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FTSE 100 5,856.34 +47.45 DOW 12,124.36 +75.42 NASDAQ 2,684.87 +9.49 /$ 1.64 unc / 1.13+0.01 /$ 1.45 -0.01

EUROCRATS have moved a step clos-er to imposing a devastating tax onthe City, sparking condemnationfrom industry groups.

In a bid to boost Brussels budgetby five per cent, the EU Parliamenthas voted to slap a Tobin, or so-called Robin Hood tax, on allfinancial transactions that passthrough the City.

The Association for FinancialMarkets in Europe (AFME), a region-al industry body, yesterday con-demned the move, which would addto a mounting burden of regulation

that is due to swamp the financialsector over the coming months.

AFME chief executive Simon Lewissaid: Calls for a financial transac-tion tax are being made against thebackdrop of several significant newtaxes or levies already being intro-duced by individual member states.

Before raising new taxes on thesector, policymakers need to haveaccurate data about the tax contri-bution it is already making, to avoidmaking decisions in the dark.

The tax would levy a 0.05 per centfee on the total value of every typeof financial transaction that goesthrough any institution in Europe,pushing up the cost of economic

activity at a time when the region isstruggling to stage a convincingrecovery.

It would hit the foreign exchangemarkets particularly hard, a trade inwhich London is a global leader.

The EU parliament wants toimpose the tax in order to raise200bn (172bn) to fund increasingspending from 2014 onwards.

It also claims the tax will combatpoverty and climate change andtackle the highly damaging tradingpatterns in financial markets, suchas some short-term and automatedhigh-frequency trade transactions,and curb speculation.

The parliament voted in favour ofthe budget rise and accompanyingtax 397 to 246, by a lesser marginthan the 529 to 127 by which itvoted in favour of the tax in March.

The vote requires member statesconsent through the EuropeanCouncil to become law, but this sec-ond vote will ratchet up the pres-sure on the European Commissionto consider ways of imposing the

tax.Syed Kamall, Conservative MEP

for London, said: The EU parlia-ments vote in favour of a transac-tion tax is particularlydisappointing given that they didnot even wait for the EuropeanCommissions initial impact assess-ment before making their decision.

Unilaterally imposing the tax would send financial activity tolower cost destinations outside theEU and damage Londons attractive-ness as a financial centre.

And banks would simply pass onthe costs of the tax to their cus-tomers, hitting savers andinvestors.

FURY AS EUROCRATSVOTE FOR TOBIN TAXBY JULIET SAMUELTAX

Simon Lewis, chiefexecutive of AFME,warned a Tobin taxwould add to the alreadygrowing tax burden

www.cityam.comIssue 1,400 Friday 10 June 2011 FREE

BUSINESS WITH PERSONALITY

Certified Distribution04/04/11 - 01/05/11 is 103,899

LONDONSFINANCIAL

ELITEMEETSWILLS

AND KATE

ARK HEDGIE EXTRAVAGANZARAISES MILLIONS FOR GOOD

CAUSES

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News2 CITYA.M. 10 JUNE 2011

Dovish Bank holds rates againTHE Bank of England is increasinglyexpected to anchor interest rates attheir historic low for the duration of2011, prompting lenders to slash theinterest on fixed rate mortgages.

Two-year fixed rate loans dipped totheir lowest cost since the beginningof the year yesterday as Bank rate washeld at 0.5 per cent for the 27thmonth in a row. An average two-yearsecured loan costs 4.41 per cent, downfrom 4.58 per cent in March, the web-site Moneyfacts revealed yesterday.

Five year fixed rates are down to5.41 per cent, it emerged.

The financial markets are not pric-ing in an interest rates hike until Mayof next year, commented MarkitsChris Williamson, after the Bank con-firmed its latest decision.

On the basis of the Banks outlookfor inflation, the door is wide open toa rate hike, added Alan Clarke ofScotia Capital.

However, the committee hasshown virtually no inclination towalk through that door and deliver a

rate hike.Separate data released yesterday

exposed only modest progress in theeffort to rebalance the UK economytowards exports.

Yet despite a narrowing of the UKsvisible trade gap in April (from 7.7bnto 7.4bn), the surplus in services alsoshrank by the same amount (from4.9bn to 4.6bn).

The overall trade gap was effective-ly unchanged, at 2.8bn.

There is no good news in todaystrade balance figures, said Nida Aliof the Ernst and Young Item Club.

The trade deficit narrowed for the wrong reason, namely a fall inimports rather than an increase inexports, adding further confirmationto the fact the domestic demand inthe UK remains exceptionally weak.

Importers morale has sunk to anall-time low due to the effects of highinflation, a survey by Travelexrevealed.

Three in five businesses that tradeinternationally are concerned overrising inflation and fewer than halfthought a depreciated pound wouldresult in an export-led recovery.

BY JULIAN HARRISECONOMICS

Inflating away the UKs national debt

ONCE again, the Bank of Englandchose to keep interest rates on hold yesterday. It is now looking like itwont be raising rates until next yearat the earliest. Forget about strictinflation targeting; its new policyappears to be to keep monetary policyas loose as possible for the foreseeablefuture, as long as inflation doesntbreach an unacceptable threshold (say6-7 per cent) and that pay rises dontcatch up too much with price rises.The goal is to keep the cost of borrow-ing down, depress sterling to boostexports, help those with big mort-

gages and turn a blind eye to rampantinflation, which is slashing the valueof wages and savings (and thus cuttingconsumer spending).

The Banks approach and the very

different attitude of the EuropeanCentral Bank (ECB), which will soon behiking rates again needs to be seenin the context of rival deleveragingstrategies. There are three ways acountry can cut its debt burden. It canactually pay back its debts perhapsby selling assets, as Gordon Brown didwhen he auctioned off 3G licenses in2000 for a ridiculously high 22.5bnand actually cut the national debt (notjust the deficit). Such a fiscally conservative approach is that favoured bythe ECB and the Bundesbank. Most ofthe time, however, actually repayingdebt is too tough as it involves run-ning a budget surplus, somethingpoliticians dont have the self-controlto achieve. The best they can usuallyachieve is to reduce the rate at whichthey accumulate extra debt to sta-bilise or cut debt to GDP ratios.

The second possibility is for a stateto default by failing to repay some ofits debt or by missing an interest pay-ment. The UK, thanks to the coali-tions austerity policies, is not going

down that route, unlike Greece andseveral other Eurozone countries. TheUS wont either, despite its profligacy:it could always print more dollars if itever were to run out of tax cash. Actual defaults are never painless:they destroy financial systems andimpoverish citizens. By law, banks,pension firms and insurance compa-nies have to buy lots of governmentdebt, on the assumption that it is risk-free; default guarantees disaster. Thedefault can be dressed up as a renego-tiation or a reprofiling but the litmustest is whether creditors lose out.

Another, legally sounder kind ofsemi-default is to ditch off-balancesheet pledges to electorates. In manycountries, public sector workers havebeen promised generous pensions, forexample. The UK and everybody elsewill have to go down that road.

The third way to deleverage is toinflate away debt or to slash its valueby engineering a devaluation. This isonly possible for countries able to bor-row in a fiat currency they control.

Greece cant do this as it is part of theeuro and doesnt control the ECB; itsbonds are in a foreign currency. TheUK and the US, on the other hand, canand are doing this.

True, the British governments ben-efit payments go up automatically ifprices rise, while index-linked gilts arefully protected from inflation, both interms of their coupons and of theirprincipal. But while these specialkinds of bonds cant be inflated away,78 per cent (and rising) of outstandinggilts are not protected in this wayagainst inflation and are thus losing 5per cent or so a year of their value.Deleveraging is desperately important it is a shame that once again somany countries will be taking the easyway out.

[email protected] me on Twitter: @allisterheath

Mervyn King is expected to have voted to keep interest rates on hold

NEWS | IN BRIEF

Tube workers Wimbledon strikeLondon Underground drivers will strikeduring Wimbledon, threatening travelchaos for tennis lovers. The first strikewill take place between 8pm on 19 Juneand 2am on 20 June, said the union.Three more strikes covering 27 June, 30June and 1 July were also announced by

the RMT union. The dispute centresaround the sacking of union activist. ATransport for London spokesman calledthe RMT's decision to strike "completelymystifying".

Credit Agricole in China dealCredit Agricole, Frances third-biggest list-ed bank, said yesterday it has agreed tosell stakes in its CLSA and Cheuvreuxbrokerage brands to Chinas Citic for atotal amount of $374m (228m). Thedeal comes as Credit Agricole embarks ona four-year plan to focus on retail bankingin France and abroad to boost growthafter the crisis cut short a push intoinvestment banking and complex financialproducts. The aim is to unite pan-European Cheuvreux with the more Asia-focused CLSA to tap into investmentbanking opportunities in the east and tocreate a global brokerage platform.

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 of

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

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

THIRD INDEPENDENT DIRECTOR TOQUIT ENRC BOARDA third independent director is set toleave the board of FTSE 100 minerEurasian Natural ResourcesCorporation, thrusting the London-listed Kazakh company further intoturmoil. Two prominent City figures,Sir Richard Sykes and Ken Olisa, wereousted from ENRC on Wednesday.Now, according to two people close tothe situation, Mehmet Dalman, theformer investment banker, is set toresign, leaving only one other inde-pendent director on the board.

