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www.cityam.comIssue 1,210 Wednesday 1 September 2010 FREE

RISINGSTARS

WHOS NEXT ON

CITY A.M.S

AWARDS LIST? P13

BLAIR: ENDING NEW LABOURCOST BROWN THE ELECTION

NEWS P3 MILIBAND INTERVIEW P17

BUSINESS WITH PERSONALITY

ONE of the Citys largest investorswarned foreign predators not to viewUK companies as easy pickings yester-day after Tomkins became the latestname to fall to an overseas bid.

Standard Life Investments (SLI)made an angry intervention aftershareholders in Tomkins, the formerbuns-to-guns group, voted to accepta 2.9bn offer from a consortium ofCanadian funds. Private equity player

Onex and the Canada Pension PlanInvestment Board will now take theconglomerate private within weeks.

David Cummings, head of UK equi-

BY OLIVER SHAHM&A

ties at SLI, said the transatlantic offerundervalues Tomkins futureprospects. He added: We also hopethis vote will not be seen as a signal toother potential bidders for UK corpo-rates that UK shareholders are pre-pared to sell assets too cheaply as aconsequence of current depressedmarket valuations.

Cummings remarks follow a stringof buyouts of London-listed outfits.Since the start of the year fund man-agers have seen US companies Kraftand Emerson Electric take over

Cadbury and Chloride respectively, while French firm GDF Suez hasseized control of International Power.

American buyout house Apollo is

scrutinising Brit Insurance on thebasis of an 851m indicative offer.

Tomkins board, led by chief execu-tive Jim Nicol, came under fire in Julyfor opening the books to theCanadian bidders without consultingshareholders. At the time, SLI voicedthe discontent of other investors byaccusing Nicol of engaging in talksfor a 325p-per-share offer that mate-rially undervalued the automotiveand industrial parts manufacturer.

But investors accounting for morethan 90 per cent of Tomkins shares

gave a green light to the sale yester-day. Among those voting in favourwere blue-chip institutions Schrodersand Aberdeen Asset Management.

A source close to the companyplayed down the significance of thenear-10 per cent of holders whorebelled, saying: I dont think itscompletely out of the way with what

weve seen in other transactions.Tomkins, which earned the buns-

to-guns moniker for its brief owner-ship of Rank Hovis MacDougall andSmith & Wesson in the 1980s, will besold at the end of September subjectto anti-trust clearance. The dealmarks the end of the Square Milesrelationship with a firm that began

as a belt buckle maker in 1925 andgrew into an industrial giant underthe stewardship of controversialtycoon Greg Hutchings, before slim-

GAME UP FOR TOMKINSAS BUYERS TARGET UK

ming down in the 1990s.Neil Vickers, a mergers and acquisi-

tions adviser at law firm DentonWilde Sapte, predicted a further raftof offers for UK companies from USand Asian buyers. Its difficult for

boards to defend against bids becauseits hard to see where the price should

be given unpredictable markets, Vickers said. Companies that arecash-rich are making the most oftheir opportunities and were seeingthat coming through right now.

Paul Zimmerman, a partner at

Deloitte, said: Some of it can be oppor-tunistic, but some of it can be part of agrand strategy where a US or Far Easternfirm wants to get a foothold in Europe.

INTERNATIONAL POWERmerged with GDF Suez for

1.4bn windfall

CHLORIDEbought by Emerson Electric for

1bn

TOMKINSbought by Canadian consortium for

2.9bn

ARRIVAbought by Deutsche Bahn for

1.6bn

BRIT INSURANCEin talks with Apollo over

850m offerJames Nicol, Tomkins chief executive Some of the takeovers by overseas firms of UK corporate giants since the start of this year Ex-Tomkins chief Greg Hutchings

Picture:PHOTOSHOT

CADBURYbought by Kraft for

11.9bn

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News2 CITYA.M. 1 SEPTEMBER 2010

Fed warns ofsluggishnessUS POLICYMAKERS warned ofincreasing risks to economic growthin the minutes of the Federal OpenMarkets Committee (FOMC) meetingreleased yesterday.

The softer tone of incoming eco-nomic data suggested that the paceof the expansion would be slowerover the near term than previouslyprojected, the minutes said.

The Fed decided to reinvest the pro-ceeds of mortgage-backed securitiesinto safer Treasury bonds in a meet-ing on 10 August, though some members worried the move would sendinappropriate signals to investorsabout the likelihood of further quan-titative easing and the state of theeconomy.

Ben Bernanke and other partic-

pants agreed during the five-hourmeeting that the Fed could not ruleout future investment in mortgage-backed securities.

Members said loans to householdsand small firms showed slow signs ofimprovement, and maintained thatgrowth would pick up in 2011.

Low interest rates are likely to con-tinue for an extended period untileconomic conditions improve.

Only Thomas Hoenig, who has dis-agreed with the Feds interest ratepolicy for four months, voted againstthe decision. US DATA: P11

BYMARION DAKERS

US ECONOMY

David Miliband: The least bad option

ONE of the stories of the summer hasbeen just how far the Labour party ismoving to the left, as its leadershipcandidates appeal to grassroot mem-bers and trade unionists angry at theperceived betrayals of the Blair years.With the coalitions honeymoon longsince over, and the Lib Dems popular-ity in freefall, who takes over theLabour Party is a critical issue forBritains aspirational classes, includ-ing readers of this newspaper, as wellas for Londons financial and businesscommunity. It is in this context that Irecommend our interview with David

Miliband on p17 as well as our pre-view of Tony Blairs explosive memoirs(see p3 opposite), where he decries hispartys return to hard-core statism.

By the standards of the pre-reces-

sion economic debate, Miliband, whotogether with his brother and arch-rival Ed is one of the frontrunners forthe leadership, is way to the left; yet intodays anti-capitalist political atmos-phere, he sounds almost (though notquite) centrist, the closest thingLabour has to an heir to Blair. Hebelieves in some supply side reform ofpublic services, hinting that MichaelGove, the Tory education secretaryand one of the coalitions few trulyradical reformers, hasnt gone fastenough with his support for acade-mies. He backs Alistair Darlingsdeficit reduction plan, which wouldhalve it in four years; other candi-dates, including Ed Miliband, are dan-gerously equivocal on the matter.

Like Blair, David Miliband under-stands that if Labour is to have anychance of winning again, it needs to

appeal to the hard-working, strug-gling, striving middle classes won byBlair but lost by Gordon Brown. His brother Ed, by contrast, believes inreturning the party to its roots, a

neo-socialist strategy which would beelectorally disastrous (especially in theprivate sector-dominated parts ofEngland) as well as economically andfinancially destructive to the whole ofthe UK. Blair is right to argue in hismemoirs, out today, that the previousgovernment could have gone on, hadit not abandoned New Labour; theonly candidate who gets this, howeverincompletely, is David Miliband.

So much for the goodish news. Itremains unlikely that Miliband hasthe stomach for proper reform of pub-lic services or, for that matter, forany other positive action. He is to theleft of Browns government, and huge-ly to the left of Browns 1997 incarna-tion. We gave him ample opportunityduring our interview to take positionsto the right of the coalition on the 50pincome tax rate or on returning capi-

tal gains tax to the 18 per cent it wasunder Labour. He wouldn't bite.

In truth, all of the Labour candi-dates are flawed. But anybody whocares for the future competitiveness

and prosperity of this country should be hoping David Miliband becomesthe next Leader of the Opposition. Heis the least bad candidate and that,after all, is better than nothing.

KEYNES IS STILL DEAD Anybody who still believes inKeynesian economics and is there-fore unduly worried about the UKspublic spending cuts should take alook at Germany and America. The for-mer, which at the height of the reces-sion rejected demands by GordonBrown to spend uncontrollably, is booming. The latter, under arch-Keynesian Barack Obama, is under-performing severely, despite (orbecause of) its massive budget deficit.Ever larger amounts of state spendingis the problem not the solution.

[email protected]

POTASH said yesterday its suitor BHPBilliton has been inappropriate andhighly unethical by cold-callingmany of its customers whileembroiled in a hostile takeover deal.

BHP, the Anglo-Australian mininggiant, earlier this month launched a$38.6bn (24.1bn) hostile takeover bidfor Potash Corp, the worlds largestfertiliser company.

Potash said in a letter to its cus-

tomers it recently learned that ChrisRyder, the head of potash marketingfor BHP, had called many of them.

Since the purpose of BHP Billitonscall clearly was not to solicit yourpotash order from BHP BillitonsJansen project...we consider this con-tact to be inappropriate, saidStephen Dowdle, Potash Corps headof sales, in the letter dated 30 August.

We can only assume that BHPBillitons purpose is to sow seeds ofdoubt and confusion about thefuture of Potash, he added.

BYMARION DAKERS

M&A

Potash: BHP was unethicalBHP chief executive Marius Kloppers bid tactics have been criticised by Potash Picture: REUTERS

NEWS | IN BRIEF

US lending drops but profit upUS banking showed signs of improve-ment in the last quarter, as firms postedtheir biggest profit in almost three yearsdespite a fall in lending and a jump inthe number of at-risk institutions. The$21.6bn gain in the three months to 30June was aided by lenders covering

fewer expected loan losses, said theFederal Deposit Insurance Corp.However, the number of banks at risk offailure rose to 11 per cent of all coveredfirms, the most since 1992. Overall lend-ing fell 1.4 per cent in the quarter.

