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FTSE 100 5,466.36 +62.98 DOW 11,644.49 +166.36 NASDAQ 2,667.85 +47.61 /$ 1.58+0.01 / 1.14 unc /$ 1.39 +0.01

Mouchel

chair quitsafter justfour days

STRUGGLING infrastructure groupMouchel was plunged into furtherchaos last night after its interim chair-man quit after barely four days in the

job.David Sugden resigned after failing

to win the backing of Mouchelslenders to fill the position permanent-ly. He had only replaced Bo Lerenius on

Thursday when the firm warned itcould breach its banking covenants.

Sir Michael Lyons, the senior inde-pendent director and a former chair-man of the BBC Trust, has been namedinterim chairman.

Yesterday the school and roadbuilder Mouchel, which has an 87mdebt pile, said Sugden had left afterfurther discussions with the boardand other key parties about the best

way to secure its future.City A.M. understands Sugden did

not want to be a stop-gap and thatMouchels main lenders, Lloyds, RoyalBank of Scotland and Barclays, did notoffer him the position permanently.

Mouchel said: The lending bankshave informed the board that they arefully supportive of the board and itsexecutive team.

Earlier this month RichardCuthbert resigned as chief executive

after Mouchel said a statistical errorand mounting risks to contractswould cut about 60 per cent from thisyears profits.

BY PETER EDWARDS

SUPPORT SERVICES

Business secretary Vince Cable said the plan was a creative idea that we should certainly be looking at Picture: Rex

THE Treasury is being urged to consid-er a radical new scheme that wouldsee it hand government cash to banksso they can lend it to small firms, CityA.M. has learned.

The plan, which has been raised inmeetings between government minis-ters and bankers, has sparked theinterest of Vince Cable as well as back-ing from newer, smaller banks whoare keen to get a foothold in the mar-ket.

If the government pursues thescheme, it could see hundreds of mil-lions in taxpayer cash deposited insmall-time banks and loaned to strug-gling small and medium-sized enter-prises (SMEs) at below current marketprices.

It comes as Chancellor GeorgeOsborne struggles to find ways to stim-ulate the economy. His lending deal

with banks, Project Merlin, has hadmixed success due to ongoing econom-ic turmoil.

Under the new plan being presentedto the government, the Treasury

would redirect some of the cash itdeposits in the Bank of England andlarger lenders into either loans ordeposits for newer, smaller banks. Thesmall-time lenders would then com-mit to lending that cash onwards only

to SMEs.Business secretary Vince Cable toldCity A.M. that it was a creative ideathat we should certainly look at,

www.cityam.com FREE

BLACKBERRYBLUNDERSOUR READER

PANEL ASSESSES

THE DAMAGE P12

BUSINESS WITH PERSONALITY

adding that he would be examiningthe proposal.

Aldermore Bank, a small bank setup in 2009, is making a bid to get

between $75m (47m) and $100m ofTreasury cash deposited per month aspart of the scheme.

Chief executive Phillip Monks saidthat the money could be loaned out at

below current market rates: If [get-ting] the government deposits werecheaper than retail deposits, we would

pass that advantage on to SMEs.Philip George, co-managing directorof Shawbrook Bank, a small-timelender that relaunched today, also sup-

ports it: We have had our own discus-sions about it... The government wantsto get money into SMEs and we would

be keen to do that, he said.Metro Bank chief Craig Donaldson

also said his bank would certainly beon board to participate.

Recently, Osborne unveiled a crediteasing scheme to buy up private debt

with the aim of creating a market insmall business bonds. But the policy isnot likely to have an impact for three-

to-five years. Channelling governmentcash into SMEs through banks, by con-trast, could feed it through muchsooner.

It would likely prove controversial,however, because it would see taxpay-ers money put into potentially high-risk loans. If SMEs began to default athigher rates, government financescould be hit.

It is understood that the proposalwas discussed a month ago at a closed-door meeting between bankers, Cableand Treasury secretary Mark Hoban.

It was greeted with a high level ofsupport from the chief executives,

said a source who attended the meet-ing. Those present were left believingthat follow-up meetings are likely to

be held on the matter. BANKS: P7

Issue 1,490 Monday 17 October 2011

Certified Distribution

29/08/11 till 02/10/11 is 98,447

BY JULIET SAMUEL

EXCLUSIVE

TREASURY URGED TOBACK SMALL BANKS

ACTIVISTS PITCH TENTSOUTSIDE ST PAULS

WALL ST PROTESTS SPREAD P5

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News2 CITYA.M. 17 OCTOBER 2011

Trichet: Dissentersdamage EU progressSLOVAKIA and other small countriesmust never again be allowed to defythe will of the EuropeanCommission on crucial financial ini-tiatives, Jean-Claude Trichet, outgo-ing president of the EuropeanCentral Bank (ECB), said yesterday,preparing the way for yet anotherpower grab by Brussels bureaucrats.

It is necessary to change thetreaty to prevent one member statefrom straying and creating problemsfor all the others, he told Frenchradio Europe 1. One needs to be ableto impose decisions.

As well as lamenting the lack ofpolitical federation which meantevery Eurozone country had to indi- vidually approve the expandedEuropean Financial Stability Fund

(EFSF), Trichet (pictured right)also attacked countriesincluding Greece for failingto comply with previousagreements.

I think that the lessonof the cost of negli-gence, of the costof lax manage-ment is sufficient-ly potent that infuture the rules -which have also just been rein-forced will bef o l l o w e dmuch morestrictly, hesaid.

Trichet, whosteps down atthe end of thismonth, made

the comments the day after G20finance ministers called onEurozone leaders to draw up adecisive plan to deal with the on-going sovereign debt crisis.

Last week saw the possibilityof the EFSFs extension being vetoed bySlovakias parliament though the measurefound approval at asecond vote, bringingdown the govern-ment in the process.

Other countries most notablyGreece, but alsoothers includingItaly and evenGermany havelong ignored budget deficitlimits.

BY TIMWALLACE

EUROZONE

Time to shake up transport policies

BRITAINS transport policy needs fix-ing; last weeks appointment ofJustine Greening as the new transportsecretary is an opportunity for changein a difficult area. Her first moveought to be to scrap the high-speedrail (HS2) project. The crippling costsof the proposal, which would see a32bn ultra-fast railway line builtfrom London to Manchester and Leeds via Birmingham, are much greaterthan the benefits and that is assum-ing that the final bill is not massivelygreater, as it surely would be. It wouldmake more sense to concentrate on

smaller, less grandiose projects thatreduce journey times on roads andrailways across the UK, rather than onthis deeply flawed white elephantwhich would do nothing to boost the

North of Englands economy. The second big change is thatLondons airport capacity must beincreased. In the short-term, buildingan ultra-fast underground rail linkbetween Gatwick and Heathrow (cre-ating a new Heathwick super airport)to cut the journey time between thetwo hubs to 15 minutes might help(though for a contrary view, see theForum on page 25). Eventually, howev-er, we will either need a new runway perhaps at Gatwick or anothermajor international airport or both.One option is a new airport on theThames Gateway, as proposed by BorisJohnson; but there are other possibili-ties. They must all be debated withouthysteria. The details matter hugely,not least for locals, but the bottomline is that the coalition mustacknowledge the need for increased

capacity. Visitors from China, India,Brazil and the emerging marketscould transform the UKs tourismindustry and create hundreds of thou-sands of jobs; total numbers of

tourists to these shores could doubleover the next few decades thanks tothe emergence of a global middleclass willing and able to travel. Itwould be madness to miss out on this.London will not remain a world finan-cial hub without better access.

