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FTSE 100 5,439.19 +11.04 DOW CLOSED NASDAQ CLOSED /$ 1.54 -0.01 / 1.20 unc /$ 1.28 -0.01 Certified Distribution05/07/2010 till 01/08/10 is 94,889

Gartmore

hit by rowover trust

AILING fund manager Gartmore suf-fered another blow yesterday as theindependent board of one of its mosthigh-profile investment trusts threat-ened to cut ties with the company.

The Gartmore GrOpportunities trust served 12-monthnotice on Gartmore following theshock resignation of star fund manag-er Gervais Williams. Williams, whoquit last week after 17 years at theinvestment house, is said to have beenunhappy about the way the group

was being run for some time.Investors in the Growth

Opportunities trust are understood to be livid at Gartmore for lettingGervais go. The trust is consideringhanding its mandate to a rival fundmanagement outfit.

Potential candidates includeBlackRock, Henderson and Jupiter, allof whom have thriving investmenttrust departments.

Other options being mulled by theboard are to re-engage Williams whenhe surfaces at another asset manageror to liquidate the trust. Because thenext quarterly opportunity forinvestors to jettison shares falls inmid-October, the clock is ticking.

The board will meet witGartmores replacement for

Williams, Adam McConkey, thi week. But a source told City A.M.:

Shareholders are absolutely livid andtheyre not going to be comfortablehaving someone foisted on them.

Theyre not going to rush things.

BY OLIVER SHAH

FUND MANAGEMENT

Investment banking veteran Bob Diamond will take over at a crucial time for Barclays Picture: GETTY

BARCLAYS will today name invest-ment banking president BobDiamond as successor to chief execu-tive John Varley in a surprise shake-upat the top of the British bank.

Diamond, who is credited with pro-pelling Barclays Capital into the pre-mier league of Wall Street players, isexpected to take the reins next yeararound the time of the groups annu-al general meeting in April. He willrun Barclays along similar lines and

will continue to defend the merits ofuniversal banking in the face of callsfrom politicians for giant institutionsto be broken up.

When he became chief executive in2004, Varley told the board he wouldretire at 55. Having reached that agethis year he has decided to step downto concentrate on other projects.

Varley will continue to sit on theboard of drugs maker AstraZeneca asa non-executive director and willdevote more time to his charitableactivities, which include chairing theBusiness Action on Homelessnesscampaign and running theEmployers Forum on Disability.

Diamond and Varley have devel-oped a strong rapport over the pastseven years. Diamond will be seen asthe natural choice to step into the

breach despite his lack of experiencein the retail lending arena. The 59-year-old American joined

the company from Credit Suisse in

BOB DIAMOND SETTO LEAD BARCLAYSBY OLIVER SHAH

BANKING

www.cityam.comIssue 1,214 Tuesday 7 September 2010 FREE

BORISSPEAKS OUTWARNS BANKS TO

HEED PUBLIC

ANGER ON PAY P3

HOW TO GET AROUNDTODAYS TUBE STRIKESOUR GUIDE TO THE CHAOS P4-5

BUSINESS WITH PERSONALITY

1996 and has enjoyed increasing free-dom at the helm of BarCap. His great-est coup to date, the purchase of theUS brokerage arm of LehmanBrothers at a knock-down price in themiddle of the financial crisis of 2008,gave Barclays a foothold from which

to compete against the likes ofJPMorgan and Goldman Sachs.However, some UK shareholders

will be concerned by Diamonds more

brash style. While Varley won popu-larity in the City with his quintessen-tially English manner, Diamondsovert association with a culture ofhigh remuneration has made him atarget for politicians. Before the gen-eral election earlier this year, then-

business secretary Peter Mandelsondubbed him the unacceptable faceof banking after taking home areported 63m pay cheque in 2009.

Diamond will take control at a cru-cial time for Barclays. Internally, hefaces the challenge of weaning thegroup off its dependence on BarCaps

volatile revenue streams. On a broad-er level he faces myriad regulatoryissues including the incoming UK

levy on balance sheets and the possi- bility of a Glass-Steagall separation, which executives have hinted couldforce Barclays to quit the UK.

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EUROPEAN finance commissionerMichel Barnier will take on the UKtoday when he advocates setting up aseries of liquidation vehicles fundedthrough a region-wide bank tax.

Chancellor George Osborne hasrefused to back the use of tax rev-enues to create funds to wind downfailed institutions, arguing that ring-fencing the proceeds of bankinglevies would encourage risk-taking.

But Barnier will present a workingpaper to a meeting of EuropeanUnion finance ministers arguing forthe establishment of several resolu-tion funds financed by a pan-EU taxon lenders balance sheets. A briefingpaper said the system would removemoral hazard, whereby banks knowthey can take risks because they areeffectively insured by taxpayers, andencourage responsible behaviour.

The proposal has been taking shapesince the financial crisis saw the likesof Lloyds Banking Group and Royal

Bank of Scotland in the UK, and Fortisin the Netherlands, propped up withgovernments cash. Barnier is expect-ed to recognise the tax will come in ata time when banks are under pres-sure to hold more capital.

The rate of the levy must not beset so high that it damages prospectsfor economic growth, he will say.

Like Osborne, Barnier believes thelevy should be based on banks liabili-ties minus their guaranteed deposits.However, it is understood the UK willstrongly oppose the plan to ploughthe proceeds into wind-down funds.

A Treasury source said: We havebeen very clear that revenues shouldgo to the Exchequer and should not

be ring-fenced nationally or at aEuropean level. COMMENT: P19

Barnier takes

on UK withbank tax plan

Weak rise in high street sales

SALES on the high street picked upslightly last month but the positive

performance was flattered by anextremely weak August 2009, theBritish Retail Consortium (BRC) willsay today.

Like-for-like sales values, whichstrip out the effect on sales ofchanges in floorspace, rose one percent in August compared to the sameperiod a year earlier with food salesgrowth slowing slightly. However, it

was still stronger than in both Mayand June and, in the three months to

August, food sales rose 1.8 per centon a like-for-like basis.

Non-food sales gained 0.3 per cent

but this was mostly driven by promo-tions, the BRC said.Stephen Robertson, director gener-

al of the BRC, said: The good news issales are still growing but anxietyabout job cuts and tax rises is puttingpeople off making major spendingcommitments.

He added: With the governmentabout to detail its cuts and a VAT rise

in prospect, retailers will be hopingconsumer confidence doesnt slipover the next few months.

Helen Dickinson, head of retail atKPMG, said: Overall sales perform-

ance deteriorated marginally as themonth progressed, driven by a slow-ing in food, but all other sectors con-tinued to show high levels of

volatility.Economists expect retail sales to be

hit by waning consumer confidence,a dip in disposable income from aus-terity cuts and the VAT hike in

January.

BYOLIVER SHAH

TAXATION

BY JESSICAMEAD

RETAIL

LAST month was the busiest onrecord for international shoppers hit-ting UK stores, a new survey showedtoday.

Sales were up 18 per cent withshoppers from China, Russia,

Thailand and Malaysia leading theboom. The hike came despite MiddleEastern shoppers heading home forreligious festival Ramadan during the

month. The growth in Chinese shop-pers was 73 per cent. They snapped

up luxury items, particularly watch-es. Meanwhile Thai shoppers were up71 per cent, Russians 45 per cent andMalaysians 44 per cent.

Nigel Dasler, vice president offinancial service company GlobalBlue which carried out the research,said: We have seen a concentrationand increase in spend from theMiddle East market.

Record for foreigners inUK shopping bonanzaRETAIL

News 3CITYA.M. 7 SEPTEMBER 2010

Boris Johnson has criticised Tory economic policy Picture: Micha Theiner/ CITY AM

EU finance commissionerMichel Barnier wants touse a pan-European banklevy to fund a series ofwind-down vehicles

MAYOR of London Boris Johnson, oneof the very few politicians who untilnow has defended the City, has calledon bankers to cut back on theirChristmas bonuses.

Johnson said the spectacle otraders taking home large payouts

would create a combustible con-trast with the first wave of publicsector job losses, which are expectedto follow next months governmentspending review. An unwise display of

wealth could provoke a regulatorybacklash that would damage Londonas a centre for business, Johnson said.

The banks have got to understandthat this year public feeling may beeven more inflamed than last andpoliticians will be facing colossal pres-sure, the mayor wrote in a column.David Buik of BGC Partners said:Boris is living in fantasy land. The

banks need to get their profits up tothe highest level they can to repay thetaxpayer and if one of the ways to dothat is to pay bonuses to attract profit-generators, so be it.

In remarks certain to irk the Toryleadership, Johnson also claimed themain argument for cutting theBudget deficit early to reduce gilt

yields and protect the UKs credit rat-ing no longer looks as strong as itdid.

Johnson warnsbanks to heedanger over pay

POLITICS

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MILLIONS of Londoners faced longdelays getting into work today asLondon Underground (LU) strikers areset to continue their action into theevening.

Yesterday at 5pm, LU maintenanceand engineering staff left their postsand were followed four hours later bydrivers, signallers, station staff andoperational managers at trade unionsRMT and Transport Salaried Staffs

Association (TSSA).

The disruption is affecting LUsentire Underground network, withdelays expected to continue all thisevening.