Amazon explores TV projectOnline retailer Amazon has made amove into television, with the Americanfirm working on a project to provideunlimited shows over the internet forpaying subscribers. Reports last nightput NBC Universal, Time Warner andViacom in the frame as potential part-ners. The new service would competewith firms like Netflix that allow sub-scribers to stream TV shows and rentfilms. The Wall Street Journal saidAmazon might tie-in the new projectwith its Prime service, which guaranteesusers faster delivery for an annual fee.

EDITORS LETTER

ALLISTER HEATH

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Editorial StatementThis newspaper adheres to the system of

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Fed panel member andinflation hawk ThomasHoenig has warned thatcontinued low ratesstifle the economy

DEMOCRATS FACE MIDTERMMELTDOWNBarack Obamas Democratic partyfaces a series of dramatic defeats atevery level of government in Washington and beyond in theNovember midterm elections, accord-ing to leading analysts and opinionpolls. The University of Virginias widely monitored Crystal Ball willtoday forecast sweeping setbacks onCapitol Hill and the loss of a clutch ofstate governorships on November 2. Itfollows a Gallup poll that showed theRepublicans with a 10 percentagepoint lead over the Democrats thewidest margin in 68 years.

UK TO LAUNCH COMPREHENSIVEPOLICING OF ONLINE ADVERTISING The UK is to introduce one of theworlds most ambitious attempts to

police online marketing next year, when the Advertising Standards

Authority extends its regime to corpo-rate websites, social networks and

mobile applications.LIB DEM MEMBERS GIVE POLL BOOSTTO CLEGGNick Clegg and his fellow seniorLiberal Democrats have been given atimely boost ahead of a potentiallyfractious party conference by theresults of a survey showing that sup-port for Mr Clegg among party mem-bers remains high. But the survey ofalmost 600 members shows that netsupport for the coalition has begun toslip, falling to 45 per cent in Augustfrom 57 per cent in July.

FLEXIBLE LEADERS REAP REWARD OFTRUSTChief executives who managed to pro-tect jobs during the recessionthrough measures such as flexibleworking or reduced hours are reap-ing the reward of higher levels of

trust from their staff, according toresearch published today.

JAL TO CUT 16,000 STAFF INRESTRUCTURE Japan Airlines took the first step toreturn from bankruptcy today whenit submitted a rehabilitation plan toshed 16,000 jobs, cut routes and sellits hotels. The company said that it was studying the possibility oflaunching a low-cost carrier asJapans economic recovery continuesto falter and consumer spendingremains weak.

EDF PASSES ON HIGHER COST OFELECTRICITYEDF Energy will raise electricityprices by 2.6 per cent for more than athird of its customers from October 1and is reviewing its gas prices.Europes biggest utility company saidthat it was forced to raise tariffs afterbeing hit with a 16 per cent rise in dis-

tribution and transmission costssince it increased prices last year.

CREDIT SUISSE DEFENDS ITS BANKERSMID-YEAR BONUSCredit Suisse has defended a decisionto award its London-based bankers with a surprise mid-year bonus byclaiming that it had no choice after itscompliance with British rules on paybackfired. The Swiss bank suggestedits decision to distribute a multi-mil-lion pound bonus-round, a move thatlooks set to re-ignite the row over Citypay, was necessary to avoid losing keypeople to its rivals over the next fewmonths.

AMERICA FACES CRISIS OFLEADERSHIP LEADING WALL STINVESTOR WARNSAmerica faces a crisis of leadershipthat is damaging the countrys recov-ery, one of Wall Streets leading hedgefund managers, Daniel Loeb, has

warned in a scathing attack onPresident Barack Obama.

FRANCE SEEKS COMMODITIESOVERSIGHTFrance is calling for tighter oversightof European commodity derivativesmarkets in order to curtail pricevolatility, as US regulators also gearup to implement new rules to governcomplex financial instruments.Three French ministers called the cur-rent regulatory regime "insufficient"in a letter to Michel Barnier, theEuropean Union commissioner forinternal markets and services.

ISRAELS GAS-TAX REVIEW DRAWSFIREEnergy companies involved in recentlarge natural-gas discoveries offshoreIsrael have warned that any move bythe government to increase its shareof tax and royalties from naturalresources may jeopardise investment

in the countrys expanding energysector.

WHAT THE OTHER PAPERS SAY THIS MORNING

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TONY Blair has blamed Gordon Brownfor Labours loss in the last election,claiming in his long-awaited autobi-ography that the party veered too farto the left.

His memoir, A Journey, which hitsthe shelves today, also reveals the for-mer Prime Ministers thoughts onwhy Labour lost the election in May,the much-criticised Iraq war and hisrelationship with Gordon Brown.

Marketed as a deeply personal

account which took him three yearsto write, the book starts with thewords: I begin as one type of leader; Iend as another. Thats why I call it ajourney.

In the book he claims GordonBrown could have won the recentelection if he had kept up the princi-ples and policies of New Labour.

And of his decision to involveBritain in the Iraq war, he said: Dothey suppose I dont regret with everyfibre the loss of those who died?

He described Gordon Brown asmaddening, but shrugged off therelentless personal pressure fromthe then-chancellor and his allies asfar less troubl[ing] than they or per-haps even he ever realised.

Blair said he came to the conclusionthat having [Brown] inside and con-strained was better than outside andlet loose or, worse, becoming the fig-urehead of a far more damaging forcewell to the left.

Online retailer Amazon said pre-orders are 36 per cent up on PeterMandelsons The Third Man, which is

currently the websites most success-ful political autobiography.

Blair has eschewed the traditionalbookselling tactics of a promotionaltour and advance copies for reviewers,and will donate the proceeds from thetome to the Royal British Legion.

He is scheduled to be in Washington today, to attend peacetalks in his role as Middle East envoy,but has pre-recorded a television inter-view with Andrew Marr, which will beshown on BBC2 tonight.

Blair memoirwarns againstmove to Left TRADE on global currency marketshas jumped by a fifth over the pastthree years to $4 trillion a day, rough-

ly equal to the annual economic out-put of Germany, according to theBank for International Settlements(BIS).

The increase in volumes was drivenby a 48 per cent jump in turnover ofconventional spot transactions, BISsaid in the triennial survey, which iswatched closely by banks and institu-tions as a comprehensive snapshot ofcurrency market trading.

Growth in the spot market partlyreflects the continued rise of algorith-mic trading, where so-called blackboxes can process thousands of tradesa minute.

The survey also showed London hasfurther cemented its prominence as

the centre for forex markets, account-ing for 36.7 per cent of globalturnover, up from 34.6 per cent in2007.

In 2007-2010 Londons share ofaverage daily turnover rose roughlyby a quarter to $1.9 trillion. That wasmore than double the turnover in theUS, the second-largest centre.

The over-the-counter (OTC) deriva-tives market also saw strong growth, with daily turnover 24 per cent to$2.1 trillion.

Global FX tradesurges to $4trillion per day

Former prime minister Blair blames Gordon Brown for the election loss Picture: REUTERS

BYMARION DAKERS

POLITICS

CURRENCIES

News 3CITYA.M. 1 SEPTEMBER 2010

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BPS efforts to permanently plug theDeepwater Horizon well have beendelayed by stormy seas caused byHurricane Earl.

The firm said it would have to waitat least two days before proceedingwith a plan it hopes will stop the leakfor good.

Thad Allen, the US official oversee-ing the Deepwater Horizon work saidwaves in the area were up to eight feet.For now we are in a hold pending fur-ther calming of the weather out here. The current weather looks like itsgoing to hold for at least the next twoto three days.

Meanwhile, the Obama administra-tion has imposed a new ethics policyon employees overseeing offshoredrilling as the government moves to

clean up a regulatory regime tarnishedby the BP oil spill.Under the new rules issued to

employees, inspectors for the Bureau ofOcean Energy Management are barredfrom conducting inspections on anyprojects employing family members orclose friends.

The bureau has faced intense attackssince the Gulf oil spill, with critics say-ing the agency was too close to theindustry it was supposed to regulate.

However, there are concerns in theindustry that the rules might make itdifficult to find inspectors in someareas, which could slow the approvalprocess of projects.

BP plug plansdelayed bybad weather

The US Securities and ExchangeCommission has decided not to pur-sue a fraud case against Moodys overa computer glitch that inflated rat-ings on some European debt.

The regulator yesterday citeduncertainty over its authority tobring the case in the US as the reason

not to press a fraud enforcementaction against the parent of Moodys

Investors Service. The probe arose after it was

revealed that a computer codingerror caused the rating agency towrongly assign Aaa ratings to com-plex European products known asconstant proportion debt obligations.

The SEC said Moodys found theproblem in January 2007, fixed it thenext month, but waited until January

2008 before changing the underlyingratings, affecting nearly $1bn of debt.