Because commuters into Londonmostly use trains, one often forgetsthat most work journeys in the UKtake place by car. The road networkremains essential; Greening has agreat opportunity to halt the war onmotorists. New projects are requiredacross the UK. London desperatelyneeds another, proper road bridge ortunnel across the Thames between theBlackwall tunnel and the DartfordCrossing, linking East London toSouth East London. That part of thecapital is woefully underserved withriver crossings, a problem that is crip-

pling economic development. Just likewith airports, this is not a new issue:the East London River Crossing wasapproved by two public inquiries dur-ing the 1970s1990s but blocked by

the government. The most recent ver-sion of the plan was killed off byBritains ridiculous planning processin the noughties. If Boris Johnson real-ly cares about the economic develop-ment of that part of London, he needsto relaunch the idea of a ThamesGateway bridge or a variant of theproject and work closely withGreening to deliver it.

The trick with all of these projectsmust be to harness private f inancing.We urgently need a new version of theprivate finance initiative that allowsprivate firms to build and run infra-structure without the taxpayer beingripped off. What is clear is that thecoalitions transport policy is in amess. Lets hope the new secretary ofstate shakes it up.

[email protected] me on Twitter: @allisterheath

NEWS | IN BRIEF

Hollande wins Socialist run-offsFranois Hollande yesterday became theFrench Socialist Party candidate whowill try to unseat President NicolasSarkozy next April and return a Socialistto the Elysee Palace for the first time in17 years. With well over two-thirds ofclose to three million votes counted,

Hollandes victory in a presidential pri-mary election runoff against MartineAubry, a more old-school leftist, wasresounding, with his score topping 56per cent. The polls suggest French votersare ready to put the left back in theElysee Palace and oust the unpopularSarkozy, who is widely expected to seeka second five-year term.

Energy firms face dressing downThe big six energy companies willtoday receive a dressing down atDowning Street amid warnings energybills could climb even higher. Bills havedoubled from just 740 five years agoto 1,345 for the average household.Cameron will meet with British Gas,EDF, Eon, Npower, Scottish Power andScottish & Southern in a bid to con-vince them to offer cheaper tariffs tocustomers.

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

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4th Floor, 33 Queen Street, London, EC4R 1BRTel: 020 3201 8900 Fax: 020 7283 5334Email: [email protected] 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 Jo SimpsonPictures Alice Hepple

CommercialSales Director Jeremy SlatteryCommercial Director Harry OwenHead of Distribution Nick Owen

l Finance ministers from non-EurozoneG20 nations issued a statement urgingdecisive action from the Eurozoneleaders at their summit next weekend,to cover Greeces crisis, risks of conta-gion and Europes wobbling banks.

l The group urged Eurozone govern-ments to maximize the impact of theEFSF in order to address contagion.

lNot all of the promises come from theEurozone side. Countries includingBritain said they would be prepared topay more into the IMFs bailout pot as long as it was remained availablefor any troubled nation, not just those

in the Eurozone. Estimates suggest upto 2 trillion may be required.

lHelp for banks as well as governmentswas covered. The G20 ministers saidthey wanted concrete details on howbanks would be recapitalised.

l French minister Francois Baroinchaired the meeting and assured hisnon-Eurozone counterparts that nego-tiations with Germany on how muchof a haircut to impose on Greek debtwas well underway.

G20 MEETING: WHAT HAPPENED IN PARIS

CHOPPY MARKETS THREATEN EMI SALE Turbulent financing markets couldderail Citigroups attempt to sell EMI,according to people close to the $3bn-plus auction who warned that the USbank could abandon the sale if it can-not squeeze higher offers from bid-ders. The bidding process remainsfluid, with Citigroup expected todecide within two weeks whether tosell EMI in one piece, break the UKmusic company in two, or put the saleon hold.

ETIHAD IN TALKS TO BUYAER LINGUS STAKEEtihad, the fast-growing MiddleEastern airline, has approached theIrish government to buy its 25 percent stake in flag-carrier Aer Lingus,people with knowledge of the movesaid. The approach comes after the

Irish sovereign said in September itwould sell its stake in the carrier.

DREYFUS LOOKS TO LISTING OR SALELouis Dreyfus Commodities has hired

bankers to prepare for a potential list-ing or a partial sale to a sovereignwealth fund after the privately-held160-year-old trading house failed toreach a merger deal with rivals Olam,Glencore and Bunge. Margarita Louis-Dreyfus, the heir of the tradingempire, has hired Credit Suisse toadvise her trust and the company inthe clearest sign that the trader couldabandon its private status. But peoplefamiliar with the talks warned that adeal was unlikely until late 2012.

STUDENT DEBT IS LIKE SUBPRIME CRISISUS university students and graduatesare facing a double whammy of bal-looning debt loads and high unem-ployment, raising worries that apotential delinquency crisis could bleed into the wider economy.Student debt has increased nearly sev-enfold from $80bn in 1999 to $550bn

at the end of June 2011, according tothe Federal Reserve Bank of New York.

WOMEN DESERT TORIES ASECONOMIC PAIN HITS HOMEMillions more women than menthink that the economy is headed inthe wrong direction, have becomedeeply pessimistic about their chil-drens futures and are suspicious ofthe coalition. That is the conclusion ofextensive internal research by theConservative Party that sources haverevealed to The Times. It lays bare thescale of the task facing DavidCameron if he wants to win back dis-affected female voters.

TESCOS NOT-SO-BIG PRICE DROPDozens of the savings offered by Tescoin its Big Price Drop the 500mcampaign that started a supermarketprice war three weeks ago are onfoods that were only briefly sold atthe higher price, research by The

Times has shown. Tesco has promisednever-ending discounts.

BARROSO PROPOSES PENALTIESFOR ROGUE BANKERSFinanciers accused of skulduggerycould become subject to criminalsanctions under laws set to be pro-posed by the president of theEuropean Commission. Jose ManuelBarroso has said he will this week pro-pose individual criminal responsibil-ity for financial players to berecognised in European law. Theplans for an EU-wide directive wouldfocus on curbing high frequency trad-ing.

COUNCIL BOSSES USE CREDITCARDS FOR LAVISH LIFESTYLESCouncil bosses presiding over thedeepest cuts since the Second WorldWar are using their taxpayer-fundedexpenses and credit cards to fund alifestyle of five-star hotels, Michelin-

starred restaurants and golf resortsand spas, The Daily Telegraph reveals.