ROW ERUPTS OVER ROYAL MAILWRITE-OFFA storm has broken over governmentplans to write-off a large part of RoyalMails 1.7bn debt as historic legisla-tion to allow privatisation of the

state-owned postal operator passed itsfinal parliamentary stage.

DIAGEO NEARS SEC SETTLEMENT

OVER LONG-RUNNING ASIAN BRIBERYPROBEDiageo, the worlds largest spiritscompany, is close to a settlementwith the US Securities and ExchangeCommission under which it wouldpay more than $10m to end a long-running bribery investigation, peo-ple familiar with the matter say.Diageo, the UK-based owner of theSmirnoff vodka brand and Guinnessstout, has been under SEC scrutinyfor several years as the agency investi-gated whether Diageo employees orcontractors paid bribes to govern-ment officials in South Korea, Indiaand Thailand.

02 WARNS OFCOM ON AIRWAVESSELL-OFF REGULATIONBritain could fall further behindwith the construction of high-speedmobile broadband networks after O2

claimed that a planned airwaves sell-off would breach state aid rules.

APPLE BACKS DOWN IN BATTLE OVERRIGHT TO SELL APPSApple has caved in to the app makers by relenting over its subscriptionrules. In a rare victory for suppliers, Apple yesterday scrapped an edictthat prevented thousands of compa-nies from selling content designedfor iPods, iPhones and iPads inde-pendently. Apple will continue to dis-courage users from buying contentwithout going through its store, butwill no longer ban the practice alto-gether.

LOREAL PEACE TREATY TORN UP ASDAUGHTER GOES TO COURT The family feud that racked theLOral empire last year broke outagain yesterday when it was revealedthat the daughter of heiress LilianeBettencourt, Franoise Bettencourt-

Meyers has sought to have her placedunder legal protection.

CHRISTINE LAGARDES VICTORY ADONE DEAL SAYS IMF RIVALChristine Lagardes appointment asIMF Managing Director is a donedeal, Grigori Marchenko, the IMFcandidate backed by the former Sovietblock, has said, as he prepares to backout of the race as early as this evening.Marchenko said that G8 countriesmay have agreed to back the Frenchfinance minister even before the sud-den resignation of Dominique Strauss-Kahn.

DEFAULT FEARS GRIP GREECE AS DEBTINSURANCE SOARSThe cost of insuring Greek sovereigndebt has been pushed to a record highamid fresh fears the indebted countryis moving closer to default. There were protests yesterday as Greecesprime minister George Papandreou

sought to get further austerity meas-ures approved.

SUPREME COURT AFFIRMS JUDGMENTAGAINST MICROSOFTThe US Supreme Court unanimouslyupheld a $300m patent-infringement verdict against Microsoft, rejectingthe software makers attempts tolower protections for challengedpatents. A federal jury made theaward yesterday to i4i Inc. after find-ing that Microsofts Word softwareprogramme infringed a patent heldby the Toronto technology company.

ANGLO IRISH CLOSE TO SALE OF USPORTFOLIOAnglo Irish Bank is close to putting itsentire $10bn portfolio of US commer-cial real-estate loans up for sale assoon as this month, according to peo-ple familiar with the matter.Such anoffering would amount to one of thelargest portfolios of commercial-prop-

erty assets to hit the market since the2009 sale of Corus Bank assets.

WHAT THE OTHER PAPERS SAY THIS MORNING

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GOLDMAN Sachs yesterday said itwould pay a $10m (6.1m) fine andstop giving favoured clients tradingideas developed at internal gather-ings known as trading huddles.

Goldman analysts had beenaccused of giving priority clientsshort-term trading tips that may have been at odds with the banks pub-lished research. Analysts and tradersbegan holding huddles in 2006.

A Goldman spokesman said thebank is pleased to settle the matterwith Massachusetts securities regula-

tor. The settlement includes noadmission of fraud.

SHAREHOLDERS in gaming groupRank are considering launching acomplaint to the Takeover Panel overHong Kong-listed Guocos approachfor the firm.

At least two institutional investorsare understood to be concerned thatsome exiting shareholders have con-nections with Guoco and could havebeen acting in concert over the offer, which analysts say significantlyunder-values the f irm.

A source close to the bid told CityA.M. some investors were consideringtheir position but declined to namethose planning to approach the Takeover Panel. According to ruleeight of the takeover code, any parties working in concert with Guocowould have had to declare their posi-tion by noon yesterday.

Guoco, which is controlled by theMalaysian billionaire Quek LengChan, strongly denied it solicitedshareholders and expressed surpriseat the strong take-up of its offer.

A Takeover Panel source said thebody will consider all complaints.

The Rank board responded with a

strongly worded statement yesterdayurging remaining shareholders notto accept the bid. It said: The boardcontinues to believe that GuocoGroups final offer of 150p per sharesubstantially undervalues Rank andfails to reflect its underlying valueand prospects, including the signifi-cant potential upside related to VATclaims.

Guoco was obliged to make anapproach for the company afteracquiring a sizeable stake fromMalaysian gaming group GentingBerhad, taking its holding to 41 percent. The bid of 150p a share valuedRank, which runs the Mecca Bingoand Grosvenor Casino chains, at586m. An unexpectedly high 15.6per cent accepted the offer, givingGuoco a controlling stake withoutpaying a premium.

Panmure analyst Simon Frenchcalled the bid very disappointing,adding: We wonder which share-holders considered 150p a share a fairprice to surrender compared to ourtake-out estimate of 248p a share.

Guoco has signalled it is willing towork with the current managementstructure and will maintain Rankspublic listing.

Investor fury

over GuocosRank offer

TROUBLED social network MySpace isin final talks over a sale to ActivisionBlizzard chief executive Bobby Kotick.

It is understood Koticks involve-ment is not linked to his Activisionrole.

MySpace owner News Corp, whichpaid $580m (354m) for Myspace in2005, may seek to retain a 20 per cent

holding as part of the offer, accordingto people close to the deal.Kotick is now the preferred bidder,

edging ahead of other runners includ-ing founder Chris De Wolfe, musicvideo site Vevo, and current Myspaceboss Mike Jones, who has partneredwith private equity backers.

Earlier this year News Corp heldearly-stage talks with Vevo overexchanging its ownership of Myspacefor a stake in a new venture.

THE

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MySpace is in talkswith Activision boss

THE1.15bn (1.02bn) float of Atento,the call centre unit of Spains biggesttelecoms company Telefonica, was indoubt last night after bankers had toslash the offer price to lure investors.

STJ Advisors, the boutique capitalmarkets bank that has in the pastaccused larger banks of undervaluingfloats, is advising on the deal, withGoldman Sachs and Citigroup amongthe book-runners.

Telefonica confirmed that the bankshad abandoned the 19.25-25 pricerange in favour of a lower fixed price of

17.25, and that it has pushed back itslisting timetable by one day.

Spanish Atentofloat in doubtGoldman finedfor priority tips

BY STEVE DINNEEN

GAMING

BANKING

CAPITAL MARKETS

Rank chief exec IanBurke is fielding atakeover bid fromGuoco, a HongKong-based firmcontrolled by QuekLeng Chan

Picture: REX

BY STEVE DINNEENTECHNOLOGY

News 3CITYA.M. 10 JUNE 2011

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REGULATION that has forced theCity to pay almost 500m to com-pensate clients of failed investmentfirms in the past three years needsurgent reform, an industry leadersaid yesterday.

Douglas Ferrans, chairman ofthe Investment Management Association, called for an inde-pendent review into the FinancialServices Compensation Scheme, which charges investment man-agers for the compensation bill

when their peers collapse. The FSCS caused an outcry

among fund managers last yearwhen it billed the industry 230mfor compensation after the collapseof investment product providerKeydata Investment Services.

Wealth managers such asCharles Stanley, Rathbones andBrewin Dolphin have been outspo-ken in their criticism of thescheme, which bit into their prof-its after being imposed withoutwarning.

Ferrans said the FinancialServices Authority, which manages

the FSCS, needed to do a better jobof regulating the companies toavoid their failing at such cost.

The scale of recent failurescan not be ignored, he said. Allthe firms in question were regulat-ed by the FSA. And warning lightshad been flashing over them forsome time.

The unpredictability of the levymakes the UK a less attractive placefor international funds to invest,he added. There is a need for theseevents to be the subject of an inde-pendent review and for lessons tobe learned.

Calls for reform ofKeydata chargesBYALISON LOCK

FUND MANAGEMENT

Sir Stuart stood down as chairman in January Picture: Micha Theiner/City A.M.

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SIR Stuart Rose was handed an8.1m golden goodbye when he leftMarks & Spencer last year, accordingto the retailers annual report.

The former chief executive andexecutive chairman received a paypacket worth 2.77m in 2010-11,compared to 2.6m a year earlier,plus over 5m in shares.

Marc Bolland, who became chiefexecutive in May 2010, received4.38m, including 2.6m compensa-tion for rewards he would havereceived at Morrisons. He was alsoawarded share options that will vestover the coming years and couldearn as much as 9.4m if the compa-ny meets its highest performancetargets.

