BUSINESS WITH PERSONALITY

FEARS OVER
TWEETDECK SALE NETS LOAN COSTS
ENTREPRENEUR MILLIONS PUTS
WHY MOODY’S
14 UK BANKS
TWITTER BUYS UK START-UP P13 ON REVIEW P4
Issue 1,389 Wednesday 25 May 2011 www.cityam.com FREE

AIRLINES HIT
AS ASH CLOUD
REACHES UK
AVIATION
BARACK Obama will today meet with David Cameron in Downing Street to discuss the use of
▲

BY RICHARD PARTINGTON
A ROW between airlines and aviation
officials broke out yesterday over fears
the volcanic ash cloud blowing in
for aircraft to fly in.
“There is no safety threat to aircraft
in this mythical ‘red zone’, which is
another misguided invention by the
UK Met Office and the Civil Aviation
Authority,” the airline said.
tioned the accuracy of Ryanair’s test
flight.
“Radar tracking has shown that at
no point did the Ryanair flight fly
directly through the notified area of
high ash contamination over Scotland
military force in Libya, as well as the war in Afghanistan and the global economy. The US
president is on the second day of his state visit to the UK. Last night, he attended a banquet
hosted by the Queen. Earlier in the day, he visited a south London school with the Prime
Minister, where the two gave each other a high five (above) after a game of table tennis.

Goldman Sachs: oil price

from Iceland could cause a repeat of The operator was amongst several so it is unsurprising that it found no
last summer’s mass flight disruptions. carriers in the UK to cancel flights, ash,” a department for transport
Planes due to fly to and from including BA, easyJet and KLM. spokesperson said.
Scotland were grounded yesterday, Shares of airline firms slumped on Transport secretary Philip

will bounce back to $120

including flights from London air-
ports. However, late last night, UK air
traffic control service NATS said flights
would not be affected from today.
Irish carrier Ryanair had blasted the
UK Met Office and the Civil Aviation
the news, as well as on fears of further
disruption.
Ryanair had conducted a test flight
in Scottish airspace yesterday morn-
ing. The airline claimed it had flown
within the red zone and had found
Hammond rushed to calm fears the
impact of the eruption would cause a
repeat of last year’s travel chaos.
“We are in a much better place this
year because we have worked with air-
lines and regulators to build a regime
▲

ENERGY
Authority (CAA) for the creation of “no evidence of volcanic ash”. that puts safety first, but with far recovery is nearing a trough, “creat-
“red zone” areas designated as unsafe But authorities last night ques- more flexibility,” he said. BY RICHARD PARTINGTON ing upside to metal prices”, and that
GOLDMAN Sachs, which caused a brent crude is now expected to end
ANALYSIS l EasyJet commodities sell-off last month the year at $120 a barrel, up from an
345.00 ANALYSIS l International Consolidated Airlines Group ANALYSIS l Ryanair Holdings
365
p 24 May 260 230.80 when it predicted the short-term earlier prediction of $105.
p 3.7
€ 3.40 peak of the market, said yesterday The bullish note came as a UK par-
360 24 May 24 May
250 3.6 that investors should pile back in. liamentary committee raised con-
355
3.5
Analysts said “the risk/reward cerns about anti-competitive trading
240 once again favours being long com- on the London Metal Exchange.
350
3.4 modities” following a 10 per cent The science and technology com-
230
345
3.3
average dip in a basket of materials mittee said it would refer the matter
340 220
including crude oil, copper and plat- to the Office of Fair Trading, after it
3.2 inum. noted that the same companies that
350 210 3.1
A note to investors said the mid- dominate the metal trade also store
28 Feb 18 Mar 7 Apr 3 May 23 May 28 Feb 18 Mar 7 Apr 3 May 23 May cycle pause in global economic the materials.
28 Feb 18 Mar 7 Apr 3 May 23 May

FTSE 100 ▲5,858.41 +22.52 DOW ▼12,356.21 -25.05 NASDAQ ▼2,746.16 -12.74 £/$ 1.62 ▲+0.01 £/¤ 1.15 unc ¤/$ ▲1.41 +0.01 Certified Distribution
04/04/11 - 01/05/11 is 103,899
 2 News
Britain’s long journey back to sanity
EDITOR’S LETTER
ALLISTER HEATH
HERE is a little test for you, dear read-
er. How much do you think public
spending has been cut over the past
year? Five per cent? 10 per cent?
Maybe 20 per cent? I’m afraid you will
be disappointed. Total spending is up
by well over four per cent in cash
terms and by more than the public
sector’s special inflation measure,
according to the latest data for April
2011 released yesterday by the Office
for National Statistics.
In fact, current spending was the
highest it has ever been last month
and up five per cent. Spending on
7th Floor, Centurion House,
24 Monument Street, London, EC3R 8AJ
Tel: 020 7015 1200 Fax: 020 7283 5334
Email: news@cityam.com www.cityam.com
Editorial
Editor Allister Heath
Deputy Editor David Hellier
News Editor David Crow
Night Editor Katie Hope
Business Features Editor Marc Sidwell
Lifestyle Editor Zoe Strimpel
Sports Editor Frank Dalleres
Art Director Craig Gaymer
Pictures Alice Hepple
Commercial
Sales Director Jeremy Slattery
Commercial Director Harry Owen
Head of Distribution Nick Owen
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self-regulation overseen by the Press Complaints
Commission. The PCC takes complaints about the
editorial content of publications under the Editor’s
Code of Practice, a copy of which can be found at
www.pcc.org.uk
Printed by Newsfax International,
Beam Reach 5 Business Park,
Marsh Way, Rainham, Essex, RM13 8RS
WHAT THE OTHER PAPERS SAY THIS MORNING
POLL SHOWS MAJORITY
INVESTORS USE VOTES
Almost eight in 10 UK institutional
investors exercise their voting rights
in all the companies in which they
own shares, according to a survey by
the Investment Management
Association. The finding, in a report
setting out the extent of shareholder
involvement in the early days of the
stewardship code of conduct
launched last year, confirms the UK
as the market where shareholders are
most likely to engage with the compa-
nies through voting.
BRUSSELS URGED TO MORE FLEXIBLE
OVER BASEL RULES
Brussels is being urged to give
European Union countries more flex-
ibility when it tries to implement the
new Basel III rules on banking capital
across the 27-country bloc later this
year.
interest shot up 26.6 per cent; but
most other kinds of expenditure also
rose. In April alone, the UK govern-
ment borrowed £10bn, the most ever
for that particular month, equivalent
to £333m every single day. The excheq-
uer was caught by a double whammy:
total receipts fell slightly, primarily
because £3.5bn was raised a year ago in
a special one-off bank tax, while spend-
ing went up in all categories except
capex, which fell by £200m.
Eventually, debt must be repaid:
the bill will fall on us taxpayers as
well as on our children – unless the
government tries to inflate its liabili-
ties away, which will only work for
non-indexed gilts and which will end
up costing all of us dear through
higher interest rates. Public sector net
debt (excluding financial interven-
tions) was £910.1bn (equivalent to
60.1 per cent of GDP) at the end of
April 2011. This compares to £765.5bn
(53.0 per cent of GDP) as at the end of
April 2010. So next time you hear
somebody claiming that the coalition
UK deficit hits
an April high
UK ECONOMY
▲
BY JULIAN HARRIS
OUT of control government spending
sent the deficit soaring to a record
high for the month of April, official
data exposed yesterday.
Current spending by the central
government (excluding capex) hit
£54.1bn last month, a five per cent
jump from the same point last year.
Government borrowing for April
struck £10bn, up from £7.3bn in April
2010.
“Chancellor Osborne’s target of
reducing borrowing by £30bn in 2011-
12 looks more stretching than ever,
especially with economic growth look-
ing likely to disappoint,” said Nida Ali
of the Ernst and Young Item Club.
Tax receipts fell slightly compared-
with the same point in the last fiscal
year, said the Treasury citing a one off
TPG POACHES GOLDMAN CHINA
DEALMAKER SUN
TPG has poached one of Goldman
OF Sachs’ Chinese dealmakers as the US
private equity group seeks to rebuild
its team in China following a number
of recent defections. Steve Sun, a prin-
cipal in Goldman’s private equity
firm in Hong Kong, is set to join TPG’s
China group alongside Sing Wang,
also a former Goldman executive, and
Ricky Lau. Sun has been offered the
prospect of a percentage of the profits
on any deal he completes.
BUY-OUT GROUPS IN RECORD SALES
SPREE
Private equity groups have cashed in
a record amount of money by selling
companies in the past two months as
they aim to hand cash back to
investors to attract them into their
next funds. The value of companies
sold by buy-out groups worldwide
reached a high of $85bn (£52.5bn) in
April and May, data by Preqin, which
collects industry data, shows.
is “cutting the UK’s debt”, don’t forget
to laugh out loud. It is merely reduc-
ing the rate at which more debt is
being accumulated.
There was some good news in the
figures for George Osborne, the chan-
cellor. Public sector net borrowing
(excluding financial interventions)
was revised down to £139.4bn in
2010/11, down from £156.5bn last
year. The Office for Budget
Responsibility’s March Economic and
Fiscal Outlook had forecast net bor-
rowing of £145.9bn, so the chancellor
has done better than expected. The
trend is down, something which the
markets are focusing on.
But next time you are told that
Osborne is imposing savage, reckless
cuts on the UK, remember that the
figures tell a different story. So far,
spending is still going up. The plan is
for total spending to go up in cash
terms overall this financial year and
to fall by 0.6 per cent in real terms
(the measure that really matters). This
will hurt, especially given that debt
bank payroll tax which distorted the
figures for April 2010.
The government’s new bank levy
will show up in the figures over the
course of this fiscal year, it said.
“It is clear from the downward revi-
sion to last year’s borrowing figures
that the government’s deficit reduc-
tion strategy is making headway in
dealing with our unsustainable
deficit,” a spokesperson hit back.
The deficit for 2010-11 was revised
down to £139.4bn; yet government
debt now totals £910.1bn, equivalent
to 60.1 per cent of Britain’s GDP.
April’s record high
deficit provided a
headache for the UK
chancellor George
Osborne.
TOP JUDGE TO FACE MPS IN SEARCH
FOR SOLUTION TO PRIVACY LAW
CRISIS
Britain’s most senior judge could
appear before a committee to tackle
the crisis over privacy laws in an
attempt to defuse the situation. Lord
Judge, the Lord Chief Justice, said yes-
terday that the judiciary would assist
the new parliamentary committee
set up by the Prime Minister to look
into the current crisis over privacy
orders imposed by the courts.
HOTELS TO CASH IN ON CHINA’S
RUNAWAY GROWTH
InterContinental Hotels Group is
about to unveil a deal with a state-
owned Chinese property group to
develop six hotels costing more than
£350m in total. It expects China to
account for a quarter of all new
rooms globally over the next five
years.
interest payments are soaring, reduc-
ing the funds available for public serv-
ices by a lot more than the 0.6 per
cent overall cut. But this should also
be put into context. Barack Obama,
who was in London yesterday, wants
to cut public spending by 3.8 per cent
next year, more than the 3.7 per cent
pencilled in over four years by
Osborne. In other words, Obama’s
cuts – which many in the US want to
make even larger – are four times
larger than the average annual cuts
proposed by slowcoach Osborne.
So it is no wonder really that the
UK’s credit rating was downgraded
yesterday by (wait for it) Chinese rat-
ing agency Dagong, which cut the UK
by one notch to A+, from AA-, and
placed it on a negative outlook. You
may snigger – but unless the UK is
able to deliver on its fiscal austerity
not just this year but for the next
four, our creditors will soon start pan-
icking again, with good reason.
allister.heath@cityam.com
Follow me on Twitter: @allisterheath
Lord Sebastian Coe warned against unofficial tickets
Olympic ticket warning
BUSINESS OF SPORT
▲
BY JAMES GOLDMAN
LONDON 2012 organising committee
chair Lord Sebastian Coe has
implored the British public to steer
clear of unofficial ticket websites as
the clamour to attend high-profile
Olympic events intensifies.
Earlier this week it was revealed
that British fans were attempting to
utilise foreign-based websites in order
to purchase tickets on a first-come-
first served basis.
CHINESE TOURISTS BRING £200M
WINDFALL FOR LONDON RETAILERS
A sharp jump in the number of
Chinese tourists has brought a £200m
windfall for retailers in central
London, the government will
announce today. The Chinese are
already outgunning their Russian
counterparts – spending an average of
£600 each time they walk into a store -
but they cannot yet match the eye-
watering largesse of the Arabs, who
spend £1,800 on average.
EUROPE DEBT CRISIS POSES THREAT TO
US RECOVERY, SAYS FEDERAL
RESERVE’S JAMES BULLARD
The intensification of Europe’s debt
crisis poses a threat to the US econom-
ic recovery, a senior official from the
Federal Reserve has warned. The tur-
moil in financial markets leading up
to Greece’s bail-out last May may have
added to a slowdown in US growth.
CITYA.M. 25 MAY 2011
NEWS | IN BRIEF
AIG share sale hands US $8.7bn
The sale of shares in insurance giant
American International Group (AIG)
has raised $8.7bn (£5.3bn), taking the
state-backed firm closer to independ-
ence after its 2008 bailout. A com-
bined total of 300 shares of the
company were sold by the US Treasury
and AIG at $29 per unit. The govern-
ment, which retains a majority stake in
the firm, needed to sell shares at about
$28.7 per unit in order to recover a
$47.5bn investment. The sale repre-
sents the government’s first step
toward exiting its ownership of the
firm, which received more than $182bn
in aid during the financial crisis.
Diageo eyes Jose Cuervo for $2bn
Drinks maker Diageo is in talks to buy
tequila brand Jose Cuervo for more than
$2bn (£1.2bn). Cuervo is in exclusive
talks with Diageo, which has the first
option to buy the company because of
its international distribution rights to
the brand. Casa Cuervo, the maker of
the world’s best-selling tequila brand, is
renegotiating a distribution deal with
Diageo, which could have led to the sale
talks.
Picture: Micha Theiner/City A.M.
But Lord Coe has advised those des-
perate to secure coveted tickets “not
to panic” and insisted they should
not be tempted to visit sites which
may not be authentic.
“Do not panic,” he said. “Do not be
tempted to go to [fake] websites. You
should punch in urls (web links) on
our website to check if they are
authentic but I doubt whether that’s
the case.
“There is no perfect system. There
is no ticket process of this scale. This
is an extraordinary scale.”
VOLKSWAGEN CONSIDERS BUILDING
US AUDI FACTORY
Volkswagen AG will decide in the
next 12 months whether it will build
Audi luxury cars in the US in addi-
tion to VWs it is churning out at a
new factory here, the company’s
chief executive said yesterday. The
German auto maker hopes to dramat-
ically increase US sales of VWs and
Audi luxury cars over the next five
years. It is counting on its new
Chattanooga plant to lower produc-
tion costs of a key VW sedan.
SEC DEEPENS PROBE OF FOREX
TRADING
Federal securities regulators are tak-
ing a deeper look at the role of big
banks in executing currency trades
for clients. The SEC is examining
whether two major banks made prop-
er representations to pension-fund
clients about currency trading.
CITYA.M. 25 MAY 2011
HEIR TO ARCELORMITTAL EMPIRE
ADITYA Mittal, the son
of Britain’s wealthiest
man Lakshmi, yester-
day moved a step clos-
er to succeeding his
father as chief executive
of the world’s largest
steelmaker. He has
been handed control of
the biggest and most
problematic unit – Flat
Carbon Europe instead
of Flat Carbon
Americas, as well as
remaining chief finan-
cial officer, putting him
on course to head up
ArcelorMittal when his
father, Lakshmi Mittal,
60, steps down.
Greece pushed
to sell assets
▲
EUROZONE ECONOMY
BY RICHARD PARTINGTON
GREECE could be forced to sell up to
€50bn (£44bn) in state-owned assets by
European officials, as the nation tries
to mend its battered finances.
European leaders want to push for
measures to ensure the Greek govern-
ment completes its promised €50bn
privatisation drive, but believe a state
asset sale programme could ultimate-
ly net it between €250bn and €300bn –
almost all of Greece’s outstanding
debt.
But there are fears over Greece’s
resolve to carry out the privatisation
plan – which EU officials see as the
only way for the beleaguered country
to avoid insolvency.
Yesterday the biggest opposition
party in the country rejected Prime
Minister George Papandreou’s bid to
build support for €78bn of budget
measures and asset sales – a key condi-
tion for extra European Union finan-
cial assistance.
Underlining public hostility to fur-
ther austerity, Greece’s public sector
union called another 24-hour strike
for June.
One solution for officials could be
to place the Greek asset sale in the
hands of a specially formed independ-
ent international body, possibly led by
the International Monetary Fund
US regulators sue traders in new
blitz on oil price manipulation
▲
REGULATION
US regulators launched one of the
biggest ever crackdowns on oil price
manipulation yesterday, suing two
well-known traders and two trading
firms owned by Norwegian billion-
aire John Fredriksen for allegedly
making $50m by squeezing markets
in 2008.
The Commodity Futures Trading
Commission (CFTC) said traders
James Dyer of Oklahoma’s Parnon
Energy, and Nick Wildgoose of
Europe-based Arcadia Energy,
amassed large physical positions at a
key US trading hub to create the
News 3
Lagarde set to formally enter
race for top role at the IMF
▲
WORLD ECONOMY who quit last week over sexual assault South Africa and Russia, or BRIC
BY RICHARD PARTINGTON charges. countries, argued that the conven-
Lagarde is seen as the frontrunner tion undermines the legitimacy of
FRENCH finance minister Christine for the job, although she faces strong the IMF as a global institution.
Lagarde is expected to formally opposition from developing nations. “If the Fund is to have credibility
announce her bid to run the IMF directors for five key emerging and legitimacy, its managing director
International Monetary Fund (IMF) market economies yesterday hit out should be selected after broad consul-
this morning. at what they call an “obsolete unwrit- tation with the membership,” the
The European Union is said to have ten convention” that the head of the IMF directors said, adding that the
reached a consensus on backing her organisation should be a European. new boss should be chosen on the
to replace Dominique Strauss-Kahn, Directors from China, Brazil, India, basis of competence, not nationality.
(IMF). Dutch finance minister Jan Kees
de Jager said that Greece should set
up a privatisation authority along the
lines of the “Treuhand” agency that
sold off state companies in the former
East Germany after unification in
1990. “We could package their state
companies into a fund, with inde-
pendent advisers or IMF oversight,” he
said, adding that state assets could be
used as collateral for loans.
Delays in the state asset sell-off will
jeopardise both payment of the rescue
package’s next instalment, of €12bn
due in June, as well as ongoing talks
over a second bailout, of as much as
€60bn. The European Central Bank
has already made it clear that it is
against a fresh restructuring of greek
debt.
Moody’s became the latest agency
yesterday to warn of a chain reaction
of severe consequences for the 17-
nation euro area if Greece were
allowed to default next month, when
it faces a €13.4bn funding crunch.
The political wrangling came as Vince This is how much Spread Co charge to be
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 4 News CITYA.M. 25 MAY 2011

