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Speculation

hots up overeurobonds

ITALIAN politicians stepped up pres-sure for closer fiscal union across theEurozone over the weekend, as areport emerged that German minis-ters were considering caving in ondemands for eurobonds.

Speaking ahead of a crucial Franco-German summit this week, Italianeconomy minister Giulio Tremontisaid: We would not have arrived

where we are if we had had theeurobond, describing the measure asa master solution.

Bonds would spread the burden ofdebt from troubled member statesacross the whole of the 17-nation sin-gle currency area.

The proposal was vehemently reject-ed on Saturday by WolfgangSchaeuble, for as long as memberstates conduct their own financialpolicies.

Yet despite publicly denouncing thescheme, one German newspaperclaims that senior German officialsare considering the case for eurobonds

behind closed doors.Preserving the Eurozone with all

its members has absolute top priorityfor us, according to a governmentsource quoted in the newspaper underthe headline: Government no longerexcludes European transfer union and

joint eurobonds as last resort.Former hedge fund legend George

Soros waded into the debate yesterday,calling for Greece and Portugal to quitboth the Eurozone and the EuropeanUnion as a whole.

BY JULIAN HARRIS

EUROZONE ECONOMY

Prime Minister David Cameron will this morning promise a widespread shake-up of UK social policy Picture: GETTY

DAVID Cameron will today pledge asweeping review of the UKsapproach to social policy in the wakeof last weeks devastating riots.

The prime minister will use aspeech this morning to announce asocial fightback to match last

weeks security operation.He will pledge to review every

aspect of our work to mend our bro-ken society, on schools, welfare, fami-lies, parenting, addiction,communities, on the cultural, legal,

bureaucratic problems in our society;from the twisting and misrepresent-ing of human rights that has under-mined personal responsibility, to theobsession with health and safety thathas eroded peoples willingness to actaccording to common sense.

With 97 per cent ofCityA.M./PoliticsHome.coms Voice of theCity panel of business and financialprofessionals saying that the riotshave damaged Londons internation-al business reputation, Cameron willhave his work cut out to reassureinvestors and tourists. He will talk ofreforms big enough and boldenough to deliver the change I feelthis country now wants to see.

Of the 470 business and finance

professionals that took part in ourlatest survey, 35 per cent thought lastweeks riots had been very damag-ing to Londons international repu-

BY ELIZABETH FOURNIERPOLITICS

www.cityam.comIssue 1,446 Monday 15 August 2011 FREE

COCKTAILHOUR P10

A FREE MARTINI

FOR READERS AT

THE ANTHOLOGIST

ITS CRUNCH TIME FORTHE GLOBAL MARKETSFRESH TURMOIL LOOMS P3, 4, 15

BUSINESS WITH PERSONALITY

tation for investors and tourists, witha further 38 per cent calling the vio-lence and looting quite damagingand 24 per cent a little damaging.

Just three per cent felt that no dam-age had been done.

Though chancellor GeorgeOsborne insisted over the weekendthat planned cuts to the UKs police

budget would go ahead, 60 per centof our panel say the cuts should berethought echoing Boris Johnsonscall. The Mayor reiterated his stance

yesterday in a move bound to raisehackles among the coalition, sayingof police numbers in the capital:The general movement has got to bestatic or upwards, and that is vital forpolicing London.

The Metropolitan police has mademore than 1,400 arrests in connec-tion with the riots. Courts remain

open round the clock.Go to www.cityam.com/panel to applyto join our panel.

ALLISTER HEATH: P2

Certified Distribution

04/07/2011 till 31/07/2011 is 93,093

Quite damaging

Very damaging

A little damaging

Not at all damaging

How damaging do you believe the riotinghas been to London's internationalreputation for investors and tourists?

35%

38%

24%

3%

60% Yes

No

Dont know

In light of the recent rioting in London,should the Government review theirplanned cuts to the Metropolitan Police?

37%

3%

In partnership with

Apply to join today at www.cityam.com/panel

PoliticsHome.comPoliticsHome.com

CAMERON PLEDGESRADICAL REFORMS

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News2 CITYA.M. 15 AUGUST 2011

BP to offloadNorth Sea rigBP is set to continue the trend of oiland gas firms exiting North Seaassets with the sale of its minoritystake in the Shearwater field.

Sources close to the deal told CityA.M. the 27.5 per cent stake in theShell-run gas field could net BP morethan 150m. GDF Suez is also under-stood to have put its stake in the WestFranklin field on the market.

Norwegian energy giant Statoilhalted $10bn (6.2bn) worth of proj-ects following the surprise Budget-day announcement by GeorgeOsborne of a 12 per cent tax hike onthe profits of companies operating inthe region. It later resumed prepara-tory work, saying it will make a finaldecision next year.

Japanese trading conglomerate

Marubeni Corporation also put upfor sale all but one of its North Seaoilfields in June, adding to a listthat includes ExxonMobil andChevron.

Many oil and gas firms are keen tooffload their mature assets while theprice of oil is high but have been setback by the March tax levy.

Last month the Treasury performeda partial U-turn, saying it will raise theannual rate of Ring Fence ExpenditureSupplement from six to 10 per cent tosupport firms working in less prof-itable fields.

BY STEVE DINNEEN

OIL AND GAS

Camerons police and euro blunders

EVERY so often, a confluence of eventsforces a country to choose a new direc-tion. Britain is at such a crossroads: weneed radical reform in virtually allareas of domestic policy as well as newtrading relationships and securityalliances internationally.

The riots and the crisis in theEurozone ought to serve as catalystsfor change. But so far the governmentremains hopelessly in hook to vestedinterests. The job description for thenew Metropolitan Police commission-er bars non-UK nationals and stipu-lates that only serving UK chief

constables or people of equivalent UKranks may apply. These non-merito-cratic, discriminatory clauses arethere to prevent the appointment of aUS chief such as Bill Bratton, the

worlds greatest expert on vanquish-ing crime and gangs while boostingcommunity relations. Its a closedshop, a job-creation scheme for UKpolice bosses, signed off by TheresaMay, our hapless home secretary. Whydoesnt David Cameron stop this non-sense? Bratton is keen; he would evenconsider switching nationalities to getthe job. Cameron is right to want tomake the police more efficient andredeploy more resources to actualpolicing but overall budgets should-nt be cut. It would be suicide for theUK to give up on austerity. But insteadof massively increasing foreign aid, why not spend the money on morefront-line, street-based police?

There may be light at the end of thetunnel. Cameron will diagnose theproblem correctly today:Irresponsibility. Selfishness. Behaving

as if your choices have no conse-quences. Children without fathers.Schools without discipline. Rewardwithout effort. Crime without punish-ment. Rights without responsibilities.

Communities without control. Someof the worst aspects of human naturetolerated, indulged sometimes evenincentivised by a state and its agen-cies that in parts have become literallyde-moralised. Its much better thanEd Milibands constant attempts atdrawing moral equivalences betweenthe looters and the City, a philosophi-cally absurd parallel which fails to dis-tinguish between legal wealthacquisition by mutual consent andgrabbing money and propertythrough theft and the illegal breachof others property rights. We shallsoon find out whether Cameronswords are matched by actions.

As to the Eurozone, the UK now sup-ports the creation of a fiscal unionwith tax raising powers and the abilityto transfer unlimited wealth fromsome countries to others. Of course,

the euro as currently constituted does-nt work. The one-size-fits all interestrates are inappropriate for most mem-bers, countries cant devalue any more and yet they cannot readjust in any

other way because they have failed toderegulate their economies, includingtheir labour markets, to allow them torespond to shocks.

This will never change. But thatdoesnt mean that forcing Germans topay for the errors of Greeks or Italiansis the answer either. A giant pan-European welfare state would merelyreward failure and fuel nationalismand bitter resentment. Short-term,Eurobonds, federalised debt and cen-tral bank purchases of toxic bonds willprevent a catastrophic, uncontrolledbreak-up of the euro which would trig-ger another recession. Long-term, thebacklash will be cataclysmic. The onlysustainable solution is a controlled,managed break-up of the euro. The UKis backing the wrong horse.

allister.heath@cityam.comFollow me on Twitter: @allisterheath

TRANSPORT campaigners havewarned train fares will rise by fourtimes the rate of inflation comeJanuary thanks to government plans.

Transport secretary PhilipHammond will cut the 5bn annualtrain subsidy and has upped theamount rail operators can increasetheir fares from RPI plus one to RPIplus three. The plans will see faresrise by as much as a third by 2014,

with an eight per cent hike in themost popular fares as soon asJanuary. Some fares will rise by evenmore thanks to a flex system whichallows price rises to be averagedacross a basket of routes.

The government says it is keen toshift the burden of the strugglingtrain network from the taxpayer torail users.

Critics from the Campaign forBetter Transport last night warnedcommuters will voice their anger inthe ballot box.

BY STEVE DINNEEN

TRANSPORT

Rail fees to soar in JanuaryTransport secretary Philip Hammond faces the wrath of commuters

NEWS | IN BRIEF

Rebels in Libya breakthroughLibyan rebels raised their flag over astrategic town near Tripoli yesterday aftertheir most dramatic advance in monthscut off Muammar Gaddafis capital fromits main link to the outside world. Theswift advance on the town of Zawiyah,about 50 km (30 miles) west of Tripoli,

will deal a psychological blow to Gaddafi'ssupporters and severs the coastal high-way to Tunisia that keeps the capital sup-plied with food and fuel. Previous rebeladvances have often been reversed,despite help from NATO warplanes.

