cityam 2011-03-17

8/7/2019 Cityam 2011-03-17

1/36

BUSINESS WITH PERSONALITY

8/7/2019 Cityam 2011-03-17

2/36

8/7/2019 Cityam 2011-03-17

3/36

FTSE 100 5,598.23 -97.05 DOW 11,613.30 -242.12 NASDAQ 2,616.82 -50.51 /$ 1.60 -0.01 / 1.15 unc /$ 1.39 -0.01 Certified Distribution31/01/11 - 27/02/11 is 107,265

Turner inbid to upbank ratiosto 20pc

MAJOR banks should maintain capital

ratios of 15-20 per cent of their risk-weighted assets (RWAs), according toFSA chairman Adair Turner.

Speaking at Cass Business Schoollast night, Turner said: If global regu-lators were benevolent dictators theywould be wise to choose capital ratiosfar above even Basel III levels, some-thing more like 15-20 per cent.

Turner did not propose introducingsuch requirements, which all of theUKs major banks would struggle tofulfil, but said that Basel III should beviewed only as a step towards a morestringent regime.

The FSA is currently determiningwhat level of capital surcharge it willimpose upon systemically importantfinancial institutions (SIFIs) beyondBasel IIIs requirement of seven percent of RWAs. Most observers expect atwo to four per cent figure, to bringratios up to nine to 11 per cent, butTurners remarks suggest that a highernumber is possible. He said yesterdaythat imposing a surcharge was a keypolicy objective for this year.

His thoughts will cause alarm forsome banks that are try-ing to balance build-ing up their capitalwith delivering ade-quate returns.

During Barclaysannual resultslast month,for example,chief execu-tive BobD i a m o n dpresented ac a p i t a lplan thatassumesonly a

two percent sur-charge.

BY JULIET SAMUEL

BANKING

A TOXIC cocktail of fears over theworsening nuclear crisis in Japan,violence in the Middle East spi-ralling out of control and theprospect of an EU/IMF bailout forPortugal saw markets worldwideplunge for the third day in a rowyesterday.

The losses piled up after theEuropean Unions commissioner forenergy said that the crisis at Japansearthquake-damaged Fukushimanuclear plant was out of control,

while a top US nuclear safety offi-cial said that the situation in Japanwas worse than officials had indi-

cated with one of the damaged reac-tors dry and emitting extremelyhigh radiation levels. The US gov-ernment last night urgedAmericans in Japan to stay outside a50-mile radius of the reactors more than double the distanceordered by Japanese officials.

Japans Nikkei shed more thanhalf the gains it made onWednesday, falling 2.8 per cent inthe first hour of trading despite theBank of Japans offer to inject a fur-ther 5 trillion yen ( 3.8bn) into thebanking system in same-day funds,continuing its effort to boost liquid-

ity and calm markets. That came ontop of a total of 28 trillion yenalready offered in same-day opera-

tions this week.The yen rose to a fresh all-time

high against the dollar of 76.32 yenon speculation investors would buythe currencyto fund reconstruction projectsin the aftermath of last Fridays dev-astating earthquake and tsunami.

The Bank of Japan, due to make astatement later last night, is expect-ed to intervene to weaken the cur-rency.

Meanwhile, violence continuedto worsen in the Middle East withthe Bahrain stock exchange forcedto close after the ruling royal family

declared a three-month state ofemergency and the military wascalled in to reassert control over the

capital Manama.And in Portugal, bond yields rose

again yesterday as its downgrade byMoodys heaped pressure on its frag-ile economy with its sale of 1bn(870m) in short-term governmentdebt seeing its yields rise from 4.05per cent just two weeks ago to 4.33per cent.

Analysts said it is now a matter ofwhen rather than if Portugalaccepts an EU bailout.

The FTSE crashed 1.7 per cent toa fresh three-month low of5598.23, while the Dow Jonesindex, down as much as 300 points

at one point, finished 242.12 pointslower, or 2.04 per cent, at 11,613.30.JAPAN: P4-P5; MARKETS: P16

BY KATIE HOPEWORLD

www.cityam.comIssue 1,344 Thursday 17 March 2011 FREE

BUSINESS WITH PERSONALITY

MARKETS PLUNGEON GLOBAL FEARS

l From left: A Japanese worker examines citizens forradiation exposure; a protestor in Bahrain and recentprotests in Portugal where an EU/IMF bailout is expected

8/7/2019 Cityam 2011-03-17

4/36

News2 CITYA.M. 17 MARCH 2011

Cuts must goahead: OECDCHANCELLOR George Osborne mustpersevere with his deficit cutting andreform programmes, despite a slow-down in growth, the Organisation forEconomic Co-operation andDevelopment (OECD) said yesterday.

The spending cuts will bring long-term gain the OECD said, althoughit lowered the UKs growth forecastfor this year to 1.5 per cent, from 1.7per cent.

Britains recovery faces significantheadwinds during 2011, it said.

The forecast was leapt upon byLabour shadow chancellor Ed Balls.

The evidence is mounting that his[Osbornes] reckless plan to cut deep-er and faster than any other majoreconomy in the world isnt working,Balls said. He has just a week until

the Budget to come up with a plan B.And the chancellor will be urged to

consider a so-called plan B today bythe Institute for Public PolicyResearch.

The left-leaning think tank isexpected to say that the deficit couldstill be eliminated by 2017-18, evenwithout annual deficit reduction tar-gets.

However, Osborne seems deter-mined to see through his plans, andinsists budget will mark the transi-tion from rescue to reform.

ECONOMICS: P13

BY JULIAN HARRIS

UK ECONOMY

Good and bad news on the jobs front

THERE are not enough jobs in Britain.Among all the claims and counter-claims about the state of the economy,that is one of the few facts that every-body agrees on. The number of unem-ployed people was up 87,000 from ayear earlier, according to the leastunreliable survey of these matters; thetrue number is higher. The young arefinding it especially hard to find work.Those of us fortunate enough to havea job should thank our lucky stars;nobody should ever downplay thetraumatic financial and psychologicaltoll of unemployment.

But while unemployment has risen,the overall picture is less grim. It actu-ally confirms that the economy isrecovering, led by the private sector,and that it is rebalancing faster than

hoped for. This is not a jobless recov-ery. The private sector is creating morethan enough jobs to replace thosebeing lost by the public sector. Andwhile it is true that overall spendingcuts havent really started yet, reduc-tions to the states payrolls havealready been proceeding in earnest.

In the most recent quarter, publicsector employment was down 123,000year on year (a drop of two per cent)excluding state-owned financial com-panies (132,000 or 2.1 per cent, includ-ing them). This is the biggest dropsince 1994. The rate of public sectorjobs cuts will probably remain rough-ly constant over the next few years. Itis unlikely to accelerate or if it does,the cull will end earlier than expected.But private sector employment rose428,000 (1.9 per cent) year on year, thebiggest rise since the first quarter of

2008 and taking the net rise in overallemployment to 296,000 over the past12 months, a respectable figure. Theproblem was that the amount of peo-ple looking for work went up faster

than the total number of new jobs cre-ated. Britain probably needs to create400-500,000 extra jobs a year to startcutting unemployment noticeably.

But the private sector is doing welldespite weak overall GDP growth anda growing burden of tax and regula-tion. For every state sector job beinglost, 3.5 are being created in the pri-vate sector. Even more encouragingly,while the jobs recovery started offwith part-timers (up 206,000 over thepast year), there has now also been arise in full-timers (up 90,000). Over thepast three months, part-time jobsactually fell, with the rise in full-timers more than compensating.

There are lots of other interestingtrends. Employment in manufactur-ing is up 14,000 0.5 per cent in themost recent quarter. This is the biggestincrease since 1997. Less welcome was

a 2,000 drop in finance and insurancejobs over the past year. The number ofpeople in employment aged 65 andover jumped 56,000 on the quarter toreach 900,000, a record. The number

of people in employment agedbetween 50 and 64 also increased tothe highest figure on record. Overseas-born people are still proving to bemuch more adept at finding jobs thanthe UK-born, who grabbed just 15.7per cent of new positions. The youngand the UK-born are struggling; older,more experienced workers and theoverseas-born are doing well. This two-tiered labour market is a huge prob-lem. George Osborne shouldnt panicor delay his budgetary tightening. Butthe government desperately needs todo two things: first, improve theincentives for firms to hire staff.Second, work out why it is thatemployers prefer pensioners to youngpeople. One thing is clear: Britainneeds a skills revolution and fast.

[email protected] me on Twitter: @allisterheath

THE chief executive of SocieteGenerale, Frederic Oudea, has beenawarded his first bonus since takingthe job, the bank revealed yesterday.

Oudea has been given 598,400(519,000) in a cash bonus in additionto his 1.16m salary, for total compen-sation of1.75m.

He waived his bonus for both 2008and 2009, citing the banks ongoinglosses due to the financial crisis and

the 4.9bn damage done by roguetrader Jerome Kerviel.

The bank increased pre-tax profitsseven-fold last year, however. Theboard judged that the general man-agement had very largely met thequalitative goals set for it by the boardin 2010, SocGen said.

Its pre-tax profits for 2010 were5.8bn and net income came in at3.9bn. Oudea said at the banksresults presentation that it is one yearinto a five-year plan that aims to bringnet income up to 6bn.

BY JULIET SAMUEL

BANKING

SocGen chiefs first bonus

STEEP costs of proposed new USDodd-Frank regulations could deterproprietary traders from providingthe same kind of liquidity in swapsmarkets as they do in futures, thehead of a major Chicago-based firmsaid.

Proprietary firms, which typicallyuse their own money to trade and donot trade on behalf of customers,would like to play a bigger role inswaps markets.

But they are concerned they will becaught in a broad net of expensiveregulations, said Donald Wilson ofDRW Trading.

The US futures regulator is over-hauling the over-the-counter markets,requiring many to trade on exchange-like venues and go through clearing-houses.