CHALLENGERS TAKE AIM ATCREDIT-RATING TITANSSeveral underdogs in the credit-ratingbusiness are stepping up their chal-lenge to the industrys three giants.The credit-rating arm of Morningstar, best known for mutual-funresearch, yesterday launched ratingsof bond deals backed by home mort-gages. The rating firm already ratescommercial-mortgage bonds and is inthe early stages of developing munic-ipal-bond ratings.

NISSAN WEIGHS CUT INDOMESTIC OUTPUTNissan may shift production of moremodels from Japan to factories over-seas and could see domestic outputfall below one million vehicles a yearif the yen continues to strengthenagainst the dollar, said Toshiyuki

Shiga, chief operating officer ofNissan.

WHAT THE OTHER PAPERS SAY THIS MORNING

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DIVIDENDS in the UK have brokenthrough the 20bn-in-a-quarter barri-er for the first time since 2008.

Data for the third quarter fromanalysts Capita Registrars showsinvestors pocketed 20.1bn in divi-dends, a 15.9 per cent rise on thesame period in 2010.

Forecasts for total dividends this year have been hiked to 67bn 18per cent up on 2010, as a result.

The figures have been fuelled by

one-off factors including BP restoringits dividend. But even stripping thoseout, payments for the year are up 11per cent.

Dividends in FTSE 100 companiesare up 17 per cent, with FTSE 250 pay-outs rising by nine per cent.

It is the first time big-cap stocksexceeded the dividend growth of themid-caps since the fourth quarter of2009.

For the first nine months of 2011,the 55bn distributed to shareholders

only just fell short of the total payoutfor the whole of 2010.

The research, carried out byExchange Data International forCapita Registrars, found that all sec-tors increased their dividends in thethird quarter.

Overall 228 companies paid a divi-dend compared with 201 last year. Atotal of 96 increased, reinstated orstarted paying dividends, while only23 cut or cancelled them.

The arrival of commodities traderGlencore on the exchange after itsfloat provided 224m in dividends for

its shareholders. Other mining stockspaid an additional 200m betweenthem, making the sector one of thetop dividend payers.

Capita Registrars chief executiveCharles Cryer said: Dividends aregrowing faster than we expected asUK firms shrug off the worst stockmarket conditions since 2008 andcontinue to increase payouts to share-holders. In real terms they still havesome way to go to top previous highs,however.

UK quarterlydividends top20bn mark MINING giant BHP Billiton is close tomaking a 2bn bid for FerrousResources, the Brazilian iron oreminer that made a failed attempt to

float on the London Stock Exchangelast year.

Ferrous is understood to be the lat-est target for Marius Kloppers, BHPschief executive, who announced inAugust that the company was plan-ning a $20bn spending spree thisfinancial year after posting recordprofits of 15.1bn.

The FTSE 100 firm started negotia-tions with Ferrous earlier this yearafter a Chinese bidder made a condi-tional offer for the company, it isunderstood.

Ferrous, which was founded in2007, owns assets in Brazils IronQuadrangle region of Minas Gerais,

one of the worlds best deposits ofiron ore, which is used to make steel.

In June last year, the miner pulledout of a London flotation that wasexpected to value the company at$3.5bn (2.4bn), citing difficult mar-ket conditions.

It has since hired Deutsche Bank tosound out a strategic investor orbuyer to help fund its developmentprojects in the Minas Gerais region .

Both BHP and Ferrous declined tocomment last night.

BHP eyes bidfor Brazilianiron ore miner

BP, led by Bob Dudley, has reinstated its dividend this year Picture: Reuters

BY JOHN DUNNE

INVESTMENT

MINING

News 3CITYA.M. 17 OCTOBER 2011

ANALYSIS l UK Dividends

50

55

60

65

70

45

40

2007 2008 2009 2010 2011 e

n

ANALYSIS l Growth in quarterly dividends

-10%

-5%

0

5%

10%

15%

25%

20%

30%

-20%

-15%

-30%

-25%

Q108Q208Q308Q408Q109Q209Q309Q409Q110Q210 Q111 Q211 Q311Q310Q410

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PROTESTERS vowed to occupy theCity indefinitely as they vented theiranger at bankers and politicians overthe global economic crisis.

Around 250 campaigners remainedpitched outside St Pauls Cathedralfor a second day yesterday after policethwarted their attempts to take over

the area outside the London StockExchange.They said they were inspired by an

array of causes including the questfor global justice, the failures offinancial regulation, opposition tothe coalitions NHS reforms and adesire to show solidarity with theOccupy Wall Street movement. Oneinvoked the spirit of the Egyptian rev-olution by fixing a sign to a pillaropposite St Pauls saying TahrirSquare, EC4M.

Tom, 33, a philosophy lecturer whodeclined to give his surname, told CityA.M. that a core of activists would stayas long as possible. Some, however,like software developer GavinMeredith, 25, said they planned toleave the protest later yesterday inorder to go to work today.

The police presence was scaleddown after the Rev Dr Giles Fraser,

the canon chancellor of St Pauls,asked officers to move off the steps of

the cathedral. He said: I think peoplehave a right to protest, and Im veryhappy that people have a right toprotest. And people are being general-ly respectful.

Worshippers at St Pauls steppedaround the camp as they made their

way into the cathedral. Jill Hooper, 67,said the protestors were not unruly

but theirs aims were unclear.I dont think it is effective if I

came in and out of church not know-ing what it is for. At its height on Saturday the

protest attracted 3,000 people, accord-ing to organisers, and included

Wikileaks founder Julian Assangeand gay rights activist Peter Tatchell.One service at St Pauls was cancelled.

Over the weekend eight peoplewere arrested on suspicion of affray,assault on a police officer and posses-sion of cannabis. Activists claimedthey had been kettled and a policespokesman said a containment wasin place for two hours on Saturday.

Rallies also took place in more than80 nations in Asia, Europe and the USas part of a day of rage. Theyreached their height in Rome wheremasked Black Bloc protesters torchedcars, attacked banks and hurledrocks. They were condemned with-out reservation by prime minister

Silvio Berlusconi but Italians askedwhy police made only 12 arrests.

Activists vow

to stay in CityindefinitelyBY PETER EDWARDS

POLITICS


Protesters outside St Pauls yesterday Picture: Reuters

Protests tookplace in morethan 80 citiesincludingRome, left, andNew York

Pictures: Reuters

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NBNK Investments, headed by chiefexecutive Gary Hoffman, hasapproached the board of NorthernRock about making a bid for the bank,

which Hoffman used to run. The board and UKFI, the state

agency that manages the gov-ernments investment in theRock, have given Hoffman per-mission to join the first roundof bidding despite NBNK hav-ing been formally barredfrom doing so untilNovember.

Hoffman had been banned because it wasjudged that his familiaritywith the assets could givehim a big advantage overother bidders.

But City A.M. revealedin August that NBNK

was nonetheless look-ing at tabling a bid

because the auction was running behindschedule (see inset).UKFIs decision

means that Hoffman does not have towait an extra week and can make anoffer before the end of the month.

The move will see NBNK become aninterloper in what had been a re-run ofthe 2007 bidding war between JCFlowers and Virgin Money, which bothtried to buy the Rock before the crisis.

