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Join us at our next information session on 20 April 2011. For moredetails call 020 7040 5258 or email [email protected]

Cass MastersWaiting for the upturn?

Get out there and make it happen

www.cass.city.ac.uk/skillup


FTSE 100 t5,964.47 -88.97 DOW t12,263.58 -117.53 NASDAQ t2,744.79 -26.72 /$ 1.63 unc / t1.12 -0.01 /$ 1.45 +0.01

Probe into

inflationfigures leak

SUSPICIONS that yesterdays shockinflation figures were leaked prior totheir release are being investigated bythe governments independent statis-tics office.

Economists widely anticipated con-sumer prices to have edged up to 4.6per cent in March, yet the figure unex-pectedly fell to four per cent.

While sterling dipped when thenews was officially released at 9:30amBST, there were movements againstthe currency prior to that time, stok-ing rumours of a leak.

Sterling dropped to a low of $1.6265shortly after 8am, while the euro roseto 0.8855 shortly after 9am.

The statistics office later claimedtheir initial investigation showed noevidence of such a leak, but said theyare continuing to review the situa-tion. The Financial Services Authoritydeclined to comment.

ECONOMICS: P4WEALTH MANAGEMENT: P19

BY JULIAN HARRIS

MARKETS

Londons IPO market, in which compa-nies raise funds through the issue ofnew shares, was in a state of intensivecare last night after the online pay-ments group Skrill became the latestissuer to pull its listing plans.

The UK online payments providerpostponed its London offering, blam-ing adverse IPO (Initial PublicOffering) market conditions.

It had earlier cut the size of its shareoffer, in a last-minute and doomedscramble to salvage the listing.

Existing investors in Skrill, operatorof online payments systemMoneybookers.com, cut the offer to30m of shares in the float, downfrom 80m. Yet frenzied talks all day tosave the sale were in vain, after man-agement resolved to put the plans onhold after an eleventh hour meetinglast night.

Skrills failed battle to persuadeinvestors to back it comes days afterEdwards, the vacuum technology firm,was forced to pull its share offer. Lastweek the media group Performbecame the first UK-based company topress ahead with a flotation in thewhole of 2011 to date, according toInternational Financing Review (whichtracks transactions of more than

50m). But its shares have dived byaround 20 per cent since the deal wentahead last Thursday.

One equity markets banker said last

FIRMS HIT AS CITYTURNS OFF THE TAPBY DAVID HELLIER & RICHARD PARTINGTON

CAPITAL MARKETS

www.cityam.comIssue 1,363 Wednesday 13 April 2011 FREE

CITY A.M.AWARDSJUST THREE

WEEKS LEFT TO

ENTER P15

CHELSEA EURO DREAMDIES AT MAN UNITEDCHAMPIONS LEAGUE P26-27

BUSINESS WITH PERSONALITY

night: Ive been speaking to a lot ofinvestors but basically the trust withthem has been broken. They just thinkwe are trying to get them. He cited the

flotations of Promethean, Betfair andPerform as examples of companiesthat had seen falls in their share pricesoon after their floats. He also said the

problems currently being experiencedby identity security group CPP, whoseshares have dived in the past few dayson regulatory issues around a year

after its flotation, had not helped.Skrill, led by chief executive MartinOtt (pictured) has more than 15m regis-tered users and mainly operates in

Europe. It had attempted to stage anIPO market offer to boost its profileand help fund its expansion into newproducts and locations.

The firm is majority owned by pri-vate equity group InvestcorpTechnology Partners, who were due tobe among those selling shares.

Certified Distribution

31/01/11 - 27/02/11 is 107,265

ANALYSIS l The euro soared againststerling yesterday morning

/0.88880

0.88740

0.88460

0.88600

0.88320

0.88220

5: 00 6: 00 7:0 0 8: 00 9: 00

Source: Spread Co.

UNSETTLED IPO MARKETS

COMPANY EXPECTEDVALUE

DATE WHATHAPPENED

Skrill

Topaz Energy& Marine

Perform Group

Edwards Co

Suspended IPOdue to uncertaintyin the markets

Pulled offer because ofuncertainty in markets

Lowered price to260p per share,raising 146m

Looked to raiseapproximately306m

Looked to raiseabout 80m

Planned to raiseabout 375m

Looked to raiseup to 175m

Announcedon 16 March

Announced on28 February

Suspended offer lastnight due to adverse

IPO market conditions

Announcedon 14 March

Announcedon 24March

Skrill CEO MartinOtt has pulled itsplanned 80mfloat due to mar-ket uncertainty.

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News2 CITYA.M. 13 APRIL 2011

Swaps curbsto hit US firmsLARGE non-financial US companieswill be required to post collateral forderivatives transactions if theyexceed a predetermined limit forcredit exposure, according to propos-als issued by regulators yesterday.

The Federal Deposit InsuranceCorp (FDIC), which along with theFederal Reserve and other regulators,has produced the rules as part of theDodd-Frank reform Act, said the newrules wont hurt companies provid-ing that they dont engage in overlyspeculative bids.

We do not want to blow up thehealthy and needed parts of the mar-ket, said FDIC chairman Sheila Bair.

But companies, which have fiercelyfought against the swaps marketreform financial contracts between

two parties to exchange one asset orliability for another at a future pointin time said applying marginrequirements to corporate users, whorequire them to hedge against cur-rency or fuel price fluctuations, wascounter to the purpose of Frank-Dodd.

The Coalition for Derivatives End-Users, an umbrella group of businessinterests, warned that the proposalscould divert working capital from pro-ductive uses at the costs of economicgrowth and jobs, or send a vibrant,secure swaps market overseas.

BYKATIE HOPE

REGULATION

Ministers in office but not in power

THERE is nothing more depressingthan a good idea that is badly execut-ed. The government is right to seek toregain control of the public finances but its inability to implement austerityproperly could yet destroy the coali-tion. The wrong cuts are happening and far too little meaningful restruc-turing of the public sector is takingplace. Even well-managed privatefirms are usually able to reduce costsby 5-10 per cent in an emergency with-out consumers noticing. After years ofspending increases, the generallybloated, monopolistic and badly man-

aged public sector ought to be able toabsorb much larger cuts while preserv-ing essential services. Services could beoutsourced (including overseas) or pri-vatised, councils could merge, all

unnecessary functions and staff couldbe eliminated, management could bestreamlined, new working practicescould be introduced, departmentscould move into cheaper offices and soon all the things that private firmsdo when they need to make substan-tial savings while still continuing toplease their customers.

The tragedy is that the public sectordoesnt have to compete for paying cus-tomers its resources are extractedforcibly via the tax system. The incen-tive structure is thus very different: topmanagers need to meet their budgets but how they do it does not matter asmuch. In fact, if they cut vital services,the resulting outcry can actually endup boosting their resources over time.It is a very different game to that facedby the private sector. Ministers havediscovered, to their horror, that they

have even less control over the publicsector than they feared in their worstnightmares. There are few levers thatthey can pull to ensure that changetakes place; the bureaucracy is desper-

ate to put its own interests first.The result is a looming disaster forthe coalition. Take cuts: yesterday,London Ambulance said that it wouldbe cutting 560 frontline positions overthe next five years, which is very badnews. Yet at the same time local coun-cils are still recruiting politically cor-rect non-jobs. One recent investigationrevealed that walking coordinators",obesity strategy officers, and activeworkers are still being recruited. Onecouncil has just hired an age friendlycommunities manager, a walkingand cycling officer, a community con-servationofficer and an EnergyIsland administrator. Meanwhile,many bureaucrats prefer to shut servic-es such as libraries rather than seekthe help of more efficient privateproviders to keep them going at amuch cheaper cost. Earlier this year,

Library Systems and Services, a UScompany, offered to run libraries for35 per cent less than councils arespending. Book borrowing wouldremain free, while add-on services,

such as coffee shops, IT and bookstores would be used to generate rev-enues. Others have suggested purchas-ing second hand books. Yet manycouncils arent interested.

The coalition should legislate toforce local authorities to seek to putservices out to tender or even to pri-vatise them completely before theyshut them. An independent consultan-cy should be hired to analyse all thestaffing of all government depart-ments and to make a list of non-essential jobs. The government shouldlegislate to cut these as a priority, toprotect nurses and teachers. Unlessradical action is taken, and fast, thewrong cuts will be made with disas-trous consequences for consumers aswell as for the coalition.

[email protected] me on Twitter: @allisterheath

THE INTERNATIONAL Monetary Fund(IMF) has urged the United States tocome up with credible measures toreduce its record budget deficit, heap-ing pressure on the White House.

President Barack Obama will todayoutline fresh plans for reducing thenations debt, which is on track for hit-ting $1.4 trillion (857bn) this year, ashe attempts to seize the high groundin a debate with Republicans over how

best to cut costs.But the IMF said in its latest Fiscal

Monitor report that a further delay ofaction to cut the countrys deficitcould be fiscally costly. It added thata major adjustment will be needednext year to put the budget back ontrack. The US posted a monthly budgetdeficit of $188bn (115.5bn) in March,the Treasury Department reported yes-terday. The deficit will reach 10.8 percent of its gross domestic product thisyear, the largest among major devel-oped economies.

BYRICHARD PARTINGTON

US BUDGET

IMF urges faster US cutsBarack Obama is being urged to act quicker to cut the US deficit.