Transport for London (TfL) said pas-sengers can expect a return to rela-tively normal service by the start oftomorrows morning rush hour com-mute but that some minor disrup-tions should still be expected.

Last night, Londoners scrambled toget home early before the strikes

began.

Commuters flooded into under-ground stations before 5pm to catchthe Tube, while overland trains leav-ing London Bridge station were

busier than usual and commutersfought for space on Londons buses.

TfL said it will keep London mov-ing through the course of the 24-hour strike period and yesterday putits plans into action.

Roughly 100 extra buses wereadded to main routes, whileLondoners were also encouraged toget on their bikes. But due to over-crowding, its likely that most will

have to travel to work by foot. Just half an hour after the strike

started last night, disruptions werealready reported on the Bakerloo,Central and District Lines.

At the centre of the bitter disputeare cost-cutting measures LU said it

will have to take in order to avoid araft of draconian cuts in nextmonths government spendingreview. The cuts will affect under-ground station staff. Unions RMT and

TSSA have called the cuts unsafe.

Tube strikescause miseryfor LondonersBY EMMA SADOWSKITRANSPORT

Focus on Tube Strikes4 CITYA.M. 7 SEPTEMBER 2010

CITY VIEWS: IS THE TUBE STRIKE THE START OF WIDESPREAD INDUSTRIAL ACTION? Interviews by Marion Dakers

NEAL TAYLOR | A.F.M.E

Commutersfaced a tough timegetting into work

this morning asTube workers went

on strike over job

cuts

I get the train straight to

Fenchurch Street so wont becaught up in this strike, but Iwouldnt be surprised if therewere more. There seems to bean awful lots of strikes hap-pening now, and they havelost quite a lot of theirimpact.

SAM DAVIDSON | BELL & CLEMENTS

Its a real pain for commuters,

and it probably wont get thestriking workers what theywant. The threat of strikes isfrustrating if youre trying tobook a holiday abroad. Theaction is going to lower shareprices, which is surely notgoing to help the workers.

SCOTT HARRIS | DALLAS KIRKLAND

All the strikes will be about pay,

no doubt, and they will never feellike they are paid enough. Wevegot to take it all with a pinch ofsalt, as the unions aregoing to do whateverthey want. Luckily Ivenot been affected thistime around yet.

HOW TO BEAT THE STRIKE

TUBETfL said disruption is likely to themajority of journeys, but LU hasbid to run as many trains andkeep as many stations open aspossible. According to LU, volun-teers will be on hand at key sta-tions throughout London to

provide alternative travel optionsto passengers.

BUSESLondons buses will continue tooperate around 700 routes, withthe addition of 100 buses onextra busy routes during thestrike. Extra staff will also beadded on major hubs to assistpassengers.

RAIL AND THE DLRThese services will operate on anormal schedule, howeverLondon Underground has warnedthat some disruptions may occurwhere there are interchangeswith Tube stations. Network Railservices will also operate a nor-mal service.

CYCLING

TfL said that over 5,000 of itsBoris bikes will be available tohire for members althoughdemand for the service is expect-ed to be high, especially at peaktimes. The transport group hasencouraged Londoners to cycleinto work and has pledged toprovide guided rides today. TfLsaid: We've written to hundredsof businesses across London toask them to be flexible and make

it easy for staff to cycle to work,and to allow staff to wear casualclothes on the day.

RIVER SERVICESTfL is to add 10,000 additionalseats on boats travelling on theThames between Towe Bridge,Westminster and London Eye

Piers.

TAXISThis morning taxi drivers will beoperating a marshalled servicefor central London at Waterloo,Liverpool St, Kings Cross,Charing Cross and Marylebonetrain stations, while fixed-faretaxi sharing will be implementedat Euston and Paddington sta-tions. In addition, the fixed-faretaxi sharing schemes at EustonStation and Paddington Stationare expected to operate as nor-mal

DRIVINGThe Congestion Charge willremain in operation throughoutthe strike. However, TfL added:We will be delaying or curtailingroad works on major London

roads wherever possible and areencouraging all London boroughsto take similar measures on theirnetwork.

WALKINGTfL will provide passengers withwalking maps at Tube stationswithin Zone 1 and key outerLondon stations, with volunteershelping people plan their routesaround the city.

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Focus on Tube Strikes 5CITYA.M. 7 SEPTEMBER 2010

CITY VIEWS: WHAT DO YOU THINK ABOUT THE TUBE STRIKE?By Emma Sadowski

JOHN CRIDLAND | CBI

It is disappointing that the RMT andTSSA have decided to go ahead with this strike,which will disrupt London at work. It willcause misery and disruption to the generalpublic and to employers.

COLIN STANBRIDGE | LCCI

Londoners will still struggle in to work,aided by the additional transport laid on by themayor. However, the worlds leading busi-ness centre will suffer.

PHILIP HAMMOND | TRANSPORT SECRETARY

A tube strike would be bad for passengers, bad for business and bad for London. At a time when public financesare under pressure any strike by tube workers will be seriously damaging undermining the case we are making withinthe spending review for continued investment in the Tube.

Q&A: WHAT IS THE DISPUTE ABOUT?Q.WHY ARE WORKERS STRIKING?A.London Underground staff, asrepresented by unions RMT and

TSSA, are striking against proposalsby London Mayor Boris Johnson andTransport for London (TfL) to cut up

to 800 station jobs, including ticket-ing staff and station management ina bid to save the cash-starved net-

work from a series of governmentfunding cuts.

Q.HOW WILL THE CUTS HITUNDERGROUND WORKERS?A.TfL has said that it plans toreduce the number of opera-tional hours at Underground ticket-ing offices by nearly 7,500 a weekacross the network. TfL has said that

at some stations, including LatimerRoad and North Ealing, ticket officessell less than 10 tickets an hour,

while only one in 20 Undergroundjourneys begin at a ticketing office.TfL said this is a result of the Oystercard programme.

Q.SO WHY ARE THE UNIONSUNHAPPY?A.RMT and TSSA have argued thatthe proposed cuts are now a safe-ty issue as ticketing staff not only selltickets but also provide assistance topassengers. The unions have alsoargued that a brightly lit ticketingoffice provides a safe haven to pas-sengers, especially for women whoare travelling on the undergroundnetwork, at night or when few

people are around.

Q.ARE JOB CUTS THEONLY ISSUE?A.Not entirely. On Sundayevening at 7pm, over 200

Alstom-Metro workers left their

posts to strike for 24 hours. Thetrain engineers, who service theNorthern and Jubilee Lines are dis-puting pay levels. The RMT votedagainst a proposed two per centpay increase for Alstom staff, butthe company called the proposalsfair and reasonable in the cur-rent financial climate. Engineersplan to strike on 2 October, 1November and 27 November. RMTsaid this first strike would be rocksolid.

Q A&

NEWS | IN BRIEF

Blair cancels book signingFormer Prime Minister Tony Blair can-celled a book signing at Waterstones inPiccadilly planned for today to preventcausing the public and the police a lotof hassle. Eggs and shoes were thrownat Blair at a similar event in Dublin atthe weekend by anti-Iraq and

Afghanistan war protesters. Blair added:"I know the Metropolitan Police would,as ever, have done a superb job in man-aging any disruption but I do not wishto impose an extra strain on policeresources, simply for a book signing.

Police to reopen Coulson probeThe Metropolitan Police said it wouldlook again at new material on thealleged phone-hacking of prominent fig-ures by News of the World reportersunder former editor Andy Coulson, whois now head of communications atNumber 10. Labour MPs in parliamentdemanded the police reopen the investi-gation, while home secretary TheresaMay said this was solely a decision forthe police. The allegations resurfacedlast week, when reporter Sean Hoaretold the New York Times that the prac-tice of phone hacking was more exten-sive than the newspaper acknowledged,

and that Coulson had personally askedhim to hack phones. Coulson denies this.

UK faces EC calls to end rebateThere is no longer any justification forthe UK's EU budget rebate worthabout 5bn last year the EU budgetcommissioner said. Janusz Lewandowskitold the German daily paperHandelsblatt that UK income per headhad grown markedly since former PrimeMinister Margaret Thatcher negotiatedthe rebate in 1984.

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UNITE, the union representingBritish Airways (BA) cabin crew, has

warned that a further strike ballotis inevitable with the Christmasholidays the next likely target forindustrial action.

Yesterday up to 2,000 membersof the British Airlines Stewards andStewardesses Association (BASSA),the BA crew branch of Unite, metat Kempton Park Racecourse todebate whether or not to launchanother strike ballot.

Union members voted to goahead with the ballot, leaving thefinal decision to launch the poll

with Unites joint general secre-taries Tony Woodley and Derek

Simpson.Unite is to meet with BA next

week in Manchester at the TradeUnion Congress in a bid to settlethe long standing dispute, whichhas already seen crew cause disrup-tion to BA passengers and cost theairline more than 150m.

BA management and Uniteremain at odds over disciplinaryactions taken by the airline duringthe previous 22-day strike periodand the removal of travel perksfrom striking crew.

A spokesperson from BA said:We continue to be in contact withUnite. We have received no notifi-cation of any ballot for industrialaction. Unites crew branch BASSAhas been talking about a ballot forthe last three months. It does not

have the authority to call a ballot.Should the vote for further

industrial action go through, BAsChristmas operations could beseverely disrupted causingheadaches for the airlines passen-gers.

