cityam 2011-01-18 book

8/8/2019 Cityam 2011-01-18 book

1/28

FTSE 100 t5,985.70 -16.37 DOW CLOSED NASDAQ CLOSED /$ 1.59 unc / 1.20 +0.01 /$ t 1.33 -0.01 Certified Distribution29/11/10 till 02/01/11 is 98,444

SANTANDERS chief executive Alfredo Senz is set to be barredfrom banking and sentenced toeight months in jail by Spainssupreme court, according to reports.

Spains El Mundo newspaper said yesterday, without citing sources,that Senz will be given a longer sen-tence than the one he appealed after

being convicted of bringing falsecharges against shareholders inDecember 2009.

Santanders chairman, EmilioBotin father of Ana Patricia Botin,chief executive of Santander UK said he had not seen the sentenceand Santander refused to comment.

The charges relate to Senzs timeas chief executive of Spanish retail bank Banesto, which is owned bySantander.

Courts convicted Senz of wronglyclaiming that shareholders owed thebank money, but the prosecution inthe case said his sentence was toolenient. The shareholders them-selves spent time in jail while beinginvestigated.

However, even if Senz is awardeda harsher sentence this time around,he will not go to prison becauseunder Spanish law, sentences undertwo years are not served.

If Senzs conviction were to beconfirmed, he is expected to delayany supreme court move against himby four or five months by appealingon technical grounds. He could thentake the case to Spains highest court,the constitutional court, potentiallystaving off a f inal decision for severalyears, and meanwhile enabling himto remain in his post.

Senz cemented his reputation inthe 1990s by helping turn around

Banesto after Santander took it over.Santanders shares closed down

on the news yesterday, falling 1.22per cent yesterday at 8.40.

BY JULIET SAMUEL

BANKING

APPLE shares tanked in Europeantrading yesterday after talismanic boss Steve Jobs announced he willtake an open-ended leave of absenceon medical grounds.

The bombshell, dropped on the eveof tonights Apple trading update,caused panic among investors whofear the firm could struggle withoutJobs at the helm.

US markets were closed for MartinLuther King day but the firms stock was trading in Germany, where itplummeted almost nine per cent before recovering slightly to closedown 6.2 per cent. If repeated whenUS markets open this morning, thedrop would represent a fall of almost$20bn (12.6bn) in the firms marketcap.

Simon Clark, a trader from ETXCapital said the slump could be over-done, with investors overselling theirGerman stock because they could nottrade in the US.

He said: Jobs is Apple really, so thefact he is off on medical leave couldmean a big hit on the firms stock.But its impossible to get a proper feeluntil later this morning.

It could be that it is very badly hitinitially but we might then see some

bargain hunting later in the day.

Chief operating officer Tim Cook,who was poached from rival Compaqby Jobs in 1998, will deputise duringhis absence. Jobs has been plagued byspeculation regarding his healthsince suffering from a rare form ofpancreatic cancer. He had a tumoursuccessfully removed in 2004 but hissubsequent gaunt appearance fuelledrumours his health was still poor.

In 2009, after missing his keynotespeech at the Macworld conference,he took a six month leave of absenceto undergo a liver transplant. On thisoccasion trading in Apples stock wassuspended after falling 10 per cent.

On both occasions Cook took overthe day-to-day running of the firm.

Jobs letter to staff read: At myrequest, the board of directors hasgranted me a medical leave ofabsence so I can focus on myhealth. I will continue as chiefexecutive and be involved inmajor strategic decisions for thecompany.

I love Apple so much and hopeto be back as soon as I can.

Fears over Jobs health are sureto reignite the fierce debate overhis successor, with investors pres-suring the firm to name a futureleader. Apple, the worlds secondbiggest firm with a market cap of$319.7bn, is poised to announce

record quarterly sales of $24bn today.

APPLE ROCKED ASJOBS SICK AGAIN

Alfredo Senz was headof Banesto and was con-victed of wronglyclaiming its shareholdersowed the bank money

www.cityam.comIssue 1,302 Tuesday 18 January 2011 FREE

Santanders Spanish CEO may be forced to quit

GOLDMANEXCLUDES USAMERICAN CLIENTS

SHUT OUT OF

FACEBOOK DEAL P2

CITY A.M. NAMED OFFICIALPAPER FOR INVESTEC DERBY

SPECIAL EDITION ON THE DAY P26

BY STEVE DINNEEN

TECHNOLOGY

Apple head Steve Jobs said poor health means he will leave the firm again Picture: REX

Northern

Rock setfor sell-off

THE government has invited pitchesfor financial advisers to assist inoffloading its stake in the nation-alised bank Northern Rock.

UK Financial Investments, the bodythat administers the taxpayers stakein bailed-out banks, opened itself upfor a beauty parade of investmentbanks yesterday.

It said that it is considering a rangeof options, but most observers think asale of the Northern Rock goodbank as opposed to the bad bankprivatised last year is most likely.

The good bank includes all ofNorthern Rocks branches, depositsand IT systems, with estimates thatthe assets will fetch a price close to1.5bn.

Credit Suisse is thought to be ingood standing with UKFI, having han-dled a lot of government work duringthe financial crisis.

Goldman Sachs has also been citedas a strong contender, but industrysources queried whether it is in poleposition given it was dropped as anadviser after a previous deal involvingNorthern Rock.

The sale is likely to attract stronginterest from a range of banks whichare looking to expand their presencein the UK. Virgin Money, NBVKInvestments and National Bank ofAustralia are all thought to be interest-

ed.

BY JULIET SAMUEL

BANKING

BUSINESS WITH PERSONALITY

8/8/2019 Cityam 2011-01-18 book

2/28

News2 CITYA.M. 18 JANUARY 2011

PFI found tofail taxpayersPRIVATE investors have been reapingthe profits of private finance initia-tives (PFIs) without sharing the pro-ceeds with the taxpayer, according toan influential Commons committee.

In a scathing evaluation of privateinvolvement in the funding of socialhousing and hospitals, Labour MPMargaret Hodge, the chair of thePublic Accounts Committee, hascalled for new alternatives to PFI to befound.

She said: Private sector investorsmay use the consequent economiesof scale to drive up the value of theirinterests and generate bigger profits.We are concerned that the benefitsarising from these economies of scaleare not being shared by the taxpayer.

The use of PFI and its alternatives

should now be robustly evaluated.The findings could harm business

and the future strength of the eco-nomic recovery, according to the CBI.

Elizabeth Fells, CBI head of publicservices reform, said: With the pub-lic finances constrained, the role ofthe private sector in supporting newinfrastructure will become evenmore important.

Fells added: Any moves to chal-lenge existing contracts will under-mine private sector confidence, jeopardising future investment incrucial infrastructure projects.

BYRICHARD PARTINGTON

POLITICS

Investors must regain the initiative

DO your own homework and takegreater responsibility for your money:this must become investors newmotto. They must start to rely less onthe opinions of outsiders auditors,rating agencies and sell-side analysts and more on their own judgment.Here is how I would change things.

Until the 1970s, credit rating agen-cies used to be paid for by investors,rather than by the issuers of securities.As so often with what appears to be amarket failure, the change was in facttriggered by the US authorities. Whatis needed is a return to the older

model, and a further loosening of reg-ulations that limit the number ofauthorised agencies. Too many institu-tional investors must, by law or forother reasons, only invest in securities

rated in a certain way. This must alsochange: rules governing funds should become concept-based and moredescriptive: low risk should be usedrather than investment grade, forexample. This would be no panacea:some buy-side firms may still wish touse sloppy rating agencies, hoping to boost returns by investing in riskyassets wrongly described as safe.Buyers and sellers of debt may some-times seek to collude against the inter-ests of investors. And it is impossiblefor any rating firm to get it right all thetime. Ultimately, those whose moneyis at stake must examine investmentsclosely and no longer place as muchtrust in the ratings of a security,regardless of who has paid for it.

Auditors emerged far better fromthe crisis: any negligence should bepunished, of course, but the industry

cannot be blamed for the crunch. Accountancy firms are not meant toreconstruct the entire books of a com-pany if that is what shareholderswant, they will have to pay much more

in fees. Auditors are not meant to ques-tion the entire business model of anindustry, especially when it has beengiven the green light by regulators.They are not supposed to refuse to signoff books just because there is (say) atwo per cent chance of a sovereign cri-sis in the Eurozone. Adding pages ofdisclaimers to audit reports wont help nobody will read them. Again, themain lesson is that investors need totake greater responsibility you cantsubcontract everything.

What about sell-side analysts? Theirwork is very useful and an essentialpart of my own daily reading but theindustry is excessively optimistic, asMcKinsey has conclusively proved. It isespecially too upbeat just before arecession and then too pessimistic atthe start of the recovery. There are stillfar too few sell recommendations. Few

analysts predicted the crisis (but nei-ther did most buy-side firms, universi-ties, regulators and media groups).

The answer isnt more regulation;that was tried after the dot.com col-

lapse. Evolutionary forces inevitablyreward trend-followers and penalisedissidents: when the stock marketkeeps on rising quarter after quarter,the bears get sacked and the bullsrewarded. Investors must buy moreresearch from ideologically diverseindependent research firms andgroups specialising in blue skies think-ing and scenario planning; or commis-sion forensic research. Buy-side firmsmust also do more of their own analy-sis, with an obsessive wariness of thepsychology of the herd.

The best way for the City to improveits performance is for buy-side firmsand fund managers to take greaterresponsibility and for institutionaland retail investors to support them.Easier said than done, but vital.

[email protected] me on twitter: @allisterheath

GOLDMAN Sachs will exclude USclients from a $1.5bn (940m) privateoffering of Facebook shares, citingintense media attention.

The investment bank denied themove was heralded by the Securitiesand Exchange Commission examin-ing the trading of stock in non-listedcompanies.