Concern thatUS swaps rulesmay hit market

Chief executive Frederic Oudea has taken home his first ever bonus of0.6m

REGULATION

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 Gaymer

CommercialSales Director Jeremy SlatteryCommercial Director Harry Owen

Head of Distribution Nick Owen

Editorial StatementThis newspaper adheres to the system ofself-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]

Chancellor GeorgeOsborne welcomed theOECDs report, anddefended the govern-ments cuts policy.

BANKS SERVED LIBOR SUBPOENASRegulators probing alleged manipula-tion of a key interbank lendingrate have focused their demands forinformation and interviews on fiveglobal banks, according to peoplefamiliar with the investigation. UBS,Bank of America, Citigroup andBarclays have received subpoenas fromUS regulators probing the setting ofthe London interbank offered rate, orLibor, for US dollars between 2006 and2008.

WELLCOME TRUST OFFERS 1BN FOROLYMPIC PARKThe Wellcome Trust has put in a 1bnoffer to the government to buy up thefreehold of the bulk of the OlympicPark, including the stadium, theaquatics centre, the athletics villageand the media centre. According to

people familiar with Wellcomes pro-posal, it has been put forward by Sir

William Castell, chairman of the UK-based global charitable foundation,

and Danny Truell, its chief investmentofficer.

US SOCIAL NETWORKS WILL FACE EUPRIVACY RULESWebsites including Google andFacebook that operate from the US buttarget consumers in Europe will bebound to follow tighter EU privacy anddata protection rules being drawn upby the EU, its justice commissioner hassaid. Viviane Reding told a seminar inBrussels that European citizens rightsin regard to data collection needed toapply regardless of where the datawere collected.

X MARKS THE SPOT FOR PEPSI INCOWELL TIE-UPPepsiCo is planning a US TV anddigital campaign of record cost andscope around its sponsorship of XFactor, as it seeks to use Simon

Cowells new talent show to revive itscore cola brand.

KOREAN AIRLINE PUTS FAITH INROLLS-ROYCERolls-Royce has won its first neworder for the Trent 900 since the fail-ure of one of the engines on a QantasA380 flight last year. Asiana Airlines,the South Korean carrier, said yester-day that it had ordered Trent 900s forsix A380s in a deal that is likely to beworth more than $1bn. The orderwill be a relief to Rolls-Royce after theQantas incident

NOVARTIS PUTS 600 JOBS ON LINEWITH THREAT TO RESEARCHBritains pharmaceutical industrysuffered a fresh blow yesterday asNovartis announced plans to restruc-ture its operations in a move thatcould lead to the loss of 600 jobs. TheSwiss drugmaker said that it wouldbegin negotiations with staff on the

future of its research and manufac-turing site at Horsham, West Sussex.

US HASN'T SOLVED WALL STREET'S'TOO BIG TO FAIL' PROBLEMThe US is no closer to ending WallStreets too big to fail problem,according to an official report onAmericas $700bn (438bn) scheme tobail out banks and prop up the mar-kets at the height of the financial cri-sis. The findings from theCongressional Oversight Panel on theTroubled Asset Relief Programme(TARP) also concluded that the contro-versial bail-outs have cost the US tax-payer far less than expected.

VEVO TO LAUNCH UK SERVICE'IMMINENTLY'Vevo, the worlds leading onlinemusic video service, is to launch inthe UK imminently. Speaking at thetold the Abu Dhabi Media Summit RioCaraeff, the president and chief execu-

tive of Vevo, said the service couldlaunch in Britain in April.

URANIUM TUMBLES ON JAPAN CRISISThe most volatile market since theJapanese earthquake isnt Japanese orUS stocks. It is uranium, which untilFriday was a little-noticed pocket ofthe commodities markets. Trading inuranium is often sporadic, with just afew dozen transactions taking placeeach month, and trading on the spotmarket totaling about $2.5bn (1.6bn)last year. But the earthquake andtsunami in Japan has changed allthat at least for now.

WEBSENSE PONDERS SALE OFCOMPANYWebsense, a web security softwarefirm, is exploring a sale with the aidof investment bank Qatalyst Partners,people familiar with the matter said.San Diego-based Websense has a mar-ket capitalization of $826m (517m)

and could fetch around $1bn in asale, these people said.

WHAT THE OTHER PAPERS SAY THIS MORNING

8/7/2019 Cityam 2011-03-17

5/36

THE Tchenguiz family has won theright to have a damages claim againstIcelandic bank Kaupthing heard in theUK courts, after a judge determinedthat claim, worth more than 1bn,was subject to English law.

Property investment tycoon broth-ers Robert and Vincent (pictured)Tchenguiz, who were arrested on 9March as part of a fraud investigationinto Kaupthings collapse, will nowhave the merits of their damagesclaim heard in the EnglishHigh Court, upholding ajurisdictional clause in theoriginal loan agreementwith the bank.

The Icelandic lender,taken under state con-trol in October 2008,had tried to have theclaim dismissed fromthe UK system, leaving aseparate claim to be filed aspart of administration pro-

cedures in Iceland.A statement released on behalf of

Consensus Business Group, of whichVincent Tchenguiz is chairman, said:I am delighted that the English HighCourt has recognised the right of theclaimants to bring their claim inEngland. All dealings with KaupthingBank were conducted in England

under English law The substan-tive claim for damages of over1bn will now proceed in theEnglish courts.

The familys trust is alsopursuing Kaupthing in

Reykjavik court, as part ofthe banks winding upprocedure under theIcelandic administra-tion regime.

The Tchenguizbrothers werereleased withoutcharge last week aspart of an ongoing

investigation intothe Icelandic banks

downfall.

Tchenguiz

wins UK rulingon Kaupthing

Antitrust rules could up costs

GOVERNMENT proposals to create asingle competition authority in the UK

prompted concern yesterday that newmandatory merger notification rulescould increase both costs and regulato-ry burdens for companies.

The consultation, launched by theDepartment of Business, details howthe existing Office of Fair Trading andCompetition Commission will be com-bined to create a new Competition andMarkets Authority.

The move is designed to streamlinethe competition regime, and avoidduplicated costs for firms.

But the proposals come with addi-tional changes, including a mandato-

ry requirement for companiesinvolved in large M&A deals to notifythe Authority, regardless of whetherthere are competition considerationsinvolved.

The UK currently operates a volun-tary code, with companies able to alertthe regulators to deals that they thinkmay contain a competition element.

The new regime could drive up

costs, and increase regulatory scrutinyon straightforward transactions.

A mandatory merger regime is like-ly to result in additional burdens forbusiness and an extra administrative

burden for the OFT at a time of fiscalrestraint, said Eamonn Doran, aLinklaters competition partner.

There are also worries over propos-als to recover costs from those investi-gated for antitrust if an infringementis found. Its somewhat like a hangedman having to pay for his noose, andwould not be welcome to business,said Michael Grenfell at Norton Rose.

BY ELIZABETH FOURNIER

LEGAL

BY JULIET SAMUELREGULATION


REGULATION

ACCUSED hedge fund manager RajRajaratnam did not get secrets aboutAdvanced Micro Devices and eBayfrom a former high-placed friendbecause the information was alreadypublic, his lawyer argued at his trialyesterday.

In heated exchanges that cameclose to shouting in the biggest WallStreet insider trading trial in

decades, lawyer John Dowd also triedto point out contradictions in testi-

mony of key prosecution witnessAnil Kumar, a disgraced former part-ner of the elite McKinsey & Co con-sultancy.

Galleon Group founderRajaratnam is on trial in Manhattanfederal court accused of making$45m in illicit profit from trades inAMD, eBay, Intel Corp and otherstocks based on tips from executives.

Rajaratnams lawyer saysinformation was publicENFORCEMENT

News 3CITYA.M. 17 MARCH 2011

Seymour Pierce executive chairman Keith Harris has appointed a CEO Picture: REX

KEITH Harris is set to relinquish oneof his leadership roles at SeymourPierce in a shakeup of the broker,City A.M. learned yesterday.

Phillip Wale, its head of equitiespoached from rival Collins Stewartlast year, is set to become chief exec-utive, subject to regulatoryapproval, with Harris becomingchairman.

Harris said Wales appointmentwould free him up from the day-to-day running of the business andallow him to spend more time onrevenue generation. Having beenchief executive of a business foryears, I came here not to be chief

executive but to be chairman, hesaid.

He has been in talks in recentmonths to orchestrate a tripartitemerger with Bermuda-basedfinance group Gerova and NewYork-based trader TiconderogaSecurities.

Seymour Pierce walked awayfrom Gerova after a series of disclo-sures caused the suspension of itsshares, but Harris was in New Yorklast weekend working to progress amerger with Ticonderoga, whichwas founded by ex-Collins Stewartexecutives a link he said was notcoincidental.

Harris said such a deal would givehim more options but would notaffect his work at Seymour Pierce.

Keith Harris steps back

IRELAND is to fiercely oppose what itsPrime Minister Enda Kenny has calledan EU attempt at harmonisation oftaxes by the back door.

Proposals published by theEuropean Commission (EC) yesterdayaim to offer companies a single set ofrules for calculating their corporatetax across the whole EU.

But the proposals have beenlaunched during a row about Irelands12.5 per cent corporate tax rate, whichFrance has said Dublin must raise inreturn for a lower interest rate on its85bn (74bn) bailout. The rules wouldnot mandate a uniform EU corporatetax rate, but would offer businessesthe option of filing a single tax returnwith their main national regulator onall their European profits.

The commission said it would savebusinesses 700m in compliance costsand 1.3bn from being able to offsetlosses across borders. But tax lawyerscalled the proposals simplistic.Theyll have to be a raft of guidance inpractice, said Eloise Walker, a partnerat Pinsent Masons, adding they wouldimpose an administrative burden onHMRC. And once introduced, theycould also make it easier to harmonisetax rates. What the EU wants ulti-mately is a common corporate taxrate, said Walker.