Merkel party hit by scandalGerman chancellor Angela Merkels con-servative Christian Democrats suffered asetback last night when a regional leaderwas forced to resign over his affair with a16-year-old girl. Christian von Boetticherannounced he was stepping down aschairman of the CDU in Schleswig-Holstein state, in a further blow toMerkel's conservatives. Boetticher hadbeen the designated successor to CDUstate premier Peter Harry Carstensen ,who is not running in an election inGermanys northernmost state in May2012.

EDITORS LETTER

ALLISTER HEATH

Editorial StatementThis newspaper adheres to the system of

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

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

Distribution helplineIf you have any comments about the distributionof City A.M. Please ring 0207 015 1230, or emaildistribution@cityam.com

Sources say BP chiefexecutive Bob Dudleywill put the firmsNorth Sea Shearwaterfield on the market

4th Floor, 33 Queen Street, London, EC4R 1BRTel: 020 3201 8900 Fax: 020 7283 5334Email: news@cityam.com www.cityam.com

EditorialEditor Allister HeathDeputy Editor David HellierNews Editor David CrowActing Night Editor Marion DakersBusiness 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

FEARS RAISED AS LACK OF CAUTIONFUELS COMMERCIAL PROPERTY VALUESCommercial real estate values havebeen spurred by a lack of cautionon the back of an astonishingrebound in lending to the sector,according to one of the largest globalfund managers. LaSalle Investmente, which manages $45bn (27bn) ofreal estate assets across the world, will this week warn that the recov-ery in commercial real estate is wellahead of what fundamental econom-ic activity in some markets shouldsupport.

DOUBTS CAST ON FSAS NEW PAY CODEFOR BANKSOnly one in three bank executives based in London believes that theFinancial Service Authoritys toughnew pay code will curb risk-taking

while four in five think it will harmthe Citys competitiveness, a survey

by PA Consulting Group has found.The survey of top human resources

executives at 50 UK banks and UKoffices of global banks comes twoyears after the FSA began reviewingbanker pay with an eye to promotingfinancial stability.

PURE GYM RAISES CASH TO BEEF UPA low-cost UK fitness chain cateringto commitment-phobes has securedfunding to double in size. Pure Gym, which offers access to its facilitieswithout a monthly contract, raised9m from Barclays and privateinvestors to expand from 15 gyms to28 by the end of next year.

FRENCH SOLE STEPS OUT IN ASIAFrench Sole, which sells ballet-styleshoes beloved of the Duchess ofCambridge, is opening its firstfranchised stores in Asia in a prel-ude to further international expan-sion for the privately owned UK

business. It has opened a store inKuala Lumpur.

DRIVERS SETTLE FOR NEW PARTSINSTEAD OF NEW CARSSales of new cars in Britain may beunder pressure but the market forparts is in ruder health. Euro CarParts, the largest distributor ofreplacement components for carsand vans, reported profit up by athird in the first six months of theyear. Sales increased by 30 per cent to164 million with sales to large cus-tomers rising 150 per cent.

HERES THE DEAL ... NOW WE WANT 25PER CENT OF THE PROFITSThe developer who brought New Yorkstyle loft living to Britain is beingsued by a property agent over therestoration of the Victorian Gothic StPancras Hotel. Charles Lissack hasfiled a lawsuit against ManhattanLoft Corporation at the High Court in

London, claiming a quarter of the cor-porations profit on the project.

DUCATI REVS UP FOR A 900M HONGKONG IPO

Luxury motorcycle maker Ducati ispoised for a 900m Hong Kong flota-tion as China becomes its main mar-ket for selling bikes. The 85-year-oldItalian company, which made 79m ofprofits last year, has launched aninformal beauty parade for banks as itdraws up plans for a possible 2012 IPO.The listing will follow IPOs from otherluxury goods companies such asSamsonite and Prada that have alsodebuted on the Hong Kong bourse.

COMMODITY BULLS IN $21BN SELL-OFFThe extent of the panic that grippedfinancial markets last week has beenlaid bare by figures that showed spec-ulators slashed their bets in US com-modity markets by record margins.

Positions were cut by $21bn (13bn)during the week to August 9.

HONG KONG POSTS SURPRISEECONOMIC CONTRACTIONSoftening demand for exports and weakness in the financial sectorthreaten a deeper slowdown for HongKong after a surprise contraction inthe territorys economy in the secondquarter. Waning global demand andsupply-chain disruptions followingthe March earthquake and tsunamiin Japan led to a 11.1 per cent drop inexports from the first quarter, a dra-matic reversal from a 14.4 per centrise in the previous quarter.

PANEL SEEKS AN UPGRADE FOR AIR-LINE PILOT TRAININGCommercial pilots need enhancedmanual flying skills, improved leader-ship abilities and greater access toadvanced simulators, according to agroup of experts asked by Congress to

recommend safety improvements forUS airlines.

WHAT THE OTHER PAPERS SAY THIS MORNING

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POLITICIANS in Europe and the USmust wake up to the severe loss of mar-ket confidence in their economic lead-ership, the head of the World Banksaid last night in Australia.

Recent events have pushed us intoa new danger zone, Robert Zoellick(pictured) warned, arguing that sub-stantial reforms to government spend-ing commitments are required.

There were few real fears

that the US was facing a fis-cal crisis, Zoellick said, yetadded: frankly that marketsare used to the US playing akey role in the economic sys-tem and leadership.

He said efforts to cut US gov-ernment spending have so far

been focused on discre-tionary spending asopposed to the entitlementprogramme such as socialsecurity. Until they make

an effort on those programmes, thereis going to be continued scepticismabout dealing with long-term spend-ing.

Zoellick said the process of dealingwith the sovereign debt problem andsome of the competitive issues in theEurozone have tended to be done aday late, leaving markets worried thatauthorities may not be ahead of theproblem or moving in the right direc-tion.

That (worry) has accumulatedand so were moving from drama

to trauma for a lot of theEurozone countries, he said.

On a more positive note,Zoellick added: What is differ-ent from the world of the past is

now emerging marketsare sources of growth

and opportunity.About half of glob-

al growth is repre-sented by thed e v e l o p i n gworld.

World Bankchief hits outat politicians SWISS and Japanese authorities aresimultaneously threatening to takeaction to halt their currencies appre-ciations against the greenback.

Japans finance minister, YoshihikoNoda, pledged bold action over the

weekend if it becomes necessary toanchor down the yen.

Throughout the world investors areseeking refuge from risk amid height-ening uncertainty over the global eco-nomic outlook and governmentsdebt crises.

The yen strengthened to 76.31 tothe dollar last Thursday; a similarspike earlier in the month prompted

Japanese authorities to intervene, sell-ing the currency.

Although the Bank of Japan hasonly recently expanded its asset-pur-chase scheme, we would not rule out

further monetary easing, particularlyin combination with governmentaction to reduce the value of the yen,commented Capital Economics.

The Swiss National Bank (SNB),meanwhile, indicated last week thatit could peg its currency to the euro,to prevent further escalation.

The Swiss franc lost ground againstthe Eurozones single currency as aresult of the speculation, yet the cen-tral bank is still expected to announcesome form of intervention this week.

ITALYS second austerity package inless than a month met with a chorusof criticism a day after becoming law,

with the largest union federationthreatening a general strike over theinjustice of the measures.

President Giorgio Napolitano onSaturday signed the emergencydecree introducing sweeping austeri-ty measures to cut the fiscal def icit by

some45.5bn (40bn) and balance thebudget in 2013, a year ahead of its pre-vious schedule.

A missed opportunity, was thecomment by the chief economist ofthe OECD, Pier Carlo Padoan.

Padoan said the plan was positive inthe pledge to bring forward the bal-anced budget but it lacked measuresto boost growth and tackle tax eva-sion. Employers lobby Confindustriaestimates Italys tax evasion totals120bn.

Central reservesstep in over yenand Swiss franc

Berlusconi faces criticismover Italian austerity plan

Prime minister Silvio Berlusconi announced spending cuts over the weekend Picture: REUTERSBY JULIAN HARRIS

WORLD ECONOMY

WORLD ECONOMY

Markets in focusCITYA.M. 15 AUGUST 2011

BYHARRY BANKSEUROZONE

3

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Markets in focus4 CITYA.M. 15 AUGUST 2011

TUMBLING equities have hammeredmany pension schemes this month,a group of pensions advisersannounced yesterday.

An equivalent of 100bn has beenadded to pension deficits, withnational funding levels falling byaround 10 per cent in recent weeks,Bucks Consultants has found.

And it is not just equity marketsthat have hit pension funds. Giltyields have fallen steadily as demandfor lower risk assets has risen, whilematuring pension schemes seek to

de-risk, further increasing schemeliabilities, the report stated.

In a bearish note, BucksConsultants described the collapsein equity markets early last week asa more meaningful retrenchmentand not a short-term correction.

Equity markets are more realisti-cally pricing in the significant struc-tural difficulties that still lie ahead,as economies adjust to the long termimplications of the current financialcrisis that began four years ago, itsaid.

Volatility and nervousness willremain elevated, even if equitiesbounce back.

Nonetheless, Bucks propose that

trustees suspend planned de-risk-ing into fixed income assets.