The news comes as BA chief exec-utive Willie Walsh has outlined hisplans to significantly expand theairlines footprint.

Walsh has already drawn up ashortlist of 12 possible airlines BAcould merge with once the

American Airlines and Iberia tie-ups are complete.

BA also signed a codesharingagreement with Indias Kingfisher

Airlines to share flights betweenthe UK, Europe, India and SriLanka.

Unite: BA strike

ballot is inevitableBY EMMA SADOWSKI

AVIATION

VIRGIN ATLANTIC managementmet with members from tradeunion Balpa yesterday in a bid tosettle tensions with the airlinespilots and avoid a possible strike.

The two met last night in anattempt to smooth over a mount-ing dispute between Virgin

Atlantic and its pilots over holidayentitlement and time off.

Balpa, which represents over 75per cent of airline and helicopter

pilots in the UK, said the dispute isover the number of days pilots are

allowed to take off in addition toholiday privilege.

Virgin Atlantic pilots have beenangered by changes to a system

which guarantees them 120 daysoff a year, on top of holiday, inreturn for routinely working week-ends and bank holidays.

The airline is looking to trim thefigure in a bid to cut costs. The air-line reported a 132m loss last year.

If neither side can come to anagreement, Balpa already threat-ened Virgin Atlantic with the possi-

bility of launching the first strikethe airline will have suffered.

A spokesperson from the airlinesaid that last months talks wereconstructive and that it awaitedBalpas reaction.

As City A.M. went to press lastnight, a decision had not beenmade. Yesterdays discussions fol-lowed a meeting last month

between the union, the airlinespilots and senior figures at Virgin

Atlantic to address the growingconcerns.

But talks ended early last monthin a bid to avoid confrontation as

no agreement was reached at thattime.

Virgin Atlantic and Balpa meet toavoid industrial action by its pilotsAVIATION

BRITISH AIRWAYS is planning to boost its investment at London City Airport with the launch of newtransatlantic services.

The Flag-carrier introduced a 32-seat all-business service from thedocklands airport to New Yorks JFK

just over a year ago.But yesterday chief executive Willie

Walsh said: This route has exceededour expectations. We are now lookingat adding capacity or adding newcities like Boston and Washington.

Walsh, who was speaking in Mumbaiafter the launch of the improved 777-300ER long-haul service to the Indiancommercial capital, would not bedrawn on when the increased service

would start. However, sources close toBA said ordering the specially modi-fied Airbus A318 planes would meanthe plans could not be put into place

before the end of next year.

British Airwaysplans to boostits London CityAirport service

AVIATION

Aviation News6 CITYA.M. 7 SEPTEMBER 2010

A HIGHER number of travellers areturning to budget airlines easyJet andRyanair according to August passen-ger figures published by the two carri-ers yesterday.

The figures indicate a general moveby air passengers towards low cost air-lines, as each posted an increase inpassenger numbers last month.

EasyJet said yesterday that it car-ried 5.2m passengers in August,marking an 8.4 per cent increase incustomer traffic from the same peri-od last year when it flew 4.8m people.

The airline, founded by Sir Stelios

Haji-Ioannous easyGroup in 1995,said it flew 48.4m passengers duringthe 12 months ended August.

The budget airline reported that92.3 per cent of available seats on its

planes were filled last month.Meanwhile, rivals Ryanair carried

12 per cent more passengers duringAugust after 7.68m customers turnedto the budget airline.

Despite this, Ryanair filled a small-er portion of its planes after 89 percent of available seats on its aircraft

were taken.The Dublin based airline has flown

70.9m people during the 12 monthsto August.

However, this figure includes the1.45m passengers who were eitherdisplaced or saw flights cancelled

when European regulators closed air-space after an explosion of a volcanoin Iceland.

The numbers show an exodus fromlarger airlines, including British

Airways, which reported August pas-senger traffic was down after it flew3.154m customers last month.

Budget airlines fly ahigher number of

August passengersBY EMMA SADOWSKI

AVIATION

Month August 2010 August 2009 Change

Passengers 7.68m 6.88m 12%

Load Factor 89% 90% -1%


Passengers 3.154m 3.157m -0.1%

Load Factor 84.4% 84.7% -0.3 pts


Passengers 5.2m 4.8m 8.4pp

Load Factor 92.3% 91.8% 0.5pp

AUGUST 2010 PASSENGER TRAFFIC

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LAND Securities has managed tosecure tenants for 96 per cent of itsretail space in the One New Changeshopping centre on Cheapside, over amonth before the firm expects con-struction to end.

The property developer said yester-day it is in talks over the remaininghandful of units, which include thetwo rooftop cafes overlooking StPauls cathedral that Gordon Ramseyand Jamie Oliver rejected as being too

small. The two restaurateurs have since

signed deals elsewhere in the devel-opment, and will trade alongsidearound 60 other retailers in 220,000square foot of retail space when thedevelopment opens on 28 October.

Land Securities retail managerDavid Atcherley-Symes denied thatfashion chains were just attracted tothe Square Mile by the cheaper retailrents.

The lets include several shops

such as Topshop which have always been looking for places in the City but have never been able to find aspace big enough, he told City A.M.

yesterday.Rents are obviously less in the City

than they are in the West End, butthe amounts were talking aboutreflect rents that were being paid onCheapside two years ago.

He added that some shops havesigned rent agreements that are tiedto turnover, meaning they will payless rent if sales are disappointing.

Some of the firms have never been

to the City before, and they are a bitwary. To help them get over that weare sharing the risk, and we are confi-dent in the strategy, he said.

Land Secs saysCity shoppingsite all but full

ANALYSIS l The outlets that have already rented space at Land Securities One New Change

CHEAPSIDE

POULTRY

MANSION

HOUSE

STPAULS

STPAULS

CATHEDERAL

WATLINGST

CANNONST

NEWGATEST

NEW

CHANGE

All SaintsAccessorizeAzendiBanana RepublicBridgesCK LingerieDaniel HershesonDermalogicaDuneFraser HartGuess

H&MHobbsHotel ChocolatHugo BossKaren MillenKetroyKurt GeigerLinks of LondonIllyNandosSumoSaladWasabiZizzi

LK BennettM&S Simply FoodMalikaNextOfficeOliver BonasPhase EightReissRushSpringfieldStrip

Super DrySwarovskiSwatchTM LewinTopmanTopshopWilton & NobleWomensecretBeas of BloomsburyByronCaff ConcertoGordon Ramsay

BYMARION DAKERS

PROPERTY

Land Securities is the biggest property com-pany in the UK. It owns more than 29m square feet of UKreal estate, including the landmark PiccadillyLights building and the Ministry of Justice HQ.

FAST FACTS | LAND SECURITIES


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GERMANYS 10 biggest banks mayneed 105bn (87.8bn) of additionalcapital under a revamp of bankingrules designed to prevent futurefinancial crises, the countrys bank-ing association said.

International banking regulatorsknown as the Basel Committee willlikely require banks to have a Tier 1capital ratio of six per cent, up fromfour per cent, said Germanys BdBbanking association, whose membersinclude lenders such asCommerzbank and Deutsche Bank.

Regulators are bumping up theamount of capital banks need to hold

in an effort to ensure lenders have anarray of loss-absorbing backstops thatcan be used to avoid another down-turn such as the recent financial cri-sis.

Buffers for capital conservation ofan additional two per cent and acountercyclical capital buffer of twoper cent more are also likely to beapplied, the BdB said yesterday.

The Tier 1 ratio and each of thebuffers probably would be composedof 80 per cent of top quality or coreTier 1 capital, which consists of equi-ty capital and retained earnings, BdBsaid.

Many leading banks already holdTier 1 capital of 10 per cent or more.

DRUGS firm Shire launched its 19-a-share offer for Belgian gastro-intestin-al specialist Movetis yesterday, as thecompany pushes ahead with its plansfor international expansion.

Movetis investors have until 26September to accept the offer, which values the firm at 428m (358m)including its 100m cash pile.

Movetis management have unani-mously recommended the offer toshareholders, which represents a pre-mium of 74 per cent on stock pricesbefore the bid was first announced on3 August.

Institutional investors SofinnovaPartners, Sofinnova Ventures, andLife Sciences Partners, which togethermake up 38.9 per cent of shares, havealready agreed to sell.

Shire said yesterday it believes theacquisition will make money from2012. The tender offer is being fundedby existing cash resources and execut-ed through the companysLuxembourg-based subsidiary.

The acquisition would give Shirethe rights to Resolor, which treatschronic constipation in women in 27

countries of the European Union andelsewhere. Shire estimates potentialannual peak sales of Resolor of morethan 300m.

The purchase will boost the acquis-itive drugmakers gastro-intestinal business, which is currently thesmallest of its three areas of opera-tion. The takeover is one of severaldeals being thrashed out in the phar-maceutical sector. French drugs giantSanofi-Aventis said yesterday it would be prepared to moderately raise its$69 per share (44.7) offer forGenzyme, after the US firm rejectedan all-cash $18.5bn offer last week.

Shares in Shire closed 0.55 per centup at 14.59 yesterday, while Movetisremained flat at 18.84.

