduction of 4,000 to 6,000
jobs until 2016.
The negative trend of earnings
disappointments continues, DZ
Bank analyst Christoph Bast said,
adding the large amount of
writedowns was a surprise.
In November Commerzbank
lowered its 2016 return on equity
target to roughly eight per cent at
group level, setting a goal below
the industrys average cost of
capital of 10-12 per cent.
As a result the bank is now
unable to make full use of losses
carried forward to reduce its tax
bill and had to write down 560m
on deferred tax assets for the
fourth quarter.
Commerzbank
charges lead
to surprise loss
BY CITY A.M. REPORTER
Osbornes bank plan set
to hurt City and economy
THREATENING to split up all banks if
the ringfence does not work will
hurt the economy and hit the value
of the bailed-out banks, analysts and
lawyers claimed yesterday, attacking
George Osbornes plan for the sector.
Individual banks could be broken
up if the authorities fear they are try-
ing to get around the partial separa-
tion of retail and investment
banking, while the whole sector
could be hit if the rules are reviewed
and found wanting in years to come.
As the exact size and location of
the ringfence has yet to be finalised
lobbying is set to intensify, potential-
ly meaning the move to electrify the
ringfence will backfire, as banks try
to shift its foundations. And that
unpredictability is likely to hurt any
sale of the state-owned banks.
The high stakes approach now
being introduced to the ringfence
measures will make it difficult for
the government to decide the opti-
mum time to reduce their holdings
in UK banks, said Pinsent Masons
Tony Anderson. There could be sig-
nificant political fallout for the gov-
ernment from any proximity
between a sell down of shares in a
state owned bank and a full separa-
tion of banking operations following
a breach of the ringfence.
And the UKs economy could lose
Whitehall departments face big cuts
Several government departments will
have lost more than 3 in every 10 they
once had available for spending, by the
time of the next election, according to
Financial Times research.
SGX in talks over LCH.Clearnet stake
SGX, the Singapore stock exchange, is in
discussions about taking a stake in
LCH.Clearnet, the transatlantic clearing
house, as bourses gear up for sweeping
reform of derivatives and equities
markets. The Asian exchange is in talks
with London-based LCH about taking a
separate stake or becoming part of the
deal in which the London Stock Exchange
is set to take a controlling 60 per cent
shareholding, said three people familiar
with the situation.
ECB told to double manpower
The European Central Bank will need to
more than double its manpower and hire
around 2,000 bank supervision staff to
put the Eurozones banking union into
practice, according to a confidential study
for the ECB. The consultancy report was
from Promontory Financial Group.
Boeing faces legal claim
Japans national airline intends to seek
compensation from Boeing over the
grounding of its troubled Dreamliner jets,
which are standing idle on the tarmac
after safety scares.
Gates open at BBC Television Centre
Members of the public will be able to walk
in the footsteps of famous BBC figures
and classic programme characters for the
first time in more than half a century after
a decision by the new owner of Television
Centre, Stanhope, to throw open its gates.
Investor confidence in UK rail low
Investor confidence in the UK rail industry
couldnt get much worse in the wake of
the West Coast rail franchise fiasco,
according to the incoming boss of
Stagecoach, Martin Griffiths.
Harrods shuts lid on piano sections
Harrods has shut its piano department
after 118 years, as sales of the musical
instrument fall across Britain. Today, only
about 4,000 acoustic pianos are sold in
Britain each year compared with 14,000 in
the late 1960s. Hardly any are UK made.
Ryanair offers new concessions
Ryanair has submitted yet another
package of concessions to EU regulators
in a last-ditch attempt to secure approval
for its bid to acquire rival Irish carrier Aer
Lingus, people close to the process said
yesterday.
Ford pouring cash into pensions
Ford expects to spend $5bn this year
shoring up its pension funds, almost as
much as the auto maker spent last year
building plants, buying equipment and
developing new cars.
George Osborne wants banks to face tough punishments if they go against his wishes
2
NEWS
BY TIM WALLACE
To contact the newsdesk email news@cityam.com
I
T is hard to know where to start
with George Osbornes latest
rhetorically fiery foray into bank
regulation. The vast majority of it
was a rehash of previous
announcements, a restatement of
already existing aspirations. As
usual, some of his ideas were
excellent and others awful.
It will now take just a week to
change bank account. The chancellor
is right to want to empower con-
sumers and to seek to reform the pay-
ment system to encourage
competition; let us hope he is more
successful in this pursuit than his
predecessors, who were all defeated
by the challenge. The banks are
wrong to oppose change: we eventual-
ly need to move to full bank account
portability, making it easier to change
bank than it is to change mobile
phone company.
EDITORS
LETTER
ALLISTER HEATH
Ringfencing is the wrong solution to the wrong problem
TUESDAY 5 FEBRUARY 2013
Another positive move is the idea
that we need a new bankruptcy code
to allow even the largest banks to go
bust in a controlled manner, and be
wound down gently, protecting
depositors and taxpayers and avoid-
ing bailouts. It is a myth that some
banks are too big too fail. Lehmans
uncontrolled collapse under the old
system wreaked immense havoc but
the purpose of banking reform
should be to make such bank failures
safe for the rest of us, not to seek to
make banks themselves safe.
Capitalism requires the possibility of
bankruptcy if it is to function effec-
tively. Under the proposed reforms,
bondholders and other creditors
would see their loans turned into new
equity, and shareholders would be
wiped out. Creating a workable reso-
lution mechanism for large universal
banks ought to be the number priori-
ty for regulators; it is a shame, there-
fore, that so many, including
Osborne, are wasting so much of their
time on pointless grandstanding.
One such blind alley is the sort of
ringfencing that Osborne is imposing
on the industry. This will be hugely
costly, reduce efficiency and cut the
supply of credit for no benefit to con-
sumers. The policy is premised on the
myth that retail banking is intrinsi-
cally safe and investment banking
intrinsically dangerous, which is
break up banks that dont follow
these new rules, which doesnt make
sense. Either banks will obey the law
or they should immediately be prose-
cuted; the electrified ring-fence is a
typical case of triangulation, with the
chancellor seeking to have it both
ways. At best, this idea will turn out
to be a useless gimmick; at worst it
will make it harder for the City to
engage in long-term planning and
create yet more uncertainty.
The chancellors demand that exist-
ing RBS staff who are blameless
have their bonuses docked to pay for
Libor fines is unfair and petty.
Osborne is meant to be maximising
RBSs value for the taxpayers that own
it, not using the bank as a political
football. All in all, not a great day.
utter nonsense. A ringfence wouldnt
have stopped the failures of Northern
Rock, HBOS and Bradford and
Bingley, all of which were pure (or
almost pure) retail banks. It was not
trading that caused the crisis, it was
bad lending (such as to subprime bor-
rowers) and then the fact that lots of
financial institutions invested in
these dodgy loans, while simultane-
ously holding very little capital in
reserve. Lending against residential
and commercial property is probably
the most dangerous form of banking.
It is essential to protect depositors
and taxpayers, and banish bailouts for
ever but that can be done with a
proper resolution mechanism and
some other reforms.
Osbornes electrified ringfence
the only new policy will turn out to
be even more damaging. It will give
the authorities reserve powers to
competitiveness as its rules become
tougher than those in other countries.
It is frankly extraordinary that the
British government should be trying to
electrify the regulatory fence for banks
here when in Germany and France
they are busy trying to dig holes under
it, said Ash Saluja from CMS Cameron
McKenna. An uneven playing field is
not what the single market is sup-
posed to be about.
And analysts at the Institute for
Economic Affairs argued the whole
concept of ringfencing is flawed.
We need to make bank failure safe.
We therefore need more focus on how
to wind up failed banks without
recourse to taxpayers money, said
Mark Littlewood. Sadly, Osborne
seems to want to introduce more pre-
scriptive regulations which will make
genuine competition harder and could
exacerbate the too big to fail problem.
The chancellor also argued he is mak-
ing the sector more competitive with
seven-day current account switching.
He added he wants to open up the
payments system to improve service
and make sure small banks no longer
have to go through rivals systems.
n Banks face being broken up if they try
to undermine the ringfence
n The chancellor said that this is in
response to banks previously pushing
hard to get around regulations
n We are going to arm ourselves in
advance. In the jargon, we will electrify
the ringfence
n He pledged to increase competition in
the sector
n Customers will be allowed to switch
current accounts from one bank to
another in seven days
n They will be able to take all their direct
debits with them seamlessly
n Osborne hopes that will encourage
movement between banks
n The theory is that should put pressure
on institutions to take more care of their
customers
n The chancellor wants to open up
payments services, too
n He said he does not want small banks
to have to rely on bigger rivals for access
to payments systems
n Osborne believes it is unfair that small
firms must wait days for payments when
banks can carry out the transfers in
seconds
n He argued it is wrong and damaging
that it takes several days for cheques to
clear
n The chancellor added he wants to
make sure RBS pays its impending Libor
fine from bonuses, not taxpayer money
n And he told his Bournemouth audience
that Barclays 290m Libor fine is going
to a variety of good causes including
35m to armed forces charities.
OSBORNES SPEECH
The new jobs website for London professionals
CITYAMCAREERS.com
WHAT THE OTHER PAPERS SAY THIS MORNING
THE RETURN on government bonds
has seen a significant slump since the
turn of the year, with data revealing
that investors in UK gilts took the
strongest hit last month.
While riskier assets such as equi-
ties on the FTSE 100 soared in
January, gilts lost two per cent,
while other so called safe haven
assets also suffered.
New figures show German
bunds losing 1.7 per cent last
month, while US Treasuries
were down around one
per cent.
French govern-
ment bonds also
lost 1.5 per cent
in the opening
month of
2013, putting
these forms
of debt
a mo n g
the worst
perform-
ing major
financial
assets.
Risk on as bond
returns slump
at start of year
BY JULIAN HARRIS
Conversely, the FTSE gained 6.43 per
cent during January marking the
best start to a year for the blue chip
index since 1989. And globally, equi-
ties jumped nearly five per cent,
although gains were pared yesterday.
Perceived declines in tail risks and
plentiful liquidity, with more resolute
asset purchase programmes on the
way from Japan, have noticeably
changed investor sentiment
and behaviour away from
risk-off to risk-on mode,
commented the Institute of
International Finance in a
research note.
Investors will also be keeping
an eye on monetary policy
closer to home.
Incoming Bank of
England chief Mark
Carney appears in
front of the Treasury
Select Committee on
Thursday, with mar-
kets looking for any
hints towards a possible
change in direction.
Mark Carney is replacing
Sir Mervyn King (pictured)
NEW market entrants outdid FTSE
100 stalwarts over the past two
years, according to data out
yesterday.
The share price of 10 firms who
joined the main market with an
initial public offering (IPO)
between 2011-12 rose 19.2 per cent
by the end of January 2013,
Deloitte said, while the market as
a whole rose only 8.8 per cent in
the same period.
This marks a reversal of the
story seen in 2010, the accounting
giant said, when the 12 firms
joining the main market did 41.4
per cent worse than the FTSE 100
overall.
Deloitte equities head John
Hammond said a smattering of IPO
horror stories should not drive
investors away from firms listing
publicly for the first time.
There is a misconception that
IPOs are a bad investment and that
it is better to keep your money in
already listed stocks, Hammond
said. 2010s results perpetuated
this view. Our analysis shows that
the picture is changing as recent
IPOs have performed 11 per cent
better than the FTSE.
This data comes at a bad time
for the London IPO market, which
saw just four main market share
issues last year the lowest total
since 2009.
New listings
outdo FTSE in
last two years
BY BEN SOUTHWOOD
THE COALITION government faces
a divisive by-election after Chris
Huhne yesterday admitted
perverting the course of justice and
announced his resignation from
parliament on the day his trial was
due to begin.
The former Lib Dem cabinet
minister faces jail after admitting
handing speeding penalty points to
his then wife Vicky Pryce in 2003.
The trial of Pryce, who pleads not
guilty on the grounds of marital
coercion, will begin today.
Huhnes resignation means a by-
election for his Eastleigh seat, a
Huhne admits perverting justice
and kicks off by-election vote
BY JAMES WATERSON Tory-Lib Dem marginal, must be
held within the next three months.
The Hampshire seat is one of the
constituencies the Conservatives
must win if they want a majority at
the next general election.
Last night Ukip leader Nigel
Farage was considering whether to
stand as a candidate in the poll.
Mark Spragg of Keystone Law
told City A.M. that Huhne is
looking at twelve months behind
bars and a bill of at least 150,000
following a two year legal battle: If
he had pleaded guilty when first
interviewed by police he might just
might have escaped prison with a
suspended sentence or fine.
3
NEWS
cityam.com
Chris Huhne lost the 2007 Lib Dem leadership election to Nick Clegg by just 500 votes
PREMIER FOODS new chief
executive Gavin Darby has ousted
the groups chief operating
officer on his first day at the
helm.
The owner of Hovis bread
and Mr Kipling Cakes said
Geoff Eaton will leave the
company with immediate
effect and that the role of
chief operating officer
will cease to exist as
part of a board shake-up.
Eatons departure
follows former chief
executive Michael Clarkes
shock exit last week
Q
What does the government want from
the new nuclear programme?
A
The government wants to secure
long-term energy supply that will
also help its meet its environmental
emissions target.
Q
Who has signed up to the programme so
far?
A
EDF is working on the first new
build nuclear project at Hinkley
Point C in Somerset. Japanese firm
Hitachi got involved last year when it
bought Horizon Nuclear Power,
while questions remain over the
future of a joint venture between
GDF Suez and Iberdrola.
Q
What barriers does
the project face?
A
There are three main barriers to
the new nuclear project: cost,
planning permission for the nuclear
sites and government policy.
Q
Does Centricas exit leave the
governments plan in tatters?
A
Centricas partner EDF Energy
said yesterday that it remains
committed to Hinkley Point. It is
understood that interest in
Centricas 20 per cent stake could
come from China, where a state
energy company has previously
expressed an interest in the venture.
BRITISH GAS owner Centrica yester-
day pulled out of plans to build up to
four new nuclear power stations in
collaboration with EDF, blaming ris-
ing costs and the construction
timetable slipping.
Centrica has spent around 200m
on the project, which will be written
off in this years results. EDF is in dis-
cussions with a number of Chinese
groups with an eye to taking over
Centricas 20 per cent stake in the
joint venture.
The move follows last weeks deci-
sion by Cumbria county council to
reject a new 12bn nuclear waste dis-
posal site in the Lake District, seen as
vital to the UKs nuclear expansion.
Its unfortunate that Centrica is the
first official victim of the councils
vote but the prognosis for new
nuclear builds in the UK remains
extremely strong, Cumbrian MP
Jamie Reed told City A.M. yesterday.
I expect further changes [to outside
investors] as boardrooms get closer to
writing cheques but am assured that
contingencies are in place in case
smaller operators fall by the wayside.
The Department of Energy and
Climate Change (DECC) insisted
Centrica pulls
out of UK new
nuclear plans
BY CATHY ADAMS AND
JAMES WATERSON
Centricas decision did not affect the
case for nuclear expansion: We are
determined to make the UK a leading
global destination for investment in
new nuclear. The decision by Centrica
reflects the companys investment pri-
orities and is not a reflection on UK
government policy.