TRADERS will return to work thisweek hoping for a calmer start thanlast Monday, when the downgrade ofthe US credit rating sparked the high-est levels of volatility seen in years inUS and European markets.

Traders were described as shellshocked and investors scared andnervous after a week in which theFTSE 100 broke through the critical5,000 level twice in five sessions amidmassive positive and negativeswings.

Both traders and for-mer City minister LordMyners (pictured) alsocriticised European gov-ernments decision to tryto calm markets by ban-ning short selling of bank-ing stocks in four countries.

While bans such asthese usually generatea brief pop higher, inthe longer term theydont address theunderlying prob-lems and merelyserve to delay the

inevitable, and we could well see fur-ther volatility, said CMC Markets ana-lyst Michael Hewson.

Lord Myners said shorting had not been a contributory factor to shareprice falls seen by institutions such asFrances number two bank SocieteGenerale, which lost more than 20 percent during Wednesdays trading asinvestors panicked over its health.

Instead, he called for action by boththe Financial Services Authority andthe Treasury to address high-frequen-cy trading, an electronic system thatplaces trades in micro-seconds that hebelieves exacerbated volatility.

High-frequency trading appears sodetached from the true function ofcapital markets, but is potentiallyfraught with hazard. It definitelydeserves more attention than eitherthe FSA or the Treasury has given it,Myners told the Sunday Telegraph.

The FSA said it was contribut-ing to a Europe-wide consul-

tation into guidelines forHFT launched by theEuropean Securitiesand MarketsAuthority.

MARTIN SLANEY:P15

Fears focus on

volatility asmarkets open

Billions shed from pension fundsby plummeting equity stocks

BYALISON LOCK

CAPITAL MARKETS

PENSIONS

8 Aug 9 Aug 10 Aug 11 Aug 12 Aug

5,300

5,400

5,200

5100

5000

4,800

4,900

Wednesday 10 AugustA pledge by US Federal Reserve chairman BenBernanke (below) to keep US interest rates lowsparks a relief rally but that evaporates as marketsseize on unfounded rumours over Frances sovereignrating and French banks financial health. The FTSEcloses at a recent low of 5,007.

Monday 8 AugustTrading screens fill with red in thefirst session of the week after S&Pstrips the US of its triple-A creditrating. Mass selling leaves the FTSEdown 3.4 per cent at 5,105 after aday traders liken to 2008.

Thursday 11 AugustFTSE drops briefly below 5,000as French banks again fend offrumours over their strength, butrallies to close 3.1 per cent upafter French president NicolasSarkozy schedules talks withAngela Merkel (below right) forthis Tuesday to find a fix for theEurozone.

Tuesday 9 AugustFTSE 100 slumps below the5,000 mark for the firsttime since July 2010 as theconfidence crisis deepens,but after huge volatility theindex closes up one per centfor the day.

Friday 12 AugustFrance, Italy, Spain andBelgium ban short sellingof their banks overnighton Thursday. The FTSErallies to a secondpositive close at 5,320.

Gold tops

$1,800an ounce

Societe Generale

closes

15%down

FTSE finishes

178points lower

Analysis: A long week in the markets

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News6 CITYA.M. 15 AUGUST 2011

TWO bulge-bracket investment banksare in talks with the bank lenders totroubled medical staff providerHealthcare Locums over buying itsdebt pile, City A.M. has learned.

The plan is the latest twist inthe companys efforts to repay135m of debt as it struggles tounpick accounting irregulari-ties, over which its foundingchief executive Kate Bleasdale(pictured) resigned in February.

The two investment banksare negotiating with two

Australian banks,National Australia Bankand CommonwealthBank, which providedthe debt last December,

weeks before HCLs board announced aprobe of its accounts.

City A.M. understands the talks mayconclude in the next week and wouldsee the investment banks buy the debtat close to its full value.

Permian Investment Partners, a 6.5per cent shareholder, said it like other

shareholders, is supportive of theinvestment banks negotiationsto acquire Healthcare Locumsdebt, since these negotiationsappear to recognise the compa-nys value as an operating busi-

ness and its bright commercialfuture.

The talks overtake anotherplan to repay debt by raising60m through a share place-ment to a group of investors.

That appears not to have been concluded by the

named close date of 11 August. HCL denied it

had to pull a fundrais-ing but would notcomment further.

Banks plan tobuy HCL debtBYALISON LOCK

SERVICES

CONAGRA Foods said last night it willconsider its options after the rejectionon Friday of its sweetened $5.2bn(3.19bn) offer to buy private-label foodcompany Ralcorp Holdings.

ConAgra had raised its offer to $94 ashare from its previous unsolicited bidof $86 a share. Its original offer forRalcorp was $82 a share. Ralcorp hasrejected all of ConAgras offers andsaid there is nothing further to dis-cuss. Shares of Ralcorp closed onFriday at $79.02. Its market capitalisa-tion is roughly $4.36bn.

Last month, Ralcorp decided to sep-

arate its Post-brand cereals unit from

its predominantly private-label busi-ness to create two companies.

ConAgra said in a statement thatRalcorps spin-off plan does not pro-

vide competitive value to Ralcorpsshareholders relative to ConAgraFoods proposal. ConAgra said itsoffer provides Ralcorp shareholders

with certainty and upfront value.Ralcorps spin-off plan would not

deliver comparable value, would takeat least four to six months to completeand poses potential risks, ConAgrasaid. ConAgra added its $94-per-shareproposal marks a 44 per cent premi-um to Ralcorps closing price on 21March, the last business day prior to

ConAgras initial approach.

ConAgra signals plan to play thelong game after Ralcorp bid failsM&A

Shells Gannet Alpha platform has been leaking oil since last Wednesday

INVESTORS will be watching oil giantRoyal Dutch Shell closely this morn-ing after the company said that theoil leak from its Gannet Alpha plat-form in the North Sea was undercontrol.

Shell, which detected a leak in aflow line on Wednesday last week,stressed that an inspection by aremote-operated vehicle (ROV) on

Saturday night shows the leak rate

has reduced further.The leak spilled between 12 to 120barrels, much less than the prelimi-nary estimate of 1,000 barrels. Thesheen located 112 miles east of

Aberdeen in Scotland is estimatedto be around 37 square feet.

The company said that the plat-form will continue to operate andthat they do not expect the oil slick toreach the shore.

We are using ROVs and preparing

divers as we continue to take action

to reduce the leak as the weatherallows, and where it is safe to do so,Shell said.

The spill contrasts to the Gulf ofMexico oil slick, where the well wasnot contained and covered an area ofaround 5,200 square kms. Shell hasshut in the North Sea well and theflow line has been depressurised so nofurther oil should flow out.

Shell closed at 2,008p in London onFriday night, up 2.95 per cent.

Shell says rate of North Seaoil leak has reduced furtherBYKASMIRA JEFFORD

OIL & GAS

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tarnishes. Do you:

a) Remember Gordon Brown dumping our UKreserves at a paltry price and weep.

b) Join in the merry-go-round and buy, buy, buy(not forgetting your stop, stop, stop!)

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MICHELE Bachmann scraped to victo-ry in the weekends Iowa straw pollof Republicans, with the race to chal-lenge President Barack Obama set toheat up.

Bachmann narrowly pipped liber-tarian Ron Paul to the post, winning

with nearly 29 per cent of the vote --just 152 votes ahead of Paul.

Supporters of the more-ideologicalPaul swarmed the grounds and

jammed the arena when he spoke.

Americans will go to the polls inNovember 2012 to decide whetherDemocrat President Obama is electedto a second term in the White House.

Yet Bachmann could face a sternercontest from right-wing Texan gover-nor Rick Perry, who stormed into the

contest only this weekend.Perry replaces previous second-

favourite Tim Pawlenty, who sensa-tionally dropped his campaign aftercoming a disappointing third placein Iowa, with less that 14 per cent ofthe vote. Sarah Palin running mateto John McCain in 2008 -- looksunlikely to enter the race afterBachmann stormed ahead. It isthought she was hoping for a weakperformance from Bachmann topave the way for her own candidacy.

Outsider Ron Paul surprised ana-lysts by coming second in Iowa. Dr

Paul is surging in this race, andtodays results show the strength ofhis grassroots support and top notchorganisation, his spokesperson said.Paul endorses low taxes, free mar-kets, and a return to sound monetarypolicies.

Republicansbattle it outfor 2012 race

LONDONS house prices have col-lapsed in August, yet a leading analysthas said that global financial worries

will not impact the housing marketacross the UK.

Asking prices were down in all 32London boroughs this month, plum-meting 3.4 per cent across the capital,according to the Rightmove indexreleased this morning.

Prices in London had been defyingthe UK-wide slump this year, yet thisindex shows they are now falling

back more sharply than in the rest ofthe country.

The renewed turmoil in globalfinancial markets may be starting tohit home with London buyers whohave thus far been insulated from the

worst of the downturn, the reportsaid yet Rightmove insisted thatfinancial worries will not hit pricesacross the country as a whole.

Low transaction levels mean thatprices in the UK are already bumpingalong the bottom, Rightmove said.

Asking prices for the UK as a wholewere down 2.1 per cent in August.

House prices dropthroughout London

BY LYDIA ELLIS AND JULIAN HARRIS

US POLITICS

News8 CITYA.M. 15 AUGUST 2011

WHICH REPUBLICAN WILL STAND AGAINST OBAMA?