Both Virgin and JC Flowers aremulling bids that are likely to be

around 850m far below theRocks start-up equityof 1.4bn, injected bytaxpayers.

UKFI and NorthernRock believe thatNBNKs arrival on thescene is in the bestinterests of the UK tax-payer because it makesthe sale more competi-tive, said a source familiar

with the deal.Snapping up the Rock

could make sense for NBNK because it would giveHoffman an IT platform anda large surplus of depositsonto which it could bolt the632 Lloyds branches it is tryingto buy.

NBNK set to

crash statesale of RockBY JULIET SAMUEL

BANKING

BARCLAYS is considering a bid forassets owned by three recently nation-alised Spanish savings banks (cajas).

Following its preliminary bid for thenationalised Caja Mediterrneo,Barclays is now leafing through theportfolios of CatalunyaCaixa,NovaCaixaGalicia and Unnim.

All three were all taken over by theBank of Spain last month after failing

to raise enough capital to comply with

regulations.But Barclays will only make firmoffers if it can be sure of state guaran-tees for some of the dodgy assets in thelenders portfolios, despite chief execu-tive Bob Diamonds public positionthat banks should never have theirrisky lending decisions underwritten

by taxpayers.It is not clear how much Barclays

might pay for the assets: one of the tar-gets, NovaCaixaGalicia, was originally

seeking a 2bn (1.75bn) cash injection

from a foreign investor, but failed toraise the money before the regulatorydeadline. CatalunyaCaixa was seeking1.72bn in capital before it was nation-alised.

But Barclays would buy only chunksof the assets, rather than inject bil-lions to resuscitate whole lenders.Spain is currently restructuring itsentire banking sector, which is stillplagued by non-performing propertyloans and was downgraded by S&P.

Barclays seeks Spanish stateguarantee to buy caja assetsBY JULIET SAMUEL

BANKING


NBNK chief Gary Hoffman could move in on the bank he used to run Picture: REX

RBS is planning a strategic review ofits business that could see thousandsof jobs cut at its investment bank,many of them in the City. Seniormanagement at the bank aremulling the continuing onslaught ofregulation with an eye to paringdown its global banking & markets(GBM) division. Chief executiveStephen Hester has talked aboutplans to reduce the cost base fur-ther even after the recent

announcement that it expects to cut2,000 jobs in the next year.

SHAWBROOK Bank, a new retail sav-ings bank, is targeting 250m in newgross lending to small and medium-sized enterprises (SMEs) this year, the

banks managing director PhilipGeorge told City A.M.The bank, bought

by RBS Equity Finance in January andrelaunched under the Shawbrook

brand today, also plans to mop up350-400m in new retail deposits overthe same period. Meeting the targets

would mean a substantial expansion

of its balance sheet, which currentlyhas assets worth 75m.

New retail banktargets SMEs

RBS mulls cutsin finance jobsBANKING

BANKING

FormerCEOoftheRockmullsabidNBNKInvestmentsiseyeingabidfor

NorthernRock,CityA.M.haslearned.

The investmentvehicle headed by

LordLevenehadbeenruledoutofthe

running because it was forbidden

frommakingabidfortheRockfora

periodof12monthsafterpoachingits

formerchiefexecutiveGaryHoffman

lastyear.However,CityA.M. understandsthat

the Rock auction is running well

behindschedule,andsoNBNKiscon-

sideringenteringthe fray inOctober

whenitsprohibitiononbiddingends.

The loose timetable will help.An

adviser familiar with the sale said:

Its not at all clear as toprice or

process.Anditsnotclearwhenitwill

becomeclear.IfNBNKdoesde idet i i

have a i ifii

BYJULIETSAMUELEXCLUSIVE

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DOWNTONSCREATOR IN

NEW DRAMAAT NOMURASUNDAYS have taken on new meaning forNomuras joint head of global equitiesBenoit Savoret, ever since Downton Abbeyreturned to the nations screens.

So lets hope the twists and turns ofthe First World War drama havent beenspoiled for Savoret and his colleagues

William Vereker, Paul Spanswick andBrett Olsen, after Nomuras senior

bankers spent the evening with the castof the ITV show at a fundraiser hosted byits creator Julian Fellowes.

For once, the very entertaining Jeffrey Archer was upstaged, as the Earl ofGrantham, Lady Mary and valet JohnBates otherwise known as actors Hugh

Bonneville, Michelle Dockery andBrendan Coyle held court at the Silver

Jubilee Ball in aid of Nomuras partnercharity The Rainbow Trust.

Fellowes was on the verge of tears ashe talked about the work of the chil-drens charity, and his emotional turninspired the cast of Downton Abbey to

bid for dinner with the writer who madethem household names.

None of his actors won the dinner withFellowes though; another, unnamed,guest a few glasses of wine had been

drunk by that stage placed the bid thathelped the nights takings reach 200,000.

DISHES OF THE DAYJAMIE Oliver has already invited a few of hisnew neighbours round to let the kitchen

work its way up to fifth gear. And fromtoday, the doors of the latest Jamies Italianat 38 Threadneedle Street have beenthrown open to the rest of the City.

The restaurant is special anyway, saysJamies camp, but mindful of its demand-

ing banking diners, Oliver and his busi-ness partner Gennaro Contaldo haveadded some extra dishes to the menu.City people are going to want different

wines from people who eat in, say,Guildford, explained a mole.

Nothing against Guildford, you under-stand, but the dinner ladies nemesis islimiting his Cumbrian rock oysters,Devonshire lobster ravioli, white trufflerisotto and herb roasted quail to his latestaffordable Italian franchise in the for-mer Bank of Scotland building.

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xr eok fcehe csael. Pnoitairae vtae rgnahcxd eny atilibaliavo a

.11//

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The Capitalist8 CITYA.M. 17 OCTOBER 2011

EDITED BY

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

NO MATTER that GracechurchStreet is 53 miles from the sea Loch Fyne still aims to serve thefreshest seafood you will find any-where. A big claim, and one thatsix stockbrokers were keen to putto the test when they visited theseafood restaurant that startedlife as a small oyster shack in aglen at the head of Argylls LochFyne. Three dozen oysters disap-peared faster than you can say

enterprise with respect for ani-mals, people and ecology,accompanied by one bottle ofBaron de Barbon Reserva Rioja,two bottles of Mersault, four bot-tles of vintage Pol Roger, fourplates of Kinglas fillet steak, tworibeye steaks and threelobster/crab platters. How wor-thy of honour is the sea,thought the group, inspired bythe venues Gaelic motto as theysplit the 700 bill.

BILL OF THE WEEK

Brett Olsen, EMEA MD at Nomura (left) and his wife Betsy (centre) with the Downton Abbey cast

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THE manufacturers organisation EEFhas added its name to the growing listof bodies calling on the chancellor tointroduce a package of tax reliefs forcompanies who are about to be ham-mered by the governments 3.2bnstealth tax on carbon.

In a set of demands ahead ofGeorge Osbornes autumn state-ment next month, the EEF said:The chancellor must introduce acompensation package whicheffectively targets those energy-intensive industries most affect-ed by its climate changepolicies.