Shire begins

358m offerfor Movetis

German banks could require anextra 88bn under Basel rules

BYMARION DAKERS

PHARMACEUTICALS

BANKING

JON MOULTONS company BetterCapital has acquired the debt andrelated rights in IT services providerCalyx, a firm that Moultons formerfirm Alchemy took private in 2007.

Calyx provides IT outsourcing,voice and data services, software, network security and training. Thegroups UK and Irish companies have been placed into administration and

receivership respectively. Alchemy owned 59.2 per cent ofStornoway, the 2007 management buy-out vehicle of Calyx.

Stornoways 101p a share bid valuedCalyx at 70.2m. Calyx joined Aim at55p a share in 2005. Better Capitalacquired the debt on 3 September andthis puts it in a strong position to buythe operations. Better Capital hasmade its investment through a specialpurpose vehicle.

Moultons BetterCapital buys Calyx

PRIVATE EQUITY

Shire chiefexecutive AngusRussell yesterdaylaunched his bid tobuy rival drugcompany Movetis

News8 CITYA.M. 7 SEPTEMBER 2010

ANALYSIS l Shire Plc

1300

1350

1400

1450

1500

4 Aug 24 Aug15 Jul25 Jun7 Jun

1,459.006 Sep

8/8/2019 Cityam 2010-09-07

9/32

IRELAND is still mulling whether to keep parts of AngloIrish Bank open but stands ready to wind it down if thathelps keep the country solvent, finance minister BrianLenihan said yesterday.

Earlier, the Irish Independent newspaper reportedLenihan would ask the European Commission to allow aclosure of the troubled lender over a 10-year period andanalysts say that scenario is looking increasingly likely.

Science and technology junior minister ConorLenihan said on Saturday the bank would be decommis-sioned, the latest signal that the government, consciousof its wafer-thin parliamentary majority, is set to cave into growing pressure.

Anglo Irish has submitted a plan to Brussels, favouringthe option of carving out a small functioning bank via agood bank/bad bank split and Lenihan yesterday said

this proposal was still on the table.We have to evaluate that case, Brian Lenihan said. Ifwhat is best for the taxpayer and for the country interms of the risks to the countrys solvency if the bestoption is a workout [wind-down] over an extended periodof time, then so be it, Lenihan told public radio RTE

before flying to Brussels. The escalating cost of rescuingAnglo Irish is a major threat to Irelands creditworthi-ness, with analysts seeing it as the next potentialEurozone trouble spot after Greece despite much-vaunt-ed efforts to cut public spending. Lenihan said howeverthe costs would be manageable.

I was a bit concerned to see yesterday that a lot of pub-lic opinion believe that Anglo Irish Bank will bankruptthe country, he said referring to a survey published atthe weekend. Thats simply not the case.

Lenihan also said he had completed treatment for can-cer, stabilising the disease and allowing him to stay in his

job in the run up to the next budget which he said wouldbe presented on 7 December.

At around 352 basis points (bps), the premiuminvestors demand to hold 10-year Irish debt rather than

benchmark German Bunds remains only about 20 bps

below last weeks record highs, showing investors are stillnervous.

Dublin willclose Angloto keep Eire

in the blackBYHARRY BANKS

BANKING

Irish finance minister Brian Lenihan Picture: P

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PARTNERS at the Citys top 10 lawfirms saw average billing fees fall byalmost 1m per partner during thedownturn, according to newly pub-lished figures.

Average billable fees per partnerplunged by 875,000 across the tenlargest law firms in the UK, includ-ing the elite Magic Circle, saidrecruitment consultant Ambition.

Last year the largest law firmsbilled 2.4m per partner, according

to the survey, marking a drop from2008 when the top 10 billed 3.3mper partner.

The fall in fees came after lawfirms experienced a drop off in bank-ing and City related work as therecession took its toll.

Ambition said increasing demandfrom clients to provide better valuefor services and a pressure on costreduction also contributed to the fall.

As a result, support staff head-count reduced by 14 per cent

between 2008 and 2009 as the largestfirms scaled back on staff numbers.Similarly, the number of lawyers,excluding partners, was reduced byfour per cent during the same period.

In 2009 there was a very gloomyoutlook for non-fee earners withinthe legal sector, said Tim Gilbert, UKmanaging director at Ambition.

Further information from Ambitions survey shows that inresponse to falling fees the top tenlaw firms are looking to employmore business development, market-ing and client relationship specialists

in a bid to bolster billing levels.According to the results, vacancies

within the business developmentfunction in the legal sector haverisen 54 per cent during the last 12months.

There is an awareness that thelegal sector is becoming more of acommoditised market law firmsare realising that they have toemploy individuals to improve branddevelopment in an increasingly com-petitive environment, said Gilbert.

Top 10 UK lawfirms see feesslump in 2009 DESPITE increasing fees during 2010,top accountants in the UK havereported a three per cent decline inthe amount they collected from FTSE

100 clients, new research shows.During the 2009 to 2010 financial

year, FTSE 100 companies paid891.9m in both audit and non-auditfees, marking a drop from the previ-ous year when clients paid 857m foraccountancy services, according toinformation compiled byAccountancy magazine.

The drop off in revenues during theyear came despite a 3.7 per cent hikein auditing fees across the bigaccounting firms.

Giants KPMG and Ernst & Young(E&Y) reported a decline in auditincome from FTSE 100 clients for theyear, the research pointed out. KPMG

saw that figure go down by morethan four per cent, while E&Y experi-enced a four per cent fall in revenuesfrom top UK clients.

But rivals PricewaterhouseCoopers(PwC) and Deloitte have bucked thetrend by reporting a rise in auditingincome.

Last year, PwC billed its top FTSE100 clients 245.7m, pushing its totalaudit income up 10 per cent.

Similarly, Deloitte saw auditing rev-enue rise 4.8 per cent.

Accountants hitas FTSE 100skimps on bills

The legal fees at top City law firms came under pressure last year Picture: GETTY

BY EMMA SADOWSKI

LEGAL

ACCOUNTANCY


Average fees per partner fall by 875,000

Support staff headcount drops by 14 per cent

In 2009 top 10 firms billed 2.4mper partner

Lawyer headcount drops by 4 per cent

2009 SNAPSHOT FOR TOP 10 UK FIRMS

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GLAXOSMITHKLINES diabetes drug Avandia should be pulled from sale because of concerns about heartrisks, British drug regulators said yes-terday ahead of a special Europeanmeeting on the drugs safety.

The strong line from safety expertsin the drugmakers home market is afresh blow to a medicine that wasonce Glaxos second biggest seller buthas become a liability since beinglinked to increased heart attack riskin 2007.

The Medicines and Healthcareproducts Regulatory Agency (MHRA)said it believed the risks of Avandia,known generically as rosiglitazone,outweighed its benefits and that itno longer has a place on the UK mar-

ket.Stephen Hallworth, a spokesman

for the MHRA, said the regulator hadput forward its position robustly tothe European Medicines Agency(EMA) and would highlight its con-cerns again at a special meeting onthe drugs future this week.

The EMA the European bodyresponsible for licensing Avandia in2000 will hold an extraordinaryexpert meeting on 8 September toreview the drugs safety.

Glaxo drug toface the axeBYHARRY BANKS

PHARMACEUTICALS

TESCOS corporate and legal affairsdirector Lucy Neville-Rolfe yesterday

became the first woman to join the board of broadcaster ITV followingArchie Normans arrival as chairmanearlier this year.

Neville-Rolfe, one of Tescos mostsenior figures, has been at the retailerfor the past 13 years. Prior to that, she

spent years in Whitehall, including astint in then-Prime Minister JohnMajors policy unit and another asdirector of the Deregulation Unit.

Norman said: We set out to createa lean, high calibre board, and Lucy

brings a unique combination of con-sumer and governmental experienceas well as sheer intellectual calibre.

The other members of ITVs boardare chief executive Adam Crozier,finance director Ian Griffiths and

non-executives Mike Clasper, chair-man of Which?; Andy Haste, chiefexecutive of RSA Insurance; and JohnOrmerod, chairman of Tribal Group.

Tesco director Lucy NevilleRolfe joins the board of ITVBYVICTORIA BATESMEDIA


JOHNSTON PRESS FOCUSES ON DIGITAL

JOHNSTON Press hired Henry Faure Walker as digital and business development directoryesterday, to replace Lori Cunningham. Walker will be responsible for expanding digitalactivities at the media group. The company, which owns 300 local newspapers, set up a

paywall around six regional websites last November but dropped the system in April.

Prior to her 13-yearcareer at Tesco, LucyNeville-Rolfe worked invarious governmentaldepartments

Avandia is not materialSENIOR doctors proposal to with-draw Avandia on safety grounds,

which remains subject to an EU- wide final decision this month,would have little impact on the val-uation of Glaxo. The market haslong assumed declining future rev-enues and contribution to earningsfrom the diabetes drug.

The peak year for sales was backin 2007 when it joined the block-

buster drug class with sales of1.2bn. Since then it has drifteddown with sales of 771m last year

and it goes out of patent in 2012-13.

If the drug is withdrawn, Glaxo willlose around 770m in revenues, cut-ting around 500m from its bot-tomline an amount the welldiversified Glaxo can afford.

Yet, the legal uncertainty over Avandia is already hitting itsshares which are trading at alower multiple than its Europeanpeer group. Now could be the timeto pick up a bargain.