Police quiz MOODY’S ESTIMATE OF IMPLICIT CREDIT SUBSIDY FOR UK BANKS

Huhne over
Bank

Barclays
Baseline
credit rating

A3
Systemic
uplift

3
Outlook

Negative
Vickers: ICB
driving row HSBC

Lloyds
A2

Baa1
2

4
Negative

Under review for downgrade

plans will cut
state subsidy
▲

POLITICS RBS Baa2 5 Under review for downgrade

BY RICHARD PARTINGTON
EMBATTLED cabinet minister Chris NatWest Baa2 5 Under review for downgrade
Huhne was last night interviewed by
police over allegations that he asked
someone else to take driving licence Santander UK Baa1 2 Under review for downgrade REGULATION month, Vickers said that while remu-

▲
penalty points on his behalf. BY JULIET SAMUEL neration is not directly within the
The energy secretary is fighting for commission’s remit, “some of the

Moody’s puts 14 UK banks

his political life over the accusations, BANKS will see their implicit subsidy issues we’re focusing on could well
made by his estranged wife Vicky from the state significantly cut down bear on that kind of issue (bonuses)”.
Pryce, that he made her accept the if the government implements recom- He added that the report sought to
points incurred for a speeding mendations from the Independent protect “ordinary, core banking”, but

on negative rating outlook

offence.
The alleged offence is said to have
occurred in March 2003 while Huhne
was returning from Stansted Airport.
Huhne was a member of the
European parliament at the time and
regularly travelled between his
▲
Commission on Banking (ICB), its chair
John Vickers (pictured) said yesterday.
“Our measures would have a major
effect on reducing the subsidy,”
Vickers said when speaking before the
Treasury Select Committee yesterday.
BANKING TSB, NatWest, HBOS, RBS and His views appeared to be well-support-
did not detail what that includes.
He also told members of the public
gathered to discuss banking: “If banks
do ... get into trouble it’s got to be
much easier to sort them
out.”
The ICB is con-

London home and the Essex airport,
where he would fly in from Brussels.
Essex police also interviewed Pryce
last night, according to her lawyer.
No arrests have been made by the
police force in connection with the
inquiries.
A spokeswoman for Huhne said:
“Chris Huhne helped Essex police
with their inquiries today and looks
forward to an early resolution of this
issue.”
BY JULIET SAMUEL
MOODY’S has put 14 of the UK’s
biggest banks on review for a ratings
downgrade due to regulatory efforts to
resolve the “too big to fail” problem.
The move could significantly
increase borrowing costs for banks as
regulators draw up plans to reduce the
likelihood that taxpayers will have to
bail out failing banks in future.
Those under review include Lloyds
Santander UK, while the outlook on ed by Moody’s decision to launch a sulting on propos-
Barclays’ senior debt was revised to review into the credit ratings of the als in its interim
“negative”. HSBC has escaped a change UK’s major banks (see left). report, which rec-
but remains on a negative outlook. But Vickers added that it is impossi- ommended a
Moody’s said that the review was ble to solve the “too big to fail” prob- “ringfence” around
sparked by regulators’ desire to create lem entirely: “Total abolition is the retail opera-
resolution plans that will make it easi- unlikely. There are always going to be tions of major
er to wind up collapsing banks rather circumstances when the government lenders to
than bail them out. “Current levels of will feel committed to come to the res- insulate them
systemic support account for two to cue of banks.” from global
five notches of uplift for the large UK Later, at the ICB’s first public hear- financial
banks,” the agency said. ing on its interim report, released last instability.

@
NEWS | IN BRIEF
One Finsbury Circus is sold
The former City headquarters of BP has
been sold to a real estate fund for
£141.5m, the vendors said yesterday.
One Finsbury Circus has been snapped
up by Invesco Real Estate’s pan-
European fund after months of bidding.
Hermes Real Estate and LaSalle, which
acted on behalf of the sellers, said the
sale of the multi-let, 210,000 square
foot building allows their clients to

@
spend on new investments. GM Real
Estate acted for the joint owners, while
Knight Frank represented Invesco.

It’s
It’s all
all about
about s
style
tyle Armani rules out sales or listing
Designer Giorgio Armani yesterday ruled
KLM b
business
usiness cla
class
ss out selling or listing his company as it
posted annual revenues up 4.6 per cent
to €1.59bn (£1.4bn). Net profit jumped
81 per cent to €161m and cash was a
Dubai
Dubai from
from £
1,391 record €604m. “I have always associat-
ed good cash liquidity with the concepts
of independence and solidity,” said
Mumbai
Mumbai from
from £
1,572 Armani, 76. He also did not exclude pos-

@
sible acquisitions.

Shanghai
Shanghai from
from £
1,821 Yandex surges on first day
Shares of Russian internet company
Yandex surged more than 40 per cent in
Bangkok
Bangkok from
from £
1,886 their debut yesterday, in the largest US
initial public offering in the internet sec-
tor since Google. Yandex raised $1.3bn
Cape
Cape Town
Town from
from £
1,927 (£803m) in its IPO on Monday by selling
52.2m shares for $25 each. The offering
valued the overall company at about
Lima
Lima from
from £
2,244 $8bn. Morgan Stanley, Deutsche Bank
and Goldman Sachs led the underwrit-
Re
Return
turn ffares
ares fr
from
om H
Heathrow,
eathrow, incl
incl ttaxes
axes ers on the offering. Shares were up 40
per cent at $35, after pricing at $25.
More offers on KLM.com Google to reveal phone payments
Google will take the wraps off a mobile
www.cityam.com

payment system tomorrow that lets

consumers pay at checkout with phones
Fares quoted are for return business class flights from Heathrow via Amsterdam, including taxes and charges, and are instead of cards, a source said, hoping to
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Fares are subject to availability. Credit card surcharge will apply. Specific booking conditions and the General Conditions
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Internet search and advertising leader
will work with MasterCard, the world’s
second-largest credit and debit card
processing network, to launch the sys-
tem. It has now signed up retail part-
ners Macy’s, American Eagle Outfitters
and Subway.
 Here’s one little reason
why we make tyres that stop
shorter in the wet.