MITT ROMNEY

DESPITE performingpoorly at the Iowastraw pool with 3.37per cent of the vote,Mitt Romney is a seri-ous contender. The for-mer governor ofMassachusetts is no

novice to presidentialcandidacy campaigning. Coming third toMcCain in 2008, Romneys campaign sawwins in 11 primaries and caucuses, fundedby $45m out of his own pocket. With abackground in management consultancyand private equity investment, Romneysreal life experience is his key strength.

MICHELE BACHMANNUNDERVALUED bybookmakers,Bachmann is one towatch. Narrowly seiz-ing victory in Iowasstraw poll, Minnesotasfirst Republican con-gresswoman is more

than a match for anychallenge by Palin. Palin is the bigger brand,but Bachmann is the bigger personality.As a traditional conservative with Tea Partysupport, PoliticalBetting.coms MikeSmithson told City A.M. that Bachmann hasa better than 50 per cent chance of winningthe first primary.

SARAH PALINPALINS failure toannounce her candida-cy by this late stage,coupled with rivalBachmanns strongperformance, effec-tively rules out anyhopes she may hold

for the contest. Onespeculator expressed the view that theAlaskan governor would have entered therunning yesterday following a poor resultfor her rival Minnesotan congresswoman.Despite having not even entered the contestyet, the infamous Palin is tipped as thebookies fourth favourite to win.

RICK PERRYPERRY came sixth inthe Iowa straw pollwith 4.26 per cent ofthe vote, yet remainsthe bookies favouriteto win. Cited as theAmerican publicsfavourite by MikeSmithson ofPoliticalBetting.com, some reckon thatPerrys support will eat into the Bachmann

vote. Overtaking Romney as the marketsfavourite, the ten years governor of Texashas overseen around 200 executions byelectric chair, the most controversial ofwhich may return to haunt his campaign.

RON PAULCOMING a close sec-ond to Bachmann inyesterdays poll with27.74 per cent of thevote, Ron Paul is con-testing the presiden-tial candidacy asecond time. Havingcome fourth to JohnMcCain (and behind Romney) in 2008, thebookies place the 75-year-old Texas con-

gressman four places below Romney as thesixth placed favourite to win. LibertarianPaul, originally from Pittsburgh, is an out-spoken critic of current American economicand foreign policy.

JON HUNTSMANWITH a measly 0.41per cent of votes atthe straw poll, JonHuntsmans refusal tocompromise policiesmay alienate the mid-dle-ground conserva-tives. A careerpolitician, Huntsmanworked as staff assistant to Reagan, deputyassistant secretary of commerce and US

trade representative to Bushes senior andjunior respectively. The former governor ofUtah achieved tax cuts of more than$400m while maintaining a budget surplus.Huntsman is also a Mormon.

NEWS | IN BRIEF

Think tank attacks green taxesGreen taxes are imposing excessivecosts averaging 500 per year for everyBritish family, the Taxpayers Alliancewill argue today. The social costs of car-bon emissions total 16.9bn, accordingto government estimates around13bn less than the 30.1bn net amountraised by domestic green taxes, the TPAhas calculated.

Wages rise in motoring sectorPay in the automotive industry is risingfor the first time since before the reces-sion, according to the latest data fromIncomes Data Services (IDS), releasedthis morning. Figures for the year toJune show that median pay rises acrossthe industry grew to 3.4 per cent thisyear, up from zero growth the previousyear. The median basic salary for skilledgrade positions in the automotive indus-try is now 475.49 a week, the figuresrevealed.

BY JULIAN HARRIS

HOUSING

15/1 10/1

17/120/115/8

TESCO today reduced its fuel prices byup to two pence per litre (ppl). Theprice cut covers both unleaded anddiesel and is in addition to the pricecut of up to 1ppl announced earlier inthe week.

Yesterday Morrisons took twopence off the price of a litre of unlead-ed and diesel. The supermarket hadalready slashed the price of a litre ofunleaded by 2p on Tuesday. ASDA alsosaid it would cut prices nationwidetomorrow by up to 2ppl.

Supermarketskick off pricewar over petrol

BUSINESS morale has slumped againthis month, according to researchreleased this morning by account-ants group BDO.

Economic growth in the UK hasbeen profoundly hampered by ongo-ing fragility in the manufacturingsector, the groups business trendsreport said.

The factory sector has been in con-traction for two straight months, BDOsaid, with the risk of falling intorecession. Its inflation index, mean-

while, has hit a 35-month high.

UK confidencedips on ailingfactory sector

UK ECONOMY

BY LYDIA ELLIS

FUEL

2/1

Research by Lydia Ellis

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READER AT THE ANTHOLOGIST BARLocated in the heart of theCity, The Anthologist offers aseasonal all day menu, winesfrom across the globe, skinnycocktails, a mixology table,deli, two cocktail lounges, aprivate room complete with1950s kitchen and analfresco terrace.

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HAYWARDRETURNS TO

DEEP WATEROFF COWESHOW TIME flies. Barely one year on fromthe Deepwater disaster in the Gulf ofMexico, former BP boss Tony Hayward isout of his depth again only this time heis steering Bob, his Farr 52 yacht, around atreacherous rock off the coast of Ireland.

Hayward, who spent last week compet-ing at Cowes, is currently on board one ofthe 318 competing yachts in the RolexFastnet Race a 608-mile sprint fromCowes to Plymouth via Fastnet Rock, theoutcrop that was the last sight of Irelandfor emigrants to the US.

As the fleet set sail yesterday, thefavourite to win the race was Mike Slade,the seafaring chief executive of property

developer Helical Bar, who is racing ICAPLeopard. Slade, who set the race record in2007, is being given a run for his money bythe fastest boat on the water, the tri-maran Maxi Banque Populaire V, which isin turn being chased by Ran, the 72-footerowned by Skype founder Niklas Zennstrmand Rambler 100, the 100-foot Maxi piloted

by former United TechnologiesCorporation chief executive George David.

Meanwhile, Julian Metherell, thefinance director of Vallares, the cash shell

Sailing close to the wind: US businessman George David and his crew racing Rambler 100yesterday

WHEN the world has gonemad, stick to what you know,thought six asset managers asthey chose Greens on Cornhillfor a nerve-restoring lunch inthe week the markets wentinto meltdown. The soothinglytraditional venue deliveredcomfort food including fishand chips, Dover sole andrump of lamb as clientsstocks plunged, served with areinforcing double G&T forone financier and a largevodka for another. Even thewine came in doubles: two

bottles of Puligny MontBitouzet disappeared fasterthan you can say October2008, then chasers ofChateau Lynch Bages,Chateau Talbot, Fonseca1985 port and a magnum ofLaurent Perrier Ros fol-lowed. If only the FTSEexpanded at the same rateas the groups drinks bill,their problems would beover

founded by Hayward with financier NatRothschild, is racing the Class 40 yachtMAX VMG, with former BP executive JohnManzoni also on board.

High stakes indeed as the contest movesinto its closing leg, with the fastest boatexpected to finish in Plymouth late thisevening. If they are lucky with the weath-

er, said a race spokesperson ominously, nodoubt mindful of the 1979 competition

when stormy conditions claimed 15 lives.

GUESSING GAME ARE Arki Busson and Uma Thurman anitem once more? The glamorous pair haveRSVPd as a couple for a party for the eliteof the elite on 8 September, organised byhedge fund tycoon Lord Stanley Fink andhis business partner David Johnstone.

No Arki Busson plus one; the advancelist of confirmed attendees for The World

Wide Launch Party a launch extravagan-za for The Global Party the following week clearly states: Arki Busson and Uma

Thurman, financier and actress.Of course, the Swiss philanthropist may

be bringing Thurman as his date out of a

shared commitment to raise the profile ofhis charity Ark, one of the beneficiaries ofthe event. Or the old friends may simply

want to catch up on past times.Whatever with hotelier Sir Sol Kerzner,

Virgin boss Sir Richard Branson, DiageoCEO Paul Walsh and retail mogul Sir PhilipGreen also expected to show up at theNatural History Museum fundraiser for2,000 guests, the evening wont be short onsurprises. A lot of things will be secretuntil the night, said a mysterious mole.

BILL OF THE WEEK

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News 11CITYA.M. 15 AUGUST 2011

UNITED Biscuits, which makes tea-time favourites including Digestivesand Jaffa Cakes, could be broken up asits owners plan to renew efforts to sellthe company.

Private Equity owners Blackstoneand PAI Capital will hold fresh talks incoming months that may see thesavoury brands, which include KPPeanuts, spun off from its biscuits divi-sion.

The two firms bought UnitedBiscuits, Britains largest biscuit pro-ducer, in 2006 for 1.6bn.

Last summer, they hired JP Morganand Goldman Sachs to conduct a

strategic review of the business, with aview to selling it for more than 2bn,but they have failed to deliver a deal,despite big food multinationals,such as Chinas Bright FoodsKraft and Campbell SoupCompany, being linked as poten-tial purchasers.

A new attempt to sell thefirm would see Britains largest

biscuit producer split into two,in a move that echoes Kraftsannouncement last week todivide itself into two listedcompanies.

In accounts published lastmonths, United Biscuits UKsaw its operating profits

jump by 10.4 per cent to

218.5m last year, showing thatBritons hunger for biscuits held updespite a tough year for cash-strapped

UK consumers. The accounts also

showed that the UK suf-fered most from a drive to

cut costs across the compa-ny, with a headcount crum-

bling by five per cent to 6,169.Campbell Soup Company is

expected to renew its interestin UBs biscuit arm, whichaccounts for 26 per cent of theUKs biscuit market.