M&S has revamped its executive

pay plan and said Bolland andfinance director Alan Stewart hadagreed to have their basic salariesfrozen at 975,000 and 550,000respectively for the 2011/12 year.

Sir Stuart Rosegot an 8.1mgolden goodbye

BYHARRY BANKSRETAIL

FOR MORE NEWS

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GLOBAL FINANCIERSWALK PURPLE CARPET

AT GLITZY HEDGIE BASH

THE Citys big-name philanthro-pists descended on KensingtonPalace gardens last night for thetenth anniversary gala hosted

by Absolute Return for Kids (Ark).Walking the purple carpet to the

cavernous marquee in Perks Fieldwere One Hyde Park developer NickCandy; Elisabeth Murdoch, chair-man and chief executive of ShineGroup; Winton Capital founderDavid Harding; former Man Groupchief executive Lord Stanley Fink;and Pierre Lagrange, co-founder of GLGPartners.

However, the galasguests of honour werethe Duke and Duchess

of Cambridge, wholast nightannounced a newfour-year partner-ship between Arkand TheFoundation ofPrince William,Prince Harry and

The Duchess ofCambridge, engi-neered with Arkschairman Ian

Wace and founding chairman ArkiBusson (pictured below).

The importance of having Williamand Catherine on board cannot beunderestimated, said Busson,

because it will help the internationalchildrens charity reach the newgenerations. We need to reach

young philanthropists, he said.There is a great deal [Ark and ThePrinces Trust] can do together.

So what exactly will t hat involve?Ill let the Duke speak about

that, said Busson and William later obliged in his

after-dinner address to the900 guests, where he out-

lined the partnershipsplans to transform

the lives of thousandsof young people.Programmes fromthis partnership willraise aspirations,

broaden horizons andencourage young peopleto achieve what may haveseemed to them unachiev-able, said the Duke.Together, we havetremendous potential tomake a difference.

Above: Shanghai Tang founder David Tang with his wife Lucy

Right: Paul Marshall, co-founder of Marshall Wace Pictures: Micha Theiner/City A.M.

Left: GLG Partners co-founder Pierre Lagrange(right)

Below: Former Man Group chief executiveStanley Fink

The Capitalist6

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Below: Peter Sands, chief executive ofStandard Chartered

Left: Shine Group chief Elisabeth Murdochand husband Matthew Freud

Right: Tidjane Thiam, chief executive of Prudential

Above: David Harding, founder of Winton Capital

Left: Model and writer Sophie Dahl

Above: Candy & Candy co-founder Nick Candy with girlfriend Holly Valance

Below: Former City minister Lord Myners with wife Lady Alison Myners

EDITED BY

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

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ADVISORY bank Lazard has hired ateam of credit experts in London tohelp banks and investment man-agers address a vast overhang ofstructured products still plaguingtheir balance sheets.

The team, to be led in Europe bymanaging director Alan Patterson,

will give strategic advice on how torebalance or wind down the bil-lions in non-core assets such as

collateralised debt obligations(CDO) and commercial mortgage-

backed securities (CMBS).Patterson estimates there are

2 trillion (1.8 trillion) of asset- backed securities in Europe,100bn of them CMBS due tomature by 2014.

With values formany of the prod-ucts havingdropped throughthe floor after the

financial crisis, many institutionshave held onto the products for fearof taking hits to their earnings state-ments when they have to mark themto market.

Patterson said: There are lot ofinstitutions that invested heavily inthe structured credit space.Constraints on the funding availableand changing regulation on capital

have all come together tomake these portfolios

less relevant thanthey were once

thought to be.Lazard, led in

London by WilliamRucker (pictured), has

made the move follow-ing a spate of hiring by

UBS to boost its struc-tured credit productstrading team. The bank

hired 12 managingdirectors to itsstructured creditdesk last year.

Lazard beefsup non-coreasset advice US LENDER Citigroup has admittedcomputer hackers had breached itsnetwork and accessed the data ofabout 200,000 bank card holders in

North America, the latest in a stringof cyber attacks on high-profile com-panies.

Citi said the names of customers,account numbers and contact infor-mation, including email addresses,

were viewed in the breach.The bank joins a growing number

of companies that have sufferedcyber attacks.

Japanese technology firm Sonyhad its Playstation network hacked,and drew criticism for a delay intelling account holders their infor-mation had been stolen.

Internet giant Google last weekrevealed a major attack on its Gmail

accounts targeting, among others,US government officials. Google saidthe attack appeared to originate inChina.

During routine monitoring, werecently discovered unauthorisedaccess to Citis Account Online inthe US. A limited number roughlyone per cent of Citi bankcard cus-tomers account information was

viewed, the bank said.We are contacting customers

whose information was impacted.

LLOYDS is mulling an initial publicoffering (IPO) of the 620 branches thatit is being forced to sell under EU com-petition law.

The bank is now pursuing a dualtrack approach to offloading the

branches, with a float or sale both onthe table. A float would see Paul Pester,now the managing director for the

branches, become chief executive of anew standalone bank.

But in the mean time, Lloyds is

pressing ahead with a sale and hasbeen finalising an information memo-randum to kick off the process this

week. Chief exec Antnio Horta-Osriosaid the bank hopes to have receivedserious offers by the end of July.

On Wednesday he was accused oftrying to present the VickersCommission, which wants Lloyds todispose of more than 620 branches,

with a fait accompli when the panelproduces its final report on bankreform in September.

Citi says cyberhack breachedbank card data

Lloyds considering floatalongside sale of branches

Lloyds chief Antnio Horta-Osrio has sped up the sale Picture: Micha Theiner/City A.M.BY JULIET SAMUEL

BANKING

BANKING

NewsCITYA.M. 10 JUNE 2011

BY JULIET SAMUEL

BANKING

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STRUGGLING care home operatorSouthern Cross will not receive a gov-ernment bailout, but the departmentfor business is making sure its banksmaintain its flow of credit properly,

Vince Cable said yesterday.The news came as Southern Cross

told its creditors that it plans to hand back 132 care homes to their land-lords, which would then likely be

wound down.The firm has already picked out 47

homes that would be handed backover the summer, with a further 85expected to go in the next two to five

years, a person familiar with the com-pany said yesterday.

Speaking in Parliament, Cable saidthere was no way to bail out thefirm despite its rental woes.

My colleague the minister of statehas been in touch with the banks toensure that the process of managingtheir credit in this critical period isproperly managed, and that it hap-

pens in an orderly way, Cable said.Southern Cross hired accountant

KPMG in February to lead its debtrestructuring and is being advised bylawyers Clifford Chance and invest-ment bank Greenhill as it fights toavoid going into administration.

The firm has announced plans tocut 3,000 of its 44,000 staff to reduceits costs. It has also asked landlords toaccept 30 per cent less rent for thenext four months.

Cable confirmed the departmentfor business, innovation and skills isinvestigating the role of private

finance, particularly private equity, inrunning care providers. SouthernCross was owned by private equity forfour years from 2002 to 2006.

Cable vetoes

a Southern

Cross bailout

BRITISH shale gas firm 3LegsResources has listed on Londonsalternative investment market (AIM)in a deal valued at about 77.2m.

The firm, which specialises in the

exploration and development ofunconventional oil and gasresources, listed its shares yesterdayat 190p per unit.

3Legs raised about 62.5m in new

shares in order to exploit the com-mercial potential of a gas basin inPoland, where the majority of itsoperations are based.

Several selling shareholders,including father and son directorsRobert and William Jeffcock, also

sold shares valued at a total of14.7m.The listing price values the firm at

approximately 161m.Shale natural gas drilling has expe-

rienced a boom in the US in recent years, but development in Europehas been slow so far due to environ-mental confirms.

Chief executive Peter Clutterbucksaid: We have a substantial growthopportunity beyond the Baltic Basin,

with over 1m additional gross acresheld across Poland and Germany. Ilook forward to providing our share-holders with updates on our progressin due course.

Shale gas and oil specialist floats in London

BYALISON LOCK

HEALTHCARE

ENERGY

Cares for 31,000 of the UKs 230,000 carehome residents Can not pay its 230m rent bill on its 758homes so has asked for a 30 per cent deferral Will cut 3,000 of its 44,000 staff

FAST FACTS | SOUTHERN CROSS CRISIS

FORMER Tory energy minister TimEggar has been named as the newchairman of 3Legs, in his secondappointment to the board of agrowing oil and gas firm this year.

Eggar is already chairman ofCape, the oil services group poisedto move from the Aim junior index

to Londons main market, as wellas a string of other energy firms.

He oversaw energy policy in JohnMajors government during the1990s, before standing down at the1997 election.

The son of county cricket player,he was elected to parliament in the

Tory landslide in 1979 after work-ing in the City as a corporate finan-cier at Hambros Bank.

He served as a junior minister

under Margaret Thatchers govern-ment in the 1980s, and went on tofulfill a variety of trade and indus-try posts.

After leaving parliament, hewent to work in the energy indus-try in the United States and tookup a seat as the president of theRusso-British Chamber ofCommerce.