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For your nearest Bridgestone authorized dealer,
visit our website
www.bridgestone.eu
 6 News
Give us your views on NHS reforms
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services. Do you support this plan?
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PoliticsHome.com
In association with
PoliticsHome.com
De La Rue plans cuts
as production fades
▲
FINANCIAL SERVICES
BY HARRY BANKS
@
BRITISH banknote printer De La
@
Rue yesterday reported a 68 per
cent drop in full-year profit due to
paper production problems and
said it was unable to predict the
outcome of talks with the key cus-
tomer still affected.
De La Rue said production of
banknote paper for one of its top
customers -- named by a source
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£35m.
“Discussions remain ongoing
with the principal customer con-
cerned and the authorities, and
therefore there remains uncertain-
ty as to the ultimate outcome of
these issues, including their finan-
cial impact,” the company said yes-
terday.
De La Rue, which produces over
150 national currencies and securi-
ty documents including passports,
said pre-tax profit before exception-
al items for the year to 26 March
fell to £33.3m from £104.1m in the
previous financial year.
In January, France’s Oberthur
CITYA.M. 25 MAY 2011
AssetCo faces
new payment
call from bank
▲
SUPPORT SERVICES
TROUBLED fire engine provider
AssetCo is being pursued by one of
its banks for repayment of a £1.3m
overdraft facility, it said yesterday.
Northern Bank has filed a credi-
tor’s petition but AssetCo said it
would not pay it while it was still
renegotiating its banking arrange-
ments. “This effectively seeks to
improve the bank’s position, and the
position of its guarantor, ahead of
other banks and creditors,” it said.
City A.M. understands AssetCo was
expected to repay the loan from pro-
ceeds of its £16m share placement.
One source told City A.M. former
chief executive John Shannon
remains the overdraft guarantor
despite being sacked in March, and
AssetCo was trying to force the bank
to collect on Shannon’s guarantee
rather than repay the loan.
AssetCo’s executive chairman
Tudor Davies told City A.M. he did
not know who the guarantor was.
Technologies walked away from a
bid for De La Rue after a higher
indicative offer failed to engage the
banknote printer’s board in talks.
ANALYSIS l De La Rue
860
p 838.45
840 24 May
820
800
780
760
740
720
700
28 Feb 18 Mar 7 Apr 3 May 23 May
CITYA.M. 25 MAY 2011
Glencore rises
2pc in first
day’s trading
▲
CAPITAL MARKETS
BY JULIET SAMUEL
GLENCORE saw its share price close
up 2.14 per cent in its first day of
public trading on the London Stock
Exchange yesterday in what the LSE
confirmed is London’s largest ever
float, with $10bn raised.
The stock closed at 525p, failing to
break above its original float price of
530p when conditional trading
began last week.
Some questioned why the share
price was not above its float price
given that the order book was said to
be many times oversubscribed last
week.
But most analysts were moderate-
ly positive on the stock, with many
saying that successfully launching a
huge float in the current volatile
market for commodities was in itself
impressive.
“I don’t think it’s been a disap-
pointing week given the softness in
the commodities space since
Glencore announced its float,” said
News 7
A sorely needed
IPO success story
L
ondon’s float market badly
needed a success story after a
run of false starts and post-
ponements this year. And
Glencore’s moderate price move-
ment during its first day’s trading
seems to have supplied just that.
Observers looking for a superstar
rally, to fit hype from bankers last
week that a five to 10 per cent rise
was expected on day one, were
understandably disappointed. But
as one analyst put it: “It’s a miner,
Numis Securities’ Andy Davidson, not a tech company.”
metals and mining analyst. “I think Of course, Glencore is not a pure
the best we could hope for was stabil- miner and in fact derives the lion’s
ity and we seem to have got that so share of its revenues from commod-
far. It’s still early days.” ity trading, where it has close to a
RBC Capital Markets’ Tim Huff 50 per cent market share in a range
said: “I think it’s going pretty well – of commodities. The company’s
it’s traded in line with the sector.” trading arm uses its global scale to
With a market cap of $59.2bn at take advantage of price differences
the close of its first day’s trading, faster than rivals, shipping materi-
Glencore will be the first company to als across the world in bulk to meet
be fast-tracked into the FTSE 100 demand.
index in 25 years. It could see its This makes it more complex than
price rise today on the back of a FTSE 100 miner, as it benefits
demand from index-trackers. from commodity price volatility,
not just rises. Its trading operation
ANALYSIS l Glencore has been criticised for being a
550 p “black box” without enough infor-
540
525.00 mation telling investors how it
24 May works. But as Numis Securities’
530 Andy Davidson said: “The moment
we do know exactly how it works,
520 then Glencore will lose its edge.”
510
500
BOTTOMLINE
19 May 20 May 23 May 24 May Analysis by Juliet Samuel
Glencore chairman Simon Murray and colleagues at the LSE yesterday
 8 Consumer News
M&S in store
revamps as
profit climbs
▲
RETAIL
BY JOHN DUNNE
MARKS and Spencer (M&S) yesterday
unveiled a far reaching shake-up of its
stores which will see branches in rich-
er areas being stocked with more
expensive lines.
Chief executive Marc Bolland said
the move – based on the spending
power and demography of a local
area – would see products better
reflect the requirements of shoppers.
Announcing a catalogue of sweep-
ing changes he also said M&S would be
opening a series of pilot stores to test
new layouts. Allied with the store
revamps he said the retailer would
fight competitors to become a heavy-
weight online retailer.
He said the fact that online retailers
trading only three years were selling
goods in the US while M&S lagged
behind signalled that its web offering
needed an overhaul. “Our business is
changing and we must change with
it,” he said.
International growth overall will be
CITYA.M. 25 MAY 2011
Tesco market
share rises as
Asda sees dip
RETAIL
▲
TESCO’S market share rose for the
M&S boss Marc Bolland is planning to tailor his stores to their location first time since November last year,
according to Kantar Worldpanel mar-
DO YOU SHOP AT MARKS AND SPENCER, AND DO YOU THINK THE ket share data.
For the 12 weeks to 15 May Tesco’s
STORES NEED A REVAMP? Interviews by Shiba Babamiri and Phoebe Torrance market share rose to 30.7 per cent,
powered by China, India and Europe from 30.6 per cent. The only other
while Bolland said any move to the US retailer in the top four to increase its
wold be “long term”. STEVE HART | SAGICOR share was fourth-placed Morrisons. Its
M&S made profit before tax and share rose for the third consecutive
one-off items of £714.3m in the year to period to 11.9 per cent, from 11.8 per
2 April, a rise of 13 per cent on the pre- “I don’t shop there because I find it is very old cent a year earlier.
vious year. fashioned and hard to find what you are look- Sainsbury’s, the UK’s third-largest
But Bolland warned that times
would remain tough on the high
ing for. I think the stores need a revamp to retailer by market share, saw its mar-
ket share unchanged at 16.3 per cent.
street. He said: “The consumer is con-
attract a younger range of customers.” Up until March, Sainsbury’s market
cerned about job security. April was share had increased consecutively for
good but that was a distortion because
of holidays, nice events and sunshine.”
ELLIOT CAPLAIN | ASPEN INSURANCE 25 periods. Asda, the second biggest,
saw its market share slip to 17.2 per
Its shares closed 2.9 per cent lower cent, from 17.5 per cent. Outside the
at 385.6p yesterday. “Yes I am a big fan, the food is great quality. A top four, Waitrose’s market share rose
ANALYSIS l Marks & Spencer revamp could be a good idea because the to 4.3 per cent, from 4.1 per cent,
according to Kantar, which monitors
410
p 385.60
stores should provide what the area needs but household grocery purchasing habits.
400 24 May overall the stores are very well organised.” The collective market share of dis-
390 count retailers Aldi and Lidl rose to
380 six per cent, from 5.4 per cent a year
370
RORY DUNCAN | FARADAY INSURANCE earlier. Edward Garner, communica-
360 tions director at Kantar, said that in
350
340
“I shop in Marks and Spencer for food but not the four weeks leading up to 15 May
the year-on-year grocery growth rate
330
for anything else. The stores are pretty rose to 7.8 per cent, fuelled largely by
320 straightforward but they could expand on the Easter shopping, the good weather
28 Feb 18 Mar 7 Apr 3 May 23 May
variety of the food they offer.” and, the Royal Wedding.
CITYA.M. 25 MAY 2011 News 9

Busy lives and tight belts drive HomeServe growth

SUPPORT SERVICES the Midlands-based firm up 16 per multi-country giant with access to four per cent to 3m, it is expanding far
▲ BY ALISON LOCK cent to £117.1m, while earnings per 68m households, but says there is still faster in its international markets such
share rose 17 per cent to 25.9p. vast room for growth. Only 22-23 per as the US, France and Spain. In the US
HOMESERVE founder Richard “It’s reinforcing the fact that people cent of UK homes have plumbing and new policies rose by 55 per cent to
Harpin (pictured) yesterday said are living busier and busier lives,” said drainage protection while just 30 per 450,000 and it delivered £6.1m operat-
penny wise homeowners keen to Harpin. “And particularly in difficult cent have boiler cover – compared ing profit, up from 1.5m in 2010.
avoid costly disasters such as boil- economic conditions when people are with 65 per cent of people that have HomeServe’s next steps will be to use
er breakdowns helped it grow last feeling a bit hard up it’s so they can vehicle breakdown cover, he said. its high cash generation – up to £86.1m
year. avoid the cost of a big repair bill.” Harpin says HomeServe has “older in 2011, from £26.3m the previous year
Revenues at HomeServe, He is no exception: his house dates customers that have older properties, – to buy the in-house service books of
which repairs and protects sys- from 1660 and he’s had “more than they worry about things going wrong, established utility companies in new
tems such as plumbing and my fair share” of HomeServe claims. “I and they want to have somebody to and existing markets. Harpin says it is
heating, increased by 27 per think on average I’ve had at least a sort it out.” They are also loyal – more currently negotiating deals in Belgium,
cent to £467.1m in the year to claim a year,” he sighs. than 80 per cent are repeat customers. Germany, and Canada and will target
March 2011 compared with Harpin has grown HomeServe to a While UK new customers were up more, at up to £20m, this year.
2010, as it sold 15 per cent
more insurance policies.
That pushed pre-tax profit at

ANALYSIS l HomeServe
540
p 509.50
520
24 May
500

480

460

440

420
28 Feb 18 Mar 7 Apr 3 May 23 May

Musdt
en ly
31 Ju

Areas include; Westminster, Camden, Southwark,

City of London, Tower Hamlets and Islington.

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 The Capitalist
10 EDITED BY CITYA.M. 25 MAY 2011
HARRIET DENNYS
Got A Story? Email
thecapitalist@cityam.com
Follow The Capitalist
on Twitter: @citycapitalist

GLENCORE Shortly after

BOSS’S BRIEF
ENCOUNTER
AT CHELSEA
IT WAS unseasonably cold at the preview of
this week’s Chelsea Flower Show – so the
Queen, mindful of her constitution, didn’t
stop to admire every single show garden.
However, she did manage to drop in on
the Royal Bank of Canada’s New Wild
Garden, designed by Nigel Dunnett of
The Landscape Agency, where Lynn
Patterson, the bank’s director of corpo-
rate responsibility and John Burbidge,
chief executive of RBC Capital Markets
for Europe and Asia, were “deeply hon-
oured” to meet her Majesty.
Burbidge stayed on for the evening’s
gala dinner, where he and Ross Jennings,
director of RBC Wealth Management,
hosted a client party alongside RBC
Capital Markets’ Patrick Meier, head of
investment banking for Europe, and Josh
Critchley, head of equity capital markets.
Elsewhere at the Chelsea show-
grounds, Stephen Hester, group CEO of
RBS, braved the wind to admire the
award-winning flowerbeds, as former
Channel 4 chairman Luke Johnson and
ITV chairman Archie Norman retreated
inside the marquee for “a bit of a chat”
in a more sheltered corner.
A “very tall” power trio from the
Nigel Dunnett and Lynn Patterson at RBC’s New Wild Garden
show’s sponsor M&G Investments and its
owner Prudential – Prudential chief
executive Tidjane Thiam, chairman
Harvey McGrath and M&G chief execu-
tive Mike McLintock – held court for the
evening, while Deutsche Bank managing
director Charles Wilkinson hosted a
party for the new CEO of software firm
Sage, Guy Burruyer, on his first Chelsea
outing as a FTSE 100 leader.
Former PM John Major was “on good
form”, as was the “charming” former
Barclays chairman Sir Peter Middleton,
who attended the gala with his wife.
Also escorting his other half was Citi’s
head investment banker David
Wormsley, fresh from his bank’s co-advi-
sory role on Glencore’s float this month,
celebrating
London’s
biggest-ever
flotation,
Glasenberg
was straight
on a flight to
tured below) was already halfway to Asia
Hong Kong on a plane to Hong Kong.
STOCK EXCHANGE
ON THE subject of Glasenberg, The
Capitalist hears there was an amusing
Picture: Micha Theiner/CITY A.M. exchange of presents yesterday between
the Glencore chief and Xavier Rolet of the
who caught up with spinner Guy London Stock Exchange (LSE).
Lamming of Finsbury, which handles the Before hotfooting it to Hong Kong,
PR for the commodities giant. Wormsley Glasenberg took time to celebrate
also no doubt had a word with Glencore’s London’s largest-ever flotation with some
boss Ivan Glasenberg himself (pictured of his extremely athletic-looking manage-
right), who made his flower show debut ment team at the LSE headquarters.
at the Monday night gala. Glasenberg presented Rolet with a huge
“Did Glasenberg try and buy the toy truck to represent the commodity
flower show?” wondered one mole giant’s heritage, which Rolet duly prom-
of the commodities billionaire. ised to give pride of place among the
An interesting question, but stock’s exchange’s other top
The Capitalist will have to mementoes.
find that out another It sounds like Glasenberg got a
time – by the time the good deal, though, since Rolet
dust settled on this then presented him with a
year’s horticultural 1996 bottle of Boerl & Kroff
power gathering, champagne, thought to be
Glasenberg (pic- worth around £1,000.

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We’re proud to introduce the latest showpiece in
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 12 News
Twitter is the winner in super-injunction saga
BRANDINDEX
STEPHAN SHAKESPEARE
W
HO has done well out of
the super-injunction saga?
Those celebrities whose
names have now been
revealed? Not at all. The lawyers?
Presumably.
But what of Twitter? The social
media platform deemed to have
changed the dynamics of the saga
and elevated freedom of speech to
dazzling heights: the conqueror of
tyrants and celebrities who would
rather their lives remained private.
GOOD YEAR FOR TWITTER MINDSHARE
In terms of mindshare it has been a
good year for Twitter. It started 2011
with an attention score of 26 i.e. a
quarter of people were hearing
something about them (whether
good or bad) and got a small bump
(to 31) from the beginnings of the
Arab Spring.
It trended around this level for
the next four months before the
super-injunction controversies saw
it rise again, this time to 39.
GOOGLE AND FACEBOOK HIGH PROFILE
This has enabled it to move from
6th to 2nd in terms of the most
talked about online brands edging
above Google, with only Facebook
above it.
Despite this rise in profile, Twitter
has yet to really see a significant
gain in terms of sentiment. Its over-
all impression scores have edged up
through May from -7 to -3 but it will
want to see the increased mind-
share get it bigger gains than that
and it still remains down in 20th
position out of 25 online brands on
CITYA.M. 25 MAY 2011
that measure. able +68 we can see that it still has a
So good news for Twitter in terms long way to go in terms of turning
of making noise but when we com- that noise into positive sentiment.
pare its impression score with Stephan Shakespeare is chief executive
Facebook’s +19 or Google’s remark- of YouGov
ANALYSIS l Attention chart ANALYSIS l Impression chart
60.0 80
Facebook 70 Google
50.0 60
50
40.0 Google 40
30.0 30
Facebook
Twitter 20
20.0 10
0
10.0
-10.0
Twitter
0 -20.0
3 Jan 7 Feb 7 Mar 4 Apr 2 May 23 May 2 May 5 May 10 May 13 May 18 May 23 May
NEWS | IN BRIEF
Microsoft fights EU fine Chrysler repays $7.6bn loan
An €899m (£783m) EU antitrust fine was Chrysler yesterday paid back $7.6bn
excessive and undeserved, Microsoft told an (£4.7bn) in US and Canadian government
EU court yesterday in a case which could loans from its 2009 bailout, a move that
draw a line under a decade of legal battles. allows the US automaker to distance
The 2008 European Commission fine – a itself from an unpopular bailout and
record at the time – penalised Microsoft for deepen its ties with Italian automaker
failing to comply with the regulator’s order Fiat SpA. Chrysler said it transferred
four years earlier to provide information $5.9bn to the US Treasury and $1.7bn to
that would allow other products to work the governments of Canada and Ontario
with computers running its software. to repay loans it received in June 2009.
CITYA.M. 25 MAY 2011 News 13

Greencore: we
are not for sale
Tweetdeck founder a millionaire after
says chief exec Twitter pays £25m for London start-up
of the deal.
▲

▲
SERVICES MEDIA He declined to say how much his
BY STEVE DINNEEN interest was worth but said he made a
SANDWICH and chilled foods maker “healthy return”.
Greencore posted a net half-year loss yes- LONDON-BASED TweetDeck founder He also said it was a “very good”
terday as costs from its failed merger Iain Dodsworth became an overnight deal for Dodsworth, adding:
with Northern Foods wiped out gains millionaire yesterday after selling the “TweetDeck is a brilliant product that
from a steady sales rise. firm to Twitter for around $40m has been recognised by one of the top
The Irish group booked a €13.4m (£25m) in cash and shares. internet firms in the world.”
(£11.7m) charge for its bid to merge It is not yet clear if Dodsworth, who Hoberman said he doubts Twitter,
with Northern Foods, a convenience founded TweetDeck in 2008, will which recently signed an ad sharing
food specialist that was prised out of its retain a stake in the company or agreement with TweetDeck will close
hands by chicken tycoon Ranjit Singh become part of the management the site to remove the distraction from
Boparan in January. Revenues rose 7.9 team. The former BSkyB and Pru pro- its homepage, as has been speculated.
per cent in the six months to the end of grammer, who “It’s a lot to spend to
March, giving the firm a pre-tax profit describes himself on just close some-
of €2.4m – a fall of more than 76 per his Twitter page as an thing,” he said.
cent on the same period last year, and a “F1 obsessive”, could TweetDeck is
sum that is more than wiped out by tax not be reached for also backed by
bills. comment yesterday. Betaworks, TAG,
Greencore said it would continue to Lastminute.com and angel investors
expand, but “does not feel compelled to founder Brent from the US and
do a transaction at this stage”. Hoberman, whose Europe.
Chief financial officer Andy Williams PROfounder Capital TweetDeck
dismissed reports that Greencore had Tweetdeck founder vehicle invested organises Twitter
asked private equity players to examine Iain Dodsworth has £1.2m in TweetDeck, and other social
a sale of the firm, telling City A.M.: “I can sold his business to yesterday confirmed media feeds into
categorically confirm that the business Twitter for £25m to City A.M. he has easy to navigate
is not for sale. sold his stake as part columns.

