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    sector, equivalent to 3.5 per cent of theworkforce, with total employment taxof 24.5bn. The average amount of taxpaid by each employee was more than40,000, on a salary of 71,236. Thenumber employed fell 7.9 per cent year-

    on-year.National insurance contributions

    accounted for 39.7 per cent of taxes,with VAT at 23.9 per cent and corpora-tion tax at 16.6 per cent.

    Corporation of London policy chair-

    man Stuart Fraser told City A.M. thefindings prove the City is a vital con-tributor to the UK.

    He said: This report shows the vitalcontribution made by the financialservices industry to the Exchequer

    even as the effects of the crisis weighed on institutions across theCity. I was surprised the drop was only8bn, given the effects of the financial

    crisis. Next year, I suspect that the8bn will be almost recovered. Imvery concerned that new bonus rulescould drive talent away from the UK.

    Anthony Browne, the Mayor ofLondons adviser for economic devel-opment, said: These figures are agood message for the rest of Britain. Itis in everyones interest that there is athriving financial services sector.

    Angela Knight, chief executive ofthe British Bankers Association, said:This shows just how significant theUK financial services industry is to theUK economy in tax and employment.

    We have always maintained thatthe industry is a big taxpayer it paysa lot of tax despite perceptions to thecontrary. If this is what the industry iscontributing, in a year like this, thenimagine what it would pay in better years. Luke Johnson, who foundedPizza Express and is a former Channel4 chairman, added: This is a tangibledemonstration of the vital role thatfinancial services and the Square Mileplays in the UK economy. It is theengine of growth for the capital cityand, to put it bluntly, the UK as a whole. If we demonise the City andthe key players emigrate, then thenation as a whole will be losers.Additional reporting by Alison LockALLISTER HEATH: P2FULL INTERVIEW: P18

    Certified

    Distribution

    1/11/10 - 28/11/10

    is 113,348

    THE US government said yesterday it would sue BP for $21bn (13.5bn)alongside four other companies tied tothe Gulf of Mexico oil spill in August,for violating US environmental laws,in the opening salvo in what will likelybe a lengthy legal battle.

    If successful the damages from thelawsuit would be on top of the $20bnthat BP has already agreed to pay intoa fund to compensate people on theGulf coast who have suffered finan-cially because of the spill.

    The final damages figure dependson the US governments ability toprove gross negligence.

    The lawsuit seeks damages fromBP, Transocean, Anadarko PetroleumCorp, Mitsui & Co unit MOEX and

    Transoceans insurer Lloyds of

    London for their roles in the worst oilspill in US history.

    The US Justice Department asked afederal judge in New Orleans oversee-ing the litigation related to the oilspill to hold the companies liable,except for Lloyds, for unlimited dam-ages, beyond the $75m cap under theUS Oil Pollution Act.

    BP said the lawsuit was solely astatement of the governments allega-tions and does not in any mannerconstitute any finding of liability orany judicial finding that the allega-tions have merit.

    Also yesterday, BP said it was exam-ining a possible sale of its Canadiannatural-gas liquids business as it seeksto raise up to $30bn to pay for its Gulfof Mexico oil spill. The unit, whichincludes pipelines and processing sta-

    tions, could go for $2bn. P2: MORE

    BY MATTHEW WEST

    ENERGY

    Corporation of London policy chairman Stuart Fraser hailed the Citys contribution to the UK Picture: Micha Theiner/City A.M.

    THE City paid a staggering 53.4bn in

    tax last year more than a tenth oftotal government tax receipts.

    The report carried out by PwC forthe Corporation of London shows taxpaid by the UKs financial servicesindustry is ahead of any other sector.

    Business leaders and industry fig-ures lauded the City for its contribu-tion to the UK and called forpoliticians to heed its importance tothe public purse.

    Banks were the biggest tax payers inthe financial services sector, with theircontribution set to rise even furthernext year when the 3.4bn raked inthrough the bonus tax, which waslevied from 2009 but collected afterthe year-end in March, is taken intoaccount.

    In corporation tax alone financialservices brought in 5.6bn, down from7.6bn after a tough financial year. Incontrast oil and gas firms saw theircorporation tax receipts plummetfrom 10.3bn in 2009 to just 5.5bn asthey struggled in the wake of therecession. Overall the amount of taxpaid by the financial services industryfell 8bn down from 61.4bn in 2009,which equated to 12.1 per cent of totaltax receipts.

    The total tax paid as a percentage ofprofit was 48.5 per cent, down from57.4 per cent the year before.

    More than 1m are employed by the

    BY STEVE DINNEENFINANCIAL SERVICES

    FTSE 100 5,882.18 -9.03DOW 11,457.47 -19.07

    NASDAQ 2,617.22 -10.50/$ 1.56 +0.01

    / 1.18 unc/$ 1.32 +0.01

    BUSINESS WITH PERSONALITYwww.cityam.comIssue 1,286 Thursday 16 December 2010 FREE

    City Power 100:

    WIN A PAIROF CITYJET

    FLIGHTS p12

    CSC bid battle:

    PROPERTYFIRM SNUBS3BN OFFER p4

    53,000,000,000Revealed: how much the City paid in tax last year

    US sues BP for $21bn infresh Gulf spill lawsuit

    265,000nurses

    at 20,000

    WHAT 53BNCOULD BUY:

    1,060hospitalsat 50m

    67Millennium

    Domesat 789m

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    News2 CITYA.M. 16 DECEMBER 2010

    FSA to revealfull RBS view

    THE Financial Services Authority(FSA) pledged to publish its reportinto the near-collapse of Royal Bankof Scotland (RBS) yesterday, followingwidespread political pressure.

    FSA chairman Lord Turner said in aletter yesterday he hoped to release aclear description of any key failingsby the end of March

    RBS was not warned in advance of Turners volte-face, which wasreleased to the press before the banksaw a copy, but said it had no objec-tion and would engage construc-tively to facilitate publication of thereport. The FSA previously claimedRBS was blocking the release of itsinvestigation, and maintained it hadnot written up its findings in a docu-ment that could be released.

    Turners letter to the Treasuryselect committee chairman AndrewTyrie came after he was called to ameeting with business secretary Vince Cable to discuss making thereport public yesterday afternoon.Tyrie had been pressuring the watch-dog to release the details of its find-ings, within the confidentiality limitsof the Financial Services and MarketsAct.

    Cable said in a TV interview that hestill did not know the details of thereport, but added that his meetingwith Turner had been productive.

    BYMARION DAKERS

    REGULATION

    Reform needed but City vital to UK

    AT last, some facts to enlighten adebate mired in hysteria, dema-goguery and ignorance. The much-maligned financial services industrycontributed an estimated 53.4bn toUK government taxes in the 2009/10financial year, 11.2 per cent of thetotal UK tax take, according to a reporttoday from the City of LondonCorporation. The banks are thebiggest taxpayers within the overallfinance industry. Without the City,therefore, the UK would be sunk, the budget deficit even larger than italready is and the spending cuts

    required to tackle years of govern-ment over-spending even greater.

    These refreshing facts followWednesdays report from the NationalAudit Office, which said that UK tax-

    payers would likely suffer no overallloss from the banking rescue, includ-ing the equity stakes in RBS, Lloydsand Northern Rock, various guaran-tees and the Special Liquidity Scheme.Interest on the gilts issued to fund thehelp to the banks is being covered bythe fees charged.

    This does not excuse stupid actionsduring the bubble, and this newspa-per has long expressed its outrage atthe way some institutions were bailedout, even if taxpayers end up making aprofit on their stakes, as is now likely.But it does mean that critics whoallege that finance firms are of nobenefit to the UK are talking danger-ous nonsense as are those whobelieve that it is the bailouts that sentthe deficit and national debt soaring.

    The industrys total tax take fell8bn last year due to the downturn

    but it overtook North Sea energy tobecome the top payer of corporationtax. Finance employed over 1m work-ers, generating 24.5bn in employ-ment taxes. This would have been

    even higher had the sector not lost91,000 employees (7.9 per cent of thetotal). Average pay in the sector was71,236 and employment taxes peremployee 40,481 (including allnational insurance contributions).Those cheering whenever bankers aresacked should understand that onejob loss in finance entails close to twojob losses in the public sector.

    It is in the UKs interest to have athriving financial industry just as itis to grow as many other industries aspossible. But it is equally imperativethat the City doesnt help promoteboom and bust or that all of its liabili-ties end up being underwritten by tax-payers. That is the key issue. There aremany who, following the crisis,claimed that banking needs to bereduced to a small share of GDP tomake sure the government would

    never go bust as a result of having totake on the sectors huge liabilities.That was only true in one way: bankswere far too leveraged; their balancesheets had to be cut, which by defini-

    tion is reducing their size as a share ofGDP. But the remainder of that con-clusion was based on the wrong prem-ise, which was that bailouts are alwaysnecessary in a recession.

    Capitalism requires that all badfirms be allowed to go bust, wipingout shareholders, bondholders andstaff contracts. Lehmans disorderlycollapse showed that banks are slight-ly different to other companiesbecause of their inter-connectedness.Special resolution procedures need tobe introduced to allow bank failuresto take place in a controlled manner,protecting the overall economy. It is atragedy that such wind-downschemes, now planned by the FSA,were not in place three years ago. Forthat, regulators, who write bankrupt-cy law, are entirely to blame.