Ireland to fighttax harmony bythe back door

BY DAVID HELLIER AND ALISON LOCK

EXCLUSIVE

8/7/2019 Cityam 2011-03-17

6/36

CHINA slapped a moratorium on allnuclear plant development yesterday,announcing a full-scale safety reviewof the worlds biggest nuclear pro-gramme.

We will temporarily suspendapproval of nuclear power projects,

including those in the preliminarystages of development, before nuclearsafety regulations are approved, saidthe state council, or cabinet, in a state-ment.

The suspension will pause the con-struction of 28 nuclear plants, 40 percent of those currently being builtglobally.

Observers said the move wouldswing the balance of power towardsregulators, who are sometimes leftscrambling to catch up when building

begins before official approval hasbeen given.

Any hazards must be thoroughlydealt with, said the Chinese cabinet,and those that do not conform tosafety standards must immediatelycease construction.

The Chinese decision follows safetyreviews initiated in France, the UK, theUS, Spain and Switzerland. Germany

also suspended its nuclear pro-gramme.

Lessons will have to be drawn fromthe accident in Fukushima through atotal review of the security systems ofour nuclear plants, said French presi-dent Nicolas Sarkozy.

But Sarkozy did not signal any draw-back from Frances nuclear energy pol-icy. France generates 80 per cent of itspower from 58 nuclear plants, makingit Europes most nuclear-dependentstate.

China halts

nuclear plantprogrammeBY JULIET SAMUEL

ENERGY


JAPANESE DISASTER

Above: a satellite imageof damage to theFukushima nuclear plant

yesterday, following aseries of explosions on thesite. Far right, top: dam-age to reactor 4 atFukushima nuclearplant, with potentiallyradioactive steam beingvented into the atmos-phere. Far right, bottom:a woman is screened bygeiger counter for possi-ble radiation exposure.Pictures: Reuters, Rex

8/7/2019 Cityam 2011-03-17

7/36

THE YEN surged to an all-time recordhigh against the dollar yesterday asfears Japan may be losing its battle tocontain a nuclear meltdown sawdemand for the currency rocket onexpectations that Japanese investorswill bring home cash from abroad tohelp finance reconstruction of thecrisis-stricken country.

The dollar plunged by more thanfive per cent against the yen, falling

to a record low of 76.32 yen, breach-ing a previous record low of 79.75 set

on 19 April, 1995.Strategists said a combination ofthe repatriation of money byJapanese insurers of money necessaryto pay damage claims, investors exit-ing riskier investments abroad andthe end of the fiscal year meaningJapanese companies would be bring-ing back overseas earnings by the endof March were behind the currencysbiggest rise since World War II.

The yens extraordinary rally,

which puts further pressure onJapans fragile economy by making its

goods less competitive, promptedexpectations that the Bank of Japanwould be forced to intervene by sell-ing yen in the market in a bid to drivethe dollar higher.

It is now a game of chickenbetween the market and the Bank ofJapan over intervention to try andweaken the yen and help the alreadyfragile Japanese export market, saidJeremy Cook, chief economist at for-eign exchange brokers World First.

Yen hits high against dollarBY KATIE HOPE

CURRENCIES

News 5CITYA.M. 17 MARCH 2011

OPERATORS of the quake-cripplednuclear plant in Japan said theywould try again yesterday to use mili-tary helicopters to douse overheatingreactors, as US officials warned of arising risk of a catastrophic radiationleak from spent fuel rods.

Japan had earlier called off helicop-ters attempting to pour water on itsexposed nuclear reactors atFukushima Daiichi yesterday, amidfresh concerns about radiation levelsabove the site.

Plant operator Tokyo Electric PowerCompany (TEPCO) tried to douse theplant, 220km from Tokyo, beforesending in some of its 180 remainingground crew to try and manage theunstable nuclear reactors.

Reactors 1, 2 and 3 have nuclearrods exposed by one or two metres,the International Atomic EnergyAgency (IAEA) confirmed yesterday,while the spent fuel pond below reac-tor 4 briefly caught fire.

The situation at Daiichi is veryserious, said IAEA director generalYukiya Amano, who plans to fly intoTokyo today on a fact-finding mission.But he added, despite the hydrogen

explosions, reactors vessels and con-tainment vessels stayed in tact. As a

result, the release of radioactivity waslimited.

Fukushima residents between20km and 30km from the plant havebeen told to remain indoors, but pre-fecture governor Yuhei Sato saidthere is a lack of information aboutthe danger. Anxiety and anger felt bypeople have reached boiling point,he said.

Radiation levels have risen inTokyo, Amano said, but not enoughto pose a danger to human health.

IAEA officials declined to commenton media reports based on Wikileaksdocuments that the internationalgroup has only revised its earthquakesafety guidelines three times in thelast 35 years, or on TEPCOs handlingof the disaster.

Analysts said yesterday that dam-age and injury caused by radioactivecontamination is uninsurable bythe private market, leaving Japansresidents without any guarantee offinancial protection in a meltdown.

BNP Paribas analyst Rafael Villarealsaid the cost of a nuclear disaster onpeoples health and property wouldfar exceed anything that privateinsurers or even an entire countrysinsurers could provide. When insur-ers say a risk is uninsurable, it means

the government will end up pickingup the tab, he said.

BY MARION DAKERS & ALISON LOCK

ENERGY

Japan races to

cool unstablenuclear plants

8/7/2019 Cityam 2011-03-17

8/36

OFFICE investment in London fellmarkedly in the first three months ofthe year, though higher oil prices areexpected to drive more sovereignwealth funds into real estate in thecapital, according to Knight Frankresearch seen byCity A.M.

Office properties worth 1.6bn aredue to change hands in the threemonths to the end of March, downfrom a bumper quarter at the end of2010 when 3.6bn-worth of invest-

ments were made, according to theestate agents figures.

While a drop in the first threemonths of the year is normal, it isimpossible to ignore the fact that thisslowdown has coincided with anuncertain time for the global econo-my, said head of central Londonresearch James Roberts in the report.

Foreign investors, particularly fromChina and Korea, have propped up the

market, with the few UK fundsinvolved in deals largely selling theirproperties.

The downbeat economic news andunrest in the Middle East has cast ashadow over sentiment, the reportsaid. However, medium-term this willprobably benefit the London invest-ment market as we expect more sover-eign wealth and oil economy interest.

While volumes are down, the agenthas seen signs of a return to riskierproperties in recent months, whichcan offer higher rental yields thanprime office space.

Prime rents in the City remainsteady at 55 per square foot this quar-ter, meaning a 5.25 per cent yield forlandlords. A lack of available space inthe West End has squeezed rents up to90 per square foot.

Available space in central Londoncontinues to fall, though Knight Franksaid tenant demand remains unspec-tacular given the ongoing economicuncertainty.

Middle Eastbuyers to liftoffice gloomBYMARION DAKERS

PROPERTY

More offers on KLM.com

Fares quoted are for return flights from Heathrow via Amsterdam, including taxes and charges, which are subject to change. Bookby 20/03/11. Travel periods vary. Fares are subject to availability. Credit card surcharge will apply. Specific booking conditions andthe General Conditions of Transportation of KLM and AIR FRANCE apply. Prices correct at 03/03/11.

Hot fares!Fly from Heathrow

Dubai from 319

Lagos from 347

Accra from 386

Nairobifrom

421Johannesburg from 422

Singapore from 480

Return fares, incl taxes


w

ww.cityam.com

A moratorium on buildingis certain to choke growth

IF you are ever tempted to complainthat London is too crowded, justreflect that it would be much worse ifit were the opposite deserted. One ofthe best indicators of how well a city isdoing is its population. People move tothriving cities, and leave strugglingones. So many people have abandonedthe declining industrial cities of rust-belt America that they no longer havetraffic jams instead they have board-ed up properties. In contrast, the extra

million people we expect to come toLondon over the coming decades is asign of how well our city is doing.People are voting with their feet.

In his fascinating book, theTriumph of the City, published thisweek, Harvard academic EdwardGlaeser describes cities as mansgreatest invention, saying theymake us smarter, greener, richer,healthier and happier. He is particu-

larly optimistic about the prospects

for London, with its educated, interna-tionally connected workforce, anddiverse, innovation-driven economy.Few things predict the success of a citymore accurately than the proportionof its workers with degrees, and withthat we are blessed.

However, growth obviously bringsits own problems. The transportcapacity has to be increased to ensurethe city doesnt get ensnared in con-gestion that is why the mayor hasput such emphasis on the tubeupgrades and Crossrail.

As Professor Glaeser points out, tomake sure the success of the city con-tinues, you also need to carry on build-ing. A moratorium on construction, assome cities have had, is guaranteed tochoke off growth. The London skylineis filling up with cranes as companiesturn their optimism into offices. TheShard of Glass, near City Hall, already

Europes tallest skyscraper, is not onlya soaring vote of confidence thatLondon will continue prospering, butits very construction makes such pros-pering more likely.

Just as important is housebuilding,to home the growing population andkeep housing costs down. High hous-ing costs not only make life difficultfor Londoners, but will deter peoplefrom moving here, choking off the

flow of talent on which London

depends.The mayor has a target of 50,000affordable homes by 2012, the recordfor a mayoral term, and despite theworst recession since the war, we arewell on track to deliver.

Spades are going in the groundwith increasing rapidity, with thenumber of affordable new housingstarts 35 per cent higher in 2009-10than two years previously. It was notan accident it was the result of themayor putting such emphasis onhousing, chairing the Homes andCommunities Agency, and makingsure major regeneration schemessuch as the West Hendon Estate inBarnet went full steam ahead duringthe economic maelstrom.

It was important to keep on build-ing through the recession, becauselike all bad things, the recession wasbound to come to an end. Avoiding a

construction backlog means we arenow far better placed as the economysteps up a gear, with housing pres-sures less than they would have been.