FSA gives £1m fine

for market abuse
ENFORCEMENT MULBER RY
MULBERRY

ising Event
▲

BY STEVE DINNEEN
THE Financial Services Authority (FSA)
has fined a man more than £1m for
market abuse in the first use of a tough
new penalty system.
Fundra
drawn from a third party’s bank &
account and delivered to Kahn, who BIGLAND
has never worked at an authorised GREEN
firm regulated by the FSA. CENTRE
Tracey McDermott, acting director
of enforcement and financial crime,

ffor
or MMulberry
ulberry a
and
nd
The FSA also took out a high court said: “Kahn undertook a month-long
injunction against the individual – campaign of market abuse. The FSA
repeat offender Samuel Kahn – mean- will not tolerate this type of repeat
ing he could face jail for contempt of behaviour and will use all of our pow-
court if he is caught again.
Kahn co-ordinated a scheme to delib-
erately inflate the share price of Global
ers to ensure credible deterrence.”
Simon Morris of CMS Cameron
McKenna called the punishment a
BBigland Green
igland G Centre
reen C entre
Brands Licensing (GBL), a company
quoted on the PLUS Stock Exchange.
“remarkable first” for the FSA but said
it must now prove it can nail more
Thursday
day 16
16th
6th
th June 201
2011
11
He disguised his involvement in the “mainstream” cases.
scheme by repeatedly impersonating He said: “This is a typical case of a Goldsm
miths’ Ha
Goldsmiths’ Hall, London – 6.30pm
Hall, 6 - 9.00pm
9.
other people when placing orders to fringe operator flouting the rules. Until
trade in GBL’s shares and co-ordinating the FSA digs into mainstream insider
trades conducted by third parties. dealing the risk remains that the City
The FSA says the profits were with- will not take the message seriously.” Ann ev
evening musical
sical extrav
extravaganza
extravaga anz ffr
from
om
m ar
around
ouund the
ound
world led by Jeremy
Jer
erremy
emy Jack
Jackman naand Mulberry
ulberryy Schh
hool
School
NEWS | IN BRIEF for Girls
Girls.. There
The
here will b
bee a champagne rreception
eception with
wi
w
Holidaybreak hit by weather sumers by giving secure funding lines to
raf fle p
raffle prize
prizeses and goodie
goo odie bagss.
bags.
Outdoor European specialist holiday group work with suppliers. GO Outdoors oper-
Holidaybreak yesterday posted a wider ates from 30 outlets across the UK and All ffunds
All unds rraised
aised aare
re iinn aaid
id o
off tthe
he M
Mulberry
ulberry aand nd B
Bigland
igland GGreen
reen
first-half pre-tax loss as cash-strapped plans to open ten stores per year. It said it
consumers preferred to stay home amid also intends to increase investment in its
C entre. T
Centre. he p
The urpose iiss tto
purpose op rovide iits
provide ts llocal
ocal c ommunity iinn S
community hadwell,
Shadwell,
last year’s harsh winter on top of a diffi- online retail offering. 3i recently completed T
Toower H
Tower amlets w
Hamlets ith o
with pportunities ffor
opportunities or aadult
dult aand
nd ffamily
amily llearning,
earning,
cult economy. For the six months ended 31 an investment in GO Outdoors to acquire a
March, pre-tax loss widened to £19.2m significant minority shareholding. hhealth
ealth aadvice
dvice aand
nd ssupport,
upport, aaccess
ccess ttoom meeting
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nd uuse
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from £17.7m last year. Revenue fell seven
per cent to £139.6m. The company, which Big Yellow says UK recovery slow off a p
o professional
rofessional ttheatre.
heatre.
provides residential outdoor education and UK self-storage company Big Yellow
adventure trips for school children, said it Group said yesterday that a recovery in
was looking to further strengthen the edu- the sector was unlikely until the economy
cation share of the group. improves but still increased profit. April to
March adjusted pre-tax profit rose to Suppor
Supported
ted by
Go Outdoors in refinance deal £20.2m from £16.5m a year ago. Revenue
Outdoors retailer GO Outdoors has rose seven per cent to £61.9m. “In the UK, For mor
more
m e information,
secured a £30m financial package from at the moment we’re operating in a very
Lloyds Banking Group to fund its growth subdued environment, where the economy headspa@mulberry.towerhamlets.sch.uk
conta headspa@m
contact mulberry
berry.towerhamlets.sch.uk
.towerhamlets.
.t
plans. The business said the three-year re- did not really do very much since T:: 020
T 0 7790 0 6327
finance deal included £12.2m for trade September," chief executive James Gibson
finance to help deliver new lines to con- said. www.mbgc.co.uk
www.mbgc.co
bgc.co.uk
k
CITYA.M. 25 MAY 2011
English Heritage
has called the
Broadgate estate
“among the best
of its type and
period”
British Land has
said a listing
“sends a terrible
signal” and that
the case for list-
ing is “weak”
UBS and the site owners are due to learn English Heritage’s decision as soon as today
New projects
steal the show
at Portland
▲
PROPERTY
BY MARION DAKERS
LONDON real estate investor Great
Portland Estates (GPE) yesterday
reported a 78 per cent rise in profits
to £50.4m, as it unveiled planning
approval for its Hannover Square proj-
ect and the sale of some of its stake in
100 Bishopsgate.
The firm’s West End-focused prop-
erty portfolio gained 15.5 per cent in
value to £1.65bn over the year to the
end of March, while rental growth
rose 10.8 per cent, beating consensus
analyst forecasts by seven per cent.
Westminster City Council has given
the green light to GPE’s £500m luxu-
ry flats and office space in Hanover
Square, which is due for completion
in 2016 to tie in with nearby Crossrail
construction.
But GPE said it hoped to sell off
some of its stake in the 100
Bishopsgate tower, a 40-storey block
Paragon leads the way with rise
in lending and 35pc profit jump
▲
PROPERTY
STRONG demand for rented accommo-
dation helped push profits up at buy-
to-let specialist Paragon, with the
company yesterday predicting further
growth in lending for the rest of the
year.
Pre-tax profit for the six months to
the end of March rose 34.8 per cent to
£39.5m and the company also raised
its interim dividend by 12.5 per cent,
News 15
Development
cost of up to
£340m
English Heritage to BROADGATE
LISTING SPAT Q&A
judge on UBS office Q. WHO DECIDES WHETHER TO
LIST BROADGATE?
for the new
building A. The final decision will rest with
the culture secretary, Jeremy
Hunt. He is obliged to consider what
English Heritage wants, as it is a
statutory adviser on conservation
British Land, which owns the matters. It is unusual for a listing to
▲
PROPERTY
BY HARRY BANKS Broadgate complex of 16 buildings in a defy English Heritage’s wishes, but
joint venture with Blackstone, wants not unheard of – for example, when
A PANEL of planning and architecture to keep UBS on its estate with a £340m a stakeholder, owner or other state
experts will today meet to decide purpose-built headquarters, due for body disagrees with its findings.
whether to push for listed status of the completion in 2016.
Broadgate estate near Liverpool Street.
English Heritage is due to announce
But conservationists want the site to
be protected as a leading example of Q. IS A LISTING LIKELY?
shortly afterwards whether plans to
knock down two buildings on the
estate should be put on ice, pending
1980s architecture.
English Heritage declined to com-
ment on confidential proceedings yes-
A. It is not standard practice to list
buildings less than 30 years old,
though exceptions can be made if a
government approval. terday. site is under threat.
Cell,
cell,
cell.
expected to deliver almost 1m square
feet of City office space.
GPE said during an analyst presen-
tation that more than one investor is
interested in buying some of its 50
per cent stake in the site, to take its
stake down to a quarter and reducing
its costs to £152.9m.
The names of the potential buyers
were not disclosed. Existing partner
Brookfields declined to comment on
whether it would increase its stake.
ANALYSIS l Great Portland Estates
430
p
420 413.10
24 May
410
400
390
380
370
360
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CITYA.M. 25 MAY 2011 News 17

Sarko urges web Endemol star to take over Mecom

cooperation
TECHNOLOGY commercial activities. His remit tions with rapidly growing online

▲
BY STEVE DINNEEN included the expansion of the com- and new media operations. It has
TECHNOLOGY pany’s distribution business and considerable potential to develop
▲

NICOLAS Sarkozy urged internet
leaders gathered in Paris for the e-G8
talks to work with governments and
share fairly the benefits of a revolu-
tion he compared to the discoveries
of Columbus, Galileo and Newton.
Opening a forum at which
Google’s Eric Schmidt and Facebook’s
Mark Zuckerberg will be among the
speakers, Sarkozy heaped praise on
an industry that has democratised
information and helped enable the
revolutions of the Arab Spring.
RISING Endemol star Tom Toumazis
will become the new chief executive
of European publisher Mecom when
Stephen Davidson, currently execu-
tive chairman, steps aside in August.
Toumazis (pictured) has worked in
the media industry since 1983 and
has held senior international and UK
positions in print, online, TV and
radio.
He served as chief commercial
officer at Endemol from 2009,
where he headed up its worldwide
worldwide sales
He was previously executive vice
president with Walt Disney, where
he was in charge of programming,
new media and channel distribution
for Europe, the Middle East, Africa
and Canada.
He also held senior roles at UK-
based publisher Emap.
He said of his new role: “Mecom
has an impressive European foot-
print, which combines powerful
national and local print media posi-
its multi-media platforms and
build strong digital revenues
and I am excited to be given the
opportunity to lead the compa-
ny.”
Davidson, who became exec-
utive chairman after the for-
mer boss of Mirror newspapers
David Montgomery stepped
aside over a row with share-
holders, will stay on as non-
executive chairman of the
firm.
TOM TOUMAZIS

C&WW sees
its cashflow Waste not,
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▲