Last year, then shadow chancel-

lor George Osborne invited Eggarto review the tax treatment of theNorth Sea oil and gas industry.

Although never published, thereview raised hopes amongsmaller UK oil companies thatgovernment policy mightchange.

It was anticipated that thereport would call for a morefavourable tax regime forfirms operating in the

North Sea afar cry fromthe tax raidthat wasperformed

by chancel-lor GeorgeOsborne ear-lier in the

year.

BYRICHARD PARTINGTON

ENERGY


TIM EGGAR

Ex-Tory energy minister takes on role at 3Legs

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CITY financier Nat Rothschild and for-mer BP chief executive Tony Haywardset out plans yesterday to raise 1bn ina flotation of their investment vehicleVallares in London.

The scion of the banking dynastyand former City heavyweight havejoined forces to launch Vallares as acash shell to acquire and expand high-growth but cash-poor emerging mar-ket oil and gas companies.

It will take stakes in compa-nies valued at 3-8bn, offeringthem Vallares shares instead ofa cash buyout, to allow theoriginal management toretain equity in the business asit grows.

The vehicle is a bigger repli-ca of Rothschilds first suchventure, Vallar, which listed lastJuly and raised 707m to investin resources outfits.

It also marks

H a y w a r d sreturn to the

boardroom after a ten-month exile fol-lowing his resignation from BP in thewake of the Deepwater Horizon disas-ter last July.

Vallar is now worth 2.5bn afterinvesting in a $3bn (1.8bn) reversetakeover of Indonesian coal assetsBerau Capital and Bumi Resources,both owned by the Bakrie family.

Vallar is a proven success and it isclear that the concept applies equally well in the oil and gas sector, saidHayward. Many high quality interna-

tional resource assets have beenacquired by family owned or

private companies in thelast few years.

We will have the cash,access to funds and thecapability to unlock valuewhere the current ownershave neither the capital

nor technical expertise todevelop the assets.Vallares will issue 10 sharesand expects to close the

order book and publish

a prospectus on oraround 20 June.

Rothschildand Haywardin 1bn floatBYALISON LOCK

CAPITAL MARKETS

OPHIR Energy, an oil and gas firm backed by Britains richest manLakshmi Mittal, has said it plans tolist on the London Stock Exchange ina deal that values the company atmore than $1bn (607m).

The Africa-focused explorationfirm is seeking up to $400m from aninitial public offering (IPO) and is

expected to go straight into the FTSE250 index.The company is 21 per cent backed

by Mittal Group, the Indian steel mag-nates investment vehicle.

Ophir said it would use the pro-ceeds from the share raising tofinance further exploration drilling.

It said it aims to complete the list-ing in July, subject to market condi-tions.

Credit Suisse and JP Morgan and

RBC Capital Markets are acting as joint bookrunners, whilst OrieSecurities and Standard Bank are alsosyndicate members.

Lexicon Partners is acting as finan-cial adviser to the company.

Alan Stein, founder of Ophir andexecutive deputy chairman, said: Wefeel that now is the right time tobring the company to the public mar-ket in order to facilitate the nextstage in Ophirs development.

Mittal-backed Ophir Energyplans 600m London listingBYRICHARD PARTINGTON

CAPITAL MARKETS


Ian Hannam, managing director at JPMorgan Cazenove, is a highly-experi-enced mining and resources dealmakercurrently advising Gem Diamonds onits acquisition trail, Heritage Oil & Gasand Fresnillo among others.

Hannam was notably unable to par-

ticipate in metals trader Glencores

recent IPO due to his long-standingrole advising its takeover targetXstrata and close links to its chiefexecutive, Mick Davis, since theyworked on the 2001 merger and 2005London listing of BHP Billiton.

George Maddison, Credit SuissesUK investment banking vice chairman,has spent 20 years working on capitalmarkets transactions, and played avital role during the financial crisis onthe Treasury team that devised theplan to refinance the banking sector.However, his advisory work onPrudentials attempted takeover ofAsian insurer AIA last year is, with theother advisers HSBC and JP Morgan,

being scrutinised by the FSA.

IAN HANNAM

JP MORGAN

ADVISERS: JP MORGAN & CREDIT SUISSE

Nat Rothschild is teaming up with Tony Hayward (below) on the new venture

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BMW is ploughing an extra 500minto UK manufacturing with anagreement to build its next genera-tion of Minis here.

Chairman Norbert Reithofer saidyesterday that the extra contract, forthe next three years, demonstratesthat the UK will remain the heart ofMini production and will take the

companys UK investment to morethan 1.5bn since 2000.The announcement, made after a

meeting with Prime Minister DavidCameron at Downing Street, followsNissans news on Wednesday that thenext version of its popular Qashqaiwill be designed and made in Britain.

Nissan chief Carlos Ghosn said theproject represents a 192m invest-ment in Britain and will safeguard6,000 jobs in the UK.

BMW said yesterday that most of itsmoney will go towards new produc-tion facilities and equipment at itsOxford Mini plant, safeguarding over5,000 jobs.

The company revealed its strategyis to link its production location withits largest markets. The UK is BMWGroups fourth-largest single marketfor sales, behind only Germany, theUS and China, with 154,750 sales lastyear for BMW, Mini and Rolls-Royce.

Mini contract gives UKscar industry 500m lift

Groovy baby! David Cameron road tests an Austin Powers style Mini Picture: REX

BY JENNY FORSYTHAUTOMOTIVE


NEWS | IN BRIEF

PZ Cussons prices up as costs soarCleaning products maker PZ Cussons saidit would have to raise its prices to com-bat soaring costs of its raw materialsyesterday. The maker of Imperial Leathersoap said trading over the past year was

in line with its expectations, but it had toput mitigation plans in place to dealwith rising costs, such as reducing theweight of soap bars from 125g to 100g,and passing on the costs to consumers.

Across the group, raw material costsremain at high levels with mitigationplans underway through higher sellingprices where possible as well as internalmargin improvement projects, it said ina trading update. It said heavy discount-

ing and weak customer demand had alsobeen problems in the UK, but its marketshare had grown after several brandrelaunches, and premium brands had per-formed particularly well.

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SHARES in Argos owner Home RetailGroup fell 13.3 per cent yesterdayafter it said the catalogue retailerssales fell more than expected in thepast quarter.

Argos was hit hard by customersreluctance to buy expensive electron-ics and big-ticket household goods,causing its sales to slump 9.6 per centto 817m in the past three months.

The fall was substantially larger

than the 4-7 per cent fall that analystshad expected, while its gross marginfell a bigger-than-expected 75 basispoints.

In contrast, Home Retails otherhigh street brand Homebase saw like-for-like sales rise 1.6 per cent in thequarter, in line with market expecta-tions, as sunny weather promptedcustomers to spend.

Trading conditions, particularly atArgos, have proved to be more diffi-cult and volatile than anticipated,

said chief executive Terry Duddy inan interim management statement.

For Argos, the consumer electron-ics market represents a substantialproportion of its sales and has experi-enced a further significant decline.

The difficulty of this market, togetherwith the volatility of overall sales, hasmade the balance of the year moredifficult to predict.

Analysts said the sales fall could wipe up to 20 per cent off HomeRetails full-year pre-tax profit. Itissued a profit warning in March.

Argos slumpadds to HomeRetails woes HALFORDS shook off the gloom hang-ing over the UK retail sector yesterdayto announce a 7.2 per cent rise in pre-tax profit in the past year.

Customers bought more car partsand fitted them at Halfords stores asthey cut back on expensive services ornew vehicle purchases, chief executiveDavid Wild told City A.M.

The firm also saw a surge indemand for bicycles and camping gearsince January as customers adjusted toa long-term expectation of spendingless on their lifestyles.

Customers are realising this is nota short term situation, of just needingto get through the next six months this is the new reality, Wild said.

They dont want to be miserable, sothey are buying more innovative prod-ucts and looking for bargains.

Revenues rose 4.6 per cent to869.7m and underlying pre-tax profitrose to 125.6m while it changed theappearance of its stores, acquired achain of autocentre garages and wield-ed the axe on costs.

Sales in its leisure arm jumped 11.1per cent in the nine weeks from 1

April due to the hot weather and extraholidays. JD Sports Fashion said sales fell 2.8per cent in the quarter, but thedeclines were within its expectations.

Halfords defiesretail gloom topost profit rise

BYALISON LOCK

RETAIL

RETAIL


ANALYSIS l Home Retail

14 Mar 1 Apr 21 Apr 17 May 7 Jun

p230

210

190

170

174.509 June

ANALYST VIEWS: HOW BAD WAS THEPERFORMANCE OF ARGOS? Interviews by Alison Lock

TOM GADSBY | MATRIX GROUP

These are pretty dire figures. We expected another tricky quarter forArgos, but the like-for-like sales fall is well below the expected range. While t hedecline in profits over the past two years is cyclical rather than structural, a clearupturn in consumer demand would be needed for the shares to pick up.

DAVID JEARY | INVESTEC

This was an all-round disappointing trading update, likely to drive up toa 20 per cent cut to current 2012 full-year pre-tax profit forecasts. Pressure onprofit will come from Argos, especially with the cost base likely to increase byaround 30m over the year. It will also raise questions on the dividend.