BOTTOMLINEAnalysis by Katie Hope

ANALYSIS lGlaxoSmithKline

1,100

1,150

1,250

1,200

1,300


p 1,249.0006 Sep

8/8/2019 Cityam 2010-09-07

12/32

CABLE & Wireless Worldwide (C&WW)yesterday surged ahead on the LondonStock Exchange, buoyed by talk of apotential takeover bid in the offingfrom Eastern rival Singapore Telecom.

Shares in the telecoms group,demerged earlier this year from theconsumer-focused arm Cable &

Wireless Communications, bouncedto as high as 78p in early trading, easi-ly their highest point since a profit

warning in July. The stocks buoyancy came after

reports suggested that Singapore Telecom has appointed investmentbankers in Asia and Europe to investi-gate a possible bid for the company.C&WW has also recently been subjectto speculation over another possible

bid from US telecoms giant AT&T.However, C&WW pared gains on the

stock market later yesterday, as ana-lysts remained largely sceptical overthe strategic sense of a bid fromSingapore Telecom, particularly as thegroup has limited UK operations.

We see limited scaleability of the

business if Singapore Telecom doesacquire C&W, with the majority of itsrevenues linked to UK-based opera-tions, said Citigroups Arthur Pineda.

Last year, about a quarter ofC&WWs 2.27bn in revenue camefrom its operations in India, theMiddle East, Africa and South East

Asia. In July, C&WW investors wererocked by a first quarter update fromthe group, which admitted that the

withdrawal of large quantities ofmoney from UK public sector budgetsin the wake of the new governmentsemergency Budget would hit tradingin the current year. The stock latereased closing down 0.2 per cent at 73.6p.

Focus on C&W

WW heats upBYVICTORIA BATES

TELECOMS

ITALYS biggest bank UniCredit willask Libyan investors to show they areindependent shareholders, chief exec-utive Alessandro Profumo said yester-day, after their stakes triggeredconcern among some politicians.

Libyas sovereign wealth fund tooka 2.075 per cent stake in UniCredit inlate July, joining the Central Bank ofLibya as a top shareholder. The two

Libyan investors combined have sevenper cent and bank rules bar a share-holder from having a voting stake ofmore than five per cent.

We will ask these investors to showus the legal documentation to be ableto evaluate if they are independentinvestors or not, Profumo said.

Profumo said he had not contactedLibyan investors about taking stakesand the moves were totallyautonomous.

Unicredit puts heaton Libyan investorsBANKING

Cable & WirelessWorldwide chiefexecutive Jim

Marsh saw hisfirms shares surgeyesterday on bidtalk


ANALYST VIEWS: HOW LIKELYIS A BID FOR C&WW? Interviews by Victoria Bates

TOM GIDLEY-KITCHIN | CHARLES STANLEY

We see C&WWs networks and business as being

attractive to a number of potential acquirers but we had notexpected there would be any bid interest for another 12months or so and that may well still be the case.

WILL DRAPER | EXECUTION NOBLE

A bid is likely eventually, but it probably wont comefrom Singapore Telecom a firm with little UK business andtherefore few synergies. The natural bidders for C&WW areFrance Telecom, Telefonica and Vodafone.

MARK JAMES | LIBERUM CAPITAL

I think a bid is unlikely from Singapore Telecom looking at the other acquisitions it has made, the companyhas sought to buy growth overseas that it is lacking domes-

tically, and in my view C&WW cannot offer that.

ANALYSIS l Cable & Wireless Worldwide

55

65

75

85

95


p

73.6006 Sep

8/8/2019 Cityam 2010-09-07

13/32

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14/32

IF THE remaining doubters neededproof that the City has opened itsarms wide to the talents and potentialof the fairer sex, look no further. TheMansion House yesterday eveningplayed host to hundreds of guests forthe latest gala fundraiser for LordMayor Nick Anstees charity Appeal: adinner specifically for the fathers anddaughters of the City.

Business and banking grandeesthronging the ornate halls includedRobert Swannell, newly-appointed asthe incoming chairman of Marks &Spencer (the events main sponsor,though Swannell himself assured methat his presence there was merecoincidence and that he has not yetstepped out to officially represent theretailer for the first time).

Completing the supermarketsweep were Sainsburys boss JustinKing and his daughter Briony and

Tescos Sir Terry Leahy with hisdaughter Katie; while the bankingcontingent was represented by a selec-tion of the Citys most celebrated rain-

makers, including Credit SuissesRussell Chambers and Bank of America Merrill Lynchs co-head ofcorporate broking Mark

Astaire. Astaire was joinedat the event by his daugh-ter Emma and former

veteran colleagueMatthew Greenburgh,

who quit the City earli-er this year to go

back to university.

MONEY

MATTERSMany of the atten-dees were involved

with planning theevent, which committeemembers said was theoriginal brainchild of

the Lord Mayors Appealchairman Donald

Brydon, also chair of Royal Mail.On the committee were London

Stock Exchange chairman ChrisGibson-Smith and Dame Clara Furse,the exchanges former chief execu-tive. Id urge you all to have a goodlook at the auction lots, Furse toldthe guests as dinner was served.Daughters, this really is the point at

which you should take your fathersshopping

None heeded that advice moresoundly than Briony King, who man-aged to persuade father Justin tostump up a healthy 16,000 for a

bespoke portrait of herself and herbrother by painter Johnny Jonas. Alsodigging deep for a worthy cause thecharitable work of the LondonSymphony Orchestra and the CricketFoundation were Finsbury PRfounder Roland Rudd, who bought a

box for 18 at the O2 to see Shakira inconcert; and Dame Clara and RobertSwannell, who snapped up workexperience for their progenies atDeutsche Bank and the London

Symphony Orchestra respectively.

A DOLLAR A MINUTE All that giving certainly did notdisappoint the event organisers

who managed to raisean astonishing

200,000 ont h ee v e n i n g ,

net ofexpenses in no small

part thanks to the hardgraft of master auctioneer

Nick Bonham.Bonham kicked off the pro-

ceedings by auctioning off thehighest-denomination banknoteever printed 100 trillion dollars.

Of course, its worthless theyre Zimbabwean dollars,Bonham chuckled. The note

eventually went for 2,000, asterling feat indeed.

DAUGHTERS JOIN DADSFOR GALA FUNDRAISER

The Capitalist14 CITYA.M. 7 SEPTEMBER 2010

EDITED BY

VICTORIA BATESGOT A STORY? [email protected]

Above: The Lord Mayor Nick Anstee

Pictures: Micha Theiner/City A.M.

Finsbury PR bossRoland Rudd anddaughter Issy withSainsburys Justin

King and Katie

Above: MatthewGreenburgh and

Anna with MarkAstaire anddaughter Emma

Above left: TescosSir Terry Leahy

with Katie

Above: DameClara Furse

Left: The LSEsChris Gibson-

Smith withdaughters Sarah

and Emma

8/8/2019 Cityam 2010-09-07

15/32


EUROPEANUnion energy commission-er Gunether Oettinger yesterday wel-comed Germanys nuclear energymove made by the government onSunday, saying plans to grant nuclearplants longer life cycles tied in withwider energy plans for the bloc.

Talking to reporters at an energyconference in Munich, he said: The

EU wants to lay down a focus for thenext 10 years of energy policy in thewinter and Germanys decision fits inexactly at the right time.

The compromise between chancel-lor Angela Merkel, utilities and manyother stakeholders was fair, he said.I am also pleased that additionalfunds for renewables will be broughtin as part of the provisions. Burdens

from the deal for utilities in the shapeof a fuel tax and funds that they have

to provide to the promotion of renew-able energies, would probably beshouldered. I am certain everyonesdone their sums and it was correctlymeasured.

Oettinger also said he was con-vinced the plan would stand up to pos-sible challenges in constitutionalcourts. The EU Commission was plan-ning soon to get directives on the way

that would aim to solve nuclear wasterepository issues, he added.

EUs Oettinger: German nuclear deal is fair

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BRITAIN will publish economic fore-casts and a fiscal statement later this

year, the Treasury said yesterday, butthe event is expected to be narrower inscope than usual and is unlikely tochange the policy outlook.

The statement is also unlikely to fallon the same day as the Conservative-

Liberal Democrat coalition govern-ments spending review due on 20October which will detail the cutseach department will have to absorbover the next four years.

The government is required by lawto present two forecasts each year. Thespring annual Budget accompaniesone, while under the previous Labouradministration a substantial pre-Budget report followed in the autumn

months. The coalition, which came topower in May after 13 years of Labourrule, delivered an emergency Budgetin June which outlined fiscal policyuntil 2015, in particular how a record

Budget deficit of around 11 per centwould be cut.A replacement for interim Office for

Budget Responsibility chairman AlanBudd is expected to be announced inthe coming weeks.

End of pre-Budget reportBYHARRY BANKS

ECONOMICS

JULIUS Baer, Switzerlands thirdlargest private bank, plans to doubleits Asian assets to 20-25 per cent of itstotal in five years as it recruits newstaff and opens more offices in thefast-growing region.

Julius Baer, which had 166bn Swissfrancs (100.9bn) in assets under man-agement as of the end of June, derivesthe bulk of its business in Europe,with Asian clients accounting for justover 10 per cent of total assets.