TELECOMS
BY STEVE DINNEEN
CABLE & Wireless Worldwide
(C&WW) yesterday released a work-
manlike set of results that reassured
investors who had been spooked by a
torrid few months.
The firm slashed costs to push pre-
tax profit up 23 per cent to £143m on
slightly lower revenues of £2.3bn.
Shares in the firm, which concen-
trates on the global corporate market
and has a large presence in the UK,
closed 4.91 per cent higher. They have
lost more than 40 per cent of their
value since the demerger.
The business, which split from the
former Cable & Wireless Group in
2009, turned cashflow positive for the
first time. It reported free cash flow
generation of £61m. In 2006 it was
burning through well over £400m in
cash.
The firm says it now expects trad-
ing cashflow to continue to improve
ly flat.
It maintained its dividend at 4.5p a saved on average £6,600 by switching to Zero Spreads
share, reassuring investors who
feared it could be cut.
Chief executive Jim Marsh said:
“This year we passed the important
milestone of turning cash positive for
the first time. The movement to
cloud, along with the ongoing con-
vergence between mobile and fixed
line communications and the rapid
growth in global data traffic create
good opportunities for our business.”
ANALYSIS l Cable & Wireless Worldwide
75
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70
65
60
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 18 Economics
UK’s retail sales hold steady
RETAIL
▲
BY JULIAN HARRIS
ACTIVITY on the UK high street is “sub-
dued, but steady,” according to the lat-
est research by the Confederation of
British Industry (CBI).
Retail sales are “holding up about as
well as can be expected,” the CBI said
yesterday, after announcing that sales
have remained surprisingly resilient
this month.
A positive balance of 18 per cent of
retailers reported a higher volume of
Germany still
on track with
high morale
EUROZONE ECONOMY
▲
BY JULIAN HARRIS
GERMAN business confidence has
defied expectations by holding strong
this month, despite drops in French
and Belgian morale and tumbling
industrial orders across the
Eurozone.
Sentiment in the business climate
stuck at 114.2 in May, according to the
highly regarded survey from Munich-
based think tank Ifo.
And the index measuring the cur-
rent business situation climbed to a
fresh high of 121.4, from 121 in April.
The news coincided with official
data confirming that the German
economy grew 1.5 per cent in the first
three months of year.
“It is important to emphasise just
how elevated these indices are, espe-
cially in the context of the bad run of
news in recent months,” said Eoin
O’Callaghan of BNP Paribas, citing
high oil prices and knock-on effects
from the Japanese earthquake.
“Germany cannot be immune to
sales, compared to 21 per cent in April
when sales were boosted by the Royal
Wedding.
Price pressures eased very slightly in
May, yet remain extremely high by his-
torical standards.
A positive balance of 65 per cent of
traders said they were selling at higher
prices in the three months to May, a
minimal drop.
“We are still anticipating higher
inflation later in the year,” said CBI
economist Lai Wah Co.
High inflation, taxes and sluggish
these dynamics, but there is very
strong momentum in the economy.”
German manufacturing saw a
decline for the third consecutive
month, however, from 28.7 to 27.8 in
the sub-index.
In France the business climate
among factories also dropped, for the
second straight month, according to
the statistics office INSEE.
The index slipped from 109 in April
to 107 in May, yet remains above its
long term average.
A sharper drop was recorded in
Belgium, where a confidence index
plummeted from 2.8 to -0.5, dragged
down by the manufacturing sector.
“It’s reached its lowest level since
October 2010,” said BNP’s Steven
Vanneste. “At current levels, the indi-
cator is indicative of growth around
two per cent, a notable slowdown
from the three per cent registered in
the first-quarter.”
New industrial orders dropped by
1.8 per cent in March across the
Eurozone, according to a separate
data release from the Eurostat office.
wage growth have squeezed British
households and placed pressure on
retailers.
“Family spending power is at a very
low level, and with the continuing bite
of rising utilities and fuel, we are not
likely to see an improvement in this
situation any time soon,” said Judith
McKenna, chief financial officer for
ASDA.
“Given these challenging consumer
conditions, it is good news that retail
sales growth is stable, not falling,” con-
cluded CBI chief John Cridland.
BANK’S FISHER IN NO HURRY TO RAISE RATES
BANK of England rate-setter Paul Fisher showed a dovish outlook yesterday during a speech
on the UK’s economic outlook. Downside risks to growth have prompted Fisher to “pause to
consider when policy should start to be normalised or even whether further loosening might
be justified,” he said, insisting that rate hikes were not urgently needed. Picture: GETTY
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CITYA.M. 25 MAY 2011
Dagong slashes UK credit
rating over new debt fear
▲
WORLD ECONOMY
deficit figures.
THE UK’s credit rating was downgrad- The British economy will expand by
ed yesterday, by Chinese rating agency just 1.3 per cent this year and 1.5 per
Dagong. cent next year, Dagong expects.
China’s first domestic credit rating Conversely, the outlook for China’s
group cut the UK’s rating by one level economy was also cut yesterday, in a
to A+, from AA-, and placed it on a neg- statement from Goldman Sachs.
ative outlook. China’s double-digit growth will slow
The agency cited a reduction in the this year to 9.4 per cent, the bank now
UK’s capability to repay debts coincid- predicts, and drop to 9.2 per cent in
ing with extremely disappointing 2012.
NEWS | IN BRIEF
Investment to London keeps up
London attracted more foreign direct
investment in 2010 than every European
country apart from France, Germany
and Russia, a report from Ernst and
Young revealed today. The UK as a
whole continues to attract the highest
level of investment in Europe, up seven
per cent in 2010 from the previous year.
While almost half (46 per cent) of exist-
ing investors would like to invest more,
the UK could do more to attract funds
from upcoming emerging economies, the
report said.
Private equity exits at fresh high
Private equity firms have been cashing
in on their investment at a record level,
analysts Preqin revealed yesterday.
Preqin announced 201 private equity-
backed exits already in the second-quar-
ter of this year, valued at $85bn
(£52.5bn). This is already five per cent
higher than the final quarter of 2010,
according to the report. European exit
value has reached $57.9bn, double the
first-quarter of the year, and almost five
times the $12.7bn in exits seen during
the same quarter in 2010.
Norwegian GDP growth slows
Norway’s mainland GDP grew slower
than the market expectation in the first
three months of the year. The economy
expanded by 0.6 per cent, after 0.3 per
cent growth in the final quarter of last
year.
New home sales pick up in US
The US housing market showed signs of
improvement in April, data showed yes-
terday. Sales of new homes increased by
7.3 per cent to 323,000 in April from a
revised 301,000 in March.
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 20 News
NEWS | IN BRIEF
Pennon flush with profit
Waste and water company Pennon yes-
terday reported a pre-tax profit rise of
1.5 per cent to £188.5m for the first
three months of the year and recom-
mended a final dividend per share up 9.9
per cent to 17.15p. The company says it
is well positioned in the current econom-
ic conditions with South West Water
continuing to improve its operational
performance while revenues from its
waste management segment Viridor
soared by 13.6 per cent.
Victrex plastics has strong sales
Hi-tech plastics company Victrex
announced a rise in pre-tax profit of 57
per cent to £48.3m boosted by strong
sales of its polymer products used in air-
craft components and car parts. The
company, whose revenues increased as
major markets showed a significant
recovery, raised its dividend by 25 per
cent for the first-half of 2011 and said it
would pay 8p per share compared to
6.4p one year ago.
Extended use for Roche drugs
Roche’s cancer drug MabThera has been
recommended as a maintenance drug
for NHS patients with follicular non-
Hodgkin’s lymphoma by the National
Institute for Health and Clinical
Excellence (NICE). NICE said it could
postpone the spread and growth of can-
cer by up to four years.
The Royal Ascot
Golf Day and Charity Ball
in aid of Cancer Research UK
hosted by Derek Thompson and horseracing stars
Cancer Researcch UK is a registered charity
in England & Waales (1089464) and in
Scotland (SC041666)
Tepco has admitted that meltdowns occured at three reactors
Tepco admits rod damage
ENERGY
▲
BY HARRY BANKS
TOKYO Electric Power (Tepco), the
operator of the Fukushima Daiichi
nuclear power plant disabled by the 11
March earthquake and tsunami, con-
firmed yesterday that there were melt-
downs of fuel rods at three of the
plant’s reactors early in the crisis.
It had said earlier this month that
fuel rods in the No.1 reactor had melt-
ed, but officials of the utility confirmed
yesterday that there were also melt-
▲
Picture: REUTERS
downs of fuel rods at the plant’s No.2
and No.3 reactors early in the crisis.
The disaster has triggered a drop of
more than 80 per cent in Tokyo
Electric’s share price and forced the
company to seek government aid as it
faces compensation liabilities that
some analysts say could top $100bn.
The Tepco officials said damage to
the No.2 reactor fuel rods began three
days after the quake. A delegation
from the International Atomic Energy
Agency (IAEA) will present a report,
based on their inspection, on 20 June.
Nestle makes $1bn
move in US pharma
M&A
▲
BY HARRY BANKS
NESTLE, the world’s biggest food
group, has agreed to buy US gas-
trointestinal diagnostics firm
Prometheus Laboratories for an esti-
mated $1.1bn (£680.5m) as part of
the Swiss group’s drive into health
sciences.
Nestle said Prometheus, which is
expected to have annual sales of
around $250m in 2012, makes tests
to help doctors diagnose conditions
such as inflammatory bowel dis-
eases, including Crohn’s disease
and ulcerative colitis.
Nestle, maker of Nescafe coffee,
KitKat chocolate bars and Maggi
soup, hopes Prometheus’s sales
force will push its hospital nutrition
Sony shares rise on upbeat outlook
despite fresh hacking of online info
▲
TECHNOLOGY
SONY’S shares bounced from two-
month lows yesterday as expecta-
tions were raised that it might have
put its troubles behind it after it said
this year’s operating profit would
match last year’s, easing worries
about the impact of the March earth-
quake.
In its first estimate for the year to
March 2012, Sony said its operating
profit would come in around 200bn
yen (£1.5bn), prompting Macquarie
to upgrade its rating on the stock to
“outperform” from “neutral”.
CITYA.M. 25 MAY 2011
Toshiba shifts focus
from nuclear to
offset order delays
ENERGY dependence on nuclear power by
BY HARRY BANKS investing in renewable energy sources.
It now targets sales of 350bn yen in
TOSHIBA said yesterday it may not solar, hydroelectric, geothermal and
reach its target of 39 orders for nuclear wind power, 900bn yen in smart grid
reactors until two to three years later products and 800bn yen in low-power
than expected, and that it would consumption motors and batteries.
increase focus on renewables as the cri- It said it could spend more than
sis rumbles on at the Fukushima three trillion yen on capital outlays,
Daiichi nuclear plant. research and M&A through 2014.
Despite the setback, Toshiba said it
aims to more than double its operating ANALYSIS l Toshiba
profit to 500bn yen (£3.7bn) by the year 520
432.00
¥
to March 2014. 510
24 May
Engineers are still battling to bring 500
the Fukushima nuclear plant under 490
control more than two months after 480
470
the earthquake and tsunami that dev-
460
astated a swathe of Japan’s coastline. 450
“If everyone around the world is 440
against nuclear power, there is no point 430
in us saying it is a pillar of our strategy,” 420
Toshiba president Norio Sasaki said. 28 Feb 18 Mar 7 Apr 3 May 23 May
Toshiba has been trying to lower its
products like Peptamen and own research.
Novasource. “We will incorporate the nutri-
While Nestle declined to give tion dimension through existing
financial details, analyst Jean- products and new products we are
Philippe Bertschy at bank and asset going to develop,” he said.
manager Vontobel estimated Nestle “Significant innovations in the next
might have paid more than 1bn 12 to 24 months will be added to the
Swiss francs ($1.1bn) for the compa- existing platform.”
ny.
“The combined entity will be able ANALYSIS l Nestlé SA
54.5
to leverage the products and geo- 53.5 CHF 54.60
graphic presence in gastrointestinal 52.5 24 May
diagnostics. We see that acquisition 51.5
50.5
as a decisive step for Nestle,” he said. 49.5
Luis Cantarell, head of Nestle’s 48.5
47.5
health science unit created at the 46.5
beginning of the year, said the com- 45.5
44.5
pany hoped to develop personalised 43.5
nutrition offerings with 42.5
Prometheus’s diagnostics and 41.5
expected the buy to accelerate its 26 Apr 3 Mar 10 May 17 May 24 May
Morgan Stanley, Credit Suisse and ted its websites in three countries
UBS reiterated their “overweight”, had been hacked, with 8,500 Greek
“buy” and “outperform” ratings user accounts compromised.
respectively. Sites in Thailand and Indonesia
Analysts said Sony had provided had also been affected, it said.
markets with a realistic view of the The Japanese entertainment and
impact of the quake and a technology giant said data taken
PlayStation network hacking inci- from Greek accounts included email
dent, both of which had weighed on addresses, telephone numbers,
the shares. Sony expects to report a names and passwords but that credit
net loss of 260bn yen for the year card data had not been stolen in the
ended 31 March, its third straight latest attacks.
annual net loss, after writing of tax Sony has seen a series of hacking
credits following Japan’s earthquake attacks that have exposed more than
and tsunami. 100m accounts on its online gaming
The outlook came as Sony admit- network to possible data theft.
CITYA.M. 25 MAY 2011 News 21

CITY MOVES | WHO’S SWITCHING JOBS Edited by Harriet Dennys in association with

May Gurney
Margaret Ford, Baroness Ford of Cunninghame,
will become non-executive chairman at the com-
pany’s AGM on 7 July 2011. In the interim she
will be appointed to the board as a non-execu-
tive director, with immediate effect. Gurney, 53,
recently retired from Serco as senior independ-
ent director and has extensive public company
experience, including Grainger Trust and English
Partnerships. She replaces outgoing chairman
David Sterry, who will stand down in July.
Logica director of the Logica board, with
Logica has appointed Himanshu Raja effect from 5 September. Raja has
as chief financial officer and executive spent the last ten years at BT, most
recently as chief financial officer of
BT Global Services.
Arqiva
The communications infrastructure firm
has appointed Phil Moses as chief
financial officer. Moses joins from BT,
where he was chief financial officer of
BT’s Openreach business, an operation
with a turnover approaching £5bn.
Midmar Capital
Dariusz Sliwinski has been appointed by
the asset management firm to join the
investment team of Michael Nicol and
Alistair MacDonald. Previously,
Sliwinski was a director at Martin
Currie Investment, where he also held
the role of head of emerging markets.
CAPCO
The business technology consultancy
has appointed Alex Corsi as partner in
the firm’s London office. Corsi was
formerly executive partner of
Accenture’s Capital Markets.
TNT Post
Manoj Parmar has been appointed as
group finance director for the private
postal sector operator. Parmar qualified
as a chartered accountant with PWC,
and joins TNT Post UK from a private
equity-backed technology business,
where he was chief financial officer.
Religare Capital Markets
The investment bank has appointed
Gautam Trivedi as managing director
and head of institutional equities for
India. Trivedi joins from Goldman
Sachs, where he was head of sales.
VTB Capital
The investment bank has appointed
Atanas Bostandjiev as its chief execu-
tive for UK and international.
Bostandjiev, who was formerly a part-
ner at Goldman Sachs, will be responsi-
ble for the bank’s operations at an
international level, based in London.

To appear in CITYMOVES please email your career

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

BEST OF THE BROKERS To appear in Best of the Brokers email your research to notes@cityam.com

ANALYSIS l BT 196.60 ANALYSIS l SABMiller 2,210.50 ANALYSIS l Go-Ahead 1,450.00

205 p 24 May 2,300 p 24 May 1,550 p 24 May

195 2,200
1,450
185 2,100

2,000 1,350
175

28 Feb 18 Mar 7 Apr 3 May 23 May 28 Feb 18 Mar 7 Apr 3 May 23 May 28 Feb 18 Mar 7 Apr 3 May 23 May

BT SABMILLER GO-AHEAD GROUP

UBS has upgraded the telecommunications company to a “buy” and has
raised its target price to 230p. The broker has raised its earnings per share
forecast ahead of consensus, and notes the firm’s positive earnings growth,
which contrasts with mobile-driven earnings cuts for other telecoms firms.
UBS is also upbeat about BT’s pensions deficit, forecasting a more opti-
mistic dividend outlook from 2012.
Citi rates the brewer “buy” and has a target price of £27. The broker sees
potential for bolt-on acquisitions but unless the firm makes a significant
acquisition in the next year, it thinks that buybacks could be on the agenda
at an annual rate of $1.5bn (£722m). Citi adds that SABMiller is unlikely to
be interested in buying Foster’s at a premium to its current price, leaving
earnings per share growth to continue at a rate in the mid-teens.
Morgan Stanley has upgraded the transport provider from “underweight”
to “equalweight” on the back of improved trading, and has raised its target
price by 290p to 1535p. The broker thinks the current share price reflects
strong passenger growth, now forecast at 1.5 per cent a year, and believes
Go-Ahead can work to offset lower state subsidies for bus routes over the
next few years.