    [email protected]

    EDITORS LETTER

    ALLISTER HEATH

    7th Floor, Centurion House,24 Monument Street, London, EC3R 8AJTel: 020 7015 1200 Fax: 020 7283 5334Email: [email protected] www.cityam.com

    EditorialEditor Allister HeathDeputy Editor David HellierNews Editor David CrowNight Editor Katie HopeBusiness Features Editor Marc SidwellLifestyle Editor Zoe StrimpelSports Editor Frank DalleresArt Director Craig GaymerPictures Alex Ridley

    CommercialSales Director Jeremy SlatteryCommercial Director Harry Owen

    Head of Distribution Nick Owen

    Editorial StatementThis newspaper adheres to the system of

    self-regulation overseen by the Press ComplaintsCommission. The PCC takes complaints about theeditorial content of publications under the EditorsCode of Practice, a copy of which can be found atwww.pcc.org.uk

    Printed by Newsfax International,Beam Reach 5 Business Park,Marsh Way, Rainham, Essex, RM13 8RS

    Distribution helplineIf you have any comments about the distributionof City A.M. Please ring 0207 015 1230, or [email protected]

    Adair Turner said theFSA would publish thefindings of its reportinto Royal Bank ofScotland by March

    TELL US THECITYS TOPTHREE: P12

    FLIGHTS TOBE WON

    To celebrate this years list, CityJet, City A.M.s partner for the Power

    Hundred 2011, is giving away one pair of flights each day for 7 days in therun up to the list. CityJet is a subsidiary of one of the largest airlines in theworld and offers a choice of over 480 flights a week to 14 major Europeanand UK business centres from London City Airport. With just a 15 minutecheck-in time - the shortest of any UK airport - CityJet are the smartest

    choice for time-conscious business and leisure passengers in London.

    FOR YOUR CHANCE TO WIN, SIMPLY TELL US YOUR TOP 3 CHOICES FOR THE POWER HUNDRED. A NEW WINNER WILL BE CHOSEN EACH DAY.

    WHO WILL TOP OUR EXCLUSIVE CLUB THIS YEAR?Go to www.CityJet.com/cityam to submit your entries.

    Dont forget to pick up City A.M. on 22 December to check out who's up, who's down, which banker ispulling the best deals, who has entered our exclusive club and who has dropped out of it.

    *from London City Airport, excluding Milan Linate. Terms and conditions apply

    | PROMOTION

    TERMS&CONDITIONS:Theprizeis7pairsoftickets,validforflightstoanyoftheCityJet(LondonCitynetwork)destinationsexcludingMilanLinate.Thepromotioncommences13December2010at00h00.Thepromotioncloses21December2010at24h00.Entrantsmustbeover18yearsofage.Entryisopentoallresidents.EmployeesofCityJet,VLM,AirFrance,CITYA.M.andtheimmediatefamiliesarenoteligibletoenter.Flightscannotbeexchangedforcash.Onlyoneentryperpersonispermittedforeachdayofthepromotion.Entryintothepromotionisfree.Entrantsmustprovidetheirname,emailaddressandtelephonenumber.Eachentrantacknowledgesandagreesthatticketsmustnotberesoldorusedforadvertising,promotionorothercommercialpurposes.FlightsarenotavailableonbankholidaysinUKandEurope.Flightsmustbetakenbefore30June2011.Itisthewinnersresponsibilitytoensurethewinnerandtheirguesthavepassportsthatarevalidfor12months,andanynecessaryvisas.Thewinnerandtheirguestareresponsiblefortheirowntravelinsurance.Travelexpensesandaccommodationarenotincluded.Thejudgesdecisionisfinalandnocorrespondencewillbeenteredinto.CityJetexcludeliabilityforanyloss,damageorinjurywhatsoeversufferedorsustainedarisingoutoforinconnectionwiththiscompetition.Winnerswillbedrawnrandomlyfromallentriesreceived.Winnerswillbenotifiedbytelephonebefore31December2010.Detailsfromallentrieswillbecollectedandusedforthepurposesofconductingthiscompetitionandforsurroundingpublicitypurposes.

    TELL US YOUR TOP 3 CHOICESFOR THE POWER HUNDRED 2011

    The Power Hundred 2011, published on22 December in City A.M., will highlight allthose who were calling the shots in the City,whether they be bankers, lawyers, chiefexecutives orhedge fund managers, in 2010.

    Two years ago, the Power Hundred wasdominated by those involved in rescuing thebanks. This year's list will have a differentcomplexion, with dealmakers and successfulbusiness leaders in the ascendancy.

    ONE OF 7 PAIRS OF FLIGHTSTO ANY CITYJET DESTINATION*WIN

    ThePowerHundred2011

    www.CityJet.com/cityam

    LEGAL CASES STEMMING FROM OIL SPILL

    The US Department of Justice yesterdayjoined the hundreds of lawsuits that havebeen filed as a result of the Gulf of Mexicooil spill, the largest in US history: TYPES OF LAWSUITS- The vast majority are for economic lossesfiled under the Oil Pollution Act, seeking torecover lost wages or damage to a busi-ness. Thousands have claimed they wereharmed by the spill, including shrimpers,owners of commercial vessels, seafoodprocessors and even owners of nail salons.- Personal injury and wrongful death casesbrought by workers hurt in the blast andby families of the 11 killed.- The states of Louisiana and Alabama havefiled lawsuits over claims for loss ofresources, loss of tax revenue and response

    costs for the cleanup. The federal govern-ment is pursuing civil penalties under theClean Water Act that could top $4,300 perbarrel of spilled oil, or $20BN, if gross negli-gence is determined.- Securities-related claims have been filedon behalf of investors who bought BPsstock, which lost half its value in themonths after the rig explosion. LOCATION OF CASES- Most have been filed along the Gulf Coast,in Texas, Louisiana, Mississippi, Alabamaand Florida. But some cases have been filedas far away as Ohio and California.

    - About 379 cases, the vast majority of thefederal cases, have been consolidated witha federal court in New Orleans. The court iscoordinating discovery and other procedur-al matters. The court has scheduled "testtrials" for next year to determine whichparties are potentially at fault.- The securities-related lawsuits are beforea federal court in Houston. DEFENDANTS-- BP has been the focus of the lawsuits,but other parties sued include:-Anadarko Petroleum Corp, which owns a25-per cent stake in the Macondo well thatspewed the oil.- MOEX Offshore, which holds a 10 percent interest in the well.- Transocean, a Swiss company that owned

    the Deepwater Horizon rig, which it leasedto BP.- Halliburton Energy Services, whichcemented the blown-out well.-Cameron International Corp, which manu-factured the blow-out preventer valve thatwas meant to prevent a spill from the well.-M-I LLC which provided drilling fluids forthe well.-Weatherford International, a Swiss com-pany that was involved in the casingprocess for the well.-Hyundai Heavy Industries, which manu-factured the Deepwater Horizon rig.

    SIENNA MILLER CLAIMS REIGNITEHACKING ROWLawyers representing the actressSienna Miller have alleged that a sen-ior executive at the News of theWorld ordered a private detective tohack into her mobile phone voice-mail account, reigniting a controver-sy over journalistic practices at thetabloid Sunday newspaper.

    GOLDMANS SZE TO LEAVE FOR HEDGEFUNDMorgan Sze, the global head ofGoldman Sachs biggest proprietarytrading desk and one of the banksmost highly paid employees, has begun raising money for what isexpected to be the largest hedge fundlaunch since the financial crisisbegan. Szes new hedge fund eagerlyanticipated by many in the industry

    is to be called Azentus Capital andwill based in Hong Kong.

    CHINA BANK TO LAUNCH FUND OF

    FUNDSChina Development Bank, the state-owned lender that owns part of theUKs Barclays Bank, is set to launchthe countrys first private equity fundof funds in a sign of how rapidly theChinese private equity industry ismaturing. With direct approval fromthe State Council, Chinas cabinet,the fund of funds is scheduled toraise a total of Rmb60bn ($9bn), pro-viding a huge boost to the burgeon-ing domestic private equity sector.

    HYUNDAI PREPARES TO RELAUNCHBRANDHyundai Motor is preparing torelaunch its brand as modern premi-um in line with the South Koreancarmakers growing confidence andglobal Hyundai and its sister brandKia will this year produce more than6m vehicles, up about 20 per cent on

    2009, and will be the industrys fifth-largest carmaking group.

    INFLATION IS THE BIGGEST ENEMY,WELLCOME TRUST WARNS BANKBritains richest charity and one of itsmost successful investors gave warn-ing yesterday that the country is fac-ing its biggest inflationary threat for20 years and disclosed that it hadabandoned bond investment as a con-sequence. Wellcome Trust, which hasamassed a 14.5bn investment for-tune, said that it had sold its lastbond in April as it positioned itself fora rise in inflation.

    COVENTRY TO BE THE HOME OF TATASELECTRIC CARDreams of making Britain the world-wide hub of the electric car revolu-tion have been boosted by Tata, whichpledged its plug-in hatchback wouldbe produced in Coventry. The Indiancarmarker confirmed the Tata Vista

    EV will be built in the spiritual homeof the British motor industry.

    PIMCO RAISES US DEBT HOLDINGSBill Gross, who runs the worlds biggest bond fund at Pimco, lastmonth raised holdings of US govern-ment-related debt for the first timesince June. Gross increased the pro-portion of the US government andrelated securities in his Total ReturnFund to 30pc of assets in Novemberfrom 28pc in October.

    CLAIMS RGI IS USED AS PERSONALBANK ARE MISLEADING, SAYSPROPERTY COMPANYThe Aim-listed Russian property com-pany accused of being used as a per-sonal bank for management hasclaimed the allegations against it aremisleading and unfounded. RGIInternational was accused of bribery,nepotism and financial malpracticeby Petr Shura, owner of 22.5 per cent

    of the company, in a stock marketstatement on Monday.

    BANK OF AMERICA IN SETTTLEMENTTALKS OVER MORTGAGESBank of America, after vowing tofight requests that it repurchase cer-tain loans, has begun potential settle-ment discussions with some of itslargest mortgage investors. The 17-member group now in talks with thenations largest bank includes theFederal Reserve, Freddie Mac,BlackRock and Allianz SE's PacificInvestment Management.