SEC will not pursue a fraud caseagainst Moodys over rating error

CREDIT RATING AGENCIES

TENSIONS between British Airways(BA) and Unite were re-ignited yester-day over allegations of bullying as thetrade union representing the airlinescabin crew warned of a possible fresh wave of strikes to be held over theChristmas period.

An unresolved dispute over bully-ing allegations made by the unionand BA staff during the previous 22

day strike period was unearthed yes-terday after it was revealed that morethan 80 BA staff were suspended and13 sacked because of incidents relatedto the strike.

BA said that most of the suspen-sions have related to allegationsfrom other employees of bullying andintimidation and that it could notignore them.

A statement said: Investigationsinto any allegations are conductedunder the companys disciplinary

procedures, which have been in placefor many years, are fair, open andtransparent and are agreed with allour trade unions, including Unite.

The union has warned that the air-lines disciplinary action could causea roadblock to peace talks, as the twoare set to meet next week in a bid toend their bitter dispute.

But Unite has warned that a freshstrike ballot could be held if noprogress is made, threatening to dis-rupt Christmas travel.

Unite threatens fresh strikeballot as bullying feud ignitesBY EMMA SADOWSKI

AVIATION


ANALYSIS l BP

300

340

380

420

4 Aug 24 Aug15 Jul25 Jun7 Jun

p

380.6031 Aug

Hurricane Earl has hampered the Deepwater Horizon clean-up Picture: REUTERS

BYHARRY BANKS

BP IN CRISIS

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PRIVATE equity stalwart CandoverInvestments will complete its spectac-ular fall from grace as it winds itselfup to return cash to shareholders.

The once high-flying firm will nowconcentrate on offloading its portfo-lio as part of a measured plan thatcould take years to complete.

However, a spokesman told CityA.M. there will be absolutely no fire-sale. She said: There will be no fixedtime-frame. The assets will be soldwhen we can maximise our return onthem for our shareholders.

This is not a decision to close thecompany, it is a decision not to makefurther investments going forward.

Candovers move to sell its portfolioof companies, which includes oil-fieldservices firm Expro, and return cashto shareholders and investors followsa failed attempt to sell the businesslast month and ends months ofuncertainty over its future.

Industry sources yesterday suggest-ed Equity Trust may be one of thefirst of its portfolio companies to besold, with Doughty Hanson believed

to be interested in a 300m deal.The firm was undone by a series of

ill-judged acquisitions at the heightof the boom. But when the market went sour, Candover saw the netvalue of its assets fall by half and wasforced to allow investors a chance tocancel outstanding commitments tothe fund.

Candover says there is still signifi-cant value in its portfolio. Expro, forexample, accounts for almost onethird of the firms valuation.

Now analysts say the firm is a goodbet for investors, as returns to share-holders from the sale of companies islikely to be above the current shareprice.

Candover to

wind up as iteyes sell-offBY STEVE DINNEEN

PRIVATE EQUITY

ALLIANCE Boots will shift 300m ofits pensions liabilities to a specialistbuyout vehicle, it confirmed yester-day.

Pension Corporation will takeresponsibility for 3,000 defined bene-fit plans from the firms old AllianceUniChem pension scheme, whichwas closed earlier this year.

An Alliance Boots spokesman said:

As part of the groups ongoingefforts to ensure long term security ofaccrued benefits for its defined bene-fit pension funds, Alliance Boots con-firms today that the trustees of the Alliance UniChem pension schemehave insured its members past serv-ice benefits for future payment withPension Corporation.

Alliance Boots continues to workwith the trustees of its other pensionschemes to ensure that members

pension obligations continue to besuitably funded and secured.Pension Corporation oversees pen-

sion fund liabilities of around 7bnand is affiliated to more than 100,000pension scheme members or formermembers.

Offloading pension plans to thirdparties has become increasingly pop-ular in recent years, as firms strugglewith deficits left by the tsunami ofthe financial crisis.

Boots offloads 300m of itspension pot to a third party

PENSIONS

Malcolm Fallon, chief executive of Candover, will sell its portfolio of assets Picture: REX


Shares are still attractive THAT silence is the sound ofCandover bosses having given up.Once a leading light in the privateequity industry, the firm will makeno further investments and hasabandoned plans to find a buyer.Instead it will run its investmentsoff over an unspecified time frame.What started so well has come to asorry end.

All private equity firms have suf-fered disproportionately in thefinancial turmoil, as evidenced bytheir notable absence from therecent spate of M&A action. ButCandovers problems were unique.Its complicated structure -- with alisted parent that co-invests along-side an independent but wholly

owned fund manager, Candover

Partners, over which it has no say --drew heavy criticism and lay at theheart of the firms woes.

Still, now that the uncertaintyover Candovers future has been putto rest, the shares which trade at ahefty 34 per cent discount to the netasset value of its investments arelooking rather tasty. If the outfitavoids a fire sale and realises thetrue value of its assets, then returnsfor its shareholders will be well inexcess of its 611p share price. As thesaying goes, one mans loss is anoth-er mans gain.

[email protected]

BOTTOMLINEAnalysis by David Crow

ANALYSIS l Candover

600

650

700

750

800


p

611.0031 Aug

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ANGLO Irish Bank said yesterday the bill for its rescue should not exceed25bn (20.6bn) but investorsremained sceptical after mountinglosses raised pressure on Ireland toshut down the nationalised lender.

Once the posterchild of the CelticTiger economy, the cost of bailing out Anglo left Ireland with the biggestbudget deficit in the European Unionlast year, undermining the govern-ments austerity drive and raising itsborrowing costs.

Anglo Irish chief executive Mike Aynsleys view that the bank wouldnot need more than the 25bn previ-ously flagged by the governmentfailed to soothe markets already rat-tled by concerns over Eurozone debt.

Its a pretty brave comment by themanagement, said one analyst whodeclined to be named. As a taxpayer I would be somewhat relieved, and I

think it would be a nice support forthe bond market, but I'm scratchingmy head over it.

The premium investors demand tohold 10-year Irish bonds over GermanBunds was hovering close to euro-erahighs of 366 basis points yesterday.Irish financial stocks were tradingdown 1.45 per cent.

In an analysis criticised by Irish offi-cials, ratings agency Standard & Poorsestimated last week that the final costof purging Anglo of bad debts accumu-lated during the property boom couldhit35bn.

Finance minister Brian Lenihan didnot put a final figure on Anglosbailout but said clarity on the totalcost would come when Ireland reachesan agreement with the EuropeanCommission on what to do with thelender. We must bring finality andcertainty to that figure and that is partof this exercise we are doing with theEuropean Commission, he told thenational broadcaster.

Dublin signalled on Monday itmight wind down Anglo Irish, the worst-performing company in Irish

corporate history, after its losses andscandals made it more difficult topush through spending cuts.

Anglo seeking25bn bailoutBYHARRY BANKS

BANKING

LAW firm Addleshaw Goddard askedpartners to inject more than 15minto its business last year, accordingto financial accounts recently submit-ted by the firm.

The limited liability partnership(LLP) accounts, which were filed onCompanies House, show that part-

ners introduced 15.6m in fresh capi-tal during the period ending 30 April

2010. Partners are required to provideextra cash where its needed underthe firms agreement.

Information also contained withinthe accounts shows that Addleshawstook out a 20m loan from the bank.

The firm said some of the extracash was to pay for new City premis-es, which it took over in August 2009.

During 2009/10, Addleshaws saw

fee income fall 3.3 per cent to167.5m.

Addleshaw Goddard turned topartners for 15.6m cash callLEGAL

ONLINE gaming firm 888 yesterdayscrapped its dividend, preservingcash to pay for acquisitions after theweak economy and soccer World Cupsapped appetite for poker games andhit first half profit.

In order to continue investing forfuture growth, and to support poten-tial acquisitions, the board has decid-

ed not to declare an interim divi-dend, chief executive Gigi Levy said,adding that he saw significantopportunities for M&A activity.

The company said in a statementthat first half adjusted pre-tax profitfell 44 per cent to $8.4m (5.4m) from$14.9m a year earlier, saying theWorld Cup in June had exacerbated a broader, industry-wide decline inonline poker playing.

It also pointed to adverse currency

movements and said the benefits of acost cutting programme would onlybe felt during the second half of theyear.

Trading in August has been signif-icantly stronger than in July, with adouble digit daily revenue increaseespecially in casino and poker, 888said in a statement.

Poker has seen an increase ofmore than 15 per cent in revenue inAugust.

Online gaming firm 888 dropsdividend as World Cup bitesBYHARRY BANKSLEISURE


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RETAIL packaging behemoth Bunzl iseyeing a large acquisition in the US,analysts believe, after it raised pre-taxprofits six per cent to 100m andincreased its dividend.

The supplier of take-away boxesand hard hats said it had a promis-ing pipeline of ideas as it delivered arobust set of interim results. Bunzlhas bought eight businesses since thestart of the year and announced thepurchase of California-based veg-etable packaging producer Cool-Pakand Brazils AM ComrcioRepresentao e Servios yesterday.