Clearly, as the latest declining GDPfigures show, we are not in the clearyet. But as Professor Glaeser pointsout, London has many reasons to beconfident about the future.Anthony Browne is an adviser to the Mayorof London

VIEW FROM CITY HALL

ANTHONY BROWNE

WPP BOSS Sir Martin Sorrell was yes-terday given 5.3m worth of shares aspart of his firms incentive scheme.

He accepted 318,000 shares fromthe US part of the scheme worth2.3m and has deferred collection of404,000 shares from the UK partworth 3m.

Sorrells full remuneration packagewill be announced in WPPs annualreport in May but it is expected toinclude a basic salary of around 1mand a bonus of roughly 2m.

Last year he was given 562,000shares through the Leadership EquityAcquisition Plan which would beworth 4.1m at todays share price.

WPP boss given5m in sharesADVERTISING

THE UK can expect a handsomereturn on its bailout of Royal Bank ofScotland (RBS) and Lloyds, according toEric Daniels. The former Lloyds bosstold the Public Accounts Committeeyesterday that taxpayers will more thanmake back the 66bn they pumpedinto the pair in 2008 and 2009.

A recent slump in banking sharesmeans the UK is currently sitting on aloss of billions on the stake. A sale isunlikely before the IndependentCommission publishes its final reportin September.

RBS boss Stephen Hester also

admitted his bank still has too muchrisk in its business.

Daniels: UK willmake bank profitBANKING

8/7/2019 Cityam 2011-03-17

9/36

FEARS that new immigration rulescould deter wealthy investors frommoving to Britain have been quelled,following changes made by the gov-ernment.

Foreign entrepreneurs are to begiven extra incentives to come to theUK under new visa rules, which willreward those who contribute to eco-nomic growth.

Those willing to invest 5m in a

British bank account will be allowedto settle here after three years, underthe rules outlined in parliament yes-terday.

Those who invest 10m will beallowed to stay after two years, com-pared to the current minimum five-year requirement.

Wealthy individuals who move toBritain and deposit 1m in a Britishbank account will be allowed to stayafter the five-year period, and willalso be exempt from the statutory

English language test being drawn upfor other migrants.

City firms had feared that foreignbankers and lawyers with vital skillsneeded in Britain could have beencaught out by the new immigrationrules.

However, the government is gradu-ally clarifying its position on highlypaid individuals wishing to settlehere. The changes include an exten-sion to the amount of time wealthymigrants can spend away fromBritain, while still qualifying for UK

residence. This period will now dou-ble from 90 to 180 days.

During extensive consultation, itbecame clear that one of the mostunattractive criteria of the existinginvestor scheme was the number ofdays that investors were required tobe present in the UK in order to quali-fy for settlement, said Nick Rollason,head of immigration at City law firmKingsley Napley.

He added that the new rules werewin-win for the UK.

Migrant rulesclear the wayfor investors STRUGGLING hedge fund managerRAB Capitals losses deepened yester-day, after it reported a pre-tax loss of20.2m and a 15 per cent fall in rev-

enues last year.Assets under management tum-

bled 21 per cent to $1.06bn (662m)last year as a mixture of underper-forming funds and fleeing investorshit the company, which issued a prof-it warning in September.

The firm said $124m of this fall wasdue to funds being closed or sold on,while $53m was repaid to exitinginvestors.

Our results for the year are not sat-isfactory, chief executive CharlesKirwan-Taylor, who took the top jobin September during a large-scalereshuffle, said.

The firm has closed a number of

unprofitable strategies, cut almost2m in costs and ramped up market-ing to try and reshape the companygoing into 2011, it said in a state-ment.

RABs funds have had a patchy yearwith the RAB Energy fund, its bestperformer, gaining 47 per cent whileothers including its special situationsfund lost up to 7.6 per cent.

But management and performancefees fell 14 per cent to 9.2m and2.4m respectively.

Losses worsenat RAB Capitalhedge funds

RAB boss Charles Kirwan-Taylor said the firms full-year results were not satisfactory

BYRICHARD PARTINGTON

POLITICS

HEDGE FUNDS

NewsCITYA.M. 17 MARCH 2011 7

ANALYST VIEWS: IS RECOVERY ON THECARDS FOR RAB CAPITAL? Interviews by Marion Dakers

DUNCAN HALL | FINNCAP

RABs assets under management are much reduced, and its a challengeto attract funds in the sub-5m band. The strong hedge funds seem to be gettingstronger right now, and the weaker ones are getting weaker. Smaller hedge fundsmight struggle to attract capital.

JUSTIN URQUHART-STEWART | SEVEN

Hedge funds go in and out of fashion, and since RAB is seen as high risk

then it has suffered net outflows. In general there are a number of good hedgefund managers around, with a good track record, and the sector is by no meansfinished.

GREG SMITH | FAT PROPHETS

The test of any fund is performance, and RAB hasnt been up toscratch. Turning things around wont be easy. While cost cutting has been benefi-cial, the bottom line is that if performance continues to be below par, the RAB willcontinue to suffer. But weve seen firms in similar situations come back.

8/7/2019 Cityam 2011-03-17

10/36

TROUBLED music retailer HMV wasyesterday preparing a presentation toits bank lenders due early next weekas it works to resolve an impendingbreach of a loan covenant.

HMV is meeting the banks on aweekly basis as it attempts to renego-tiate terms of a 240m loan facilityand is taking debt advice from consul-tancies KPMG and Deloitte, sourcestold City A.M.

Banks including Lloyds and RBSextended the debt facility but HMV isexpected to breach the covenant,which specifies that its earningsbefore interest, taxes, depreciationand amortisation must be higherthan its rent bill, when it comes duein April. Its shares closed 4.6 per centup at 11.5p, bucking the FTSE trend.

HMV is three years into a digital

strategy that has seen it take a 50 percent stake in 7digital, a digital down-load system that will be loaded ontoall new BlackBerry smartphones andtablets. It also operates digital down-load site HMV Digital to offset themove away from high street stores.

In January, chief executive SimonFox admitted it does not expect tomeet several covenants tested againstits full-year results out in June.

HMV meets

banks on loanfacility fears

The iPad 2 was released just days agobut some users have already torn itopen to see what is inside.

The results have proved a bonus formanufacturers and chipmakerswhose shares have been hit by fearsthe earthquake in Japan would dis-rupt supply chains and result infewer sales.

Imagination Technologies saw itsshares climb 5.88 per cent on Tuesdaywhen its input into the device wasconfirmed. Other chipmakers thathave been involved in the iPad 2include Broadcom, Toshiba,Samsung, Dialog Semi, STMicro andTexas Instruments.

The parts total $326.6 (204.2) around the same as the original iPad.

Analysts expect sales of around39m iPad 2s this year.

Chipmakers hopefor iPad 2 boost

BYALISON LOCK

RETAIL

ANALYSIS l iPad 2s logic board

BY STEVE DINNEENTECHNOLOGY

CITY VIEWS: WILL HMVSURVIVE?Interviews byPhoebe Torrene and Eric Wilkens

www.RateSetter.com Customer Phoneline: 08442490115

Save or Borrow peer to peer at RateSetter.com

IN ASSOCIATION WITH

ADRIAN PEARSON | RBS

Yes, because HMV has good management andits a good and strong brand.

HMV can't save itself now because its downloadswon't be able to compete against iTunes.

CHRIS VOELKER | CLYDE & CO

MIKE HARMER | FWD MARKETING

ANALYSIS l HMVp

20 Dec 10 Jan 31 Jan 18 Feb 11 Mar

35

25

15

11.5016 Mar

A5 Processor chip:

Designed by UK firms ARM and

Imagination Technologies and pro-

duced by Samsung. Seems to be a

snub to chipmaker Nvidia.

Toshiba flash memory:The 16GB NAND flash memory is

made by Japanese firm Toshiba,

which has seen its value hit by the

earthquake.

Broadcom integrated circuit: Broadcom

relationship maintained from the first generation iPad.Broadcom touchscreen controller:

The US chipmaker has seen its shares slide despite

working with Apple on the new device.

Texas Instrumentsline driver: Works with

the Broadcom chips to con-

trol touchscreen. Shares hit

by the earthquake.

Dialog Semi power

management chip:Appears to be the same as previous

iPad chip. Its shares rose 4.38

per cent yesterday.


It'll be difficult for HMV to succeed because the record-owninggeneration and the world have moved on to digital.

8/7/2019 Cityam 2011-03-17

11/36

8/7/2019 Cityam 2011-03-17

12/36

STEPHEN Davidson, the new execu-tive chairman of the European-wideregional newspaper group Mecom, islooking for a couple of non-executivedirectors to bolster the groups board.

Industry sources say former Metromanaging director Mike Andersonhas held talks with Davidson but he isunlikely to be on the shortlist.

The group said that its annualresults showed a 28 per cent rise inunderlying earnings to 135malthough paid-for circulation has fall-en from 912,000 to 889,000.

Shares in Mecom closed down 1.4per cent at 247p after the results.

UK COMPANIES reacted angrily yester-day to reports that the Bribery Actcould exclude overseas firms listedin London from liability for prose-cution, reigniting criticism thatthe Act is anti-competitive forUK plc.

Asset manager F&C raised con-cerns that the move would dam-age the integrity of the Londonmarket, and go against the modelof the long-running US ForeignCorrupt Practices Act.

Discriminating in favour of over-seas-domiciled companies whenenforcing anti-corruption lawstrikes us as misguided and count-er-productive, said director of cor-porate governance George Dallas.

Justice secretary Ken Clarke(pictured) announced in Januarythat the Ministry of Justice wouldprovide further guidance on the

Act, following pressure from compa-nies concerned about its impacton their business. So appearing tofavour international firms would

be a surprising move, andone that would require rati-fication in Parliament.