FTSE rallys on commodities Manufacturing dip

but Eurozone doubts linger affects US shares
hiked its oil price forecasts, led by a best in Europe,” Espirito Santo expected New York and Philadelphia

THELONDON 2.5 per cent advance in BG Group as

the same broker hiked its target price
for the company.
Investment Bank said in a note.
British Airways owner
International Airlines Group fell 1.8
THENEW YORK Fed manufacturing surveys last week,
the Richmond Fed survey showed yes-
terday that manufacturing in the cen-

REPORT Cairn Energy added 4 per cent in

heavy trading as the oil explorer
announced a drilling campaign off-
per cent as flights in northern Britain
and elsewhere in north Europe were
cancelled over worries about a vol-
REPORT tral Atlantic region stalled in May
after expanding for seven months.
“We don’t really have jobs strength-

B
RITAIN’S top shares rose yester- shore Greenland. canic ash cloud from Iceland, though ening,” Forrest said.

day as rallying commodity
stocks helped the index recover
some of its poise, but the
advance may be short-lived as
investors find themselves hemmed in
by Eurozone debt concerns.
The FTSE 100 closed up 22.52
points or 0.4 per cent at 5,858.41, hav-
ing hit a two-month closing low on
Monday after a downgrade of Greek
debt, a ratings outlook warning on
Italy and doubts about austerity
measures in Spain.
“We’ve got quite a lot of negative
sentiment out there ... if traders are
going to take on a bit of risk, it’s
mainly with a view to just a very
short-term bounce and nothing more
long-term than that,” Joshua
Raymond, market strategist at City
Index, said.
Bargain hunters moved in on min-
ers, which recovered along with met-
als prices after Monday’s falls, with
Antofagasta among the best off, up
3.1 per cent.
Glencore added 2.1 per cent but
remained below its issue price as
unconditional trading began in the
commodity trader’s stock.
Integrated oil stocks found favour
as crude rose after Goldman Sachs
Marks & Spencer was the biggest
blue-chip faller, off 2.9 per cent after
the food and clothing retailer said it
had made a good start to the new
financial year but expected trading
conditions in the year ahead to be
challenging.
Primark owner Associated British
Foods slipped 1 per cent and super-
market chain Tesco drifted 0.4 per-
cent lower.
“We remain very wary of direct
exposure to the UK consumer, in par-
ticular the retail sector,” said Jamie
Seaton, manager of the £64.6m SVG
UK Focus Fund, run by SVG
Investment Managers.
“With upward pressure on con-
sumers’ non-discretionary spend, bor-
rowing costs, energy bills, petrol etc,
this is putting a significant squeeze
on disposable income.”
Banks were out of favour after cred-
it rating agency Moody’s said it might
cut its rating on 14 British financial
groups, including Lloyds and Royal
Bank of Scotland, off 2.2 per cent and
1.1 per cent respectively.
“While there is certainly a fair
amount of credibility to Moody’s
actions, we also note the capital posi-
tion of the UK banks is among the
officials reckoned the disruption
would not be as bad as last year.
In Europe, shares edged up yester-
day, with miners among those recov-
ering some ground lost in a sharp
sell-off in the previous session,
though analysts said markets might
struggle to make much progress in
the short term.
The pan-European FTSEurofirst 300
index of top shares rose 0.2 per cent
to close at 1,118.76 points, having fall-
en 1.7 per cent on Monday. The index
remained below its 50-day moving
average, a bearish signal.
It is just below the middle of a
range defined by the 2011 high of
1,190.51, hit in mid-February, and a
low of 1,066.62, hit in mid-March.
ANALYSIS l FTSE 5,858.41
6,100 24 May
6,000
5,900
5,800
5,700
5,600
5,500
24 Feb 11 Mar 21 Mar 20 Apr
U
S stocks dipped in light volume
yesterday as lingering concerns
about a slowdown in growth
more than offset gains in ener-
gy shares.
Investors kept trimming large-cap
technology positions, pushing the
tech-heavy Nasdaq Composite lower.
The S&P energy sector index rose
1.3 per cent, while its industrials
index slipped 0.6 per cent, sending
the market down for a second day.
Sectors associated with cyclical
growth have suffered recently, with
industrials down more than 5 per
cent so far this month.
“I don’t see any strong positive
momentum,” said Kim Caughey
Forrest, senior equity research analyst
at Fort Pitt Capital Group in
Pittsburgh.
The S&P 500 closed at its lowest
level in over a month and ended
below its 50-day moving average for a
second straight day. The 50-day MA,
now at 1,324.59, could turn into a
hurdle for the benchmark to reestab-
lish a strong uptrend.
Occidental Petroleum, rose 3.6 per
cent to $102.50, while Joy Global fell
1.8 per cent to $85.96.
16 Mar Following much weaker-than-
Energy shares were helped by a
near 2 per cent rise in US and Brent
crude futures. Oil rallied after
Goldman Sachs raised its forecast
price for the commodity and as the
euro erased some of the previous
day’s losses.
The Dow Jones industrial average
lost 25.05 points, or 0.20 per cent, to
12,356.21. The Standard & Poor’s 500
Index dropped 1.09 points, or 0.08 per
cent, to 1,316.28. The Nasdaq
Composite Index fell 12.74 points, or
0.46 per cent, to 2,746.16.
Gold miners’ stocks advanced as
bullion rose to its highest in about
three weeks on concerns about a
spreading debt crisis in the Eurozone.
Freeport-McMoRan Copper & Gold
gained 3 per cent to $48.82.
Volume was light, with roughly
6.6bn shares traded on the New York
Stock Exchange, NYSE Amex and
Nasdaq, below last year’s estimated
daily average of 8.47bn.
Decliners outnumbered advancers
on the NYSE by a ratio of about 8 to 7,
while on the Nasdaq, about eight
stocks fell for every five that rose.
Shares of Russian Internet compa-
ny Yandex surged as much as 68 per
cent in their debut.
 22
Wealth Management Foreign Exchange
THE PROBLEM
WITH THE EURO
IS IN THE CORE
BORIS SCHLOSSBERG
DIRECTOR OF CURRENCY RESEARCH, GFT
A
S CURRENCY markets opened this week in
Asia, euro-dollar traders were already on edge,
after the Socialists lost badly in Spain and
Standard & Poor’s (S&P) downgraded Italy’s
sovereign debt. In a report published over the week-
end, the ratings agency affirmed Italy’s A+ long-term
rating and its top-ranked A-1+ short-term rating but
lowered the credit rating outlook to negative from
stable. S&P pointed to slowing economic growth and
“diminished prospects for a reduction of government
debt”, as the primary reason for its action. The rating
agency said Italy’s debt had a one-in-three chance of
being downgraded in the next two years.
Italian officials quickly challenged the S&P report,
with Giulio Tremonti, the finance minister, noting
that “the only new element (in the report) is that
there apparently is a risk of political gridlock. This is
absolutely out of the question.” Meanwhile, the cred-
it markets were far less sanguine, with credit
spreads on Italian sovereign debt widening out to
new highs.
Yet despite the continued focus on the political
and economic problems in the periphery, the real
trouble for euro-dollar could lie within the Eurozone
core. This past Monday, traders got a glimpse of
German PMI Manufacturing data and the news was
not good. While German PMI readings remained
above the 50 boom/bust level, the flash results for
May printed at 58.2 versus 61.2 eyed. The data for
the services sector was even worse as it came in at
54.9 versus 57.1 forecast. This was the weakest
reading since October of last year, indicating that
growth in the Eurozone’s largest economy is deceler-
ating at an alarming rate.
If growth in the Eurozone’s core economies con-
tinues to slow as the summer progresses, the chance
of any additional European Central Bank rate hikes
will become minimal at best, even if inflation pres-
sures remain elevated. The break below the critical
$1.40 level on Monday morning indicates that mar-
kets no longer view euro-dollar as a possible yield
play and, as that change in sentiment takes hold, the
pair could see more selling in the days ahead.
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Forex traders
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The internet offers a wealth of information and
access to learn from the best, says Philip Salter
T
HERE is no shortage of online infor-
mation for forex traders, whether
through newswires, providers, dedi-
cated websites, blogs or Twitter. Our
favourite, of course, is cityam.com, which
you should all visit. Here are some others.
WORD ON THE FX STREET
Kathleen Brooks of Forex.com says “the
Reuters market reports along with FX
Street and the Bloomberg currencies sec-
tion are a great way to get up-to-date on
which currencies are moving and how
they have performed.” Richard Nehme of
International FX also recommends FX
Street (www.fxstreet.com). He likes its eco-
nomic calendar, which shows the impor-
tance of the release relative to currencies,
as well as good synopses of what the
releases are about, making it good for
training junior traders.
FREE RANGE TRADING
For the more advanced trader in need of
some actionable ideas, Brooks suggests a
couple of blogs dedicated to FX fans. She
particularly likes Trade2Win
(www.trade2win.com) and Forex Factory
(www.forexfactory.com). She says:
“Trade2Win has a section with articles
from FX experts that discuss topics such as
how to read candlestick charts to learn
various correlations that exist within mar-
kets. These articles give you extra detail
CITYA.M. 25 MAY 2011
|
about the FX market and can really
enhance your knowledge about the FX
market.” She adds: “It also has a trading
forum that allows you to discuss trading
ideas and strategies with your peers and
enhance your trading style by learning
from the success, or mistakes, of others.”
Brooks says that Forex Factory “has
forums, communities and conversation
threads where you can post a question or
make a statement and get instant feed-
back.”
FUNNY MONEY
For a forex site with a slightly satirical
bent, ForexLive (ww.forexlive.com) comes
highly recommended. For those new to
forex trading, it offers an easier and more
entertaining read than the jargon-
swamped commentary aimed at those its directors, Kathy Lien and Boris
familiar with the various forex dialects. Schlossberg, as well as access to charts,
New Yorker Jamie Coleman launched videos and technical analysis. Your trading
ForexLive. He used to be chief dealer at platform can also provide you with
Baring Securities, until Nick Leeson lost research through a third party.
£827m down the back of the futures mar- Among others, Alpari and IG both offer
ket. The best way of keeping up with the access to Trading Central, which supplies
content of ForexLive is to sign up to its plenty of detailed technical commen-
email bulletin. taries.
TRADING IDEAS TWEETING TRADERS
Most of the major trading platform To plug into IG’s analysis of the four major
providers have plenty of free educational currency pairs follow @IG_ForexFocus on
materials to tap into. For example, GFT’s Twitter, which is updated around the
FX360.com has regular commentary from clock by their offices globally. Ian
*
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CITYA.M. 25 MAY 2011
O’Sullivan of Spread Co (@Spreadco)
recommends the tweeters: @50pips,
@FxGuy, @SE1 and @FX Forex. James
Hughes (@JHughes00) of Alpari
(@alpariukforex) also recommends
@50pips, whose “insightful little
nuggets throughout the day,” he
says, are “very comprehensive and
very helpful.” Hughes also advises
following the big newswires to con-
firm stories from independents.
Hughes suggests that Twitter is
not just about garnering informa-
tion, but sharing ideas: “You want to
follow people who are willing to
THE TIPSTER
DEBT WEIGHS
DOWN EURO
AND STERLING
SURPRISE shortfall in tax receipts
A
and news that the Chinese down-
graded UK sovereign debt took the
shine off sterling in yesterday’s
trade, but there’s little reason to be cheering
the euro now, either. Eurozone debt con-
cerns remain high and even the release of
some marginally better than expected eco-
nomic readings from Germany isn’t going to
provide much support. IG Index is quoting
euro-sterling at £0.8727-£0.8729.
Earlier this week, the euro fell sharply
after ratings agencies shifted Italy and
Belgium to a negative outlook. We may
find the theme is towards safe haven cur-
rencies such as the Swiss franc. The euro is
at a record low against its counterpart
since 1999, and with the situation still
fragile, traders should be cautious. Capital
Spreads quotes euro-Swiss franc at
SFr1.2412- SFr1.2416.
23
Tapping into the
power of computers
(left) Picture: PA
Learning your trade
on FX360.com (right)
Forex
Forex & CFD Trading.
Trading. Worldwide.
Focus your Forex trading potential
share ideas, answer questions and
generally share their knowledge.
That, for me, is what using Twitter
for market data is best for. Sharing
knowledge and ideas is what is all
about.”
Forex traders and people who
work in the industry are remarkably
willing to give away their knowledge
online. It would be a mistake to
ignore the virtual forex community
that has sprung up. Anyone serious
about their trading should listen to
the online gurus making serious
money.
Sterling rallied against the dollar With MetaTrader
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Philip Salter
 24 Wealth Management | Foreign Exchange CITYA.M. 25 MAY 2011

Stopping the rot: Eurozone contagion

Greek debt looks unsustainable; Spain’s electoral rout has put its reforms in question; now Belgium
and Italy are shaky. As the single currency’s crisis continues, we asked the forex experts for their views

GLOBAL REACH PTNRS more. By implication the equity markets and the
pound will suffer as risk downgrades for banks
MARK play out. Before this can happen, it is the euro
THOMPSON that will be shorted as Greece moves towards
default and Spain, Italy and Belgium vie for posi-
The resurgence of tion on the Eurozone bailout grid.
Eurozone sovereign debt The repercussions here stretch beyond the eco-
fears has driven the euro nomic picture and challenge the philosophy of
to two month lows the euro itself. Will the European taxpayer’s tol-
against the dollar in the erance of funding foreign bailouts reach its limit?
last two trading sessions Perhaps a fourth round of bailouts could reveal
and looks likely to keep the common currency the answer. In the meantime, risk warnings,
under pressure in the days to come. Investors credit downgrades and European unrest will
are right to be anxious about the implications of keep the euro in the short seller’s crosshairs.
further negativity as Moody’s overnight risk With markets on geopolitical amber alert due to
warning on UK banks shows. the Grimsvotn ash cloud, they will be susceptible
The fallout from the inevitable restructuring of to negative Eurozone news. The dollar will be the
Greek debt proves that it is not just sovereign main beneficiary of this shift in sentiment,
states that will shoulder the burden - fears of although UK importers should see improvements
writedowns and defaults stalk the markets once in pound to euro exchanges in the short term.
FOREX.COM
KATHLEEN
BROOKS
The recovery in the
markets after Monday’s
sell-off suggests to us
that they aren’t willing
to ditch risk when it is
only Greece in the
immediate line of fire.
However, elements of
the Greek crisis are
extremely concerning. There’s the risk that
the EU/IMF won’t extend the next tranche of
funds to Athens and also that the ECB refus-
es to take collateral from Greek banks, thus
freezing them out of the capital markets.
Both would cause havoc across the financial
world. If Greece doesn’t get the funds, then
the state won’t be able to pay its wage bills.
This could quickly lead to rioting and social
unrest on a massive scale. As we have seen in
the Middle East, popular uprising during
times of economic stress can spread across
regions very fast – leaving Spain, Portugal
and Ireland vulnerable.
If Greek banks are forced to default, this
would hurt German and French banks with
Greek subsidiaries and probably cause their
share prices to crash. Back in 2008 it was
one investment bank – Lehman Brothers –
that set off the financial crisis that caused a
global recession. The same could happen in
Europe: some Greek banks get into trouble
and all of a sudden the whole banking sector
is on the line. So while these scenarios are
extreme, the markets are jittery and won’t go
up or down in a straight line from here.