Chief executive Michael Roney toldCity A.M. more deals would follow,adding: There are discussions goingon with potential targets we deal infragmented markets and theres a lotof opportunity to consolidate thosemarkets. Its a key part of our strategyand the pipeline is promising.

Oriel Securities analyst PaulChecketts thought the company wasin a position to buy a sizeable familyoutfit in America worth several hun-

dreds of millions of pounds.Theres a feeling there are plenty

of options out there and you do getthe feeling some of the bigger optionsare in play, Checketts said.

Despite a slowdown in westerneconomies, the FTSE 100 conglomer-ate raised its revenues two per cent to2.4bn and cranked up its payouteight per cent to 7.15p. One dark spot

was the UK and Ireland. In a signal oftough times to come for the region,Bunzl saw sales fall five per cent to493.7m, though margins improved.

The firms net debt grew to 745.3m.Shares in Bunzl climbed 6.5p to

close at 708.5p.

Bunzl set for

more buyouts

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SERVICES

THE FINANCIAL Services Authority(FSA) has banned one mortgage bro-ker and fined another for commit-ting reckless business practices,

which it said led to false and mislead-ing mortgage applications made tolenders.

Ngozika Louise Ogboru, who ranHarrow based JN Finance UK, has

been banned by the financial watch-dog after it found that advisers at herfirm were able to submit false andmisleading mortgage applications tolenders using her details. Ogboru

was the only approved broker at JNFinance to implement adequate sys-tems and controls, said the FSA.

Meanwhile, Ronald Winton fromMortgage Healthcare in Dundee has

been fined 31,500 by the FSA andsuspended from holding a senior

position at a financial services firmfor the next two years for leaving hisbroking business under the manage-ment of two non-approved advisers.

FSA director of enforcement,Margaret Cole said: Ogboru and

Winton were not of sufficient calibreto run their firms to the standardsexpected by the FSA.

Ogboru would have been fined65,000, but the fine would havecaused serious financial hardship.

FSA fines and censures twomortgage brokers for fraud

FSA enforcement director Margaret Cole led the bans Picture: Micha Theiner/ CITY A.M


ANALYST VIEWS: WHAT DID YOU MAKE OFBUNZLS FIRST HALF NUMBERS? Interviews by Oliver Shah

PAUL CHECKETTS | ORIEL SECURITIES

Theres a lack of drama in some senses, but theheadline numbers are great. Earnings per share were up 10per cent to 27.5p and they lifted the dividend. It just showstheyre doing a cracking job in tough markets.

MIKE MURPHY | NUMIS SECURITIES

We think the mergers & acquisitions cycle hasturned their way. A lot more vendors are now looking to sellat sensible prices. The most important thing for Bunzl in themeantime is to keep grinding out the results.

JONATHAN JACKSON | KILLIK & CO

Although the group makes reference to the chal-lenging economic environment, the outlook statement is

upbeat. In North America, good underlying revenue growthis expected to continue.

ANALYSIS l Bunzl

660

680

700

720

740

760


p711.00

31 Aug

BY EMMA SADOWSKIENFORCEMENT

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A GROWING belief among Britishinvestment managers that fears of arenewed economic slump areoverblown has halted a five-monthdecline in allocations to stocks,according to a Reuters poll.

The survey of 11 British fund man-

agers polled on asset allocations inAugust shows the average exposure to

equities jumped more than three per-centage points from a month earlier.

The average allocation to equitiesclimbed to 49.8 per cent in August,compared with 46.4 per cent in July.Allocations to bonds fell to 24.2 percent from 25.5 per cent.

The effect is exaggerated by the par-ticipation in August of a large equi-ties-heavy fund manager who did not

answer the poll in July but the trendremains the same if results are com-

pared on a like-for-like basis. The move to shares follows five

months in which managers paredallocations to stocks, mostly in favourof bonds.

Concerns about a double-diprecession are certainly overblown. Toofew investors look at economic histo-ry. In reality such events are reallyrather rare, said Andrew Milligan,

head of global strategy at StandardLife investments.

August sees investors start to turn bullish

$#

!$

"$

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ACTIVIST investor Sherborne hasincreased its stake in British fund

firm F&C Asset Management to justshort of 15 per cent, piling fresh pres-sure on F&C management andfuelling takeover speculation.

F&C confirmed yesterday thatFridays trade of 16m shares had seen

Edward Bramsons SherborneInvestors hike its stake to 14.6 percent from 11.3 per cent.

Sherbornes interest has helpedrally F&Cs shares and sparked specu-

lation of M&A interest, even thoughSherborne itself has ruled out a bidand said it will not take its stakebeyond 30 per cent.

The stakebuilding has also putchief executive Alain Grisay in the

spotlight as he tries to reposition thecompany after a rough few years.Bramson has forced out executives inother companies where he has takena stake.

Clive Cowderys Resolution hasbeen cited as one potential candidateto acquire the firm. It is buying uplife insurers and has said it might buya standalone asset manager to runsome of the life assets.

Activist ups heat on F&CBYHARRY BANKS

FUND MANAGEMENT

FRANCE has sent detailed proposalsto the European Commission callingfor common action to regulatevolatile commodities markets beforeit is due to head the Group of 20 eco-nomic powers, ministry officials said.

President Nicolas Sarkozy said last week that regulating commodityderivatives would be one of the prior-ities of Frances presidency of the G20starting in November for a year.

Frances economy, energy and agri-culture ministers sent a letter to threeEuropean commissioners on 27 August stressing that currenEuropean regulation was not enoughand calling for coordinated and cross-sector EU action.

At a time when commodities mar-kets are more and more financial, theEuropean regulation of commodityderivatives markets appears insuffi-cient to us, the ministers wrote in aletter made public by the economyministry.

The derivative markets cited inFrances proposals include grains andother raw agricultural products, met-als, oil, gas and CO2 quotas.

European commodity markets areunder pressure to tighten regulationas the United States pushes forwardwith plans to tame speculative activi-ty, which was blamed by some for boosting food and energy prices torecord highs in 2008.

France wants the EU to adopt newlegislation to improve its own system but also hopes to convince itsEuropean counterparts to put for-ward a joint proposal at the G20.

In February farm ministers fromthe Organisation for Economic Co-

operation and Development (OECD)failed to produce concrete measureson market regulation at a meeting onprice volatility as differences surfacedon several issues.

French pushto regulatecommodities

GENZYME chief executive HenriTermeer said he is willing to sell thecompany he built up over 25 years,but not for $69 a share.

Termeer yesterday said it wasunlikely that French drugmakerSanofi-Aventis SA would go hostilewith its $18.5bn bid and that the twosides had a good chance of coming toterms, though negotiations could lastmonths.

On Monday, the Cambridge,Massachusetts-based biotech compa-ny rejected Sanofis bid of $69 a share.Sanofi has hinted it may take its offerdirectly to Genzyme shareholders ifthe company refuses to enter discus-sions based on its current offer.

I think a hostile situation isunlikely to occur here, Termeer saidin an interview with Reuters. Weneed each other too much in terms offuture value. It may well be that theygo that way, but I would recommendagainst it if I were advising the otherside. He said there was a high proba-bility that a deal would eventually beconsummated, given the two compa-nies strategic needs.

Sanofi faces the loss of some 20 percent of its revenue by 2013 as genericcompetition erodes sales. Genzyme isthe worlds leading maker of drugsfor rare genetic diseases, generatingsales in 2009 of $4.5bn.

Genzymesays it is stillup for sale

HITACHI is planning an initial publicoffering (IPO) of its hard-drive unitand could name underwriters inearly September, several people famil-iar with the situation said.

Bankers are in discussions withHitachi about an IPO of the worldsthird-largest hard-drive maker, several

sources said. The stock float would be in the

United States and could happen byyears end, the sources said.

Goldman Sachs has unofficiallybeen named one of the underwriterson the IPO, the sources said.

Although an IPO is the most likelyscenario, Japan-based Hitachi is alsoconsidering a sale of all or part of thehard-drive unit, several sources said.

Hitachi said yesterday it has not

made any decisions but continues toexplore possibilities.

Hitachi mulls hard-drive IPOTECHNOLOGY

Sherbornes stakebuilding has put pressure on F&C chief Alain Grisay (above).

BYHARRY BANKS

PHARMACEUTICALS

BYHARRY BANKS

FINANCIAL MARKETS

BYHARRY BANKS

EU REGULATION

ANALYSIS l Genzyme

50

60

70

75

24 Aug4 Aug15 Jul25 Jun7 Jun

$70.1231 Aug

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OLYMPICS BONUSAs a former Goldman Sachs invest-ment banker Paul Deighton must beused to earning large bonuses. Butthe one he has been granted this

year as chief executive of LOCOG, thecompany that is stage-managing theOlympics, he will not be keeping.