Earlier this month, City A.M.revealed the chancellor waspoised to announce such acompensation package in his

autumn statement, afterintensive lobbying fromemployers organisation theCBI.

The package will focus

on those firms that use large amountsof energy, such as cement, aluminiumand steel makers.

Osborne came under fierce criti-cism after he shocked industry byannouncing a carbon floor price inhis Budget last March, which will

raise 3.2bn for the excheq-uer by 2016. The

Treasury willset a mini-mum price forcarbon even ifthe market priceis lower and col-lect the differ-ence as taxation.

It was labelled astealth tax

because the govern-ment said it was agreen measure whilecritics argued it was

only introduced tohelp pay for a 1p cut infuel duty.

Earlier this month,John Cridland, the direc-

Manufacturing body incall for carbon tax relief

George Osborne is set to announce a relief package for energy intensive firms Pic: Reuters

BYDAVID CROWPOLITICS


MORE NEWSONLINE

www.cityam.com

tor-general of the CBI, told City A.M. hehad been in discussions with theTreasury about exempting some ener-gy-intensive firms from the carbonfloor price and was hopeful thechancellor would find a resolution.

He added: I have been talking tothe Treasury about energy-intensiveindustries and the carbon floor priceand I am hopeful we will see a resolu-tion in the autumn statement.

JOHN CRIDLAND INTERVIEW: P18-19

IndustrytogetcarbontaxbreaksTHE CHANCELLOR is set to unveil a

packageoftaxreliefforenergy-inten-

sive firms in hisautumn statement,

after he was criticised for hitting

industrywitha3.2bncarbonstealth

taxinhislastBudget.CityA.M. understands thepackage

will help those firms that use large

amounts of energy, such as cement,

aluminium and steel makers. A

Treasurysourceconfirmedthechan-

cellorwasworkingonapackagefor

energy-intensiveindustries.JohnCridland,thedirector-general

oftheCBI,toldCityA.M.hehadbeenin

discussionswith the Treasury about

exempting some energy-intensive

firmsfromthecarbonfloorpriceand

was hopeful the chancellor would

findaresolution.Ifyouregoingtodoacn

price in th UKsensii

BYDAVIDCROW

EXCLUSIVE

8/3/2019 Cityam 2011-10-17

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BORIS Johnson has risked a fresh rowwith David Cameron by warning thatBritain will become a bit part play-er in the global economy unlessa new hub airport is built in thesouth-east.

The Mayor of London saidBritain risks becoming an avia-tion backwater and losingout in the battle for emerg-ing markets contracts

because the capitals air-ports will be at capaci-ty within 20 years.

Without those(extra) runways we

will lose business toour European com-

petitors and we riskrelegation from eco-nomic powerhouseto merely a bit part

player in the global economy.Johnson has long opposed the coali-

tions pledge not to expand airportcapacity in the south-east and wants tosee a floating multiple runway air-port built in the Thames Estuary,

dubbed Boris Island.He spoke out as Willie Walsh,

chief executive of International Airlines Group, which ownsBritish Airways, claimed that new

transport secretary JustineGreening faces a conflict

of interest because herPutney constituency

is under theHeathrow flightpath.

Last weekWalsh also said heopposed a

Heathwick raillink betweenHeathrow andGatwick.

Mayors pleato Cameronover airportBY PETER EDWARDS

AVIATION

FOREIGN secretary William Haguehas dismissed claims that Liam Foxand his best man were trying to runtheir own foreign policy operation asit emerged that Adam Werritty could

be investigated for fraud.Hague told the BBC it was fanci-

ful to suggest one minister could

run a separate policy. It came aspolice confirmed they could investi-

gate Werritty over allegations offraud. Labour MP John Mann hasasked officers to look into Werrittysuse of business cards which wronglyclaimed he was an adviser to Fox.

A City of London Police spokesmansaid the force had received one allega-tion of fraud and the economic crimeteam will decide whether it is appro-priate to investigate. Fox resigned on

Friday over revelations about his rela-tionship with Werrity

Adam Werritty could face fraudprobe over Fox business card

POLITICS


M2

M20

M25

A2

A2

ESSEX

ESSEX

KENT

Ebbsfleet Intl

Channel Tunnel

rail linkNew rail links

Southend-on-Sea

Sheerness

Gravesend

Chatham

New terminals

New terminals

Island runways

Maidstone

ISLE OF

SHEPPEY

Runway tobe built onartificialisland

Shuttle train viatunnels and bridges

How an estuary airport might look: flight paths would be up the Channel and along theThames Estuary to avoid residential areas

Promoted to the cabinetfrom the junior economicsecretary role, Greeningfaces several challenges. Shehas to continue the high-speed rail argument, tackleLondons airport problems having opposed a newHeathrow runway andestablish her place as a cabi-net heavyweight.

Replacing scandal-struckLiam Fox, Hammond movesto defence from transport a brief in which he survivedrows over foreign trains andhigh-speed rail links. Amonghis many shadow roles, heexcelled in the Treasury. As aresult, his grasp of numbersshould come in handy whendealing with the messy MoD.

Famed for winning a by-elec-tion aged just 27 in 2009,Smith is a rapid-riser withsocially liberal views. A for-mer business consultant atDeloitte, she will handlepotentially controversial poli-cy areas including taxationon North Sea oil, Britainscontributions to the EUbudget and excise duties.

Unsurprisingly for the chan-cellors parliamentary privatesecretary, Javid is on mes-sage with Osbornes spend-ing plans. He may indeed gofurther, saying he believes ina low tax, low inflationeconomy. However, he isless keen on inflation andQE in contrast with his newbosss letters to Mervyn King.

JUSTINE

GREENING

TRANSPORT

SECRETARY

PHILIP

HAMMOND

DEFENCE

SECRETARY

CHLOE

SMITH

ECONOMIC

SECRETARY

SAJID JAVID

GEORGE

OSBORNES

PPS

WHOS WHO: CABINET RESHUFFLE

8/3/2019 Cityam 2011-10-17

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PoliticsHome.comPoliticsHome.com

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

In association with PoliticsHome.com

In partnershipwith

BlackBerry brand seriously hurt byoutages, according to our panel

Slight problems

No problems

Severe problems

Significant problems

%28%

10%

31%

31%

BlackBerry users:have you experienced problems?

Samsung

Sony Ericsson

None

Apple

Dont know

Other

HTC

%8%

6%

6%

13%

1%

2%Which brand will benefit from BlackBerry outages?

How long will it take for the BlackBerry brand to recover?

Slightly less likely

Much less likelyWould never choose Blackberry

Would still consider Blackberry

Would always choose Blackberry

Dont know

Somewhat less likely

%

17%

9%

18%

19%

30%

5%

3%

Are you more or less likely to buy a BlackBerry?

Six Months to a year

One to three years

More than three years

Less than a month

Will never recover

Dont know

Brand is undamaged

One to six months

%1%

4% 4%

17%

27%

24%

12%

10%

64%

THE BlackBerry brand has been seri-ously damaged by the recent out-ages that left users with no dataservices for three working days,according to the City A.M. /PoliticsHome Voice of the City Panel.