NEWS | IN BRIEF

LSE eyes FTSE futures tradingThe London Stock Exchange is forgingahead with a plan to challenge the domi-nance of NYSE Euronext's Liffe andDeutsche Boerse's Eurex by expanding itsfutures trading business. The exchangesaid yesterday it will start trading FTSE100 index futures, subject to regulatory

approval, in the first week of June, adirect challenge to its domestic rival Liffe,the main FTSE futures exchange. TheJune launch will mark a milestone for theLSE which has been working hard in thepast two years to diversify its revenues.

SABMiller faces India tax feeIndian regulators have demandedLondon-listed firm SABMiller pays out$39.5m (24m) in tax for its 2006acquisition of assets in the country fromAustralian brewer Fosters. The firmargues it is not eligible for tax as thedeal was struck between two non-resi-dent firms. Yet New Delhi is seeking ret-rospective tax on deals completedoutside of India, with the SABMillerclaim the latest in a string of attemptedtax clawbacks including Vodafonesdeal with Hong Kong-listed firmHutchison for assets in India.

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 Alice HeppleCommercialSales 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]

JP Morgan chief JamieDimon warned USfirms would takebusiness overseas toavoid draconian rules

CITY INVESTOR CHIEFS BACK BANKINGREVAMPCity fund managers have broadly wel-comed the reform drive sweepingBritains banking sector, in spite ofvocal criticism from some institu-tions. There is a largely silent majori-ty of investors who believe thatstructural reform and tougher capitalrequirements are a good idea, saidJames Alexander, head of equityresearch at M&G.

CHINESE COMPANIES GO ON GLOBALBOND SPREEChinese companies have this yearembarked on an unprecedented bor-rowing spree in international bondmarkets, a trend driven by propertydevelopers starved of credit by state-owned banks. Mainland groups havealready borrowed $12.2bn from inter-

national investors so far in 2011 more than five times the amount they

had secured by the same point lastyear, according to data provider

Dealogic.MEDVEDEV TO DECIDE SOON ONSECOND TERMDmitry Medvedev, the Russian presi-dent, has said he will soon decidewhether to seek re-election in 2012and that it is time to draw a lineunder building state capitalism in thecountry. Painting himself as the can-didate for change, Mr Medvedevunderlined the differences betweenhis style of rule and that of his prede-cessor and mentor, Vladimir Putin,the prime minister.

HIGH-FREQUENCY BOOM TIME HITSSLOWDOWNLow market volumes and stiff compe-tition have led to a sharp fall in high-frequency trading as industryexperts warn that the past two yearsof rapid growth may be coming to a

halt. High frequency traders areinstead flocking to emerging markets.

BUSINESS GIANTS TAP GROWTH FUNDSome of the worlds largest compa-nies have won a share of a 450 mil-lion fund designed to boost regionalgrowth, provoking accusations thatministers froze struggling small busi-nesses out of the scheme. GeneralMotors, Procter & Gamble, Thales, thedefence company, and DurhamCounty Cricket Club were among alist of grant recipients described asbizarre by Labour and Tory MPs yes-terday.

BLACKBERRY MAKER TURNS ON IPADThe Playbook tablet computer will bethe saviour of Research In Motion,according to the co-chief executive ofthe maker of the BlackBerry. Analystshave claimed that the company is onthe verge of decline after being out-flanked in the smartphone market by

Apples iPhone and devices based onGoogles Android operating system.

LUBRIZOL TIMETABLE SHEDS MORELIGHT ON WARREN BUFFETT DEALDavid Sokol, a former key lieutenant toWarren Buffett at Berkshire Hathaway,knew in December that Lubrizol'sboard was aware of Berkshire's interestin a possible takeover, according to anew filing with US regulators. A moredetailed timetable of the events thatled to Berkshire's $9bn (5.5bn)takeover of the US chemicals companylast month is in the document.

BRITONS ENJOY EASY LIFE, SAYS OECDBritons work fewer hours than theSpanish, Portuguese and Italians oncecooking, cleaning and caring areincluded in the daily grind. When itcomes to shopping, though, the UK canhold its head up high only theGermans, Canadians and French spendmore time on the high street, accord-

ing to the Organisation for EconomicCo-operation and Development (OECD).

HIGHER OIL PRICES CURB DEMANDThe highest oil prices in two and ahalf years have begun to triggersome deterioration in demand, oilproducers and consumers said, asurprising fallout from the disrup-tion in oil production that hasresulted from unrest in the MiddleEast. Opec slightly downgraded itsannual forecast on Tuesday for glob-al oil consumption growth for thefirst time this year, as it emergedthat kingpin Saudi Arabia had cutback production on lacklusterdemand for extra barrels.

FIAT INCREASES CHRYSLER STAKEFiat Tuesday boosted its stake inChrysler Group LLC to 30 per centfrom 25 per cent after the Italian automaker met the second of three U.S.government-mandated requirements

that automatically trigger increasesin its ownership stake.

WHAT THE OTHER PAPERS SAY THIS MORNING

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News 3CITYA.M. 13 APRIL 2011

THE RATE at which the private sec-tor in London took on staff hit itsquickest pace for almost three yearsin March.

A survey by Lloyds TSB and Markit,which indicates growth with a scoreabove 50, shot up to 57.7 last month.

The last time the private sector inthe capital hired at a quicker ratewas in April 2008.

The jobs market also grew for asecond consecutive month for thefirst time since last April. The capi-tals service driven economy helped

to boost employment, as the sectorcontinued to take on new staff.

DESIGNING a system to make switch-ing accounts easier would cost thebanking industry 2bn and take twoyears, according to a confidentialreport given by Lloyds to theIndependent Commission on Banking(ICB).

The eight-page document and 21-page appendix, seen byCity A.M., laysout several options for introducing anew account switching service, withthe bank favouring a seven-day redi-rect service that would enable alldirect debits and other payments to beautomatically re-routed.

Notably, the bank suggests that sucha system could also be introduced aspart of a resolution process for failingbanks: In the event of bank failure,one of the imperatives may be tomigrate substantial numbers ofaccounts quickly to another provider,it says. The switching remedy whichwe propose could be developed and/orused to reduce the risk of paymentsgoing to the wrong accounts followingmigration.

This suggests that a portable switch-ing service for retail deposits could be

part of the infrastructure that banksare required to include in the ring-fenced retail subsidiaries that the ICBhas suggested .

If the ring-fenced subsidiary were toconsist solely of retail deposits and apayments system, it would in fact becloser to operational subsidiarisa-tion (ring-fencing of essential infra-structure) rather than a full-scaledivision of banks along business lines.

However, this is unlikely to consistof full account number portabilityof the kind available to mobile phoneusers. The Lloyds paper concludes thatsuch a system would cost 2bn-5bnand take five to ten years to implementas it would require a redesign of theentire payments system.

The introduction of a switchingservice that could improve competi-tion in retail banking was one of theICBs proposals in its interim reportreleased on Monday. In line with theLloyds recommendations, the reportsuggests that a radically improved sys-tem for switching accounts could andshould be introduced at a reasonablecost within a short timescale and thatthis would be less costly than fullaccount number portability.

Lloyds declined to comment.

Lloyds puts

switchingcost at 2bn

NEW pension rules being consideredby the European Union could force UKemployers to pay off deficits morequickly, according to City law firmTowers Watson.

The European Commission wants torevise rules on the funding of pensionschemes, making them equal acrossmember states.

Towers Watson warned that thefuture of some UK companies could beunder threat if they were forced todivert more cash into their pensionfunds.

John Ball, head of UK pensions, said:The Commissions position may wellchange the way that funding targetsare calculated but its too early to con-clude that it will make them moreprudent overall.

EU pension schemerules could hit UK

BANKS need to do more to shift awayfrom a culture of risk and the exces-sive pay structures that prevailedbefore the financial crisis, an indus-try report has said.

Banks have made progress since2008 as top management and boardshave become more involved in settingrisk policy, according to the survey of62 firms released on Tuesday.

But reforms were far from com-plete, with risk appetite across thefirms broadly unchanged, said thereport by Ernst & Young, conducted

on behalf of the Institute ofInternational Finance.

High bank payreforms neededPrivate sectorhire rate jumps

BY JULIET SAMUEL

BANKING

EMPLOYMENT

BANKING

Lloyds chiefexecutive AntonioHorta-Osoriolashed out at thebankingcommissionyesterday

Picture:MICHA THEINER

/CITY A.M.

BYRICHARD PARTINGTON

EU REGULATION

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INFLATION surprisingly slowed to fourper cent in March, down fromFebruarys 28-month high of 4.4 percent, the Office for National Statistics(ONS) said yesterday.

Consumer prices rose 0.3 per centfrom February to March, yet comparedto the same months last year inflationslowed by 0.4 per cent.

Food discounts by the UKs super-markets were largely cited for thedecline. Food prices dropped by arecord 1.4 per cent from February toMarch, the ONS said.

Core inflation, which excludes food,energy, alcohol and tobacco, dippedfrom 3.4 per cent in February to 3.2per cent last month.

The retail price index (RPI), whichincludes mortgage payments, and thetax and prices index (TPI), whichincludes direct taxes, also fell by 0.2per cent to 5.3 per cent and 5.8 per

cent respectively.Markets have now moved to almost

totally remove the possibility of a ratehike in May or June, said CitigroupsMichael Saunders, following the news.This seems rather premature in ourview.

The consumer price index averagefor the first-quarter of the year (4.1 to4.2 per cent) remains slightly above thelevel predicted in the Banks last infla-tion report (four to 4.1 per cent),Saunders said.

This effect from the food dip is like-ly to prove temporary, saidHendersons Simon Ward. Food com-modity prices and fuel costs haveclimbed more in recent weeks.