This plays into thehands of the Acts critics,and is not in line with thebusiness communitysconcerns, said DanielBarton at advisory firmAlvarez & Marsal.Lawyers, meanwhile,

questioned the signifi-cance of an exemption,

with most firms UK presencelikely to extend beyond a simplelisting.

The exemption assumes thata listing is the only link toLondon, said Barry Vitou atLondon law firm Pinsent Masons.

But there are plenty of otherlinks that could trigger the Act.

UK firms slamBribery Actexemptions

PORSCHE has brushed off a new law-suit filed against the German sportscar maker by hedge funds in the US.

Several New York hedge funds,including some that failed in a simi-lar suit against Porsche last year,have filed a new lawsuit accusingthe carmaker of causing more than$1bn (624m) of losses by corneringthe market in shares of Volkswagen.

Porsche SE considers the com-plaint to be inadmissible and unsub-stantiated, a spokesman for theautomotive holding said yesterday.

Plaintiffs in the case includeGlenhill Capital and Glenview.

Porsche rebuffsnew US lawsuitMecom in huntfor non-execs


REGULATION

MEDIA

AUTOMOTIVE

News10

FRY JOINS PORTUGUESE BANK

PORTUGALS Espirito Santo has appointed mergers and acquisitions specialist AnthonyFry to head its UK investment banking operation, as it expands its foothold in London. Thebanking group hired Fry, a veteran of Rothschild and other investment banks includingCredit Suisse and Lehman Brothers, as chairman of its investment bank in the UK.

8/7/2019 Cityam 2011-03-17

13/36

DUBAI-based oilfield services firmTopaz Energy and Marine plans toraise $500m (311m) in a London list-ing.

The firm, which is part of OmansRenaissance Services, is likely topower into the FTSE 250 if the listingis successful, with a market capitalisa-tion of $1.7bn.

Topaz has set a price range of 170pper share to 230p per share and plans

to list early next month. It will usethe funds to expand its operationsand repay debt.

The oilfield services firm plans tospend up to $2.5bn over the next twoyears to acquire 75 new vessels for itsfleet. It currently has 100 vessels,focused on shallow-water operations.The firm said it plans to expand intodeep-water, moving into regions offthe coast of Brazil and West Africa.

Topaz chief executive FazelFazelbhoy said: The era of easy oil is

over. The most exciting finds are com-ing increasingly offshore.

The global offer is subject toRenaissance shareholders approvingthe move at the companys annualgeneral meeting on 28 March.

As the Oman-listed firms marineunit, Topaz made earnings beforeinterest depreciation and amortisa-tion of $127m last year.

Fears the companys exposure tothe Middle East would detract frominvestor appetite for the offering wereplayed down yesterday.

It said most of its operations wereoffshore and that its operations, cen-tred on the Caspian Sea, remainedaway from current unrest.

However, the BP Gulf of Mexico oilspill could have a bearing for firmslooking to move into deepwater oper-ations, warned ING analyst JasonKenny. He said: Deepwater is going toremain the domain of large cap oilfirms, as they can shoulder the bur-den insurers require for those opera-tions.

Topaz eyes aLondon listingto raise 311m

Topaz chief executive Fazel Fazelbhoy is listing to further expansion plans.

BYRICHARD PARTINGTON

ENERGY

NewsCITYA.M. 17 MARCH 2011 11

NEWS | IN BRIEF

Hardy Oil hopes for growthExplorer Hardy Oil & Gas hit pre-taxprofit for its continuing operations of$2.2m (1.4m) during 2010, thanks to atrebling of production volumes and high-er oil prices pushing up revenues by 67.5per cent to $12.9m. Hardy said it willfocus on its Indian upstream business

this year, after BP bought into the explo-ration site.

Oil and gas deals hit record highThe volume of global oil and gas equityofferings has hit $20.9bn (13bn) so farthis year, more than double a year earlier.At this point last year, $9.2bn had beentransacted in the sector in equity mar-kets according to data providerDealogic. The figure is the highest everrecorded by the researcher.

JJB landlord backs CVA planOne of JJBs biggest landlords has cavedin to the struggling sports firms contro-versial CVA plan to help avoid adminis-tration. Peel Holdings, which owns sixJJB stores that will see rents slashed orthe outlets closed under the scheme, saidit plans to vote in favour of the cost-cut-ting package at a creditors meeting nextTuesday.

RBS shuffles its futures businessState-owned lender RBS has reorgan-ised its futures business, seeing thedeparture of its head of over the counter(OTC) derivatives clearing. At a timewhen regulators are shaking up theindustry, RBS has merged its OTC deriv-atives clearing unit with its futures busi-ness under new global head JeremyWright. It has let go of John Wilson, theformer managing director and globalhead of OTC clearing.

RUPERT Hume-Kendall is leading theadvisory for Bank of America MerrillLynch on the Topaz Energy and Marineinitial public offering (IPO).

The bank is acting as joint bookrun-ner on the deal alongside fellowbookrunner and sole global coordina-tor and sponsor JP Morgan Cazenove.

As chairman of global capital mar-kets, Hume-Kendall recently advised

on the privatisation of VTB Bank, thestate-owned Russian lender, in a$3.3bn (2bn) share sale.

He also led the advisory for a$6.6bn raising by Japans fourth-largest bank, Resona.

Hume-Kendall has a particular

focus on European and Asian markets,and has led the funding of many ofMerrill Lynchs largest and most pres-tigious clients, including BT, RBS, andLloyds Banking Group.

He joined Merrill Lynch in 1998from Swiss bank UBS, where he hadworked for five years following a peri-od at Schroders.

Merrill Lynch managing director incorporate broking Andrew Osbornejoined him on the Topaz advisory.

RUPERTHUME-KENDALL

MERRILL LYNCH

8/7/2019 Cityam 2011-03-17

14/36

WELL

DO ITFORNOTHING

Supported by

WANTA FREEAD?On March 18th, help RedRoute createmore ads for more clients in one daythan any other agency in history andhelp create a poverty-free world.

Just send a brief for your product, brand, service -

whatever - and youll get a hot-off-the-Mac ad. But

instead of paying RedRoute, well be asking you to

make a donation to Comic Relief. Now if that isnt

ethical advertising, what is?

To get your creative brief visitwww.redrouteagency.comor see us at the top ofCarnaby Street on March 18th

CAPITAL Radio presenters LisaSnowdon and Johnny Vaughan showedthey may have missed their real callingwhen they dropped in to PhoenixPartners Group yesterday to execute afew trades in a whirlwind 30-minutevisit.

The pairs stint on the trading floor,directly after their breakfast show, waspart of the brokers annual charity dayheld in memory of Jerome Thibaud, a

former colleague who died tragically inan avalanche last year two days afterhis twenty-ninth birthday.

All profits made by Phoenix yester-day were donated to the memorialfund, with the pairs professionalphone manner as they brokered dealswith City clients helping to raise a six-figure sum. This year, it will go toCapitals charity Help a London Child.

I would hire them in a heartbeat,

CAPITAL RADIO HOSTSPHONE IN THE PROFITS

The Capitalist12 CITYA.M. 17 MARCH 2011

EDITED BY

HARRIET DENNYSGot A Story? [email protected] The Capitaliston Twitter: @citycapitalist

said an impressed Alex Hucklesby,managing director of Phoenix.Perhaps they could put in a shift for usafter their show every morning.

RACING DEMONSTHERE will be an edge in the air afterlunch at Cheltenham today, when twoof the Citys most powerful racehorse

owners go head to head for the260,000 prize fund in the LadbrokesWorld Hurdle at 3.20pm.

Andy Stewart (pictured),who retired from stock-broker Cenkos Securitieslast summer, will bebacking Big Bucks [sic],while Tim Leslie,founder of hedge fundJames Cairn AssetManagement, will hopethat Any Given Day cantriumph after his otherhorse, Peddlers Cross,came a close second inTuesdays ChampionsHurdle.

Unfortunately forLeslie, Big Bucks isthe clear favourite

Capital Radiospresenters JohnnyVaughan and LisaSnowdon trade onthe markets atPhoenix Partnerssmemorial day

Final Closure Friday

25th March 2011Further reductions - while supplies last

Suits from 250 . Jackets from 195Shirts 40 each or 3 for 100

Ties 30 each or 3 for 75

Monday - Friday 10am - 6pm

Thursday 10am - 7pm

Units 1-2 Royal Exchange Buildings

Bank, City of London EC3V 3LF

+44(0)207 2838133

Terms & Conditions apply

GIEVES&

HAWKESSALE SHOP

in the days big race, with City book-maker Fitzdares offering a spread betof Big Bucks/Grand Crus at 1.5-3.

NOT FOR PROFITERIC Daniels, the outgoing chief execu-tive of Lloyds Banking Group, mayhave been lashed in the press forreceiving a 2m bonus, but his one

time employees are quietly giving uptheir time for no reward.

One group from the banksCorporate Markets team spent

the day on Tuesday painting ahomeless hostel in ShepherdsBush, while another team isplanning to assist at a schoolfor children with learningdifficulties.

There are lot of people [inthe City] who have been

bruised by the headlines overthe past three years, one

Lloyds source told The Capitalist,as he rushed back to his

desk to keep the wheels ofthe UKs economy turning.

We should not all betarred with the same

brush.

8/7/2019 Cityam 2011-03-17

15/36

PRIVATE sector jobs growth at theend of last year more than offset cutsin government jobs, official datashowed yesterday.

However, the jobs boost was notenough to stop overall unemploy-ment edging up from 7.9 to eight percent, as the working age populationgrew by half a per cent.

According to more up to date fig-ures, the number of people claimingunemployment benefits surprisedanalysts by dropping by 10,200 inFebruary, to 1.45m, the Office forNational Statistics (ONS) revealed.

The survey figures for unemploy-ment often lag the claimant-countmeasure, suggesting that unemploy-ment will stabilise or decline overcoming months, said HendersonsSimon Ward.