But the bank has identified Asia asits second home market and itsexpansion plans include upgradingits Northeast Asia headquarters inHong Kong to a booking centre before year-end and opening a representa-tive office in Shanghai next year.

Julius Baer also plans to set up atrust office in Singapore to adviseclients in areas such as estate plan-ning, chief executive officer for Asiaand the Middle East Thomas Meiersaid yesterday.

We are trying to move into a(Singapore) office space that canhouse 700 people, he said whenasked about new hirings. The bankemploys over 400 people in Asia, themajority of them in Singapore.

Global private banks are increas-ingly turning their eyes to Asia,where with the exclusion of Japan wealth is expected to grow at nearlytwice the global rate, according to theBoston Consulting Group.

Private banks in Singapore andHong Kong, the regions most promi-nent financial centres, already man-age $700bn. While Switzerlandremains the worlds biggest wealthmanagement centre with $2 trillion

of offshore managed wealth, the cen-tre came under pressure recentlyfrom an erosion of traditional banksecrecy and a bitter US tax fraud inves-tigation into Swiss bank giant UBS.

Julius Baerto doubleAsian assets

PRUDENTIALS fund managementarm, M&G, is tapping into fears ofresurgent inflation and appetite forbonds with an inf lation-linked corpo-rate bond fund, which it says is thefirst of its kind.

M&G Investments said yesterday itsUK Inflation Linked Corporate BondFund, aimed at the retail sector, willinvest in fixed interest securities thatshould perform well when inflation ishigh or rising. The launch is sched-uled for 16 September, it said in astatement.

Put simply, the new fund is the cor-porate bond equivalent of an index-linked gilt fund. It should protect thevalue of investors income and capitalover the medium to long term, saidJim Leaviss, head of M&Gs retail fixedinterest team, which will run the fundwith Ben Lord.

The fund launch comes at a time ofconcern that quantitative easing, cen-tral banks purchase of governmentbonds to inject cash into global mar-kets after the Lehman Brothers col-lapse, will trigger a bout of highinflation in the medium term.

Inflation in the UK has exceededthe two per cent target consistently inthe last four years, Leaviss said, but hestill does not expect high inflation inthe short term.

We think there is far too muchunemployment, too much overcapaci-ty (for inflation to rise), he saidadding the fund launch was a pre-emptive strike to cope with investordemand. We are building the fireengines in case there is a fire, headded.

Investors have also shown appetite

for fixed-income investments thissummer.The global bond sector was the best-

selling asset class in July, with netretail sales of 361m.

M&Gs bondfund tapsinflation fear

BRITISH engineering group Invensysyesterday said it was in talks to providecontrols and systems for up to fournew nuclear power stations in China.

Chief executive Ulf Henriksson saidat Nomuras Rail Infrastructure semi-nar that Invensys was increasingly tar-geting emerging markets, particularly

in its power, oil and gas and railwayoperations.

We have had considerable successduring the past two years in Chinasrapidly expanding nuclear power gen-eration market, and we expect thissuccess to continue, as we are current-ly in negotiations to supply such solu-tions to four additional greenfieldnuclear powers stations, he said.

The group, which also provides railsignalling equipment, is looking at

partnerships with other rail infrastruc-ture providers.

Invensys eyes nuclear dealENERGY

Alan Budds replacement will be announced soon Picture: REUTERS

BYHARRY BANKS

FUND MANAGEMENT

BYHARRY BANKS

ENERGY

BYHARRY BANKS

BANKING

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GOALS Soccer Centres saw its profitdip after heavy snowfall cost it180,000.

The company, which operates 37five-a-side soccer centres across theUK, reported a slight drop in half-yearprofits to 3.8m. The companys salesfell by four per cent, but its birthdayparty bookings and corporate events

were both up four per cent. Goalsmanaging director Keith Rogers said:Without the snow these results

would have been a lot better.Our corporate bookings are on the

up and interest driven by the WorldCup has also helped.

SHOPPING centre Westfield Londonwill host a designer car boot sale thismonth, with designs and exclusivepieces from retailers Whistles andHouse of Fraser.

The mall, in Shepherds Bush, willsee the goods sold from 20 Hyundaicars in the centres car park.

The event is to celebrate LondonFashion Week, and will run from 21to 26 September.

Westfield will also host two fashionshows during the week.

TopShop will also be taking part in

the event along with denim specialistDona Ida.

Westfield hostsa car boot saleGoals Soccerhit by snowfallLEISURE

NEW car sales plunged 17.5 per cent year-on-year in August after the scrappage scheme wasphased out, figures showed yesterday.

The Society of Motor Manufacturers and Traders (SMMT) data revealed that sales haddropped for the second consecutive month,after falling by 13 per cent year-on-year in July.

The biggest fall was in private car purchaseswhich were down 38 per cent on a year ago.

Analysts said the end of the scrappagescheme which gave owners cash incentives tochange their vehicle had contributed to the fall,as well as uncertainty over the economy amongconsumers.

SMMT chief executive Paul Everitt said:Conditions will remain challenging through therest of the year. The industry enjoyed a better-than-expected first half and, despite difficulties, SMMT isforecasting that new car registrations will close just

ahead of 2009 figures.A total of 55,305 new cars were sold in August.Howard Archer of Global Insight said: Sales were

still being lifted in the early months of the year bythe car scrappage scheme that finished at the end ofMarch.

Car sales fallas scrappagebites the dust

AUTOMOTIVE

RETAIL

ANALYSIS l New car sales in August

GB

NEW CAR SALES

17.5%YEAR-ON-YEAR IN AUGUST

GB

PRIVATE CAR PURCHASES

38%ON A YEAR AGO

GB 55,305

TOTAL NUMBEROF CARS SOLD IN AUGUST

GB

SALES DROPPED

YEAR-ON-YEAR IN JULY13%

GOURMET Burger Kitchen (GBK)owner Clapham House yesterday

warned of a volatile environmentas it opened a new outlet at the 02complex in Greenwich.

Clapham, which also owns TheReal Greek chain, has received atakeover approach from an unnamedsuitor and talks over a possible dealare ongoing.

But chairman David Page did notgloss over the problems facing thecompany.

He said: The UK trading environ-ment and outlook remain challeng-ing and although August has shownsigns of a return to the improved pre-

World Cup sales trends, performanceremains volatile.

The company recently reported a50 per cent rise in profits in the yearto 28 March.

However, the World Cup and glori-ous summer weather contributed to aslump in the number of restaurant-goers.

Clapham operates 53 GBK restau-rants in the UK and 15 international-ly, as well as six restaurants under

The Real Greek brand.The stock closed down 5.2 per cent

at 68p after the update, which camebefore the companys annual gener-al meeting. The firms market

value is 28m.Last week Middle Eastern

giant Landmark Group agreedto pay 90.3m for Italianrestaurant chain Carluccios.

Page added that the board was continuingtalks with the possiblesuitor but nooffer wascertain.

Clapham House warnsof tough times aheadBY JOHN DUNNE

CONSUMER

Consumer News 17CITYA.M. 7 SEPTEMBER 2010

Chairman David Pagesaid restaurant salesare picking up againafter the World Cupled to a downturn

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City A.M. Awards 201018 CITYA.M. 7 SEPTEMBER 2010

THE past 12 months have seen a

boom in M&A as we have

emerged from the downturn,with the Kraft-Cadbury deal fill-ing endless column inches.

Elsewhere, Santanders onwardmarch continued. Other deals bro-

kered by our short list were perhapsnot so high-profile, but just as impres-sive in their own sectors.

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.

As chairman of Cadbury, the 62-year-old had a central role in oneof the most dramatic M&A dealsof recent times, when Kraftlaunched a bid for the British con-fectioner. He stood up to theaggressive American tactics andby the time he shook hands on a

deal with the formidable IreneRosenfield at the offices ofLazards in Mayfair, the 62-year-old had fought tooth and nail towin his shareholders a decentdeal. A tough cookie.

ROGER CARR,CHAIRMAN,CENTRICA

When Cadbury was facing a hos-tile bid from Kraft, the crackteam of City advisers to defend itincluded Goldman Sachs super-woman Cook. For a decade shehas been one of the most power-ful women in the City, formerlyworking at Schroders before

becoming a managing director ofGoldman Sachs International, a job she juggles with a role as anon-executive director at Tesco.The Cadbury defence hascemented her reputation.

KARENCOOK,GOLDMANSACHS

He may no longer be Big Cliveafter he trimmed a few inchesfrom his waistline, but his deals and profits are still sizeable.With just three O-levels to his

CLIVE

COWDERY,RESOLUTION

name he is a City outsider, butthat has not damaged his career.Resolution, his insurance buyoutcompany that made a fortunebuying up zombie insurancefunds, in its latest incarnationrecently announced a 139mprofit this year after buying bothFriends Provident and most ofAxas UK life operations. Cowdreyplans to buy and merge four moreUK life assurers by 2013.

The managing director of corpo-rate broking at Bank of AmericaMerrill Lynch has long been thego-to man for the mid-cap ener-gy and power sector. When thegutsy British start-up Tullowwanted to raise 1bn to fundbuying rights to exploration on

the shores of Lake Albert, he wasone of their major advisers. Thesuccessful conclusion of the dealearlier this year saw Tullow moveinto the premier league of oilexplorers.