DECC cited the recent purchase of
Horizon Nuclear Power by Japans
Hitachi which yesterday revised
down its full-year profit forecast as
clear evidence of the attractiveness
of the new nuclear market in the UK.
Centrica will launch a 500m share
buyback programme to return capital
to shareholders, having previously
undertaken a 2.2bn rights issue to
fund its stake in the construction of
new power stations at Hinkley Point in
Somerset and Sizewell in East Anglia.
4
NEWS
cityam.com
Premier Foods new boss ousts
chief operating officer Eaton
BY KASMIRA JEFFORD
just 18 months after he joined the
group.
Shares have fallen more than 25
per cent in the week since the
announcement.
Darby, the former Cable and
Wireless Worldwide boss who
succeeded Clarke as chief
executive, yesterday said he
wanted a flatter executive
management structure...
that will enable
commercial and
functional management to
report directly to him.
Q
A
and Whats next for UK nuclear power?
Centrica PLC
350.0
352.5
347.5
355.0
357.5
360.0
349.00
4Feb
ITALIAN prosecutors in the town
of Trani are investigating five
foreign banks for possible
manipulation of Euribor, the euro-
priced counterpart of scandal-hit
Libor bank-to-bank lending rates,
court sources said yesterday.
The five banks are said to be
Deutsche Bank, Barclays, Royal
Bank of Scotland, HSBC and Societe
Generale, according to the court
sources.
The probe was opened in July
after complaints from consumer
groups.
The Libor investigation in the UK
has rocked many of the top banks.
Italy probe on
Euribor claims
SWISS watchmaker Swatch yesterday posted a 26 per cent rise in net income to
SFr1.61bn (1.12bn), smashing analyst expectations. The groups operating margin rose
to 25.4 per cent, versus 23.9 per cent a year ago, giving hope to other luxury goods
firms aiming for an uptick in demand from China.
SWATCH SALES TICK UP
Geoff Eaton joined the
firm in October
Lloyds chairman Sir Win
Bischoff also gave evidence
THE HEAD of Chinas central bank
Zhou Xiaochuan will step down next
month after 11 years, according to a
report in a state-run newspaper, the
China Securities Journal.
Zhous departure was signalled at
the end of last year when he was
excluded from the Communist
Partys central committee.
Zhou, 65, gained the nickname Mr
RMB when he oversaw the loosening
of the states exchange rate regime
for the renminbi in 2005.
Mooted successors include the
head of Chinas banking regulator
Shang Fulin and Guo Shuqing the
chief securities regulator.
Mr RMB to bow
out this March
LLOYDS chief executive may not
receive this years bonus until the gov-
ernments stake in the bank is above
the level it put into the institution, it
emerged yesterday.
The banks remuneration commit-
tee is thought to be considering hold-
ing back the payment of Antonio
Horta-Osorios bonus until the share
price recovers beyond its bailout
level.
They have not yet decided the
level of that bonus.
The chief declined to com-
ment on his likely payout, but
told the Parliamentary
Commission on Banking
Standards he is aware
of public anger over
pay.
We are very
mindful of the gen-
eral environment
in financial servic-
es, he said.
At the hearing
Ho r t a - Os o r i o
revealed he dis-
agrees with the
British Bankers
Lloyds bonuses
may face new
bailout target
BY TIM WALLACE
Association on ringfencing. Lloyds
favours tough rules to enforce the par-
tial separation of retail and invest-
ment banking, but the industry body
opposes the plan.
We are the only bank to publicly
support the ringfence, and we support
electrification, he said. It is absolute-
ly correct that for society as a whole it
is better for financial stability and
from a cultural perspective to have a
ringfence with strong enforcement
and incentives.
But the bank is not entirely in
conflict with the BBA Lloyds
chairman Sir Winfried Bischoff
called for a standards body to be
set up with the powers to strike
off errant bankers in the same
way as bad doctors are
banned from the profes-
sion, in line with pro-
posals the lobby group
is considering.
Horta-Osorio also
said he wants a cut off
date for PPI claims,
arguing it would
speed up the process,
cut the costs from
bogus applications
from claims compa-
nies, and help the
industry move on from
the scandal.
Chief executive of Lloyds Antonio Horta-Osorio was hired to clean up the bank
STARBUCKS tax arrangements are
perfectly legitimate under
international tax rules and do not
represent abuses of the system, tax
heads from HM Revenue and
Customs (HMRC) and the Treasury
said yesterday.
The coffee chain had come in for
criticism for recording no UK
profits and so not paying
corporation tax in Britain, despite
large sales in the country.
But that is the result of the firm
abiding by international
agreements, not of abusive
arrangements according to the
Treasurys corporation tax head.
BY TIM WALLACE
7
NEWS
cityam.com
NATIONAL regulators across the
European Union must show by the
end of the month they are not
damaging the single market by
being too heavyhanded with banks
from elsewhere in the bloc, the EC
said yesterday.
Britain has lobbied for more
wriggle room as its regulators
discourage foreign branches and
put pressure on lenders to set up
subsidiaries that are required to
have their own capital and
liquidity buffers to withstand
market shocks.
BY HARRY BANKS
EC deadline for
bank regulators
The media debate has
fundamentally been about taxing
rights allocated between countries
something determined in
accordance with international
principles and not something the
general anti-abuse rule (GAAR)
could rewrite, Mike Williams told
the House of Lords economic
affairs committee.
Multinationals adopt a range of
tax structures and when they are
abusive the GAAR will apply to
multinationals.
Meanwhile HMRCs Judith Knott
argued the GAAR will cut down on
legal bills by creating a simple
smell test for tax schemes, rather
than needing expensive advice.
Tax bosses say Starbucks has
not been abusing the system
THE GERMAN government is
considering a new law to imprison
bank executives for up to five years if
they are found guilty of reckless
behaviour that puts a bank at risk.
Weve found a regulatory gap
here that we want to close, a senior
government official in Berlin said
yesterday. According to the draft
banking law amendment, which
the cabinet discussed yesterday, a
manager may face a jail sentence if
he deliberately ignored risk rules
and thereby risked the collapse of a
financial institution.
German plans
to jail bankers
BRITAINS accountants have
enjoyed a seven per cent pay rise in
the last year, marking three years
of solid wage growth, research
showed yesterday.
The average salary rose five per
cent to 64,022, according to a
survey conducted by financial
services recruiter Marks Sattin.
But it was a bigger-than-expected
bonus pool that boosted bean
counters pay packets, with the
average bonus jumping from just
over 9,500 to more than 11,000
in 2012/13.
Around 47 per cent received a
bonus this year, up from 45 per
cent a year ago.
Obviously accountants are not
immune from the gloomy
economic news, hence their
understated bonus expectations,
said Dave Way, deputy managing
director of Marks Sattin.
But the news is actually very
good for them these figures
represent the third year in a row of
solid, above inflation, pay growth,
Sattin added.
Accountants
enjoy fresh
rises in pay
BY AMY-JO CROWLEY
UK listed companies returned twice as
much money to shareholders
through share buybacks in 2012 as
they raised in new capital, according
to figures released today.
Last year businesses spent 12.4bn
buying back and cancelling their own
shares compared to the 5.9bn they
raised from the stock market through
IPOs and rights issues.
The imbalance suggests that com-
panies do not see enough investment
opportunities to justify keeping hold
of cash let alone raising new cash
from shareholders, said Laurence
Sacker of accountancy group UHY
Hacker Young.
A narrowing of that gap would be
an important indicator that the mar-
ket is starting to fire on all cylinders
and returning to its crucial function
Stock buybacks
twice as likely
as new issues
BY JAMES WATERSON of funding future growth.
The British IPO market was stagnant
for most of last year, with Direct Lines
successful float in October accounting
for more than a tenth of total annual
funds raised through share issues.
By contrast, in 2009 just 593m was
returned to investors through buy-
back schemes, while companies raised
76.7bn.
Shareissuanceandrepayment amongUKlistedcompanies
2012 2011 2010 2009 2008 2007
40
50
30
20
10
0
60
70
80 bn Issuance
16.5
28.4
54
17.2
76.7
18.1
4.9 5.9
0.6
4.1
14.4
12.4
Repayment
MORE than half of UK finance
directors have no succession plan
in place according to research
released today.
The survey of 200 finance
directors by recruitment
consultancy Robert Half found 55
per cent of respondents had no
plans to ensure a smooth
transition at their business,
Yesterday Barclays confirmed
that group finance director Chris
Half of finance directors have
no succession plan at their firm
BY JAMES WATERSON Lucas was leaving the business but
said it would take a considerable
time to find a replacement,
highlighting the difficulties
associated with finding suitable
top-level executives.
With a raft of high profile
senior resignations over the past
year, it is surprising to see such a
large proportion of financial
directors without a chosen
successor, or indeed the pool to
choose from, said Phil Sheridan,
of Robert Half.
8
NEWS
cityam.com
Barclays group finance director Chris Lucas is leaving the bank after six years in the role
IN BRIEF
FORMER JP Morgan dealmaker
Ian Hannam, one of the Citys
most prolific M&A bankers, is
in the early throes of setting up
a new investment boutique
advising companies in the
mining, oil and gas sectors, it
emerged yesterday.
Hannam, who stepped down
from his role at the bank last
April to contest a 450,000 fine
handed to him by City
regulators, is understood to be
lining up City grandee John
Manser as chairman of the
prospective business, which is
in the very early stages of
applying for regulatory
approval,
Manser was
chair of
legendary City
merchant bank
Robert Fleming
until its eventual
merger into JP
Morgan
Cazenove,
Hannams
former
Top dealmaker Hannam gets
set for new advisory venture
BY MICHAEL BOW
stomping ground. Manser is
currently chairman of
Shaftesbury and deputy
chairman of SABMiller.
A spokesman for Hannam
declined to comment on
speculation about a new
venture yesterday but referred
to an earlier statement which
said: Ian Hannam has said he
intends to set up his own FSA-
registered business.
However, the plans are still
evolving and until they are
finalised and ready to be
announced publicly, it is
inappropriate to comment on
details which may be subject to
change and which should
remain confidential.
Before his resignation,
Hannam was one of the Citys
busiest dealmakers clocking up
hundreds of floats and
mergers. He had a hand in the
early stages of the Xstrata and
Glencore mega merger which
closed last year.
PETER Cruddas, executive chairman
of CMC Markets and former co-treas-
urer of the Conservative Party, was
yesterday awarded libel damages of
45,000 in the High Court against
Mark Adams, the political lobbyist.
Cruddas stepped down from his
post in the Conservative Party after a
series of allegations about his role in
Tory party funding.
At a previous court hearing in
November 2012, judgment had been
entered against Adams with dam-
ages to be assessed. Adams is also
required to pay the costs of the
action, more than 120,000, and has
undertaken to the court not to pub-
lish in future the defamatory allega-
tions he had posted about Cruddas
on his standup4lobbying website
and via his Twitter account.
Commenting, Jeremy Clarke-
Williams, a lawyer at Slater &
Gordon who represents Cruddas,
said: The very serious nature of the
defamatory campaign pursued by
Adams left Cruddas with no option
but to accept his invitation to sue
him for libel. .....There now remains
his ongoing libel action against The
Sunday Times.
Cruddas gets
45,000 win
BY DAVID HELLIER
Top rainmaker Ian
Hannam is prolific
M&C Saatchi heads claim shares
n Advertising giant M&C Saatchi has
awarded shares worth more than
7m to four directors, including co-
founder Lord Saatchi, as it
announced profits in line with
expectations. In an interim
statement, the agency network said
it was awarding 886,733 shares each
to Lord Saatchi, chief executive David
Kershaw, executive director Bill
Muirhead and chairman Jeremy
Sinclair. The shares are worth just
over 7m based on yesterdays
closing price of 198.5p. The firms
year-end report will be on 18 March.
LondonMetric starts spending
n LondonMetric Property has moved
quickly to boost its property portfolio
following the merger of London &
Stamford and Metric Property
Investment last month. In its first
interim management statement, the
firm said that between 1 October last
year and 1 February it has exchanged
contracts for six retail warehouses
worth 92.4m, as well as further sales
and lettings. Chief executive Andrew
Jones said: We are excited to have
announced the 92.4m portfolio
acquisition so soon after completing
the merger.
Banco de Valencia posts loss
n Spains Banco de Valencia, which
was bought by Spains third-largest
lender Caixabank last year, reported a
loss of 3.6bn (3.1bn) for 2012, the
bank restructuring fund (FROB) said
yesterday. While Banco de Valencia is
still technically held by the FROB,
CaixaBank bought the smaller lender
for 1 with the benefit of a
government-funded programme to
protect it against future losses on
assets. A Caixabank spokesperson
said the loss has not been
consolidated into the larger banks
results.
THE WORLDS MOST EXPENSIVE CITIES
#1 TOKYO
#2 OSAKA
#12 FRANKFURT
#46 MOSCOW
#3 SYDNEY
#6 SINGAPORE
#4= MELBOURNE
#4= OSLO
#7 ZURICH
#10 GENEVA
#8 PARIS
#16 LONDON
#47 MANCHESTER
#9 CARACAS
LONDON will gain its own TV station
next year, after the race to operate the
channel was awarded to Russian
billionaire Alexander Lebedev, the
owner of the Evening Standard and
Independent newspapers.
Communications regulator Ofcom
announced that Lebedevs London
Live bid had beaten four competitors
to win the rights to the contract.
London is one of 21 areas which will
switch on a local TV station from late
2013, although following delays to the
awarding process, London Live is
unlikely to be switched on before this
time next year.
The station will focus on news and
current affairs with programming
created by staff at the Standard.
It will also present live politics cover-
age with space for drama and sports.
Standard owner
wins London TV
BY JAMES TITCOMB The race to win the 12-year licence
for the London channel was the most
hotly contested in the UK, with the
ability to reach four million viewers a
big advertising opportunity.
Launching a TV station could turn
Lebedevs British media holdings into
a profitable enterprise for the first
time since he bought the Independent
and a majority share of the Standard
in 2009.
The most recent figures available for
parent company Lebedev Holdings
showed a 27.4m loss in 2011.
It is controlled by Alexanders son,
Evgeny, who will be chairman of the
TV company, ESTV.
Other bidders for the London TV
licence included London8, led by for-
mer Channel 4 chairman Luke
Johnson, and LondonTV, fronted by
former ITV News editor David
Mannion.
DO YOU THINK IT IS EXPENSIVE TO
LIVE IN LONDON?Interviews by Amy-Jo Crowley
Food kills me. Things like Pret are totally over-
rated - 3.50 for a sandwich is extortionate and
youre lucky to get a proper meal for 10. If I was to eat
out every day, I think Id easily spend 40-60 a week.
These views are those of the individuals above andnot necessarily those of their company
TOBY WILLIAMS
JP MORGAN
Its difcult for young people who have left Uni

or starting out on their rst job. But there is
denitely a lot of things to do the galleries and muse-
ums are free which can help keep you active and busy.