However, it is thought that scruti-ny of the deal in the US could leave

Goldman open to regulatory obsta-cles. The offering attracted attentionas it will circumvent rules requiringfirms with more than 500 investorsto publish their financial results. The Facebook offer makes use of aspecial use investment vehicle which many individuals can buyinto but only counts as a singleshareholder.

Clients in the UK, mainlandEurope and Asia have been alerted tothe offer, which will value the socialnetwork at $50bn.

BY STEVE DINNEEN

TECHNOLOGY

Facebook offer closed to US

Mark Zuckerbergs firm is valued at $50bn

NEWS | IN BRIEF

Regulators to share audit detailsTwo City regulators have signed anagreement to share confidential infor-mation about UK auditors. The FinancialServices Authority and the FinancialReporting Council yesterday agreed toallow greater exchange of informationabout auditors and their reports on UK

companies. The regulators are heighten-ing their oversight of audits followingthe financial crisis. FSA accounting andauditing sector leader, Richard Thorpe,said he was concerned that some audi-tors may not be exercising sufficientprofessional scepticism in theirapproach.

Branson considers airline futureBritish billionaire Sir Richard Branson isconsidering selling down his controllingstake in Virgin Atlantic. Branson, whofounded the airline 27 years ago, couldlook to sell his shares in the carrier tohelp it compete with larger rival firms.Virgin called in Deutsche Bank last yearto review its options after US authori-ties allowed rivals BA and AmericanAirlines to operate jointly on transat-lantic routes, despite opposition fromBranson.

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]

The benefits of PFI arenot being shared withthe taxpayer, saidAccounts Committeechair Margaret Hodge

CHINAS LENDING HITS NEW HEIGHTSChina has lent more money to otherdeveloping countries over the pasttwo years than the World Bank, astark indication of the scale ofBeijings economic reach and its driveto secure natural resources. ChinaDevelopment Bank and China Export-Import Bank signed loans of at least$110bn (70bn) to other developingcountry governments and companiesin 2009 and 2010, according toFinancial Times research.

RUSNANO PLEDGES TO INVEST IN UKMICROCHIPS A company spun out of Cambridgeuniversity to make cheap plasticmicrochips has won the promise of a$650m investment from Russiasstate-backed nanotechnology corpora-tion. Rusnano will take an immediate

stake of about 25 per cent in PlasticLogic in exchange for an initial injec-

tion of $150m. The Russian govern-ment may eventually take control as

the rest of the finance becomes avail-able.

EUROPEAN SECURITISATIONS FACES&P DOWNGRADENearly half of all European securitisa-tions could be downgraded followingchanges in the criteria Standard &Poors uses to measure the creditwor-thiness of deals. The criteria, whichcover how third parties involved indeals are evaluated, are global but thenew changes will more heavily af fectEuropean deals because of their high-er use of counterparties to provideinterest rate and currency swaps.

INVESTORS SNAP UP US COMPANYDEBTBanks and companies have borrowedrecord amounts in the US bonds mar-kets in the first two weeks of the year,with investor appetite for debt show-

ing no signs of waning, data fromThomson Reuters shows.

QUANGO CHIEFS PAY CUT TO 57,000FOR A TWO-DAY WEEKThe new chief executive of a quangotargeted for cuts has accepted a paypackage about 61,000 smaller thanhis predecessor in a move thatreduces his pay below that of thePrime Minister. Bill Galvin, who yes-terday was promoted to be chief exec-utive of The Pensions Regulator oneof hundreds of quangos facing cuts will receive base pay of 138,000, which is 4,500 less than DavidCameron.

HEALTH AND SAFETY REGIME ISPAIN-FREEA survey of 550 companies by the lawfirm Norton Rose found that most businesses are relaxed about regula-tions, which they say are flexible andhave little negative impact. Nine in ten

companies said that they had enoughfreedom to decide the best way.

INDIA PICKS BANKS TO LEAD $4BNSALE OF 5 PER CENT ONGC STAKEThe Indian government has hired sixinvestment banks to lead the sale of a5 per cent stake in Oil & Natural GasCorp (ONGC), India's largest oil explo-ration company. Selling the stake isexpected to raise about $3bn (1.9bn)to $4bn for India, according to thecountry's oil secretary, S Sundareshan.

GRADUATES WITHOUT WORKEXPERIENCE 'WON'T FIND JOB'Graduates who have not bothered tosecure work experience while study-ing stand "little or no" chance of get-ting a job at one of the UK's leadingemployers, a new report showed. Athird of this year's graduate vacanciesare expected to be filled by applicants who have already worked for theorganisation during their degree

course, according to the research byHigh Fliers, published today.

CHINESE PRESIDENT QUESTIONS THEDOLLAR AHEAD OF WASHINGTON TRIPChinese President Hu Jintao empha-sized the need for cooperation withthe U.S. in areas from new energy tospace ahead of his visit to Washingtonthis week, but he called the presentU.S. dollar-dominated currency systema "product of the past" and highlightedmoves to turn the yuan into a globalcurrency. "We both stand to gain froma sound China-U.S. relationship, andlose from confrontation," Mr. Hu said.

GERMANY IS RELUCTANT TO BOLSTERRESCUE FUNDSEuropean finance ministers debatedMonday how to beef up their giant res-cue fund for troubled euro-zone coun-tries but ended the first day of atwo-day meeting without reaching afirm resolution on how to do it, amid

German reluctance to open the doorsto more and bigger bailouts.

WHAT THE OTHER PAPERS SAY THIS MORNING

8/8/2019 Cityam 2011-01-18 book

3/28

8/8/2019 Cityam 2011-01-18 book

4/28

BP SHARES edged up yesterday in themarkets first chance to react to its$16bn (10.1bn) deal and share swapwith Russias state oil firm Rosneft.

BP closed up 0.24 per cent at 500.7p,beating an overall decline in the FTSE100 index, despite a likely dilution ofearnings per share through the deal.

As BP began a charm offensive tosell the merits of the Arctic explo-ration project to investors, industryexperts were broadly supportive of the

move to access Rosnefts fields in theArctic circle.Credit Suisse analysts said the proj-

ect represented a major break-through for relationships betweenmajors and Russia. They added: Thetechnically challenging nature ofArctic developments explains Russiasdecision to open up access to [BP].

Figures from Dealogic show the tie-

in is the third biggest deal in BPs his-tory, behind its two US acquisitions of Amoco, for $53bn, and Arco, for$26.8bn, in the late 1990s.

Michael Tamvakis, professor ofcommodity economics and finance atCass Business School, pointed to BPshistory of being the first to drill in dif-ficult locations. Getting into bed with the Russians isnt the safestthing BP can do the Arctic territoryis still disputed for one thing but itsone of the only options BP has rightnow, he told City A.M.

This could be a sign that BP is con-sidering withdrawing from deepwatersites such as the Gulf, and in any case

makes BP more difficult to look at as atakeover target.Fred Lucas at JP Morgan in a note to

investors, questioned why the firmsplan to wait four years to drill whenthey already have positive seismicresults: Even allowing for a shortthree-month work window due toArctic weather, Big Oil still moves fartoo slowly, in our view.

BP shares rise

after historic

Russian deal

LONDONCITY TOSTOCKHOLMFROM 65ONE WAY

POLITICAL tensions over BPs deal with Russian state-owned Rosneftwere played down yesterday by theUK government.

A spokesman for Prime MinisterDavid Cameron said the share swap was a commercial deal betweentwo companies, and did not indi-cate a thaw in political relations between Britain and the Russian

government.He said: The Prime Minister hasmade the point that our view is thatthere will be differences of opinionon specific issues between us andRussia, but there will also be areaswhere it is in our mutual interest towork together and we will do that.

The deal had come in for strongcriticism after several US congress-men, diplomats and environmentalcampaigners raised fears over BPsenvironmental safety record in the

wake of the Gulf of Mexico oil spilland the link with the Russian state.David Camerons spokesman

declined to comment on US con-cerns, but said he was unaware ofany communication between thePrime Ministers office and theWhite House about the deal.

BP chief executive Bob Dudley yes-terday said the company notifiedthe US government about the dealbefore it was announced but said itdid not need US approval.

Cameron denies any politicaltensions over Rosneft dealBYRICHARD PARTINGTONENERGY

Focus on BP-Rosneft deal4 CITYA.M. 18 JANUARY 2011

ANALYSIS lBP

300

400

500

600

700

Jul Sep 2011Nov20 Apr 10

p

509.5017 Jan

BYMARION DAKERS

BP ROSNEFTDEAL

8/8/2019 Cityam 2011-01-18 book

5/28

Focus on BP-Rosneft deal 5CITYA.M. 18 JANUARY 2011

From left: BP chair-man Carl-HenricSvanberg, energysecretary ChrisHuhne, BP chiefexecutive BobDudley, Rosneftchief executiveEduardKhudainatov, andother Russian dig-nitaries at the sign-

ing of the historicdeal

Picture:REUTERS

BPs latest attempts to expand inRussia will be a chance for chief execu-tive Bob Dudley to mend his relation-ship with the country, following histroubled time as president of TNK-BP,the firms ongoing joint venture inthe country.

Dudley was forced to leave Moscowin 2008 when his visa was notrenewed, following a dispute betweenBP and fellow TNK investors Alfa-

Access-Renova (AAR) that saw theRussian police raid the firms officesand what Dudley said was sustainedharassment from officials.

AAR, run by a quartet of Russian oli-garchs, said it would consult itslawyers about whether BPs latest deal

breaks conditions of its TNK-BP agree-ment, which were renewed in January2009, that give the venture firstrefusal on BPs Russian explorationsin the country.

Bob Dudley met with AAR represen-tatives during his visit to Russia last

week, where he also spoke to RussiasDeputy Prime Minister and Rosneftchairman Igor Sechin.