Deighton earnt a bonus of justunder 300,000 in the past yearthanks to achieving a number of tar-gets. That would normally have sup-plemented a salary of 480,000. ButDeighton has decided to give over his

bonus to charity.A spokesman says that he has not

chosen which charities to give to but

they would not include Arsenal,the football club he supports.Of the other LOCOG boardmembers, Sebastian Coessalary is up slightly from357,000 to 365,507. SirKeith Mills, the creatorof Air Miles, and a

Tottenham Hotspurdirector, gets a 50,000package for being anon-executive direc-tor while former ITV

and EMI chief CharlesAllen gets just 6,000for being chairman ofLOCOGs Nations andRegions Group.

ON PAR GAGCooperative Group chiefexecutive Peter Marks is

well known as the coun-trys most famous musi-cal businessman; heplays drums in a rockcovers in a pub band,Last Orders.

But when not runningone of the countryslargest and most diverseretail outfits, which cov-ers supermarket tofuneral services, Marksis also a keen but frus-

trated golfer. What is your current

handicap, The Capitalist enquired atthe end of an interview in his wood-

panelled Manchester headquarters?My clubs are my handicap,

replied a deadpan Marks.The Capitalistis sure that Marks in

not the only golfer to feel the more heplays the worse he gets.

GENERATION WHY?Amid the flood of silly season pressreleases that bombarded this newspa-pers offices during August, one inparticular stuck out for its proficiencyat stating the bleedin obvious.

According to research commissioned by recruiter Badenoch & Clark,Generation Y thats those workersaged 16-24 years old is disillusioned

with the workplace. The research found a third of

respondents do not trust their bossesand refuse to believe either most orany of what they say.

And there was The Capitalistthink-ing that it was the employers who

were fed up with the attitude ofGeneration Y or Generation Why,Oh Why as one City wag likes to callthem.

Perhaps facing up to the truth thatthe world owes no-one a living and

knuckling down to some hardgraft would put a stop to thewhingeing and give exasperatedbosses a break.

DEAD IMPRESSIVEPerhaps those disillusionedyoung workers should takea leaf out of Laura Copleysbook.

While holidaying innorth Norfolk, TheCapitaliststumbled across

the news that the 18-year-old Norwich girl has sether sights on twinambitions.

Besides being anaspiring beauty queen Copley is striving tobecome Miss Norfolk she is also keen to

broaden her horizonsand explore a business

career in an industry that isunlikely to die out any timesoon.

Having become interestedafter doing work experienceat a funeral parlour, Copleyis reported to have justsecured a post at a localfirm.

Whoever said sestarters were a dying

breed? Heres wishing her

luck in her chosen career.Victoria Bates is away.

BORIS OUT FOR A RIDE WITH KELLYBROOK TO LAUNCH BIKE SCHEMEBORIS Johnsons love affair with two

wheels continued yesterday with thelaunch of his driver-frustrating SkyRide scheme, where roads are clearedthroughout central London to allowcyclists to take in the sights.

But The Capitalist cant help butthink bikes werent the only thing onthe mind of the red-blooded Mayor.

Accompanying him on a joy-ridethrough the City was the curvaceous

Kelly Brook, fresh from her recentshoot with Playboy.

And not for the first time Borishas ensured she has been at all threeSky Ride events he has organised.

He appeared positively weak at theknees as the glamorous star ofPiranha 3D threw her arm around hisshoulders, her vertiginous heels ris-ing almost to his puffed-out chest.

The conversation that passed

between them as they revelled in thesights of our fine city, alas, we willnever know. The Capitalist imaginesBoris serenaded her with sweet noth-ings, recounting tales of his misad-

ventures at Eton.He said the scheme is sheer bliss

for anyone with a love of our great cityor the bicycle. If cyclists have as muchfun as Boris appeared to be having, theevent will be a roaring success.

When Kelly met Boris: Mayor and model launch Sky Ride scheme Picture: PA

The Capitalist10 CITYA.M. 1 SEPTEMBER 2010

Paul Deighton has plenty to smile about

EDITED BY

STEVE DINNEENGOT A STORY? [email protected]

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JUST 48,700 mortgages were approvedin July, according to data published

yesterday by the Bank of England, rais-ing fears that the UK housing marketis at best drifting sideways and at

worst heading for a double-dip reces-sion.

Although the small rise was betterthan the dip to 46-47,000 that the mar-ket had expected, economists wereextremely pessimistic about the out-look for the British property market.

They pointed out that approvals arestill well below the average of 93,000per month over the past decade.

Andrew Goodwin, senior economicadvisor to the Ernst & Young ITEMClub, said: The figures provide fur-ther confirmation that the housingmarket is heading for a double dip,

with net mortgage lending prettymuch flat and the number of mort-gage approvals remaining very low.

The figures for mortgageapprovals, a proxy for activity, tend to

be well correlated with prices and thelatest figures clearly point to fallingprices over the second half of this yearand into 2011, particularly now thatsupply shortages have eased,

Goodwin added.Economists pointed to subdued

demand for housing caused by highunemployment levels which couldrise further once public sector spend-ing cuts come into effect as well aspoor household income growth andaffordability.

Although the interest rates are atrecord lows, these are not being fullypassed on to borrowers, who mustmeet more stringent lending criteria.

Simon Rubinsohn, chief economistat the Royal Institution for CharteredSurveyors (RICS) said: A lack of mort-gage finance remains a key problemfor many borrowers looking to taketheir first step on the property ladder,

with the high deposits required stillproving to be an obstacle for many.Uncertainty over the outlook for themarket may also be discouraging

would be buyers.The poor approvals data adds to a

string of cheerless figures for the UKhousing market both in terms ofhouse prices and mortgage lending.Only last week, the British Bankers

Association data showed no change innet mortgage lending in July on theprevious month. The impact will befelt in tomorrows Nationwide Augustdata.

THE Bank of Englands preferredmeasure of Britains broad moneysupply excluding intermediatefinancial institutions (M4X) failed togrow in July, raising fears amongsome economists that asset purchas-es have failed to boost the money sup-ply sustainably.

According to figures published by

the central bank yesterday, its pre-ferred measure was flat on the

month while the headline measureposted growth of 0.4 per cent com-pared to June.

The three-month annualisedgrowth of the preferred measureslowed to 5.6 per cent from 6.8 percent, taking it back below the 6-9 percent range that Bank governorMervyn King has said he is aiming for.

However, other economists point tothe faster pace of growth in the keymoney supply measures since the

start ofthe year, with M4X growing at5.9 per cent over the past six months.

Hendersons Simon Ward pointsout that within broad money non-financial companies holdings rose by0.9 per cent in July, pushing annualgrowth up to 4 per cent.

But, unusually, households broadmoney holdings were unchanged inJuly. The last and only time this hashappened since 1997 was in October2008 at the height of the financial cri-sis. Ward attributes this lack ofgrowth to households switching into

mutual funds and borrowers repay-ing debts.

Bank of Englands preferred measureof money supply fails to grow in July

US consumer confidence rose mod-estly in August, lifted by a mildimprovement in the short-term out-look, according to a private reportreleased yesterday.

The Conference Board, an indus-try group, said its index of con-sumer attitudes rose to 53.5 in

August from an upwardly revised51.0 in July.

The median of forecasts from ana-lysts polled by Reuters was for a

reading of 50.5. Forecasts rangedfrom 47.5 to 55.0. Julys reading was

revised up from an original readingof 50.4. The expectations index roseto 72.5 from 67.5 in July.

The present situation index fell to24.9, the lowest since February, from26.4 in July.

Consumers labour market assess-ment worsened. The jobs hard toget index rose to 45.7 per cent from45.1 per cent in July, while the jobsplentiful index declined to 3.8 percent from 4.4 per cent in July.

US consumer confidencerises modestly in August

US ECONOMY

CONFIDENCE levels held by City busi-nesses have dipped, according to newresearch, despite firms seeing a gen-eral rise in turnover and profits.

The business confidence monitorsurvey, conducted by accountantsGrant Thornton and the Institute ofChartered Accountants for Englandand Wales (ICAEW), found that confi-

dence amongst Londons businesseshas fallen in the last three months asuncertainty over austerity measureshave taken its toll.

Ian Strange, ICAEWs Londonregional director, said: Businesses inthe capital are now facing the chal-lenge of surviving the recovery. Theystill dont know what the futureholds and are uncertain about howthe mood of fiscal austerity will

impact on the economic recovery. The surveys confidence index

which ranks overall responses to thesurvey, fell from 28.1 points duringthe last quarter to 25.9 this quarter,indicating that businesses are wearyabout future growth.

However, the survey also foundthat 1.7 per cent of London firms sawrevenue grow over the year, while 1.5per cent reported a rise in profits.

Confidence at City firms falls as fearsover austerity measures take their toll

ECONOMY

PRICES of US single-family homesgained more than expected in June

and rose in the second quarter,reflecting the lingering boost fromhomebuyer tax credits that ended in

April, Standard & Poors/Case Shillerhome price indexes showed yesterday.

The effects of buyer tax credits havelargely filtered through and homeprices will be hard-pressed to sustainthese gains with unemployment stillnear 10 per cent, economists agree.