    DANNON SETTLES COMPLAINTS OVERYOGURT ADSDannon, one of the biggest promot-ers of probiotic foods such as Activiaand DanActive dairy drinks, agreedWednesday to pay $21m to settle stateand federal investigations into allega-tions that the company's claims forthe health benefits of foods contain-

    ing probiotics were exaggerated, ornot properly supported.

    WHAT THE OTHER PAPERS SAY THIS MORNING

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    THE Cabinet Office yesterday pub-lished a list of top business leaders

    who have been appointed as non-executive directors to sit on Whitehall

    boards.The appointments are designed to

    ensure the government operates in amore business like manner and arethe brainchild of Cabinet office min-ister Francis Maude and Lord Browne,the recent author of the report onhigher eduction funding and former

    chief executive of BP. Among the list of appointments

    are Sara Weller, chief executive ofArgos, Jim Leng former chairman ofRio Tinto and deputy chairman of

    Tata Steel, chief executive ofGlaxoSmithKline Andrew Witty andBabara Stocking chief executive ofOxfam.

    Of the 31 board membersannounced yesterday, 13, or 42 percent, are women. The remaining listof board members will be published

    in the New Year which is also whenthe first board meetings are expectedto take place. The Cabinet Office saidthe non-executive board members

    will help steer responsibility forstrategic and operational leadershipfor each government department andfor agreeing each departments three-

    year rolling business plan. They will also provide advice and

    support to ministers and civil ser-vants, challenge discussions and dis-cuss any performance issues withLord Browne and the Prime Minister,the Cabinet Office added.

    Maude, said: Todays namesinclude business heavyweights withhuge experience of financial manage-ment and improving operational per-formance and they will play a keyrole in helping departments rise tothe challenge and deliver further sav-ings. Previously, we have paid mil-lions of pounds to consultants for thiskind of advice.

    He added new ef ficiency measuresput in place by the government hadalready saved over 1bn.

    Britains bestdrafted in to

    run Whitehall THE auditor general refused to signoff MPs expenses accounts for last

    year yesterday citing concerns overnearly 14m of payments.

    Amyas Morse carried out a fullscope audit of 98.1m expenses paidin 2009-1 the year of the expensesscandal.

    The audit found the House ofCommons authorities had failed toobtain receipts to justify 2.6m inclaims. Another 11.3m of expenseshad been incurred on items whichMPs could not prove were necessaryfor parliamentary purposes.

    The news came as David Cameronmet with backbench MPs last night todiscuss problems with the new sys-tem governing MPs expenses.

    The Independent ParliamentaryStandards Authority (Ipsa) has faced

    criticism from MPs that is not work-ing properly and its too expensive.

    Last night the Prime Ministeragreed the new system was anti-fam-ily and would have to relax its grip

    by 1 April, or face being reformed. A spokesman for Cameron added:

    There needs to be a better system inplace by 1 April otherwise it will haveto change. That can be through Ipsarecognising its shortcomings, or itcan be it being changed. Either way, it

    will have to change.

    Auditor refusesto sign off onMPs expenses

    BYMATTHEWWEST

    POLITICS

    POLITICS

    Politics 3CITYA.M. 16 DECEMBER 2010

    Clockwisefrom topright: SaraWeller CEO of

    Argos,AndrewWitty CEO ofGSK, DavidVerey senioradviser at

    Lazard, LordBrowne for-mer CEO of

    BP

    From left to right: JimLeng, Baroness Hogg andBabara Stocking

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    US property giant Simon tried to pushCapital Shopping Centres (CSC) intoscrapping its 1.6bn purchase of the

    Trafford Centre yesterday with a2.9bn indicative offer for the entirecompany.

    CSC rejected the 425p-per-share pro-posal after an emergency board meet-ing yesterday, claiming the move wasyet another attempt by Simon to frus-trate the Trafford Centre acquisition.

    However, CSC delayed its sharehold-

    er meeting planned for 20 December, which would have given investors achance to approve the Trafford deal

    with current owner Peel Holdings. Peelbacked its stance.

    Simon welcomed the delay, andurged CSC to listen to calls from yourshareholders many of whom we havespoken to opposing the TraffordCentre.

    Its indicative offer represents aseven per cent premium to CSCs shareprice on Tuesday, and comes with con-

    ditions including the end of theTrafford purchase and access to CSCsbooks to undertake due diligence.

    Credit Suisse analyst Steve Bramley- Jackson told City A.M. that Simonsoffer was unrealistic. I dont thinktheres enough financial headroomfor Simon to increase its offer to a levelacceptable for CSC shareholders.

    A lot of the big CSC investors areinvolved to maintain exposure to UKproperty, which they are unlikely toexchange for cash at this stage.

    Capital Shopping Centres sharesgained 4.9 per cent to close at 415.6p.

    CSC fends offSimons 3bn

    takeover bidBYMARION DAKERS

    PROPERTY

    Focus on CSC4 CITYA.M. 16 DECEMBER 2010

    How not todeal with atakeover bidSIMONS pursuit of CSC has been a

    textbook example of how not tohandle a takeover bid. First it said itwould bid for CSC on the precondi-tion it did not purchase the TraffordCentre (providing all sorts of rea-sons for why it was a bad pur-chase); then it offered to financethe acquisition of the mall insteadof Peel (destroying its own argu-ments against the purchase); now itis back with an indicative offer of425p again providing manage-ment does not purchase theManchester shopping centre.

    But CSC knows it has to at leastconsider Simons offer, which repre-sents a 21 per cent premium overthe stocks closing price in the pastsix months. That would allow share-holders to exit their investment at a13 per cent premium to the lastreported Net Asset Value of 377p.

    Simons advances will provide

    support for the share price in thenear term, but we think its flip-flop-ping speaks volumes about theprobability of an eventual deal. Thisis less holy matrimony and moretransatlantic teenage crush. Savvyinvestors will get out while thegoing is good.

    BOTTOMLINEAnalysis by David Crow

    24 NovemberCSC confirms it in advanced talks withPeel Holdings to buy the Trafford Centrein Manchester for 1.6bn. The deal looksset to be the biggest-ever single propertytransaction in the UK.

    25 NovemberWorlds biggest mall-owner and CSCshareholder Simon Property publishes a

    letter it wrote ahead of CSCs announce-ment, urging it to delay its purchase ofthe Trafford Centre until it can make atakeover offer. CSC shares gain 12.5 percent.

    8 DecemberSimon demands to see CSCs books so itcan perform due diligence ahead of a for-mal takeover offer, threatening to sell its6.25 per cent stake; CSC refuses.

    8 DecemberSimon sends a letter to the CSC boardoffering to fund a 400p per share plac-ing, providing Peel Holdings accepts cashrather than a stake in CSC in the Trafforddeal. CSC rejects the offer, and Peelwrites a letter in support of its position.

    15 December: 7amSimon makes an indicative offer of 425p

    a share for CSC.

    15 December: 2.30pmFollowing an emergency board meeting,CSC rejects the offer as yet anotherattempt by Simon to frustrate theTrafford Centre acquisition, but says itwill delay its EGM.

    Late January 2011New EGM to vote on Trafford deal.

    TIME LINE | THE FIGHT FOR CAPITAL SHOPPING CENTRES

    The TraffordCentre inManchester hassparked atakeover bid

    Picture: REX

    320

    340

    360

    420

    28 Oct 17 Nov 7 Dec20 Sep 8 Oct

    ANALYSIS l CSC Groupp

    380

    400

    415.6015 Dec

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    GERMANY has signalled it would beprepared to fund a possible doublingin the European Central Banks (ECB)capital reserves, which economists saycould be a precursor to the launch of aEuropean quantitative easing pro-gramme.

    If the ECB does decide to loosen itsmonetary stance, say economists, itwould do so by ending the sterilisa-tion of its bond purchases.

    Last month, the bank was forced torestart its intervention in secondarybond markets to stem the rising tide ofgilt yields in peripheral Eurozoneeconomies, but in the past it has offsetthe monetary loosening effect of itspurchases by selling bonds so calledsterilisation.

    Megan Greene, a senior economistat the Economist Intelligence Unit,says that with the Eurozones optionslimited politically, the bank might beforced to stop sterilising its purchases effectively ushering in a EurozoneQE programme.

    She claims that while the ECB talksdown its desire to intervene, it has

    shown a willingness to take drasticaction. Thats how the ECB has func-tioned all along, she says. It says itshoping to withdraw emergency meas-ures but at the same time has goneand bought up a whole bunch of debt.Figures show the bank bought2.67bnof sovereign bonds last week.

    With German chancellor AngelaMerkel refusing to consider othermeasures such as increasing the sizeof the Eurozones bailout fund or issu-ing region-wide bonds, Greene saysthat radical action by the ECB could bethe only option left.

    Capital Economics Ben May agreeswith Greene that the bank might haveto fall back on QE: We certainly thinkit could if it wanted to, he says.

    But others are sceptical, pointing tothe institutions hawkish rhetoric.Saxo Banks Nick Beecroft says: Itwould go against the grain of the ECB.He also points out that while Germanyhas agreed to a capital increase for thebank, German fears about inflationcould be a barrier to any QE.

    But he added that the bank couldscale up its bonds programme: Ithink it will do whatever is necessaryto save the euro.

    Fears for euro

    may force ECBto launch QE

    MOODYSyesterday warned that it hadput Spain on review for a downgradeon its sovereign debt due to its refi-nancing needs over the next year.

    But the ratings agency added that itdoes not expect the country will needa bailout, saying it does not believeSpains solvency is under threat.

    Spain will need to refinance

    210bns (178bn) worth of debt nextyear, according to Goldman Sachs, andSpanish banks refinancing needs willhit35bn.

    Stocks and the euro fell afterMoodys warning: the Eurostoxx 50closed down 0.69 per cent, while theeuro had dropped 0.7 per cent againstthe greenback by yesterday evening.However, bond investors appearedreassured: the yield on 10-year Spanishdebt closed down at 5.5 per cent.