JEMIMA HARRIS
CLARKSONS
Our company is based out of different cities
and in different places such as Norwich for
about 400, you get your own one-bedroom at per
month. Here you have to pay at least twice as much.
RAGAV SAWHNEY
AVIVA
CITYVIEWS
9
NEWS
cityam.com
TOKYO has regained its position as
the most expensive major city in
the world, according to figures
released today, while the ongoing
financial crisis has pushed down
the relative cost of living in the
Eurozone.
Research by the Economist
Intelligence Unit shows uncertainty
surrounding the single currency
has made it relatively cheaper to
live in cities such as Frankfurt,
Brussels and Dublin. London rose
one position to joint 16th place.
Asian cities have also been rising
on the back of wage growth and
economic optimism, said the
Tokyo tops cost of living table
but London rises to 16th place
BY JAMES WATERSON
reports editor Jon Copestake. This
means that over half of the 20 most
expensive cities now hail from Asia
and Australasia.
The report considers more than
160 items in large cities, including
the price of a litre of petrol, a loaf
of bread and a bottle of table wine.
The cost of these items are then
converted into US dollars and
weighted in order to achieve
comparative indices.
Caracas makes the top ten most
expensive currency due to
substantial price volatility and a
fixed exchange rate between the
Venezuelan bolvar and the dollar.
Karachi in Pakistan is the
cheapest major city on the list.
MOSCOWS stock exchange will be
valued at up to $4.6bn in its
planned stock market flotation,
which will raise around $500m for
the company and selling
shareholders, according to a price
range published yesterday.
The Moscow Exchange, Russias
main venue for trading in stocks,
bonds, currencies and derivatives,
is to float on its own platform in
an attempt to revitalise Russias
capital markets and convince
companies to list domestically.
Russian stock exchange priced
Promoting Moscow's markets
has been backed by the Kremlin in
a bid to transform the Russian
capital into a global financial
centre. President Vladimir Putin
recently called for upcoming
privatisations of state assets to be
held in Russia.
The exchange, formed in 2011
through the merger of Moscows
two largest stock exchanges
MICEX and RTS set an
indicative price range for its initial
public offering (IPO) of between 55
(1.15) and 63 roubles.
Etihad triples
its net profits
ROYAL Caribbean Cruises, the
worlds second-largest cruise
operator, yesterday said that strong
US demand and a jump in bookings
so far this year would help mitigate
lingering weakness in Europe in
2013.
The firm reported a fourth-
quarter net loss of $392.8m
(249m), on revenue of $1.81bn,
compared with a profit of $36.6m
on revenue of $1.78bn a year earlier.
The loss stemmed from a $413.9m
impairment charge related to its
Spanish cruise line Pullmantur,
which has been hit by austerity
measures in that country.
The company said it has seen a
significant deterioration in
demand in Spain, and sales across
the industry have been hit by the
sinking of the Costa Concordia.
Choppy waters
for cruise firm
SCRAPPING air passenger duty (APD)
would end up benefiting the public
purse, according to research
conducted by PwC and
commissioned by airlines.
If the government ended the
controversial levy on air travellers
entering or leaving the UK, the
subsequent boost to businesses
could lift GDP by 0.46 per cent this
year, the study by PwC claimed
yesterday.
The rise in business activity would
more than offset the amount raised
by APD each year, leading to a net
gain of 500m a year in the first two
years for the exchequer, it adds.
The Treasury expects to take
2.9bn in air passenger duty in
2012/13, rising to 3.9bn by 2017/18.
PwCs report, which comes just
over a month ahead of George
Osbornes next Budget, was
commissioned by four of the UKs
biggest airlines.
British Airways, Virgin Atlantic,
Axe tax and lift
growth, airlines
urge Osborne
BY MARION DAKERS
Ryanair and EasyJet put aside
rivalries in 2011 to jointly lobby for
the end of APD through their Axe
the Tax campaign.
The levy has long been a bugbear
of the travel industry, and sparked a
fresh wave of criticism when it rose
by eight per cent last April.
APD costs between 13 per
passenger on a short-haul flight and
92 for long-haul journeys.
The government must urgently
review the reports
recommendations ahead of the
upcoming Budget, said Mark
Tanzer, chief executive of the
Association of Britsh Travel Agents.
The four airlines said in a
statement: Should APD be abolished
the aviation industry would be able
to move quickly to add new flights in
and out of the UK, or invest in new
products and services, creating new
opportunities for businesses and
much needed jobs across the UK.
The report claims that 60,000 jobs
would be created if the tax gets the
chop in the Budget.
EasyJet boss Carolyn McCall New Virgin Atlantic boss Craig Kreeger
Ryanairs Michael OLeary Willie Walsh of British Airways parent IAG
10
NEWS
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US computer giant Dell gets
closer to $24bn buyout deal
DELL was last night moving closer
to a near $24bn (15.2bn) buyout
deal, with price negotiations
narrowing to $13.50 to $13.75 a
share in what would be the
biggest leveraged buyout since the
financial crisis.
Talks between Dell, the worlds
third biggest computer maker,
and a consortium led by its
founder and chief executive,
Michael Dell, to take the company
private were in the final stages
yesterday, a person familiar with
the matter said.
An outcome is expected soon,
the person said, cautioning that
no final agreement had been
reached and negotiations could
still break down.
Dell shares fell almost three per
cent yesterday.
Microsoft, which provides its
Windows software for Dell
computers and is also part of the
investment consortium, is
expected to invest around $2bn in
the deal, while private equity firm
Silver Lake is expected to put in
about $1bn, the source said.
Michael Dell is expected to roll
over his roughly 16 per cent stake
and put in some of his own money
so he has control of the company,
the source added.
Dell and Silver Lake declined to
comment and Microsoft did not
immediately respond to a request
for a comment.
The $13.75 per share is a
premium of about 23 per cent to
the average of $11 per share Dell
traded before news of the deal
talks broke, but is far below the
$17.61 that the shares were trading
a year ago.
ETIHAD Airways yesterday said its
net profit tripled in 2012 as its
fast-expanding global network
attracted more passengers.
Etihad which has stakes in Air
Berlin and Virgin Australia and is
close to taking a stake in Indias
Jet Airways earned a net profit of
$42m (26.6m) in 2012, compared
with $14m in the previous year.
Revenue rose 17 per cent to
$4.8bn, the airline said in a
statement.
The eight-year old carrier made
its first profit in 2011.
The UAE carrier competes with
key Gulf rivals like Emirates and
Qatar Airways.
Etihad said it carried 10.3m
passengers last year, up 23 per cent
over 2011. The average seat factor
was 78.2 per cent.
T
HE strike that hit Lonmins
Marikana platinum mine in
South Africa last summer is the
one that sticks most tragically
in the memory, thanks to the
appalling violence which broke out,
ending with 34 strikers dead at the
hands of the police on a single day
the bloodiest security incident in
the troubled nation since the end of
apartheid.
Yet Lonmin was not the only firm
affected. Platinum miner Amplats,
part of the FTSE 100 mining and
natural resources group Anglo
American, endured problems on an
enormous scale as the year wore
on, at one point sacking 12,000
miners at a swoop.
It is hardly surprising that these
damaging disputes, costly in
human life and to corporate
bottom lines, were reflected in the
disappointing numbers reported by
Anglo and Amplats yesterday.
Amplats, which is the worlds
biggest platinum producer, saw a
headline loss of $170m (108m)
over the 2012 calendar year, down
from a profit of $527m the year
before. For Anglo American, this
translated into a $225m loss to
underlying earnings, down from a
$410m contribution to the same
measure of earnings in 2011. Shares
fell 1.51 per cent on the news.
Such shocking losses are in line
with the shocking scale of the
problem. Of more concern for
investors today is how intractable
the situation in South Africa still
appears. Amplats has already
announced this year a fresh round
of job cuts, with 14,000 intended to
be axed, as it mothballs some
mines in order to reduce platinum
output a plan that was predicted
to reduce the worlds total
platinum production by seven per
cent.
However, these plans met with
an unsurprisingly frosty reception
and the threat of further strikes.
Amplats has subsequently delayed
implementing the radical scheme
while it negotiates further with the
unions.
Part of the problem is the
generosity of Lonmin, which
buckled in the face of the dreadful
escalation at Marikana and offered
its workers a 22 per cent wage hike.
As a result, other platinum miners
find themselves faced with the
option of following suit or being
threatened with more labour
disruption until they offer similar
concessions. It is hardly surprising
that laying off 14,000 miners looks
unacceptable by comparison.
And yet both Anglo and Lonmin
are in their different ways trying to
adjust to some tough new market
realities. The price of platinum fell
off a cliff in 2008 and is still
trading below its pre-crisis trend
price.
Platinum suffers from being a
useful metal. Important for
catalystic converters in cars, the
slowdown in Europes automobile
market has hit demand very hard
and prices have been depressed as a
result. The stoppages last year, with
all the uncertainty they brought
and their constraining effect on
production, failed to make prices
for the white metal spike up even
to match the recent highs of early
2011. Anglos 2012 losses are bad
but worse still is the reality that
there is no imminent gleam at the
end of this tunnel except the lamp
of an angry miner.
MINER Anglo American will take a
$225m (143m) hit in this years
results for its interest in its platinum
operations, following violent strikes
last summer.
Anglo American, which is due to
report its annual results next week,
said it will take the $225m as an
underlying loss in respect of majori-
ty-owned subsidiary Anglo American
Platinum.
Separately, Amplats, which is 80
per cent owned by its London-listed
parent, yesterday posted an operat-
ing loss of ZAR6.3bn (451m) for
2012, a drop of 180 per cent from a
profit of almost ZAR8bn last year.
Lower sales volumes due to the two-
month long strike that erupted in
August last year, higher mining costs
and lower platinum costs all
weighed on the miners results.
Amplats said it produced eight per
cent less refined platinum year on
year, hit by the industrial action that
erupted last summer that plagued
Anglo warns of
$225m loss on
back of strikes
BY CATHY ADAMS
many of its peers working across
South Africas platinum belt.
Amplats chief executive Chris
Griffith yesterday labelled 2012 a
challenging year for the company
and the platinum industry as a
whole, adding that it was charac-
terised by increasingly volatile
markets.
Last month, Amplats unveiled a rad-
ical overhaul of its South African
operations, involving the sale of a
mine complex and the closure of sev-
eral shafts. The restructuring could
lead to the loss of up to 14,000 jobs.
BOTTOM
LINE
MARC SIDWELL
Anglo American PLC
1,900
1,920
1,880
1,940
1,960
1,980 p
1,924.50
4Feb
12
NEWS
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Hard choices ahead as platinum prices fail to brighten
WITH just over two weeks to go
before Bumis boardroom battle
on 21 February, senior
independent non-executive
director Julian Horn-Smith has
called on co-founder Nat
Rothschild to give up more than
16m bonus shares.
Rothschild was granted the
shares when his acquisition
vehicle Vallar bought Bumi assets
in 2011.
It is now clear that the deal and
deal structure which Nat proposed
and championed for Vallar has
resulted in considerable losses for
many shareholders, Horn-Smith
said in a statement.
Following meetings with
shareholders over the past few
weeks there is growing pressure
Bumi director urges Rothschild
to return his 16m bonus shares
BY CATHY ADAMS
from them for Nat to return these
shares, he added.
The board believes it is unjust
that Nat should be able to
continue to own and vote these
shares which he received as the
result of a flawed transaction. It is
wrong for failure to be rewarded
and this bonus should be clawed
back.
Rothschild responded: These
shares were awarded because I and
my associates put up 20m in cash
ahead of the IPO of Vallar; this
20m would have been lost,
without any compensation to me,
had we failed to execute the IPO.
In a letter to shareholders
yesterday, the financier urged
them to save Bumi and vote for
his radical board overhaul at the
meeting in a little over two weeks
time.
IN BRIEF
EnQuest hits output targets
nProducer EnQuest hit its production
targets for 2012, it said yesterday,
producing an average 22,802 barrels a
day. The FTSE 250 explorer, which last
month became the first oil company
to launch a retail bond, had given
guidance of between 20,000 and
24,000 barrels of oil equivalent a day.
EnQuest added that the first oil was
expected from its Alma/Galia project
in the North Sea in the fourth quarter
of this year. Separately, the London-
listed explorer said its bond offer
period would close this Friday, and the
offer would be at least 100m.
Rolls-Royce wins Air Lease order
nRolls-Royce has netted an order for
its Trent XWB engines worth $1.1bn
(699m) at list prices from leasing
company Air Lease Corporation. The
engines will be used to power 25 of
Air Leases Airbus aircraft.
Additionally, Air Lease has an option
for an extra five aircraft. The Trent
XWB engine specially designed for
the Airbus A350 is the fastest selling
Trent engine ever, Rolls-Royce said
yesterday, with more than 1,200
already sold. Shares in the FTSE 100
power systems company closed up
0.05 per cent yesterday at 971.5p.
Sumitomo buys Surrey water
nJapanese trading house Sumitomo
has agreed to spend 164.5m on
buying Sutton and East Surrey Water
Group from Aqueduct, which is
owned by investors including Icon
Infrastructure. The utility firm, which
serves around 655,000 water
customers in south east England,
had attracted bid interest from CVC
and Beijing Water Company.
Sumitomo was advised by Nomura,
while Aqueduct and Icon took advice
from Citigroup and law firm
Freshfields.
GOLD miner Randgold Resources yes-
terday posted record production and
profits for last year, despite a tough
time at some of its African operations.
The FTSE 100 miner logged profits of
$511m (325m) over the year, up 16
per cent. Production was up 14 per
cent, at 794,844 ounces of gold.
Quarter on quarter, profit in the
three months to September was up 18
per cent and production rose by five
per cent.
On the back of soaring profits,
Randgold which has operations in
Mali, the Congo and the Ivory Coast in
Africa has proposed a 25 per cent
hike in the annual dividend to $0.50.
On an operational level, its flagship
Loulo-Gounkoto complex in Mali
exceeded its output target for the
year, producing more than 500,000
ounces of gold, on
the back of devel-
opment of the
Yalea and Gara
unde r g r o und
mines.
Gold output at
Randgolds Tongon
Randgold tops
FTSE 100 risers
on record profit
BY CATHY ADAMS
mine in the Ivory Coast inched down
from 250,390 ounces in 2011 to
210,615 ounces last year.
Randgold blamed frequent outages
in the grid power supply leading to
plant stoppages for the fall in pro-
duction.
It's been a particularly eventful year
but the team once again rose to the
challenges, chief executive Mark
Bristow said yesterday.
Not only did we achieve very cred-
itable results for 2012 but we start
2013 in good shape and with a
renewed focus on growing our produc-
tion and managing our costs.
Bristow reiterated Randgolds annu-
al production target of 1.2m ounces of
gold by 2015. This year, he said the
company was focussed on pouring the
first gold at its Kibali mine, getting
Tongon back on target and maintain
the strong performance at Loulo and
Morila.
Randgold was the biggest blue chip
riser yesterday.
Salamander soars as it strikes oil at
the North Kutei basin off Indonesia
SHARES in explorer Salamander Energy
soared yesterday as it said it had discovered
oil at a well offshore Indonesia.