PAI Partners declined to com-ment while City A.Mwas unableto reach Blackstone for com-ment.

United Biscuits nearsbreak-up of brandsBY KASMIRA JEFFORD AND ALISON LOCK

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JOY Seppalas secretive hedge fundSisu Capital posted a 434,000 net lossfor the year to the end of March after

being hit by a huge tax charge byHMRC, accounts show.

Sisu Capital, co-founded 14 years ago by Seppala and business partnerDermot Coleman, posted a 272,300loss before tax, slightly better than the376,300 loss it made in the year toMarch 2010. This second consecutiveloss is a far cry from the 10.6mpre-tax profit Sisu made inthe year to March 2008and 17m profit in

2007. The high

post-tax fig-ure wascaused by a

161,752 tax charge from the conclu-sion of an HMRC probe into Sisus taxpayments from 2006 to 2008.

Sisu, a low-profile fund withMayfair headquarters and no website,specialises in buying distressed debtand has a reputation for aggressive tac-tics to recoup funds when it invests.

It took control of Coventry City foot-ball club in 2007 after unsuccessfullybidding for Southampton, Derby and

Manchester City. But whileit has spent a reported25m on the club, Citysdebt remains at 40m andis growing by 500,000 per

month. The firm paid

1.493m in salariesto 25 employeesover the year,down from1.723m in 2010.

Sisu Capital seessecond annual loss

as fee income fallsBY ALISON LOCK

FUND MANAGEMENT

NEWS | IN BRIEF

Ben Sherman hires Burberry manUK menswear label Ben Sherman hashired Burberrys head of marketing AdrianWard-Rees as the companys new com-mercial director. Ward-Rees has previous-ly held positions at Nike and Speedo, and

joined Burberry in 2007. Ben Sherman isrun by ex-WDT chief executive Pan

Philippou, and was bought by US clothingretailer Oxford Industries in 2004.

Apes film tops US box officeSci-fi movie Rise of the Planet of the Apeshung on to the top spot at the weekendbox office for the second week in a row,according to studio estimates. The revivalof the Planet of the Apes franchise pulledin an estimated $27.5m (16.9m) at USand Canadian theatres over three days,distributor 20th Century Fox, a unit ofNews Corp, said. Civil Rights-era dramaThe Help finished a strong second with$25.5m in domestic ticket sales over threedays. Horror flick Final Destination 5 land-ed in third place with $18.4m.

Evonik plans real estate saleGerman unlisted chemicals maker Evonikwants to sell the majority of its real estatebusiness apartments. Through focusingon its core chemicals business, Evonik

hopes to bolster itself for a planned initialpublic offering (IPO). Evoniks residentialreal estate operations, Evonik ImmobilienGmbH and THS GmbH jointly hold around130,000 residential apartments.

GREAT NORTHERN HOTEL FREEHOLD SOLD

THE freehold on the 157-year-old Grade-II listed Great Northern Hotel, which will formpart of the new Kings Cross station redevelopment, has been bought by US real estateinvestor Pramerica for 12m. A pedestrian arcade that links the station and the hotelhas already been completed, and the renovated hotel is slated to reopen in 2012, in timefor the London Olympic Games.

MORE NEWSONLINE

www.cityam.com

ALGY Cluff, the 71-year old miningtycoon who once said that his ven-ture Cluff Gold would be the lastthrow of the dice is returning to themarket with plans to list a new min-ing company on the London StockExchange next year.

Cluff Africa Associates, the fifth ina line of companies to bear his name,

was set up last year for exploringcopper and coal deposits in Africanand has raised 2.5m so far throughtwo fundraisings.

Cluffs attachment to Africa stems

back to his time serving as a

Grenadier Guard in the 1960s, whenhe told one paper the mysteriousplace got under his skin.

After spending three decades inoil and gas exploration, heembarked on his first mining ven-ture in Africa with Cluff Resourcesin the 1980s, which made one of thelargest postwar gold finds in 1994

before being taken over a year laterfor 80m by Ashanti, much toCluffs dismay.

This was followed by CluffMining now Ridge Mining in2000, which specialises in platinumextraction and Cluff Gold, which list-ed on the Alternative Investment

Market in 2005 and received a

takeover bid lastyear.

Cluff, whoonce describedhimself asa romantic Tory,o w n e dthe Spectatorm a g a z i n efor four

years in the1980s and

was chair-man formore than 20

years.

Algy Cluff sets his sights on listingself-named coal mining firmBY KASMIRA JEFFORD

MINING

ALGY CLUFF

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TAKE-UP of office space in the Cityremained at its lowest level since2009 in the last quarter, according tonew research by Equipe.

There have been no moves tooffices larger than 50,000 sq ft in thelast six months, with take-up of officespace at just 834,000 sq ft, slightlydown on the previous quarter. Thenumber of deals also fell by three percent quarter-on-quarter.

However, tech and media firmshave driven a remarkable spike inthe uptake of space in east centralLondon. Farringdon saw anincrease of 125 per cent in thethree months to the end of

June and the EC1 areajumped 30 per cent.

A spokesman toldCity A.M. this islargely due toc o m p a r a -t i v e l y c h e a pr e n t a lprices

CLIVE Jackson, the serial entrepreneurbehind digital marketing firms includ-ing Autotorq and Global Reach, haslaunched a private jet-share business,

which aims to make luxury travelmore accessible to the wider market.

Victor, the new jet broking business,allows members to book spare seats onprivate flights already chartered byother travellers through its website.

Jackson, who devised a similar con-cept for the automotive industry with

Autotorq, has already subscribed 240members and has a contracted fleet of

over 120 private jets across Europe,through 22 partner aircraft operators.

Office space

take-up in theCity stays flat

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lectronicsCo.Ltd.

*T3Magazine,Techradar,Stuff

The multi-award winning* Galaxy S II smartphone.Still Faster. Slimmer. Brighter.Read the reviews: its all in black and white at samsung.com/uk/galaxys2

THE UKS biggest book publisher istaking steps to address a 35m pen-sion black hole and could see some ofits top editors leave in the process.

Hachette is closing its remainingfinal salary pension schemes to newaccruals this autumn, affecting some250 long-serving workers.

Negotiations are understood tohave dragged, with sources suggest-ing top staff are now consideringtheir position at the company.

Hachette last year struck a dealwith Google to control the scanning

and electronic sale of 50,000 out-of-print French language titles.

Pension deficittroubles HachetteJackson sets upprivate jet firm

BY STEVE DINNEEN

PROPERTY

AVIATION

PUBLISHING

News12 CITYA.M. 15 AUGUST 2011

Time to choose: Fiscal union or euro break-up

I TS all getting a bit Cheryl and Ashley Cole in the Eurozonerecently. To quote Cheryls no.1 hit,the EU seems to think that if its

worth having, its worth fighting for.

Well, I beg to differ. If youre in a sit-uation that clearly doesnt work, thenget out and dont look back.

Even after all the bailouts and sup-port schemes, contagion is still the

name of the game. Every time a coun-try gets in trouble and the authoritiestake measures to try and deal with it,attention invariably turns to who willcome unstuck next.

Frankly, Im finding this tedious. The only point to these expensivepatching-up exercises, in Europe andelsewhere, is to return confidence tomarkets and get the various partiesspending, investing and lending again.

If the fundamentals or the system

are so obviously rotten that noamount of patching up will do it, thensurely its time to start again.

Bailout upon bailout, QE, short-sell-ing bans, central bank intervention of

various kinds... None of it changes thefact that theres still tonnes of debt, lit-tle growth and an ongoing mismatch

between economic, fiscal and politicalaccountability in the Eurozone thatleaves Europe impotent when it comesto the core issues.

Recently, a growing number of ourviewers have emailed and tweeted totell us theyre losing patience withrepeated intervention. Many are call-ing upon governments on both sides

of the Atlantic to unleash the power ofthe markets to reset the system onceand for all.

The question is, are we prepared totake the consequences? Unbridled

market forces, ripping off the plaster,purging the system and various othercliches sound very statesmanlike fromthe comfortable surroundings of youroffice sipping a latte.

But what about the unemployment,the home repossessions, the bankrupt-cies, the protests, the political unpopu-larity?

I think we need to remember whyEurope opted for closer economic inte-gration to start with. Surely the goal

wasnt monetary union in its ownright.

It was supposed to bring great pros-perity and stability for us all. Thats

worth fighting for.

The debt crisis has shown faults inthe system. Rather than blindlydefending a flawed system we must gofull steam in one direction either fullEuropean integration or full nationalfiscal, monetary and political sover-eignty.

And in the meantime I promise thatIm going to read less celebrity gossipmagazines and more City A.M.

Beccy Meehan is an anchor at CNBC.Twitter @BeccyMeehan

CNBC COMMENT

BECCY MEEHAN

and an up-shoot in the number ofnew business start-ups taking advan-tage of the smaller spaces available inthese areas.

Central London take up increasedby 10 per cent in the second quarter,buoyed by a 22 per cent increase intake up in the West End.

This largely comprised of Googlesmove to the Central St Giles develop-ment (pictured) and DoubleNegatives move to 160 Portland Place,

without which take up would havebeen flat.