    HALFPRICE

    or

    BETTER

    ASSEENONTV

    ASS

    T

    N

    Moodys warns onSpains debt rating

    CHANCELLOR George Osborne hassaid that Britain will be free of its com-mitment to fund Eurozone bailouts by2013, even as the European Council(EC) meets today to negotiate the legalbasis of a permanent bailout fund.

    The EU summit comes as the Irishparliament voted yesterday to acceptthe terms of the 85bn (72bn) EU/IMF bailout. The vote underscored PrimeMinister Brian Cowens fragile grip:the bailout passed 81-75, with the gov-erning coalition relying on the sup-

    port of three independent MPs.Opposition parties have sworn to rene-

    gotiate the bailout if they win nextyears elections.

    Osborne announced that Britainstands to make 440m from intereston its 3.25bn bilateral loan to Ireland.

    But he also assured parliament thathe has struck a deal to free Britainfrom its participation in Eurozone bailouts once a permanent fund isestablished in 2013. The UK is obligedto contribute up to 7bn for anybailouts until then under the terms ofa deal negotiated by former-chancellorAlistair Darling.

    The European Council meets today

    and tomorrow to alter EU treaties inorder to establish a permanent fund.

    UK to be free of bailoutcommitment from 2013

    BY JULIET SAMUEL

    EUROZONE CRISIS

    EUROZONE CRISIS

    GREEK unions grounded flights,kept ferries dockedat ports and shutdown public servic-es yesterday toprotest wage cutsas the Athens gov-

    ernment continuesto stick to the con-ditions of its inter-national bailout.

    Picture: GETTY

    BY JULIET SAMUELEUROZONE CRISIS

    Eurozone debt crisis 5CITYA.M. 16 DECEMBER 2010

    GREEK STRIKES

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    UNEMPLOYMENT rose in the threemonths to October as government jobcuts took their toll, official datashowed yesterday.

    Unemployment crept up to 7.9 percent, the highest rate in six months,representing an increase of 35,000people to 2.5m in total.

    The news came from the Office forNational Statistics (ONS), which alsoannounced that government sector

    employment was down 33,000 in thethird quarter of the year.

    Employment in the private sectorremained steady, totalling 23m, thesame as the previous quarter.

    The figures are in line with fore-casts made by the governments fiscal

    watchdog, which expects 7.9 per centunemployment for this year, with aslight rise to eight per cent next year.

    But unemployment is projected tofall from 2012 onwards, as privatesector job creation more than offsets

    falling public sector employment,the Office for Budget Responsibility(OBR) said last month.

    Government employment coulddrop by 330,000 as part of the austeri-ty measures. Yet there are still 6mgovernment employees in the UK,according to the ONS data, includingover half a million civil servants.

    Unemployment benefit claimantsactually fell by 1,200 in November to1.46m. And 56,700 fewer peopleclaimed Jobseekers Allowance com-pared to the same time last year.

    And in London unemployment fellby 4,000 from August to October.

    The coalition is trying to boost thejobs market by cutting tax, simplify-ing regulations, and sealing interna-tional trade deals, employmentminister Chris Grayling said.

    We are increasing the supportavailable to people, he added.

    But opposition leader Ed Milibandsaid the coalitions confidence in theeconomy would seem very hollowto people affected by unemployment.

    Job cuts riseas tighteningbegins to biteBY JULIAN HARRIS

    UK ECONOMY

    Economics6 CITYA.M. 16 DECEMBER 2010

    NEWS | IN BRIEF

    Eurozone employment stagnatesEmployment failed to grow across theEurozone in the three months toSeptember, it was revealed yesterday.The Eurostat office estimated no changein job rates across the single currencyarea, yet revised up rates for the secondquarter of the year. Employment grew

    by 0.1 per cent in the three months toJune, it said. For the third quarter, fallsof 0.7 per cent were recorded in Greeceand Spain.

    Christmas boost for retail salesHoliday season high street sales are upon last year, employers body the CBIreported yesterday. Some 67 per cent ofretailers expected higher sales than lastyear, with only 11 per cent preparing fora decline. The positive index score wasthe highest year-on-year comparisonsince April 2002. However, fewer retail-ers expect the sales boom to continueinto next year, with the VAT rise on 4January threatening to dampen salesof big ticket items.

    Production wages edge upwardsSigns of pay rises in the manufacturingsector are starting to emerge, accordingto business group EEF. The average pay

    settlement crept up to two per centfrom 1.8 per cent for the three monthsto October, it said. Only 23 per cent ofthe surveyed settlements ended in a payfreeze, and none resulted in less pay.

    Fears grow for Japans economyThe Bank of Japans latest survey ofbusiness conditions delivered more badnews for its ailing economy. The headlineindex of the quarterly Tankan survey fellto +5 (from +8), stoking fears of a con-traction in GDP.

    ANALYST VIEWS: WHAT CAN WE DO TO STOPUNEMPLOYMENT RISING? Interviews by Julian Harris

    MATTHEW SINCLAIR | TAXPAYERS ALLIANCE

    People on benefits have little incentive to work due to high, complextaxes. The minimum wage of 5.80 an hour can be worth as little as 26p. Byadopting a more realistic poverty line, the government could save enough moneyto lower the marginal tax rate, and tackle long-term unemployment.

    SIMON KIRBY | NIESR

    I would limit fiscal consolidation until we have robust economicgrowth. Under the current plans, unemployment will hit 8.6 per cent next year.Long term unemployment leaves a big scar, and we must avoid ending up withNEET [not in employment, education or training] young people.

    DAVID KERN | BRITISH CHAMBERS OF COMMERCE

    Given the expected fall in public sector employment, it is critical thatbusinesses are able to create new jobs. The labour market needs to remain as flex-ible as possible. Onerous regulation must be scrapped or suspended so that theprivate sector can absorb the temporary public sector job losses.

    Employment minis-ter Chris Graylinghopes to boost jobs

    in the UKPicture:MichaTheiner/ CITY A.M

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    BROAD based rises in consumerprices and manufacturing werewarmly received in the US yesterday,following the Federal Reserves finalmeeting of the year on Tuesday.

    Positive industrial production fig-ures offer hope for the Americaneconomy as it stutters towards recov-ery.

    Overall production rose 0.4 percent in November, despite a hugedrop in automobile output.

    Motor vehicle output can bevolatile from month to month, saidPaul Ashworth of Capital Economics.Otherwise, the gains in manufactur-ing output were fairly broad based.

    Excluding motor vehicles, manu-facturing output increased by 0.7 percent on October.

    And an index of business morale inthe sector bounced back after a fall inNovember. The Empire State manu-facturing survey jumped 22 points torecord a positive reading of 10.6.

    This is more evidence suggestingthat the economy is getting its grooveback, commented Ashworth.

    Meanwhile, core US consumerprices (excluding food and energy)grew steadily by 0.1 per cent inNovember, in line with expectations.

    Headline inflation measured 1.1per cent on last year, slightly downfrom Octobers rate of 1.2 per cent.

    The period of disinflation haslargely run its course, said PeterNewland of Barclays Capital Research.The data showed small rises acrossmost core components, he said.

    Fed chairman Ben Bernankerecently told television programme60 Minutes that the US was close to apoint where prices start falling.Deflation would be a serious con-cern if the Fed did not pursue histor-ically loose monetary policy, he said.

    And the US housing marketremains stagnant, according to theNational Association of HomeBuilders. Yesterday the group report-ed unchanged sales rates forDecember.

    Factory boostfor Americasslow recovery

    BRITAINS tax burden has increasedsince 1995 and is higher than that ofmany peer countries, the Organisationfor Economic Co-operation andDevelopment (OECD) revealed yester-day.

    Overall taxes, as a proportion ofGDP, exceeded the 34.8 per cent OECD

    average in 2008, despite falling inrecent years.

    Some countries have reduced theirtax burden since 1995, such as NewZealand, Ireland, Canada and the US.

    And even high tax countries, suchas Denmark and Sweden, havereduced taxes. But in the UK the bur-den increased by around 1.5 per cent.

    Tax Freedom Day the day untilwhich all revenue effectively funds the

    government fell on 30 May this year,according to the Adam SmithInstitute.

    And allowing for government bor-rowing, the state consumes 187 daysworth of incomes every year, they said.

    In recent years tax revenues havefallen in most countries, due to theeconomic slowdown, and tax reduc-tions designed to cushion the effectsof recession, the report said.

    OECD: Britains tax burden is greaterthan peer average and up since 1995

    BY JULIAN HARRIS

    US ECONOMY

    BY JULIAN HARRIS

    WORLD ECONOMY

    Economics 7CITYA.M. 16 DECEMBER 2010

    ANALYSIS l Total tax ratio as percentage of GDP, 2008

    Irelan

    d

    Denmark

    10

    20

    30

    40

    Italy

    France

    Japan

    Australia

    US

    Germany

    UK

    Spain

    Ca

    nada

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    News 9CITYA.M. 16 DECEMBER 2010

    BT will not be allowed to increase theamount it charges rivals to use itsinfrastructure to help plug its pen-sion deficit, communications watch-dog Ofcom ruled yesterday.

    The move is a blow to the telecomsgiant, which had hoped Ofcom would

    follow the example set by regulatorsof the postal, energy and water indus-

    tries, which sometimes allow deficitrecovery payments to be included inregulated charges. The decision was

    welcomed by rivals BSkyB and TalkTalk, which will avoid payinghigher prices for the same service. AnOfcom spokesman said: We believethis is important for creating an envi-ronment in which regulated firms,such as BT, and their wholesale cus-

    tomers are willing and able to invest.The guidelines meet our principal

    duty to further the interests of citi-zens and consumers by promotingcompetition.

    BTS mammoth pension deficit fell by 2.9bn last month thanks to achange that links pension paymentsto the Consumer Prices Index infla-tion measure instead of the RetailPrices Index. The fall in deficit, whichstood at 9bn in 2009, will immedi-

    ately have an impact on its interestpayments.