The London-listed explorer said
yesterday that it had discovered 40 metres
of net oil and gas in sandstones in the
North Kutei basin part of Salamanders
multi-well drilling programme off the
coast of Indonesia.
The well was drilled to a depth of more
than 2,000 metres, and was flowing at
6,000 barrels of light oil and 8m cubic feet
of gas per day during tests, Salamander
said in an operational update.
BY CATHY ADAMS The well, known technically as the South
Kecapi-1 DIR/ST exploration well, has been
plugged and abandoned as an oil and gas
discovery.
Work is now underway to confirm the
resources. Salamander said that the gas
resources are not commercial on a
standalone basis.
We are very encouraged by these results
and are now moving on to drill one of the
largest structures in the basin at the North
Kendang location, chief executive James
Menzies said yesterday.
Phil Corbett, analyst from Deutsche
Bank, hailed the FTSE 250 explorers
discovery yesterday, adding that it could be
transformational for Salamanders
investment case.
Shares closed up 11.83 per cent at 208p.
Randgolds gold production hit record highs in 2012
Salamander Energy PLC
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Chief exec
Mark Bristow
Randgold guided production in a range of 900-950,000 ounces,
representing a 13-19 per cent increase over 2012, based on more conservative
guidance for Tongon and Morila than our forecast of 950,000 ounces. We
maintain our buy rating.
ANALYST VIEWS
2012 production was broadly in line with our numbers. Cash costs were
up at both Loulo and Tongon due to issues with recoveries that we expect will
run into the rst quarter of this year. Kibali capital expenditure overrun
was only six per cent which is better than our estimation of 10 per cent.
Given that the share price falls since October have arguably factored in
the uncertainty over Mali conict, the reassurance from Bristow and his team
that Randgold Resources is on target to produce 1.2m ounces of gold by
2015 is good enough for us.
WHAT SHOULD INVESTORS

WATCH OUT FOR IN
RANDGOLDS RESULTS? Interviews by Cathy Adams
TIM DUDLEY CANACCORD GENUITY
KATE CRAIG LIBERUM CAPITAL
RICHARD CURR PRIME MARKETS

ANADARKO yesterday reported
fourth-quarter net income of
$203m (128.8m) a big
improvement on the $358m
loss at the same time last year.
Adjusted net income for the
quarter was $457m, or 91 cents
a share, compared to $423m or
85 cents a share at the same
time last year. Analysts had
Anadarko moves back into
black for 2012 fourth quarter
BY CITY A.M. REPORTER forecast the company to report
earnings of 72 cents per share
for the quarter.
Total revenues for the oil and
gas producer fell to $3.41bn
from $3.84bn last year.
However that was still above
analysts consensus revenue of
$3.38bn for the period in 2012.
Shares fell 0.8 per cent to
$80.50 at the close of New York
trading.
KFC parent Yum Brands
yesterday warned it expects
2013 per-share earnings to
shrink rather than grow, as it
grapples with a food safety
scare that ensnared some of its
chicken suppliers in its top
market.
The company, which gets
more than half of its overall
KFC poultry probe leaves
bad taste for Yum Brands
Randgold Resources Ltd
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sales and operating profit from
China, reported a six per cent
drop in fourth-quarter sales at
established restaurants in
China due to adverse
publicity regarding its
poultry supply.
As a result, Yum forecast a
mid-single digit percentage
decline in earnings per share
for 2013.
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FORMER Morgan Stanley investment
banker Emmett Kilduff has
left the firm to become a
social media guru.
Eagle Intel, which
launches fully next
month, aims to capture
stock intelligence from the
likes of Twitter to assist
institutional investors. The
Capitalist hears that fund man-
ager Tim Steer from Artemis is
one of 15 City clients already
signed up.
My father was a successful technol-
ogy entrepreneur and I grew up
wanting to launch my own business,
Kilduff told The Capitalist. He appears
to not only be following in his
parental footsteps, but also those of
DCM Capital, which offers a similar
analytics service.
This is not his first foray into web
entrepreneurship. Kilduff founded
cmypitch.com in 2008 after
eight years at Credit Suisse,
but returned to invest-
ment banking after his
first web venture ended.
Ex-banker Emmett Kilduff
Good news for City thespians:
there are two new financial sector-
inspired productions on the horizon. The
first by Anders Lustgarten If You Dont
Let us Dream, We Wont Let You Sleep
looks at what life might be like in a
privatised world where hedge fund
managers can hedge on social issues
like crime and healthcare. The play,
starring The Kumars actress Meera Syal
(pictured), runs at the Royal Court
Theatre from 15 February to 9 March.
For a more playful take on the financial
sector, the Bush Theatre is offering up
Money: The Game Show by playwright
Clare Duffy. The production involves
10,000 of hard cash
being gratuitously
flashed on-stage
while the audience is
invited to play a
series of high
stake games
that explore
how the worlds
economic
system came to
the brink of
collapse. From
now until
2 March.
Twitter power
harnessesed
by ex-banker
14
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Got A Story? Email
thecapitalist@cityam.com
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for London
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The Bishop of Durham, Reverend Justin Welby, returned to the City yesterday when he was
confirmed as the 105th Archbishop of Canterbury at St Pauls Cathedral. No stranger to the
Square Mile, the new Archbishop worked in corporate finance for two oil companies before
he retrained as an Anglican priest in his mid-30s. Tweeting to his online followers after the
ceremony, his message was: Sitting in new office, spoken to Nigerian friend: Minor
inconveniences of moving as against floods and utter poverty. Need to stop whinging.
FORMER OIL EXECUTIVE IS THE NEW ARCHBISHOP
IT giant Oracle is set to buy network
equipment maker Acme Packet for
$2.1bn (1.3bn), it emerged yesterday.
The purchase is intended to put it
in a better position to compete with
Cisco Systems in moving data
securely over internet networks.
The deal is Oracles biggest since it
bought Sun Microsystems in 2010 for
about $7bn.
The company bought nearly a
dozen companies in 2012, including
Eloqua for $810m in December.
Telecom carriers have been
dumping wireline and other legacy
services as people increasingly use a
newer breed of devices to access
internet and businesses shift to IP
(internet protocol) networks, an area
where Acme Packet specialises.
Users are increasingly connected
and expect to communicate anytime
and anywhere using their
application, device, and network of
choice, Oracle said in a statement.
Oracle chief executive Larry
Ellison, who has used acquisitions to
boost the companys revenue
dramatically over the past decade,
had said in October he would not
rule out a big deal down the road.
The offer represents a 22 per cent
premium to Acme Packets Friday
close on the Nasdaq.
Oracle lines up
$2bn purchase
of Acme Packet
DESPITE economic woe in Spain and
Italy, online poker is proving more
popular than ever, internet gambling
firm 888 Holdings said yesterday.
The company said that better trad-
ing in the countries, as well as a
boom in mobile gambling, had led to
a 13 per cent rise in annual revenues
to $376m (239m).
Unlike many other London-listed
online gambling firms, 888 has per-
formed well in newly-regulated
European markets. Spain, which
introduced a regulated system last
year, has seen online poker prove far
more popular than most industry
observers expected.
Our success in Spain and Italy
shows that we have the right product
and technology led marketing to
make significant inroads into new
markets, and we will look to repeat
that success in other regulating terri-
tories, 888 chief executive Brian
Mattingley said yesterday. We are
Spanish poker
boom has 888
looking flush
BY JAMES TITCOMB
experiencing a significant increase in
customer recruitment and revenue
from mobile platforms and, given our
focus and commitment to invest-
ment in mobile, see this is as just the
beginning of an increasing trend.
888 said most of the growth was
driven by increasing revenues from
poker, which were up 32 per cent in
the final quarter of last year.
Casino revenue rose by around six
per cent, while bingo fell 11 per cent
due to challenging and competitive
market conditions.
888 Holdings PLC
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Find your next step at
HMV administrators sell stake in
GAY nightclub chain to founder
HMV has sold its majority stake in
G-A-Y Group to its founder Jeremy
Joseph, marking the collapsed
retailers final exit from its music
venues business.
Administrators Deloitte said
yesterday that Joseph, who founded
G-A-Y 20 years ago and grew the
business to four gay and lesbian
nightclubs including Heaven, has
regained full control in a move that
safeguards 200 jobs.
The G-A-Y group was the last
remaining venues business to be
BY KASMIRA JEFFORD
sold after HMV sold its other assets
including the Hammersmith Apollo
and Mama group last year.
Rob Harding, joint administrator
to HMV said the sale will benefit
the creditors of HMV and we wish Mr
Joseph the best in the beginning
of a new era for G-A-Y.
The deal comes ahead
of a statement
expected later this
week from Deloitte
that it plans to close
between 60 and 100
HMV stores, endangering
up to 1,500 jobs.
Deloitte axed 190 staff at HMVs
head office and distribution centres
last week.
The future of discount fashion
retailer Store Twenty One was also
thrown into doubt yesterday after
the company stopped trading
through its website.
The firm, owned by Indian
textiles giant Alok could
not be reached for
comment.
THE FISHMONGERS Company, one of the City of Londons ancient livery companies, has
bought the long leasehold interest in Tower Vaults for just over 12.5m. The 46,500
square foot site next to the Tower of London, has 12 shops and restaurants including
Costa Coffee and McDonalds. Cluttons acted on the sale to the 700-year-old guild.
FISHMONGERS COMPANY BUYS TOWER VAULTS
MAGAZINE group Future
Publishing now takes in more
than half of its advertising
revenue from digital adverts, the
owner of T3 and Total Film
reported yesterday.
The company said that income
from online, tablet and mobile ads
have accounted for 54 per cent of
advertising revenue since October,
up from 45 per cent a year ago.
Total revenues, which include
subscriptions and other sources of
income, saw digital account for 23
per cent, up from 18 per cent a
year ago.
Future, which owns a stable of
Magazine publisher Future sees
growth in digital advertising
BY JAMES TITCOMB film, gadget, music and sports
magazines, said like-for-like
revenues had fallen about three
per cent as the print magazine
landscape remains challenging.
Its US business, which has seen
print revenues decline a lot faster
than the more resilient UK
market, remains loss-making,
Future said. Seventy-four per cent
of the US businesss revenues now
come from digital while UK saw
revenues down by just one per
cent.
Future has seen video game
magazines in particular suffer as
more people search out online
reviews. It has closed four gaming
magazines in the last year.
Heaven, located under Charing
Cross station, is part of the deal
WALKER Greenbank, the luxury
interior furnishings group, said it
expects full-year profits to be at the
top end of analyst forecasts after a
solid first half performance.
The owner of brands including
Sanderson, Morris & Co and Zoffany,
yesterday said it expected group
sales to be up 2.3 per cent to 75.7m
in the year to 31 January.
Brand revenue is expected to rise
2.5 per cent on the previous year,
driven by strong growth in certain
international markets including the
US, where brand sales were up 17.6
per cent. Licence income is forecast
to be up seven per cent.
Greenbank to
top forecasts
BY KASMIRA JEFFORD
SHARES in Japanese TV maker
Panasonic saw their highest
increase in 38 years yesterday after a
weak yen moved the company into
an unexpected profit.
The shares rose 17 per cent in
Tokyo until the rise was halted by
Japans daily limit of a 100-yen price
increase. In the run up to Japans
December election, anticipation of a
victory for Shinzo Abes Liberal
Democrat party sent the yens value
tumbling, as Abe had promised to
print money to boost inflation.
The weaker yen has provided a
boost to struggling Japanese tech-
nology firms such as Sony and
Sharp, which have suffered from
lower demand for consumer elec-
tronics.
It has the effect of both making
Japanese goods cheaper to foreign
buyers and making TVs from rival
manufacturers such as Samsung
and LG relatively more expensive for
Japanese consumers. The currency
has fallen around 15 per cent
against the dollar since November.
BY JAMES TITCOMB Panasonics net profit in 2012s
final quarter was 61.3bn (420m),
compared with a loss of 197.6bn in
the same period last year, Panasonic
announced after trading closed on
Friday.
However, the company did not
change its guidance for an annual
loss of 765bn, saying that global
demand for TVs remains weak.
The news from Panasonic also
boosted Sony and Sharp yesterday,
with their shares rise by 7.5 per cent
and 5.5 per cent respectively. Sony
will reveal its figures later this week
Panasonics shares have fallen
steadily since 2008.
16
NEWS
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Saturday 22 June 2013, London and Surrey
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HITACHI yesterday cut its full-
year profit outlook by about 13
per cent to 420bn (2.9bn), citing
a weak economic recovery in
Europe and a slowdown in
emerging markets.
The sprawling Japanese firm,
which is cutting costs and trying
to push into growth areas such as
infrastructure, posted a 28 per
cent fall in its third-quarter
operating profit, well below
market forecasts for a small rise.
The business environment
facing our company is likely to
stay unclear, including not only a
prolonged European economic
struggle but also a slowdown in
growth in emerging markets,
Hitachi slashes forecasts after
its turnaround plan stumbles
including China and India, the
firm said in a statement.
Japans biggest industrial
electronics firm has been
overhauling its empire of some
900 firms since reporting one of
the largest losses in Japanese
corporate history.
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Panasonic Corp
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Panasonic sees
shares rocket
on shock profit
HTC TO FOCUS ON CHINA AS REVENUES FALL
SMARTPHONE
manufacturer HTC
said yesterday it
planned to focus
on emerging
markets, having
been squeezed out
of the US and
western Europe by
Samsung and
Apple. The
Taiwanese firm has
seen its market
share plummet in
the last two years.
The Taiwanese
firms chief Peter
Chou (pictured)
warned of a 17 per
cent revenue fall in
the first quarter
yesterday.
GRAINGER, the UKs largest
quoted residential landlord, has
acquired its first build to rent
scheme in Barking as part of a
major regeneration project being
developed by Bouygues
Development.
Grainger said yesterday it will
pay 13.7m for the residential part
of the scheme comprising of 100
residential units, which it is due to
complete in 2015.
The group plans to let the
homes rather than to sell them on
to private individuals, and will
also take responsibility for the
asset and property management.
Residential landlord Grainger
makes first build-to-rent deal
BY KASMIRA JEFFORD
The deal is part of a wider
strategy outlined by Grainger last
year to play a significant role in
the UKs growing private rented
sector.
Nick Jopling, Graingers
executive director for property,
called the acquisition a
significant milestone for the
private rented sector.
This is a sector that desperately
needs to grow in order to meet the
demands of the UK population and
is supported at the highest levels
of government, and we believe that
this style of residential
development has huge potential to
grow in the coming years, Jopling
added.
IN BRIEF
Factory price fall could spur ECB
nAnalysts yesterday suggested that
falling producer prices could drive the
European Central Bank (ECB) to cut
rates. Data put out by Eurostat showed
producer prices were down 0.2 per cent
in December, following a fall of the same
size the month before, and suggesting
consumer price inflation could fall even
further than the 26-month low of two
per cent achieved in January giving
the bank leeway to cut rates to boost
demand.