Midtown takeup was fiveper cent ahead to 240,000

sq ft, driven by demandin Holborn.

The number of dealsin Central London in

total was up six percent, with realestate adviserEquipe sayingthat, despiteoccupier cau-tion, themarket iss t i l lresilient.

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SHAVING paraphernalia firm King ofShaves has been valued at almost25m after selling an increased staketo Japanese investor Kai Industries.

The blade manufacturer tripled itsholding from seven per cent to 21 percent, according to the Sunday

Telegraph.Kai and King of Shaves have had a

successful relationship in the past,with Kai helping to develop the popu-lar Azor manual razor.

King of Shaves also announced alicensing agreement with Remington

to sell a new range of branded electri-cal products through Argos.

TOTAL revenues at the UKs top 100law firms hit 14.27bn in 2010-11, afour per cent increase from the previ-ous year and a return to growth afterdeclining turnovers since 2008.

Profit at the biggest firms hit 4.3bn also up four per cent from the4.15bn in 2009-10, while the overallprofit margin remained flat at 30 percent, according to The Lawyers latestUK 100 survey.

Magic circle firm Clifford Chance,which in the past year has worked onLondon listings for both Glencore andDP World, retained its top spot as theUKs largest firm by revenue, reportinga three per cent increase in income forthe past year to hit 1.2bn.

The firm, run by managing partnerDavid Childs, also re-entered the mil-lion club with profits per equity part-ner (PEP) topping 1.005m, up fromlast years 933,000.

But it wasnt enough to knock Cityfavourite Slaughter and May off itsperch as home to the UKs top-earninglawyers, with PEP at the firm hitting1.9m up 0.5 per cent from 2009-10.Due to the lockstep pay system, where

partners are paid according to theirlength of service, the highest earnersat the firm took home 2.1m last year.

Though Clifford Chances revenuestopped the table, rival firm FreshfieldsBruckhaus Deringers impressive 47.7per cent margin means it holds thetitle for richest firm in the City, despitean eight per cent drop in profits sincelast year. Net profit at the firm fellfrom 589m to 544m, but on rev-enues that remained f lat at 1.14bn.

The Lawyer survey also covers barris-ters chambers, with Temple-basedBrick Court Chambers heading up thelist of the countrys biggest earners asrevenues rose from 42.5m in 2009-10to 47m over the last year.

But the barristers with the largestpaychecks are the residents of

Wilberforce Chambers, where averageearnings per lawyer were 800,000.

New entrants to the solicitors listinclude volume insurance firmParabis Law and Yorkshire firmMinster Law.

Parabis raced up the charts, debut-ing in the top 100 at number 29 withrevenues of 100m. It also posted PEPof 3.1m, but is structured in such a

way that it cannot be compared to themore traditional corporate firms.

Magic Circle

law firms ruleUKs top 100

headline sponsor champagne reception sponsor

official venue partner

sponsors

The Square Milesevent of the year.

Book your place for the City A.M. Awards

on Wednesday 21 September at the

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Visitwww.CityAMAwards.com

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BUDGET hotel chain Travelodge yester-day announced plans to open 37 hotelsnear to the UKs 15 national parks in a135m expansion drive

The group, which currently has 475hotels in the UK, Ireland and Spain,said the move came in response tohigh customer demand for hotels closeto the UKs top rural locations.

Travelodge said its existing hotelsnear to the main national parks,including Snowdonia and the LakeDistrict, achieved high occupancy lev-els far earlier than normal this year.

The expansion is expected to createmore than 500 jobs.

Travelodge eyesNational ParksKing of Shavesvalued at 25m

BY ELIZABETH FOURNIER

LEGAL SERVICES

RETAIL

LEISURE

News 13CITYA.M. 15 AUGUST 2011

Slaughter and May, whose senior partner is Chris Saul,reported average profits per equity partner of 1.9m

Clifford Chance, led by David Childs, is the UKs largestfirm by revenue

Mark Rawlinson heads up Freshfields BruckhausDeringer, the UKs richest firm by profits

Brick Court Chambers, where Nicholas Green is jointmanaging partner, is the UKs biggest by revenue

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London 2012 TIME TO GET READY

Dont take freight reduce, rethink and retimeThe Transport for London and London 2012 Travel Advicefor Business team answers your Olympic readiness questions

Q.WE ARE BASED IN THE CITY,

AND WE USE A NUMBER OFFREIGHT SUPPLIERS TODELIVER PERISHABLE GOODS TOOUR OFFICE EACH DAY. WE HAVELIMITED STORAGE SPACE, SO WHATARE OUR OPTIONS?

A. The City is a hotspot, anddeliveries to this area are like-ly to be affected during Games

time. While access to businesses willbe maintained and your firm will beable to receive deliveries, you shouldstart to plan now to minimise dis-ruption to your deliveries.

Businesses should review the per-ishable goods they require duringthe Games and reduce freight trafficwhere possible.

While some sectors, such as thehospitality industry, are expectingan increase in activity during theGames, others may be aiming to

reduce the level of staff at their site.

It is important to consider the sup-plies you require during the Gamesperiod and whether demand is likelyto change.

Many businesses are planning tostockpile non-perishable goods dur-ing the Games. For businesses withlimited storage space, it may be pos-sible to work collaboratively withneighbouring businesses.

Transport for London and London2012 are working with both freightand business trade associations,business forums and business inter-mediaries to raise awareness of theimpacts the Games will have ondeliveries, collections and servicing.

To ensure your suppliers are awareof the impacts of the Games, it isimportant to have early conversa-tions with them. Find out how theyare preparing for the Games, andplan ahead to avoid disruption.

Make your suppliers aware of your

needs during the Games and discussany changes to your normal opera-tions or those of your suppliers.

There are several actions business-es can take to reduce the impact theGames has on deliveries. Your busi-ness may want to consider reducingdeliveries by pre-ordering and stock-piling non-perishable items andcoordinating deliveries with neigh-bours who share the same suppliers.Other options are retiming deliver-ies to avoid peak hours and rerout-ing deliveries around road hotspotsin your area if necessary identify-ing different delivery points or load-ing/unloading locations.

Over the next two months, your ques-tions on Olympic preparedness will beanswered in City A.M. every Monday bythe Transport for London and London 2012 team. For more information, visitlondon2012.com/traveladviceforbusiness.

Stock up onstationery inadvancePicture:Reuters

News14 CITYA.M. 15 AUGUST 2011

Q A&

The City will tighten security inside and out

WITH rioting spreadingthroughout the country lastweek, a number of other sig-nificant stories were relegat-

ed to the back the newspapers.There is no doubt that in any other

week a ban on short-selling in four

major European countries and thedowngrading of the United Statescredit rating after months of political brinksmanship would have been

front page news in every publication.In some ways given its centrallocation and the high-density of inter-national businesses and well-paidworkers it was surprising that theCity remained untouched by themindless criminality we witnessedlast week in parts of London and therest of the UK.

However, for people looking tocause such disruption, the City repre-sents a daunting prospect. Doubtlessthe presence of one of the worldsdensest security and surveillance net-

works played a part bolstered by theSquare Miles own police force, largenumbers of in-house security guards,and an alertness honed over decades

of being a potential terrorist target.And while the Square Miles physi-cal security remained intact, moveswere also afoot to bolster the securityof the banks and investment housesthat form such an important part ofthe its business community.

Last week, the FSA released a con-sultation paper outlining proposalsfor more than 250 banks and build-ing societies, as well investment firmswith more than 15bn in assets, todraw up living wills.

These documents will outline the

measures each institution would takein order to try to prevent collapse including cutting bonuses and sellingoff substantial assets or to safeguard

investors and deposit holders weresuch an eventuality to transpire.Inevitably, there are concerns;

many institutions feel that they may be left vulnerable to takeovers andhostile bids and that they will have tocommit huge amounts of time andmoney in order to produce docu-ments that the FSA will deem to besatisfactory.

However, such concerns would be asmall price to pay in order to reducethe possibility of future taxpayer bailouts. No longer could any UK-

based institutions or UK subsidiariesbe deemed too big to fail.

The FSA is setting the agenda forthe formulation of recovery and reso-

lution plans internationally; a courseof action to which our global partnersare already committed and whichwill be the focus of a worldwide planfrom the international FinancialStability Board later in the year.

Hopefully, once implemented,these plans will help to ensure that itis not just the Citys streets andoffices that are secure, but the finan-cial institutions that operate withinthem.

Stuart Fraser is the policy chairman atthe City of London Corporation

DONGFANG Shipbuilding will list onthe AIM market later this week in abid to boost its European profile.

The Chinese firm will not initiallyraise new funds through the listing,although finance director AKM Ismailtold City A.M. this will be a considera-tion in the coming months.

Around 29 per cent of the firmsstock will be listed, with chief execu-tive Chen Tongkao maintaining his71 per cent stake.

The stock to be listed, which is cur-

rently held by retail investors, has avalue of around 10m.

Finance director AKM Ismail said:Thursdays listing is primarily anintroduction to the market, to giveinvestors a feel for the company.There will probably be a fundraisingin the future.

We want to differentiate us fromall the other shipbuilders in China. Alarge proportion of our customers are based in Europe so this will helpbeing us closer to them.

Dongfang Shipbuilding manufac-tures small and medium size vesselssuch as chemical tankers and multi-

purpose container ships from twoshipbuilding yards in Anhui andZhejiang provinces in China.