Transport was the biggest contribu-tor to the four per cent annualised risein prices, with fuels and lubricantssoaring by 15.9 per cent in the 12months to March. Food prices rose0.49 per cent over the period, despitethe slip from February to March.

WEALTH MANAGEMENT: P19

Inflation dips

on food pricesBY JULIAN HARRIS

UK ECONOMY

Focus on Inflation4 CITYA.M. 13 APRIL 2011

I'm quite worried because the cost ofliving is going up. My pay increase

was below inflation so it was essentiallya pay decrease.

GAVIN SUMMERS | XL INSURANCE

I'm not worried. I have a mortgage andcredit card but it is not that bad if you con-sider the cost of oil and VAT. Take taxes outof the equation and it is to be expected.

Reasonably worried. I am lookingto buy a house and I have alreadygot a loan out but inflation makes

that difficult.

ANDY PEACOCK | AXA INSURANCE

ANALYSIS l Inflation in the UK remains above the Bank of England's target

Sep 2009 Dec 2009 Mar 2010 Jun 2010 Sep 2010 Dec 2010 Mar 20

6

5

4

3

1

2

0

-1

-2

CPI

CORE CPI

RPI

Bank of England CPI target

WHY DID INFLATION FALL, AND WILL THE DECLINE CONTINUE?

THE EASTER EFFECTThis year we will have the latestEaster since 1996. Bank holidayEaster Monday falls on 25 April,while last year it was on 5 April.Prices in the run up to Easter tend toincrease. As is well known retailerstend to push up prices in the twoweeks ahead of Easter (and other

holidays), in order to institute theostensible sharp discounts over holi-day weekends, said Marc Ostwald ofMonument Securities. Last yearsEaster was close enough to March toaffect its inflation figures, while thisyears Easter will primarily influ-ence the April numbers. The latertiming of Easter compared to lastyear played a key role in this drop [ininflation], added Vicky Redwood ofCapital Economics.

VALUE ADDED TAXJanuarys 2.5 per cent rise in VATincreased prices by 0.76 per cent, theOffice for National Statistics (ONS)said yesterday. While this was farmore than last years pass-throughof 0.4 per cent, a change in the waythe ONS weighs some sectors in itsstatistics affected the change. From

next January the VAT effect falls outof the year-on-year statistics. Thepass through was higher thanexpected, offering some comfort toinflation doves, yet HendersonsSimon Ward warns otherwise. Thisblows apart the claim that inflationwould be close to the target but forthe VAT hike, based on the mislead-ing CPI at constant tax rates meas-ure, which assumes that tax changesare passed on in full, Ward said.

OTHER TAXES AND DUTIESSome new duties introduced bychancellor George Osborne cameinto effect on 23 March. These werenot counted by the March figures,however, as the Office for NationalStatistics bases much of its data onone index day during the month.Last month this was 15 March

before the extra duties came intoeffect. The duties will therefore becounted in next months inflationfigures. However, last April therewas also a 0.6 per cent monthlyincrease in prices, attributed tosome extra duties in the finalLabour budget so the annual rateof inflation may not be boosted somuch this month. Duties typicallybolstered by chancellors are on alco-hol and tobacco.

CITY VIEWS: HOW WORRIED ARE YOU ABOUTINFLATION?

Interviews by Robert Leedham and Eric Wilkens

MATTHEW FAWL | LORIEN RESOURCING

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COMMODITY prices dipped yesterdayafter long-term bull Goldman Sachsadvised clients to close their longpositions on a basket of commoditiesincluding copper, platinum, soybeans and crude oil.

Goldmans CCCP basket hasmade a 25 per cent gain over the lastfour months, but the bank warnedclients to take profits before anexpected cooling of the market.

Although we believe that on a 12-

month horizon the CCCP basket stillhas upside potential, in the near termrisk-reward no longer favours beinglong the basket, Goldmans com-modity research team, led by JeffreyCurrie, said in a note.

Crude oil fell from a two and a halfyear high yesterday, with Brent spotprices closing down 4.4 per cent at$120.83 a barrel in London trading.

Copper prices fell two per cent yes-terday while platinum edged downone per cent.

Mining firms were the top fallers inthe FTSE 100 after the notes release,though the sector was also pusheddown by a wider flight to safer stocks.

Across the Atlantic, the Dow JonesIndustrial Average lost 117.53 points,led by energy stocks, on fears fallingoil prices could set off a reversal inthe high-flying energy sector

A spokesman for diversified minerAnglo American, which saw its sharesfall 4.6 per cent yesterday, said thatwhile metal prices are expected to beunsettled in the near-term, our viewis that demand pace is sufficiently

robust and supply sufficiently chal-lenged, with the resources in increas-ingly difficult geographies to ensureprice rises. MARKETS: P18

Goldman callstop of rally incommodities PORTUGUESE voters will have a fullynegotiated bailout package readybefore their June elections, saidfinance minister Fernando Teixeira

dos Santos yesterday, giving them thechance to accept or reject it at thepolls.

The loan is likely to be around80bn (71.2bn) with conditions basedon the austerity package that wasrejected by parliament, Teixeira dosSantos said.

IMF and EU officials kicked off nego-tiations in Lisbon yesterday. Portugal isexpected to get a less punitive rate onits rescue than either Ireland orGreece, whose bailout costs are widelythought to be unsustainable.

The aim is to get the rescue in placebefore Lisbon faces a 4.9bn bondredemption in mid-June. Teixeira dos

Santos said: We are covered untilJune. But in June we will be needingthe activation of this program.

The speedy schedule is due toPortugals rapidly diminishing pile ofcash. Analysts estimated that the treas-ury had 5.6bn left after its early Aprildebt sale, leaving it far short of the9.6bn it needs between now and June.

Meanwhile, Chinese Premier WenJiabao reiterated Beijings intention tosupport Madrid by buying Spanishdebt during a state visit yesterday.

Lisbon bailoutto be in placeby June vote

BYMARION DAKERS

COMMODITIES

EUROZONE CRISIS

l FTSE giants like BHP Billiton, Rio Tinto andShell reported huge profits for the last year onsoaring commodity prices.l Demand from new markets and uncertainlong-term supply have recently pushed prices.

FAST FACTS | COMMODITY BOOM


Have your say on Portugals bailout join our London business panel

In association withPoliticsHome.com

Apply to join today atwww.cityam.com/panel

THE latest Voice of the City survey, inassociation with PoliticsHome.com,would like to know what you thinkabout the Portuguese bailout, andthe role you think the UK should play.

To participate, simply go towww.cityam.com/panel and answerthe questions below. Results will bepublished in Mondays paper. All ofthe data provided is confidential andwill not be shared with any otherparty.1. The UK may have to contribute4bn towards the European bailoutof Portugal. Do you think contribut-

ing is the right or wrong step for theUK to take?lTotally rightlSomewhat rightlSomewhat wrong

lTotally wrong2. Do you feel the Portuguese govern-ments request for a bailout has justi-fied the coalitions level and speed ofcuts to public expenditure?lYes. The level and speed of cuts havebeen justified.lNo. The cuts need to be more drastic.lNo. The cuts are being made too dras-tically.3. Labour shadow chancellor Ed Ballshas expressed scepticism towards UKparticipation in bailouts of Europeancountries. How does this make youfeel towards him?

lMuch more favourablelSomewhat more favourablelNeither more nor less favourablelSomewhat less favourablelMuch less favourable

PoliticsHome.comPoliticsHome.com

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CALPERS the biggest US public pen-sion fund, and its Florida equivalenthave said they will vote against man-agement ahead of BPs annual generalmeeting tomorrow, over anger at theGulf of Mexico oil spill.

Calpers and the Florida State Boardof Administration, which betweenthem own almost 83m shares, or 0.4per cent of BPs shares, said they willoppose the approval of the companysannual report and against the re-elec-

tion of Bill Castell, non-executive direc-tor and head of the safety, ethics andenvironment assurance committee.

The shareholder rebellion comes asBP tries to secure a last-minute dealwith Rosneft. Sources close to TNK-BPyesterday confirmed that executives at

the Russian venture are looking to sueBP management over their planned10bn deal with oil giant Rosneft.Bosses at TNK-BP are hoping to enforcethe firms alleged rights as BPs pre-ferred partner in the country, on topof a separate lawsuit being fought byinvestor AAR.

TNK-BP is also preparing to sue BPchief executive Bob Dudley, who itargues helped the directors.

AAR, the vehicle used by theRussian oligarchs who jointly runTNK-BP, started a separate lawsuit backin January to block BPs 10bn share

swap and exploration deal and cur-rently has an interim injunction halt-ing further progress. BP has untiltomorrow to secure an extension to itsshare swap and exploration plans withRosneft before the original dealexpires.

BP faces USshareholderrevolt at AGM

TRANSPORT for London has chosenits preferred bidder to overhaul theTube signalling system, handingwork worth an estimated 25m a yearto one of the firms involved in the col-lapsed Metronet operator.

The award came on a day of severedelays on the Underground followinga signal failure on the District Line.

Bombardier Transportation hadlong-term refurbishment contractsworth 3.4bn before Metronet, a ven-ture between five companies, fell intoadministration in 2008 after an

expected 2bn overspend.Bombadier has seen off competi-

tion for the new contract fromInvensys, whose shares dropped 2.5per cent yesterday.

It may cost Invensys about 25mof revenues a year, which in the grandscheme of things isnt that much,said Nomura analyst MichaelHagmann. The question is whetherthe firm will be able to make up for itwith other contracts.

Bombardier and TfL said they couldnot comment on the deal until it isformally signed in a few weeks time.