US factories boost output again...
nNew orders and shipments in the US
manufacturing industry continued their
upward trend in December, according
to official numbers out yesterday. New
orders grew $8.6bn (5.5bn) 1.8 per
cent to reach $484.8bn during the
month, the Census Bureau said, while
firms added 0.4 per cent to their
shipments. Firms were getting more
active, and finding it harder to meet
demand, the data suggested, with
unfilled orders up 0.8 per cent.
...but investment indicator falls
nA gauge of US business investment
plans dropped in December, a possible
sign firms were losing confidence in
the economys strength. The data,
released yesterday by the Commerce
Department, also gave some positive
signals, with a big jump in defence
industry capital orders pointing to a
reversal to some of the surprise fall in
US GDP. Economists have expected
firms to invest more timidly because
of uncertainty over tax and spending.
UK CONSTRUCTION firms contin-
ued to feel the pain in January,
according to data out yesterday.
The Markit construction purchas-
ing managers index (PMI), released
yesterday, was stuck at its six-
month low of 48.7 in the first
month of the year, signalling
another month of moderate con-
traction in the sector.
This pulls it down from the
already low base it has reached
and failed to convincingly recover
from during the credit crunch
and continued recession.
Januarys survey results are yet
another indicator of the severe
underlying fragility across the UK
construction sector, with output
failing to rise in any of the three
sub-sectors for the first time since
last summer, said Tim Moore at
Markit.
Snowfall at the start of the year
may have disrupted output to some
degree, but unfavourable weather
outside is clearly far down the long
Survey shows
UK construction
still in the vice
BY BEN SOUTHWOOD
list of difficulties afflicting
construction companies at present.
Another terrible performance in
the construction sector could ham-
per the overall economy, despite the
fact it only makes up about seven
per cent of GDP. The industry was
the major drag on economic growth
for the first three quarters of 2012,
pulling some half a percentage
point from growth in the first three
months of the year.
And David Noble, chief executive
of the Chartered Institute of
Purchasing & Supply, who prepared
the data in tandem with Markit,
warned that if the government fails
to make good on its promises of
infrastructure spending, worse
news could be to come.
Against expectations, businesses
have a spring in their step looking
ahead to the rest of 2013, Noble
said. This new-found confidence
has been buoyed by news of public
investment, but it could be found
wanting, if the governments recent
rhetoric on major infrastructure
projects fails to bear fruit.
Retail enjoys January rebound
with best growth in 13 months
LIKE-FOR-LIKE sales grew at their
fastest annual pace for 13-months
in January, delivering a much-
needed rebound to the embattled
retail sector.
Januarys sales were 1.9 per
cent higher than during the same
month last year, figures from the
British Retail Consortium (BRC)
and KPMG revealed this morning.
Total spend grew an even
healthier three per cent over the
12 months.
BRC director general Helen
Dickinson cheered the growth as
a rare nugget of welcome news
BY BEN SOUTHWOOD for the sector which has seen
Jessops, HMV and Blockbuster
collapse in the last month.
After a fairly subdued
December, these results are sure
to lift spirits for many, Dickinson
said. Retailers didnt have high
hopes for strong sales at
Christmas, but this meant they
prepared well and headed into the
New Year with less stock to clear
than last year.
She said a number of must-have
new tech products, combined with
returning consumer confidence
delivered Januarys improvement.
Online sales growth had
actually slowed down slightly
since January 2012, but compared
to the rest of the market it was
roaring ahead.
Sales were up 10.2 per cent over
the year, a slight deceleration
compared to the 11.3 per cent the
sector grew over the 12 months to
last January, though this was a
bigger fall compared to the closer
to 20 per cent online growth
registered in December.
However KPMGs David
McCorquodale worried that the
cost of the impressive sales growth
might have been aggressive
promotions and margin
squeezes whose cost will put a
dent in retailers profits.
THE TOTAL value of the UKs
housing stock rose to breach the
pre-recession peak of 4.08 trillion
in 2012, according to figures
released yesterday.
UK houses were together worth
4.17 trillion in 2012, Lloyds Bank
said, up from 4.07 trillion in
2011, and up from 3.69 trillion
during the depths of the credit
crunch and housing crash.
However, since the consumer
price index has grown 18.5 per
cent between January 2008 and
December 2012, this boosted
BY BEN SOUTHWOOD
nominal value of housing is
actually still around 14 per cent
below its earlier peak.
And the long term gains have
not been spread equally across the
UK. Londons housing stock has
gained 373bn in value over the
past ten years 83 per cent
ahead of any other region barring
Scotland, where the housing
stocks value soared 115 per cent
between 2002 and 2012.
A separate data release out
yesterday, from Savills, showed
that Westminster topped the table
of London boroughs for housing
wealth, with a cool 94.9bn.
17
NEWS
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Only Scotland has beaten London for rising house values between 2002 and 2012
Linklaters
Simon Pritchard has been
appointed partner in the law
firms competition team. He is a
former senior director of mergers
at the Office of Fair Trading
(OFT). Pritchard is also editor of
UK Merger Control, and an
external adviser to the OFT on
international competition
network matters.
Lloyds TSB Commercial Finance
Donald Kerr has been appointed managing director of
Lloyds TSB Commercial Finance. He joined the bank in
1990, and has previously served as head of its small and
medium-sized enterprises banking arm. Kerr replaces
Ian Larkin.
Mercer
Fiona Dunshire has been appointed UK chief executive of
the consulting firm. She joined Mercer as a graduate in
1988, and was most recently senior client leader in its
investments business. Dunshire is also a senior partner
and fellow of the Institute of Actuaries.
SNR Denton
The law firm has appointed Samanthan Hutchinson as a
partner in its London-based banking and finance
practice. She joins from Hogan Lovells, where she most
recently led its fund finance team. Hutchinson specialises
in advising on fund lending transactions.
NIG
The commercial insurer has appointed Rob Smart as its
new head of commercial claims. He was most recently
senior claims manager at Travelers Insurance, with
responsibility for property and public liability claims.
Smart has over 20 years experience in the claims
industry.
FRP Advisory
The restructuring, recovery and insolvency firm has
appointed Sam Talby as a partner. He joins from Bishop
Fleming Rabjohns, the mid-market accountancy firm,
where he was partner.
Silicon Valley Bank
Andrew Hunter has been appointed relationship
manager at Silicon Valley Banks UK branch. He currently
works in the banks accelerator and growth group, based
in London. In his new role, Hunter will be responsible for
spearheading its new business efforts in Ireland.
Crimson & Co
The supply chain consultancy has appointed Peter
Garnett to its procurement practice. He joins from The
Procurement Think Tank, where he was director. Garnett
has also worked for GSK Pharmaceuticals and Fisons.
WHOS SWITCHING JOBS Edited by Tom Welsh
+44 (0)20 7092 0053
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SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT
CITY MOVES
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in association with
THE UK economy will grow at a
snails pace, with persistently
above-target inflation, according
to widely-regarded forecasts out
this morning.
GDP will creep up just 0.7 per
cent during 2013, the National
Institute for Economic and Social
Research (NIESR) said yesterday,
before gaining pace to grow 1.5
per cent during the following year.
Only in 2015 will this growth
bring total output in the economy
above its 2008 peak and per
capita output will take until 2018,
effectively leaving a lost decade,
NIESR predicted.
To add to the pain, consumer
price inflation will stay above the
Think tank: economy will not
reach pre-crisis peak until 2015
BY BEN SOUTHWOOD
Bank of Englands target for the
whole period, on average. This
year it will average 2.4 per cent,
NIESR says, only edging down 0.1
percentage points next year.
The UKs underlying economic
performance is best described as
flat, with zero growth in 2012,
the think tank said.
The broader picture remains
one of persistent economic
weakness GDP is roughly at the
same level as two years ago, and
remains more than three per cent
below the 2008 peak.
And world growth will also stay
below trend, according to a
separate set of NIESR forecasts.
The world economy will grow 3.3
per cent this year, and 3.7 per cent
in 2014, it says.
Value of housing expands to
all-time record of 4.2 trillion
18
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LONDONREPORT
B
RITAINS top share index
suffered its biggest one-day fall
in three months yesterday, as
growing political uncertainty
elsewhere in Europe and a string of
analyst downgrades sparked a wave of
profit taking.
The growing popularity of former
premier Silvio Berlusconi ahead of
elections in Italy and a corruption
scandal in Spain fanned concerns that
political instability could undermine
the regions slow progress out of its
debt crisis.
Any setback there is also likely to hit
Britain, for whom the Eurozone is the
top trade partner, and whose corpo-
rates have already taken hits from
problems in Southern Europe.
That, together with the hefty seven
per cent rally in Britains FTSE 100 so
far in 2013 and the strong perform-
ance fuelled by new-month money on
Friday, prompted some investors to
cash in.
Its just a bit of profit-taking today,
it's been coming for a while. We were
over-bought and we have seen a few
guys come and look at names that
have had big moves, said Martin
Tormey, head of equity trading at
Goodbody Stockbrokers.
I dont think its any more than that
... There is a lot of money sitting on the
sidelines and we definitely sense from
clients that there is a lot more fear of
the market going up than of the mar-
ket going down.
The UK blue chip index closed down
100.40 points, or 1.6 per cent, at
6,246.84 points, retreating after post-
ing its highest finish since May 2008
on Friday.
The banking sector, the most directly
exposed to Eurozone woes through
their holdings of sovereign debt, was
one of the worst performers, down 2.2
per cent as investors booked profits on
a rally of over 10 per cent in early 2013.
Traders said the Eurozone jitters
which pushed the yields on 10-year
Spanish and Italian government bonds
to 2013 peaks were the main driver
for the UK sector, overshadowing plans
by British chancellor George Osborne
for a new law to break up banks that
fail to shield retail operations from
risky investments.
Obviously Eurozone politics dont
help the overall situation and the yield
spikes in Italy/Spain 10-year bonds are
arguably the bigger driving force
behind todays selling than anything
the chancellor said this morning, said
Matt Basi, head sales trader at CMC
Markets.
Heavyweight energy companies also
suffered, as oil prices retreated on con-
cern over geopolitical tension in the
Middle East.
Yesterdays drop the biggest since
November pushed the index below
minor resistance at the 10-day moving
average around 6,268.80, but that was
not enough to cast a shadow over the
broader uptrend that has been intact
since June 2012.
FTSE knocked
by downgrades
and euro jitters
CITY
YOUR ONE-
STOP SHOP
BROKER VIEWS AND
MARKET REPORTS
FTSE
4 Feb 29 Jan30 Jan 31 Jan 1 Feb
6,280
6,300
6,260
6,320
6,340
6,360
6,246.84
4 Feb
DASHBOARD
US stocks slide
as downgrades
pull back gains
U
S stocks slid yesterday, giving
the S&P 500 its worst day since
November, as renewed worries
about the Eurozone crisis
caused the market to pull back from
recent gains.
Shares of McGraw-Hill shed 13.8 per
cent to $50.30, their worst daily per-
centage decline since the October
1987 market crash, after news the US
Justice Department plans to sue
Standard & Poors, a unit of McGraw-
Hill, over its ratings in 2007 of some
mortgage bond deals. Moodys Corp
shares were down 10.7 per cent at
$49.45, their worst one-day drop since
August 2011.
Chevron and Wal-Mart were among
the biggest drags on the Dow after
analyst downgrades, and all 10 S&P
500 sectors were lower. The losses fol-
low Fridays market climb that left
the S&P 500 at a five-year high and
the Dow above 14,000.
The market is extended and due for
a pullback. I think people are looking
for an excuse to make sales, and there
(is) the concern coming from Europe,
said Michael James, senior trader at
Wedbush Morgan in Los Angeles.
Spanish and Italian bond yields rose,
renewing worries about the
Eurozones sovereign debt crisis.
Spains Prime Minister faced calls to
resign over a corruption scandal,
while a probe of alleged misconduct
involving an Italian bank was expect-
ed to widen three weeks before a
national election.
Adding to market pressure, data
from the US Commerce Department
showed overall factory orders for
December were below expectations.
The Dow Jones industrial average
was down 129.71 points, or 0.93 per
cent, at 13,880.08. The Standard &
Poors 500 Index was down 17.46
points, or 1.15 per cent, at 1,495.71.
The Nasdaq Composite Index was
down 47.93 points, or 1.51 per cent, at
3,131.17.
BESTof theBROKERS
ASSOCIATED BRITISH FOODS
Shore Capital has downgraded the food and retail group Associated British Foods to
hold with a target price of 1,762p following several years of sustained share price
growth. This is thoroughly merited given the outperformance of Primark, and the
high valuation such a fast growing international retailer should demand but the
broker sees limited scope for further gains.
VODAFONE
Analysts from Citi yesterday downgraded the blue chip telecoms company from
buy to neutral, with an ex-dividend target price of 180p. While the
investment bank said that Vodafone shares had returned 11 per cent in the year to
date, post-rally it also saw elevated M&A risk and near-term revenue pressure in
Europe for the company.
PETROFAC
Galvans research department have issued a buy rating on oilfield services group
Petrofac, with a target price of 1,750p. The companys shares dipped last week after
Italian rival Saipem issued a profit warning but Galvan believe this is a dip to buy
into. They point out Petrofac reiterated full year profits guidance in December and
the price drop makes the group more attractive on valuation.
NEW YORK
REPORT
Associated British Foods PLC
29 Jan 30 Jan 31 Jan 1 Feb 4 Feb
p 1,780
1,770
1,760
1,750
1,730
1,740
1,750.00
4 Feb
Vodafone Group PLC
p 174
173
172
171
170
170.50
4 Feb
Petrofac Ltd
p 1,750
1,725
1,700
1,675
1,625
1,650
1,633.00
4 Feb
L
ORD Lawson, the former
chancellor, has rightly asked
the question of what to do
about the ownership of RBS.
But his suggestion full
nationalisation has certainly raised
eyebrows.
While the yearly debate about
bonuses causes political headaches, it
is well-acknowledged that RBSs
current management is defusing the
biggest balance-sheet time-bomb in
history. Longer-term state
ownership, however, blunts decision-
making, depresses value and hinders
long-term competitiveness. It distorts
competition by offering an explicit
guarantee to certain firms and
invariably leads to politically-directed
lending decisions. In fact, it would be
B
ANKS used retail deposits to
gamble on the investment
banking casino! That is the
common perception of the
cause behind the 2007-2008
financial crisis.
The popular belief is that retail
deposits, instead of being used to fund
safe traditional retail lending like
mortgages, were used to fund high-risk
derivatives trading on the international
capital markets. This belief is now driv-
ing calls including yesterday from
George Osborne for the structural sep-
aration of retail and investment banks.
Separate retail and investment bank-
ing, so the thinking goes, and retail
deposits will be safe.
Nothing could be further from the
truth. At the time of the crisis, only
three UK banks had investment bank-
ing arms Barclays, HSBC and RBS. The
rest were retail banks. Northern Rock,
Bradford & Bingley and HBOS/Lloyds
all three were bailed out, but none had
a significant investment bank. But that
didnt mean they were isolated from
wholesale and investment banking
activity, or from the capital markets.
cityam.com/forum
Structural separation
of retail and investment
would cause even more
of a credit crunch
THEFORUM
Twitter: @cityamforum on the web: cityam.com/forum or by email: theforum@cityam.com
Agree? Disagree? Got a sharp comment?