MARK PHOTIADES | SINGER CAPITAL

This is in line with forecasts in the smaller Homebase division but signif-icantly below expectations in the Argos division. We would expect downgrades ofcirca five to ten per cent to current full-year pre-tax profit estimates. We remaincautious on earnings prospects given i ts exposure to the UK customer.

Home Retail Group chief executive Terry Duddy said conditions were volatile

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SPREAD betting firm IG Group hassaid it expects to post an increase infull-year profits this year.

The British company said it antici-pated a three per cent increase in itsfull-year pre-tax profits to 163m inthe year to 31 May.

IG, which reports detailed annualresults next month, also said itexpected trading revenue for the yearof 320m, an increase of seven percent.

The group said its financial busi-ness grew revenue at nine per cent inthe year when the Japanese market, which is undergoing regulatorychange, is stripped out.

However, the extended holidayperiod in April for the royal weddinghad hit revenue for its final quarter ofthis year, the firm said.

IG said it expected third quarterrevenues to be slightly down on thesame time a year earlier.

London-based IG said it planned toclose its sports operations, branded asExtrabet, selling most of its client listto peer Spreadex.

The group said its sports businessnow represented less than 2.5 per

cent of its total revenue, due to itssubstantial fixed cost base and muchlower percentage of profits.

IG said it had been unable to securea sale of its sports business in itsentirety and had decided to makestaff at Extrabet redundant.

It said costs relating to closing the business would include a 5.25mnon-cash write off and 2.5m in cashfor redundancy payouts and lease-related costs.

The spread betting firm remainedbullish on its prospects for growth,despite volatile market conditions.

Continued focus on building thenumber of high quality active clientsand development of the groups offer-ing leaves IG well positioned for fur-ther growth, the company said.

PROFITS at Network Rail jumpedalmost 11 per cent last year, althoughits performance dipped.

Pre-tax profits at the firm thatmaintains Britains rail networkjumped 10.8 per cent to 438m in theyear ending 31 March.

However, the number of trainsrunning on time fell from 91.5 per

cent to 90.9 per cent, which NetworkRail attributed to Decembers severe

winter weather.The firm cut costs by 400m and

said it was on target to meet chal-lenging efficiency savings demand-ed by the rail regulator.

It has saved 600m since itembarked on a programme of costcuts two years ago.

Last month, a report into the railindustry by Sir Roy McNulty saidNetwork Rail should cut the cost ofrunning the network by 30 per cent

to bring Britain into line with therest of Europe.

Network Rail finance directorPatrick Butcher said the industryaccepted that costs must be drivendown further.

The rail industry simply has tobecome more affordable for the userof the railway network and for tax-payers, he said.

Network Rail said revenues wereup 5.66bn to 5.71bn while operat-ing profits grew from 1.9bn to 2bn.Capital expenditure rose slightly to

4bn while net debt grew five percent to 25bn.

Network Rail grows profits by 11pcbut number of late trains creeps up

NOKIA yesterday said its chief tech-nology officer has taken a leave ofabsence and sources say he is unlikelyto return after disagreements withmanagement on strategy.

Richard Green is said to be unhap-py with decisions such as abandoningthe MeeGo operating system it wasdeveloping with Intel in favour ofgoing with Microsofts WindowsPhone software.

In a fresh blow for the struggling

company, Nokia confirmed Green hastaken leave for personal reasons and

declined to comment on when hewill return or on other details. HenryTirri, head of Nokia Research Centre, will be the acting chief technologyofficer, a spokesman said.

The move comes as Nokias once-undisputed leadership in mobilephones crumbles. The company is los-ing smartphone market share to Apple iPhone and Google Androiddevices and, at the low end, to cheap-er Asian rivals.

Fresh blow as Nokia seestechnology boss walk out

TELECOMS

Spreadbetter

IG eyes profitrise this yearBYRICHARD PARTINGTON

FINANCIAL SERVICES

BY SCARLETT ARCHER

TRANSPORT


Mark Zuckerbergs firm will hand information to the EU Picture: REUTERS

NEWS | IN BRIEF

African Barrick shares recoverShares in London-listed miner AfricanBarrick Gold rebounded yesterday after itattempted to allay fears over tax changesin Tanzania. The firm said the Tanzaniangovernment had shown its ongoing com-mitment to the mining industry. Fears hadbeen raised the country could impose aharsh tax regime on extractive firms, caus-ing the miner to take a hit.

Bowleven jumps on well newsShares in Bowleven jumped 8.6 per centafter the Africa-focused oil and gasexplorer said its Sapele-1 well off thecoast of Cameroon flowed oil at rateswhich it believes indicate a commercialdevelopment is possible. The company is

waiting for the results of tests at the sec-ond Sapele well.

Wincanton axes its dividendHaulier Wincanton suspended dividendpayments for at least a year after a slow-down at British and French businesses hitprofits, prompting it to sell some Europeanoperations to cut debt. Wincanton, whichtransports goods such as food, documentsand materials for recycling around Britainand mainland Europe, reported a pre-taxloss of 25.9m.

Visa buys mobile payments firmVisa said it will acquire South African firmFundamo for $110m (67m), andannounced a five-year agreement with UK-based Monitise, as it looks to grow its newtechnology-enabled payments business.Payment processors such as Visa and

rival Mastercard have been increasinglylooking for growth through new gateways.

Finnish mobile firms fightback will prove futile ANOTHER day, another blow forNokia. Richard Green, the firmstechnology supremo, has quit afterjust one year in the job, and you canhardly blame him. Even chief execu-tive Stephen Elop has described thecompany as a burning platform;

Green obviously thought it was asinking ship.Much has been made of Nokias

slaughter at the hands of Apple andother handset manufacturers, suchas Blackberry maker RIM. These rela-tively new insurgents have decimat-ed its market share in high-endsmartphones. In 2008, Nokia had33.4 per cent of the global market forphones worth $300 upwards, but by

the end of 2010 its slice was a paltry11.3 per cent.

Less attention has been paid toNokias vulnerability in the marketfor cheaper phones. At the end of last year, it still had an 86.8 per centshare of the global market for sub-

$200 smartphones and over half(52.5 per cent) of the market forphones worth $200-$300.

In our view, Nokias apparentstrength in the low-end phone spaceis unsustainable, because better Asian handsets using GooglesAndroid are quickly making inroads.Given Nokias abject inability to staveoff Apple et al, we dont fancy theFinnish firms chances.

It is tempting to see Nokias stockas cheap, with an enterprise value of just 0.4 times 2011 sales forecaststhanks to its hefty6.4bn cash pile.This wont prove much of a buffer tothe 7.7bn of revenues that analystsat Nomura think Nokia will lose by

2013. In that light, Nokias plan toreduce operating expenditure by1bn over the same period seemslaughable, and only serves to high-light the futility of any fightback.Investors should follow Green by vot-ing with their feet.

BOTTOMLINEAnalysis by David Crow

ANALYSIS l IG Group Holdings

p

14 Mar 1 Apr 21 Apr 17 May 7 Jun

490

480

470

460

450

440

430

439.409 Jun

CITY VIEWS: ARE YOU WORRIED ABOUT FACEBOOKS FACIAL RECOGNITIONTOOL? Interviews by Shiba Babamiri and Phoebe Torrance

It's definitely an invasion of privacy and I thinkFacebook is being very sneaky by telling us thatwe have the option to change the settings. I'drather have the option of deciding if I want tohave the feature on my account. This is going topush a lot of people to deactivate accounts.

GILLIAN MCCOMBES | ATRIUM INSURANCE

I don't think so. As long as you have theoption to change the settings and youhave been warned about it then I don'tsee what the problem is. It's actuallygood because it speeds up the processof tagging friends.

JAKE CASS | LLOYD'S INSURANCE

Yes, I don't really see the point of this app as we already have a manual method. I'm concerned withthe fact that more companies are holding our information, without any regulators checking whothese people are.

SAM HERBERT | ISM FINANCIAL SOLUTIONS

FACEBOOK has agreed to hand overinformation about its use of facialrecognition software to European reg-ulators after privacy campaignerscomplained.

The software, which can be turnedoff in Facebooks settings, invitesusers to automatically tag theirfriends on photographs by scanningtheir faces.

Facebook has stressed that theautomated photo-tagging suggestionsare only made when new photos areadded to Facebook and that onlyfriends are suggested.

The firm, fronted by chief executiveMark Zuckerberg, says no formalinvestigation is underway into theuse of the technology.

Facebook willhand info to EU

TECHNOLOGY

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RISING numbers of fresh benefitclaims and lower than expected wholesale inventories combined toproduce another gloomy day for theAmerican economic outlook.

Yet stocks in New York pared recentlosses, as a narrowed US trade deficitwas seen as one positive point in arecent string of weak economic data.

Imports from Japan tumbled morethan 25 per cent after its earthquake,contributing to a narrowing of the

trade gap to $43.7bn (26.7bn), down6.7 per cent from a revised estimate of$46.8bn in March -- suggestingstronger second-quarter GDP figuresthan economists had expected.