More than half of the 355 peoplesurveyed said it will take longerthan six months for BlackBerry torestore its dented reputation, with10 per cent saying it will never recov-er. Only four per cent saidBlackBerry-maker Research InMotion (RIM) was unaffected by theserver failure.

An overwhelming 90 per cent of

BlackBerry users said they had beenhit by the outages last week, suggest-ing the problems were not limitedto individual consumers but also hitenterprise contracts.

Almost two thirds of respondentssaid Apple will be the biggest win-ner, with HTC and Samsung alsoamong the top choices. Forty-fourper cent of people said last weeks

events will make them less likely tochoose a BlackBerry when it comesto renewing their contracts, withalmost a fifth saying they aremuch less likely to choose the brand. A third said it would notaffect their decision to buy aBlackBerry next time.

The most common answer when we asked respondents to describethe current state of theBlackBerry/RIM brand in just one word was damaged, with tar-nished, unreliable and trou-bled also featuring highly.

The angry response was as muchdue to RIMs handling of the crisis asthe outage itself. One respondentsaid: People will forgive you for a

mistake if they understand whatwent wrong and what youre doingabout it but if you communicatepoorly, as RIM has, then people arefar less forgiving.

Another said: RIM didnt man-age the problem well. It should havebeen quicker to acknowledge it hada serious problem and said it wasaddressing it as fast as possible.

BY STEVEDINNEEN

TELECOMS

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JEREMY Blood is planning to stepdown from the helm of Mitchells &Butlers following the aborted 940mtakeover by billionaire Joe Lewis, it isunderstood.

Blood was appointed as interimchief executive in March to replaceAdam Fowle, who left by mutual con-sent after two years in the post.

City A.M. understands the formerScottish & Newcastle managing direc-tor made it clear he always took the

role on an interim basis, and that theongoing search for a full-time chiefexecutive for the pub group whichwas put on hold during the takeovertalks by its largest shareholder JoeLewis has been restarted.

James Hyde, a senior partner atheadhunter Korn/Ferry WhiteheadMann, worked on the July appoint-ment of Ron Robson as M&Bs non-executive deputy chairman, and it isunderstood Hyde has been asked tolead the hunt for suitable chief execu-

tive candidates, as well as at least twoadditional non-executive directors.

Meanwhile, Bob Ivell, who agreed tobecome acting chairman after SimonBurke quit on 14 July, is facing pres-sure to stay on permanently. Plans torecruit a new chairman were shelvedlast month when Lewis made his open-ing possible bid of 230p per share.

There are as yet no plans for Ivell todiscuss his position with Lewis, but itis understood the pair will meet inthe coming weeks.

Both Blood and Ivell were unavail-able for comment.

M&B restartsthe hunt for

new Blood ADVISORY firms and investment banks face another troubling fewmonths, after the worst start to thefourth quarter for M&A and equityfundraisings since 2002.

Global M&A activity since the startof the fourth quarter earlier thismonth has reached just $58.9bn(37.4bn), down from $99.2bn at thispoint a year ago, data from Dealogicshows.

UK M&A activity was even moresubdued, with activity at its lowestebb since 1998. Deals worth just$2.8bn have closed since the start ofOctober. This compares to a peak of$31bn in the same period in 2005 and$3.9bn a year ago.

Equity market activity globally isalso at 2002 lows, as companies have

shelved IPOs and share placementsuntil they can be certain of betterprices in calmer conditions.

Companies worldwide have raised just $3.6bn on stock markets in 88transactions since the start of October down from $62bn a year ago.

UK equity placements are down,but not yet plumbing the lows seen in2008. Ten UK companies raised a total$102m in the past two weeks, downfrom $2.4bn a year ago but still higherthan the paltry $52m raised in 2008.

Dealmakers setfor worst fourthquarter since 02

BYHARRIET DENNYS

LEISURE


ANALYSIS l Mitchells and Butlers

p260

240

220

10 Oct 11 Oct 12 Oct 13 Oct 14 Oct

240.0014 Oct

Above: M&Bs largestshareholder Joe Lewis

Left: Bob IvellRight: Jeremy Blood

BYALISON LOCK

M&A

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Cosmetic surgery tax hike


CHANCELLOR George Osborne is plan-ning a new tax on plastic surgerywhich would boost the price of sometreatments by 20 per cent.

New guidelines call for doctors per-

forming more invasive treatments such as facelifts, breast enhancement,liposuction and tummy tucks tocharge VAT. Until now, that charge hasonly applied to minor treatments,

including Botox injections and chemi-cal peels carried out in High Streetbeauty salons.

The new levy, already dubbed theboob tax could raise up to 500m a

year for the government, but has beencondemned by the cosmetic industry.

Patients would have to pay VATunless they can persuade the doctorthat the operation is therapeutic.

Clock is ticking on plan to stop a euro break-up

OVER three weeks ago during theIMF, World Bank meetings,George Osborne suggestedEurozone leaders had just six

weeks to come up with a substantive

plan to solve its crippling debt crisis.The deadline is the G20 leaders sum-mit in Cannes on 3 November.

The German Chancellor AngelaMerkel says theres no big bang

miracle cure, but hopes that Europeis edging towards a solution havebuoyed stock markets. The FTSE hasrallied nearly eight per cent since the Washington summit and the DAXand CAC40 are up nearly 15 per centin the last three weeks.

That rally has been based on the broad outline of a plan centredaround three things: a more crediblerestructuring of Greek debt, includ-ing private sector involvement of 50

per cent or more; a big recapitalisa-tion of banks 200bn or more todeal with it, and devising a schemethat leverages the firepower of theEFSF from 450bn to 2 to 3 trillion

to protect the debt of other peripher-al countries. There will also need tobe measures to try and boost growth.

But thats the easy bit, because atthe back of every investors mind isthe thought we could be facing a bigfall. To avoid disappointment, leaderswill not just need to announce a plan,they will need to provide exact detailson how each component will work.

And lest they dither, formerLehman banker Larry MacDonalds

note reminds us whats at stake. HSBCsays if the euro broke up it couldmean a repeat of the GreatDepression. The reintroduction ofnational currencies and legal ambigu-

ities would rattle markets. Peripheralnations could suffer hyperinflation astheir currencies plunged, while thecore economies would be hammeredby surging exchange rates.

If Greece left the euro first, UBSsuggests its new currency would drop60 per cent and local borrowing costswould jump at least seven percentagepoints. The cost in that countrywould be as much as 11,500 a personin the first year.

If Germany quit the euro UBS saysits new exchange rate would surge 40per cent and interest rates two per-centage points. Banks would requirerecapitalisation and trade would slide

20 per cent. Each person would loseup to 8,000 in the first year.Credit Suisse reckons the S&P 500

would tumble to around 750 andcompany earnings would slide asmuch as 45 per cent. They haveassigned a 10 per cent probability to aeuro breakup.

No pressure then. The clock is tick-ing. Ross Westgate is co-anchor of CNBCsWorldwide Exchange.