Retailers at risk of goingunder are on the increase

WEDNESDAY 6TH APRIL MONDAY 2ND MAY

HOME EVENT

THE NUMBER of retailers at risk ofgoing under shot up for the secondconsecutive month in March, accord-ing to insolvency firm RSM Tenon.

The number of companies deemedto be at high risk of insolvencyjumped by four per cent in March,compared to the month before, andjumped two per cent compared tothis time last year.

The development comes followingthe worst fall in sales since recordsbegan in 1996, with a drop of 1.9 percent in March compared to the sameperiod last year, findings by theBritish Retail Consortium show.

More than 8,000 retailers wereshown to be in danger of going underlast month, according to RSM Tenonstraffic light report.

Head of recovery Carl Jackson said:We may technically be out of reces-sion, but it is clear that the highstreet is struggling at the moment.Retailers are suffering as their costssoar with increased fuel and manu-facturing costs and shoppers remainthrifty with their purchases. Itappears people just arent spendingunless they have to and who canblame them as they struggle with thecost of increased tax burdens and ris-ing inflation.

Signal work goes toMetronet partner

BYMARION DAKERS

ENERGY

TWO German public-sector lendersare set to fail European stress tests,should they be unable to find a wayround new rules on core capitalratios.

NordLB and Helaba survived thefinancial crisis without state aid, yethold low levels of capital once specialsubordinated debt they hold is dis-counted.

The banks must restructure theirdebts by the end of April, althoughthere are doubts as to whether theywill be able to do so.

German lendersexpected to failEU stress tests

TRANSPORT

BANKING

RETAIL


LONDON DEPUTY MAYOR DIES

LONDON mayor Boris Johnson yesterday paid tribute to his deputy mayor and chief of staffSir Simon Milton, who has died at the age of 49 af ter a short illness. Johnson said: He wasa wonderful colleague and friend and will be much missed. Milton led Westminster CityCouncil for eight years and was appointed deputy mayor in 2008. Picture: PA

NEWS | IN BRIEF

Leicester Tigers consider IPOLeicester Tigers are plotting an initialpublic offering (IPO) to raise more than4.4m to develop their stadium. Rugbyleagues Aviva Premiership championshad planned an IPO two years ago, butare now reviving the plans to pay forwork at their Welford Road ground. The

fundraising would help to build a multi-storey car park and could be used toimprove changing-room facilities.Former CBI chief Lord Digby Jones hasbeen brought onto the board to adviseon the listing, which could be set for thisautumn.

Cisco to close Flip camera armNetworking firm Cisco is to close itsembattled consumer products business,as it looks to revive its fortunes. Thefirm will close down its Flip video cam-era business, the portable device itacquired through buying manufacturerPure Digital in 2009. Closing the armwill help it to refocus on its core busi-ness network, as part of the firmsrestructuring plans, it said yesterday.

Citi ordered to pay out $54mAn arbitration panel has orderedCitigroup to pay a group of investors

$54.1m (33m) for losses from munici-pal securities funds that crateredbetween 2007 and 2008, the biggestaward yet involving the funds in a longseries of legal claims against the bank.The products were sold as low-risk, yetplaintiffs alleged they were misled.

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FUND management firm MAMFunds showed it was on the road torecovery yesterday, with a 39 percent increase in pre-tax profits in itspreliminary results for the year to31 December 2010.

The firm, which had suffered atthe hands of the financial crash,increased pre-tax profits to 4.4bn,on revenues of 20.4m.

Funds under management at thefirm increased to 1.7bn, up from1.5bn a year earlier.

The firm said it had freed itselffrom restrictive banking covenants

since the year end and was now setto strengthen its business.

The appointment of formerGartmore fund manager GervaisWilliams, and the listing of hisDiverse Income Trust on the LondonStock Exchange next week, will addfurther strong future prospects, thefirm said.

Williams added: The businesshad a core operation held back bydebt and the need to repay thatdebt.

Now that it has raised sufficientcapital, the business is now in a netcash position, so we can now dedi-cate cashflow and the increasedscale of the management team to

realising the potential of the busi-ness.

MAM Funds increases profits asit starts on the road to recoveryFUND MANAGEMENT

A STAR New York investor hasemerged as a significant shareholderin London-based spread-betting firmIG Group.

William von Mueffling, one of WallStreets so-called hedge-fund elite,has seen his holding in the firm riseabove five per cent.

Placed through his CantillonCapital investment vehicle, the 5.01per cent stake is worth 80m at thecurrent share price.

Sources close to von Mueffling,who turned his back on hedge-fundmanagement two years ago, sayCantillons share increased due tofresh inflows, which have pushed upthe size of its assets under manage-ment. The input of von Mueffling willbe seen as a boost to IG, which hasstruggled in tough market conditionsso far this year.

The spread-betting firm revealed ahalf-year loss in January, after it washit by a 143m write-down on itsJapanese foreign exchange FXO.

Von Mueffling made his name atLazard running its EuropeanOpportunities Fund.

He predicted the end of thedot.com boom and made millions forinvestors, before he fell out with bossBruce Wasserstein.

He quit in 2003, leaving to foundCantillon a firm he grew into one ofthe most successful Wall Street hedgefunds before quitting hedge fundstwo years ago.

He turned the firm into a long-onlyinvestor, focusing on a select numberof companies.

Star investor

builds stakein IG GroupBYRICHARD PARTINGTON

HEDGE FUNDS


BANK of America Merrill Lynch(BofAML) is joint global coordinator andjoint bookrunner on the IPO of RussianHelicopters, alongside BNP Paribas andVTB Capital.

Leading the team is Riccardo Orcel,BofAML head of CEEMEA corporate &investment banking. Riccardo is thebrother of Andrea Orcel, BoAMLs headof emerging markets excluding Asia andexecutive chairman of global banking

and markets.Also advising for BofAML was

Andrei Arofikin, managing director ofRussia investment banking. Arofikinreturned to the bank in 2010 after leav-ing in 2008 to join the state savingsbank Sberbank. He had previously

worked for BoAML in Moscow for twoyears. Before this he worked at CreditSuisses Russian arm for six years.

Aukse Jurkute, head of Russia andCIS equity capital markets and AlexReznik, vice president of Russia invest-ment banking were also on the team.

BofAML was number one in M&Aand equity capital markets in Russia forthe first quarter of 2011.

It has led both major privatisations inRussia this year.

MEET THE ADVISERS

RICCARDO ORCEL

BANK OF AMERICA

MERRILL LYNCH

STATE controlled JSC RussianHelicopters yesterday confirmed itsintention to raise $500m (308m) in ajoint flotation in London and Moscow.

The offering is expected to consist ofthe sale of existing shares, primarilyby the firms major shareholderOboronprom, as well as up to $250mof primary shares in the form ofGlobal Depository Receipts.

It will begin an initial public offer-ing (IPO) roadshow in the week of 25April, and says it will use the proceedsto pay off existing debt and to fundcertain mandatory tender offers forshares in its subsidiaries which itdoes not already own.

Chief executive Dmitri Petrov said:The IPO will help us to increase fur-ther our global market share and tocontinue to meet the needs of our cus-tomers around the world.

Russian Helicopters is the latest in astring of Russian firms looking toLondon to float as market volatility,heightened by the Japan nuclear disas-ter, begins to dissipate.

Mid-size bank Nomos confirmedplans to float 20 per cent of its stock,and mobile phone retailer Eurosetsaid this month it is seeking up to$1.52bn. Real estate developer Etalonbegan roadshows for a $650m floatlast week.

Helicopter company is latestRussian to seek London float

COMPANIES

ANALYSIS l IG Group

p520

500

480

450

17 Jan 4 Feb 24 Feb 16 Mar 5 Apr

438.6812 Apr

440

420

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TROUBLED healthcare groupSouthern Cross has appointed a newchairman, the second reshufflewithin the companys top ranks injust three weeks.

Ray Miles, who was chairman ofthe group for three years, has beenreplaced by Chris Fisher (right), asthe company continues its restruc-turing. Fisher has over 25 years expe-rience in investment banking. Hewas a managing director for Lazarduntil 2003 then served as vice chair-man at KPMG until 2006, when hejoined the board of Southern Crossas a non-executive director.

Britains largest care home opera-tor is struggling to reduce its rentburden and is on the hunt for capi-tal after profits were hit by cuts inlocal authority spending.

The Darlington-based firm saidproposals had been made tolandlords on the restructuringof its rent payments, but thatits full-year outlook has

come under

pressure dueto its recenttroubles.

SouthernCross shareshave lostmore than97 per cent oftheir valuesince 2008.

A new man to bear the

Southern Cross

BY EUGENIOMONTESANO

SUPPORT SERVICES

EMBATTLED investment firm AllianceTrust reported a 16 per cent rise in netasset value in 2010 and raised its divi-dend as it rallied support for its battlewith activist investors yesterday.

Net asset value reached a three-yearhigh of 439p per share by the end ofJanuary, almost 17 per cent morethan its 364p share price at that time.

The persistent discount hasbecome a lightning rod for activistfunds such as Laxey Partners, whichhas told Alliance to use share buy-backs to reduce the discount whenev-er it goes above ten per cent.

Alliance chairman Lesley Knox hitback at the rebels yesterday, tellinginvestors to vote down Laxeys propos-als as the board was focused on man-

aging the trust in the best interests oflong-term shareholders, not those who

are motivated purely to make a short-term gain. Alliance says a sustainableshare price will result from betteroverall performance at the firm. Knoxsaid management had taken firmactions to do this that were drivingan improved performance.

Total shareholder return was 19.2per cent and third party assets rose to83m in 2010. The dividend rose threeper cent to 8.4p per share in 2010.