The Dow Jones industrial averageclimbed over a percentage point totouch 12,181, while the Nasdaq com-posite index rose 0.46 per cent toprint 2,690 during the days trading.

The markets shrugged off the earlybad news, including a 1,000 increasein new claims for unemployment

benefit. Fresh claims were up to427,000 in the latest recorded week,despite economists forecasts of adrop in the numbers.

First-time claims have now beenperched above the 400,000 mark fornine weeks in a row. Analysts normal-ly associate a level below that withsteady job growth.

On the one hand this is a disap-pointing confirmation that the num-ber of people continues to run above400,000, said Nomura SecuritiesDavid Ressler. But on the moreencouraging front it looks like this

may be a reflection of job turnover asopposed to sustained joblessness.

Inventories rose 0.8 per cent to$447.2bn in the first month of the sec-ond quarter, below economists fore-casts for a one per cent rise. Automotive inventories, one of thebiggest categories, fell 1.3 per cent.

Sales rose to $393.5bn, the highestsince June 2008. But the 0.3 per centmonth-to-month rise was much lessthan the 1.2 per cent gain analystshad forecast.

Dow recoversdespite weakUS jobs dataBY JULIAN HARRIS

US ECONOMY


NEWS | IN BRIEF

One million on benefit for decadeOver a million people across the UK havespent the last decade on benefits, theDepartment of Work and Pensionsrevealed today. In London, 126,500 peo-ple have spent 10 years on either job-seekers allowance, incapacity benefit orincome support. The figures were

released as employment minister ChrisGrayling launched a new programme inan attempt to tackle joblessness.

QE could still worsen inflationQuantitative easing in the US could stillhave the effect of stoking inflation,Federal Reserve hawk Charles Plosserwarned yesterday, at a meeting inLondon. Theres about $1.5 trillion(912bn) of what we call excessreserves in the banking system: theyre

just sitting there, theyre not creatinginflation, at least not yet. But they dohave the potential to do that, he said.

First time buyer mortgages riseThe number of mortgages available tofirst time buyers has nearly trebled inthe last two years, according to thewebsite Moneyfacts. Today there are183 deals for people looking to get on tothe property ladder, compared to just

62 this time in 2009.

Japan recession is confirmedRevised data showed Japans economyshrank 0.9 per cent in the first quarter,unchanged from the initial estimate asinventory adjustments offset weakercorporate spending, but analysts said arecovery is on track as industrial produc-tion rebounds. Manufacturers are mak-ing progress in restoring supply chainsafter the devastating March earthquake,fuelling hopes for an early bounce-back.

INTEREST rates in the Eurozone wereheld at 1.25 per cent yesterday, yetcentral bank chief Jean-ClaudeTrichet signalled a move to raise ratesnext month.

The European Central Bank (ECB)head used the key code-words strongvigilance in his statement, indicat-ing monetary tightening to come.

The euro initially rose on the com-

ments before retreating, with ana-lysts saying a hike in July had already been priced in. Persistent worriesabout debt problems in Greece andother peripheral Eurozoneeconomies also dented sentiment.

Potentially the economic situationin some of the peripheral countries isnot going to get much better in thenear-term, and that will err the mar-ket on the side of caution of pricingless rather than more rate hikes, saidRBS rate strategist Simon Peck.

Rates held for Eurozonebut hike in July signalled

ECB president Jean-Claude Trichet indicated that rates could rise next month

BY JULIAN HARRISEUROZONE ECONOMY

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LloydsErik Johnson has joined Lloyds ofLondon as the strategy manager in the

strategy & business team, moving fromDeloitte, where he was an assistantdirector in the corporate finance insur-ance practice. Johnson also now repre-

sents the Lloyds of London market onthe Insurance Institute of Londons rep-resentatives committee.

Merrill LynchMerrill Lynch Wealth Management has

made three hires in its Middle Eastteam. Leila Alameddine joins as marketmanager for Levant, Shereen Ghobrial

joins as regional sales manager, andUtku Balik joins as business strategyand initiatives execution manager.

Barnett WaddinghamThe actuary and consultancy firm haspromoted seven senior client advisers topartner, taking the firms total partners

to 50. The new partners are: MarkFutcher, Paul Hubbold, JulianMainwood, Ben Pullen, Ben Roach,Vanessa Smart and Ruth Thomas.

AMP Capital Investors

Scott Davies will join the investmentmanagement company in July as globalhead of infrastructure. Davies will joinfrom Macquarie CommunicationsInfrastructure Group, where he hasbeen chief executive since 2002.

Lloyds TSBSimon Boddy, formerly of Barclays, hasbeen appointed as regional manager forthe banks commercial finance team in

the East Midlands.

BlackRockThe asset manager has appointed GarySmith as head of pensions administra-tion services to lead the development

of BlackRocks defined contributionbusiness. Most recently, Smith servedas a member of the DC executive teamat Towers Watson.

Gore BrowneThe discretionary investment managerhas appointed Chris Rogers and SimonJackson as investment managers, basedin the Salisbury office. Both join fromBarclays Wealth in Bournemouth.

CITY MOVES | WHOS SWITCHING JOBS Edited by Harriet Dennys

+44 (0)20 7092 0053morganmckinley.com

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

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Wall Street ends itssix-day losing streak

WALL Street ended higher forthe first time in over a week yesterday, with theDow and the S&P 500 rising

1 per cent at one point, but manyanalysts saw the rebound as short-

lived.A report showing record US exportsin April eased some concerns about astalled economic recovery, which hadbeen weighing on the market.

A spike in oil prices helped liftmaterials and energy stocks. Investorsalso snapped up beaten-down stocksin the f inancial sector.

The S&P materials sector index rose1.6 per cent and the energy indexgained 1.2 per cent. The MorganStanley cyclical index, which is downmore than 5.2 per cent in June, rose 1per cent. The KBW bank index was up1.2 per cent.

Several economists said the spikein US exports in April could promptrevisions higher of gross domesticproduct growth in the second quar-ter, interrupting a trend of loweredexpectations.

But many analysts still expected

the S&P to retest its March low of1,250 after a string of data, including

the latest payrolls report, provided lit-tle room for optimism.

Concern over the future of equitiesafter the Feds $600bn second roundof stimulus expires at the end of thismonth also weighed on the market.

After falling for six straight days,the market was looking for anexcuse to bounce back and it got itfrom the trade data, said Steve Blitz,senior economist at ITG in New York.

You cant take just one day anddraw a conclusion that the bear mar-

ket is over.Reflecting the bearish sentiment,the daily volume put/call ratio forequity options on the Chicago BoardOptions Exchange (CBOE) was at an18-month high as of Wednesdaysclose, according to data posted on theexchange website, indicatinginvestors are significantly bearish onthe stock market.

The Dow Jones industrial averagewas up 75.42 points, or 0.63 per cent,at 12,124.36. The Standard & Poors500 Index was up 9.44 points, or 0.74per cent, at 1,289.00. The NasdaqComposite Index was up 9.49 points,or 0.35 per cent, at 2,684.87.

The S&P had lost more than 6 percent in the last six days leading up toyesterday, while the Nasdaq had near-ly erased its gains for the year.Texas Instruments shares rose 0.7percent to $32.91 even after the com-

pany cut its earnings and revenueforecasts late on Wednesday.

MINERS rebounded from theprevious days sharp sell-off to help push Britainstop share index higher yes-

terday, while oil stocks trackedcrude higher on supply fears.

The FTSE 100 closed up 47.45points, or 0.8 per cent, at 5,856.34,having bounced well clear of the ses-sion low of 5,795.00, although thin volumes exaggerated the indexsmove.

Integrated oil stocks added themost points to the blue-chip index ascrude rose $1.39 to $102.13, whileminers also saw strong gains, ledhigher by a 2.5-per cent advance fromChilean copper miner Antofagasta,Wednesdays biggest FTSE 100 casual-ty.

A surprise narrowing of the US April trade deficit offered investorsrespite after a run of gloomy econom-ic data, but the prevailing tone wasone of caution, with a rise in US week-ly jobless claims adding to fears thelabour market has stalled.

Really were heading into the sum-mer now, and everythings a problem

for the markets, David Morrison,market strategist at GFT Global, said.

Weve got problems in Europewith the debt crisis, the difficultiesJapans still facing (post-earthquake),China is doing everything to slowthings down and the foots comingoff the pedal as far as the Feds con-cerned in terms of stimulus.

US blue chips were up 0.8 per centby Londons close.

Weakness was seen on Britainshigh street after the UKs biggesthousehold goods retailer Home Retailreported a slump in first-quarter sales

at its Argos chain, sending its sharesdown almost 14 per cent.J Sainsbury, scheduled to issue atrading update next week, dropped1.2 per cent, while Marks & Spencerslipped 0.9 per cent.

Both the Bank of England and theEuropean Central Bank left interestrates on hold yesterday. The BoEsdecision was widely anticipated, butthe ECBs move was less expected.

There was a lot of talk that theECB were going to put rates up by aquarter of a per cent... If the Eurozonewere to go up a quarter of a per cent,the concern was that the UK wouldhave to follow suit sooner rather thanlater, and I think that would haveworried the market, Yusuf Heusen,senior sales trader at IG Index, said.