CAXTON FX
RICHARD
DRIVER
This is not just an isolat-
ed Greek debt problem.
American banks, as well
as European banks, have
substantial exposure to
Greek debt, so the impli-
cations of a default
would be felt throughout the financial markets.
Moreover, a Greek default would only be the
beginning. We have already seen the grass roots
of contagion; Greek concerns triggered rating
agencies to downgrade the economic outlooks of
both Italy and Belgium. A Greek default would
also drive up the borrowing costs of other
peripheral nations, pushing them into similar sit-
uations like dominoes. These Eurozone ripples
could make their way across the pond sooner
than some might think. With the US debt levels
soaring, safeguarding investor confidence in sov-
ereign debt is crucial.
Additional IMF/EU aid is an option, but an exten-
sion of maturities seems the most likely path.
Haircuts must be avoided; they would inflict
enormous losses on European banks that could
realistically send the global economy back into
recession.
Equities have tumbled since last Friday and safer
assets are clearly benefiting from the current
risk averse environment. The yellow metal has
been a popular target but gold is currently well
off its pre-correction highs. Despite the debt cri-
sis and growing concerns over a global economic
slowdown, risk appetite hasn’t shied away alto-
gether.
LONDON CAPITAL GROUP
ANGUS CAMPBELL
There is some seriously
negative sentiment
towards the Eurozone
at the moment and the
British press is full of
euro doom mongering,
saying a break-up is
inevitable and Greece
will have to go it alone. In reality, the
Eurozone is almost certain to survive. The
political willpower is far greater than the
economic reality.
This doesn’t mean, however, that the euro
isn’t immune to a catastrophe. The ele-
phant in the room though at the moment is
Spain, which is going through a political
upheaval and so doubts about their austeri-
ty drive have come to the fore. This time
round it’s serious and investors are nervous
which has been reflected by a weakening
euro which has fallen from near $1.5000 to
$1.4000 against the dollar. The reason why
it’s serious this time is because when we
saw Portugal succumb to an EU and IMF
bailout the euro didn’t bat an eyelid and car-
ried on climbing.
But we must not forget Greece, which is
looking increasingly like it will eventually
default on its debt – the ramifications of
which will be severe, across the continent
and around the world. European banks
have huge exposure to Greek debt and such
a sovereign default could trigger another
banking crisis. That is not a happy
prospect.

FOREX ANALYST PICKS

FOREX STRATEGIST FOREX STRATEGIST FOREX STRATEGIST
JOHN KICKLIGHTER ILYA SPIVAK JOEL KRUGER

My pick: Short euro-dollar; Short Australian dollar-dollar
Expertise: Fundamental and Technical Analysis with Risk Management
Average time frame of trades: 1 day to 1 week
The long dollar-Swissie position above SFr0.88 has been slow to
gain ground; but clear bearish breaks for euro-dollar below $1.4000
(with a 175 point stop and first target) and Aussie dollar-dollar
below $1.0500 (holding a 150 point initial stop and objective)
would likely play out quickly. Yet that potential is heavily dependent
on risk appetite trends; and that is my reasoning for a conditional
and complementary S&P 500 tumble – preferably below 1,300.
My pick: Stay long dollar-yen
Expertise: Global Macro
Average time frame of trades: 1 week to 6 months
I entered long dollar-yen two weeks ago at ¥81.09 as it put in a bullish
Piercing Line candlestick pattern and broke above a falling channel top set
from April. I am expecting prices to follow Treasury yields higher as QE2
expires against a backdrop of increasing fiscal stress in the US, pressuring
borrowing costs higher. The pair met my initial target at ¥81.83, the 38.2 per
cent Fibonacci retracement of the 4/6-5/5 drop, and I have moved my stop to
breakeven as well as revised the target to ¥82.54, the 50 per cent Fib.
My pick: Buy sterling-Swissie at SFr1.4250
Expertise: Technical Analysis
Average time frame of trades: 6 months
This market trades just off some record lows and, with longer-term
studies finally starting to cross up from oversold levels, we like the
idea of building a meaningful long position at current levels in antici-
pation of some significant upside over the coming weeks and
months. The added bonus with counter-trending this market is that
it also offers a positive carry. Strategy: buy at SFr1.4250 for an open
objective; stop at SFr1.3950.
CITYA.M. 25 MAY 2011 Wealth Management | Markets 25

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 26

Business Features Structured Finance |

DATA ANALYSIS KEY

TO THE STRUCTURED Mapping out
FINANCE RECOVERY
DEREK CAUSSIN
ABSXCHANGE EMEA COMMERCIAL MANAGER
the direction
I
STANDARD & POOR’S VALUATION & RISK STRATEGIES
N the past decade, the European struc-
tured finance market has undergone
radical change. The global economic
downturn was the most severe stress
ticipants. Furthermore, improving loan-
level transparency puts investors on an
even footing with issuers, enabling them
to ramp up their analytics capabilities to
of this year’s
test for securitisations in decades. Indeed,
the fallout from the collapse of US residen-
tial mortgage backed securities (RMBS)
and collateralised debt obligations (CDOs)
resonates on trading floors to this day.
However, while the performance of the US
structured finance market has not recov-
examine transactions with equal precision.
Part of the reason why the crisis hit
structured finance so hard was that, prior
to the economic downturn, structured
finance transactions were often heavily
oversubscribed. Compared to supply,
demand for structured finance bonds was
Mifid review
ered to pre-crisis levels, global trends sug-
gest that increasing transparency among
so high that not enough effort was spent
on risk analysis. Yet this represents a
Craig Drake looks at the revision of the
market actors is leading a positive wave of
change.
great opportunity for investors to utilise
loan-level data in their analysis of underly- Markets in Financial Instruments Directive
In 2010, Europe's economic recovery ing risks – such as loss severity, default
contributed to improved aggregate credit rates and recovery lag – which are

performance among structured finance
transactions. Last year was the first year
since the economic downturn in which
structured finance transactions exhibited
more upgrades and fewer downgrades
from the major ratings agencies. Indeed,
market sentiment appears to be changing
as more and more transactions are being
issued publicly in response to renewed
demand. Even in a highly challenging cred-
it environment, the European structured
finance sector has proven resilient.
But what has led to the improvement in
market confidence? Principally, it has been
an evolution in the approach that all levels
of market participants – investors, regula-
tors and banks – take towards underlying
data.
Investors are requesting loan-level data
to better understand the risks inherent in
ABS instruments on offer and hence make
better investment decisions. While a lot of
investors might be reticent to invest in
certain markets, the ability to look deeper
into deals on a loan-level basis has seen
investors return to the structured finance
market with more confidence.
Regulators are moving in a similar
direction. The European Central Bank and
the Bank of England have both indicated
they are going to compel originators to
make loan level data widely available.
Regulatory standardisation in the markets
is certainly something that can help
increase the comfort levels of market par-
increasingly relevant in the current eco-
nomic environment. Going forward, the
ability to forecast cash-flows more confi-
dently will be critical.
As a further aid to investors, risk ana-
lytics providers are increasingly able to
offer cash-flow models for transactions
which have yet to be issued. Indeed,
Standard & Poor’s ABSXchange continues
to seek new ways of improving cash-flow
analysis of structured assets, as new data
sets become available and in response to
the changing needs of investors. In this
way, ABSXchange develops products and
services that provide true added value to
the investment and portfolio monitoring
process.
While some uncertainty regarding
future regulatory development may sup-
press market confidence, the nuts and
bolts of the financial services industry in
the future will hinge on clarity and trans-
parency of information for all parties.
Certainly, information transparency in the
structured finance market is no longer
simply a desirable objective. It is a reality.
What’s more, it is a reality where, as eco-
nomic actors adjust to a new environment
with greater emphasis on risk analysis, all
parties stand to benefit.
I
T’S simple really. The outcome of
Mifid II will include: more strin-
gent regulation of best execution
obligations, a move towards the
introduction of a consolidated tape,
an increased push for transparency, a
higher number of trades at a higher
speed, lower fees, tighter spreads, the
introduction of a single passport to
give improved access to a single, pan-
European market, and further liquid-
ity fragmentation.
The original Mifid changes broke
the LSE monopoly to some degree in
a push for best execution (see the
Fidessa chart below) but this still has
ANALYSIS l Fragmentation of FTSE 100 trades
Equiduct (.09%)
Lit Venues
Nyse Arca (.2%)
Turquoise (2.92%)
Bats Europe (5.26%)
Chi-X (14%)
LSE (30%)
0 10 20 30
some way to go.
EFFECTS OF THE REVIEW
It is difficult to predict the effects two
or three years down the line, but, as a
result of the changes to rules, the
structure of the markets in financial
instruments will be reformatted.
According to Derek McGibney,
management consultant for the IMS
group, “the aim of the review is to
give participants greater transparen-
cy. However, this increase in trans-
parency may in certain markets have
the side effect of reducing incentives
through reduced risk and with it
reduced exposure to returns.”
According to McGibney, this
Nomura NX (.21%)
Dark Venues increased transparency is a double
edged sword: “While this increased
Liquidnet (.25%) transparency is a good thing for par-
ticipants who are less experienced
investors, for the professional
Bats Dark (.27%) investor, this leaves less incentive as
there is less reward for taking on risk.
These investors will naturally be
Smartpool (.32%)
incentivised to migrate to areas
where there is less transparency, ergo
greater risk and potential for
Turquoise Dark (.59%)
returns.”
Should the measures that are pre-
Chi-Delta (.62%) dicted from the Mifid review be
1.5 1 0.5 0 applied uniformly and in Europe in
isolation, then this kind of arbitrage
Source: Fidessa

The Two Musketeers?

If you’re not getting analysis, support and DATA,
you’re not fully armed.
The credit-related analyses, including ratings, of Standard & Poor's and its affiliates are statements of opinion as of the date they are expressed and not statements of fact or recom-
mendations to purchase, hold, or sell any securities or to make any investment decisions. Ratings, credit-related analyses, data, models, software and output therefrom should not be
relied on when making any investment decision. Standard & Poor's opinions and analyses do not address the suitability of any security. Standard & Poor's does not act as a fiduciary
or an investment advisor.
© 2011 Standard & Poor’s Financial Services LLC, a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved. STANDARD & POOR’S and ABSXCHANGE are trademarks of
Standard & Poor’s Financial Services, LLC

will be a real concern. According to
McGibney: “While we welcome
increased transparency where it is
expected, the risk is that – if this
type of legislation is not adopted
similarly across the globe – there
may be scope for arbitrage across
markets, which is a valid concern.”
REVIEW OF PARTY CLASSIFICATION
Under the original directive, certain
organisations were classed as eligi-
ble counterparties. Those within this
category were allowed to waive con-
duct of business obligations when
executing trades with investment
firms. This meant that dealers could
execute an order without first assess-
Standard & Poor’s ABSXchange™ allows you to streamline
data gathering across the entire universe of RMBS, CMBS,
ABS and CLO transactions.
• ABSXchange™ Data Benchmarks
• RMBS Loan Level Data
• RMBS Consensus Survey
• Data Rich Web API w/ Loan Level
• Index Forward Curves
• US RMBS Data with VEROS
ing whether the product was appro-
priate – and in doing so allow high
speed traders to escape being bogged
down by regulatory red tape.
In the review, it is expected that
there will be a limiting of the eligi-
ble counterparty regime. In a consul-
tation document in December, it
was recommended that the new
directive would exclude products
such as asset backed securities and
non-standard over-the-counter (OTC)
derivatives from this waiver.
Furthermore, given the losses
accrued by municipalities and pub-
lic authorities under the previous
regime, it is expected that these non-
financial institutions will be booted
out of the eligible counterparty tree
house completely.
BEARING THE COSTS
With this slew of regulations, there
will come the inevitable expense as
institutions rush to comply with the
directives. Though these will initial-
ly be shouldered by institutions, it is
likely that they will later be pushed
down the chain. These costs will
eventually be spread across the mar-
ket via transaction costs. And soaked
up by consumers.
As with all heavy handed
European regulation, one hopes that
they will not throw out the baby
with the bathwater.
To find out more about how we can help,
call +44 20 7176 3566 or email
absxchange@standardandpoors.com
www.absxchange.com
ABSXchange™
One platform to monitor all your transactions.
The smallprint of
the review is not
yet certain
Picture: GETTY
Original Mifid
classifications
l Retail clients – afforded the most
regulatory protection
l Professional clients – considered to
be more experienced, knowledgeable
and sophisticated, and are able to assess
their own risk. Professional clients are
afforded fewer regulatory protections
l Eligible counterparties – investment
firms, credit institutions, insurance com-
panies and other regulated financial
institutions given light touch regulation
27
The original
Mifid directive
THE original Markets in Financial
Instruments Directive (Mifid) was draft-
ed in 2004 and implemented 4 years ago.
The directive is up for review. So what
were the shortcomings of the original
European Commission directive?
One of the core tenets of the original
review was to shore up protection for
clients that were classed as sophisticated,
breaking them up into three broad
groups – retail clients, professional
clients and eligible counterparties. (See
box, left.)
The aim was to give certain parties a
looser rein so as to allow them to com-
plete an increased number of trades
without being burdened with excessive
regulation.
In the original Mifid regulations,
municipalities and public authorities
were included in the category of eligible
counterparties. Given the losses accrued
by these parties, and the subsequent
pleas of mis-selling, it is expected that we
will see a limiting of the availability of
the classification of eligible counterpar-
ty in certain circumstances.
A second area where some see that the
directive failed is in terms of providing
guarantees in terms of best execution of
trades – at the best price, cost and speed
of processing.
It is also felt that it fell down in terms
of the transparency of trading because of
liquidity fragmentation.
According to a CFA Institute survey, 68
percent felt that liquidity fragmentation
has created difficulties in trade report-
ing obligations. Although it is difficult to
measure the degree to which the frag-
mentation of trading and pricing has
been detrimental to price formation, it
does form the basis of arguments for a
need for a consolidated tape for quote
and trade data for European equity mar-
kets.
Currently there are multiple trading
venues, and users have to increase their
connectivity to a much wider range of
venues than ever before. With each con-
nection costing around £10,000 per
month, that’s a high cost that can
mount up.
On the buy-side, the cumulative cost
of these fees charged by exchanges and
trade reporting services has created a sig-
nificant barrier to adoption of a consoli-
dated tape and in doing so has
diminished overall transparency.
 Lifestyle
28 CITYA.M. 25 MAY 2011