    BT cannot hike prices to pay for retirement

    BHP Billiton | Rio Tinto | Xstrata

    THE Institute of Directors (IoD) yester-day slammed the CBIs quick-fix

    suggestions to introduce more women onto the boards of compa-nies, believing that forcible diversifi-cation would constrain Britishindustry.

    The CBI is proposing that all listed

    companies should be required toreport on boardroom diversity. Whilestopping short of requiring firms tohave a quota of women on boards, itmeans companies would have to set

    internal female quotas and would beforced to explain if they fall short ofthis figure.

    The CBI is calling for its proposal to be added to the UK CorporateGovernance Code.

    But the IoDs director general Miles Templeman said that the CBIs pro-posal would risk the UK corporategovernance code becoming politi-cised and removed from commercial

    realities. He warned that a relianceon forced gender diversity wouldimpact on other dimensions of diver-sity that are necessary in the board-room, including experience, personal

    background and actual ability.

    Clash over female targetsBY THOMAS HAMED

    REGULATION

    ENGLANDS public sector pensionscheme may be underfunded by100bn, research claimed yesterday.

    Unions reacted with fury to claimsthat the Local Government PensionSchemes deficit in England has morethan doubled from 42m in 2007, andis now just 57 per cent funded com-pared with 74 per cent three yearsago.

    Councils 5.8bn annual taxpayercontributions to the LGPS now barelycover new pension pledges, theresearch by independent pension con-sultant John Ralfe found.

    They would need to increase contri-butions by 4bn a year to plug the gapover the next 25 years even after cut-ting 20bn from the deficit toaccount for pension rises being val-ued by CPI and not RPI, it said.

    Ralfe said the debate just repeatedthat held in the private sector adecade ago. I feel we are in a time

    warp, he told City A.M. The differ-ence is that in the private sector com-panies realised defined benefitschemes were very costly and veryrisky, so took steps to address that.

    Ralfes data showed that theschemes asset value rose just eight percent from 2007, to 132bn, while liabil-ities soared 41 per cent to 232bn.

    The LGPS also has an average assetallocation of 70 per cent equities,

    which Ralfe said left taxpayers severe-ly exposed to the risk of a shortfall.

    If equities perform spectacularlyover the next few years, OK, but what ifthey dont? It is absolutely clear thatlocal councils dont have a risk man-agement strategy or a Plan B if it goes

    wrong, he said.

    But Bob Summers, chair of theChartered Institute of Public Financeand Accountancys pension panelsaid there was potential for some

    very highly misleading information.

    Public sectorpensionshole grows

    A US consumer group yesterday suedMcDonalds to stop the worlds largesthamburger chain from using HappyMeal toys to lure children into itsrestaurants.

    The Center for Science in the PublicInterest is representing a Sacramentomother of two in the lawsuit, whichalleges unfair marketing and other

    violations of Californias consumerprotection law. It does not seek mone-tary damages.

    The lawsuit is about the change,not the money, CSPI litigation direc-tor Stephen Gardner said.

    We are proud of our Happy Mealsand intend to vigorously defend our

    brand, our reputation and our food,said McDonalds spokeswomanBridget Coffing. We listen to our cus-tomers, and parents consistently tellus they approve of our Happy Meals.

    Walter Olson, a senior fellow at theCato Institute and tort reform advo-cate, said he thinks that McDonald's

    will ultimately prevail but that it willlikely have to go through multiplerounds of legal wrangling, which

    would suit CSPI.In the meantime, theyve got their

    step towards a national debate, whichis what they want, Olson said.

    McDonalds debuted the HappyMeal in the United States in 1979.Modern offerings have includedthemed items from popular films likeShrek or sought-after toys like TyBeanie Babies.

    The Happy Meal has been a hugehit for McDonalds - making thecompany one of the worlds largesttoy distributors and spawning me-too offerings at most other fast-food

    chains.But lately it also has come underfire from public health officials, par-ents and lawmakers who are frustrat-ed by rising childhood obesity.

    McDonaldsfaces suit inUS over toys

    GEORE Soros, the billionaire hedgefund manager, yesteday emerged as asignificant new investor in Flybe, theBritish low-cost airline, following itsflotation.

    The financier, famous for bettingagainst the pound in the 1992 fiscalcrisis, has acquired a 3.4 per cent

    stake though his Quantum Partnersvehicle that will have cost more than

    7m, according to regulatory filingsyesterday.

    Flybe yesterday said it had exer-cised its over-allocation of shares, rais-ing another 6m and bringing inextra funds for float manager Bank of

    America Merrill Lynch.Flybe, the UKs biggest domestic air-

    line, raised 60m by offering 20.3mshares at 295p last week. Its shares fell

    2.75p to 337.25p yesterday in theirfirst day of unconditional trading.

    Soros invests 7m in FlybeAVIATION

    CBI President Helen Alexander backs targets Picture:Micha Theiner/ CITY A.M

    BY THOMAS HAMED

    CONSUMER

    BY STEVE DINNEEN

    TELECOMS

    BYALISON LOCK

    UK ECONOMY

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    EXPRESSYOURSELF,

    WITH UBSSSTYLE GUIDE

    THE Swiss are famous for their precision, but only when The Capitalist got hold ofUBSs 43-page dress code for its branch staffdid it become clear just how highly the

    bank values exactness. The dress code has been doing the

    rounds for a few days now, but you mightnot have had a chance to leaf through themost important lines of this serious docu-ment.

    If your shoes have a heel over 7cm inheight, for example, forget it its just notallowed. Nor are open toes, dull leather orcolours other than black. And dont forget:Change your shoes once a day. With freshshoes, you will feel better and improve your

    performance at work.As for adding personality to your outfit

    with jewellery, heres where youre allowedto experiment! Within the colour schemeof the dress code, that is. As for wearingmore than seven pieces of bling, it is strict-ly forbidden. (What is it with the numberseven?)

    So what is the philosophy behind thissolemn instructional document (asidefrom that of an 19th century finishingschool)? Well, it stems from a belief thatindividuals are judged primarily on their

    research note to talk down the idea ofinvesting in commodities. Specifically, heargues: Commodities for the long run?Not on your Nellie Id rather eat coal!!

    You see, its just easier to avoid the heart-break if you steer clear of em: Prior com-modity bull markets have been much likeEngland football managers, he writes.They promised much, burned brightly fora while, but ultimately crashed, breakingthe hearts of those who believed in themmost. Oh, Dylan. See, the rest of us just trynot to take Fabio Capello too seriously.

    FRAYING CABLEWhoops! A rather hasty cut-away dur-ing last nights Jeff Randall Live showon Sky gave a little glimpse of how business secretary Vince Cable getsthrough his busy days. Cable wasshown gratefully accepting a papercup of Costa coffee before the produc-

    ers cut quickly back to their anchor.Sometimes you just need that extra caf-

    feine injection before a live two-way, eh?

    appearance and that the right outfitimparts the concepts of truth, claritystewardship, responsibility and integrity,conscientiousness, reliability and consis-tency, and respect of the highest profes-

    sional standards.The Capitalistis just waiting for the bank

    to roll it out across the investment bankingdivision. Clarity and stewardship surelythatd be a few hundred million in fees

    well spent?

    ALL IN THE FAMILYMany an executive has pondered the diffi-cult question of how to stay in touch withthe family while maintaining such a tryingschedule.

    Luckily, it seems the IntercontinentalHotels Groups chief financial officerRichard Solomons has found the solution:install an app on your iPhone that tracksthe whereabouts of your wife and kids.

    OK, a little... unconventional, but, hey,how else are you going to defend your wifefrom stalkers?

    CHEWING COALWith Portuguese government min-isters pleading with the popula-tion not to hoard sugar inanticipation of a shortage, andPakistan and Egypt also runninglow, Societe Generales Dylan Griceused his regular Popular Delusions

    The UBS dress code shows how to tie such fashionable French neck-wear as a foulard and nicky

    IHGs Richard Solomons keeps track of his clan

    The Capitalist10 CITYA.M. 16 DECEMBER 2010

    EDITED BY

    JULIET SAMUELGOT A STORY? [email protected]

    Change yourshoes once aday. With

    fresh shoes,you will feelbetter andimprove yourperformanceat work.

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    ROYAL Bank of Scotland (RBS) contin-ued its divestment plan yesterday bywinding down its retail and commer-cial operations in Chinese cities.

    RBS will tranfer its 25,000-strongcustomer base, business portfoliosand employees in Shanghai, Beijingand Shenzhen, to Singapore-basedbank DBS China.

    The agreement will take six monthsand involves no cash deal, transfer ofoutlets or business licences.

    RBS will now focus on developingits wholesale and investment bank-ing businesses in the country. RBSremains strongly committed to thelong term development of its busi-ness in China, its statement said.

    The deal is the latest non-core assetdivestment following its restructur-ing in the financial crisis.

    RBS transfers Chineseretail arm to Asian bank

    RBS, led by chief executive Stephen Hester, will focus on wholesale banking in China Picture: PA

    BYALISON LOCKBANKING

    News 11CITYA.M. 16 DECEMBER 2O10

    NEWS | IN BRIEF

    eBay snaps up Critical PathWeb commerce company eBay said yes-terday it acquired Critical Path Software,a mobile software application developer,as the company further embraces sellingvia mobile. Terms of the deal were not

    disclosed. US firm Critical Path Softwarehas worked with eBay for over two years,most importantly developing its app forApples iPhone, which eBay says has beendownloaded more than 14m times.

    Twitter financing values it at $3.7bnTwitter has raised $200m in financing ina deal that values the microblogging com-pany at $3.7bn (2.4bn), less than a yearafter it began its first serious efforts tomake money. The investment came from

    Silicon Valley venture capital firm KleinerPerkins Caufield & Byers and existinginvestors. The money will help Twittergrow the company, Twitter said in a postyesterday on its corporate blog.