Commercial sector jobs createdbetween October and Decembertotalled 77,000. In the governmentsector, 45,000 jobs were cut in thefourth-quarter of the year, although6,000 of these were in publiclyowned financial groups, such as RBSand Lloyds.

Compared to the fourth-quarter of2009, public sector employment wasdown 123,000, excluding the banks.Private sector employment rose428,000 over the same period.

This is the biggest drop in publicsector employment since 1994, saidMichael Saunders of Citigroup. Yetthis is being absorbed by strongerprivate sector hiring.

The civil service headcountdropped by 8,000 to 506,000, the low-est recorded level since the SecondWorld War, the Cabinet Office said.However, total public sector employ-ment, excluding financial corpora-tions, still totals 5.98m.

Total hours worked per week,across all sectors, rose by one percent to 925.3m in the three monthsto January. The number of peopleworking over the age of 65 reached900,000 in the final quarter of 2010,the highest figure since comparablerecords began in 1992.

However, there was worse news foryounger people (aged 16 to 24), asyouth unemployment leapt 0.8 percent to a record 20.6 per cent.

Almost a million (974,000) youngpeople are now unemployed, the fig-ures showed.

Private sector

boost fails tolift job market

AMERICAS housing slump looks setto continue, despite recovery in otherparts of the worlds largest economy.

Housing starts in the US postedtheir biggest decline in 27 years inFebruary while building permitsdropped to their lowest level onrecord, it was revealed yesterday.

Groundbreaking on new construc-

tion dropped 22.5 per cent last monthto an annual rate of 479,000 units,according to Commerce Departmentdata.

Meanwhile, producer prices rose by1.6 per cent in February, as energyand consumer goods saw a strongincrease.

On Tuesday the Federal Reservesaid it would pay close attention torising prices and inflation expecta-tions.

New home startsplummet in the US

BY JULIAN HARRIS

EMPLOYMENT

ANALYSIS l Private sector employment is rising as government cuts kick in

million

Source: Timetric/ONS

2003 2004 2005 2006 2007 2008 2009 2010

23.6

23.4

23.2

23

28

6.16.1

6.06

6.02

5.98

5.94

5.9

5.86

5.82

5.78

5.74

26

22.4

22.2

million

Governmentsector excludingpublicly owned

banks

Private sectoremployment

Private sectoremployment

BY JULIAN HARRISUS ECONOMY

Economics 13CITYA.M. 17 MARCH 2011

NEWS | IN BRIEFFSB attacks fuel duty rise planRises in fuel duty are stifling eight out of10 small firms, the Federation of SmallBusinesses (FSB) said yesterday. Themanufacturing, construction and trans-port sectors are particularly affected,the FSB said, urging the government toreverse the planned one pence rise infuel duty the budget next week.

Eurozone inflation hits 2.4pcEurozone consumer price inflation forFebruary was confirmed at a 28-monthhigh of 2.4 per cent, the EUs statisticsoffice Eurostat said yesterday.Meanwhile, new car registrations roseby 0.9 per cent in February across theEuropean Union (excluding Cyprus andMalta) with 981,429 new cars regis-tered, the European Automobile

Manufacturers Association (ACEA) said.

Council staff paid 100k surgeThe number of local council staff earningover 100,000 per annum shot up by 18per cent in 2009-10, compared to theprevious year, the TaxPayers Alliance(TPA) announced yesterday. The TPAalso identified 48 council employeesearning over 250,000 per year.

UBS: Oil price rise impact minimalGlobal growth will be only slightly affect-ed by rising oil prices, economists at UBSsaid yesterday. Despite revising up itsmedium term oil price projection by $10(6.23) a barrel, UBS said world growthwould slow only by 0.1 per cent this year,from 3.9 per cent to 3.8 per cent.

Geithner urges deficit cutsTreasury Secretary Timothy Geithnersaid yesterday it is imperative that theUnited States cut its budget deficits, andhe believes there is increasing bipartisan

support in Congress to do so.

8/7/2019 Cityam 2011-03-17

16/36

8/7/2019 Cityam 2011-03-17

17/36

INTERCONTINENTAL Hotels Group(IHG) yesterday made the shockannouncement that chief executiveAndy Cosslett would stand down andhand over the reins of power tofinance boss Richard Solomons.

The move triggered a flurry of callsto the companys top ten investors toreassure them that it was businessas usual despite the resignation ofits leader.

Cosslett has led the worlds largesthotel group for six years and steeredit through a multi-billion dollar over-haul of its Holiday Inn brand.

He said yesterday that he felt thatthe time was right to stand aside,while leaving the company in goodshape.

Cosslett, who will leave the compa-ny in June, revealed that he wouldnot be receiving any extra paymentbeyond his pension pot worth 2.6mand the company shares he hadaccrued worth a further 8.6m at yes-

terdays price.I have no immediate plans (for

work) and will give it a few months toassess my options, said Cosslett.

He said that jetting across theworld for business had taken its toll.

It is hard, but thats not the reasonI am going. I think I have achievedwhat I set out to do, he added.

Chief financial officer RichardSolomons works closely with Cosslettand was described as a natural suc-cessor by IHG chairman DavidWebster.

IHGs shares fell 27p to 1,228p.

IHG boss to

quit after his6-year reign

M&B chief Fowle calls time

Weve added over 6,500 more peak seats on

the Great Northern route through longer trains

and extra services. Travel by train for a more

comfortable journey.

Find out more at moreseats.co.uk

MITCHELLS & Butlers (M&B) chiefexecutive Adam Fowle quit yesterday,

just weeks after chairman JohnLovering left the company.Fowles resignation comes amid

rumours of tension between Fowleand 23 per cent shareholder JoeLewis.

His departure after just two yearswas by mutual consent, accordingto M&Bs stock market statement.

The company has been in turmoil

for several years, with shareholdersat loggerheads.

Fowle was the last of the originalboard members when, at an annualmeeting last year, Lewis forced

through a coup, ditching most direc-tors.The interim chief executive is

Jeremy Blood a non-executiveappointed on Lewiss recommenda-tion.

Lewis acquired his stake fromRobert Tchenguiz, whose ill-fatedattempt to split off M&Bs propertyarm ended up costing the company

500m after a hedging strategy wentwrong.

Analyst at Evolution SecuritiesNigel Parson wrote: Was he pushed?Did he jump? Are the hands of Joe

Lewis and Elpida at work?...the soapopera that is Mitchells & Butlers con-tinues to run and run.

Simon Burke, who replacedLovering as chairman, said: Adamhas made a significant contributionover a number of years to Mitchells &Butlers and in particular in the pasttwo years ... in challenging condi-tions.

BY JOHN DUNNE

LEISURE

BY JOHN DUNNE

LEISURE

Consumer News 15CITYA.M. 17 MARCH 2011

NEWS | IN BRIEF

Greggs in record profitBaker Greggs made a record profit in2010 as shoppers tucked in to its value-for-money sausage rolls, pasties, cakesand buns in a tough economic climate.The Newcastle-based company, whichalso sells sandwiches and bread to over

six million customers a week from about1,490 shops, said it was well positionedto make further progress in 2011despite consumers declining disposableincome and rising global commodityprices.

AMT seals 1m deal to expandCoffee bar chain AMT yesterdayannounced that it has completed a mil-lion pound finance-raising deal. The cashwill be used to invest in new sites. Thecompany has bars across the UK, includ-ing London Bridge and Marylebone sta-tions. AMT was the first coffeecompany to solely use fairtrade beans.The 1m was secured in an agreementwith Close Leasing.

French Connection in the blackFashion group French Connection said itwas confident of coping with a tougheconomic outlook and rising input pricesas it beat forecasts with higher full-yearprofit, and hiked its dividend. The retail-er, which has sold off or closed a stringof underperforming businesses, madeprofits from continuing operations of8.9m in the year to 31 January, com-pared to a loss of 9m the previousyear, despite the difficult conditions onthe high street. French Connection,which has been fighting to repositionitself after the popularity of its FCUKbrand waned even before the recessionstarted, said it would triple its annualdividend to 1.5p.

Turmoil creates buying opportunityWHILE the Mitchells & Butlers soapopera plays itself out in the board-room, the company is doing swim-mingly. Maybe the infighting hasled to a creative tension that is goodfor business. Whatever the reason,investors should use the 2.9 per

cent fall in M&Bs shares yesterdayas a buying opportunity.The group holds some of the best

assets in the business, includingbrands like ONeills, Harvester andAll Bar One. And it has a 16 per centshare of the attractive food-led pubsmarket more than any of its com-petitors. Its balance sheet doesnt

look bad either; while others arenursing debt hangovers, Numisreckons M&B has a war chest of500m to spend on acquisitions.

M&B trades on an enterprise mul-tiple of 8.3 compared to 8.8 for therest of the sector (a better measure

than the standard price to earningsratio due to the sectors indebted-ness. It deserves to be rated morehighly; investors who get in nowcould make a tidy profit.

BOTTOMLINEAnalysis by David Crow

ANALYSIS l InterContinental Hotels

p

20 Dec 10 Jan 31 Jan 18 Feb 11 Mar

1,450

1,350

1,250

1,228.0016 Mar

IHG chief finance officer RichardSolomons has been at the heart ofthe companys expansion in Chinaand rebranding of its Holiday Inns.

He has been a constant travellingcompanion of outgoing chief execu-tive Andy Cosslett as the pairturned round the companys for-tunes after the recession.

The Manchester University stu-dent, now 48, qualified as a char-tered accountant with KPMG in1985. From there he worked ininvestment banking for seven yearswith Hill Samuel (now part ofLloyds Banking Group), including atwo year stint in New York.

The executive, who is marriedwith three children, joined IHG in1992.

He has held a series of seniorroles with the company, includingheading up the Americas hotel divi-sion.

He told City A.M. last year he wascommitted to tapping the vastpotential that he believed thegroup had in China, and usingsmartphone technology to fuela rise in bookings.