Tongkao said: The admission toAIM is a significant step in our devel-opment, as it will raise Dongfangsprofile to potential customers acrossEurope and enhance the Groupsstanding with its partners.

There are considerable opportuni-ties in our sector, and with access tocapital markets the group will be wellplaced to make acquisitions in thefuture. The board looks forward to working with its shareholders todrive our businesses forward.

Chinas Dongfang Shipbuilding plans AIM

listing this week to boost Europe appealKUWAITS Agility, the logistics firmfacing US fraud charges, posted a 57per cent drop in second-quarter netprofit, but still slightly beat forecasts.

Net profit in the last three monthswas 7.83m dinars (17.6m), the compa-ny said in a statement, down from18.09m dinars a year earlier.

Analysts had forecast Agilitys sec-ond-quarter earnings would fall to anaverage of 7.4m dinars.

Agility blamed the drop in earn-ings and a 23 per cent fall in quarter-ly revenue to 331m dinars on lostdefence and government business.

The company said it expects solidgains in 2012 as its investments inemerging markets were helping thegrowth of its core business, and itscustomer base was expanding whileoperations were being streamlined.

Fresh initiatives intended to growrevenue and reduce costs should pro-duce solid gains in 2012, Agility saidwithout giving details.

Last month, a US district judgeordered the arraignment of Agility inthe latest step of the prosecution ofthe logistics company over chargesthat it defrauded the US Army inmultibillion-dollar contracts.

Kuwaits Agility sees its secondquarter profits fall 57 per cent

LOGISTICS

BYSTEVE DINNEEN

SHIPPING

CITY COMMENT

STUART FRASER

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News 15CITYA.M. 15 AUGUST 2011

PwCThe professional services firm has hired

Steven Dicker, an expert in pensions riskmanagement, as a pensions partner.

Dicker joins from Goldman Sachs, priorto which he spent a decade as a pen-sions partner with Watson Wyatt.

TravelzestThe online travel group has appointed

James Brooke as a non-executive direc-tor. Brooke, an investment manager atHenderson Global Investors, Travelzestslargest single shareholder, will receiveno remuneration for the role.

SWIPScottish Widows InvestmentPartnership has strengthened its UK

Institutional Sales team by appointingPeter Clarke as institutional sales direc-tor. Clarke joins from placement agencyCalimere Point Advisors. Prior to that,he was head of UK and Ireland creditsales at Nomura International.

LombardThe asset financier has appointed IanIsaac as MD of Lombard Business &Commercial. Isaac returns to the firmfrom the Royal Bank of Scotland Group,where he was head of strategy, market-ing and communications for theBusiness & Commercial Banking team.

First State InvestmentsThe asset manager has hired HeleneWilliamson to lead its new EmergingMarkets Debt team. Williamson, whowill start in September, joins from F&CAsset Management, where she was

head of emerging market debt.

Cushman & WakefieldThe property firm has appointed CalumEwing as a partner in its centralLondon retail team. Ewing will joinCushman & Wakefield in Septemberafter spending five years at KnightFrank, where he was a partner.

CITY MOVES | WHOS SWITCHING JOBS Edited by Harriet Dennys

LSLMartyn Alderton has been appointed as man-aging director for asset management in theproperty services firms Corporate ClientDepartment (CCD). He replaces David Brown,

formerly managing director of LSL CCD andcommercial director of LSL PropertyServices, who will retain his commercialdirector position. Alderton was previouslyoperations director at the company.

+44 (0)20 7557 7245morganmckinley.com

To appear in CITYMOVESplease email your careerupdates and pictures to citymoves@cityam.com SPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

in association with

WALL STREET WEEK AHEAD

Modest gains forecast after a rollercoaster ride

IAM not really sure where to startthis week... and I think manytraders feel the same; we knowthere are opportunities out there,

some markets are looking over-val-ued, some looking cheap, but thesheer scale of the volatility swings

witnessed in the past two weeks themost severe since the collapse ofLehmans in 2008 takes its toll, leav-ing us weary, frazzled and rather

bemused.

FTSE RISE FORECAST TO CONTINUE The FTSE 100 somehow closed the week over 150 points higher than where it started, and the Dow alsomade healthy gains on Friday afterthe release of positive US retail salesdata.

The very short term outlook fore-

cast is for that momentum to contin-ue on the open this morning.GFT quotes two-way prices on

stock indices around the clock, even when the underlying markets areclosed.

The FTSE 100 index is called toopen up approximately around 15points at 5,335. The German DAX isforecast to open back up above the6,000 level up 25 points at 6,022

and the French CAC 40 is quoted toup 11 points at 3,224.

A complete contrast then to thenear-apocalyptic state of the marketslast Monday. After the brief respite ofthe weekend, it is expected thatinvestors will go with the momen-tum, buying on the dips and takingadvantage of some cheap-lookingfinancial stocks.

Federal Chairman Ben Bernankegave another impetus to those braveenough to buy in to these markets,saying that the Fed had discussed

the range of policy tools available.OPTIMISTS THINK QE3 IS COMING

The optimists out there took this tomean that a further round of quanti-tative easing QE3 as the programme

would be known is on the cards.But this week I believe we may see

that assumption tested as tradersreconsider the context of Bernankesstatement as really little more than a

carefully-timed reassurance to the

markets coming as it did the dayafter the Dow had fallen over 600points.

While everyone will be looking forsome return of stability this week,

watch out for earnings from HewlettPackard (Thursday) and Dell (tomor-row); after Ciscos better-than-expect-ed Q4 earnings pushed those sharesup 16 per cent on Friday, many will

be hoping for moe of the same from

these two tech-heavyweights.

Martin Slaney is director of GlobalDealing Operations at GFT

MARTINONTHE MARKETS

WITH the blow from the 5

August credit rating down-grade behind them,investors will focus on the

outlook for the US economy as well assigns that European policymakersmay be able to contain the Eurozone

debt crisis.Widespread investor panic put the

market on a rollercoaster ride last week, with steep losses followed bynearly-as-steep gains in high-volumetrading. It was the busiest week for

volume since October 2008.Though investors are still searching

for a bottom in the sell off that has

taken the benchmark Standard &Poors index down 12.4 per cent since

22 July, indexes rose both Thursdayand Friday the indexs first two-dayrally since mid-July and volatilityeased.

The move could set stocks up for acalmer week this week, especially ifeconomic data shows the United

States is not headed for another reces-sion, strategists said.

Every bit of data that shows theeconomy not slipping into recessionis going to be the basis for the marketto begin to calm down in the weeksahead, said Peter Cardillo, chief mar-ket economist at Rockwell GlobalCapital in New York.

While Wall Street stocks endedhigher on Friday, the market fell for

the week. The Dow fell 1.5 per centand the Nasdaq lost 1 per cent. TheS&P 500 fell on 11 of the past 15 days.

Housing and manufacturingreports are among indicators on tapthis week, including the New Yorkand Philadelphia Federal Reserve

regional manufacturing surveys andexisting home sales.

MARTIN SLANEY

ANALYSIS l FTSE

16 May 3 24 Jun6 Jun 14 Jul 3 Aug

6,200

5,800

5,400

5,000

5320.0312 Aug

ANALYSIS l DAX

16 May 3 Jun 23 Jun 13 Jul 2 Aug

7,500

7,000

6,500

6,000

5,997.7412 Aug

BEST OF THE BROKERS To appear in Best of the Brokers email your research to notes@cityam.com

ANALYSIS lShire Pharmaceutical

2,100

2,000

1,900

1,800

Jun Jul Aug

p1,949.00

12 Aug

SHIRE PHARMACEUTICALUBS upgrades the pharma group to buy from neutral and increases its tar-get price to 2,400p from 1,850p. The broker sees a recent retreat in the com-panys share price as an ideal buying opportunity, and think the consensus2013 earnings per share are too low. UBS says that consensus prospects onShires ADHD drug Vyanase are overly cautious and expects growth in themarket to continue, with a 17.9 per cent market share for Vyanase in 2013.

ANALYSIS lARM Holdings

600

550

500

450

Jun Jul Aug

p

526.0012 Aug

ARM HOLDINGSGoldman Sachs adds the chipmaker to its consensus buy list with atarget price of 800p, seeing its recent pullback as an attractive entrypoint into the companys shares. The broker says near-term demand inconsumer electronics may be mixed and depress ARMs royalty growthin the second half of 2011, but remains positive on growth in smart-phones and tablets.

ANALYSIS lSwisscom

390

370

350

330

Jun Jul Aug

CHF351.80

12 Aug

SWISSCOMNomura reiterates its buy rating on the Swiss telecoms provider with a tar-get price of CHF430 (339), despite weak second quarter results that sawgroup revenue and earning around two per cent below forecasts. The brokersays Swisscom is still one of its top defensive picks, and is one of the key win-ners in the appreciation of the Swiss franc against the dollar and the euro, as25 per cent of its domestic cost base is denominated in foreign currency.

8/6/2019 Cityam 2011-08-15

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THE WEEK AHEAD in association with

U.S. now running on AA+ since

S&P downgrade. Do you:

a) Wonder how a whole country cankeep going on those itty bitty batteries.

b) Guess that markets will enter a period oftotal chaos and clean up in the aftermath.

Apply now at capitalspreads.com

Spread betting and CFD trading carry ahigh level of risk to your capital and you

can lose more than your initial deposit.