The Forumwants you to join the debate.
Top responses will be reprinted in The Forum.
20
FRANCES COPPOLA
The retail funding myth why the
investment banks arent to blame
Far from it. They were dependent on
them. You could say the dependence of
retail banking on securities issuance
and overnight wholesale funding was
the banks real problem in the crisis.
This can be seen by examining banks
loan-to-deposit ratios. This measure
indicates the proportion of loans that
are backed by deposits rather than
wholesale funding, interbank borrow-
ing, or the proceeds of bonds issuance.
Most small banks and building soci-
eties operate on a loan-to-deposit ratio
of under 100 per cent: Kingdom Bank,
for example, says its target ratio is 95
per cent. It will not lend out more
than 95 per cent of the total amount of
deposits on its books. We would regard
that as a prudent approach to lending.
But the majority of large banks have
far higher loan-to-deposit ratios. At the
time of the financial crisis, the average
ratio in UK banks was 137 per cent. In
other words, 37 per cent of the funding
they required for ordinary lending
not high-risk derivatives trading came
from sources other than retail deposits.
And the ratio was much higher in
banks that were bailed out: in
Northern Rock, for example, it was
approximately 175 per cent at the time
of its collapse.
Since the financial crisis, banks have
been actively reducing their loan-to-
deposit ratios. The introduction of the
bank levy, coupled with a general per-
ception that an over-reliance on
overnight funding for longer-term loan
commitments increases risk and insta-
bility, has encouraged banks to look
more to retail deposits to fund lending.
The average ratio is down to about 105
per cent. So even now, with the possible
exception of HSBC, which has a ratio of
about 78 per cent, retail banking does
not fund investment banking. It is the
other way round.
But the price we are paying for
increased safety in retail banking from
reduced loan-to-deposit ratios is a seri-
ous decline in bank lending. Reducing
the loan-to-deposit ratio can only be
done in two ways: either the amount of
deposits must increase, or the amount
of lending must fall. Retail deposits
have been declining for many years, as
people move long-term savings into
pensions and Isas. Current accounts
have been hit by a decline in wages, and
inflation has led to increasing expendi-
ture on essential goods. Very low inter-
est rates also discourage people from
saving. And general distrust of banks
has encouraged people to put money in
other institutions, like credit unions
and building societies. One large build-
ing society is even running an advertis-
ing campaign to attract depositors
from banks on the basis that it isnt a
bank. So the only way banks can reduce
their loan-to-deposit ratios is by lending
less. We dont like that, do we?
But if we want banks to lend more,
despite the decline in deposits, we have
to accept that retail banks need to
obtain funding from wholesale and
investment bank sources, and from
capital markets. Full structural separa-
tion, with measures to prevent retail
banks from using wholesale funding,
would cause even more of a credit
crunch. And ring-fencing wont address
the loan-to-deposit imbalance that
forces retail banks into dependence on
wholesale funding.
Retail banks have lent too much and
received too little. Unless we can per-
suade people to put their money back
into banks, we have to accept either
interdependence of retail and invest-
ment banking, or continued decline in
bank lending with associated disas-
trous consequences for the economy. I
know which I would choose.
Frances Coppola is a former banker. She
blogs at coppolacomment.blogspot.co.uk
better to realise Sir Mervyn Kings
ambition of getting the semi-
nationalised banks back into the
private sector as soon as possible.
But there are two key political
hurdles that a re-privatisation would
have to overcome. First, the cost of de-
risking RBS, both in terms of its
balance sheet and its regulatory
capital, has eaten into its share price
(now 328p), which is far below the
520p we initially paid. UK Financial
Investments has told the Treasury
that the cost of a safer regulatory
environment for banking has been to
wipe value off assets. Michael Cohrs
from the Financial Policy Committee
has said that he thinks we overpaid
initially. Given the coalitions aim
was to recoup taxpayer investment,
admitting that this cant be achieved
will cause bruised egos.
Second, sporadic sales of tranches
of the stock through a conventional
privatisation are predictable and
easily exploited by the markets (see
the US governments initial placings
of AIG). They are also likely to take so
long that the destruction of value
becomes self-fulfilling, especially
given the lack of liquidity in the
shares. The markets, not taxpayers,
would be the beneficiaries of an
improvement in the share price. The
government may suffer from similar
headlines thrown at Gordon Brown,
for selling our gold too cheaply.
The Centre for Policy Studies and
Portman Capital have been
advocating an idea that would
overcome these problems, ensuring
best value is achieved while allowing
taxpayers to benefit from future
share price gains. The government
would distribute shares back to all UK
taxpayers for free, but charge a fixed
amount for each share when it is sold
on (the floor price). This holistic
solution would see all shares
returned to the private sector in one
go, instantly removing the risk of a
long-term cultural shift in the state-
owned banks.
By creating millions of small
shareholders, all making different
decisions on when to sell, the supply-
demand dynamic would be
completely inverted. There would be
no investment banking fees, and the
interests of the public and the bank
would be aligned. But most
importantly, it would be UK taxpayers
those who bore the risk of bailing
out the banks who would benefit
from any upside in the share price.
What better way to reignite the
popular capitalism that Lord
Lawson did so much to engender as
chancellor?
Ryan Bourne is head of economic
research at the Centre for Policy Studies.
FRONTLINE
ECONOMICS
RYAN BOURNE
How we can reignite popular capitalism in Britains state-owned banks
In association with
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21
Austerity politics
[Re: Recession and higher tax taking toll on
Britains top earners, yesterday]
This article makes it clear that we really are
all in it together. But this fact creates a tricky
electoral paradox for the Conservatives.
First, it isnt in the Tories best interest to
point out that they are taking large amounts
of tax from their natural supporters (high
income earners), and that these same
people are facing large drops in income. But,
secondly, they really must demonstrate that
everyone is suffering from the tax rises and
spending cuts required to balance the
budget. How can this paradox be resolved?
Its unclear. Its yet another example of how
austerity has made UK politics such a
minefield for all parties.
NickGill
Early judgement
[Re: How Sweden reformed its state to lay
foundations for future growth, Thursday]
Recent changes to the Swedish model
amount to little more than tinkering.
Sweden already had a developed education
and healthcare system before reform began
in the 1990s. And it is debateable whether
these reforms were as widespread or as
dramatic as Will Tanner suggests. The entire
Swedish education system is still
overwhelmingly state-funded and tightly-
regulated. And with the private sector
starting from a very low base, it is likely to
remain in a distant second for some time.
And since the effects of healthcare and
education reforms take generations to bear
fruit, it is too soon to judge them objectively.
Alexander Milne
N
ON-executive directors (NED)
are not a new phenomenon
in the private sector. These
men and women have been
discussing the performance
of directors, participating in
committees, and setting the strategic
direction of businesses for years. But
Whitehall has come late to the party.
NEDs have only sat on the boards of
government departments since 2010.
And they have much to say about
critical failures at the heart of
central government.
In research interviews published
today, government NEDs warn about
appalling staff management. A cul-
ture of continuously-rotating offi-
cials around Whitehall departments
is diluting experience and expertise.
Speaking anonymously, one empha-
sised there was a tendency to recruit
lots of bright people and to assume
they can do anything because
theyre bright. But as the work of
government becomes increasingly
technical and skilled, this is an archa-
ic approach to attracting talent.
Non-executives want a system of
employment that makes it possible to
reward individuals for good perform-
ance and recruit external expertise.
They complain about an arbitrary
salary cap put in place by the coali-
tion, which requires officials to be
paid less than the Prime Minister.
This means that it is increasingly dif-
ficult for Whitehall to retain talent.
One NED suggested that inflexible
systems of reward will drive people
to the private sector. Departments
like the Treasury reportedly have
higher staff turnovers than
McDonalds. There is also frustration
that better members of staff could
not be appropriately rewarded
because salaries are too low and
benefits too high.
Further, good government, like
good business, needs someone to be
As high costs force Centrica to pull out of new
projects, can nuclear power ever be profitable?
YES
Nuclear power stations can be built and operated without the need
for government subsidies. The actual build of nuclear power stations
is entirely financed by energy companies not the government.
However, the only way that you can get these companies to invest
billions of pounds is by providing them with a level of certainty.
Forecasting energy prices for the next 25 years is difficult. But the
government is in negotiations to guarantee a fair price to energy
companies not necessarily a subsidy. A look at the numbers shows
the business viability: two 1,600-megawatt reactors, operating at 90
per cent efficiency over 50 years, could generate 88bn in revenues
at an average market price of 70 per megawatt hour (the
governments median projection price for nuclear power in 2011).
This shows that building nuclear energy plants can be a financially
viable business without subsidies from the government.
Tony Lodge is a research fellow at the Centre for Policy Studies.
Tony Lodge
NO
Paul Dorfman
Centricas withdrawal from nuclear investment, amid concerns over
expected cost over-runs, was expected. There are only two reactors
currently being built in Western Europe in Finland and in France.
They both use the reactor technology proposed for the UK. Both are
delayed and over budget. Originally, it was estimated that they
would each cost 3.3bn (2.84bn) to build. But costs are now
expected to hit 8.5bn. In the UK, complex fiscal mechanisms
embedded within the Energy Bill will financially burden the taxpayer.
Although the government had promised that there would be no
subsidies, cost over-runs for new nuclear projects will be passed on
to the taxpayer through an implicit subsidy (if the government
agrees to buy nuclear energy at a price that is higher than the market
price). Without what is effectively a significant financial subsidy from
the state, nuclear projects are simply uneconomic.
Dr Paul Dorfman is founder of the Nuclear Consulting Group.
accountable for performance.
Ministers are analogous to chairmen,
so they need the formal power to
appoint permanent secretaries who
can act like chief executives. That way
they can drive change, and hold sen-
ior officials to account for the deliv-
ery of policy and the management of
departments. As one minister put it,
often neither ministers nor civil ser-
vants are actually accountable for the
programmes they are delivering.
Above all, Whitehall is missing the
drive from ministers, and the Prime
Minister, to effectively see change
enacted. The problem, according to
one minister, is that making a
department run properly is a long-
term achievement. Theres no politi-
cal upside. Ministers are also not
rewarded for good performance, and
they move positions too often to be
properly accountable. In his cogent
critique of the management of the
Ministry of Defence, Lord Levene
argued that ministers must stay in
post for longer.
At least the problem is clearly recog-
nised. One minister recommended
that ministers should produce
annual performance reports. In
future, the NEDs of government
could help to assess the performance
of ministers, just as they would in the
private sector. But while this is com-
mon practice in business, it would be
a revolution in politics.
Tara Majumdar is a researcher at the
think tank Reform. Whitehall reform: the
view from the inside is available at
www.reform.co.uk #ReformWhitehall
TARA MAJUMDAR
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59
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visit cityjet.com
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WAY
Bookings need to be made a minimum of 30 days before the date of outbound departure.
The resignation of Chris Huhne is a real test
of support for the Lib Dems in the country.
For the Tories, his seat is a must win.
@Harv278
George Osborne is in full bank-bashing
mode. This is not a good place for a
Conservative chancellor to be in.
@GABaines
Improving competition in the banking sector
is a more powerful driver of cultural change
than structural reform.
@CBITweets
Centricas decision to pull out of new nuclear
shows why you cant dither and delay on
major national infrastructure projects.
@HenryBurkitt
BEST OF TWITTER
LETTERSto the editor
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E: theforum@cityam.com | Comment: cityam.com/forum | @cityamforum
Whitehall amateurs
should take lessons
in business practice
22
cityam.com
A
S THE equity markets surge
onwards, many are calling the
beginning of the great rotation
the point when retail
investors finally rotate out of the
perceived safety of cash and bonds,
and back into the stock market.
Talk of the great rotation has occa-
sionally made it into analyst notes over
the last couple of years. And as the
Dow toys with the 14,000 mark, it is
now being talked about with increas-
ing frequency. But though January saw
net bond outflows, and net inflows
into equity funds, the great rotation
may be overhyped. While institutional
investors may be more mobile, it is dif-
ficult to say that retail investors are
leaving the safety of bonds and cash,
and dipping their toes back into the
riskier stock market.
ARTIFICIAL STIMULUS
Last month saw the strongest one
month equity run since the height of
the dot com bubble. But much of this
strength can be explained by cheap
money being pumped into the mar-
kets by the Federal Reserve, to the tune
of $84bn (53bn) each month. While
this stimulus will likely continue to
prop up the equity bull market, it is
not enough to say that retail investors
are returning en masse.
HUNT FOR YIELD
With fixed income markets offering
very little in the way of return, and
cash offering near-zero interest rates,
investors looking to go further along
the risk curve in exchange for higher
returns would usually pile into equi-
ties. While the blistering pace of the
stock markets bears witness to the fact
that this has been happening at an
institutional level, it has yet to do so at
a retail level.
The further away we get from the
last crisis, the more likely we are to see
retail investors return, says Brad
Avoid getting in a spin
about the great rotation
TRADING MANAGEMENT WEALTH
Kennedy famously quipped of the end
of the 1920s bull stock market: I knew
it was time to sell when my shoeshine
boy gave me a stock tip. There may
well be an element of Kennedys shoe
shine boy in the current markets par-
ticularly when two of the hottest sin-
gle stock picks in the market in 2012
Facebook and Apple wiped out bil-
lions in personal wealth.
The great rotation may be a handy
story for stock brokers trying to coax
clients back into the market, but
whether it will turn into a reality is yet
to be seen.
Sorensen, director of market and sec-
tor analysis at Charles Schwab. But the
last crisis wasnt long ago. Retail
investors who returned after the huge
wealth destruction of 2007-2008 were
given a spooking by the flash crash in
2010. The flash crash shook a lot of
confidence, just as investors were
beginning to come back. If another
event like that happens, we will have
to wait a long time for investors to feel
safe again, says Sorensen.
SHOE SHINE TIPS
US ambassador to London Joseph
BPS DIFFICULTIES
MAY BE BEHIND IT
DAVID BUIK
VIEWFROM THE CITY
T
HE moment John Browne
became chief executive of
BP, the companys fortunes
went from strength to
strength. Lord Browne, as he is
today, orchestrated two very
shrewd initiatives the oil
giants merger with Amoco in
1998, and its acquisition of
ARCO (Atlantic Richfield
Company) in 2000.
The world was BPs oyster. It
eventually became the largest
company in the FTSE 100,
valued close to $250bn (159bn)
at one time. BPs shares were a
major component of
investment portfolios on both
sides of the Atlantic, and the
company was responsible for
approximately 14 per cent of
the dividends paid by all FTSE
100 companies.
Lord Browne was still
relentless in his quest to
broaden BPs horizons hence
the setting up of a 50-50 joint
venture with a Russian
consortium. TNK-BP was
founded, with oligarchs from
Alfa-Access-Renova (AAR)
owning the TNK stake. Before
too long this operation was
responsible for 25 per cent of
BPs output.
But in 2006, it became clear
that BPs US management had
come up short. There were
leaks in its Alaskan Prudhoe
Bay fields, an explosion at its
Texas Refinery, costing 15 lives,
and problems near the Gulf of
Mexico. Tony Hayward, Lord
Brownes protg, replaced him
as chief executive in 2007. It was
not long before there were
issues at TNK-BP, and Bob
Dudley stepped down as its chief
executive in 2008.