He said: I am always watch-ing and thinking of ways todo things better.

Finance boss Solomonssteps into the breachBY JOHN DUNNELEISURE

RICHARD SOLOMONS

8/7/2019 Cityam 2011-03-17

18/36

Merrill LynchMerrill Lynch has appointed AlbertoCejudo Podio as a financial adviser,

based in Madrid. Cejudo Podio willfocus on providing wealth and invest-ment management services to Spanish

high net worth individuals and ultrahigh net worth individuals (UHNWIs).

JustEat.comThe worlds largest online takeawayordering service has appointed AdrianBlair as chief operating officer, where

he will lead Just Eat International. Blairjoins from music streaming serviceSpotify, where he was director ofEuropean business development. Priorto Spotify, he spent six years at Google.

JefferiesJefferies has expanded its global bank-ing business by appointing PeterBacchus as joint head of European

investment banking and global head ofmetals and mining banking. The firmhas also appointed Richard Allan asEuropean head of metals and mininginvestment banking.

Espirito Santo

Esprito Santo Investment Bank hasappointed Anthony Fry as chairman ofits UK investment banking operationsand senior adviser to the Board ofEsprito Santo Investment Bank. Frysprevious employers include Rothschildand Lehman Brothers.

ACPIThe asset management and wealth

management firm has appointed AliaYousuf as executive director and port-folio manager for the companysEmerging Markets Fixed Income UCITSFund. Yousuf joins from Standard AssetManagement, where she ran the firmsEmerging Market Fixed Income Fund.

FreshfieldsFreshfields Bruckhaus Deringer hasappointed Simone Bono, formerly ofSimpson, Thacher & Bartlett LLP, as apartner in its London finance and USsecurities practice. The law practice hasalso appointed Denise Ryan, a specialistin high yield transactions, as seniorassociate.

CITY MOVES | WHOS SWITCHING JOBS Edited by Harriet Dennys

Bank of America Merrill LynchBob Elfring will join Bank of America MerrillLynch as head of investment banking forBenelux and Northern Europe in July, where hewill be responsible for the growth of the banksinvestment banking franchise. Elfring joins from

Credit Suisse where he was head of investmentbanking for Northern Europe. Prior to joiningCredit Suisse in early 2009, he spent eight yearsat Lehman Brothers, most recently as co-head ofthe Global Industrials Group.

+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

Nuclear power fallsas Vix gauge jumps

US stocks sank for a third day yes-terday as worries about Japansnuclear crisis escalated, and ana-lysts saw more volatility ahead

for the market.The S&P 500 fell more than one pe

cent and was within a few points of

turning negative for the year after theUN nuclear watchdog chief said thesituation at a nuclear reactor in Japanwas very serious.

The Vix market volatility index,Wall Street's fear gauge, jumped 15 percent, and the IShares MSCI JapanIndex Fund, which owns Japanesestocks, slid 4.1 per cent to $9.62.

U.S. power companyExelon Corp fell3.2 per cent to $40. The Japan nuclearcrisis has created doubts about theprospects for the nuclear power indus-try.

We are so fixated here on Japan,and this intraday volatility is withoutquestion here to stay as we are allquickly learning what nuclear poweris. You can throw everything else outthe window, said Ryan Detrick, seniortechnical strategist at SchaeffersInvestment Research in Cincinnati,Ohio.

It was a third day of losses due touncertainties arising from the crisis in

Japan, the worlds third-largest econo-my. Worries over the situation havesent investors to safer assets such asbonds. US Treasury debt prices surged.

The Dow Jones industrial averagetumbled 242.12 points to 11,613.3. TheS&P 500 Index slumped 24.99 points,to 1,256.88. The Nasdaq CompositeIndex was down 50.51 points at2,616.82.

The S&P 500 is down three per centso far for the week, losing furtherground in a rally that began inSeptember.

The market has also been grappling

with unrest in the Middle East andNorth Africa that has pushed oil pricesto 2.5-year highs.

In the latest development, Bahrain,a neighbor of top oil exporter SaudiArabia, has launched a crackdown onprotesters. The political upheaval sentBrent crude up 2.2 per cent to nearly$111 a barrel.

The market was due for a correc-tion and (Japan's crisis) probably pre-cipitated that. We think the marketwas getting toward the upper end offair value. So we're not surprised tosee a correction here, said MarisOgg, president of Tower BridgeAdvisors in West Conshohocken,Pennsylvania, which has about $1bnin assets under management.

Rising radiation levels in Japancaused workers to withdraw brieflyfrom a stricken nuclear power plant,and a helicopter was unable to drop

water to cool the most troubled reac-tor.

HEIGHTENED fears about thenuclear crisis in Japan sawinvestors shun equities yester-day, with falls by heavyweight

commodity issues dragging Britain'stop share index lower.

Banks were the biggest fallers,however, also under pressure as a

downgrade of Portugal's credit rat-ing by Moodys further unnervedinvestors.

At the close, the FTSE 100 wasdown 97.05 points, or 1.7 per cent at5,598.23, dropping after a brief rallyback above 5,700 earlier in the ses-sion was snuffed out.

We are now getting in to therealms of selling the rally ratherthan buying the dips, said DavidMorrison, market strategist at GFTGlobal.

The blue chip index ended downfor a sixth consecutive session, tak-ing its total fall over that period to6.3 percent. We have now scythedthrough some pretty significant sup-port levels which we need to rallyand recapture very quickly or else weare talking about a pretty sizeablebreakdown in the market structure,GFTs Morrison added.

With the markets being dealtheavy blows from events in Europe,

Japan, and North Africa, market sen-timent seems down for the count and its difficult to predict where asecond wind will come from, saidIG Index head of research AnthonyGrech.

Japans nuclear crisis appeared tobe spinning out of control yesterdayafter workers withdrew briefly froma stricken power plant because ofsurging radiation levels and a heli-copter failed to drop water on themost troubled reactor.

Investors were spooked by com-ment from Europes energy chief

that warned of a further catastropheat the Japanese site in the cominghours, although his spokeswomansaid he had no specific or privilegedinformation on the situation.

Weak banks took the most pointsoff the index after Moodysovernight cut Portugals sovereigndebt rating by two notches and saidit may have to downgrade again.

Global lender HSBC shed 3.6 percent, with the stock trading ex-divi-dend together with insurer StandardLife and real estate investment trustLand Securities.

Rising oil prices also knocked sen-timent, with Brent crude futures upover $2 to to $110.75 a barrel on theJapan fears and renewed concernover unrest in the Middle East.

Bahrainis were warned by officialsto avoid gathering in public areas fortheir own safety, while demonstra-

tions in Yemen and Syria were vio-lently dispersed by security forces.

International ConsolidatedAirlines Group was a big blue chipfaller on increasing fuel costs andthe uncertainty caused by the situa-tion in Japan, losing 3.5 per cent.Associated British Foods, however,bucked the weaker market trend,adding one per cent after CreditSuisse lifted its rating on the foodproducer and retailing group tooutperform from neutral, citingthe benefits of high sugar prices.

Richard Curr, head of dealing atCFD specialists Prime Markets saidAB Foods shares have been signifi-

cantly oversold.We expect the slack in the shareprice to be taken up, and for ABFoods to push back through 1,000pin the next 7-10 days, he said.

The latest UK labour market dataproved mixed on Wednesday.

The number of Britons claimingjobless benefit in February fell at itsfastest pace since June, but a broadermeasure of unemployment rose to a10-month high.

Investors drop equities oncontinued Japan worriesTHELONDONREPORT

THENEW YORKREPORT

p

20 Dec 12 Jan 1 Feb 21 Feb 11 Mar

6,100

5,800

5,700

5,900

6,000

ANALYSIS l FTSE 5,598.2316 Mar

BEST OF THE BROKERS To appear in Best of the Brokers email your research to [email protected]

ANALYSIS lG4S275


p

255

260

265

270

250

253.0016 Mar

G4SCiti rates the security services company buy / medium risk with a targetprice of 270p. The broker expects later cycle recovery in G4Ss marketsthrough the year, with its European business starting to accelerate in 2011.Citi applauds the firms focus on smaller firms in its acquisition strategy,given its track record with big purchases. But warns there is uncertaintyaround G4Ss justice services, which are facing fresh bidding rounds.

ANALYSIS lMarks and Spencer390


p

365

320

329.3016 Mar

MARKS & SPENCERNomura rates the retailer buy with a target price of 430p. The brokerexpects a four per cent drop in like-for-like general merchandise sales forthe fourth-quarter, with margin growth and cost savings helping to offsetcost inflation. While Nomura thinks there is work to do on supply chaincommitments, investors can expect a better outcome to the downturnstory this year.

ANALYSIS lBG Group1,550


p

1,400

1,250

1,489.5016 Mar

BG GROUPStandard & Poors has upgraded the oil group from hold to buy with a12-month target price of 16.50 after the crude price rise on worries inthe Middle East. S&P is impressed by BGs expansion in Brazil, and thinksit could divert LNG supplies from Europe to Japan to replace the damagednuclear power supply. It also notes that BGs operations have nowreturned to normal following the unrest.


8/7/2019 Cityam 2011-03-17

19/36

The Oxford Diploma inOrganisational Leadership

Combining the highest standards ofacademic rigour with a practical

understanding of business and

management, this is a masters-level

postgraduate qualification which

provides a thorough understanding of

leadership, strategic management and

organisational design and structure,

in 4 x 4-day modules.