The S&P/Case Shiller compositeindex of 20 metropolitan areas rose

0.3 per cent in June from May on a sea-sonally adjusted basis. The rise was

better than the 0.2 per cent increaseexpected by economists polled byReuters, though slower than the 0.5

per cent rise in May.Unadjusted, the 20-city indexgained one per cent following Mays1.3 per cent jump. In the year, pricesrose 4.2 per cent, surpassing theReuters forecast of 3.9 per cent. S&P,

which publishes the indexes, also saidhome prices nationally rose 4.4 percent in the second quarter after a 2.8per cent drop in the f irst quarter.

Prices rose in 17 of the 20 metroareas in June, S&P said, adding that in

the first half of the year 15 of the 20areas had positive annual growthrates.

The housing market is in bettershape than a year ago, S&P said.

Most cities posted smaller pricegains in June, though, and the annualgrowth rates slowed in 14 of the metroareas.

The worry starts when you remem-ber that the Homebuyers' Tax Credithas expired, foreclosures are still athigh levels, and July data on homesales and starts were very, very weak,David M Blitzer, chairman of theindex committee at S&P, said in astatement.

US home prices jump in JuneBYHARRY BANKS

US ECONOMY

Weak housing

loans point toa price slumpBY JESSICAMEAD

UK ECONOMY

BY JESSICAMEAD

UK ECONOMY

Economic News 11CITYA.M. 1 SEPTEMBER 2010

CITY VIEWS: IS THE UK HEADING FOR ANOTHER RECESSION?Interviews by Emma Sadowski

Yes. We are headed for another recession because the moment the UK gets out of recession, weend up spending too much money, which eventually pushes us back into recession.

CHRISTINE GREENWOOD | KENNEDY PEARCE

No. Britain is likely to perform well and this is because of the new government and tighter regula-tion. European countries like Greece are doomed, while Britain is safer from a recession.

PADY CHATZIS | INTERMAR

No, the UK isnt headed for another recession. My sense is that a lot of people took longer hol-idays than normal over the summer but theyre back now, and are highly motivated. It will betough but well avoid another recession.

JULIA HAYHOE | BAKER & MCKENZIE

OFFICIAL statistics place too much weight on the consumer priceindex (CPI) as an inflation meas-ure, according to the RoyalStatistical Society (RSS).

The group said d ownplaying theRetail Price Index in f avour of CPI,

which is used widely acrossEurope, fails to take national needsinto account.

The coalition government said inJune it would start pricing benefits

on the CPI from next April, in amove likely to save billions ofpounds due to its traditionallylower rate.

Giving prominence to CPIahead of other indices means thatusers are implicitly being encour-aged to use it for purposes, such as

wage negotiations, for which it isnot ideal, the society wrote in aletter to the parent body of theOffice of National Statistics.

We do not feel that CPI shouldhave sole star billing in this way.

CPI is not good enough togauge inflation, says RSS

ECONOMY

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TOP FIVE BROKERS

321

45

THE WORLDS second biggest retailerCarrefour said yesterday that thesummer sales trend was mixed inEurope but demand was holding upin emerging markets with an annualoperating profit in its sights.

Tight cost control and a surge inemerging markets lifted first-halfoperating profit by 7.6 per cent to82m (67.8m) while the French com-pany was making headway on itsplan to revamp its hypermarkets in

Europe to boost lagging sales.Carrefour has launched a three-

year overhaul plan at delivering4.5bn of savings. Chief executive LarsOlofsson said in a statement: Ourtransformation plan is deliveringplanned results and makes us confi-

dent of achieving our 2010 objec-tives.

The cautious comments, plus newsof an unexpected 69m one-offcharge in Brazil, where Carrefour alsofaces weak hypermarket sales, haskept the shares under pressure.Execution Noble analyst CarolineGulliver said: Although figures werein line with expectations, commentsfrom the chief financial officer aboutthe European summer sales took theshine off and it looks as though

whilst the French business may beimproving, some of Carrefours other

key markets are deteriorating.Carrefour, behind only US group

Wal-Mart in sales, confirmed that itexpected an underlying operatingprofit of around 3.1bn for the full

year, having achieved 1.096bn in thefirst-half.

Carrefour inprofit boostafter savings

FEARS Cazenove would bleed clientsafter JPMorgan bought out theremainder of the firm were demol-ished as it stayed at the top of the

broking league table yesterday. JPMorgan Cazenove won nine

clients in the past three months,according to data provider Hemscott,putting it in pole position with 253contracts. The blue-blooded institu-tion stole ITV from UBS and alsolooks after FTSE 100 companiesincluding high street bank Barclays.

The figures will disappoint rivalstockbrokers, who hoped to poach

business from the outfit after JPMorgan took over the half ofCazenove it did not own in a 1bndeal last November. Industry insidershad speculated the Americanisation

of a famously British organisationwould put off some customers.

JPMorgan Cazenove also toppedHemscotts list of financial advisers

by adding 16 companies to its clientroster. The group was followed bySeymour Pierce, ArbuthnotSecurities, Numis Securities andCenkos Securities.

KPMG held onto first place in thetable of auditors, while FinancialDynamics strengthened its lead overother City public relations firms.

Slaughter and May held onto the topspot among corporate law advisers.

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JPMorgan Cazenove stays attop of broking league table

BY JOHN DUNNE

RETAIL

BYOLIVER SHAH

FINANCIAL SERVICES


TOP FIVE RETAILERS IN THE WORLD BY 2009 REVENUE

$404.16bn(262bn)

(Asda in UK)

85.96bn(70bn)

59.4bn

65.53bn(53.9bn)

$71.3bn(46.8bn)

TOP FIVE ADVISERS

RANK PREVIOUS OVERALL NO. OF PREVIOUSRANK RANKINGS CLIENTS CLIENT TOTAL

1 1 J.P. MORGAN CAZENOVE 109 93

2 2 SEYMOUR PIERCE 84 89

3 3 ARBUTHNOT SECURITIES 77 79

4 5 NUMIS SECURITIES 68 67

5 5 CENKOS SECURITIES 67 67

RANK PREVIOUS OVERALL NO. OF PREVIOUSRANK RANKINGS CLIENTS CLIENT TOTAL

1 1 J.P. MORGAN CAZENOVE 253 244

2 2 NUMIS SECURITIES 121 118

3 3 CENKOS SECURITIES 97 98

4 5 SEYMOUR PIERCE 90 91

4 4 ARBUTHNOT SECURITIES 90 92

JPMorgan Cazenove,chaired by David Mayhew,stayed at the top of thepile by picking up clientcontracts from rivals

Carrefour chief exec-utive Lars Olofssonsaid he is confidenton 2010

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IF ITS whizz-kids you are lookingfor, then the City is the place to

find them. Our list of the bright-est young things is varied, butevery one of them has shown real tal-

ent and verve so far in their careers.Some are young, others are just new

to the City, but all of them are sure tohave stellar success in the SquareMile. Remember the names.

Dont miss the City event of the year get online now and book your table for

the City A.M. Awards on Thursday 28October 2010 at Grange St Pauls Hotel,London EC4. www.CityAMAwards.com

One of a young team of partnersat wealth management boutiqueThurleigh Investment Managers,where he was made a partner in2008, Allen has made a name forhimself at the tender age of 29.Allen is closely involved with risk-management, and he also runs an

ETFs-only portfolio which was up23.9 per cent last year. TheOxford engineering graduate wasnamed the Citywealth EmergingManager in 2010. Great thingsare expected.

EDWARDALLEN,THURLEIGH

Having joined Bank of AmericaMerrill Lynch as a graduate in2006, Burton-Morgan hasworked in both the investmentbanking and corporate brokingteams and is currently an associ-ate in corporate broking. Heworked on nine equity raisings in

the past year, including forInforma, Scottish and SouthernEnergy, Afren and NationalExpress, but his nomination isbased on his sterling work on thesuccessful Jupiter IPO.

DANIELBURTONMORGAN,BOA MERRILLLYNCH

Nominated for his role inextracting a top price in the bidfor Scott Wilson, the engineer-ing consultancy which was soldto URS this summer following a

BEN

LOOMES,GREENHILL

bidding war, but also singled out

by a number of City insiders asone to watch. A star inGreenhills European M&A,Restructuring and FinancingAdvisory department, where hehas worked since 2003, Loomesalso worked with G4S plc on itsacquisitions of ArmorGroup andGlobal Solutions, and withExperian, Lonmin, Tesco andAlliance Boots on large deals.

The South African native becameArsenals CEO in 2008 and quick-ly won over both fans and busi-ness watchers. He ran AmericasMajor League Soccer for 15 years,and has mixed go-getting withtradition. He re-named parts ofthe Emirates after the old

Highbury stadium, while enhanc-ing Arsenals stability by signingyoungsters on long contracts andsecured manager Arsene Wengerfor three more years. Its a prom-ising start for this young Gunner.

IVANGAZIDIS,ARSENAL

The youngest person on our list at just 22 he makes up in sheerdetermination what he may lackin experience. Sramek grew up ina one-bedroom house in Moravia,

JANSRAMEK,GOLDMANSACHS

set up his first business aged 13,and got 10 As at A-Level. He wona place to study maths atCambridge before transferring toLSE in his second year (he foundCambridge too sleepy). While an

undergraduate he wrote a moti-vational book, and he now worksin emerging markets at GoldmanSachs. His ambitions? To have sixchildren and become a philan-thropist.