Then came the defining
moment of truth; the Macondo
blow-out in the Deepwater
Horizon fields in the Gulf of
Mexico in 2010 an ecological
disaster, which tragically cost 11
lives. Barack Obama, many will
recall, was sneering in his
contempt of British
Petroleum. Heywood had to go
and was replaced by Dudley. The
US authorities forced BP to
ringfence billions of dollars to
meet its obligations. And since
litigation and fines could cost
even more, BP needed to sell
assets. Its share price was
damaged and dividends were
slashed.
BP then incurred the wrath of
TNK by negotiating with Russian
state oil firm Rosneft to jointly
develop the Arctic Sea. After
some skilful political
manoeuvring, last year BP sold
its stake in TNK to Rosneft.
Now, having reached an extra
$4.5bn settlement for the Gulf
oil spill, and,despite contracting
production, many believe that
BP is close to being back on even
keel. The Sunflower could shine
again. With oil prices remaining
above $90, results today could be
interesting.
Retail buyers are yet to flock to the stock market, writes Craig Drake
There hasnt get been a rush to join in the great rotation
Chief Market Strategist, Cantor Index
THE TIPSTER
BAD RECEPTION AT VODAFONE
T
RADERS were rattled when
Vodafonewas downgraded by
two brokers yesterday, over
concerns about its revenues from
Europe. And the telecoms giant
may be in for an icy reception when it
delivers its interim management
statement on Thursday. Speculation is
mounting that it may need to acquire
other businesses to compensate for its
shortcomings. GFT Markets quotes a price
of 170.2p-170.6p for Vodafone Group.
Bellwayis expected to report that its
numbers are in line with expectations on
Thursday. The Funding for Lending
Scheme and the subsequent pickup in the
mortgage market is likely to support sales
volumes over the coming months, helping
the developer to build on its profitability.
ETX Capital quotes a price of 1,098.35p-
1,103.65p for Bellway.
YOGESH CHANDARANA
CNBC
COMMENT
KAREN TSO
Santanders chairman now believes we are witnessing a new phase in Spain
but not removed from the radar.
And last weeks Spanish banking results
were telling. Non-performing loans accel-
erated, and large provisions to cover
future losses eroded profitability even for
the biggest diversified lenders like BBVA
and Santander with its significant earn-
ings offshore. Christopher Wheeler, a
banking analyst for Mediobanca in
London, has questioned whether
Santander, widely viewed as one of the
safest banks in Spain, has enough capital
in its Spanish operations. And Santander
was among the first to return 24bn
(20.6bn) to the ECB.
Less than a year ago, Santander had
37bn deposited with the ECB, 2bn more
than it took from the central bank. At the
time, its chairman described this as akin
My pick: Long dollar-yen and euro-yen
Expertise: Fundamental and technical analysis
Average time frame of trades: A few hours to a few days
The euro is appreciating rapidly; the European Central Bank is
the only major central bank that is reining in its balance
sheet. The most noticeable divergence has been with the
Bank of Japan, which is expanding its balance sheet
aggressively. Therefore, euro-yen looks set to continue its
move higher. And against this background, the US economy
is improving too, which is providing support for the dollar
against the yen.
ANALYST PICKS
Banks cast off Eurozone insurance
T
HE longer term refinancing
operation (LTRO) the
European Central Banks (ECB)
original miracle drug for the
liquidity constraints dogging the
Eurozone has reached a crossroads.
The banks that first took the pill now
want to prove the dosage should be
reduced, or stopped altogether.
The hope is that reduced budget
deficits, increased competitiveness,
and lower leverage in the banking
system will eventually leave the
Eurozone fit as a fiddle. And as such,
banks have been eager to repay cheap
funds borrowed from the ECB.
But are they self-diagnosing when
they are only partially better? While
the 2013 risk on phase has oiled liq-
uidity markets and caused borrow-
ing costs to fall, are peripheral banks
able to cope without a safety net if
markets freeze over again?
Take Spain. Bond commentators
still worry about a return to the rubi-
con level of 7 per cent yields on ten
year government paper if appetite
wanes. Its a risk that is discounted
STRATEGIST
ILYA SPIVAK
My pick: Short euro-Swedish krona
Expertise: Global macro
Average time frame of trades: 1 week to 6 months
I expect the Swedish Riksbank to keep rates on hold in 2013,
and the European Central Bank to begin easing as recession
lingers. Therefore, I went short on euro-krona in December.
As Januarys correction faltered and prices turned lower, I
added to the position last week at Kr8.6410, with a target
price between Kr8.4994 and Kr8.5040. To manage risk, I
have set a stop-loss that will be triggered on a daily close
above Kr8.6942.
CHIEF STRATEGIST
JOHN KICKLIGHTER
My pick: Short dollar-yen and euro-New Zealand dollar
Expertise: Fundamental and technical analysis
Average time frame of trades: 1 day to 1 week
My short positions on Aussie-yen and euro-dollar entries did
not trigger last week. But I believe the yen and euro are still
at extremes. As such, I am looking for a trend reversal before
I take a short position on dollar-yen below 90. To take
advantage of the overbought euro, I will take a short position
on euro-New Zealand dollar from NZ$1.6250. And if the rise
in risk appetite continues, a long position on New Zealand
dollar-dollar from $0.85 is appealing.
to insurance. But he now believes we
are witnessing a new phase. Why then
are Spanish non-performing loans ris-
ing to 6.74 per cent and provisions
steeper than ever at 18.8bn?
Fridays latest LTRO repayment
update caused an initial sell off in risk.
Only 27 banks, compared with 278 a
week earlier, said they intend to hand
back funds. They also said theyd
return a measly 3.48bn of three-year
LTRO money, when 20bn was the
expectation. Perhaps the lower repay-
ments should have triggered applause,
as more banks chose to keep the funds
on balance sheets.
What this highlights is a more nor-
mal investor psyche. Remember the
days when the need for stimulus was
viewed as a sign of weakness? Too often
since the crisis, weve seen markets
rush on injections by the ECB, the Fed
and the Bank of Japan. Maybe its an
early indication that investors will take
the exit from extraordinary measures
in their stride.
Karen Tso is an anchor for Squawk Box
Europe on CNBC.
23
cityam.com
TRADING
CURRENCY STRATEGIST
CHRIS VECCHIO
I
F YOU are of a certain age
youll know how revered the
Peugeot 205 was. The little
motor transformed the
supermini segment when it was
introduced back in 1983 and
went on to become something of
an icon. Peugeot is hoping its
new 208 model can recapture its
success.
Unlike its 206 and 207
predecessors which never quite
managed to match the brilliance
of the 205 this 208 is excellent.
I was driving the five-door model
in Allure trim, powered by an
82bhp, three-cylinder 1.2-litre
petrol engine. Its fantastically
stylish, thanks to reduced front
and rear overhangs (which also
maximize interior space). Who
says a little car cant look
elegant?
Its also chic and modern on
the inside. The small leather
steering wheel, narrow
instrument display and piano-
black trim elements add up to a
surprisingly young-feeling,
sophisticated interior. The
aluminium and blue cloth finish
proves that you dont need
leather seats when an interior is
designed well. It is also roomier
than you might expect, and the
spacious feel is enhanced by the
optional panoramic roof that
goes (almost) all the way back to
the to the rear C-pillars. We sat
four adults in genuine comfort;
something that cannot be taken
for granted in a supermini.
What struck me most was the
steering wheel and
instrumentation. You barely have
to drop your eyes to read the
beautifully clear, elevated dash
instruments. The steering wheel
is a revelation and feels great in
your hands. Ive been grumbling
for ages that Peugeot steering
wheels are just too big but not
the new 208; the reduction in size
makes you feel more connected to
the road, adding a whole new
element to the driving experience
(think go-cart).
The interior has a remarkably
simple layout and everything is
very easy to operate. There are
just three buttons and three dials
for the air conditioning, for
example, and the rest is taken
care of by the in-dash display. Its
something youll realize youve
missed once you give it a go.
Driving the 208 is a pleasure.
The excellent view is enhanced by
front quarter windows. The
turning circle is good and nippy
city manouvres can be completed
with ease. Sure, a 1.2-litre, three-
cylinder engine was never going
to be fast, but I found the engine
to be enthusiastic and fun. These
three-cylinder engines are
becoming increasingly popular a
good compromise between fun
and frugality and so it is in this
Peugeot. There were a few
occasions when the 208 was
stretched and I needed to change
down for a bit of extra oomph but
on the motorway it sat at speed
quite comfortably helped by its
cruise control system. On the
back-roads it felt light and agile
thanks to some significant weight
loss compared to its 207
predecessor.
If youre looking for faults,
there is quite considerable wind
and road noise at motorway
speeds, but given that most miles
in this car will be driven more
slowly around town, I doubt this
will put many buyers off.
Personally, I wouldnt want to
trade this 208s excellent fuel
economy for better performance.
All in all, I found it a charming
little car it may not beat class-
leading rivals but its an
interesting and stylish alternative
and, as far as Im concerned, a
return to form for Peugeot.
The Peugeot 208 is more stylish than most small cars on the market
Peugeot aims to top its iconic 205
It is a hard act to follow but the French carmakers new 208 is a stylish motor that does its forbear proud
24
LIFE&STYLE
cityam.com
MOTORING
AND IF THAT DOESNT TAKE YOUR FANCY...
HERE ARE THREE OTHER SUPERMINIS TO CHOOSE FROM
Ford Fiesta Titanium 1.0T EcoBoost, 16,045
Its Britains best selling car for a reason. The Ford Fiesta is a great
all-rounder and considered to be one of the most fun superminis to
drive. Its also sharp-looking and offers a good combination of
attributes. The latest model is available with a three-cylinder 123bhp
1.0-litre EcoBoost engine, offering 0- 62mph in 9.4 seconds,
65.7mpg and CO2 emissions of 99g/km.
BY RYAN BORROFF
VW Polo BlueMotion 1.2 TDI, 15,985
It may not be particularly chic but its a great buy for people who
shop with their head as well as their heart. Less exciting to drive than
some rivals, its combination of VW build quality, comfort and
refinement make it a sensible choice. A super-frugal three-cylinder
74bhp diesel-powered Bluemotion version offers a massive 80.7mpg
with CO2 emissions of 91g/km.
Fiat Panda Lounge 0.9 TwinAir, 11,250
Fiats latest Panda is something of a square peg in a round hole
amongst this group, thanks to its unusual squircular, boxy styling.
The 0.9-litre 85bhp two-cylinder TwinAir version has the potential
to deliver 67.3mpg with CO2 emissions of 99g/km. The engine note
may not be to everyones taste it sounds like a vintage motorcycle
but it is one of the most fun to drive.
PRICE: 13,895
0-62MPH: 12.2 secs
TOP SPEED: 109mph
CO2 G/KM: 104g/km
MPG COMBINED: 62.8mpg
THE FACTS:
PEUGEOT 208
DESIGN hhhhh
PERFORMANCE hhhii
PRACTICALITY hhhhi
VALUE FOR MONEY hhhhi
THE VERDICT:
25
TV & GAMES
cityam.com
T
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BBC1
SKY SPORTS 1
6.30pmRevista De La Liga
7.30pmLive Johnstones Paint
Trophy Football 10pmRevista De
La Liga 11pmPremier League
Review12amFootballs Greatest
Managers 12.30amFootball Asia
12.55amLive International
Twenty20 Cricket 4am-6amLive
International One-Day Cricket
SKY SPORTS 2
7pmWomens Cricket World Cup
8pmTest Cricket 10pmSuper
League Backchat 10.30pm
Sporting Greats 11pmTest Cricket
1amJohnstones Paint Trophy
Football 2.30amWomens Cricket
World Cup 3.30amGolfing World
4amSporting Greats
4.30am-6amJohnstones Paint
Trophy Football
SKY SPORTS 3
7pmPool 8pmBritish Basketball
10pmPoker 11pmBadminton
12amBritish Basketball
2amPoker 3amPremier League
Review4am-6amBritish
Basketball
BRITISH EUROSPORT
6.30pmAlpine Skiing 7.30pm
Wintersports: Ski Pass 7.45pm
Athletics 8.45pmBoxing
10.45pmGT Academy: Race to
Dubai 11pmInside ERC Rally
11.30pm-12.30amAlpine Skiing
ESPN
7pmLive International Under-21
Football 9.45pmESPN Kicks:
Premier League 10pmEredivisie
Review Show11pmESPN FC
Press Pass 11.30pmFIS Alpine
Ski World Cup Report 12am
Snowboarding 12.30amPlanet
Speed 1amWorld Series of
Boxing Highlights 2amUFC: The
Ultimate Fighter 3am-6amUFC
156: Jose Aldo v Frankie Edgar
SKY LIVING
7pmCriminal Minds 8pmBones
9pmCriminal Minds 10pmCSI:
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Jerry Bruckheimers Chase 12am
Caribbean Cops 1amBones
1.50am Supernatural 2.40am
Medium3.30amBones 4.20am
Nothing to Declare 5.10am-6am
Motorway Patrol
BBC THREE
7pmTotal Wipeout 8pmThe Year
of Making Love 9pmSun, Sex and
Suspicious Parents 10pm
Pramface 10.30pmEastEnders
11pmFamily Guy 11.45pm
American Dad! 12.30amSun, Sex
and Suspicious Parents 1.30am
Pramface 2amThe Anti-Social
Network 3am-3.55amSun, Sex
and Suspicious Parents
E4
7pmHollyoaks 7.30pmHow
I Met Your Mother 8.30pmThe
Big Bang Theory 9pmRude
Tube: Superstars of the Web
10pmThe Cleveland Show
10.30pmThe Inbetweeners 11pm
What Happens in Kavos 12.05am
The Big Bang Theory 1.05am
Happy Endings 1.35amThe Ricky
Gervais Show2.05amThe
Cleveland Show2.25amWhat
Happens in Kavos 3.20amRude
Tube: Superstars of the Web
4.10amHappy Endings
4.30am-6amMade in Chelsea
HISTORY
7pmStorage Wars 7.30pmPawn
Stars 9pmStorage Wars 10pm
Grave Trade 11pmStorage Wars
11.30pmPawn Stars 12am
Storage Wars 1amGrave Trade
2amAmerican Pickers 3amIce
Road Truckers 4amAmerican
Restoration 5amPawn Stars
5.30am-6amStorage Wars
DISCOVERY
7pmBear Grylls: Born Survivor
8pmIce Pilots 9pmGold Divers:
Under the Ice 10pmYukon Men
11pmAuction Hunters 11.30pm
Auction Kings 12amGold Divers:
Under the Ice 1amYukon Men
2amSons of Guns 3amGold
Divers: Under the Ice 3.50am
Yukon Men 4.40amAmerican
Chopper: Senior Versus Junior
5.30am-6amMeerkat Manor
DISCOVERY HOME &
HEALTH
7pmPortland Babies 8pmJon
and Kate Plus 8 9pmIm
Obsessed with My Pet 10pm
Emergency: Life in the ER 11pm
A&E 12amIm Obsessed with My
Pet 1amEmergency: Life in the ER
2amA&E 3amJon and Kate Plus
8 4amBaby Days 5am-6am
Nanny School
SKY1
8pmLast Resort 9pmStella
10pmFILMTwisted 2004.