    38

    42

    46

    50

    28 Oct 17 Nov 7 Dec20 Sep 8 Oct

    ANALYSIS l RBS

    p

    40.7615 Dec

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    VIRGIN ATLANTIC confirmed yester-day that it has received a number oflines of enquiry from other airlinesabout a possible tie-up or merger deal.

    Sir Richard Bransons airline said ithas appointed Deutsche Bank to helphandle the approaches, which it saidare likely to run on for a number ofmonths.

    Rivals including US-based Delta

    Airlines have been named as theinterested parties, though Delta toldCity A.Myesterday: As a matter of pol-icy, we do not comment on industryrumors or speculation about poten-tial airline partnership.

    Deutsche Bank also declined tocomment.

    Branson has previously talkedabout merging Virgin Atlantic withanother carrier in order to competeas the market consolidates.

    Singapore Airlines, which owns a

    49 per cent stake in Virgin Atlantic, isthought to remain keen to offload itsholding.

    Virgins path to a tie-up has recent-ly been cleared by British Airways andIberia, which got their 5bn mergerpast regulators on both sides of theAtlantic last month. Virgin had earli-er protested against the deal, claim-ing it could stif le competition.

    Virgin ended talks with Lufthansalast year about a potential acquisitionof British airline bmi.

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    Virgin Atlantic confirmsa number of approachesBYMARION DAKERSAVIATION

    News12 CITYA.M. 16 DECEMBER 2010

    MAN OF THE MOMENT

    MARK ZUCKERBERG, 26, the billionaire co-founder of Facebook, was yesterday namedTime magazines 2010 person of the year. He beat WikiLeaks editor-in-chief Julian

    Assange, the 33 rescued Chilean miners and the US Tea Party movement to the honour.The award is given to the person judged to have most influenced the culture over the last

    year. Federal Reserve chairman Ben Bernanke won the prize in 2009. Picture: REUTERS

    To celebrate this years list, CityJet, City A.M.s partner for the PowerHundred 2011, is giving away one pair of flights each day for 7 days in the runup to the list. CityJet is a subsidiary of one of the largest airlines in the worldand offers a choice of over 480 flights a week to 14 major European and UKbusiness centres from London City Airport. With just a 15 minute check-intime - the shortest of any UK airport - CityJet are the smartest choice for

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    REAL estate consultant DTZ said yester-day its first half loss narrowed on astrong performance in Asia, as itretained a cautious outlook due tomarket uncertainty in the UK andEurope.

    The company yesterday posted a pre-tax loss of 6m for the six months to 31October, compared to a loss of 20.6min the same period last year.

    DTZ, which competes with propertyservices firms such as Jones LangLaSalle and CB Richard Ellis, said it wastrading in line with market expecta-tions for the full-year after it issued aprofit warning in October.

    The company said its pipeline fornew business was healthy but econom-ic uncertainty in Britain and Ireland,

    its largest market, and across continen-tal Europe, was hurting revenues.DTZ is a bit of a work in progress,

    said chief executive Paul Idzik, whojoined the firm in 2008 after he left hisrole as chief operating officer atBarclays. We have got through ourrestructuring and now feel very confi-dent, with results across all but one ofour markets growing.

    The firm secured 10m of mezza-nine debt from majority shareholderSaint George Participations in October,alongside an extended 15m revolvingcredit facility from RBS.

    DTZ narrows

    losses to 6mBYMARION DAKERS

    PROPERTY

    JPMORGAN Asset Management hasagreed to buy law firm Allen & Overysoffice on the Bishops Square site in adeal worth nearly 557m, joint sellersHammerson and the OmanInvestment Fund said yesterday.

    The 71,900 square foot office,which was developed and completed

    by Hammerson in 2005, was valued at510m in June with passing rents of

    35m, the developer said.Hammerson said its net proceeds

    from the sale of its stake in BishopsSquare stood at 79m.

    [T]his acquisition represents a fur-ther expansion of our funds coreproperty portfolio in Europe, saidPeter Reilly from JPMorgan.

    Clifford Chance and Jones LangLaSalle advised the sellers, while

    JPMorgan was advised by BerwinLeighton Paisner and Deloitte.

    JPMorgan buys Allen & Overyoffice from Hammerson venturePROPERTY

    News 13CITYA.M. 16 DECEMBER 2010

    Three fired as Apprentices enter final straight

    THE penultimate episode and the

    welcome return of a familiarface. For the interview challenge,Lord Sugar prised Margaret

    Mountford from her scrolls (shes com-

    pleting a Ph.D in Papyrology) to inter-rogate the final five. Her steely glareand raised eyebrow were as effective asever, though other interviewersfavoured a less subtle approach. Imgoing to give you an opportunity to do

    it the hard way and Ill rip you toshreds, snarled Claude Littner, play-ing the role of a cut-price Bond villain.

    Grilled in the glamorous surround-ings of Viglens St Albans headquar-ters, each candidate had their own way of dealing with the interviewprocess. Joanna crumbled, Jamieblamed others for his failings whileStuart violated basic social conven-tions. Stella and Chris meanwhile reg-istered so little emotion you

    wondered if they were the result ofViglens first foray into artificialintelligence.

    Stuart seemed to be having thetoughest time, with questionsraised about his ethics, business

    practices and just how truthful hisCV was. He was also askedthe question viewers have been waiting 11 weeks foran answer to: Im StuartBaggs, the brand what onearth are you talkingabout?

    We never quite found out but it is fascinating whatyou learn from these inter-views (aside from the range

    of telecoms licenses available in theIsle of Man). Jamie may or maynot have a third nipple andapparently Chris is one of theforemost theology scholars inBritain. When he was pressed on

    it, he admitted he meant hedid well at A Level. One wonders how hesreinterpreted hisCycling Proficiencytest and grade twopiano exam.

    Speaking of learn-ing new things, per-haps mid-interviewwasnt the best timefor Joanna to find

    out that theres a difference betweenAmsair and Amstrad and the correctpronunciation of Viglen.

    Back in the boardroom debate con-tinued about the five hopefuls. WasStella passionate enough? Should

    Joanna stick to running her smallbusiness? There was at least one easy,and long overdue, decision as LordSugar finally told Stuart to pack hisBaggs. A true Christmas miracle.

    With another two firings due, LordSugar got rid of Joanna and Jamie,albeit with rather less relish. And soto the final, with Stella vs Chris, in abattle of the monotones, with experi-ence on one side and education onthe other.

    APPRENTICE REVIEW

    GRAEME ALLISTER

    Paul Idzik, chiefexecutive, joinedDTZ in 2008 afterstanding down aschief operatingofficer of Barclays

    40

    44

    48

    52

    28 Oct 17 Nov 7 Dec20 Sep 8 Oct

    ANALYSIS l DTZ

    p

    38.0015 Dec

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    FEDERAL prosecutors have charged aformer UBS banker with encouraginghis wealthy American clients not to dis-close to US tax authorities they hadmoney in offshore accounts.

    Renzo Gadola, an investment adviserbased in Switzerland, faces charges ofconspiracy to defraud the United States,the US attorneys office in Miami saidin a statement yesterday.

    Gadola, a Swiss citizen who workedat UBS from 1995 to 2008, was arrestedon 8 November, two days after meetinga client at a Miami hotel and allegedlyattempting to persuade the personfrom disclosing offshore account infor-mation to US officials.

    In filed court documents, US officialscharged Gadola worked with anotherunidentified former UBS banker tohide clients money from US tax scruti-ny by shifting undeclared funds fromUBS accounts to Switzerland-basedBasler Kantonalbank.

    Gadola told authorities there musthave been a case of mistaken identitythat led to his arrest, according to courtpapers.

    He pleaded not guilty in an appear-

    ance before a judge on Tuesday. Lawyersfor Gadola were not immediately avail-able for comment.

    The unnamed ex-UBS banker wasdescribed by prosecutors as a formerexecutive director for UBSs North

    America International business, wholeft the bank seven years ago, taking150 clients with him to set up an inde-pendent investment group inSwitzerland.

    The case comes after US authoritiesrecently ended a probe into UBS, which

    was charged by federal prosecutors with helping roughly 17,000 clients with $20bn of assets hide theiraccounts from the Internal RevenueService. As part of a settlement, Zurich-

    based UBS paid $780m and handedover the names of more than 250 clientaccounts and ended its US cross-border

    banking business.In the Gadola case, prosecutors said

    the unidentified Swiss banker receivedsome $445,000 from a Mississippi client

    before transferring it first to UBS andthen to a Basler Kantonalbank account.

    The client later said he wanted todeclare the money under a voluntarydisclosure programme, but was advisedagainst it because his account was toosmall.

    Former UBS

    banker in UStax fraud case

    FRENCH Radio London, a new web- based French-language station, hasattracted City investment from

    Thierry Baudon, a founding partnerof private equity firm Mid EuropaPartners.

    The station, which has been broad-casting for just four weeks, isdesigned to capture Londons 400,000native French speakers as well asother Francophile listeners.

    Baudon will be a substantial

    investor in the station, FRLs finan-cial director Thierry de Panafieu said,

    and will take a position on the firmsboard immediately.

    Baudon said he was delighted tosupport the station. It fills an obvi-ous gap in the market, he said.

    Before founding Mid Europa in1999, Baudon headed the internation-al finance division of the Suez Groupand worked for the EBRD and WorldBank Group. Mid Europa invests incentral and eastern Europe with3.2bn (2.7bn) under managment.

    FRLs commercial partners includeaccountant Mazars, Cityjet airline,

    luxury hotel firm Relais & Chteauxand travel operator Club Med.

    French Radio London getsfunds from a City investor

    BY HARRY BANKSREGULATION

    PRIVATE EQUITY

    News 15CITYA.M. 16 DECEMBER 2010

    PricewaterhouseCoopersPwC has added to its nuclear energy

    practice with three appointments, all ofwhom will start immediately. Richard

    Lobley moves over from an investmentfirm in Abu Dhabi, having spent 10years consulting after his career as aRoyal Navy nuclear submarine engineer.He will now be based in London.