ANDREWOSBORNE,BOA MERRILLYNCH

The Portuguese banker says hehas swum with sharks 100 times,an experience which perhapsstood him in good stead when itcame to dealing with the financial

ANTONIOHORTA-OSARIO,SANTANDER

crisis. The man who has beenhead of Santander in the UK since2004 kept his cool and oversawthe acquisition of Alliance andLeicester and Bradford andBingley. More recently, he negoti-

ated the purchase of 318 highstreet bank branches from RBS.More than anybody else, Horta-Osario is responsible for makingSantander a household name inthe UK.

T

HESE are interesting times forthe Citys law firms. The comingyears promise massive changes,and the firms that make our

shortlist are those which are position-

ing themselves to take advantage ofthe opportunities. Whether its look-ing at promising practice-areas, merg-ing or looking towards the newmarkets, law firms are prepared.

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.

Generally considered to have hadthe best downturn of any of theMagic Circle firms, Freshfields isthe only City law firm to haveincreased its corporate revenuesince 2007. Profit per partner stillremained at the stratosphericlevel of 1.4m. The firm was alsoinstructed to advise BP in the caseof a hostile takeover bid this year a blow to rival Linklaters, whichhas represented the oil giant fordecades and which could netFreshfields tens of millions.

FRESHFIELDSBRUCKHAUSDERINGER

While many law firms were shed-ding people and worse in theaftermath of the downturn,Hogan Lovells took the opportuni-ty to expand and secure itself forthe future by merging with USfirm Hartson. The new firm willhave a good Asian business cour-tesy of its British wing, and willalso allow it to capitalise on theprofitable American market. Abrave move, and a credit to theforward-looking attitude of man-aging partner David Harris.

HOGANLOVELLS The bluest of the citys blue-

blooded firms, Slaughters is stillthe City law firm with the mostLSE-listed clients and still theonly one with more than 100. It

SLAUGHTER

& MAY

is still the go-to firm for thebiggest listed companies, repre-

senting a whacking 27 of theFTSE 100 and 44 of the 250.And it seems to have been barelyslowed by the financial crisis already this year with itsEuropean friends it has com-pleted 64 M&As this year. Othersmight rise and fall, merge andmove into new practice-areas,but Slaughters just marches on.

A merger with Australian firmDeakins showed that NortonRose means business in the Asia-Pacific region. Added to that, thefirm reacted to the downturnwith a flexible working, reduced-hours scheme that saved jobs andthe costs of re-hiring to fill poststhat many firms are facing now.When you also consider its workadvising on the BA/Iberia merg-er, you could argue that this wasthe year that Norton Rose movedinto the big time.

NORTONROSE

Singled out for being all over theregulatory work by a nominee,largely down to the work of TonyWoodcock, head of the regulatorylitigation group and described by

STEPHENSONHARWOOD

Chambers as the counsel ofchoice on the area. But the firmsexpertise is wider than that,reaching back to the Guinnessand Barings investigations and,most recently, to Northern Rock,

while it also acted in the high-pro-file insider dealing case involvingCazenove partner MalcolmCalvert. Over the past five years,it has had the fastest-rising prof-itability of any UK law firm.

Sponsored byOF THE YEAR | The ShortlistDEALMAKER

OF THE YEAR |LAW FIRM

TOMORROWPROFESSIONAL

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The City will pay a high price for a Tobin Tax

EU FINANCE ministers are meet-ing today to discuss the latestincarnation of the Tobin Tax. TheCity should be worried. Tobins

proposed tax on foreign exchangetransactions has deservedly been inthe wilderness for forty years, but the

mood has changed. There is a real dan-ger that a punishing levy could hap-pen, sooner rather than later.

Consider the other topic of discus-sion on the table at this EU meeting:

finalising plans for a yearly bank levythat will pay for any future bailouts.This is a tax on prudence, which willsqueeze those long-term profits thatcome from sound investment deci-sions and use the money to supportthe risk-takers who mismanage theirassets. Moral hazard will grow, notcontract. And yet the UK, Germanyand France have all agreed to take itforward; Britains version is especially

bad. In such an environment, a TobinTax no longer seems inconceivable.

The prospect of taxing foreign

exchange could scarcely come at aworse moment for the UK. The trien-nial foreign exchange figures fromthe Bank for InternationalSettlements were out just last week,

showing that the UK remains theglobal centre for foreign exchangeand continues to grow in importancein the sector. London-based tradersnow account for 36.7 per cent of allforeign exchange market turnover,

which is more than the next fourcountries (the US, Japan, Singaporeand Switzerland) put together.

It is hard to imagine any sane chan-cellor wanting to harm such a mag-nificent British success story, even

when bankers make such easy prey.And yet any transaction tax would be

a global decision, with all nationssigning up behind it. And at the trans-national level, senior figures with lessto lose are already falling into line.Nicolas Sarkozy, Angela Merkel and

Jose Manuel Barroso have all support-ed the measure. The head of theInternational Monetary Fund retract-ed his opposition at the end of last

year.Any conclusions from this EU dis-

cussion will be taken forward to theG20 in South Korea this November.George Osborne is, thankfully, said to

be wary, but the dilution of his voiceas the family of nations works towardits consensus can only grow.

If the worst happens, there will befine words about global agreement,

of everyone having signed up as equalpartners, accepting a twenty-first-cen-tury tax for the greater good. Thetruth will be that Britains dispropor-tionate success in foreign exchange

bears a disproportionate share of the burden. Our global competitors will be only too happy to posture whileloading its weight on our shoulders.

Even those sectors of the City thatmight imagine a tax on foreignexchange isnt their problem shouldread the small print of todays agen-da. Proposals under discussioninclude extending the concept tocover transactions in bonds, stocksand derivatives. Once transactionlevies begin, all trades will becometargets for the global taxman.

ROYAL Dutch Shell is in exclusivetalks with Finnish fuel distributor St1to sell the oil majors Swedish refin-ery, both companies said yesterday.

If the companies reach an agree-ment, it would be the secondEuropean refinery deal for Shell in ashort period, following the sale of itsGerman refinery in late August. Bothof them are relatively small plants

that supply local markets.Shell and St1 have entered into

exclusive negotiations for the poten-tial sale of Shells downstream busi-nesses in Finland and Sweden to St1,Shell said in a statement. A Shellspokesman said the talks includedthe Gothenburg refinery.

Mika Anttonen, St1 board chair-man added: We are negotiating withShell.Neither Shell nor St1 specifiedthe value of the deal or any furtherdetails.

Shell in refinery sale talks

COSALT, a provider of safety equip-ment to the oil industry, has lost aquarter of its value after the head ofits offshore division was suspendedfrom day to day duties.

The company, which makes thingslike lifejackets, First Aid gear and fireextinguishers, said Calum Melvillehad also resigned as a director.

An internal review of the operatingpractices of the groups businesses in

Aberdeen is underway, a statementconfirmed yesterday.

Melville joined Cosalt when itbought GTC Group, a supplier of lift-ing equipment to the oil and gasindustry he owned with his brotherStuart, in 2008 for 30m.

Cosalts shares closed 22.4 per centlower yesterday at 3.88p.

Cosalt suspends its offshore chiefsending shares plummeting 25pc

OILBYHARRY BANKS

ENERGY

COMMENT

MARC SIDWELL

ANALYSIS l Royal Dutch Shell 'A'

1,650

1,750

1,850

1,900


p1,827.00

06 Sep

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BLUE-COLLAR recruitment specialistStaffline Group posted a 50 per centprofit rise yesterday as it takes advan-tage of a glut of jobseekers to plugdemand for temporary labour.

Staffline said pre-tax profit jumpedto 2.1m in the first half of the yearon turnover up 70 per cent to 83.4m, boosted by demand for temporarystaff, acquisitions and an increase inBritish people looking for work.

Good people have lost their jobsthrough no fault of their own buttheyre good employees and therefore

we can help get them back to work,chief executive Andy Hogarth said.

Weve seen an increase in thenumber of British born-and-bred peo-ple, our workforce is now just under athird of British-born people, it wasrunning at 20 per cent a couple ofyears ago, he added.

Small-cap white collar recruiterHydrogen also reported results yester-day, showing a modest profit, largelydue to its focus on overseas markets.

Shares in Staffline, which findsworkers for food processors and man-ufacturers, rose 29.5 per cent to129.5p yesterday.

Rise in British jobseekersadvances Staffline profit

RECRUITMENT

OIL and gas explorer Oilex said ithas significantly upgraded its gasreserves in India thanks toadvances in extraction tecnology,sending its shares soaring morethan 150 per cent yesterday.

Australia-based Oilex said yester-day it estimates the Cambay fieldin Gujarat holds 248bn cubic feet ofgas with a 90 per cent certainty ofbeing produced, up from the negli-

gible amounts previously cited.Oilex was the biggest riser inLondon yesterday, as the AIM-listedfirm closed 125 per cent up at 18p. The company drilled a number of wells on the field between 2006and 2008 and found hydrocarbonsbut they were in tight reservoirsthat could not be commerciallyused.

Oilex believes the block now hassignificant commercial gasreserves, after using technologydeveloped by companies extracting

shale gas in North America.

Oilex shares gain 150pc afternew gas field success in IndiaBY MARION DAKERS

ENERGY


EUROTUNNEL enjoyed a recordsummer this year, after car trafficrose 17 per cent on last year withmore than half a million cars takingthe trip between Kent and Calais inJuly and August.