Capital Spreads is a trading name of London Capital Group, which is authorised and regulated

by the Financial Services Authority.

COMPANY NEWS

l Today, Michael Page

International announces. MichaelPage is an expert in professionalservices recruitment, itselfemploying more than 3,800 peo-ple in over 152 offices and 32countries worldwide.

l Resolution announces tomor-row. It is led by founder CliveCowdery and John Tiner, who waschief executive of the FSAbetween September 2003 andJuly 2007. Ocean Wilsons alsoannounces on Tuesday. It is a lead-ing supplier of maritime servicesin Brazil and holds a portfolio ofinternationally listed investments shareholders will hope every-thing is going swimmingly.

l On Wednesday, EurasianNatural Resources, Balfour Beattyand Henderson announce. All have

invested their reputations onunearthing good results.

COMPANY NEWS

l London Capital Group also

announces on Wednesday. It wasfounded in London in 1996 as aproprietary trading business andin 2003 underwent a majorrestructuring to become a leadingplayer in financial spread bettingwith the launch of CapitalSpreads.

l On Friday, Jupiter FundManagement will be hoping forastronomical results when itannounces. Jupiter is a UK fundmanagement group, managingequity and bond investments forprivate and institutional investors.

l Anglo-Eastern Plantations alsoannounces on Friday. It wasformed and floated on the LSE in1985 to acquire and develop fourestates in North Sumatra, aprovince of Indonesia, previously

owned by several UK based plan-tation companies.

ECONOMICS NEWS

l Tomorrow, the Eurozones second

quarter GDP results will bereleased. In the first quarter theycame in at 0.8 per cent quarter-on-quarter and 2.5 per cent year-on-year. Bad results would worry themarkets greatly.

l The UK will release RPI and CPIinflation figures tomorrow. Lastmonth RPI was running at 5 percent, while CPI was at 4.2 per cent.The Bank of England has largelygiven up on its 2 per cent target,but Mervyn King will still have fin-gers crossed that they are lower.

l The Bank of England will releaseits minutes on Wednesday. Minutesfrom the MPC meetings are alwayspublished two weeks after theinterest rate decision. They give anaccount of the policy discussion,including differences of view,

recording the votes of the individ-ual members of the committee.

POLITICAL NEWS

lA lot is happening tomorrow.

Nicholas Sarkozy and AngelaMerkel will meet in Paris to discussthe economic governance of the 17-nation Eurozone. Collaboration hasso far proved unsuccessful.

l US Vice President Joe Biden willdepart on a tour of China, Japanand Mongolia tomorrow. He willmeet both Chinese Premier WenJiabao and President Hu to discussa range of bilateral, regional andglobal issues.

lAlso on Tuesday, two more recallelections for the Wisconsin statesenate will occur. After last weekschallenge against Republicanincumbents, next Tuesday will seetwo Democrat senators facing chal-lenges. The small election hasattracted attention across Americaafter governor Walkers anti-union

legislation brought in thousands ofprotesters.

WITH Balfour Beatty reportinghalf-year results onWednesday, investors will behard pushed to draw their

attention away from the technicals, whichdon't ooze excitement. The stock appearsto be in a lasting downtrend with an RSIlevel below 30, and the fact that it haspenetrated its lower daily Bollinger bandonly backs up the view that sellers shouldbe eyeing up this stock. Capital Spreadsquotes 255.0p-256.4p.

Like the stock market currently, theproperty market doesnt seem to havemuch direction, and this is going to be abig factor for the earnings figures ofSavills on Thursday. Not only are peopledoubtful about the direction of propertyprices in the short term with the possi-bility of a double dip looming but the

recent riots wont be good news for theirfuture. And to add fuel to the fire, thesummer months are well known forbeing dry when it comes to propertybuyers. Come Thursday, investors should-nt be surprised to see the lasting down-trend continue for the advisory propertycompany. Capital Spreads quotes323.2p-326.4p.

Since the announcement that HongKong tycoon Li Ka-Shing has agreed tobuy Northumbrian Water, the shares ofPennon Group have taken a bit of abeating. The fact that it has an interimmanagement statement out on Tuesdayshould draw a bit of attention to theshare price, and although it has beenunder pressure since dipping below698p, if it can claw its way back abovethat level then there is an appealingupside, with levels of 738p in reach, andalso great potential for more interest inthe sector. Capital Spreads quotes652.0p-654.3p.

Philip Salter

Craig Drake

THE TIPSTERBALFOUR SELLCOULD BE AGOOD BEATTY

swings will occur? A good method isto use indicators such as the relativestrength index (RSI) or the movingaverage convergence divergence(MACD). The RSI helps to identifywhen a stock is overbought when it isabove 70 or oversold when below 30.In current markets, traders must ofcourse pay attention to their use ofstop losses. Not to put them in place would be foolhardy, but under volatile conditions, stops shouldnt be set too tight to avoid being

stopped out too early.

STRADDLE OPTIONSAs well as swing trading, Azbel sug-gests that traders unsure of whichway the price will go can employ astraddle option strategy, where aninvestor holds a position in both acall and put with the same strikeprice and expiration date. If thetrader knows the point at which volatility will occur (for example anews release) then straddle-options

can be highly effective but ofcourse such strategies reduce upsidefor the sake of risk mitigation. Thisis because on stocks that are to seelarge movements, the market tendsto price options at a higher premi-um, meaning that the stock needs tomove significantly to see any returns.

And if all else fails? According toAzbel: The last option is of course tostay out of the market a trader issure not to lose any money, but wontmake any either.

A

FTER the last few weeks,traders could be forgiven forwanting to shut themselves ina dark room and hide under

the duvet. We have had a downgradeof the government debt of a financialsuperpower, talks of Switzerlandresorting to pegging its currency tothe euro, and French and Italianauthorities banning short-selling. Among other lowest in decadesand record high news, US con-sumer sentiment is at its lowest sinceMay 1980. But for those who do notwant to cower beneath the bedding,how should you approach trading incurrent market conditions?

According to Autochartist chiefexecutive Ilan Azbel: My favourite isto use chart patterns in a swing trad-ing strategy. That is, not to tradebreakouts through support or resist-ance, but rather to trade movementsbetween support and resistance lev-els. If pursuing such a strategy, it isvitally important that one is not trad-ing in a trend. So ones outlook as tothe duration of the volatile market isimportant.

SWING TRADING The pioneer of swing trading wasWilliam Gann in the 1930s, rackingup huge profits using swing charts.Swing traders try to profit from theupswings and downswings of themarkets, identifying the top of a rallyand then selling at troughs. Ofcourse this is easier said than done.So how do you identify when these

Avoiding a wipeout when

trading in volatile marketsThose traders who choose tohead into choppy financialwaters will want to profiteven when the tide is againstthem, writes Craig Drake

Riding the waves toprofit

Picture: REUTERS

Wealth Management | Spread Betting16 CITYA.M. 15 AUGUST 2011

ANALYSIS l Spotting the peaks and troughs

p

Oct Nov Dec 2011 Feb

93

89

85

81

77

73

10-day moving average

A dip in Northumbrian water Picture: PA

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The King of Clubstells Donata Hugginshis views on freedom,money and motivation

ITS HOT and the big beasts of the corpo-rate jungle are getting desperate for easyprey. Gathering around the entrepreneur-ial watering holes, they are hungrily

eyeing up one species in particular, the gazelles.In business parlance being a gazelle is

about as good as it gets. Often found on theopen plains around Londons SiliconRoundabout, these are fast-growth youngbusinesses with the fitness to leap over thecompetition and live the entrepreneurialdream.

But not so fast. According to research bySAP UK & Ireland and Delta Economics, these

young bucks should beware the perils ofgrowth. Many of them are set to be culledbecause of the speed of their success.

Business failure is a very real risk, but thisset piece of summer season silliness missesthe point. Apparently 33 per cent of business-es that disappear do so because they areacquired. What a disaster, except, hold on, Ithought that selling your business was thepoint for many entrepreneurs. Tell IainDodsworth, who sold his business Tweetdeckfor 25m, that selling after three years wasthe worst mistake he made.

This sort of message says a lot about themindset of many large corporates strugglingto find a theme that works with the smallbusiness market. That when in doubt, the bestway to win is to scare the market half todeath.

But thats not my overwhelming objection.It is more that the negative message to small,fast growth companies is such a siren call offolly. Most companies dont have a realisticchoice about controlling their pace of growth,and while a reputation for being dull butdependable might sound good in a corporateivory tower, on the street its an ingredient tobe ignored and a recipe for failure.

The pursuit of growth is great. Two yearsago, the business I co-founded was an idea onthe kitchen table. A big part of our thinkingwas that if people believed we could growthen we would grow. The strategy was allabout momentum and so far the good news isthat the strategy works.

Our business is known as a fast-growthbusiness because we have the aspiration,ambition and optimism to excite our clients.Maybe we will fall off the curve at some pointbut we also might get right back on it becauseof these very same character assets.

Growth most certainly has its challengesbut we wouldnt change the direction for asecond. It provides the lifeblood that drivesthe business, develops the people, and delivers

better results for clients.For the vast majority of businesses its nottoo much growth that is the problem; its thatthey dont have enough of it. So rather thanread extinct research, my advice to aspiringgazelles is to get hold of the Jungle Book, andheed the lyrics