Meanwhile, a BP boss predicted in2008 that TNK-BP would eventually betaken over by Rosneft, according to aleaked US embassy cable reported inthe Guardian.

Bob Dudley gets another chanceto succeed in Russias oil market

BYMARION DAKERS

ENERGY

ANALYST VIEWS: HOW IMPORTANT IS THISDEAL FOR BP? By Marion Dakers

PETER HITCHENS | PANMURE GORDON

This is an exciting move. With this deal , BP will

bring the expertise that it has developed in Alaska, theBeaufort Sea and Northern Siberia. By getting into bed withRosneft, the group obtains first mover advantage.

KEITH MORRIS | EVOLUTION SECURITIES

The deal looks like a typically bold BP move access-ing a new region considered highly prospective. But this isan exploration opportunity so while it may be a good long-term strategic investment, delivery is years away.

JONATHAN JACKSON | KILLIK & CO

It looks as if BP has taken a view that the chancesof it being able to access resources in the US may be beyondthe company for a generation and believes it needs to look

elsewhere for growth options.

TEAMING up with the Russian government isnot a typical job for Londons investment banks

so BP has instead turned to boutique consultan-cy Lambert Energy Advisory to work on itsRosneft venture.

The firm is run by Philip Lambert, an alumni ofmerchant bank Kleinwort Benson who startedhis own business in 1999 to offer strategic andfinancial advice to governments as well as oiland gas companies.

Lambert has gained a reputation for expertisein state-run oil firms in particular, though he haskept his firm small with less than a dozen

PHILIP LAMBERT

LAMBERT ENERGYADVISORY

employees.He has worked with energy majors Shell,

Petronas, Gazprom and Total in the past, but scor-ing the advisory contract with BP is seen as acoup among energy insiders.

BPs long-time legal advisers at Linklaters arealso on board to work on the venture, withStephen Griffin in London and Grigory Gadzhiev inMoscow taking the lead.

Meanwhile, rival firm Freshfields BruckhausDeringer has moved to advise Rosneft, having pre-

viously advised BP during its defence againsttakeover bids at the height of the Gulf disaster.A spokesperson for Freshfields yesterday said

the firm continues to have a relationship with BP.Sebastian Lawson in London and Sergei

Diyachenko in Moscow are leading the team,assisted by Sam Brown and Alexey Tokovinin.

Securities law and market disclosure advicewas given by partner Sarah Murphy and seniorassociate Doug Smith in London, alongsideVladislav Skvortsov in Moscow.

8/8/2019 Cityam 2011-01-18 book

6/28

MOBILE phone manufacturer Nokiais to discontinue its free musicdownloads service in most of themajor markets it operates in.

The Finnish multinational com-munications company will drop itsOvi Music Unlimited service in theUK and 26 other countries.

Launched in 2008 as Comes withMusic the service was designed to

compete with the iTunes platform but failed to make a significantimpact on Apples dominance of themusic downloads market.

The subscription service allowedusers to download an unlimitednumber of tracks for free over a 12month period to their mobile hand-sets and keep them after the end ofthe period.

It was an initiative supported bymajor record companies Universal,Sony BMG and Warner Music.

Despite a lack of success in west-ern markets, the service will contin-ue in several emerging markets where it has proved more popular,including China, India, Indonesia,Brazil, Turkey and South Africa.

Existing subscribers will be able tocontinue downloading unlimitedmusic until subscriptions run out,whilst new handsets equipped withthe service that are still to be soldcan still be activated by the end ofthis year.

Nokia calls time on freemusic download serviceBYRICHARD PARTINGTONTECHNOLOGY


CHINA SIGNS $600M WORTH OF US DEALS

THE Chinese government kicked off a four-day US trade mission yesterday by signing sixdeals in Houston with undisclosed US companies worth $600m, according to Chinesestate media reports. The deals came a day before Chinese President Hu Jintao arrives inthe United States for a visit being billed as the most important US-China summit sinceDeng Xiaopings visit to Washington 30 years ago.

NEWS | IN BRIEF

Islamic bonds face challengeConventional bonds have risen instrength against Islamic Sukuk bondsin the Gulf. Issuance of conventionalbonds surged to hit $15bn (9.4bn) last

year, whilst the issuance of sukuk hit$7bn, according to research by Trowers& Hamlins. The reputation of sukuk hadbeen hit during the financial crisis, whichhas led investors to turn to more conven-tional bonds.

ING seeks sale of real estate armING said yesterday it was in discussionswith several parties on a possible sale ofparts of its real estate arm, whose prop-erty portfolio is valued at over 65bn

(54.2bn). These talks may lead to one ormore transactions, ING said. A sourcesaid that US property group CB RichardEllis was in talks to buy ING Real EstateInvestment Management in a deal thatwould value it at about 1bn.

NEWS | IN BRIEF

8/8/2019 Cityam 2011-01-18 book

7/28

News 7CITYA.M. 18 JANUARY 2011

Offer correct at time of going to print, subject to availability and conditions, valid for bookings until 28 February 2011.Available on selected hotels + dates only. Minimum 2 or 3 night stay applies. To see full terms and conditions visit www.lastminute.com

aweekendworth

talkingaboutbudapest3nights for the price of 2

PRIME Minister David Cameron insist-ed yesterday that bonuses at state-owned banks Lloyds and RBS are nota done deal, even as private banksprepare to award bonuses as usual thisweek.

Reports have circulated recentlythat RBS chief executive StephenHester is in the running for a 2.5m

bonus, though nearly all of it is likelyto paid in shares rather than cash.Cameron added that, overall: I

want the bonus pools to be lower... Iwant the lending that banks do to dobusiness ... to increase.

Camerons statement came as RBSchairman Sir Philip Hampton conced-ed that large numbers of bankers arepaid more than they are worth.

The star quality, as it were, seems tofilter down to people who dont seem

so star quality, he told the BBC. The Treasury is to unveil a dealinvolving industry lending targetssoon, although the collective agree-ment was dealt a blow last week whenSantander UK withdrew from talks.

Meanwhile, non state-owned banksare to proceed with bonus paymentsthis week after many chief executiveswaived their awards last year.

The total UK bonus pot for 2010 isestimated at 7bn.

Treasury locked in talksover state bank bonusesBY JULIET SAMUELBANKING

Goldman

Sachs

RevenuesTotal CompensationPercentage

JP Morgan

Morgan

Stanley

Barclays

Credit Suisse

Deutsche

Bank

RBS

UBS

FIRST NINE MON THS OF 2010, IN BILLIONS OF POUN DS (BASED ON YESTERDAYS EXCHANGE RATE)

43%8.3

19.2

RevenuesTotal CompensationPercentage 28%

3.913.7


4.912.6


7.615


2.16.3 Revenues

Total CompensationPercentage 43%

49.3


3.66.4 Revenues

Total CompensationPercentage 49%

48.3

8/8/2019 Cityam 2011-01-18 book

8/28

8/8/2019 Cityam 2011-01-18 book

9/28

RUSSIAN steel company Severstalyesterday announced plans to floatits Nord Gold unit in London to raisemore than $1bn (629m). It valuesthe company at over $4bn.

The premium listing of at least 25per cent of the gold miner is set to bethe biggest mining float since NateRothschilds $1bn offering of invest-ment shell Vallar last year.

Several reports said Severstalssubsidiary would start trading inmid-February, but would not jointhe FTSE index due to its base in t heNetherlands.

The announcement makes it thefourth Russian company to announceplans to launch in London in the past

week, following in the footsteps ofsteel pipe maker ChelPipe, pumpmanufacturer HMS Hydraulic andcoking coal producer KOKS.

Analysts have said Russian privateissuers could raise up to $30bn this

year in favourable market condi-tions. After two barren years, newshare issues rebounded in 2010 withcompanies raising around $5.5bn.

Nord Gold focuses on gold minesin emerging markets includingKazakhstan, Russia and West Africa.

It hopes to produce 1m ounces of

gold by 2013 through existing minesand acquisitions, up from 589,000ounces in 2010.

Philip Baum, Nord Golds chair-man and veteran of Anglo American,said: We will strive to ensure thatinvestors benefit from attractiveearnings growth whilst protected bythe highest standards of corporategovernance, consistent with a UKpremium listed company.

Severstals shares rose 3.9 per centto $19.79 in Moscow trading yester-day.

Nord Gold accounts for much ofSeverstals $19bn capitalisation, andthe units IPO will keep positivelyaffecting Severstals stock the closerit gets to the day of the public offer-ing, said Maxim Semenovykh, met-als analyst at Alfa-Bank.

News of Severstals plans comesafter the f lotation of African BarrickGold (ABG) in 2010 by its parentBarrick Gold, the worlds largest goldminer.ABG raised over 500m fromselling off a quarter of the company.

Several other mining companiesare in the process of coming to mar-ket. Privately held commodity traderGlencore, itself said to be preparingto float later this year in eitherLondon or Hong Kong, plans to spinoff or list its Kazzinc gold unit in2011.

UK listing for

Severstal goldmining group

AS THE SON of Soviet-era mill work-

ers, Alexey Mordashovs rise tobecome one of the richest men onthe planet has been astronomical.

The steel baron in charge ofRussias second largest steelproducer and gold minerSeverstal, in which he has acontrolling share, rose fromhumble beginnings to

become one of the worldsrichest men.

In 2010 he was named the eighthrichest man in Russia and 70th inthe world by Forbes, with an esti-mated fortune of $9.9bn (6.2bn).

Born in the northern Russian cityof Cherepovets, the primary loca-tion of his Severstal steel empire,Mordashov began his career in 1988as a planning economist in the steelmill where his parents worked.

He built up a personal stake inthe firm after the plants elderlydirector instructed him to buy upshares to prevent it from falling intothe hands of the outsider, and

quickly rose to become the youngestchief financial officer in Severstalhistory in 1992.