The French company, whichtrades on the London and Parisstock exchanges, said it broke itsprevious passenger record on 14 August, when almost 15,000 carsand 150 buses used the Chanel Tunnel. The company said trafficwas heavier than in 1999, when theend of duty-free sales within theEuropean Union prompted a scram-ble to stock up on cut-price goodieson the continent.

This summer also saw EurotunnelEurotunnel celebrate the crossing ofthe 250 millionth passenger trans-ported through the Tunnel, sinceservices commenced in 1994.

Eurotunnels commercial directorJo Willacy said: The intense activitythrough the summer shows that LeShuttle is the perfect answer to our

customers expectations: it is valuefor money and respectful of theenvironment. Our whole commer-cial strategy is aimed at increasingour traffic and our performancethis summer is an incentive to con-tinue in the same vein.

The bumper summer traffic waspart of a broader rise in passengersusing the tunnel.

Eurotunnel recently said trucknumbers grew by 41 per cent andcar transport rose 17 per cent in the year to July, while the passengertrain operator Eurostar saw a six percent increase in the same period.

Part of the gain was due to theIcelandic ash cloud playing havoc with air travel, the firms said,though yesterdays Eurotunnel fig-ures referred to a time period afterthe cloud disruption ended in May.

Eurotunnel failed to make a prof-it last year, however, due to a dis-pute with Eurostar over insuranceresponsibility for the tunnel fire in2008. A total of48m in indemnitiesis being held back by a court untilthe fight is resolved.

Record travelnumbers forEurotunnelBY MARION DAKERS

TRANSPORT

FUND of hedge funds group StenhamAsset Management yesterday said ithad snapped up niche rival MontierPartners, boosting its total assetsunder management to $3.5bn(2.27bn).

As part of the deal, the roles ofmanaging director and chief invest-ment officer at Stenham, both cur-rently held by Kevin Arenson, are to

be split. Arenson will now focus exclu-sively on investment managementand risk control, while Montierschief investment officer Jeremy Alun-Jones will manage the business on aday-to-day basis.

Montier Partners, which wasfounded in 1996, has total assets ofover $400m and manages hedge fundportfolios for family offices and insti-tutions. Stenham was set up over 25years ago.

Arenson said: We have knownMontier Partners for a number ofyears and have been impressed withthe ethos and owner-managed cul-ture at Montier which, like Stenham,has capital preservation and a com-mitment to absolute returns with lowvolatility, at its heart.

Consolidation among fund ofhedge funds firms has been widelyanticipated by the industry, after itwas hit hard by the financial crisis.

Fund of funds Stenham buys MontierHEDGE FUNDS

BEST OF THE BROKERS

ANALYSIS l Home Retail Group

205

215

210

220

225

230

240

245

235

24 Aug4 Aug15Jul25 Jun7 Jun

p227.10

6 Sep

HOME RETAIL GROUPSeymour Pierce has upgraded the owner ofArgos to a hold ahead of its tradingupdate on Thursday. The firm has lost 29.5per cent of its value in a year, and the cur-rent share price of 221p is near fair value, itbelieves. The broker notes that the retail-ers strong balance sheet could be used foracquisitions, or to impress a predator.

ANALYSIS l Mears Group

220

240

230

250

260

270

290

300

280

24 Aug4 Aug15 Jul25 Jun7 Jun

p 268.506 Sep

MEARSBrewin Dolphin rates the social housingmaintenance firm a buy with an upgrad-ed 12-month target price of 324p. The bro-ker sees resilience in the sector, and seesscope for rating expansion in the next yearas confidence in the firm improves. Butcapital expenditure linked to the public sec-tor will feel some pressure, it warns.

ANALYSIS l Barclays

240

260

280

300

320

340

360

24 Aug4 Aug15 Jul25 Jun7 Jun

p322.20

6 Sep

BARCLAYSEvolution Securities continues its sell rat-ing with a target price of 298p, down 12per cent. The broker has downgraded itsearnings per share forecast by eight percent this week, and they now stand 28 percent below consensus estimates on 2011earnings. Net asset value should be seen asa ceiling for earnings, according to Evo.

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

Matrix GroupThe financial services business haspoached a team of five research, salesand corporate finance personnel from

JP Morgan Cazenove, to focus on UKreal estate.

Roger Clarke the head of real estatecorporate finance, has also worked at

the Takeover Panel, Dresdner KleinwortBenson and ING Real Estate. Head ofreal estate research Miranda Cockburnand real estate specialist salesman CarlGough both co-headed the pan-European real estate team at CSFBbefore joining Cazenove.

Sales trader Jason Cockburn was atCazenove for the past 23 years, whileAlison Watson joins as a senior analystnew recruit from UBS, where she wasan associate director.

GLG PartnersThe hedge fund group has appointedMark Diab as a portfolio manager, withresponsibility for MENA equities within

the emerging markets team.Diab previously spent over four years

at Qatari investment bank AMWAL,where he was a managing directorresponsible for the equity asset man-agement division.

HawkpointThe corporate advisory firm, part of theCollins Stewart group, has hired DanClague from Socit Gnrale as amanaging director.

Clague spent a decade at SocGen,latterly as head of the UK mergers andacquisition and transport teams. He hasalso previously worked at ABN Amroand Barings.

In his new role, he will continue tofocus primarily on the transport andbusiness services sectors, with a partic-ular focus on the shipping and marinemarkets.

Insparo Asset ManagementGraham Stock has joined the invest-ment group as its new chief strategist,concentrating on exploiting the oppor-tunities presented by high growthpotential in Africa and the Middle East.

He spent the past 12 years at JPMorgan in a range of senior roles, lat-terly tasked with expanding researchoutput and business activity in frontiermarkets in Africa.

CITY MOVES | WHOS SWITCHING JOBS Edited by Victoria Bates

RBC Capital MarketsRoyal Bank of Canadas corporate and invest-ment banking arm has hired Bank of Englandveteran Jens Larsen as its new chief Europeaneconomist, based in London.

Larsen spent the previous 12 years at theBank, most recently as head of the macrofinancial analysis division. Between 2006 and2008, he held the position of alternate execu-tive director on the International MonetaryFunds executive board, representing the UK.

+44 (0)20 7557 7245morganmckinley.comTo appear in CITYMOVES please email your career

updates and pictures to [email protected] SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

in association with

ANALYSIS l Oilex

4

8

12

16

20


p 19.256 Sep

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AUSTRALIAN banking giantMacquarie Group yesterday slappedinvestors with a shock profit warn-ing, admitting that its earnings willfall around a quarter over the firsthalf of the year due to torrid marketconditions.

Macquarie, which has in the past been nicknamed the millionairesfactory due to the sizeable pay pack-ets awarded to its star bankers,warned that its trading and advisoryoperation had been significantlyimpacted by the weak markets.

Profit for the six months to end ofSeptember is likely to drop by 25 percent on the same period last year,Macquarie said, obliterating analystexpectations of an 11 per cent rise. The group expects earnings toremain flat over the full year toMarch compared to last year, but onlyas long as market activity returns tomore normal levels in the nearfuture.

The dismal update comes afterMacquarie migrated from its invest-ment management fee model to amore traditional investment bankingframework following the trials and

tribulations of the financial crisis.Its famously generous compensa-

tion packages have also dwindledrecently, leading analysts to questionwhether or not it is losing too manyof its top staff. Last month, analysts atUBS said in a note that Macquarieshould cut jobs and earmark themoney saved to boost salaries andbonuses.

This low compensation capabilitymay become a material hurdle forstaff retention and the ability toattract high-quality recruits, the notesaid.

Macquarie, Australias biggestbank, has slipped recently at home,with its M&A advisory market sharefalling by a third. It did not manageto land a place among the advisers tomining giant BHP Billitons $39bn bidfor Canadas PotashCorp.

It has fallen to fifth position in itsmainstay equity underwriting busi-ness, losing out to Bank of AmericaMerrill Lynch, JPMorgan and RBS,according to Thomson Reuters data.

Macquarie, which has A$3.1bn insurplus capital and A$29bn in liquidassets, had twice earlier warned con-cerns about the global recovery haddragged down market activity totheir lowest level since 2004.

THE Federal Reserve should notannounce a limit on its actions if itresumes purchases of Treasury securi-ties to stimulate the US economy, theformer vice chairman of the centralbank said.

Donald Kohn, who retired as vicechairman last week, told the NewYork Times in an interview published

yesterday that the economy was in aslow slog out of a very deep hole, and

that the Fed should take additionalmeasures if a recovery continued tobe slow.

Actions could include purchase ofmore government securities to keepinterest rates low, he said. The Fed haspumped $1.7 trillion into the econo-my through steps such as purchase oflonger-term securities.

To have a substantial effect, peo-ple would have to anticipate substan-tial purchases, Kohn said.

Does the Federal Reserve need toannounce it's buying $1 trillion? Not

necessarily. If the Fed said, Were buy-ing a smaller amount now but if itwarrants well buy more, that sort ofwould give the public and the mar-kets a sense that somebody was outthere, he added.

Fed should be prepared to embark ona new stimulus blitz, says ex-vice chair

INVESTMENT manager Pramericaannounced the completion o

cityam 2010-09-07

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