T

HE story of the last year forinvestment banks has beenrecovery. While the rest of theeconomy has remained sluggish

the smartest bankers have bounced

back and returned to profit some-times spectacularly so. Still, thingswill never be the same. A re-orderingof the banking world is ongoing, andour list reflects this.

Dont miss the City event of the year get online now and book your table forthe City A.M. Awards on Thursday 28October 2010 at Grange St Pauls Hotel,London EC4. www.CityAMAwards.com.

It has paid out bonuses early totry to prevent its star bankers jumping ship, and there was aslight embarrassment when itsname was dragged into the Prusaborted takeover of AIA theSwiss bank advised the insurer but overall Credit Suisse has beenone of the winners from thedownturn. Over the past 12months money has flooded intoits private banking arm and it hasproved itself a creative and sur-prisingly adaptable bank.

CREDITSUISSE

True, this has not been the bestyear for Goldman. PR-wise.Fabulous Fab Tourre and theAbacus CDO will forever haunt it,and there is still talk that it willspin off its prop trading opera-tion. But the bank has continuedto flourish. Trading remains itsheart and soul, but UK M&A hasbrought it $70m so far this year,and despite its woes it remains aby-word for reliability and cre-ativity, and the go-to bank for thebrightest and best.

GOLDMANSACHS

Where the big banks have suf-fered since 2008, many of theirmiddle-sized rivals have flour-ished. So it is with Numis, whichoffers both banking and stock-

NUMIS broking services, and whose rev-enues were up 63 per cent year-

on-year in the first half of 2010.Its numbers of clients have rock-eted, as many move away fromthe corporate banks and look fora more personalised, hands-onapproach. It recently announcedthat it had won its first FTSE100 client, investment firmAlliance Trust. A bank that is onthe up.

JP Morgan fully bought out theblue-blooded Cazenove earlierthis year, and with 35 FTSE 100clients, it has more than anyother investment bank. It is nom-inated, however, for its work onthe troubled Essar Energy floatin May at the height of the south-ern Europe debt crisis. Thebiggest float on the LondonStock Exchange in more thantwo years, the investment bankhad to buy shares to stabilise theprice. But it got away.

JP MORGANCAZENOVE

Set up by former LehmanBrothers bankers BenoitDAngelin and Michael Tory in2008, this boutique has attract-ed top talent ever since so

ONDRAmuch that it has even beendescribed as the A-Team ofinvestment banking. Over thepast months its reputation hasbeen further boosted by thenews that it has already turneda profit. For some, Ondra showsthat the future of banking liesnot with the corporate behe-moths, but with small, nimbleoperations like this. A trailblazer,perhaps.

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FOXCONN, maker of the iconiciPhone, saw its value tumble yester-day after revealing another set of dis-appointing results.

Its stock fell almost eight per centyesterday morning, its biggest single-day fall in 17 months, after reportingfirst-half earnings fell deeper into thered.

Foxconn recorded a January to Juneloss of $142.64m (92.9m), far worsethan the $18.7m loss it recorded a year earlier, hit by falling handsetprices and higher depreciation costs.

Foxconn blamed the diff icult andvolatile handset market, as well ashigher costs for the loss.

Analysts said yesterday it wouldtake time for the group, which manu-

factures electronic devices for globalbrands including Apple, Dell, Nokiaand Hewlett-Packard, to benefit fromrelocating its manufacturing facili-ties to inner China from higher costcoastal cities.

Shares in the Taiwanese companyclosed down 7.8 per cent to HK$5.13. At one stage, they fell as low asHK$4.98 the lowest level since 22July.

Foxconnfalls deeperinto the red

TECHNOLOGY


OFCOM has received a third competi-tion complaint about BBC-backed video-on-demand service ProjectCanvas.

Regional broadcaster Six TV joinsVirgin and Sky in claiming the joint venture will unfairly dominate theonline TV market.

Virgin lodged an official complaintearlier this year and now Six TV hasbranded the venture a poison pillfor the local TV industry.

Detractors also claim the servicewill place too much pressure on theUKs struggling broadband network.

Six TV chief executive Daniel Casssaid: Some parties appear to presentthe Project Canvas platform as theanswer to the challenges faced bynew local TV services.

Far from a panacea, we regardProject Canvas as a poison pill whichwill have a negative effect on oppor-

tunities for important new televisionservices to enter the market. We arecalling upon Ofcom to launch a fullinvestigation of the actions of thejoint venture partners as we do notbelieve local TV will be viable in theUK otherwise.

The joint venture between mediaand telecoms giants includingTalkTalk, BT, Arqiva, Channel 4, ITV,Orange and Channel Five aims toapply the success of Freeview to theonline TV market by making it avail-able through a set-top box.

Its members say the system is open

and other firms are welcome to jointhe project.

Canvas calledpoison pill forinternet TV

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SHAMED FORMER HP BOSS TO LEAVE NEWS CORP

WHEN it rains it pours. Yesterday it emerged beleaguered former HP boss Mark Hurd willnot be nominated for reelection as a director at Rupert Murdochs News Corp. He was

forced out of the top job at HP after irregular expense claims emerged followingdamaging allegations by former porn-star Jodie Fisher (above).

GatemoreThe investment consultancy hasappointed Bella Edmunds as a senior

analyst, to be based in London.Edmunds will support UK clients as wellas assist with Gatemores European

manager research. She has more thanten years experience in financial servic-es and joins from JLT Actuaries &Consultants. Prior to this she worked atBarnett Waddingham.

RSAThe insurance firm has hired NickMinney as an account manager in theproperty investor division. He will beresponsible for developing and main-taining relationships between the teamand brokers. Minney has over 22 yearsexperience in insurance, and joins fromthe property team at Aviva. He startedhis career at R.K. Harrisons, and has

also worked as a commercial accountmanager at Allianz.

Caledon ResourcesThe energy company has appointedDavid Spencer Treadwell as a non-exec-utive director with immediate effect.Treadwell, aged 41, was a foundingpartner at Cheyne CapitalManagement, and spent six years atMorgan Stanley as a portfolio managerwithin the private client services divi-sion. He established Treadwell Partnersin 2009, which provides services to cor-porates, brokerages and high net worthindividuals.

GL HearnThe property consultancy has madethree new hires to expand its UK plan-ning operations. Giulia Bunting is cur-rently head of planning at Drivers JonasDeloittes London office, while ShaunAndrews joins from Cushman &Wakefield where he is currently head ofplanning. Graeme Tulley is a nationalhead of planning and leader of the towncentres practice group at DTZ. BrianSloggett, managing director, said: Asthe planning and development environ-ment becomes increasingly complex weexpect our business in this area to groweven further.

CITY MOVES | WHOS SWITCHING JOBS Edited by Marion Dakers

Russell-Cooke LLPThe London law firm has continued its expan-sion by hiring Edward Wanambwa as employ-ment partner. He joins from CM Murray LLP,having trained at Bryan Cave and previouslyworked at Clifford Chance. He has been taskedwith building the firms business immigrationpractice, having worked on immigration issuesthroughout his career. This brings the numberof specialist employment lawyers at the firm tofour partners and four assistants.

+44 (0)20 7557 7245morganmckinley.com

To appear in CITYMOVESplease email your careerupdates and pictures to [email protected] SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

in association with

Is a joint venture between media and tele-coms giants including BT, ITV, BBC and TalkTalk. It will offer online TV to viewers through aset-top box. Developers can choose to charge for content.

FAST FACTS | PROJECT CANVAS

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EXPATS living in the UK have ratedthe region as one of the leastfavourable locations to live in the world, citing difficult job markets,reduced levels of disposable incomeand higher personal debt as the rea-sons, according to new survey find-ings.

HSBCs annual Expat Explorer sur-vey found that the UK was rated byexpats as one of the worst locations tolive when it came to wealth andcareer opportunities.

Up to 67 per cent of expats living inthe UK said the local economy haddeteriorated since 2009. As a result,two-thirds of those surveyed in theUK said career opportunities have

been reduced.Thirty-one per cent of people said

they have to closely monitor expendi-ture due to the high cost of living.

Meanwhile, the UK is home to thehighest number of expats who areaccumulating more debt, with 11 percent of the total 4,100 expats surveyedby the bank reporting it was harderto save money in the UK.

UK rated worst place to live by expatsECONOMY

BEST OF THE BROKERS

ANALYSIS lCarrefour

32

33

34

35

36

37

9 Jun 29 Jun 19 Jul 6 Aug 26 Aug

35.8331 Aug

CARREFOURExecution Noble issues a sell rating onthe French grocer following its first-halfresults yesterday. The broker says some ofCarrefours key markets are deteriorating,for example in Brazil, and that the firmsnew strategy in France will be critical toany recovery. Shares are trading at a sixper cent premium to the sector..