After he was appointed chief exec-

utive in 1996, and chairman of the board of directors in 2002,Mordashov shook off SeverstalsSoviet shackles to grow it into aninternational conglomerate.

He acquired a string of firms,including Italian steel producerLucchini in 2005 and several USsteel mills, and made an expansioninto gold mining.

Mordashov was educated at the

Leningrad Institute of Economicsand Engineering during the 1980s,completed an MBA distance-learn-ing course from the Newcastle

Business School in the late 1990sand has honorary doctorates fromSaint Petersburg State Universityand the University of Northumbria.

As a philanthropist, the billion-aire has used his personal wealthand his company to sponsor promi-nent Russian cultural institutions,including the Bolshoi Theatre, theRussian Museum and the MoscowInternational Film Festival.

Russian billionaires stellar rise to the top

BYMARION DAKERS

MINING

BYRICHARD PARTINGTON

PROFILE

Focus on Severstal 9CITYA.M. 18 JANUARY 2011

MORGAN Stanley is sole sponsor ofthe Nord Gold float, with Credit Suisse,Russian bank Troika Dialog andMorgan Stanley acting as jointbookrunners. Cannacord Genuity isacting as co-manager.

Morgan Stanleys co-head of invest-ment banking in Russia, Gergely Voros,and executive director VladimirSamarin head the team.

Voros has been with MorganStanleys London office since 1998,

taking up his new role in April 2010.

Before MS, he worked in Munich as aconsultant for Boston ConsultingGroup and gained an MBA fromHarvard Business School.

Voros has been involved in numer-ous capital raisings including the par-tial float of Russias state-ownedRosneft (currently in the headlines forits work with BP), Vimetco and ENRC.

Samarin worked for Bank ofAmerica, McDonald Investments andthe Barrington Consulting Groupbefore joining Morgan Stanley.

At Credit Suisse, NicholasKoemtzopoulos, Laurent Charbonnierand Chris Byrne lead the team.

Charbonnier joined the bank in2008 from UBS, and is a director onthe metals and mining team.

Koemtzopoulos is responsible forequity capital markets in Russia and

central and eastern Europe.

GERGELY VOROS

MORGAN STANLEY

ALEXEY MORDASHOV

8/8/2019 Cityam 2011-01-18 book

10/28


FOR the second time in a fortnight,shares in Smith & Nephew jumped onrumours of a takeover bid by Johnson& Johnson, peaking at 123.50p duringmorning trading yesterday.

Shares in the prosthetic limb man-ufacturer were up 5.62 per cent at

723.5p by 9.30am, before dippingslightly over the afternoon to close 3.5

per cent up at 709p. A December offer from the US

pharmaceuticals company, whichpriced the company at 750p pershare, was rejected for being too low.Reports yesterday suggested that J&J

was preparing to return with anincreased bid of 800p per share,

which would value Smith & Nephewat just over 7bn.

Neither company was prepared tocomment yesterday.

S&N shares spike again on bid rumours

H me is

where theheart is...

Pricesstart

from

722**

pcm

Looking for a place ofyour own in 2011?

Register at www.lqgroup.org.uk/heart

alternatively text HEART to 60123

Let L&Q find your heart a

part buy, part rent home in North,

South, East or West London.Register with L&Q today and you

could win an iPhone 4*.

DISCLAIMER: Industrial and Provident Society 30441R exempt charity. Details correct at time of going to print 01/11. Your home is at risk if you fail to keep up repayments on amortgage, rent or other loan secured on it. Please make sure you can afford the repayments before you take out a mortgage.* Register today to be entered into the prize draw for an

iPhone 4. **The figure quoted is a percentage share and is a guideline and may vary according to individual incomes and circumstances. TERMS & CONDITIONS apply: please seewww.lqgroup.org.uk/heart for details. Imagery depicts a typical L&Q show home.

To get your heart into a new home call

0844 406 9800Follow Us. Like Us. WatchUs.

SPAIN scrapped a long-term debt auc-tion yesterday in favor of a bond sale

via banks as highly indebtedEurozone states took advantage ofmore benign market conditions tolock in lower-cost borrowing.

Belgium also said it would seek toissue a new bond, most likely for 10

years, through a syndicate of banks.Portugal has said it plans to place asyndicated bond this quarter.

Spain sold 6bn (5bn) of 10-yearsyndicated bonds at a spread of 225

basis points over mid-swaps, or 256.4points over the German 10-yr bund.The news came as figures showed

that market intervention by theEuropean Central Bank (ECB) jumpedlast week, as the banks purchases

soared to 2.3bn, its highest weeklytotal since mid December.

The figures, released yesterday, con-firm that the ECB, lead by its presi-dent Jean-Claude Trichet, has

intervened heavily to prop updemand at Eurozone debt auctions.In the two weeks preceeding last, it

bought 113m and 164m. The total value of bonds bought by the ECBnow stands at 76.5bn.

ECB bond purchases soarBY JULIET SAMUEL

EUROZONE CRISIS

EUROZONE finance ministers calledyesterday for an increase in the effec-tive lending capacity of the currency

blocs rescue fund, but Germanfinance minister WolfgangSchaeuble said there was no urgencyand it would be March before a f irmplan was in place.

Schaeuble said that with bondmarkets calmer, there was no rush totake action now and work was beingprepared for a late March EU sum-mit.

There will not be results today,the market developments in the last

week have, thank God, taken anyurgency out of these discussions, hesaid.

Schaeubles comments came asEurozone finance ministers gatheredin Brussels yesterday to thrash outproposals for a regional rescue pack-age ahead of a European Councilmeeting next week.

The meeting came as the EuropeanFinancial Stability Facility (EFSF),Europes main bailout fund, said thatit had appointed financial advisersfor its first sale of debt on Monday.

Citigroup, HSBC and SocieteGenerale will advise on the deal,

which will involve an auction of3 to5bn of debt in order to fund the85bn bailout of Ireland.

At the meeting of finance minis-ters, Hollands Jan Kees de Jager indi-cated that the Eurozones morestable countries could be willing tofund an expansion in the regionsrescue fund, something that has sofar been blocked by France andGermany.

If needed, we will stand ready

with an emergency fund to assist acountry that needs it, he said.But he added: The emergency

fund, only, will not be a solution, weneed fiscal consolidation.

Euro bailoutfund rejig isset for March

IRISH Prime Minister Brian Cowenwill face a vote of no confidence by hisown Fianna Fail party today, withIrelands foreign minister saying thathe will vote against his leader.

If Cowen is ousted, the move couldspark a snap-election, which couldthrow into doubt the terms ofIrelands85bn (71.2bn) bailout.

The Irish parliament has yet to holda final vote on its 2011 budget, which

would make cuts of6bn and is a con-dition of its rescue package. The coun-trys governing coalition managed topass initial votes on the cuts only withthe help of independent MPs andpromises of support for local initia-tives.

The main opposition party, FineGael, has promised to attempt a rene-gotiation of the bailout if it winspower, with the aim of forcing losseson senior bondholders in Irish banksthat had to be rescued. However, itadmitted that doing so would requirethe ECBs permission.

The no-confidence vote on Cowen was called after it emerged that hehad met with the former chairman of

Anglo Irish Bank a few months beforeits nationalisation, which was deeplyunpopular.

Even if Cowen survives todays voteby his party, his promise to call elec-tions after passing the 2011 budgetmean that he is unlikely to last long asPrime Minister.

In declaring his intention to voteagainst Cowen, foreign ministerMichael Martin said: I would beaware of cabinet ministers who wouldhave similar views, let me put it that

way to you, but its for them to make

their views known.But a government whip denied thatthere was cabinet support to get rid ofCowen. Yields on Irelands 10-year debtedged up to 8.37 per cent yesterday.

Judgementday for IrishPM Cowen

FORMER JP Morgan executive IanSlatter has resumed his career with anew role at Swiss bank UBS.

UBS has appointed Slatter co-headof fixed-income, commodities andcurrencies (FICC) distribution forEurope, Middle East and Africa. Hetook up the role with the FICC team

on 10 January and reports to RobertoHoornway, UBS global head of securi-

ties distribution, sources told City A.M.Slatter, who left JP Morgan six

months ago after more than 16 yearsat the bank, headed sales teams forthe majority of his time there includ-ing four years as co-head of Europeansales and marketing.

At UBS he is replacing Mark Jones, who is relocating to Hong Kong tolead the credit sales team for the Asia

Pacific region. His co-head should beannounced soon.

UBS hires ex-JPM execBANKING

ECB President Jean-Claude Trichet has stepped up bond buying Picture: REUTERS

BY JULIET SAMUEL

EUROZONE CRISIS

BY ELIZABETH FOURNIER

PHARMACEUTICALS

BY JULIET SAMUEL

EUROZONE CRISIS

ANALYSIS lSmith & Nephew

550

650

750

5 Nov 25 Nov 15 Dec 7 Jan18 Oct

p 709.0017 Jan

8/8/2019 Cityam 2011-01-18 book

11/28

FRENCH investment fund Wendelsaid it would appeal a 1.5m(1.3m) fine from market watchdog

AMF for insufficient disclosureover its stake-building in glassmak-er Saint-Gobain in 2007.

The case centres on derivativescontracts with different banks

which, according to the AMF, weremarket-sensitive and should have

been disclosed by Wendel as thesole purpose was to prepare a stakepurchase in Saint-Gobain.

Wendel said yesterday it was dis-appointed at the AMF ruling,

adding it had complied with thelaw and regulations in force whenit bought into Saint-Gobains capi-tal. We had been confident on thiscase. We are surprised, a spokes-

woman said.The case was seen as important

because of its similarity to Frenchluxury goods group LVM's swoopon rival Hermes.

Both LVMH and Wendel used thesame type of swap contracts andalso spread their transactionsacross several banks. With each

bank staying below the five percent threshold, no disclosure wasnecessary.