Are you ready to take a more active role

in developing and leading the business

strategy of your organisation? Attending

this programme will equip you with the

knowledge you need to compete globally

for senior management roles.

www.sbs.oxford.edu/ol

To learn more about how to

transform your thinking, contact

[email protected] or on

0845 643 3701

Dates:

Jan, Apr, Jul, Oct 2012

SINCE their very beginnings, busi-ness schools have focused oninternational trade. When theAula do Comercio was set up in

Lisbon in 1759, one of the four subjectstaught was the study of weights andmeasures from different countries[and] methods for the exchange of cur-rencies. The Imperial Export Academyin Vienna was created in 1898 with theexpress aim of preparing students foremployment mainly in internationaltrade. From 1902, you could study aBachelor of Commerce degree at uni-versity in Birmingham, while schoolsin the British Empire taught peoplehow to do international business. SomeAmerican schools were founded withthe aim of internationalising trade,

and from the late 19th century,Chinese students went to the likes ofHarvard to learn how to build foreignmarkets for their goods.

Over the past two decades, of course,we have seen a further boom in global-isation, largely as a result of the growthof knowledge economies. Businessschools have caught the zeitgeist, and arecent survey of schools mission state-ments found that 69 per cent con-tained some variation on the wordglobal.

But are their mission statements anymore than lip service and woolly aspi-ration? On the face of it, businessschools have grasped globalisationenthusiastically. Barely a week goes bywithout a school announcing a tie-upwith one in another part of the world these days, its often an establishedAmerican or European school buildingbridges with a newer one in a boom

region such as Asia or the Middle East.

Schools like to boast about the num-bers of countries represented on theirflagship MBAs, and rave over the con-tacts that you can make with futurebusiness leaders from all over theworld. Lots of exchange programmesare available, which can send you to allcorners of the globe.

Not everybody is convinced, howev-er, that this is a meaningful prepara-tion for a globalised market. A recentreport by the AACSB (the Association toAdvance Collegiate Schools of Business,a body that accredits business schools)took a detailed look at the ways inwhich business schools prepare stu-dents for globalisation. One of itsauthors, Professor Pankaj Ghemawat ofthe IESE school in Barcelona where

he teaches a course on globalisation argues that in general they are failing.While they concentrate on their linkswith schools in other countries andtheir exchange programmes, increas-ing internationalisation basicallymeans becoming a specialised segmentof the travel and hospitality industry.It might be nice to go and spend threemonths working in Guangzhou, butdoes it really teach you anything valu-able about running a multinationalcorporation?

Also, he argues that most schoolssimply dont have the resources to evendo this. Of the 12,000 schools that areteaching business degrees, maybe athousand of them maybe as few as ahundred can really afford to assem-ble internationally diverse studentsand faculty or institute extensive (andexpensive) foreign immersion require-ments, let alone set up research centres

CONTINUED ON P18

How business

education isadapting toglobalisation

Business Features | Education17

The economy might be moving east, butAmerican schools could still have a lot to

offer students, writes Jeremy Hazlehurst

Your businesseducation shouldprepare you to workin London, Shanghaiand New York

Pictures:

MICHA THEINER,REUTERS

8/7/2019 Cityam 2011-03-17

20/36

Cass MBA Women asLeaders seminarJoin us for Women as Leaders, a seminar that blends the provocative with the

constructive, to examine the complex dynamics of leadership from a female perspective.

www.cassmba.com

Cass MBA Leadership Series.Get closer to the issues that matter.

Event details:Women as Leaders

13 April 201118.30 21.30

Cass Business School

106 Bunhill Row,

London,

EC1Y 8TZ

Register atwww.cassmba.com

MBssaC nemWAMB sansredaeLeadermen as Loin us for WJ

tenimaxeot,evtcurtsnoc

:ent detailsvE

ranimess

, a seminar that blends the prseader

daelfoscimandxelpmoceht

e with thevocatiov, a seminar that blends the pr

cepsrepelamefamofpihsred

.evtc

:ent detailsvEeadermen as L

ril 20113 A13030 21..18

hoolcCass Business S

,ow,106 Bunhill R

ondon,L

C1Y 8TZE

er atgisteR

omca.assmbc.www

seader

om

omca.assmbc..ww

omca.assmbc.www

om

Serious about an MBA?Choose wisely.

MEET TOP BUSINESS SCHOOLS | SAMPLE MBA LECTURES

LEARN HOW TO CHOOSE A PROGRAMME

The Accredited MBA Fair, London16 April 2011, Grange City Hotel, EC3N 2BQ

(nearest tube station: Tower Hill)

Or register online at

www.mbaworld.com/mbafair

TextAMBA 4 to 88101*for details on the event.

*Texts will be charged at your standard network rate

Business Features | Education18 CITYA.M. 17 MARCH 2011

CONTINUED FROM P17or campuses overseas, Ghemawat writes.90 to 99 per cent of schools just donthave the cash. Even if that was the bestpreparation for the future marketplace,they couldnt do it.

Given all of this, Ghemawat argues, theonly real way to prepare students for aglobalised marketplace is throughchanges to schools curriculums, whichshould address the cultural, administra-tive, political, geographic and economic

differences between countries. The claim which he makes in more detail in hisforthcoming book World 3.0 is that vis-iting factories overseas is nice, but theserious study of labour market regula-tions and cultural attitudes to protection-ism are more useful.

For people with a global outlook thisraises some serious questions. In recentyears we have all been told that the oldWestern economies are in decline andthat the future lies in the East and theother emerging economies, a trend thatwas accelerated so the argument goes by the financial crisis. This might havesuggested that the forward-looking busi-nessperson ought to think hard aboutheading to, say, China, India or Brazil fortheir MBA. But Ghemawats argumentsuggests that this is not necessary. Iflearning about globalisation is aboutgood faculty teaching state-of-the-artcourses, then maybe you are better off

looking for good schools. Paradoxically,globalisation means that location doesntmatter and it may lead to an entrench-ment of the old order.

This is the view of Paul Danos, dean of

Tuck business school in the US.In terms of curriculum, he says, there

has been a massive convergence in recentyears. If you went to a business school inIndia, America, Europe or Japan youwould find that they teach fundamental-ly the same topics, he says. Theres noway that an American school would teachonly American case studies, and whenthey are studying entrepreneurialism inChinese schools they look at SiliconValley. Schools want to look at the gold

standard, and they dont care if that isAmerican, Chinese or German. Thefierce market in business schools, plusthe global marketplace for faculty, meansthat if Ghemawats ideas are adopted,they will quickly be adopted everywhere.

What you should look for in a goodschool, then, is not the curriculum, butthe way that it is taught. And here, theold schools have a huge advantage theyare rich enough to teach well. Small-group and one-to-one teaching are expen-sive and unless you have a ton of moneybehind you it is hard to set up that sort ofschool, Danos says. American schoolshave been raising money for a hundredyears they run on endowments andfund-raising, they get a lot of money fromalumni.

It would take decades for schools inIndia and China, say, to reach the samelevel. And even then, would it be worthduplicating something that is already

there in America and Europe? Even if intwenty years time the American economyis no longer the worlds biggest, so what?Look at how small Switzerland is, and atthe power of Swiss banking, says Danos.

Just because India or China has a growingeconomy, it doesnt follow that it is thebest place in the world to go for your busi-ness education. In fact, we are more likely

to see movement in the opposite direc-tion. Newness has sparkle, but oldnesshas its attractions too. Globalisation,says Danos, goes both ways.

Increasingly, business schools are develop-ing ties with other schools in different partsof the world European and Americanschools with Middle Eastern or Asianschools, for example. But just how valuableare these relationships? Sometimes theycan be like speed-dating, says RobertBruner, dean of Darden business school inVirginia.A truly global business education has to aimfor a deeper understanding of the way thatbusiness is done around the world, andrather than being a stand-alone part of abusiness education globalisation shouldinfuse it, says Bruner. This requires a mix-ture of classroom teaching and time spentoverseas.To address this, Darden is launching the

Global Executive MBA later this year, whichwill send students to five financial centresall over the world.Business education is moving in the direc-tion where it is more experiential, saysBruner, who was the chair of the AACSBGlobalisation of Management EducationTask Force. The intention is to transformstudents to become completely competentplayers on the world stage.The first cohort, which will start in August,will spend time in China (Beijing andShanghai), India (New Delhi and Calcutta),Brazil (Rio and Sao Paulo), Europe (Berlin,Paris and London) and in Washington DC on Dardens doorstep where they will getto spend time in the IMF, the World Bank,not-for-profit organisations and think tanks.

WORLD CLASS | THE DARDEN GLOBAL EXECUTIVE MBA

Silicon Valley is a casestudy all over the world

Picture:GETTY

8/7/2019 Cityam 2011-03-17

21/36

The Open University is incorporated by Royal Charter (RC 000391), an exempt charity in England and Wales and a charity registered

in Scotland (SC 038302).

INSPIRING LEARNING

Ready to makea real difference

to your career?

Explore our MBA programme

www.openuniversity.co.uk/mbas

0845 366 6035

Time for an MBA qual ifi cation?

In the fast-paced world of business it pays to keep yourmanagement skills up-to-date but how do you fi nd the time for thisextra personal development? With The Open University MBA youcan take your career further without having to take time off work.

With themes like critical engagement, creativity and globalawareness integrated throughout our programme, thisinternationall y recognised qualifi cation could reallymake a difference to your career.

Learni ng that fi ts around your li fe

Our study method is designed to fi t aroundthe demands of the modern manager.You study in your own time whetherthats at home, at work or on the move.

Did you know?

Our business school is among thetop 1% in the world with recognitionfrom the top 3 internationalaccreditation bodies - AMBA,AACSB and EFMD

75% of FTSE 100 companies havesponsored staff on our courses

With one to one tutor support and

our lively student community,youre never on your own

The Open University has over20,000 MBA alumni in morethan 75 countries.

Quote: GAMADZ

Philosophers

and the fineart of business

The School of Athensby Raphael: a goodplace to learn aboutspreadsheets?

Picture: GETTY

Business Features | Education 19CITYA.M. 17 MARCH 2011

DO BUSINESSES that are trustedmake more money? Is it evermorally acceptable to lie? Is acorporation a moral agent? If

so, who does that mean is responsi-ble if it does bad things? Not themost obvious quest

cityam 2011-03-17

Documents