But ECB president Jean-Claude Trichet did signal that rates wouldrise next month, saying that strong

vigilance is needed, a phrase oftenused to signal a hike at the next meet-

ing. Among individual movers, WeirGroup rose 4.8 per cent, topping the

FTSE 100 leader board, as RBC CapitalMarkets became the latest broker totalk up the virtues of the British engi-neer, lifting its earnings forecasts.Smiths Group, meanwhile, fell 1.4per cent as Evolution Securities initi-ated coverage on the technology firm with a reduce rating followingWednesdays trading update.Imperial Tobacco also dropped 1.4per cent, with UBS highlighting thatPhilip Morris has again cut the pricesof its major Spanish cigarette brands,with the broker assessing the finan-cial impact on Imperial should it fol-low suit.

Were Imperial to reduce the priceof all its brands by0.10 per 20... thenwe estimate this would have an annu-alised impact on net sales of about65m and impact on EBITDA of 35-40m, UBS said in a note.

Mining shares rebound andoil stocks rise on supply fearsTHELONDONREPORT

THENEW YORKREPORT

ANALYSIS l FTSE 100

6,100

5,900

5,700

5,50017 May21 Apr1 Apr14 Mar 7 Jun

5,856.349 June

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

ANALYSIS lResolution Ltd.320

300

280

260

p

7 Jun17 May21 Apr2 Apr14 Mar

316.109 Jun

RESOLUTIONCiti rates the insurance company a buy and has a target price of 367p.The broker has raised its earnings per share forecasts to 30p from 27.8pfor the year as a result of the firms share buyback, and believes thatResolution will continue to deliver up to 600m capital returns due itsover-capitalisation. Citi adds that the firm is one of the best-placed insur-ance groups for the Solvency II regulations.

ANALYSIS lBritvic450

430

410

390

370

p


412.379 Jun

BRITVICJP Morgan has downgraded the drinks company from overweight toneutral and has a target price of 440p. The broker thinks the currentshare price is fully valued and does not expect the company to weather ris-ing costs well until the market can be confident that the commodity pricepeak is behind us. The downgrade also makes room for peer C&C to join JPMorgans overweight list.

ANALYSIS lFerrexpo500

460

420

380

p


485.009 Jun

FERREXPOGoldman Sachs rates the group a neutral and has raised its target pricefrom 460p to 520p. The broker thinks the firm has an attractive growthprofile, but believes that market disappointment over a lack of M&A in thecoming months might dent its share price. Goldman also notes that its com-modities analysts expect a softening of iron ore prices later this year and adrop in 2012, further dulling Ferrexpos chance of a share price jump.

Barclays WealthCalum Brewster has been appointed as a direc-tor within Barclays Wealths wealth manage-ment and private banking business, based inGlasgow. Brewster will join on 21 June fromLloyds Banking Group, where he is head of cus-

tomer experience and strategy in the life pen-sions and investment division, responsible for ateam of 150 staff. In his new role, Brewster willmanage a team of ten private bankers, report-ing to Craig Jamieson, head of BarclaysWealths Glasgow office.

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Living | RiversideTHE ONE & ONLY: THEPALM, DUBAISEE MONDAYS TRAVELSECTION FOR MORE

21

F

ORGET yachts, successful City boys andgirls will be cruising to work on boatsin the years to come. Marinas arespringing up alongside Londons

Thameside developments. Chelseas flashy1,000-apartment Imperial Wharf has justopened a marina, while Vauxhalls St.George Wharf is building a river taxi pon-toon on its doorstep that will open inSeptember.

Developers have always loved the water-front in London for building large-scale lux-ury residences. They are low riskinvestments, Carl Davenport of ChestertonHumberts says, views of the river dont lose

their value. Especially with waterfronthomes because theres no danger that some-one can build in front of them. Prices bare-ly moved over the recession and now theyon the ascent.

Their asset status has encouraged devel-opers to push further west. The recentlyopened 199-apartment NEO Bankside, nextto the Tate Modern, and the newlylaunched Doulton House development atChelsea Creek, are testaments to that fact.

Reassuringly, for those keen on the ideaof a boat trip to work, the developmentshave historically encouraged the Mayor toimprove the transport facilities. In 2009, the

New transport innovations will make luxury riversidedevelopments even more desirable, says Donata Huggins

Savvy investors will soon be taking to waterImperial Wharf overground station openedto give residents better access to the city.Davenport says these sort of transport inno-vations have an enormous impact: Thosewho bought off-plan at St. Georges Wharfall made 100,000 when they re-sold a fewyears later. A lot of that is to do with theareas great transport links into the city.Now the same approach has been taken forNEO Bankside. Blackfriars tube at the footof the development is being refurbishedand the pier and boat service improved.Indeed, the public clipper and river taxiservices already have people commuting towork by boat from the NEO Bankside devel-opment. The clipper from Bankside, forinstance, can get you to Canary Wharf injust under 20 minutes, using your Oystercard for admission.

The increased provision for private moor-ing around the developments, however,

could make commuting to work on yourown small speedboat fashionable. Riversideresident Rupert Lee-Browne already doesthis. He has a mooring at Cadogan Pier andregularly uses this to commute to the City:It is quite expensive and occasionally unre-liable, but by far and away the most beauti-ful way to travel in London. Every time I goup and down the river I discover somethingcompletely new. Ive done it now for a fewyears I am still in love with it.

If you are interested in buying your ownslice of the riverside life, you should try tobuy a home looking out on to the water if you want to get a strong return on yourinvestment. Davenport says there is a 20-30per cent premium on a river view when yousell. Up until now, lots of people have seenthe river as a barrier to work rather thanbenefit all this investment could changethat.

SPINNAKER HOUSE,BATTERSEA REACHThis development willbe completed in

Summer 2012. A one-bedroom apartment iscurrently being soldfor 319,950

DOULSTON HOUSE,CHELSEA CREEKThis recently launched devel-opment is currently beingsold off plan from 559,950for a one-bed. Knight Frank,020 7861 5444

IMPERIAL WHARFAll the apartmentsin this developmenthave already beensold, keep your eyespeeled for re-sales.

ST GEORGE WHARFThere is a three-bed-

room apartment avail-able here with a riverview at 1.2m. (Foxtons,020 7801 1111)

NEO BANKSIDEPavilion A is now sold out,but Pavilion B will be com-pleted at the end of June andhas apartments available,starting at 1m. (KnightFrank, 020 7861 5444)

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www.apdinteriors.com

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Then make the most of our special offer and have the home you

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Architects cast anexpert interior eye

FREELANCE writer Elisa Wickhamand her partner were faced with adebate two years ago when they began renovating the interior of

their promising, but outdated shabbythree-bed property in N7: Pay an architectto advise or go direct to a builder?

Neither us have any building abilitiesand we dont have massive incomes so the whole project was a gamble, says Wickham. We didnt want to get itwrong.

Wickham and partner opted to consultLondon-based architect Brian OTuamaand today they say theyd never consider

anything else. The layout and the overalldesign are much better than it was origi-nally. The flat is flooded with light thanksto his suggestion of a window on the stair-well. He also guided us through movingthe bathroom upstairs from the down-stairs kitchen, conforming to buildingregulations. It was an expense but I thinkit has really saved us money in the longrun, says Wickham. She added: If wehadnt used an architect I think we couldhave gone way over budget. He managedthe planning, the building contractor,

and materials. He helped us get a betterdeal on some supplies and advised strate-gically on where to spend money andwhere not to. Wickham said the flat wasrecently valued at 30 per cent more thanthe original purchase price, adding a dou-ble digit profit which was largely down tothe improved layout and finish.

There is a misconception that archi-tects are only there for large projects but Iwould recommend using one any time forinterior work. The way I see it, if yourespending upwards of 20,000 on renova-tions an architect can be fantastic formaking sure it is executed well and in a

way that benefits the property.Wickham is one of a growing group of

savvy consumers turning to architects forsmaller projects. Its great if you havesmall spaces like flats where you need tofit things in cleverly, says London-basedarchitect Robin Monotti, adding that peo-ple approaching him about small-scaleinterior projects were becoming increas-ingly common. You save money in thelong run because you dont make expen-sive mistakes and you get what you want.Monotti advises clients on all the tricks for

Small scale cosmetic changes? Its still worthtapping the professionals, says Lucie Greene

Old Saint Michaels, Rayne Road, Braintree, Essex CM7 2QU

For All Enquiries Call: 01376 335800

Showhomes open daily 10am to 5pm

www.oldsaintmichaels.co.uk

Nash House is the last collection of unique homes at Old Saint Michaels. Quirky interiors completewith a fully inclusive specification housed within a historic Grade II Listed Victorian building.

1 & 2 bedroom apartments and duplex from 125,000 to 310,000

Nash Houselaunching18th & 19th June

Visit Old Saint Michaels in

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*See www.cityandcountry.co.ukfor terms & conditions.

Scan with your Smartphoneto visit Old Saint Michaels.

Above, a recentkitchen renovationdesign by BrianOTuama.

making properties look, and work theirbest, from choosing the right door heightto strategic spotlight schemes.