    Rebecca Holyhead is also joining thefirm, building on her 10 years experi-

    ence in the UK nuclear industry. Shemoves to PwCs London office from theWorld Nuclear Association. Matt Burleyhas also been hired and will be based inBristol.

    White & CaseThe global law firm has appointed two

    new partners, Jacqueline Evans and LeeCullinane, who bring over 40 yearsexperience in bank finance and acquisi-tion law between them. They both jointhe company from Mayer Brown.Previously, Evans was a partner for adecade at Allen & Overy in its leveraged

    finance practice, while Lee has been apartner for 15 years at Clifford Chance.

    Samena CapitalEkaterina Sharashidze has joinedSamena Capital as an executive directorof strategy and business development.She will lead the firms business oppor-

    tunities strategy, building on her 15years business experience in manage-ment consulting, investment bankingand venture capital. She has alsoworked for the government of Georgiafor five years, including a stint as a min-ister, during which time she led major

    economic reforms.

    Asia Property FundThe APF has added Erle Spratt as afund manager and Yung Ho as an invest-ment manager. Spratt joins the firmfrom Lend Lease Management inSingapore, while Ho joins from LaSalle.

    CITY MOVES | WHOS SWITCHING JOBS Edited by Juliet Samuel

    ThreadneedleAsset manager Threadneedle has hiredMichael Langlois (pictured) as its head ofwholesale distribution, Asia. He will beginwork in January and will be working closelywith Raymundo Yu. Langlois will be in charge

    of relationships with Asian financial institu-tions and also of dealings with global privatebanks. He joins the firm from Permal Groupand has also worked previously at MerillLynch.

    +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

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    Consumer News16 CITYA.M. 16 DECEMBER 2010

    TESCO is lining up against Europeslargest retailer Carrefour in the raceto buy the Zabka retail chain.

    The pair are among four bidderspursing Zabka, which has 2,300stores in the Czech Republic andPoland.

    There are four bidders left, twostrategic (investors) and two finan-cial (investors), a source close to thetransaction said.

    The two strategic investors are Tesco and Carrefour, a marketsource added.

    Josef Janov, managing partner forPoland at Czech-based Penta

    Investments which owns Zabka,declined to comment but con-firmed the final decision on the sale

    would be made in January.Tesco already has a strong pres-

    ence in Poland and the CzechRepublic. Poland is already its sec-ond largest European market interms of sales and profits, and inthe Czech Republics capital Prague

    Tesco opened its first standaloneF&F clothing store this year.

    Offers of around 300m (256m)are expected to be made for the

    business.Janov said last month: The deci-

    sion on the initial public offering

    (IPO) of Zabka or another form ofour exit from the investment might

    be considered at the beginning of2011.

    French company Carrefour is ahypermarket chain which mainlyoperates in Europe but also hasinterests in South America.

    Tesco faces a battle

    for Czech shop chainBY JOHN DUNNE

    RETAIL

    Tesco, led by chiefexecutive Sir TerryLeahy, is up againstCarrefour in therace to buy theZabka retail chain.

    Picture: GETTY

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    NEWS | IN BRIEF

    Conran narrows its lossesLuxury designer and restaurant firmTerence Conran is facing better fortunes,despite reporting losses this year. Thefirm reduced losses to 806,000, farlower than the 8m reported in 2009.Conran Holdings fortunes were revivedafter it launched a value range in itsLondon shops. Chief executive RogerMavity said that the new line attractsyounger consumers to the stores. So forexample you can get very nice diningchairs for 80 or light fittings for 30,Mavity said. The firm also expanded i tsLondon presence with a store onMarylebone High Street. Its flagshipLondon store and restaurant are inChelsea, and it has other stores in NewYork, Paris and Dublin.

    Portmeirion in royal boostShares in Portmeirion hit a 13-year highyesterday as the pottery manufacturersaid it would smash profit forecasts forthis year and expected to launch 250new products in 2011, including a rangeof Royal Wedding items. Chairman DickSteele said export sales to the US,Korea, Canada and Italy had beenstrong. Portmeirion bought Spode andRoyal Worcester from their administra-tors for 3.2m just under two years agoand has performed well in the US.

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    SUPERGROUP shares dived yesterdayas a warning over the rising costs ofmaterials spooked investors despite ahealthy profit update.

    The company which owns thepopular Superdry brand has seen itsshares soar since they were floated at500p in March raising 395m tobankroll its expansion.

    It made an underlying pre-tax prof-it of 13.5m in the six months to 31October. That compares with analystsconsensus forecast of 13.2m.

    SuperGroup said: Theautumn/winter collection has beenwell received by our customers in theUK and overseas, and our owned andfranchised retail expansion is pro-gressing as planned.

    But some analysts went cold on thecompany after it warned that the costof raw materials was putting it underpressure. Its shares dropped up to 17

    per cent yesterday, eventually closing10.9 per cent lower at 1.450p.

    The lack of an interim dividend wasalso seen by some as a disappointment.The retailer has opened four new shopsand 13 concessions in the first half.Keith Bowman of HargreavesLansdown said: Pre-tax profits appearto be at the high end of analyst expecta-tions. Nonetheless, accounting issuesand concerns over rising input costs cotton prices in particular appear tohave taken the shine off the shares.

    SuperGrouphit by costsBY JOHN DUNNE

    RETAIL

    THE worlds biggest clothing retailerInditex announced a 42 per cent risein nine-month net profit yesterday,buoyed by developing market growthand new store openings.

    Cash-rich Inditex, which launchedonline sales of items such as black netskirted cocktail dresses for around40 for its flagship brand Zara in

    September, said sales grew 14 percent during the period.Net profit for the nine-month peri-

    od was 1.18bn (1bn).Europes retailers are seeing a tick-

    up in business, especially in emerg-ing economies. Inditex, whichoperates nearly 5,000 stores in 77countries, said sales in local curren-cies grew ten per cent from 1 Augustto 12 December.

    Shares in Inditex have risen around

    45 per cent since the beginning of the year, thanks to strong sales andhealthy margins, while Spains blue-chip index has dropped about 15 percent. Inditex has reduced exposure tothe sluggish economy of home baseSpain, which accounted for 28 percent of sales in the first half, downfrom 32 per cent in the first half of2009.

    The company was founded bySpains richest man Amancio Ortega.

    Inditex sees profit soar asemerging markets prosperBYHARRY BANKSRETAIL

    Consumer News 17CITYA.M. 16 DECEMBER 2010

    ANALYST VIEWS: IS THE SHINE COMING OFFTHE IPO FIRMS SUCCESS STORY Interviews by John Dunne

    PHILIP DORGAN | ALTIUM SECURITIES

    Given the premium rating and no upgrades, coupledwith the gross margin comment, the shares maystruggle to make progress.

    NICK BUBB | ARDEN

    The statement reads very well, with Christmasgoing well. SuperGroup looks to be ahead of expec-tations in sales for womenswear for 2011 to 2012.

    MATTHEW MCEACHRAN | SINGER CAPITAL MARKETS

    If the business were trading on a low multiple raw

    material rises etc would not matter. But its not, andhas had unimpeded progress.

    H&M SALES UP IN NOVEMBER

    SWEDISH fashion giant Hennes & Mauritz (H&M) said yesterday that sales at its estab-lished stores rose eight per cent in November from a year earlier. The retailer said totalsales, which include newly opened stores, were up 17 per cent in the month. November isthe final month of the companys financial year and it said full-year total sales were up15 per cent with like-for-like sales up five per cent. Picture: Micha Theiner/ CITY A.M.

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    News18 CITYA.M. 16 DECEMBER 2010

    City chairman says the politics ofenvy is causing an exodus of talentThe UK faces an epicstruggle to keep itsbest bankers. StuartFraser is leading thecharge for the City.

    STUART Frasers office at the City ofLondon Corporation features aninteresting contrast. Along one wallis a series of large photographic

    prints of the London skyline, including ashot of the stunning white Guildhall Yard,next to which we are sitting. The oppositewall contains a small shrine to Asia: a scalemodel of a Chinese bell, a temple carved

    out of wood and a scroll painted withChinese characters.

    The division is telling; the power-strugglebetween Asia and the West is a recurringtheme for the City of London Corporationpolicy chairman, with new EU legislationon bankers bonuses threatening to acceler-ate an exodus of talent he says has been qui-etly underway for years.

    The Committee of European BankingSupervisors (CEBS) announced itslabyrinthine new rules earlier this week,which, after cutting away the yards of redtape, will boil down to bankers receiving afraction of their bonuses up front (around atenth for those earning upwards of 1m).Add to this the spectre of a unilateral taxon bonuses being thrust onto the agenda by business secretary Vince Cable, andthings start to look very uncomfortableindeed for City workers.

    What worries me, says Fraser, Is thatthe rest of the world isnt doing it. We livein a global age with global opportunitiesand Asia is very keen to take business off us.This is Europe not taking into account therest of the world and it will drive away tal-ent. It is a very serious concern.

    More financial services will go to Asiaregardless, but if we want to accelerate thetrend by driving business away, this is howto do it.

    Fraser, 64, is a City stalwart, taking hisfirst stockbroking job in 1963 and workingacross fields including forex, equities andfund management. He was elected to hiscurrent role in 2008 but maintains an inter-est in the private sector as director ofBrewin Dolphin. He is also an adviser to theShanghai government, presumably in thespirit of knowing your enemy, helping it todevelop as a global finance centre. But hisloyalty lies with the City, which, as new

    research commissioned by his departmentshows, contributes more to the Treasurycoffers than any other industry a stagger-ing 53.4bn.

    Given its vastly disproportionate contri-bution to the public purse, Fraser is angrythat the financial services sector is still being demonised by populist politicianswho want to win over disenfranchised vot-ers.