11.50pm Road Wars 1.45amCop
Squad 2.40amNight Cops
3.35amCrash Test Dummies
4am-6amStargate SG-1
BBC2 ITV CHANNEL4 CHANNEL5
S
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&
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6pmBBC News
6.30pmBBC London News
7pmThe One Show
7.30pmEastEnders; BBC News
8pmHolby City
9pmDeath in Paradise
10pmBBC News
10.25pmRegional News;
National Lottery Update
10.35pmCHOICE Out of Jail
and on the Streets: The work
of probation officers.
11.35pmFILMRumble in the
Bronx: Martial arts adventure,
starring Jackie Chan. 1995.
1amWeatherview1.05am-6am
BBC News
6pmEggheads
6.30pmGreat British Railway
Journeys Goes to Ireland
7pmRailway Walks
7.30pmGreat British Menu
8pmThe Mary Berry Story
9pmDancing on the Edge:
Louis and the band play in front
of Prince George.
10pmThe Sarah Millican
Television Programme
10.30pmNewsnight; Weather
11.20pmWonders of Life
12.20amSign Zone: Britains
Hidden Heritage
1.20amClose 3.55am-6amBBC
Learning Zone
6pmITV News London
6.30pmITV News
7pmCHOICE Emmerdale:
Hour-long episode. Katie pulls
out of the christening.
8pmMidsomer Murders:
Barnaby investigates reports of
a headless horseman.
10pmITV News at Ten
10.30pmITV News London
10.35pmRiver Monsters
11.35pmGrimefighters
12.05amJackpot247:
Interactive gaming.
3amLoose Women 3.45amITV
Nightscreen 5.05am-6amThe
Jeremy Kyle Show
6pmThe Simpsons
6.30pmHollyoaks
7pmChannel 4 News
7.55pm4thought.tv
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9pmCHOICE The Undateables
10pmUtopia
11.05pmRandom Acts
11.10pmDerek
11.45pmOne Born Every
Minute
12.45amEuropean Poker Tour
1.40amKOTV Boxing Weekly
2.10amSailing: Americas Cup
Discovered 2.35amBeach
Volleyball 3.30amFILMMonkey
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Deal or No Deal
6pmHome and Away
6.30pm5 News at 6.30
7pmMonkey Life
7.30pmHighland Emergency; 5
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8pmBenidorm ER; 5 News at
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9pmDallas
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Lives
11pmCSI: NY
12amCSI: Miami
12.55amSuperCasino
4amHouse Doctor 4.25amHouse
Doctor 4.50amMichaelas Wild
Challenge 5.10amWildlife SOS
5.35am-6amWildlife SOS
Fill the grid so that each
block adds up to the total
in the box above or to the
left of it.
You can only use the
digits1-9 and you must not
use the same digit twice in
a block. The same digit may
occur more than once in a
row or column, but it must
be in a separate block.
COFFEE BREAK
Using only the letters in the Wordwheel, you have
ten minutes to nd as many words as possible,
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters
or more, all must contain the central letter and
letters can only be used once in every word. There
is at least one nine-letter word in the wheel.
Place the numbers from 1 to 9 in each empty cell so that
each row, each column and each 3x3 block contains all the
numbers from 1 to 9 to solve this tricky Sudoku puzzle.
Copyright Puzzle Press Ltd, www.puzzlepress.co.uk
KAKURO
QUICK CROSSWORD
LAST ISSUES
SOLUTIONS
KAKURO
WORDWHEEL
SUDOKU
SUDOKU
QUICK CROSSWORD
WORDWHEEL
1 2 3 4 5
6
7 8
9
10 11
12 13 14 15 16
17
18 19
20
21
22
13 6 7
45
24 23
45
12 8 10
35
21 5 4
45
6 8
45
24 14 16
17
15
5
14
17
33
22
37
38
13
7
16
10
15
22
21
19
34
32
6
11
3
9
ACROSS
1 Pick out (6)
6 Not clear (6)
7 Person or scheme
that comes to no
good (coll) (3,3)
9 Fast-running African
ightless bird (7)
10 Side sheltered from
the wind (3)
12 Former republic
in north central
Europe (4,7)
17 Brazilian port, ___
de Janeiro (3)
18 Popular avour of
ice cream (7)
20 Quantity (6)
21 Shouts of approval (6)
22 Warning signals
that wail (6)
DOWN
1 Barely noticeable (6)
2 Women (6)
3 Garments, clothes
generally (4)
4 Aromatic liquid
used in aftershave
lotion (3,3)
5 Giacomo ___,
composerof
Madame
Buttery (7)
8 Instrument sounded
to announce
a meal (4)
11 Otalgia (7)
13 Lavatory (6)
14 Quantity of paper (4)
15 Stimulate (6)
16 Young people (6)
19 Young woman (4)
D
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A D O B E S T O O P
M O C R A
O D E S R E A S O N
E A U T O I S
B U R N S A L T Y
A N S H E
A S K E W L I O N
L N I D L E E
O P T I C S A F A R
O F E M G
P A C E D B A D L Y
3 1 2 1 6 9 7
8 3 5 4 2 9 7 6 1
9 4 2 3 1 4 2
6 7 9 4 8 8 4
9 2 8 6 5 4 7
7 5 9 8 3 1 5 2
1 7 9 5 3 6 4
2 1 3 6 1 2 4
9 6 8 7 2 7 1
7 4 9 1 5 6 3 8 2
8 2 3 8 8 9 7
4
4
4
4
4
4
4
4
4
The nine-letter word was
STUMBLING
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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5
OUT OF JAIL AND ON THE
STREETS BBC1, 10.35PM
Documentary following the work of
probation officers, who monitor,
control and rehabilitate some of
societys most dangerous offenders.
EMMERDALE
ITV, 7PM
Hour-long episode. Katie pulls out of
the christening as she explains to
Declan she cannot cope with the role
of godmother.
THE UNDATEABLES
CHANNEL4, 9PM
Some of the contributors from the
first series reveal whether they have
found love, including poet Shaine and
amateur radio fan Richard.
TVPICK
Gallacher has
earned second
bite of cherry
S
OME players go a whole year
without an eagle but Stephen
Gallacher holed an incredible
five on his way to winning the
Dubai Desert Classic, and Im
hopeful this will rekindle his career.
The Scot hadnt won in nine years,
since a great victory on home soil at
the Dunhill Links Championship at
St Andrews, but Ive always thought
he had plenty of talent.
Gallacher the nephew of Bernard
and coached by my father, Bob
didnt push on as expected but was
hampered by inuries. Sundays win
gives him a second bite of the cherry.
Its a very difficult course in
Dubai, especially when a three-shot
overnight lead disappears two holes
into the final round, but his
wonderful 110-yard wedge for eagle
at 16 clinched the top prize.
Englands Lee Westwood made a
good start to the year, finishing joint
fifth. He made a few mistakes due to
rustiness but looked in great shape
and all despite the stress of being in
the middle of moving house.
Gallachers win earned him a top
60 ranking and qualification for the
four WGC events, and closer to a
guaranteed place at the Masters.
A man who looks sure to challenge
at Augusta is Phil Mickelson, who
won the Phoenix Open in 28 under
par a sensational performance and
the second lowest score ever in a 72-
hole PGA Tour event.
Its great when champions regain
top form and Mickelson, a three-time
Masters winner, now looks an even
better bet at the years first Major.
Sam Torrance OBE is a multiple Ryder
Cup-winning golfer and media
commentator. Follow him on Twitter
@torrancesam
GOLF
COMMENT
BRITAINS Andy Murray has called on
fellow players to sacrifice a portion of
their earnings in order to fund more
rigorous drug testing in tennis,
admitting he does not know whether
the sport can be called clean.
Murray yesterday passionately
argued for more blood testing and
the introduction of the biological
passport system in order to prevent
tennis from suffering its own Lance
Armstrong-style scandal.
The Scot conceded cost was a barri-
er to a tougher anti-doping policy,
but said he would be willing to give
up earnings in exchange for improve-
ments that he believes would ulti-
mately benefit the sport financially.
Ive been asked a lot lately if ten-
nis is clean or not, said Murray, who
was speaking at Queens Club yester-
day to publicise his participation in
the Aegon Championships in June.
I dont know anymore how you
judge whether a sport is clean. If one
in 100 players is doping then in my
eyes that isnt a clean sport.
We need to do everything we can
to ensure everyone competing at the
highest level, and below, is clean. I
think that comes with the biological
passports and more blood testing.
Maybe its down to our governing
bodies to invest some of our money
into making sure we get more test-
ing. Its a cost thing. But in the long
term I think you save a lot of money.
I think more people would come
to watch sports rather than reading
all the time about these doping scan-
dals or match fixing or whatever it is.
Every single week its something dif-
ferent and its bad for sport.
I dont know exactly how it [fund-
ing] works, I just know that it comes
down to cost and whoever is putting
the money in, if it means taking
money out of players earnings, then
thats what we have to do.
Not just tennis, all sports now
need to look very closely at this stuff,
because I think a lot has been learned
from what happened with Lance
Armstrong. You dont want that hap-
pening ever again, and I dont want
that happening for my sport because
it would be terrible.
Doping in tennis is back on the
agenda after Spanish doctor
Eufemiano Fuentes, whose trial con-
tinues, implicated unnamed stars
from the sport in suspect practices.
Dr Stuart Miller, anti-doping man-
ager of the International Tennis
Federation (ITF), which administers
the sports drug testing, told City A.M.
there had been no talks about players
part-funding the programme but said
precedents existed in other sports.
The ITFs approximate 1m testing
budget is currently funded by the
ATP and WTA tours and grand slams.
Scot calls for players to fund testing
Is the sport clean? I dont know
26
SPORT
cityam.com/sport
BY FRANK DALLERES
@cityam_sport
Cycling sucks in the city! Bring your wheels to the iconic Brands Hatch Circuit and race
international sporting legends in the 8 or 12 hour thigh-busting, soul-strengthening,
endurance team relay.
3TRONG3QUARE-ILEATTENDANCE/PTIONALFUNDRAISING#ELEBRITYRIDERS
#ORPORATE3PONSORSHIPAVAILABLE,OADEDGOODYBAGSHUGEPRIZES&REEMASSAGESUPPORT
5th September 2013
CYCLOTHON UK 2013
@cyclothonuk
www.cyclothonuk.com 0871 871 5300
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Team Jocks

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Murray advocates more blood testing and the introduction of biological passports
Murray voices
his fears over
tennis doping
SAM TORRANCE
27
EUROPEAN football chiefs Uefa
believe new financial fair play (FFP)
rules are encouraging clubs to
spend more responsibly, despite
their latest figures showing the
number of teams at risk of being
banned has rocketed.
Twenty teams from Europes top
divisions including two from
England, thought to be Chelsea and
Manchester City recorded losses of
more than 45m (37m) for 2009-
2011 inclusive figures that would
break FFP rules due to be enforced
from next year.
That is up from 13 clubs for the
2008-2010 period, according to
Uefas benchmarking report, while
the figures relating to teams who
qualified for European competition
also climbed from six to 14.
Combined losses for all top-flight
clubs in Europe also rose from
0.6bn (0.5bn) to a record 1.7bn
(1.5bn), but Uefa general secretary
Gianni Infantino cited a 0.1 per cent
narrowing to 12.7 per cent of the
gap between revenue and costs as
evidence that teams were heeding
FFP.
Infantino and Uefa president
Michel Platini also pointed to a 68
per cent reduction in clubs overdue
debt since June 2011, following the
suspension of some sides for
outstanding liabilities.
We are already starting to see
the impact of the first phase of
financial fair play with the level of
overdue debts on transfers and
employee payments reducing with
each assessment as clubs realise
tough action is and will be taken,
Platini wrote in the benchmarking
report. This is just the start of a
long but necessary journey.
The financial years 2012 and 2013
comprise the first period Uefa will
assess from early 2014, with possible
bans for those sides that exceed the
45m limit scheduled to be imposed
in the 2014-15 season.
Theo set for England striker role? Walcott
played up front with Wayne Rooney yesterday in
training ahead of tomorrows match with Brazil
cityam.com
BY FRANK DALLERES
Number of clubs at
risk of financial fair
play ban on the rise
CITY A.M.S RACING EDITOR BILL ESDAILE WITH ALL THE LASTEST RACING INFORMATION
FOR THE
CHELTENHAM
FESTIVAL.
In association with
JOINING US FROM THE WORLD OF CRICKET
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JOINING US FROM THE WORLD OF GOLF
Sam Torrance - A member of the European
Ryder Cup team a remarkable 8 times! A golng legend!
For full Terms & Conditions please visit www.mbnpromotions.co.uk
To make a booking or request further information please
email mark.hudson@mbnpromotions.co.uk. Alternatively
drop us a line on +44 (0) 845 543 8277
Thomas Castaignede
Former French rugby union international. Known as Le Petit
Prince with 54 caps for France.
Premier Table of 10 1,800 + VAT
Pre-event complimentary drinks reception, prime positioned
table, 3 course lunch, gift for each guest, half bottle of wine per
guest, quarter page advert in the souvenir programme.
Individual Tickets 155 + VAT
JOINING US FROM THE WORLD OF RUGBY
TO DIGEST THE SIX NATIONS 2013
Josh LewseyMBE - Rugby World Cup
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ALSO IN ATTENDANCE
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ANCE

IN BRIEF
Hurdle fancy Darlan dies in fall
nHORSE RACING: Darlan, one of the
favourites for next months Champion
Hurdle at Cheltenham, suffered a fatal
fall at yesterdays trials at Doncaster.
Sarries youngster in England call
n RUGBY UNION: Saracens back-row
Will Fraser, 23, has been added to
Englands squad amid growing fears
No8 Ben Morgan is likely to miss
Sundays Six Nations clash in Ireland.
Gazza checks into rehab in US
n FOOTBALL: Ex-England star Paul
Gascoigne is undergoing treatment for
alcoholism at a centre in America. The
45-year-old was admitted yesterday
amid fresh concerns over his health.
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FOOTBALL authorities reacted
with bemusement last night after
Europol said a Champions League
fixture played in England was
among hundreds being probed for
suspected match-fixing.
Investigators refused to specify
which match, only to say that it
had taken place in the last four
years, but the Football Association
said it was not aware of any
credible reports into suspicious
Champions League fixtures in
England, nor has any information
been shared with us.
European chiefs Uefa also said
they were yet to receive further
information from Europol, which
said its 18-month probe had
examined 680 matches, leading to
425 suspects and 50 arrests so far.
Europol said an Asia-based
crime syndicate was behind the
corrupt activity.
The FA said it was yet to be given any details of the suspected match-fixing
English Champions League tie
was fixed, say European police
Results
BY FRANK DALLERES
Ultimate Internet 500 Plan.
All you
can eat
data
500
Minutes
5000
Texts

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