CNBC COMMENT

ROSS WESTGATE

8/3/2019 Cityam 2011-10-17

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SOUTH ASIA and other fast-growingeconomies might offer the best oppor-tunities for financial institutions look-ing to grow, but their legal systems area major drawback, according to a sur-

vey out today from Norton Rose. Asia won out firmly as the main

driver of growth in the survey of over200 institutions. South and north

Asia were revealed as the regionsmost widely seen as offering the bestopportunities for growth in the short,medium and long term.

Sixty-five per cent of respondentssee south Asia as offering strong longterm opportunities, whilst 48 percent say the same about north Asia.

Latin America was seen by 40 percent as offering strong short-term

potential, and was viewed favourablyby 40 per cent, alongside the middleeast, as a good region in the mediumterm, defined as between three andfive years in the future.

Hot on the heels of Asia, Africacame out as the third most popularregion for long-term opportunities,

with 38 per cent viewing it favourably.However, behind the enthusiasm

for investing in emerging economieslie some doubts.

In terms of legal rights, 62 per centof those surveyed are concernedabout levels of enforcement in Africa.

The same is true of 60 per cent insouth Asia, despite its popularity, and56 per cent in eastern Europe.

Restrictions on foreign ownershipin south Asia also worry 63 per centof financial institutions.

And 70 per cent fear political insta-bility in Africa, as well as 62 per centin the middle east.

Financial institutions now dependon China and India as sources of busi-ness and of capital, and these find-ings show a shift in the financiallandscape there is a recognitionthat, in the mid and long term, Latin

America and Africa will join Asia asthe real drivers of financial activity,said Norton Roses James Bateson.

However, the findings also high-light the significant hurdles thatstand in the way of businesses look-ing to play a part in the new financialorder. The enforcement of legalrights, foreign ownership restrictions,political instability these all remainchallenges for growth economies and

businesses.

Survey: finance firms worryabout emerging market laws


BRITAINS economic growth is grind-ing to a halt due to an impendingLehman-style financial crisis in theEurozone, according to theCentre for Economic BusinessResearch (CEBR) and morequantiative easing is the bestsolution.

The think tank slashed itseconomic growth fore-cast for 2011 from 1.5per cent to 0.6 per cent,and predicts 0.7 percent growth in 2012.

A Lehman-stylefinancial crisis in theEurozone now lookshighly likely trig-gered by the unsus-tainable nature ofthe currency areain its current formand the failure ofpoliticians to takedecisive action to calmmarkets or make the neces-

sary pro-growth reforms at a fastenough rate, the think tank said.

Falling demand in the single-curren-cy bloc is likely to hit UK exports andinvestment levels, it added.

A new fiscal stimulus would bedamaging, the CEBR warns, as it would risk scaring bond marketsand push interest rates up.

Mervyn King (left) could lead theBank to carry out even more quanti-

tative easing, the CEBR argued.We are likely to see more,not less, quantitative eas-ing, economist Scott Corfesaid, adding assetspurchased by theBank of Englandcould rise to400bn in a verysevere crisis.

H o w e v e r ,the Ernst & Young ItemClub disagreed

yesterday, stat-ing QE is unlikelyto put the recovery

back on track.

Lehman-style

crisis forecastfor EurozoneBY TIMWALLACE

UK ECONOMY

CONSUMER prices rose by five per centin the year to September, tomorrowsfigures are expected to reveal.

Augusts inflation report from theBank predicted that consumer priceindex (CPI) inflation would exceed fiveper cent before the end of 2011.

The last time CPI inflation stood sohigh was in September 2008.

Augusts prices showed rises of 4.5

per cent. The retail price index (RPI),which is regarded by some as a better

measure of the cost of living, increasedby 5.2 per cent. The CPI inflation target stands at

two per cent, within one percentagepoint on each side. It has been abovethree per cent since January 2010.

The Bank says price rises shouldstart to slow into 2012, as temporaryfactors like Januarys VAT increasedrop out of the figures.

Inflation set to hit threeyear high of five per cent

UK ECONOMY

ANALYSTS VIEWS: WILL SEPTEMBERS INFLATION HIT 5PC? By Tim Wallace

PHILIP SHAW | INVESTEC

Septembers inflation will jump to 5.1per cent, thanks mainly to sharp increase ingas and electricity prices. However, we arehopeful that inflation will fall back below fiveper cent next month and drop through

three per cent in the first half of 2012.

HOWARD ARCHER | IHS GLOBAL INSIGHT

We expect CPI inflation to hit a three-year high of 4.9 per cent, though it is possible that it could have reachedfive per cent in September. Sharp rises in electricity and gas prices have been major contributing factors. However,this should be close to the peak inflation will hopefully start edging down late this year and fall back in 2012.

KEN WATTRET | BNP PARIBAS

CPI data should show inflation risingto five per cent last month. The MPC remainsconfident that it will come down sharply nextyear. We expect their minutes to show a 9-0vote in favour of QE2, which may pave

the way for even more early next year.

FINANCIAL INSTITUTIONS VIEWS OF INVESTMENT DESTINATIONS

Best for long-term Worst for enforcement Worst for foreignopportunities of legal rights ownership restrictions

Top ranked South Asia Africa South Asia

Second North Asia South Asia Middle East

Third Africa Eastern Europe N/A

BYTIMWALLACE

WORLD ECONOMY

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HOUSE prices in the south are nowover twice as high as elsewhere inEngland and Wales, according to ask-ing prices collated by Rightmove.

Asking prices in southern regionshave shot up by 4.7 per cent thismonth, wedging an even bigger gap

between housing costs in the southcompared to further north.

In London alone, sellers are asking5.2 per cent more than in September.

In regions outside the south -- the

north and north west, Yorkshire andHumberside, the Midlands and Wales prices in October actually fell 0.7 percent compared to September.

The gulf in average asking prices isnow the highest Rightmove has everrecorded, with prices in the south(336,743) now more than doublethose in the north (164,347), thereport said.

Asking prices in London have hit anall time high, according to theRightmove data, released this morn-

ing. The average house price hasspiked to a jaw-dropping 450,210.

The number of new sellers in thecapital has plummeted, with weaksupply and high demand pushingprices higher.

Supply is down 13.9 per cent inLondon this month, compared toOctober 2010. Throughout the year sofar, the number of new sellers is down7.9 per cent on the same period last

year.And one of the main drivers of

more buoyant conditions in the capi-tal is the number of potential buyers

who have either ready cash or the abil-ity to raise a substantial deposit and asecure job to fund mortgage repay-ments, the report said.

Lenders in London are competing tooffer low rates to cash-rich house buy-ers, Rightmove said.

However, the reality is that there isfurther evidence of the two-tier twist

which is dogging the return to more widespread liquidity in the housingmarket, added Rightmove directorMiles Shipside.