    We are not talking about systemic riskanymore, he says. We are not talkingabout another financial crisis. We are beinganti-highly paid people in the financialservices industry. Its as simple as that.

    I would call this targeting of the bonus

    structure the politics of envy. No govern-ment outside of Europe is telling employerswhat they can pay their employees.

    Were in danger of castigating a wholeindustry because of the inappropriateactions of a few. Some of this legislation hasa vindictive nature and it will drive awaythe talent.

    And Fraser is in no doubt where the tal-ent will go Asia. His links to the east givehim a better idea than most of the threat itcan pose to UK financial services.

    But bears have been predicting migra-tion of talent to new financial hubs likeHong Kong and Shanghai for years whenwill it happen?

    Its already here, he says. The danger isthat you dont see it. Its not a mass exodusof 100,000 people. Its the rainmakers themost talented fund managers and traders.In terms of numbers, youre not going tonotice less people on the trains. But overtime they will bring other businesses over

    to service them.Why would you stay, if you could earn at

    least the same amount of money for a lotless tax? These are young men, and a lot ofthem, particularly traders, have very shortcareers. They burn out after about 15 years,much like footballers, so they want to goand earn some money.

    Ironically, the biggest loser will be theBritish taxpayer. The new research showsthe average tax paid by financial servicesworkers is 40,000. Even a relatively smallmigration would cause overall tax receiptsto plummet.

    Fraser is cautious not to heap the blameentirely at the door of politicians (not onlydo we have the comprehensive spendingreview coming in, we have bonus season

    around the corner too. People are veryangry. No wonder politicians are keeping alow profile...). However, Cables antipathytowards the banking sector and hispredilection for a unilateral bonus levy would be disastrous.

    I have known Vince for a long time andobviously he has very strong convictions onthis, but clearly I have to disagree withhim it would be a big mistake.

    But with chancellor George Osborneloathe to resurrect Alistair Darlings bonuslevy, Fraser is more concerned about theoften-pernicious grip over the City wieldedby Brussels, which he says dominates UKfinancial policy.

    That is why we have to be very active inEurope, to make sure new rules do notdestroy Londons place as a global financialcentre. It would be a disaster for the UK ifwe became just another European city.

    He hopes that continued lobbying canbring the European rules from their cur-

    rent state into something workable-with.He points to the alternative investment

    directive, which he says was initiallyawful but, after a great deal of tweaking,is no longer such a drain on the industry.

    Part of the problem with the regulation,he says, is the sheer speed at which thefinance industry has changed in the wakeof the financial crisis.

    Its like technology when the changeis slow you can keep up. But nowadays Imstruggling with my BlackBerry Torch.Thats not age its the fast pace of change.Regulators are struggling. You need some-one who can keep up.

    The problem is, if you are a brightyoung man and someone is offering youhalf the money to become a regulator, why

    would you take it? What the regulatorsneed to do is pay more for talent. We needthe poachers to become the gamekeepersfor a while.

    He says the pace of change underway isakin to the Big Bang in 1986, whenThatcher, almost literally overnight, dereg-ulated the banking industry. Wall Streetbanks clamoured to expand their UK oper-ations and London regained its spot as theworlds foremost financial hub.

    Now Fraser says the movement istowards Asia: When you think of the sheersize of the Asian economies China andIndia in particular you have billions ofpeople at the early stages of finance. Whenthey get to our standard they will be theleaders. It is inevitable, although I think itsseveral decades away.

    What we have to make sure is thatwhen they grow, some of that comes backto London. Thats the key.

    Unless the importance of the City is

    recognised by politicians at home and inEurope this seems far from guaranteed.

    1963: Entered the City as a trainee stock-broker before moving through a number ofinvestment related disciplines, includingforeign exchange, money broking, interna-tional equities, investment research andfund management.

    1980: Became a member of the LondonStock Exchange.

    1993: Became a common councilman ofthe City of London.

    2008: Took up current role as policychairman of the Corporation of London.

    Personal life: He has been married to hiswife Laura for 41 years They live inBlackheath. In his spare time he enjoys

    travel, walking, golf and the theatre.

    CV | STUART FRASER

    Stuart Fraser says theEU needs to wake upto the migration oftalent to Asia

    Picture:Micha Theiner

    /City A.M.

    Why wouldyou stay, ifyou couldearn at leastthe sameamount ofmoney for alot less tax?These areyoung men,

    often withshort careers.

    I would callthis targetingof the bonusstructure thepolitics ofenvy. We arebeing anti-highly paid

    people.

    WORDS BY STEVE DINNEEN

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    News 19CITYA.M. 16 DECEMBER 2010

    NOVARTIS has wrapped up its long-awaited buyout of the remainderof US-listed Alcon for $12.9bn(8.25bn), after sweetening its orig-inal offer with cash.

    The Swiss drugmaker is hopingthe deal with its rival, worth some$52bn in total, will help it diversifyand protect it against patent losson big selling medicines such as

    blood pressure drug Diovan.Novartis has been trying to

    clinch 100 per cent ownership in Alcon since the start of the year,but its original all-paper offer of 2.8Novartis shares for each Alcon

    share met stiff resistance from Alcons directors, who repeatedlydismissed it as grossly inade-quate.

    Novartis move completes thefinal stage of a lengthy process toget full control of the eyecaregroup, known for its contact lenssolutions, and the dominant playerin the multibillion-dollar marketof intraocular lenses, small lensesimplanted in the eye to correctproblems focusing.

    Alcon is also number one incataracts an area that is set to

    benefit from ageing populations.Novartis also said it was restart-

    ing a SwFr10bn (6.59bn) sharebuyback programme, suspended in

    April 2008, to minimise dilution toNovartis shareholders.

    Novartis decision to restart itsshare buyback is part of a growingtrend among European drug firmsto return cash to investors.

    Novartis pays 8bnfor rest of US AlconBYHARRY BANKSPHARMACEUTICALS

    NEWS | IN BRIEF

    Australia sells power assetsHong Kongs CLP Holdings and OriginEnergy agreed to buy energy businessesfor $5.3bn (3.4bn) from Australia'sNew South Wales state, which raisedless money than expected in a long-awaited sale. The win catapults OriginEnergy to the number one position

    among Australias energy retailers, over-taking AGL Energy, a surprise loser inthe bid.

    Deutsche Tel pays Vivendi 1bnDeutsche Telekom is to pay Vivendi1.25bn (1.07bn) to settle an 11-yeardispute over ownership of Polish mobilephone operator PTC, in a boost to theGerman company's expansion plans inEastern Europe. For Vivendi, the dealprovides a welcome cash infusion thatcould be used for acquisitions, such asbuying out minority shareholders in itsFrench mobile operator, SFR.

    Otsuka gains 2pc following IPOShares of drugmaker Otsuka Holdingseked out a modest two per cent gain intheir debut yesterday after the drug-maker priced its record-setting $2.4bn(1.5bn) IPO conservatively, underscor-ing the sluggish market for new listings

    in Japan. The lacklustre first-day waswidely expected due to investor worriesover Otsukas heavy reliance on Abilify, aschizophrenia drug due to lose patentprotection in 2015.

    SPAINS ACS turned up the heat on bidtarget Hochtief yesterday by sweeteningan all-share offer to value its Germanconstruction rival at around 4.9bn(4.18bn).

    The Spanish group, which has beenstalking Hochtief since September,said it had improved its bid to nine

    ACS shares for every five Hochtiefshares from its previous eight-for-fiveoffer, adding it was confident the high-er bid would succeed.

    ACSs amended offer was unexpect-ed. It values Hochtief at 63.8 pershare, a two per cent discount to the

    market price as Hochtief shares rose1.2 per cent 65.13.

    ACS shares closed 1.1 per cent downat 35.4 as its shareholders digestedthe move. ACS had been widely expect-

    ed to let its initial offer run its course.And in another sign that ACS wants

    to wrap up the takeover quickly,sources said that the chief executive ofQatar Holding, the Qatari investment

    vehicle which last week snapped up a9.1 per cent stake in Hochtief, wouldmeet ACS.

    If ACS can get its holding above 30per cent it can then gain control ofHochtief by taking its stake up to 50per cent, without having to buy out allthe German groups shareholders.

    Analysts said the move showed ACSwas serious about the offer and wouldprobably not raise its bid again,although one of Hochtiefs top 12investors dismissed the new bid as too

    low.The current offer price is at a dis-

    count to the market price of Hochtief,said Kathleen Dewandeleer, a fundmanager at Scottish Widows.

    Hochtief pursuesSpanish target ACS

    with sweeter offerBYHARRY BANKSCONSTRUCTION

    I think the government doesntappreciate the City, really, andneither do most of the voting UKpublic. I just dontthink the publicrealises howmuch tax revenuethe City gener-ates, or how muchof the pub-lic thoserevenues

    help.

    GETHIN JONES |RSA

    It may do because taxes in thehighest brackets have gone up.The resentment across the UKmay have somethingto do with the gov-ernments responseagainst the City,considering howunpopular it isoutside ofLondon.

    GIANCOMO GHILLO |BDB

    It depends on the governmentsmood. When everything is good,the government leaves the Cityalone. When every-thing is bad, it goesafter the City. Thegovernment pointsthe finger whenev-er it can. TheCity is aneasy tar-get.

    JONATHAN BRUNNING |MILLER INSURANCE

    CITY VIEWS: DOES THE GOVERNMENT APPRECIATE THE CONTRIBUTIONTHE CITY MAKES TO THE ECONOMY? Interviews by Thomas Hamed

    BEST OF THE BROKERS

    ANALYSIS lHMV

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    HMVDeutsche Bank rates the retailer holdwith a target price of 45p. The broker hascut its profit forecast by 20 per cent aftera gloomy set of results last week, and seesan eight per cent drop in like-for-like salesin the second half of the year. It has con-

    cerns about the focus on DVD and