However, AMF chief Jean-PierreJouyet said that the Wendel ruling

did not prejudge the ongoingprobe into the Hermes case.

These are two separate cases,even if the principles of honestyand transparency are applicable toeveryone, Jouyet said. We can-not...presume the conclusions ofthe (LVMH-Hermes) probe that willtake at least nine months.

The AMF said yesterday its sanc-tions committee had decided tofine both Wendel and formerchairman Jean-Bernard Lafonta1.5m each for not properly disclos-ing swap contracts and financingarrangements with banks, which itsaid were created purely for thepurchase of a stake in Saint-Gobain.

Wendel will appeal1.5m St Gobain fineBYHARRY BANKS

REGULATION


Apaxs bid for Smiths is too little too late TOO little, too late. That is theupshot of Apaxs 2.45bn bid forSmiths medical division, whichsent the firms share price up by7.72 to 13.81 yesterday.

Too little because although theoffer almost half of Smiths mar-

ket cap seems high, it does notaccount for the huge break-uppremium a buyer would have topay.

The medical business account-ed for around 35 per cent of oper-ating profit last year and 31 percent of Smiths 2.8bn sales. So onthe face of it, Apax is offering ahefty mark-up.

But without medical, Smithsfaces an uncertain future. Unlessmanagement were to pursue anall-or-nothing break-up strategyand find buyers for its fourremaining divisions, the rest ofthe group could be downgraded.It is far from guaranteed that theremaining four businesses couldfind buyers willing to pay any-thing near the mark-up beingoffered by Apax.

Paradoxically, the amount that

Apax is willing to pay only serves

to illustrate that Smiths cantafford to let medical go unless itgets an offer it cant refuse (likelynorth of the 3bn mark).

Too late because chief executivePhilip Bowman has already start-ed to turn the division around.

When he joined Smiths in 2008,the medical arm would have beenthe last one expected to attract a

bid. It was plagued by supplychain and IT problems and wasspending too much time on low-margin business.

Bowman has made big changes. The firm no longer makes dia-betes pumps, for example, havingaccepted that Medtronic and

Johnson & Johnson had alreadycornered the market. This deci-sion, and others like it, allowed itto concentrate on more profitable

work. Margins at the medicalbusiness now stand at around 22per cent a decade-long high.

As a private equity firm, Apaxneeds to squeeze more value fromthe business before selling to anend buyer. But with the turn-around plan in full swing, it is

unclear how it would do so. There

are no similar medical businessesin the Apax stable that wouldallow it to make significant syner-gies, for instance. That suggests it

would pursue an injudiciousround of cost cutting followed bya quick sale.

Management can get more forshareholders by completing theturnaround plan and eventuallyselling to a medical consumablesmanufacturer like Baxter, BectonDickinson or Covidien. Investorscan make more in the long run bycutting out the middle man.

BOTTOMLINEAnalysis by David Crow

ANALYSIS lSmiths Group

1,150

1,250

1,350

5 Nov 25 Nov 15 Dec 7 Dec18 Oct

p 1,381.0017 Jan

8/8/2019 Cityam 2011-01-18 book

12/28

CITY GIVESCASH TO

BRIDES WHOARE HONEST

THE City of London Corporation will todayhonour a little-known City tradition byhanding out cash to brides who can provethey are honest.

The somewhat politically dubious acco-lade dates back to 1882 when Italian-bornnobleman Pasquale Favale fell in love withand married a City girl.

He was so taken with the Square Milethat he bequeathed 18,000 lira to the Cityof London Corporation, stipulating thateach year a portion of the money was to begiven to three poor, honest, young

women, natives of the City of London, aged16 to 25 who had recently been or wereabout to be married.

The dowry being offered by the modernCorporation amounts to a rather paltry100 hardly a dent in the 20,000 averagecost of a marriage.

But an even bigger problem seems to bethe lack of honest brides in the City ofLondon. The Corporation was forced toabandon the scheme last year after receiv-ing no applications for the money.

Indeed, the most recent photograph ofhappy newly-weds receiving their chequesthe Corporation was able to provide dates

back to 2004. The offer is now open to any

Crozier during his previous job as head ofthe Royal Mail.

It seems the ITV head honcho is morethan willing to plunder the top talentfrom his former employers.

TALK TO ME Alas, we dont all have friends in highplaces and, in this climate, sometimes youhave to start somewhere.

More keen than most is young JamesElgeti, who decided the best way to kick

start his career would be to don a sharp

suit and a sandwich board and sell him-self directly to passing bankers.

The final-year student at Bath hand-ed out business cards at Bank tube sta-tion last week in a bid to land hisdream internship at a top bank.

You have the ability to kick-startmy career in banking. Talk to me...

read his sign. The Capitalistawards extrapoints for the minimalist design and crispchoice of font. If you have a place for Jamesemail The Capitalist and well put you intouch.

brides who can prove they have lived in theCity for at least seven years.

This years blushing brides are JulieAnne Barnes, Nichola Rose and SuzannaSebba.

LEADING LADIESThe City might have its fair share of hon-est women, but the World EconomicForum, which kicks off next week in Davos,seems to be sadly lacking in women of anymoral persuasion.

Despite imposing a quota of at least onefemale per four males among executivedelegates from its 100 main sponsors, itseems a third have failed to come up with aleading lady to justify bringing another

guy along. To avoid the quota, some compa-nies have simply cut their delegate num-

bers down to four.But there is some good news: the quota

has at least succeeded in bringing some

overlooked women out of the woodwork.Two thirds of the events top sponsors arebringing a female delegate this year, versusone third last year.

POST OFFICEITV has hired former hack MaryFagan (pictured top right) to thenewly-created role of communications andcorporate affairs director. The ex-Independent staffer used to work undernone other than new ITV boss Adam

Deputy John Barker of the City of London Corporation hands out the dowry in 2004

The Capitalist12

The accoladedates back to1882 when

an Italiannobleman fellin love withand marrieda girl fromthe City

EDITED BY

STEVE DINNEENGOT A STORY? [email protected]

CITYA.M. 18 JANUARY 2011

Despite reports of a growingsense of confidence in the City,

with around half of the UKs

banking and financial profes-sionals stating that they are feelingpositive about the year ahead, City

workers are apparently remainingmuch more cautious when it comesto spending.

Whilst remaining outwardly bull-ish about their prospects for 2011(around 41 per cent of those ques-tioned believe that their company

will increase staff numbers this year),it seems that a combination of thenew European regulations over

bonuses and an on-going climate ofausterity have led to a morerestrained approach when it comes totheir own finances.

A recent survey found that Cityworkers spent up to 50 per cent lesson overseas purchases in 2010 than in2009, and found that clients who are

based in the City made far fewertransfers (typically used for one off

purchases) too. In total the amounttransferred was down by some 50 per

cent. The figures also demonstratedan increase in property-related trans-fers, such as mortgage payments andproperty maintenance.

BONUS TRANSACTIONSA large proportion of the transac-

tions which World First undertakes

for City workers occur following thereceipt of their annual performance

related pay. Often this payment isreceived in a foreign currency andthose living in the UK will either

want to transfer their US dollar bonus into sterling, for example, orsend the money to an overseasaccount if they are an overseas resi-dent but are working in the UK.

With exchange rates continuing tofluctuate wildly on a day to day basis,

the amount of money you couldpotentially end up with is also subjectto significant change.

MINIMISING RISKMany of our clients have come to

us for advice about how to minimisetheir risk and use our products to

plan ahead, so that they know inadvance that their money is safe. A

smart move in the current climate.Despite the signs that the City is

returning to business as usual, individuals are using their performancerelated pay to maintain their invest-ments and balance the books. Manyof our clients would have boughtoverseas property during the boom

years and are now transferringmoney to maintain those propertiesor to pay off mortgages.

If our figures are anything to go byit would seem that City workers areclearly responding to the govern-ments calls to show restraint. But

whatever you are using your annual bonus for this year, with ongoingfluctuations in the currency marketsset to continue for the foreseeablefuture, some careful forward plan-ning would be a sensible idea.

Jeremy Cook is chief economist at WorldFirst

To sign up for Jeremys free daily webcastsgo to www.worldfirst.com/jeremycook

City workers are showing restraint whenit comes to spending their annual bonus

ADVERTISEMENT FEATURE

CITY COMMENT

JEREMY COOK

No Ferraris herePicture: MichaTheiner/ CITY A.M

8/8/2019 Cityam 2011-01-18 book

13/28

THE biggest private equity firms havenot delivered the best returns, newresearch from European businessschool EDHEC showed yesterday.

A firms size has a huge influenceon its investments level of return and this overwhelmingly seems tofavour small independent firms overlarger groups.

Large firms which hold a largenumber of investments at the sametime underperform substantially,according to the study that analysed7,500 private equity investments

worldwide over 40 years.Super-sized private equity houses

such as Carlyle, with more than 400investment managers and $98bn(62bn) under management or KKR

with $55.5bn under management and650 staff, say they use their global

reach and expertise to deliver market-leading returns. But layers of hierar-chy and higher communication costsin big firms created diseconomies ofscale, outweighing the benefits ofpooling knowledge, the report said.

Longer duration deals generatedmuch lower returns than those heldfor less than two years. One in fourdeals achieved an internal rate ofreturn (IRR) above 50 per cent, whilethe median IRR was 21 per cent.

Small PE firms outshinethe largest over returnsBYALISON LOCK

PRIVATE EQUITY


MORE PLACES TO STAY AT TRAVELODGE

TRAVELODGE said it plans to build 35 hotels, creating 700 jobs, in the UK and Spain thisyear. The move will boost the budget hotel chain, led by chief executive Guy Parsons(above), to 495 hotels with 35,841 rooms. The new hotels include sites in Drury Lane andat Bank. Parsons said the chain is committed to expand during the recession whilemany companies put their development on hold. Picture: Alex Ridley/ CITY A.M

8/8/2019 Cityam 2011-01-18 book

14/28

HTCDesire

25 per month tarif available on most networks. Subject to availability and contract.

htc.com

Heres an idea:T3 magazines phone ofthe year from only 25

Superbright screen, superast processor and HTC Sense.