ANALYSIS lNational Bank of Greece

9

9.50

10

10.50

11

11.50

12

7 Jun 28 Jun 19 Jul 9 Aug

11.5531 Aug

NATIONAL BANK OF GREECEStandard & Poors maintains a strong sellrecommendation after the banks secondquarter results. NBGs pre-tax profit of104m missed broker forecasts due tohigher costs and credit losses, though rev-enues were in line. The broker says Greecesmacro instability paints a bleak medium-term outlook for margins.

ANALYSIS lSanofi-Aventis

45

46

47

48

49

50

51

52

9 Jun 29 Jun 19 Jul 6 Aug 26 Aug

45.2731 Aug

SANOFI-AVENTISRBS rates the pharmaceutical company abuy with a target price of 58 (48), butargues the firm has only limited room formanoeuvre following its initial takeoverapproach for US peer Genzyme. The brokersays the purchase would give opportunitiesfor considerable cost-cutting, but is lessconvinced of some production synergies.

To appear in Best of the Brokers email your research to [email protected]


ASTRAZENECAS MedImmune biolog-ics unit has been asked by US regula-tors for more information on itsinfant lung drug motavizumab afterdrug regulatory advisers recommend-ed against approving it in June.

The request, known as a completeresponse letter (CRL), from the USFood and Drug Administration (FDA),asked for evidence from an additionalclinical trial to support a risk/benefitprofile in a patient population for

which a prophylaxis indication isbeing requested, AstraZeneca said.

US regulators said on 25 June they were deferring a decision on theexperimental lung drug for twomonths after outside advisers recom-mended against its approval in apanel review on 2 June.

The company continues to believein the clinical benefit of motavizum-ab, and it will conduct a completereview of the CRL, continue ongoingconstructive dialogue with the FDA as

well as make a decision regardingnext steps in due course,AstraZeneca said in a statement.

The Anglo-Swedish drugmakersMedImmune unit developedmotavizumab to prevent serious res-piratory syncytial virus (RSV) in high-risk infants. RSV is a conditionaffecting around 125,000 infants inthe United States each year.

Given the small number of chil-dren affected by RSV, the experimen-tal drug has not been viewed as amajor product for AstraZeneca.Analysts have expressed doubt about

the commercial potential of the drug.FDA advisers said in June they were

concerned data showed the new drugto be only as effective in reducing RSVhospitalisations as AstraZenecas cur-rent therapy Synagis, but with agreater chance of serious skin reac-tions.

The FDA usually follows the recom-mendations of its advisory commit-tees.

AstraZenecas Synagis had world-wide sales of $1.1bn (717m) in 2009.

Astrazenecalung drug hitsa fresh hurdleBYHARRY BANKS

PHARMACEUTICALS

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RUSSIAS RUSAL, the worldslargest aluminium producer, said yesterday it swung back to theblack in the second quarter as salesincreased, and added it plans tolaunch depositary receipts inRussia later this year.

In total, for the six months to theend of June Rusal produced a netprofit of $1.27bn (825m), com-pared with a net loss of $868m ayear ago. Revenue rose 42 per centto $5.32bn from $3.76bn.

The firm put the rise down tohigher prices for the lightweightmetal at the start of the year.

Rusal, which has the Russian oli-garch Oleg Deripaska as its chief

executive, said it expects these con-ditions to continue due to strongdemand from China, the US,Europe and Japan.

Deripaska said: [The] continuedrecovery in global markets shouldgenerate good opportunities forgrowth in demand for aluminiumas it is a base metal required to sup-port key industries and growingeconomies.

Rusal enjoys a competitiveadvantage over Chinas Chalco and

other rivals due to favourable taxrates in Russia.

EuroNext-listed Rusal, whichalso listed on the Hong Kong stockexchange in January after raising$2.2bn, said it intends to launch aRussian depository receipts pro-gramme to be listed on MICEXStock Exchange and RussianTrading System Stock Exchange bythe end of 2010.

Finally, Rusal also said it hadappointed Evgeny Kornilov, former-ly chief financial officer of Russianretail group X5, as its chief finan-cial officer. Tatyana Soina, who pre- viously served as chief financialofficer of Rusal, will head its newlyformed department of control,

internal audit and business coordi-nation.

Rusal swings back

into the black againBYROGER BAIRD

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Hermes liftedby new surge inhandbag sales

FRENCH luxury goods group Hermesposted a 55 per cent rise in first-halfpre-tax profit, boosted by leathergoods, and slightly raised its f inancialtargets for the full-year yesterday.

Pre-tax profit rose to 194.6m(160m) in the f irst six months of theyear.

Hermes, known for its printed silksand leather handbags, said it expect-ed its full-year operating margin toimprove by at least one percentagepoint, whilst sales at constantexchange rates could rise 12 per cent.

Handbag sales, particularly in Asia,helped to fuel the profit jump.

Hermes last month raised its full-year sales growth target to 10 to 12per cent from five per cent after sec-ond-quarter sales beat its own expec-tations and predicted a one point risein its margin.

The luxury goods industry, whoserevenues fell eight per cent last yearaccording to US consultants Bain &Co, is crawling out of its worst down-turn in decades, buoyed by travellingshoppers from emerging markets.

BY JOHN DUNNE

RETAIL

NEWS | IN BRIEF

Boeing confident of 787 deliveryBoeing is confident it can deliver the first787 Dreamliner in the middle of the firstquarter of 2011, the chief financial officer ofthe worlds largest aerospace and defence

company said yesterday. Speaking at a con-ference hosted by Morgan Stanley, JamesBell reiterated the updated delivery targetfor the long-delayed carbon-composite com-mercial aircraft. Last week, the companyannounced another Dreamliner delay thisone related to a delay in the availability of aRolls-Royce engine needed for the final phas-es of flight testing. The plane is already morethan two years behind schedule.

Visteon to exit bankruptcyFormer Ford unit Visteon yesterday receivedcourt approval for its bankruptcy reorganisa-tion, ending a 15-month fight among hedgefunds, lenders and an industry giant for apiece of the revived auto parts maker.Visteon overcame objections about thetreatment of retiree benefits and the waybig-money shareholders, but not individualshareholders, were given the right to buy

stock in the reorganised company. The for-mer Ford unit that makes air conditioningand electronics systems exits bankruptcyunder the control of bondholders, who wereowed about $870m (567.4m).

Brazil government boosts bankBrazils federal government yesterday inject-ed 1.4bn reais (523m) into the capital baseof state-controlled development bankBNDES, which is poised to lend a recordamount this year. The government will cedeshares in state-controlled electricity utilityEletrobras to Rio de Janeiro-based BNDESas part of the plan, according to a post in theofficial government gazette. The gazette didnot say what the BNDES would give the gov-ernment in exchange for the Eletrobrasshares. Last week, the government trans-ferred about 7bn reais worth of Petrobrasstock into BNDES and Brasilia-based CaixaEconomica Federal, Brazil's largest mortgagelender. The decision underscores PresidentLuiz Inacio Lula da Silvas wish to strengthenthe balance sheets of state lenders so theycan ramp up lending.

Hermes has been boosted by handbag sales in Asia. Picture: GETTY

Rusal chiefexecutive OlegDeripaska said heexpects strong

demand this year

MINE operator Medusa Mining hasreported a record first-half net profitof $65.8m (42.9m).

The figure, for the year to 30 June,is up 131 per cent, boosted byincreased gold production and higherprices. Revenue was also up 121 percent to 94.6m, the company said.

Medusa, which said it remaineddebt-free, received an average goldprice of $1,100 per ounce from thesale of 64,020 ounces.

It had total cash and bullion of$55.8m at the end of the year, up

from $26.5m.Medusa, which is Philippines- based, produced a record 89,679ounces of gold from its Co-O mine. Itsbudget for the new fiscal year was for100,000 ounces at cash costs ofaround $190 per ounce.

Managing director Geoff Davis said:The company is in the fortunate posi-tion of being a low-cost gold producerin an economic climate where gold istrading near record highs.

Medusa Mining reportsa record first-half profitMINING

LONDON-listed property and casualtyinsurer Omega Insurance sank into

the red in the first half of the year,weighed down by a string of costlynatural disasters including theChilean earthquake.

These catastrophe losses, togetherwith the lag that currently exists in2010 premium earnings, have had amajor effect on our half-year results,chief executive Richard Pexton saidyesterday.

The outlook for the second halfdepends very much on the level of

hurricane activity, with Omega likelyto suffer in the event of a large natu-ral disaster even as some insurersbenefit.

In the absence of a significant

catastrophe, we would expect tobreak even at the end of the year, ifthere is a very large catastrophe, thatwill be a struggle, he added.

Omega swung to a pre-tax loss of$34.2m (22.3m) in the six months to30 June from a profit of $22.9m a yearearlier, in line with its profit warningthis month indicating it was oncourse for a loss of $35m.

Omega blamed a high level ofclaims stemming from catastrophes

including the Chilean quake, the BPoil spill in the Gulf of Mexico andhailstorms in western Australia.

But the insurer said it remainedconfident of its future prospects and

held its interim dividend at six centsper share.It said that the time lag on premi-

um flows, which dented first-halfprofits, will even out in the second-

cityam 2010-09-01

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