Alliance hitsback at LaxeyBYALISON LOCK

FUND MANAGEMENT

TRANSPORT Group National Expressedged closer to being broken up yes-terday after an activist investorclaimed a crucial shareholder sup-ported its cause.

Hedge fund Elliott Advisors, nowthe largest shareholder with 17.5 percent of National Express, said itexpected second-biggest investor theCosmen family to vote for its bid to

add three new directors to the board.The Cosmens, who sold the Alsabus company to National Express in2005, have not spoken publicly infavour of either side, but JorgeCosmen, the groups deputy chair-man, has effectively been a signatoryto the boards opposition to Elliott.

Elliott has had a number of discus-sions with representatives of theCosmen family in relation to its pro-posals to appoint three new directorsto the board, Elliotts statement said.

Based on those discussions, Elliottexpects that the Cosmen family andits nominees will vote their shares infavour of the resolutions.

City A.M. has learned that Elliottwill meet National Express sharehold-ers in London this week. Based on lastyears annual vote it would need thesupport of just one more top tenshareholder to pass its proposals.

The Cosmen family is likely to wantto break up the group to regain con-trol of its Spanish assets.

Break-up for National Expresslooms as Elliott gains supportBYALISON LOCK

TRANSPORT


CHRIS FISHER

ANALYSIS l Alliance Trust

p380

360

340


372.3012 Apr

Fighting talk signals time is running outTHE fight starts today. Stirringwords from Alliance Trust chief exec-utive Katherine Garrett-Cox yester-day, but is the hyperbole justified?

Management has launched aseries of rather overblown argu-ments against Laxeys demands,resisting a buyback commitmentonce its shares slip below a 10 percent discount to net asset value.

Its what (some) shareholderswant but Garrett-Cox says the so-called discount control mechanismwould restrict investment flexibility.

Understandably the Trust would

prefer to boost investment and con-

tinue buybacks on an impromptubasis.

But the two arent mutually exclu-sive. Investments can be plannedaround the discount, and since F&Cadopted the trigger in 2005 its shareprice has stabilised.

Shareholders have until 20 May todecide what to do, but with Alliancerunning out of excuses, it looks likethe time is right to drive throughchange.

BOTTOMLINEAnalysis by Elizabeth Fournier

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UBS CHIEFSMOUNTAIN

MISSIONIMPOSSIBLEITS NOT every dayThe Capitalistfinds her-self talking to a senior banker as he shel-ters from the wind halfway up theworlds tallest mountain.

But yesterday that was exactly the sce-nario for an interview with David Tait,managing director of macro directionaltrading at UBS Investment Bank, as heprepares to embark on his most stupidand dangerous mission yet climbingEverest without oxygen.

I only take calculated risks, but thisone is more ludicrous than calculated,said Tait, speaking from Base Camp at5,250m in Nepal ahead of a four-stageascent to acclimatise him for tackling

the 8,950m summit in late May.Tait has scaled Everest three times

before in a hat-trick for his two charitiesthe NSPCC and the Childs i Foundation but without supplementary oxygen,the climb is harder to the power of ten,with a greater chance of developinghypothermia or cerebral edema, thepotentially fatal swelling of the brain.

Despite the risks, Tait insisted he hadto up the stakes to capture peoplesimagination, not to mention the per-sonal challenge of pitting himself

Dunstone, Stuart Rose, the former chair-man of M&S, and his successor RobertSwannell (pictured below left).

So what will Peston talk about?Globalisation and the economic chal-lenges facing the UK, he said. The pointis to encourage kids to aim a bit higher.

STICKY WICKETHERES Paul Farrant, director of JM Finn &Co as you havent seen him before (above),batting above his average with the formerEngland wicket keeper Alec Stewart.

Farrant, known as one of the Citysbiggest cricket fans, assures The Capitalistthe signing of the Surrey and Englandprofessional as the wealth managementfirms new brand ambassador had noth-

ing to do with securing free tickets forLords this summer and every-

thing to do with champi-oning the firms values ofa strong team culture andindependence ofthought. Whatever you

say, Paul.

against virtually impossible odds.No corporates are willing to be associ-

ated with the oxygenless expedition how-ever even though Tait has tried all thepeople who wouldnt mind if I died up

there. Even B&Q sponsored EllenMacArthur when she sailed solo aroundthe world, he complained.

MATCH MAKERTHE entire Cabinet and most of theShadow Cabinet have signed up to RobertPestons new matchmaking service, buthe wont be happy until he has 1,000leaders in their fields on his books.

The BBC business editor had the ideafor his new introductions venture after

noticing that none of the requests hereceived to speak to schoolchildrencame from the kind of comprehen-sive school I went to. He said: Stateschools dont have the time, the

resources or the contacts to approachprominent people, so I decided tomake things easier for them.

The result is the Speakers for Schoolsscheme, due to launch this autumn,which will matchmake experts from thearts, science, humanities, politics andbusiness with schools in disadvantagedareas. So far, 203 members ofPestons contacts book haveagreed to give at least one talkper year, including CarphoneWarehouse boss Charles

David Tait from UBS has upped the stakes for his fourth Everest ascent by climbing without oxygen

Test match: Alec Stewart and Paul Farrant

David Taitfrom UBS isembarking on

the bankersmost deadlymission yet climbingEverest withno oxygen

11EDITED BY

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

The CapitalistCITYA.M. 13 APRIL 2011

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Arecent addition to BrandIndexhas been internet browsers andthe data tells us an interestingstory about how the domi-

nance of Internet Explorer is notmatched by perceptions of it.

If we take the impression measureand look at total impressions i.e.,people expressing both positive andnegative views we can see thatInternet Explorer is still the browserthat most people feel able to have an

impression of with over 4 in 10 peopleexpressing some sort of view.Firefox is not far behind with just

under 4 in 10, whilst Chrome hasaround a quarter mentioning it andSafari about 15 per cent.

PROPORTIONAL SCORES ALTER VIEWThis picture changes dramaticallywhen we look at proportional scores(the number that disregards size andlooks at positive views minus negativeviews amongst those that comment).

NEARLY AS MUCH NEGATIVE FEEDBACKInternet Explorer now comes bottomwith a score on Monday of 14, show-ing that they get nearly as many neg-ative mentions as positive ones.Contrast that with Firefoxs latestscore of +83 (which shows that 91.5per cent were positive and 8.5 per

cent negative), Chrome on +58 (79 percent positive and 21 per cent nega-

tive) and Safari on +53 (76.5 per centpositive and 23.5 per cent negative).

COMPETITORS PERCEIVED AS BETTERThese numbers provide an insightinto why Internet Explorer has lostshare over the past few years essen-tially people perceive its competitorsto be better. It still holds an advan-tage in terms of being the defaultbrowser for many but will need to upits game if it doesnt want to see afurther decline; once people trysomething else they tend to prefer it.Stephan Shakespeare is chief executive ofYouGov

THE NUCLEAR crisis in Japan was yes-terday upgraded to the maximumlevel of severity, on a par with theChernobyl disaster of 1986.

The problems centred around theFukushima Daiichi plant are nowclassed as a major release of radioac-tive material with widespread healthand environmental effects, theInternational Atomic Energy Agencysaid yesterday.

The partial meltdowns are nowrated as a level seven incident, upfrom level five previously thoughthe classification relates to the origi-nal explosions after the quake andtsunami on 11 March, and the ongo-ing efforts to cool the reactors have

not altered.The levels of radioactivity at

Fukushima are around 10 per cent ofthose recorded at Chernobyl.

Raising the level to a seven has seri-

ous diplomatic implications, saidOsaka University professor KenjiSumita. It is telling people that theaccident has the potential of causingtrouble to our neighbours.

Global fund managers have cuttheir exposure to Japanese equitiessharply this month following the dis-asters, according to a Bank of America-Merrill Lynch survey out yesterday.

The poll of 282 fund managersshowed a net 18 per cent now under-weight compared with a net eight percent overweight a month ago.

Japans economic output continuesto suffer following the quake, withsupply chains still under pressure.

The government estimates thematerial damage alone could top184bn, making it by far the worldscostliest natural disaster.

Fords US shares were hit yesterdayafter the carmaker warned that dis-ruption to supplies could temporarilyhalt production and eat into the com-panys earnings.

Japan nuclearcrisis deepensBYMARION DAKERS

JAPAN QUAKE

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CATASTROPHES in the first threemonths of 2011 are expected to causelosses of $40.7m (25m) Lloyds insur-er Omega Insurance, said yesterday.

Omega believes losses from Japansdual earthquake and tsunami catas-trophes will reach $23.6m, butstressed that the significant uncer-tainty surrounding the total marketloss of this event meant it was hardto assess the final cost of the disas-ters.

It based its estimate on a $25bnglobal loss from the two disasters,and said its losses were net of reinsur-ance and payments needed to rein-state its reinsurance protection.

The floods that devastatedQueensland in Australia in Januarywill cost it $7.6m in losses, while theearthquake to hit Christchurch in

New Zealand in February will cost it$9.5m, it said.

The losses also mean it has fore-gone $5m of managing agency profitcommission on the events, it said.

Omega expects25m losses sofar this year

INSURANCE


A man is tested for radiation in Koriyama, Fukushima, Japan Picture: REUTERS

Internet Explorer: thebest known browserbut not most popular

BRANDINDEX

STEPHAN SHAKESPEARE

ANALYSIS l Proportional Impressions

Source: YouGov

90

70

50

30

10

15 03 2011 22 03 2011 29 03 2011

Safari

Chrome

Internet Explorer (IE)

Firefox

ANALYSIS l Total Impressions

Source: YouGov

50

40

30

20

10

0

16 03 2011 22 03 2011 28 03 2011 03 04 2011

SafariSafari

Chrome

Internet Explorer (IE)

Firefox

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PUNCH Taverns yesterday reporteda fall in half-year profits, as it splitsinto two separate businesses.