Thats what T3 liked. Now you can pick it up rom only 25 per month.

8/8/2019 Cityam 2011-01-18 book

15/28

DEPUTY Prime Minister Nick Cleggwas accused of risking a bureaucraticnightmare yesterday, after outliningplans to expand impending paternityleave regulations.

Clegg wants to transform paterni-ty leave so that fathers can take regu-lar chunks of their wives or partnersmaternity leave yet the policy wasattacked as unworkable by businessgroups and employment lawyers.

This will be nightmare for employ-ers, said Anthony Fincham of lawfirm CMS Cameron McKenna.Without becoming unacceptablyintrusive, how will even sophisticatedHR functions be able to police the divi-sion of parental leave?

The coalition is pushing throughthe former Labour governmentspaternity leave regulations, whichcome into force from April and enablea mother to transfer six months of hermaternity leave to the childs father.

Of course there may be cases

where the identity of the father is dis-puted, McKenna added.

Clegg wants couples to be able toswap chunks of their entitlement

with each other during their childsfirst year,

Business is not against the princi-ple of shared parental leave, but this istoo difficult for small businesses todeal with, and could prevent themfrom taking on staff, said David Frostof the British Chambers of Commerce(BCC).

The problem with chopping andchanging is that companies will strug-gle to put a replacement in place,said employment lawyer AdrianCrawford of Kingsley Napley.

As statutory payment is capped at130 a week, most parents will try tokeep the better paid half of the coupleat work, Crawford explained.

Its notable that Nick Clegg is mar-ried to a very well paid prominentlawyer, Crawford quipped.

The government has promised toconsult widely, with a view to intro-ducing the extra measures in 2015.

Firms attack

changes topaternity law

House prices steady, says Rics

THE decline in house prices may beslowing down, according to data

released today by the RoyalInstitution of Chartered Surveyors(RICS).

The surveys headline net price bal-ance improved for the second monthin a row in December, RICS said.

And expectations for sales edgedupwards, with eight per cent moresurveyors expecting sales to increaserather than decrease in the coming

months.Many respondents suggested that

the market may begin to pick upagain in the spring, the report said.

Overall, 39 per cent more surveyors

saw prices fall rather than rise inDecember, yet this was a largeimprovement on Octobers figure of49 per cent reporting drops in prices.

The supply of new houses onto themarket dropped sharply, at itssharpest rate since May 2009 whichsome economists say can boost prices.However, demand also fell, albeit at aslower rate than in November.

Meanwhile, a separate pollrevealed that over two thirds (68 percent) of people in Britain think thatthis is a bad time to buy real estate.

The UK was ranked among the

worst places to buy property, accord-ing to the international survey.The public are being cautious over

spending until they feel confidentabout the economy, said AshishPrashar Ipsos MORI, who conductedthe poll.

The green shoots might be therebut it will take more than that to getpeople moving house, he added.

BY JULIAN HARRISEMPLOYMENT

BY JULIAN HARRISHOUSING

CONSUMER confidence picked up inDecember, Nationwide said today.

Despite recent falls in Nationwidesindex, data for last month revealed anuptick, driven by more optimisticexpectations for this year.

At 73 points, the expectationsmeasure reached its highest level forthree months, and perhaps providessome hope that the recovery will gainmomentum in 2011, said RobertGardner, head Nationwide economist.

Attitudes to spending alincreased, although some retailerssaw December sales damaged by theextreme weather conditions.

The index has some way to go toreturn to pre-recession levels, Gardnerwarned.

While the uptick is encouraging,household confidence neverthelessremains subdued, he said.

The headline confidence measure jumped eight points to 53 inDecember, yet remains below thelong-term average index rating of 81.

Winter turnaround for consumermorale, reports Nationwide poll

UK ECONOMY

SRI LANKA has become the latestcountry to suffer devastating floodsand a knock on effect on escalatingfood prices.

Vegetables are already going up inprice, said minister Mahinda

Amaraweera yesterday.Over a million people have been

displaced by the floods in the lastnine days, which resulted fromabnormally high monsoon rains.

The UNs food price index reachedan all-time peak last month, theyannounced earlier in the month.

Massive floods in Australia, cover-ing an area the size of France and

Germany, have heavily affected wheatprices.

Droughts and fires in Russia andUkraine last year also damaged wheatcrops, driving up prices.

The US government last weekrevised down its crop forecasts, caus-ing a jump in corn and soya beanprices.

Corn production fell by 4.9 per centlast year, and faces a drop to its lowestlevel in 15 years.

The US is the source of up to halfthe corn trade in international mar-kets.

Up to one third of corn grown inthe US is now used to produce

ethanol, according to DouglasSouthgate, an agricultural economist

from Ohio State University.A consequence of this reallocation

is to hitch corn prices and thereforethe prices of meat, milk, and otheredible goods made from corn and itsclose substitutes firmly to oilprices, Southgate said.

And rising oil prices have also beenprovoking concern, after pricesalmost jumped to $100 (63) a barrelat the end of last week.

The hike caused the head of theInternational Energy Agency todescribe prices as alarming yester-day.

We are concerned about the speedof the rising oil price, which can

harm the growth of economies, saidagency head Nobuo Tanaka.

More flood devastation hits

food stocks as prices increase

Economics 15CITYA.M. 18 JANUARY 2011

BY JULIAN HARRISWORLD ECONOMY

MORE NEWSONLINE

www.cityam.com

CITY VIEWS: WHAT DO YOU THINK OF THEPATERNITY PLANS? Interviews by Marion Dakers

It could be a good idea, if done properly. Itsharmful for womens careers for them to take

an entire year off. It would be complicated tokeep track of, though.

JOHN HANNEN | AVM LIMITED

At present mothers can take 52 weeks ofmaternity leave. The first six weeks are paid at 90 per cent ofsalary. The rest of a nine month period is paid aslow as the statutory rate (under 130 a week).

Currently, fathers can take just two weeks ofpaternity leave at the statutory rate (under130 a week), although some firms pay more. For babies due after 6 April, mothers can nowgive the final six months leave to the father.

FAST FACTS | CHANGES TO MATERNITY AND PATERNITY LEAVE REGULATIONS

Its a nice idea but I cant see it workingmyself. It would be very expensive for theentire staff to be able to take this time off. Anda lot of people in the City work as contractors,so its impossible to take the time anyway.

LUKE CORRIE | BANKING CONTRACTOR

I think its a great idea in principle. In a mod-ern society we should have equality, especiallyas we get to a stage where there are as manywomen in the workplace as there are men.

NEIL WALLER | SOUTHERN SOLAR

NEWS | IN BRIEF

Decline in small business moraleSmall companies ended 2010 less confi-dent than they were at the beginning ofthe year, the Federation of SmallBusinesses (FSB) announced yesterday.Pressures on small businesses, such asthe increase in VAT and fuel duty, are

beginning to come to a head, said theFSBs John Walker. This combined withthe severe weather at the end of 2010has meant that small firms are not asconfident about their prospects in 2011,he added.

German factory orders give hopeGermanys booming economic recoverycould face a slowdown, the Bundesbankwarned yesterday. Last year the econo-my expanded at its fastest rate sincereunification, following a severe down-turn during the global recession. Despitea possible slowdown, strong manufactur-ing orders from the final quarter of 2010bode well for German prospects, theBundesbanks monthly report said.

Low rates reduce business costsDespite rising global commodity prices,business costs continued to fall inDecember, driven lower by cheap financ-ing costs. A pick-up in investmentdemand from the corporate sector is per-haps our best hope of securing a sus-tained recovery through 2011,commented Erik Britton of Fathom, whopublished the results yesterday.

Japanese consumers downbeatRecent positive data from Japan wasdampened yesterday, as consumer confi-dence slipped downwards for the sixthsuccessive month. The figures, releasedby the Bank of Japan, disappointed econ-omists who had expected an upturn.

8/8/2019 Cityam 2011-01-18 book

16/28

EUROPEAN planemaker Airbusscored a surprise victory in the annu-al orders race against Boeing and cel-ebrated the 10,000th plane sale in its40-year history with a $5bn (3.15bn)order from Virgin America.

A last-minute surge pushed Airbuspast its US rival for a third year as itheld onto a net order market shareof 52 per cent in the face of a resur-gent Boeing, which was hit by can-cellations in 2009 due to delays to its787 Dreamliner.

EADS subsidiary Airbus said it hadsold 644 planes worth over $84bn atlist prices in 2010, beating Boeingstotal of 625 after a flood of 200orders in December and demonstrat-ing what it called a robust recoveryin emerging markets and the low-fare sector.

These figures show the economyis improving. We have dodged the bullet on a double-dip recession.Aviation is growing again because ofAsia, low-cost carriers and emergingmarkets, Airbus sales chief JohnLeahy said yesterday.

The only negative on the horizonis the fuel price.

Airbuss late spree included thefirst firm purchase of a revampedA320 passenger jet, the A320neo, byRichard Branson's California-basedlow-cost airline Virgin America.

The British entrepreneur, oncrutches after a skiing injury, stageda signing ceremony with Airbusexecutives, although the actual dealwas concluded in secrecy at the endof December.

Last week Airbus announced the worlds largest plane order by vol-ume from Indias IndiGo, including150 new model A320 jets, but thecontract should be finalised in 2011.

Virgin Americas order is for 60 Airbus A320 jets including 30 A320neo aircraft with newerengines.

CONVENIENCE foods tycoon RanjitBoparan is gearing up to make anoffer for Northern Foods ahead of his Takeover Panel deadline of Friday, aperson familiar with the matter saidyesterday.