Getting an architect isnt as expensiveas youd think. Prices start at roughly 12per cent of the total works, or can be

charged at an hourly rate of roughly 80.It really can be a bespoke service, fromjust a consultation to managing the wholething, says Brian OTuama, who has builta following among clients in NorthLondon. We source reliable builders.Because everything is drawn to scale, thequotes are much more accurate. We helppeople eek more out of the space. You alsoavoid the expensive retail costs on thingslike designer kitchens. With an architectyou can get a bespoke top quality kitchendesigned to your needs, with cost price on

materials, for a fraction of showroomprices which can run to over 20,000.

And, the benefits to the long-term valueof your home can be huge. Its a majorselling point to be able to say your proper-ty is architect designed. So often the

spaces work much better when theyre worked on professionally and peopleknow that, says Martin Bikhit, managingdirector at central London estate agentsKay & Co. People are more aware of spacenow. Its not just size, its the quality, too.An architect can help you get that right

Meanwhile, says Bikhit, a bad renova-tion can actually be counterproductive.People think they are saving money bydoing it themslevs, but buyers are put off by paying a renovation premium for aproperty they have to correct.

Living | The Knowledge 23CITYA.M. 10 JUNE 2011

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GRESHAM HOUSE,BRADFORD STREETPrice: 749,95This listed property runsacross four floors andretains a number of periodfeatures. The house has sixbedrooms, two bathrooms,three reception roomsincluding an orangery.There is a small playroom,kitchen, living room, laun-dry, utility room, office andcloakroom. There is a gymin the basement.Contact: John D Wood &Co. on 01245 344222 or goto www.johndwood.co.uk

NASH HOUSE, OLDSAINT MICHAELSPrice: 425,000Within this Victorianhospital conversionthere is a one-bedroomapartment for sale witha terrace overlooking

the courtyard gardens.It is a grade II listedbuilding and retainsmany of its period fea-tures, including originalquarry tiles, restoredsash windows and fire-places.Contact: Beresfords,www.beresfords-group.co.uk

WESTERGREENMEADOW, OFFLONDON ROADPrice: 379,995This four-bedroomfamily home hasthree receptionrooms, a fittedkitchen with granite

worktops, a recentlyre-fitted bathroom, adouble garage anddriveway.Contact: Beresfordson 01376 348444 orgo to www.beres-fordsgroup.co.uk

Q.I have 500,000 in cash to investin a buy-to-let flat in centralLondon. What should I buy?

A.One-bedroom apartments are alwaysin demand in central London whichfits in well with your budget. I would

recommend that you look for a property witha low service charge (this is importantbecause it will be your responsibility as thelandlord to pay this and a high one will eatinto your return). Ideally, the flat should havegood transport links and be on the ground,first or second floor, especially if there isnt alift. Bayswater is an area that is currently per-forming well and offers good value for moneysince it sits between the pricier areas ofNotting Hill and Marylebone. Plus it certainlylooks like it has room for price growth.Finally, don't use cash, take a mortgage. Youcan offset the mortgage interest against the

rental income which is extremely tax efficient.A good broker can offer you guidance on this.It will probably mean you can actually buytwo flats rather than one with and this meanstwice the capital appreciation.

Q.I have owned my flat for 20years. It has a large loft which Iwould like to develop into an extra

room. While I have the sole use of thisspace it is not demised to me. Can I getplanning permission to develop it beforeI sell it?

A.The problem you face is that althoughthe flat has sole access to this spaceit does not actually own it, it is owned

by your freeholder. No one can stop you fromusing this space as storage, given you haveowned and used it for 20 years, but you can-not alter it in anyway without the freeholder'sconsent. In addition, the freeholder would beperfectly entitled to ask for additional moneyfrom you to allow you to incorporate thatspace into your apartment. So, while you canapply for planning permission you cannotdevelop it without first getting permissionfrom and (probably) paying a premium to thefreeholder. If you do this without consent youwould be in breach of your lease and the free-holder could force you to reinstate the flat toits former layout something that any com-petent buyer's solicitor would pick up on. Thiswould result in them advising the buyer notto proceed with the purchase, irrespective ofthe planning permission.

Martin BikhitMANAGING DIRECTOR OFCENTRAL LONDON ESTATEAGENCY, KAY & CO

Q A&

Commuting to the city:Driving from Braintree to theCity takes just over an hour.Taking the train, however, canget you into Liverpool Streetin just over 30mins. FromLiverpool Street, you can jumpon the tube and then DLR to

reach Canary Wharf in 20minutes.

Education: While the majori-ty of schools in the area donthave particularly impressiveacademic results, the inde-pendent Gosfield School per-forms well. The school isco-educational and teachesfrom the age of 4 to 18.

Boarding is optional. Day feesrun up to 4,000 a term.

NEED TO KNOW | AREA INSIGHT

SELLBRAINTREE, ESSEX BY DONATA HUGGINS

BRAINTREE | PRICE ACTION

Detached Semi-Detached Terraced Flats

Braintree 346,780 196,501 168,419 124,313

Essex 369,726 223,912 185,693 140,908

Source: Savills

THE STABLES ~ THE COACH HOUSE ~ THE MANSION HOUSE

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Balls Park, Hertford SG13 8FP

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CALL 01992 551777 OR VISIT WWW.BALLS-PARK.CO.UKSHOW HOMES OPEN DAILY 10AM TO 5PM

CURRENT MORTGAGE DEALS BY DONATA HUGGINS

Lender Fixed/Flexible Rate Until apr Maximum Loan to(per cent) (per cent) Value (per cent)

First Direct Flexible 1.99 2 years 3.5 65

ING Direct Flexible 2.04 2 years 3.4 60

Santander Flexible 2.19 2 years 4 60

Yorkshire BS Flexible 2.29 June 2013 4.7 75

Yorkshire BS Fixed 2.79 June 2013 4.8 60

Santander Fixed 2.79 August 2013 4.2 60

Woolwich Fixed 2.98 August 2013 3.6 70

Mansfield BS Fixed 3.09 2 years 5.3 75

Yorkshire BS Fixed 3.59 June 2014 4.9 75Source: MoneySupermarket.com

Living | Focus On24 CITYA.M. 10 JUNE 2011

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Living | Property of the Month26 CITYA.M. 10 JUNE 2011

Architectural landmark and family home

WHOEVER ends up buying the

White Cottage, on a quiet road atthe south west corner ofWandsworth Common, will not

only become owner of a supremely elegantfamily home, but custodian of a highlyunusual piece of architectural history.

The house, built in 1903 and on the mar-ket for 5m, is the work of the architectCharles Voysey, a leading light of the Artsand Crafts movement and a crucial figurein British 20th century architecture. Voyseybuilt just 40 houses, most of which are larg-er country homes the White Cottage is a very rare example of a London house byhim, and a supreme expression of the sim-plicity, attention to detail and naturalistic

grace that imbued Arts and Crafts design. When its current owner, Mark Boston,

bought it 16 years ago, it was in need of seri-ous attention Boston estimates he hasspent over 1m on its restoration over theyears. My wife fell in love with the housebecause its such a beautiful place, but ithad faded and been neglected, he says. Itsa gem of a house though, and it becamelike owning an old MG car you keep onwanting to improve it and return it to itsformer glory.

The Grade II listed house has five bed-

Timothy Barber findsa gorgeous Arts and

Crafts house in theheart of Wandsworth

The White Cottagehas been painstakinglyrestored, and is beingsold with modernfurniture designedspecially for it.

rooms, and includes a drawing room, din-ing room and library. At the back of thehouse, an outdoor swimming poolinstalled by Boston has been designed inkeeping with Voyseys style. Furniture bymodern British Arts and Crafts specialistTony Colletd, made specially for the house,is also being included in the sale.

As are, most intriguingly, Voyseys origi-nal drawings. While much of his work including the textile and wallpaper designsfor which he was also famous is in muse-ums, including the V&A, his drawings for

the White Cottage have remained at thehouse. They came in handy for the restora-tion, but Boston points out that this is nomere museum.

It retains its Voysey feel, but the househas been completely brought into line withrequirements of a modern family, he says.We want to hand it on to somebody whowill appreciate it, who understands what isspecial about the property and retains thatsense of being a custodian.Call Aylesford International on 020 7351 2383 oremail [email protected]. www.aylesford.com

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Lifestyle | Arts SUMMER ATGOODWOODSEE MONDAYSNEWSPAPER

27

Film Review

KUNG FU PANDA 2Cert: PG

hhhII

SOMETHING of a surprise megahit back in2008, the original Kung Fu Panda filmturned out to be one of the best animatedfilms of the past decade. The mix of love-able animals, Oriental mythology and mar-tial arts fun proved irresistible to kids

plenty of family households have reverber-

ated to hi-YA! cries and junior kung fukicks ever since.

The follow-up isnt as engrossingly enjoy-able, perhaps in part because it isnt such afresh surprise. The predictable decision torender this film in 3D (the previous film

was in perfectly satisfactory 2D) adds noth-ing, and Id argue is a confusing detractorto some beautiful an

cityam 2011-06-10

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