Pre-tax profits for the 28 weeksto 5 March came in at 61m, downfrom the 66m recorded a year ear-lier. Like-for-like sales at the groupsmanaged pubs rose 4.9 per centover the period, and by 8.2 per centin the second-half.

The group is currently restruc-turing and splitting its managedand leased pubs into two separatecompanies.

Chief executive Ian Dyson said:We are pleased that our opera-tional initiatives continue to trans-late into improved performance

within both managed and leasedbusinesses.

Despite the challenging UK con-sumer environment, we remainconfident of making furtherprogress in the second half of thefinancial year.

Last month, Punch announced itwould sell thousands of pubs aspart of its restructuring plans.

The size of the leased business,in which landlords rent the puband get their supplies from Punch,will be halved to about 3,000 pubs.

Punch has suffered double-digitdeclines in profits for the past twoyears and is more reliant on thedeclining drinking-out market. Themanaged business, named Spirit,will be expanded to about 1,000pubs.

Punch Taverns has been strug-gling with falling profits and risingdebt, which hit 3.3bn last year.

The group yesterday said WalkerBoyd would be joining the board asa non-executive director. He willeventually be non excecutive chair-man of Spirit.

Punch profit fallsas business splitsBY JOHN DUNNE

LEISURE

Consumer News14 CITYA.M. 13 APRIL 2011

NEWS | IN BRIEF

Oddbins poised for saleWine retailer Oddbins will be sold withinseven days, the companys administratorDeloitte announced yesterday. Oddbinshas an annual turnover of 75m, includ-ing 2m of online sales, and has alreadyreceived interest from a number of par-ties, said Deloitte. Oddbins called in the

administrators earlier this month and400 jobs are at risk.

Flowers Foods in acquisitionBakery company Flowers Foods is buy-ing Tastykake-maker Tasty Baking Co,for 21.09m in an all-cash deal. Flowers,whose brands include Natures Own andWhitewheat, will add between $115-$125m (70-77m) in 2011 sales withthe acquisition. Deals in the snack foodsector over the past year include theacquisition of Pringles by DiamondFoods from P&G.

Ocado hires eBay executiveOcado has added eBay executive DougMcCallum to its board. He joins theonline grocer as a non-executive directoron 3 October. McCallum is currentlyEuropean senior vice-president of eBayand previously ran the internet giantsUK business for several years. Ocado

chairman Lord Grade added: Dougshigh-level background in e-commerceand IT is a most valuable addition to theskills and experience of the existingdirectors.

WAITROSE SALES SIZZLE

SALES at Waitrose soared by 23.7 per cent for the week ending 10 April, it revealed yes-terday, as the hot weather saw people head outdoors to eat. Sales of barbecue food wereup 566 per cent on the same period last year. Sales of side salads were up 128 per cent,dressed salads were up by 54 per cent and coleslaw up by 152 per cent.

CONSUMER goods giant Unilever,which makes Persil, is expected to befined today by competition watchdogsfor fixing prices in the washing pow-der market.

The Anglo-Dutch firm, togetherwith Ariel maker Procter & Gamble, isunderstood to have struck a deal withthe European Commission that willsee it receive a reduced penalty inexchange for admitting it participatedin a cartel.

The Commission can fine compa-nies as much as ten per cent of globalsales. However, the figure is more

often between two and three per centof sales. Germanys Henkel, whichalerted the European Commission tothe cartel in washing powder, will notbe penalised, the source said. Unilever

is a dominant force in detergentswhile P&G is the market leader.

The EU watchdog raided the threecompanies in June 2008 on suspicionof price fixing, and also sought infor-mation from US-based householdproducts firm Sara Lee.

The commission has imposed closeto 12bn (10.6bn) worth of fines oncartels in the five years to 2010.

Unilever likely toface fine for fixing

wash powder priceBY JOHN DUNNE

CONSUMER

ANALYSIS l Punch Taverns

p80

76

72

68


75.3012 Apr

ANALYSIS l Unilever

p

5 Apr16 Mar24 Feb4 Feb17 Jan

1940

1920

1900

1880

1860

1840

1820

1800

1800

1780

1915.0012 Apr

ANALYST VIEWS: HOW SHOULD INVESTORS VIEW PUNCH AHEADOF ITS DEMERGER? By John Dunne

SIMON FRENCH | PANMURE

The group will announce a financedirector for Spirit and a chairman for PunchTaverns in due course. We reiterate our Buyrecommendation and 100p price target basedon our sum-of-the-parts analysis. The grouphas made a good start to quarter-threein both managed and leased divisions.

JAMES DAWSON | CHARLES STANLEY

Having had the strategic review andquarter-two updates within the last monththese results were always likely to be of lowersignificance, although it has reaffirmed the rel-ative performance of the two divisions and themerits of a demerger. We retain ourHold view.

PAUL HICKMAN| PEEL HUNT

These (results) serve as a reminder that management is right to focus on rationalising the tenantedestate. The main event remains the early July demerger, and meanwhile trading remains in line with previously indi-

cated levels, as does our target valuation.

Burger sales up

87%in the weekto 10 April

Pimms saw a

1,038%rise

Source: Waitrose

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THERE are just three weeks leftto get those entries in for CityA.M.s second awards ceremonywhere we will be celebrating

the best of Londons financial busi-ness community and its most suc-cessful individuals and firms.

Anybody present at last yearsinaugural ceremony will bear testi-mony to the fact that the City A.M.awards have quickly establishedthemselves as a highlight in theLondon financial communitys cal-endar.

We are proud to recognise thatthe City is more than merely thesum of its parts. The awards ceremo-ny will once again be an extraordi-nary evening for an extraordinarycommunity.

Allister Heath, City A.M.s editorsaid: Our awards ceremony promis-es to be an exceptional and excitingevening. While others are still bash-ing capitalism, we will be identify-ing and celebrating thoseindividuals and companies who arereinventing the City and in doing soare helping to take the economy for-wards.

The awards are being headlinesponsored by Saxo Bank. AlbertMaasland, Saxos UK and US CEO,said: Saxo Bank supports both indi-

viduals and institutions living andworking in the City to achieve theirtrading and investment objectives intodays market. We are delighted topartner with City A.M. in theirawards, and recognise those individ-

uals and institutions that offer inno-vation, ingenuity, success and pru-dent business practices.

The awards will judge a broadrange of sectors, including banking,law, professional services, fund man-

agement and entrepreneurialism,and will aim to single out the high-est achievers as well as the mostpromising new kids on the block.

Readers can pitch in with theirvotes at least they can until voting

closes on 4 May. (See the websitewww.cityamawards.com for furtherdetails on this).

Then our distinguished panel ofjudges, comprised of some of thebest known names in Londonsfinancial community, will make thefinal decision ahead of a glitteringceremony on 21 September at one ofthe Citys best and most luxurioushotels, the Grange in St Pauls.

Panel members include manywho helped get the City A.M. awardsoff to such a successful start last yearbut they have been joined this timearound by two stalwarts of the busi-ness community, Sir Martin Sorrelland Sir Roger Carr.

Sir Martin, as head of the leadingadvertising group WPP, has played adistinctive role in British businessfor three decades.

Sir Rogers appointment to thePanel is also a real coup. He was awinner of the Dealmaker of the Yearcategory last year and he has sincebecome president of the CBI.

The Panel this year is also joinedby Goldman Sachs Phil Raper, anMD in corporate broking atGoldman Sachs, and by SimonMackenzie-Smith, UK investmentbank chair of Bank of AmericaMerrill Lynch.

Other panel members includeAlison Carnwath, the chair of LandSecurities and Slaughter & MaysNigel Boardman.

Finsbury founder Roland Ruddhas to be one of the Citys best con-nected individuals.

Truettt Tate is an executive direc-tor of Lloyds Banking and JohnGriffith-Jones is chairman of KPMGUK. Simon Borrows, Greenhills cochief executive completes the group,along with City A.M.s editor AllisterHeath and his deputy David Hellier.


Allister HeathEditor, City A.M.

David HellierDeputy editor, City A.M.

Sir Roger CarrCBI President

John Griffith-JonesKPMG UK chairman

Truett TateLloyds Bank director

Nigel BoardmanSlaughter & May

Simon Mackenzie-SmithBank of America Merrill Lynch

Roland RuddFinsbury senior partner

Simon BorrowsGreenhill co-chief exec

Sir Martin SorrellWPP chief executive

This prestigious panelwill pick the winners ofCity A.M.s 2011 annualawards, celebrating thebest and brightest firms

and people in the City

Alison CarnwathLand Securities chair

AWARDSJust three weeks to go to get yourentries in for the Citys best awards

THE JUDGES: OUR 12 JUDGES WILL PICK THE CITYS TOP PERFORMERS

2010: GLAMOUR AND A SENSE OF ACHIEVEMENT WERE THE HALLMARKS OF LAST YEARS AWARDS

(L to R) Seb Coeintroduced theawards and

Burberrys chieffinancial officerStacey Cartwright,the Mayor ofLondon BorisJohnson and SirRoger Carrwereamongthose thatcollected them.

headline sponsor champagne reception sponsor official venue partner sponsored by

2011

Phil RaperGoldman Sachs

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EXPORTS beyond the EuropeanUnion helped narrow the UKs tradegap to 2.4bn in February, in from3.9bn in January.