Boparan asked bankers atRothschild to examine Northerns books last month, and is racing to

complete due diligence and make anannouncement this week before its

put up or shut up deadline at 5pm on21 January.

Northern, the maker of Foxs bis-cuits and the Goodfellas pizza brand,announced plans to merge with Irishpeer Greencore to create Essenta inNovember.

But Boparan, who owns the HarryRamsden restaurant chain as well asthe biggest chicken producer inEurope, has said publicly the mergerrepresents a poor deal for investors.

Credit Suisse published a note yes-terday speculating that Boparan is

likely to offer between 60p and 65pper share for Northern, valuing thecompany at up to 300m.

The note was circulated byBoparans spokespeople, althoughthey would not comment on the like-lihood of a firm offer.

Northern shares gained 2.5 per centto close at 61.5p yesterday, well abovethe 45.5p level seen before the mergerwas announced.

Northern and Greencore sharehold-

ers are set to vote on the team-up on31 January.

Boparan races to prepare an offer forNorthern before its takeover deadline

BRITISH translation software firmSDL named its chief financial officerJohn Hunter as its new chief execu-tive yesterday after a period of strongtrading that will see full-year rev-enue and profits ahead of consensus.

Revenue is now expected to be inthe range of 202.5m to 203.5m,compared with analyst consensusforecasts of 191.1m.

Profits before taxation and amorti-sation of intangible assets should be

in the range of 34.5m to 35.5m.

An upbeat SDL appointsa new chief executiveTECHNOLOGY

CONSTRUCTION giant Costain has won a contract to build the firstmajor road crossing over the RiverThames in almost 20 years.

The firm said it had received thego-ahead from Surrey County Councilto construct the bridge betweenWalton and Shepperton as part of a32.3m scheme.

The Walton bridge is due to be com-pleted in 2013 and will replace twotemporary bridges in the area.

The government has agreed to con-tribute just under 23.9m to the proj-ect with the council providing afurther 8.5m.

Earlier this month business servic-es group Mouchel rejected animproved takeover approach worthabout 148m from Costain.

Earlier this month Costain won a71m school-building contact fromLewisham Council, which it expectsto complete by September 2013.

The company also said it received a59m highway-construction contractfrom Neath Port Talbot CountyBorough Council.

Shares in Costain closed one percent higher yesterday at 227.19p, valu-ing the business at 143m.

Costain wins contract to build firstbridge over the Thames in 20 yearsCONSTRUCTION

BRITISH engineering group Rolls-Royce yesterday said it had won a

contract to supply gas turbines and waterjets for up to 10 of the USNavys Littoral Combat Ships.

Rolls-Royce already suppliespropulsion equipment for some ofthe Lockheed Martin-built vesselsand the new deal extends this withone firm order and options on a fur-ther nine ships, Rolls said.

Neither company gave a value forthe contract.

Rolls-Royce has had a successful

start to the year, having alreadyclosed a deal worth more than 3bnwith British Airways on 6 January.

Littoral Combat Ships aredesigned to operate in shallow

waters close to combat zones onshore. Each ship will be fitted withtwo Rolls-Royce MT30 gas turbines,allowing them to exceed speeds of 40knots. We are delighted that theLockheed Martin design has beenselected for an additional ten vesselsin the LCS programme, said Rolls-Royce president of naval, AndrewMarsh. The Rolls-Royce equipment,including the MT30 gas turbines andwaterjets, combine to give an effec-

tive and efficient propulsion systemperfectly suited for these innovative,highly-manoeuvrable, state-of-the-artships.

US Navy contract for RollsBYHARRY BANKS

TRANSPORT

Airbus beats

Boeing in newplane ordersBYHARRY BANKS

AVIATION

BYMARION DAKERS

M&A


London Bridge1973

ANALYSIS lBridges over the Thames

Tower Bridge

1894

Hammersmith Bridge1887

Putney Bridge1729

BatterseaBridge1890

Albert

Bridge1873

Chelsea

Bridge1937

VauxhallBridge1902

Greenwich

foot tunnel1902Thames

Tunnel1843

Rotherhithe Tunnel1908

LambethBridge1932

Westminster Bridge1862Millennium Bridge

2002

Blackfriars Bridge1869

Charing Cross Bridge1864

Waterloo Bridge1945

Hungerford

Foot bridges2002

Southwark

Bridge1921

Wandsworth

Bridge1938

Walton BridgeWork in progress

Dartford Crossing1963

NEWS | IN BRIEF

SGS ups dividend as profits riseSGS, the worlds largest inspection serv-ices company, raised its dividend andsaid it saw stronger top-line growth thisyear after demand for its services pickedup in 2010. Full-year net profit at SGSrose 8.4 per cent to 588m Swiss francs(382.7m) and revenue increased 4.1per cent on a constant currency basis to4.8bn francs, said the group.

Balfour Beatty closes school dealInfrastructure group Balfour Beatty hasreached financial close on the 80mHertfordshire Schools contract that itwon in August last year. The scheme willdeliver a capital investment programmewith Hertfordshire County Council for

the construction of two mainstream andone special educational needs school.

Kofax sells hardware armUK software provider Kofax will sell itshardware business to Germany's private-ly held Hannover Finanz for $23.2m(14.6m), and said it would record a$2.6m charge to restructure its soft-ware business. The company expects therestructuring to lead to about 20 jobcuts and annual cost savings of at least$2.5m in fiscal year 2012 and thereafter.

Alterian issues upbeat statementSoftware group Alterian has said thatits fourth-quarter results for 2010 werein line with management expectations,with analysts expecting pre-tax profitsof 5.8m. The company will also be tak-ing on a new finance director in the form

of Guy Millward, who moves from ITservices group Morse.

ANALYSIS lEADS

17.00

20.00

18.00

19.00

21.00

8 Nov 29 Nov 20 Dec 20112010

20.80

17 Jan

ANALYSIS lSDL

560

580

600

620

640

660

5 Nov 25 Nov 7 Jan15Dec18 Oct

p

627.0017 Jan

ANALYSIS lRolls Royce

600

640

680

5 Nov 25 Nov 7 Dec15 Dec18 Oct

p 654.0017 Jan

8/8/2019 Cityam 2011-01-18 book

17/28

SWISS luxury goods groupRichemont saw healthy sales growthin all business areas in its third quar-ter as wealthy Chinese customers con-tinued to splash out on Cartier

jewellery and timepieces.Overall sales for the three months

to 31 December were up 33 per cent,beating analysts forecasts.

Sales in the Asia-Pacific region rose42 per cent in local currencies, the

worlds second largest luxury goodsgroup behind French rival LVMH,Richemont said.

The luxury goods industry hasrecovered strongly from its worstslump in decades thanks to buoyantdemand in Asia.

Richemont chief executive JohannRupert said yesterday the groups

brands, such as Cartier, Montblancand Jaeger-LeCoultre, performed

well and saw good sales growth, par-ticularly at the retail level.

Its sales in the period which

include the key Christmas periodsales rose to 2.12bn (1.7bn) from1.56bn a year earlier.

However Richemont warned in astatement: Higher comparative fig-ures will make the final quarter ofthe financial year ending 31 March2011 more challenging.

Gross margin is anticipated to benegatively affected by a strongerSwiss franc given the groups Swissmanufacturing base.

Richemont in November reportedan 87 per cent jump in its first halfnet profit to 664m.

Richemont in

sales boostled by China

Shoplifters bag 400k a day

SHOPLIFTERS are costing Britishretailers almost 400,000 a day,

according to new figures. A survey from the British RetailConsortium (BRC) found that thetotal year-on-year cost of high streetshoplifting was 137m, having risenfrom 99m.

The value of individual items taken by shoplifters has also risen to anaverage of 70 from 45.

Meanwhile 18,000 staff have report-

ed that they have been victims ofphysical or verbal abuse during thecourse of their work.

The total number of thefts per 100stores actually dropped by 11 per

cent, but this failed to reduce thetotal cost to retailers.Clothes stores are shoplifters most

common targets, with 29.3 per centof all thefts, followed by conveniencestores and newsagents and supermar-kets, with 27.3 per cent and 16.7 percent respectively.

Retailers are being urged to rethinktheir security precautions in order to

minimise the risk of shoplifting loss-es.

UK retailers spent around 210mduring 2009 to 2010 on protectionfrom shoplifters but the high value

items are still being stolen. A BRC spokesman said: I think araft of the more opportunist shoplift-ing offences have significantlyreduced thanks to the extra securitymeasures, and thats left a bigger pro-portion of the more sophisticated,systematic higher-value offences.

Fraud and burglary are the othercostly problems that plague retailers.

BY JOHN DUNNE

RETAIL

BYHARRY BANKS

RETAIL

CHRISTMAS revellers helped theowner of the Tiger Tiger bar chain toa boom in sales.

Novus Leisure, the privately ownedbar and restaurant operator it alsohas Babble, Jewel and the Zoo Bar inLeicester Square enjoyed an almosteight per cent surge in revenues inDecember and late November.

Chief executive Steve Richards said:

City boys splashed out in anticipa-tion of bonuses.

The key driver for the Londonmarket is corporate parties andevents, where there was a huge surgein bookings.

Novus has 38 venues and wants toexpand to 100.

At the moment Barclays Venturesand Royal Bank of Scotland are the

backers and management own 22.5per cent of the equity of the group.

Novus toasts Xmas partylift as revellers splash outLEISURE

Consumer News 17CITYA.M. 18 JANUARY 2011

NEWS | IN BRIEF

Boots in festive sales liftSales at Boots rose by 3.8 per cent inDecember on a like-for-like basis, withstrong performances in healthcare, fra-grances and electrical beauty products.The group said it had made marketshare gains in its core categories of

health and beauty. Total revenue rose by14.3 per cent in the quarter to 31December, including a 2.8 per centincrease in underlying sales on the retailside, and the group said it envisagedstrong profit growth this year. Bootswas taken private in 2007, becomingAlliance Boots, and disclosed the salesnumbers to staff in an email yesterdayfrom chief executive Andy Hornby. Thisrepresents an extremely robust per-formance and demonstrates the abilityof our group to deliver growth even intough economic conditions, Hornby toldstaff in the update.