| Motors WORDS BY
RYAN BORROFF

The new Sharan: big AND clever

The first MPVs may
have been large and
unwieldy. This new
VW is anything but

B
ACK in the early 90s it felt like MPVs
were everywhere. Created to solve
the challenge of how to move big
families about, they were sold as
useful and trendy until the public caught
on to the fact that the reality was rather
different. Though big, these lumbering
beasts often proved impractical, with
minimal luggage space and a lack of inte-
rior flexibility. Also, they were rubbish to
drive.
Since then SUVs – and increasingly
their “soft roader” siblings – have eroded
the market for these cars once known as
“people carriers”, as people choose to
transport their families in SUVs and more
compact MPVs instead. But there are still
some large MPVs on sale and 20 years of
continuous development means they are
much better than their forebears.
VW’s latest Sharan MPV may not ignite
your emotions in terms of its driving abil-
ity but it’s still very, very good.
Dependable, comfortable and surprisingly
refined, driving it proved a very positive
experience. The model we tested was the
2.0-litre, turbo diesel-powered 138hp ver-
sion. We found the car to be a genuine sur-
prise in the sense that it had a far higher
quality feel than we were expecting. The They pop up when a tag is pulled and kids
car felt sprightly – 10.9sec feels pretty seem to think they’re very cool.
quick in a vehicle so big – and it was also Ours was a relaxing trip and the Sharan
easy to throw around and, importantly, proved a happy ship. Quiet and refined, it
felt very safe doing so. We were soon waft- was just easy. As easy as carrying two fam-
ing along like a bunch of company execu- ilies about gets, in any case.
tives such was the ride quality and level of
interior comfort. In short, the Sharan is
very easy to drive and feels much smaller THE FACTS:
than it is. It also has a great driving posi- VW SHARAN MPV
tion which affords a good view. Even park-
ing it is easy thanks to its light steering
and the gear change of the six speed man- PRICE: £26,970
ual gearbox was smooth too. 0-62MPH: 10.9secs
And as a practical proposition there’s a TOP SPEED: 121mph
lot to be said for it. Over the years large already a sizeable boot. Seat flexibility could transport an Ikea kitchen. Driving Main picture, VW
MPVs like this Sharan have been revolu- thanks to some clever design means the out from London into the countryside for Sharan MPV on the
CO2 G/KM: 146g/km
tionised by the development of versatile, middle row seats slide forward and back the weekend, our Sharan easily swallowed road. Above, the MPG COMBINED: 50.4 mpg
folding seats that have turned their spa- independently of one another. What’s four adults and two kids – one in a child- Sharan’s interior
cious interiors into highly flexible places more you can choose which of the five seat and one in one of the excellent built-
THE VERDICT:
to be. We find that we can seat six easily seats in the middle row and back row in child booster seats – plus all of our stuff. Pictures: Courtesy DESIGN hhhhi
while folding the seventh seat down to seats you want to fold into the floor. And If you do have kids that need booster seats PERFORMANCE hhhhi
increase our luggage space on what is with all five seats folded into the floor you these built-in child seats are a marvel. PRACTICALITY hhhhi
VALUE FOR MONEY hhhhi

CAR TALK BY RYAN BORROFF

ASTON MARTIN TEAMS WITH ZAGATO
To celebrate the 50th anniversary of the iconic DB4GT Zagato,
Aston Martin has created an elegant, new V12 Zagato concept with
the Italian design house Zagato. The car has a handcrafted alumini-
um body and features the iconic Zagato double bubble roof. The car
premiered at the Villa D’Este Concours, Lake Como, Italy on
Saturday.
FIAT GETS A NEW GUCCI MAKEOVER
Fiat is introducing a Gucci-trimmed version of its 500 city car.
Called “500byGucci” and customised by Gucci’s creative director
Frida Giannini, the car comes in black or white and has branded
alloy wheels. The trademark Gucci stripe runs along the side of the
car and is on the seats, carpets and seat belts inside. Prices start at
£14,565 and the car is only available. www.500bygucci.com
FORD’S F1 AERODYNAMICS
If you thought active aerodynamics was just for F1 race cars you’re
mistaken. Ford’s new active grille shutter system – which is fitted to
some models of Focus, Mondeo, Galaxy and S-Max – has motorised
vanes to reduce or block air flow to the car’s cooling system
depending on driving requirements. The result is improved fuel effi-
ciency and lower emissions thanks to reduced drag.
 CITYA.M. 25 MAY 2011 Lifestyle | TV& Games 29

BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5 TV PICK

TERRESTRIAL
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Destroyed in Seconds Forget the Lyrics to move a herd of African elephants.

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

QUICK CROSSWORD
   

SUDOKU KAKURO
18 13 11 35 29 20 6  
25 10
15 
15 22
Place the numbers from 1 to 9 in each empty cell so that each 28    
row, each column and each 3x3 block contains all the numbers Fill the grid so that each block 16 21
39 12
from 1 to 9 to solve this tricky Sudoku puzzle. adds up to the total in the box 5 21
  
above or to the left of it. 16
You can only use the digits 1-9 38 15 
    and you must not use the
4
17 7    
same digit twice in a block. 14 17 25 16 26
 The same digit may occur 11 37   
15
   more than once in a row or
column, but it must be in a
22 9

11 3
     separate block.
12 15 14 
23 33
    9 30
 

 ACROSS DOWN
1 Island in Indonesia (4) 1 Christ (5)
 
  WORDWHEEL C E
3 Sybil Fawlty’s husband
in Fawlty Towers (5)
6 Flightless bird (4)
2 Vessels that carry
blood from the heart
to the body (8)
Using only the letters in the Wordwheel, you have 8 Water flow resulting 3 Asked (4)
  ten minutes to find as many words as possible,
R G from sudden rain or 4 Father Christmas (5)
none of which may be plurals, foreign words or
proper nouns. Each word must be of three letters E melting snow (5)
9 Anticipated (8)
5 At high volume (4)
7 An evil spell (3)

LAST ISSUE’S or more, all must contain the central letter and
letters can only be used once in every word. There
A L 13 Rise upward into
the air (4)
10 Pedestrianised
public square (5)
SOLUTIONS KAKURO is at least one nine-letter word in the wheel.
Y S 15 Tolerant or lenient (3)
16 Native of Baghdad,
11 Culminated (8)
12 Get out (4)
QUICK CROSSWORD 1 2 4 6 1 5 9 3
for example (5) 14 Collection of

A L O O F E D I M
7 1 2 8 2 4 7 1 SUDOKU         
17 Coat a cake with
sugar (3)
miscellaneous things (4)
18 Asian dish eaten
9 3 9 7 5 8
M R A D I I O          19 False belief (4) with rice (5)
O B E S E G G S 8 5 9 5 4 6
        
E A E E D I T S 7 8 9 2 8 1 21 Casserole of aubergine 20 Cut in two (5)
        
B E S I D E S T 7 8 5 6 2 1 3 9 4 and ground lamb 21 Celebration of the
WORDWHEEL
A T R A U         
2 5 1 8 3 9 in a sauce (8) Eucharist (4)
E K R E M L I N         
S T R A Y P I S
2 3 1 1 7 2 24 Be superior to (5) 22 Physical magnitude
        
L E L E N S U E
4 7 6 2 8 1 The nine-letter word was 25 Partition (4) of a thing (4)
2 7 8 9 6 8 9 7         
I G U I L E E
TRIBESMAN         
26 Fashion (5) 23 Range of knowledge (3)
P U G E S P A I N 1 9 6 8 1 2 4 3
27 Give a narcotic to (4)
 Sport
30
Venables
defends
Arsenal shareholder Usmanov Pic: GETTY
Usmanov ups Carlo firing
share offer
▲
FOTBALL
BY JAMES GOLDMAN
UZBEK oil magnate Alisher Usmanov
has upped the ante in the Arsenal
power struggle by offering to buy shares
at a bigger price than majority stake-
holder Stan Kroenke.
Usmanov, who currently owns just
over 27 per cent of the north London
club, has increased his offer to £14,000-
a-share compared to the £12,500 he was
understood to be willing to pay last
week. Usmanov’s latest request to meet
face-to-face with Kroenke has been
turned down.
| PROMOTION
What Wimbledon is to tennis and Henley
is to rowing, Goodwood is to motor sport.
No other motoring event can match the
unique combination of more than 350
vehicles and around 100 motor racing
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Enthusiasts attending the Goodwood
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enjoy watching great machines and driv-
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attendees can expect to see no less
than nine F1 teams, many of the
World Superbike teams, a celebration of
Your Supercar Run prize will take place on Saturday 2 July and will
also include admission into the Festival for yourself plus a guest.
Terms & Conditions: The promoter is City A.M. and the promoter reserves the right to change the prize to one of equivalent or greater value without notice. Travel expenses and accommodation are not included, prize is not transferable Entry in to the promotion is free and no purchase is necessary, entrants must be aged
18 and over. The closing date is 30th May 2011 at 11:59am. The winner will be drawn at random from all the correct entries and will be notified on 31st May 2011. By entering the promotion you agree to receive further information and similar promotions from City A.M. and Goodwood. If you wish not to receive any further
information please add ‘No’ after your answer. The winners, by accepting the prize, agree to publicity if required. The Editor’s decision is final and one entry per reader.
success to Stamford Bridge. feels someone else can do better, you understand it – not completely, but
▲
EXCLUSIVE
“I thought Ancelotti was unfortu- can understand it. So I think it’s fair the game is tough, and it is unfair. So
BY FRANK DALLERES nate – very unfortunate,” to say we can only have a look and see you’ve got to be ready for all sorts of
Venables (right) told City A.M. whether it’s right or wrong.” things.”
FORMER England manager and “But I think an owner Turkey coach Guus Hidddink, Ancelotti, who joined Chelsea two
Chelsea captain Terry Venables has has the right to do what who enjoyed a brief spell in years ago, was dismissed on Sunday
defended owner Roman he thinks is right. This is charge of Chelsea before shortly after they lost their final
Abramovich’s decision to sack the most successful eight Ancelotti, still acts as an adviser match of the season 1-0 at Everton.
Double-winning boss Carlo Ancelotti. years of the club’s history, to Abramovich and is being The club failed to win a trophy this
Venables believes the Italian was and he’s a big part of that. strongly tipped to return in a full- season and, despite a late rally, ended
unlucky to lose his job just 12 months So I don’t think we should time capacity. second in the league.
after leading the Blues to the Premier underestimate him. Venables added: “If [Abramovich] Terry Venables is a 188BET ambassador.
League and FA Cup. “I think he’s got feels safe with and has The In-Play betting specialists are offering
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 31

Murray and Baltacha join

Watson in round three
Heather Watson on Monday, Elena

▲
TENNIS
BY JAMES GOLDMAN Baltacha ensured that, along with
Murray, Britain will boast three play-
WORLD No4 Andy Murray cruised ers in the second round of the French
into the second round of the French Open for the first time in 27 years
Murray beat French Open with a straight sets victory over after her 7-5 6-2 over Sloane Stephens.
qualifier Prodon in qualifier Eric Prodon on another After his 6-4, 6-1, 6-3 win, Murray
straight sets momentous day for British tennis at said: “It was a tough match. There
Pic: ACTION IMAGES Roland Garros. was no rhythm really to it. He didn’t
After the heroics of teenager want to have any long rallies.”

Giggs row casts

shadow over Sir
Alex and final
▲

FOOTBALL journalist in question be barred from Congratulations to World Match Play

BY FRANK DALLERES Friday’s pre-match press conference. champion, Ian Poulter. As an ambassador
Yet far from stamping out the row,
MANCHESTER UNITED manager Sir Ferguson found himself embroiled in for the Jaguar Academy of Sport, Ian
Alex Ferguson attempted to brush off it when a television channel later is helping us inspire the future great
the controversy engulfing Ryan Giggs broadcast footage of the Scot discreet- Britons of sport.
yesterday – but succeeded only in ly making the remarks to the club
being dragged into the storm. employee. To find out more about the growing
So keen was Ferguson to avoid Giggs, who was on Monday
the topic, which has overshad- named by Lib Dem MP John number of British sports stars who are
owed preparations for the Hemming in the House of championing the next generation go to
Champions League final, he Commons as the player at the www.jaguaracademyofsport.co.uk
told an aide to ban a journal- centre of a super-injunction
ist who asked a question row, took part in last night’s
about the Welsh star. The testimonial match for long-
reporter had enquired how serving defender Gary Neville.
important Giggs would be in He played 30 minutes in the
Saturday’s showpiece match defeat to Italian side
against Barcelona, given the 37- Juventus at Old Trafford.
year-old’s vast experience. Meanwhile, Ferguson
“All of the players are impor- confirmed a deal had
tant, every one of them,” been struck to sign
replied Ferguson, who then Atletico Madrid goalkeeper
leant towards an aide and whis- David de Gea as Edwin van
pered a request that the agency der Sar’s successor.

SPORT | IN BRIEF
Green back in England squad Toulon have revealed that financial con-
FOOTBALL: West Ham goalkeeper straints underpinned their refusal to
Robert Green has been called into the offer Gavin Henson a new contract.
England squad for the Euro 2012 qualifi-
er with Switzerland. Fulham's David KP has milestone in mind
Stockdale has pulled out as he is get- CRICKET: England’s Kevin Pietersen has
ting married on 3 June. hit back at claims he’s fallen out of love
with game ahead of tomorrow’s first
Toulon release Henson Test by suggesting he won’t retire until
RUGBY UNION: French Top 14 club he’s reached 10,000 Test runs.

Results XJ MODEL SHOWN IS US SPECIFICATION

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