The deficit in visible goods tradedfell by 1bn in the month, to drop to6.8bn its lowest rate for a year, sur-prising economists.

Within the EU, exports from theUK actually fell by 0.6bn (4.4 percent) from January to February. Yetexported goods to non-EU countries

soared by 0.9bn, while imports fromoutside the EU dropped by 0.5bn.

Overall the trade deficit with coun-tries outside the EU dropped from4.2bn in January to 2.8bn inFebruary.

A further narrowing of the goodstrade deficit, on top of Januarysrobust data, is confirmation of therecent strong export trends, saidNida Ali of the Ernst and Young ItemClub.

And what is even more encourag-

ing is an increase in the surplus onservices this is traditionally an areaof strength for the UK, but servicesexports have consistently disappoint-ed over the past year, Ali said.

Services grew to a 4.3bn surplus inFebruary, up from 3.9bn in January.

Excluding volatile componentssuch as oil, the volume of exportsrose 2.9 per cent in the month, whileimports were 3.2 per cent lower.

Moreover volume trends showexports expanding by 5.1 per centover the past three months, against1.6 per cent for imports, supporting

the economic rebalancing story,commented Investecs Philip Shaw.

This does not quite represent aneconomists nirvana, but today cer-tainly does represent one of the UKsbetter days, Shaw concluded.

Trade is on course to boost first-quarter GDP growth by 1.25-1.5 per-centage points in the first quarter,added Hendersons Simon Ward, fur-ther evidence that the economy hasbounced back solidly in early 2011despite high-street weakness.

Non-Europeanexports cutUK trade gap

High income earners will increasingly move to the east, a report claims Picture: REX

BY JULIAN HARRIS

UK ECONOMY

Economics16 CITYA.M. 13 APRIL 2011

NEWS | IN BRIEF

Canada sticks to lending rateThe Bank of Canada kept its key lend-ing rate at one per cent yesterdaywhile raising the countrys growth out-look in 2011 by 0.5 per cent to 2.9 percent. The central bank said the globaleconomic recovery would continue at asteady pace. The bank has not raised

rates since September 2010.

Swedish inflation remains staticMarch CPI data for Sweden remainedunchanged as predicted at 2.9 per centon a year-on-year basis, while inflationworsened in Germany as the CPI wasunexpectedly revised up to 2.3 per centyear-on-year, the fastest pace of priceincreases in 29 months.

Germany hit by surging oil priceGermany's ZEW index, an indicator ofeconomic sentiment based on the opin-ions of almost 300 analysts and fundmanagers, fell surprisingly from 14.1down to 7.6 in April, as oil prices surgedand the European Central Bank raisedinterest rates last week. Economistshad expected the index to decline toten per cent.

Sweden and Singapore top in ICTSweden and Singapore are the mostcompetitive countries in the digitaleconomy, according to a study by theWorld Economic Forum (WEF). Nordicand Asian economies are best at usinginformation and communications tech-nologies (ICT) to boost their growth,the WEF said. Finland is in third place,Switzerland fourth and the UnitedStates fifth. The WEF report focuseson the power of ICT to transform soci-ety in the next decade through mod-ernisation and innovation.

HIGHLY skilled westerners willincreasingly migrate to emergingeconomies in the east, new researchrevealed yesterday.

Booming economies such asChina and India will require moreintermediary services such as thoseprovided by the financial and busi-ness sectors, a report by OxfordEconomics claimed.

I foresee a lot of people in the

west moving to places like China,

where theyll be very welcome, saideconomist Jens Tholstrup.

Whereas in wealthy countries, weput the shutters down on migra-tion.

Populist blocks on immigrationare quite damaging to economicgrowth, Tholstrup added.

Migration policies need to preventskills shortages from developing,concurred Alistair Cox, chief execu-tive of Hays, the recruitment firmthat sponsored the research.

BY JULIAN HARRIS

EMPLOYMENT

Finance jobs boom in east

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ALLIED Irish Bank is to slash more than2,000 jobs following annual results yes-terday showing that it lost a staggering12bn (10.6bn) pre-tax last year due toongoing toxic property loans. The lossis a more than four-fold increase on2009.

The bank reported an impairmentrate of 28 per cent in its property andconstruction loans. That amounts to acost of7bn up substantially on the2.7bn cost seen in 2009.

The figures add to the woes of alender that has already received 7.2bnin aid from the Irish government andwas judged to need a further 13.3bncapital injection in recent stress tests. Itis 93 per cent state-owned.

The bank saw its mortgage arrearsworsen as mortgage-holders struggledto make progress on their payments:arrears jumped 214 per cent to 3bn,188m of which is based in the UK.

As part of the Irish governmentsreforms to the banking industry, Allied

Irish will also undergo a dramatic oper-ational restructuring to split its coreand non-core operations. The non-corebank will manage 25bn of net loansversus61bn in the core bank, with theformer to be run down over time.

The ailing bank also saw its core tierone capital ratio plummet below theseven per cent Basel III minimum.Allied Irish recorded a ratio of only fourper cent for 2010 compared to 7.9 percent the year before.

Allied employs about 1,250 people inBritain and the majority of its redun-dancies are expected to be voluntary.

Allied Irish

Banks lossessoar in 2010

Nokia fights back with new OS

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EMBATTLED handset manufacturerNokia began its fightback yesterday,

launching two new handsets and anupdate of its soon-to-be-ditched oper-ating system.

The new version of Symbian, code-named Anna, appears to borrow heavi-ly from popular rival Android, whichis the industrys fastest growingmobile platform.

However, analysts are already ques-tioning whether new handsets run-

ning Anna will quickly becomeorphans, with Nokia planning toshelve Symbian later this year afterstriking a landmark deal to runMicrosofts Windows Phone 7.

It also unveiled the four-inch touch-screen X7 handset, aimed at entertain-ment consumers, and the qwertykeyboard E6, aimed at business users.

Constructed from metal and glass,both handsets are aimed squarely atthe high-end of the smartphone mar-ket an area that Nokia has struggledto break into. Nokia also announcedits Ovi Store now has 40,000 apps for

download, an eight-fold increase year-on-year, and facilitates up to 5m down-loads a day.

The announcements come just daysafter HTC overtook Nokia in terms of

market cap to become the worldsthird largest phone manufacturer.The Taiwanese firm was boosted by

the growing public appetite for hand-sets running Android

HTC, which also unveiled its newSensation handset yesterday, posted$3.6bn (2.2bn) in revenues in its first-quarter, with net income nearlytripling from last year to $513m.

BYROBERT LEEDHAM

BANKING

BY STEVE DINNEEN

TELECOMS

LOSS-MAKING Dutch car maker Spykersaid production at its Saab unit willremain on hold until it obtains fund-ing to pay suppliers, underlining thetough battle it faces to rescue the ail-ing Swedish brand.

Spyker, which bought loss-makingSaab from General Motors last year,has been forced to halt production asit is unable to pay its suppliers, but has

said it is facing a short-term liquiditycrunch rather than collapse.

The company said: Spyker and SaabAutomobile are in discussion with sev-eral parties to secure additional shortand medium-term funding.

Spyker Cars is also in talks to selland lease back the property portfolioof its Saab subsidiary. The Swedish gov-ernment, which guaranteed Spykersloan to buy Saab last year, has a vetoover the property deal.

Saab production still onhold as Spyker seeks dealAUTOMOTIVE


NEWS | IN BRIEF

African Minerals confidentIron ore developer African Minerals isconfident of starting commercial produc-tion in the fourth-quarter from itsTonkolili project in Sierra Leone. Phase Iof Tonkolili is fully funded and at fullcapacity is expected to produce 12m

tonnes of iron ore a year, once it ramps upfrom initial production in the fourth-quar-ter. Shares in African Minerals, the largestcompany on London's junior AIM wereflat, closing 0.3 per cent down at 513.4p.

EnCore Oil makes North Sea findBritish oil and gas explorer EnCore Oilsaid yesterday it found a large oil columnand hydrocarbon-bearing sands at a wellin the Cladhan field in the UK North Sea,six months after it had hinted that thediscovery could be commercial. EnCoresaid it found oil-bearing sandstones atthe upper Jurassic layers of the reservoir,after drilling the well to a depth of12,252 feet.

BG Group is positive on BrazilBG Group yesterday announced its testsin Brazilian off-shore oil site Guar Nortewere highly productive, with a productiv-ity of some 6,000 barrels of oil per dayof light oil. It also said the site, locatedapproximately 305km off the coast ofSao Paulo, has a potential of up to50,000 barrels a day.

Walker Greenback triples profitLuxury interior furnishings group WalkerGreenbanks full-year pre-tax profit near-ly tripled, helped by an uptick in demandfor luxury goods. It said it was upbeatabout its new financial year. The wallpa-per and fabrics maker said that brandsales in the first 10 weeks of the newyear were up eight per cent to 4.5m.

SPANISH retail bank Banestos netprofit slumped 20 per cent in thefirst-quarter, dragged lower by risingbad loans in a stunted economy andas higher funding costs bit into mar-gins on a yearly basis.

Quarterly profit margins improvedand the number of loans falling intoarrears dropped, providing a brightspot against a background of risingbad loans and disappointing loan

growth in a country with the highestunemployment rate in the Eurozone.

Banesto, majority owned bySantander, is the first Spanish bankto report earnings this quarter, givinga flavour of the challenges facing asector reeling from a property boomand bust that left banks owed billionsby bankrupt developers.