Royal boost for Stanley GibbonsCollectibles group Stanley Gibbons isanticipating a jump in sales, fuelled byitems to mark the wedding of PrinceWilliam and Kate Middleton, it said yes-terday. The Royal Wedding will takeplace at Westminster Abbey on 29April, and the company expects to selllots of first day covers, stamps andother collectibles. It recently added toits portfolio by buying Benhams, a firstday cover and mail order collectiblesbusiness, from Flying Brands for 1.5m.The company said: Our recent acquisi-tion of Benham has proved timely fol-lowing the announcement of the RoyalWedding. This business stands to benefitfrom sales of associated first day coversand other collectibles. Analysts expectthe wedding to boost the economy by600m.

ANALYSIS lRichemont

50

48

52

54

25 Oct 1 nov 8 Nov2010

SwFr 55.4517 Jan

Shipmentvolumes ofCognac to

China grew by

54%in 2010

Burberry completed the acquisition

of50 stores in China last yearand its trading updates point to the

country as its best up-and-

coming market

China and Hong Kong imported

3.8bn Swiss francs (2.4bn)of Swiss timepieces in the first 11

months of 2010, accounting for a

quarter of the European

countrys watch exports

Rolls Royce sales surged

800% last year beating all expectations

CHINA | A LOVE AFFAIR WITH LUXURY

Dont miss breaking newswith our new 10:30 AM EMAILEach day well cover the mornings breaking news, give

you current market analysis and the most

up-to-date financial headlines.

Sign up now to ensure you receive our free email.

Visit:

www.CityAM.com/newsletter

8/8/2019 Cityam 2011-01-18 book

18/28

OUTGOING ThyssenKrupp financechief and turnaround expert AlanHippe will take control of Rochescoffers as the Swiss drugmaker seeksto get rid of debt and embarks oncost cuts after product setbacks.

Hippe, familiar with the toughbusiness environments of the steeland auto sectors, is joining Roche asthe pharma industry faces some ofits toughest challenges and as thegroup tries to reduce debt after itsGenentech buyout.

Hippe, 44, will become a member

of Roches corporate executive com-mittee in April, Roche said yesterday,

joining from Europes largest stain-less steel company, where he wascredited with its successful restruc-turing.

He joined ThyssenKrupp fromGerman autosupplier Continental.

Roche hires finance headHippe from ThyssenKrupp

PHARMACEUTICALS

BSKYB will come under pressure fromnew BBC-backed on-demand TV ven-

ture YouView, according to a newreport by Evolution Securities.Media analyst Steve Malcolm also

says Skys encroachment into itsrivals broadband market particu-larly BT and TalkTalks is overstat-ed.

Malcolm estimates the digitalswitchover will soon bring Freeviewand BBC and ITV-backed YouView toaround 22 per cent of UK households,

which, combined with severe pres-sure on consumer spending, coulddent Sky subscriptions.

Sky is currently the undisputedking of pay-TV in the UK with morethan 10m subscribers. YouView wasset to launch in the second quarter ofthis year but industry sources believe

delays may push the date back to late2011 or early 2012. The report says Virgin Media will

be the big winner over the next few years as its broadband is generallyquicker and more reliable anincreasingly important considerationfor consumers.

Evolution is generally positive forthe sector as a whole, issuing buyrecommendations on Virgin,

TalkTalk and BT, and an add for Sky.Cable & Wireless Worldwide

(CWW) pulled off a remarkable coup

yesterday when it announced it had-won a multi-million pound commu-nications contract for engineeringfirm Babcock from BT.

CWW will now be the sole provider

of telecoms services to the firm,which has major contracts with theMinistry of Defence and NetworkRail. The value of the deal has not

been announced but sources close tothe firm told City A.M. it is worth sig-nificant single-digit millions.

CWW will focus on consolidatingBabcocks 250 sites across the UK, cre-ating encrypted networks for itsdefence, communications, education,nuclear and rail businesses. The deal

will be seen as a blow for BTs GlobalServices division.

YouView launch set to hit SkyBY STEVE DINNEENMEDIA


NORWAYS Telenor raised theprospect of yet another legal fightand the possibility of severing ties

with Vimpelcom over a proposed bid by the Russian firm for Egyptiantycoon Naguib Sawiris telecomsassets.

Telenor said yesterday it was disap-pointed by Vimpelcoms boardapproval of a revised bid for Italys

Wind and Cairo-based OrascomTelecom from Sawiris and demandedits pre-emptive rights be safeguardedin the sale of new shares.

The row threatens a 2009 peacedeal struck after years of acrimony

between Vimpelcom shareholderAltimo and Telenor. But Vimpelcomsaid the deal with Sawiris would notalter this.

Russias second-biggest mobilephone company wants to grab a shareof high-growth emerging markets bypurchasing Cairo-based Orascom

Telecom from Sawiris and tapping itsfirst developed market throughItalys Wind.

But Telenor is worried about theoutlook for Orascoms lucrative

Algerian unit Djezzy, which facesnationalisation, and the debt load ofits mother company Wind. It alsoobjects to the way the share offer is

being structured.We see this as an obvious decep-

tion that violates the Vimpelcomshareholders agreement, said

Telenor, which rejected Vimplecomsinitial deal in December.

Shares in Telenor fell 2.7 per cent to90.3 Norwegian crowns (NOK). Sharesin Orascom jumped three per cent onthe news and closed at US$3.82.

Vimpelcombid threatensTelenor tiesBY HARRY BANKS

TELECOMS

BEST OF THE BROKERS

ANALYSIS lBovis Homes

380

340

420

18 Oct 5 Nov 7 Jan25 Nov 15 Dec

p441.20

17 Jan

BOVIS HOMESUBS rates the housebuilder neutral andhas increased its target price from 401p to430p. The broker has lifted its earnings pershare forecasts after better than expectedmargins in the firms trading update, andbelieves Bovis can deliver better returns inthe long-term. Returns growth at Bovis isbelow the sector average, it adds.

ANALYSIS lVirgin Media

25

24

26

27

28


p 25.2017 Jan

VIRGIN MEDIADeutsche Bank has downgraded the mediagroup to hold with a target price of17.25. The broker is concerned about thefirms need to refocus on mobile sales tocompensate for a tougher cable and broad-band market this year with competitionfrom BT and YouView, but approves ofVirgins wider business momentum.

ANALYSIS lAfrican Barrick Gold

540

500

580

620


p 564.0017 Jan

AFRICAN BARRICK GOLDMorgan Stanley rates the miner over-weight and has lifted its target price from673p to 750p. The broker has upgraded itslong-term gold price forecasts by 21 percent, in turn raising its earnings forecastsfor the miner by nine per cent in 2011. Itexpects the firm to show increased explo-ration in its update this week.

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

Barings Asset ManagementThe investment manager has appoint-ed Christine Bergstedt Jorgensen to a

newly created role as director ofEuropean institutional sales and busi-ness development. She will report to

Andrew Benton.Bergstedt Jorgensen joins the firm

from Aviva Investors, where she washead of Nordic sales for institutionalclients. She has also worked in fundmanagement at BankInvest.

Kinsey Allen InternationalThe executive search firm has appoint-ed Kate Sumner-Brown as a consultantin its legal practice. She joins fromClifford Chance, where she was anassociate in the firms private fundsgroup.

She has also worked as a solicitor atBell Gully, a New Zealand firm, beforeshe moved to the UK.

BLPBerwin Leighton Paisner has appointedJacob Ghanty to its financial servicesteam. He was formerly a partner atPinsent Masons.

In the past, Ghanty has worked forAXA, Barclays, Credit Suisse andHSBC.

Morgan StanleyThe investment bank has recruited anew chief economist for Russia andUkraine, Jacob Nell.He joins the firm from TNK-BP inMoscow. Before this, he worked for BPin London and Moscow for five years

and has also worked at the Treasuryfor a decade.

RathboneRathbone Investment Managementhas appointed Lee Barter as an invest-ment manager. He joins the firm fromBarclays Wealth and has previouslyworked at Blackrock and RensbergSheppards.

LaSalleLaSalle Investment Management hasappointed Martin Jochem as a jointmanaging director of the firms newlylicensed investment vehicleKapitalanlagegesellschaft.

CITY MOVES | WHOS SWITCHING JOBS Edited by Juliet Samuel

RSM TenonThe financial services firm has appointed twonew directors and an associate director inLondon. Nick Atkinson has been promoted to arisk management director, specialising in inter-nal audits of the NHS. Nick Davies (pictured)has been promoted to business advisory direc-tor in the audit, tax and advisory team, special-ising in corporate clients. And Noses Nyachaehas been made an associate director in thesame team as Davies.

+44 (0)20 7557 7245morganmckinley.comTo appear in CITYMOVES please email your careerupdates and pictures to [email protected] SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

in association with

ANALYSIS lTelenor

88

92

96

8 Nov 29 Nov 10 Jan20 Dec2010

NOK 91.0017 Jan

NEWS | IN BRIEF

Soco abandons DRC wildcat wellOil and gas exploration company SocoInternational has plugged and abandonedits Bayingu-1 wildcat well, located in theNganzi Block, onshore DemocraticRepublic of Congo. Though the explo-ration found gas and oil, the reservoirsands at the primary target were poorlydeveloped and unsuitable for commercialuse.

Salamander launches Thai wellUK-based Salamander Energy has starteddrilling at an appraisal site in North-east

Thailand, a project that it expe

cityam 2011-01-18 book

Documents