Banesto said: The first quarter of2011 has developed against a difficultbackdrop, with market tension, moreintense competition and persistenteconomic weakness.

Banesto sees profits slumpBanesto chief executive Jos Garcia Cantera says the outlook for new lending remains weak

BYHARRY BANKS

BANKING

ANALYSIS l Allied Irish Banks

0.34

0.30

0.26

0.22

0.18

1 Feb 21 Feb 10 Mar 30 Mar

0.2212 Apr

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Compact Media GroupThe Lyceum Capital portfolio companyhas confirmed Warren Newbert as its

new finance director. Newbert joinsCMG from BBC Studios and PostProduction, a commercial subsidiary of

the BBC responsible for studio facilitiesat BBC Television Centre and Elstree.

RBSTim Skeet has been appointed as man-aging director for debt capital marketsat the banks financial institutions

group. Skeet, who will report to GordonTaylor, head of northern Europe finan-cial institutions origination, moves fromthe position of senior adviser to theInternational Capital MarketsAssociation.

HSBCFiona Sheerin has been confirmed asassociate director to HSBCs African

team within its private banking division.Sheerin joins from Barclays Wealthwhere she was assistant vice president,private banker.

FitbugThe AIM traded provider of online per-

sonal health services has appointedFergus Kee as executive chairman, withimmediate effect. Kee will invest200,000 in Fitbug, bringing his stakein the company to 28.5 per cent.

Old MutualOld Mutual Asset Managers has con-firmed the appointment of Jenny Segalas head of institutional business, where

she will lead the savings groups institu-tional sales and client services team.Segal joins from Alliance Bernstein,where she was senior vice president,institutional business.

Salamanca Risk Management

The risk management consultancy hasappointed Ed Butler as executive chair-man. Butler was formerly chief execu-tive of a boutique risk consultancy.

Spire HealthcareThe private hospital group has appoint-ed Gary Watts as executive chairmanand Rob Roger as chief executive of thecompany, effective from 1 May.

CITY MOVES | WHOS SWITCHING JOBS Edited by Harriet Dennys

FujitsuDuncan Tait has been promoted to the role ofchief executive for the UK & Ireland at the ITservices company, rising from managing directorof Fujitsus private sector business. Tait succeedsRoger Gilbert, who steps down to executive

chairman of the UK and Ireland, and his focuswill be developing the companys expertise inCloud storage and delivery. His appointment fol-lows client wins and contract extensions withWhitbread, Shell and Stagecoach.

+44 (0)20 7092 0053morganmckinley.com

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

in association with

US stocks drop onoil price worries

US stocks dropped yesterday onworries falling oil prices couldset off a reversal in the high-fly-ing energy sector, while Alcoas

leaner-than-expected revenue disap-pointed.

Energy stocks led the S&P 500s

losses, with the S&P Energy Indexdown 3 per cent. Strategists werealready worried the rally in energystocks may have gone too far ahead ofearnings, and a drop in oil pricescould spark an extended sell-off.

The leadership has been for thelongest time in those sectors that arehighly related to global growth andcommodity prices. So once the com-modity space starts rolling over, thenequities are poised to follow, saidRobert Van Batenburg, head of equityresearch at Louis Capital in New York.

Oil prices tumbled for a second dayfollowing a Goldman Sachs forecastcalling for a fall of almost $20 in theprice of Brent. The InternationalEnergy Agency also said high pricescould curb oil demand.

Unrest in oil-heavy regions of theMiddle East and North Africa hasfuelled a sharp rise in oil prices. The

S&P energy index, by far the marketstop-performing sector in the first

quarter, is up 11.1 per cent in 2011 --well above the S&P 500s gains of 4.5per cent since the start of the year.

Signalling the start of the US first-quarter earnings period, Alcoa lateMonday reported revenue thatmissed forecasts. Its profit, however,topped consensus expectations.Alcoas stock slid 6 per cent to $16.70and was the Dows biggest percentageloser of the day.

Materials stocks in general fell insync with declines in metals prices.Investors are worried that Japansmassive earthquake and a nuclear cri-

sis could weaken recovery prospectsin the worlds third-largest economy.The Dow Jones industrial average

was down 117.53 points, or 0.95 percent, at 12,263.58. The Standard &Poors 500 Index was down 10.30points, or 0.78 per cent, at 1,314.16.The Nasdaq Composite Index wasdown 26.72 points, or 0.96 per cent, at2,744.79.

Japan raised the severity of theFukushima nuclear power plant acci-dent to the highest level on theInternational Nuclear andRadiological Event Scale, putting it onpar with the Chernobyl 1986 disaster.Dollar-denominated Nikkei future fell1.3 per cent.

Japan is looming large in the back-ground, Van Batenburg said, notingwarnings about supply issues byJapanese companies. Coming intoearnings season with that kind of out-

lier, people are going to take a stepback.

BRITAINS top share index fellsharply yesterday, led by com-modity stocks which sufferedpartly from concerns over the

nuclear crisis in Japan and the impactof the earthquake on its economy andalso global growth.

This dented mining stocks and

technology firms such as ARMHoldings.Miners dropped sharply, weighed

down too byAlcoas fall in the UnitedStates after the aluminium makermissed revenue estimates overnight.

Rio Tinto shed 2.8 per cent ahead offirst-quarter results due out tomor-row.

For us as portfolio managers thisis just the opening salvo. Were wait-ing for the trend to emerge, OliverWallin, investment director atOctopus Investments, which has 1.2bn of funds under management.

At the moment our portfolios areweighted towards equities over otherasset classes because other asset class-es aren't looking particularly attrac-tive.

The FTSE 100 closed down 88.97points or 1.5 per cent at 5,964.47,albeit in thin volumes.

A technical analyst at CharlesStanley said many traders would be

looking for an excuse to take profitsafter the FTSE put on 8 per cent sinceMarchs lows.

He said a support level at 5,908, thecurrent April low, would be worthkeeping an eye on, a breach of whichwould strongly suggest that the rallyhas topped out.

The FTSE 100 volatility index rose14.2 per cent, hitting a one-week high.

Goldman Sachss call to lock incommodity trading profits weighedon crude oil prices, which put pres-sure on integrated oils .

Cruise operator Carnival andInternational Consolidated AirlinesGroup rose 4.7 and 4.5 per centrespectively, as Brent crude retreatedfrom a 32-month high of $127.02 abarrel hit on Monday.

High oil costs drove US importprices higher in March to post theirlargest increase in more than 1-1/2years.

With investors confidence under-mined, traders noted a flow intodefensive stocks such as tobaccos,pharmaceuticals, and utilities.

Drugmakers AstraZeneca andGlaxoSmithKlinewere near the top ofthe FTSE 100 leader board, up 0.5 and0.7 per cent respectively.

A note from Charles Stanleydescribed the broader technical pic-ture for GlaxoSmithKline -- which hitits highest closing level on Mondaysince January after rallying stronglyfrom a March low of 1,127.50 pence --

as encouraging.The price action of the last few

months suggests that the double-bot-tom has formed in the region of 1,128pence, while the magnitude of thispattern is indicating that there is stillroom for further upside in the nearterm, the broker said.

Meanwhile European stocks suf-fered their biggest one-day fall in amonth yesterday, with main indexesbreaking below their 50-day movingaverages, as Japans worseningnuclear crisis sparked a bout of profittaking.

The FTSEurofirst 300 index of topEuropean shares unofficially closed

1.65 per cent lower at 1,127.42 points,the indexs lowest close in nearly twoweeks.

Strictly speaking, valuation levelsremain very low, but there aremounting doubts over the impact ofrising energy and commodity costs,as well as interest rates, on compa-nies results. This hasnt been com-pletely priced in yet in earningsforecasts, said Pierre-Yves Gauthier,of AlphaValue in Paris.

FTSE falls sharply as Japancrisis hits commodity sharesTHELONDONREPORT

THENEW YORKREPORT


6,100

5,800

5,700

5,600

5,500

5,900

6,000

ANALYSIS l FTSE5,964.47

12 Apr

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

ANALYSIS lBritish American Tobacco2,550

2,450

2,350

2,25017 Jan 4 Feb 24 Feb 16 Mar 5 Apr

p

2,494.0012 Apr

BRITISH AMERICAN TOBACCOJefferies has started covering the tobacco group with a buy rating and atarget price of 31.87. The broker sees strong cash generating capacity,given the firm has one of the highest exposures to emerging markets in thesector with 66 per cent of sales coming from new regions, plus the possibil-ity of a tie-in with in China. BATs dividend and share buyback policy alsooffers generous cash returns to investors, the broker adds.

ANALYSIS lSchroders1,950

1,850

1,750

1,65017 Jan 4 Feb 24 Feb 16 Mar 5 Apr

p1,814.00

12 Apr

SCHRODERSCredit Suisse rates the wealth manager neutral with a target price of18.50. The broker thinks Schroders earnings and valuation are becomingincreasingly attractive compared to the firms peers, particularly given itsstrong earnings momentum. Credit Suisse expects 4.4bn of retail netinflows during 2011, and has raised its earnings per share forecast by 17per cent to 135p for the year on the back of a lower than expected tax rate.

ANALYSIS lSignet Jewelers2,900

2,800

2,700

2,600


p2,760.00

12 Apr

SIGNET JEWELERSInvestec rates the jewellery retailer buy with a 31 target price. The firmremains a class act within the mainstream US market, the broker thinks,supported by a track record of market share gains over the last decade.Despite uncertainty about the likelihood of a shareholder return in theshort term amid hints about increased capital expenditure, long-termmomentum has led Investec to raise its target price by 200p.

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