House pricerises limitedto the southBY JULIAN HARRIS

HOUSING

ANALYSIS l Asking prices across England & Wales

North West

Avg. House Price 161,797

Monthly Change -1.3%

Annual Change -1.0%

North


Monthly Change 0.1%

Annual Change -4.2%

Yorkshire & Humberside


Monthly Change 0.7%

Annual Change -3.4%

West MidlandsAvg. House Price 185,695


Annual Change -2.6%

Wales



Annual Change -0.9%

South West


Monthly Change 4.2%

Annual Change 1.1%

UPon one year ago

DOWNon one year ago

Greater London


Monthly Change 5.2%

Annual Change 7.5%

East Midlands



Annual Change -5.5%

East Anglia


Monthly Change 4.2%

Annual Change 2.8%

South East


Monthly Change 4.5%

Annual Change 4.0%


City office take-up stays low

THE TAKE-UP of new office space inLondons Square Mile this year coulddrop to its lowest since 2003 as eco-nomic uncertainty continues todampen demand, property consult-ant Cushman & Wakefield has

warned.Research published by the firm

today shows that leasing activity inthe City and the Docklands rose morethan 73 per cent in the third quarterof this year to 1.4m square feet com-

pared with the previous quarter.However, take-up a measure of

economic prosperity for the year todate is still down 45 per cent com-pared with the same period last year.

One strong quarter is not suffi-cient to call a recovery in the market,Cushman & Wakefield said, predict-ing the annual take-up to be less thanfour million square feet -- a level notseen since 2003.

James Young, Head of Cushman & Wakefields City office, said:Occupiers in general remain cau-tious and a number of decisions have

been delayed. With the current eco-nomic uncertainty, 2012 will see take-up significantly below average.

There were four deals larger than50,000 square feet signed in the Cityand the Docklands in the third quar-ter. These were mainly lease re-gearsand renewals including PWC signingon at Hays Galleria, at LondonBridge.

Development in the City alsoremains constrained, with spaceunder construction a million squarefeet below the five-year average,Cushman and Wakefield said.

BYKASMIRA JEFFORD

PROPERTY

THE SUPPLY of residential accommo-dation available to rent is in sharpdecline, according to a reportreleased this morning.

The number of letting agentsreporting that there are more tenantsthan properties has reached the high-est level since records began, the

Association of Residential LettingAgents (ARLA) has said.

Around three quarters of respon-dents to the ARLAs survey say thatdemand is outstripping supply.

The increase in demand is particu-larly acute in London and the southeast and suggests that there is insuffi-cient supply of property to meet ten-ant demand, the report said.

The survey also showed that ten-ants are staying in their properties forlonger, as they lose confidence infinding a new home to rent.

Letting agents say supplyof rental homes is fallingHOUSING

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Interview18 CITYA.M. 17 OCTOBER 2011

The quiet diplomat

who is fighting onbehalf of the realsqueezed middle

8/3/2019 Cityam 2011-10-17

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IT is always hard to fill someoneelses shoes, especially if theybelong to a larger-than-life figuresuch as Lord Digby Jones or Sir

Richard Lambert. That was the posi-tion that John Cridland found himselfin when he took the reins at the CBIjust under a year ago. The mild-man-nered, softly spoken 50-year old could-nt be more different to hispredecessors, but his quiet, behind-the-scenes diplomacy mastered dur-ing a decade as the CBIs number two appears to be paying off.

Frenetic is how he describes theparty conference season when wemeet towards the end of the Torygathering in Manchester. He has beenin much demand recently, as the gov-ernment seeks to develop a growthplan to boost the flagging economy.

Indeed, many of the announce-

ments in George Osbornes speech,most notably a policy to relax someemployment regulation and a schemeto boost credit for smaller firms, arestraight off the CBI wish-list. Cridlandsays he is hopeful that moredemands, such as tax reliefs for manu-facturers that use large amounts ofenergy, will be met when the chancel-lor delivers his autumn statementnext month.

At the Tory conference, Cridlandfinds a chancellor who is at least will-ing to listen to, and in some casesadopt, his ideas. But he says he wasconcerned by the anti-businessrhetoric on display at the Labour andLiberal Democrat conferences. EdMiliband might have claimed hisspeech wasnt anti business, but hecertainly left that impression with alot of business people. Although

there is the occasional bad apple inthe barrel, most companies are try-ing to do the right thing and makinga good fist of it, he says.

For businesses, one of Osbornesmost welcome announcements was toallow firms to dismiss workers duringtheir first two years in the job withoutbeing taken to an unfair dismissal tribunal, up from one year currently,while also introducing fees to deterspurious claims.

I pressed the chancellor to makethat announcement, explainsCridland, who says the measure willhelp smaller businesses the most. Ifyouve got four people and youve gotjust about enough business to take ona fifth, you are very worried aboutending up at an employment tribu-nal. Its a David and Goliath situation. You end up with a manager whosalso an amateur personnel officerwhos just out of their depth.

Far from exacerbating unemploy-ment, the measure will actually help bring it down, especially for theyoung, he says. If I was a 16 year oldwho couldnt find a job, whats thepriority for me: getting a job, or hav-ing an extra employment right?Because the alternative is having theright but having no job at all.

Despite the victory for employers,Cridland admits frustration at the

fact Britain cant do more to tacklesome of the more pernicious employ-ment regulation coming out ofBrussels. At the same point that thisreform is being announced, theyrebringing in the agency workers direc-tive [which guarantees temporary workers the same pay and rights asfull-time ones] which I think is reallydetrimental to the unemployed tryingto get back into the labour market.

He urges the government to do asmuch behind-the scenes work as itcan to prevent similar red-tape fur-ther down the line. The agency work-er directive was held at bay for morethan six years by Tony Blair. It waspassed when Gordon Brown wasPrime Minister. So draw your own con-clusions. If the government has thewill and recruits allies in Europe, itcan fight battles and win the argu-ments.

Cridland is less certain about crediteasing, the radical scheme that willsee the government sell tens of bil-lions of pounds worth of gilts and usethe proceeds to buy corporate bonds.Although he describes the plan as anexample of exciting, innovative, outof the box thinking, he wants to seeflesh on the bones before deliveringa final verdict. Asked whether he isworried the government could end upwith billions of dollars of toxic assetson its books, he replies: Thats the$64,000 dollar question. The govern-

ment should not take risks with thepublic finances.

He hopes the scheme will be usedto help the squeezed middle notthe one coined by Ed Miliband, butsmaller, high growth businessesthat are struggling to get finance. Heis keen to make a distinction betweenthese firms and what Americans would call Mom and Pop opera-tions. Although he has some sympa-thy for the micro-businesses who fill

MPs postbags because they cant getan overdraft extension, he can under-stand why banks turn them away. It isthe drought of credit for the Ms inSME that is the much bigger prob-lem, he says.

Unlike many, Cridland doesntblame the banks for constrained cred-it, at least not entirely. Indeed, heraised a few eyebrows when he cameout so strongly against the interimfindings of the Sir John Vickers reportinto banking. I know the CBI puttingits name behind a message calling onVickers to be more careful was poten-tially quite a challenge. Am I justspeaking for the banks? No, Im speak-ing for the businesses who would notbe able to get finance if Vickers haddefined the ring-fence too tightly.

However, he is clear that banksalone cant solve the credit problem,especially because regulatory

requirements have gone up, weaken-ing their ability to lend. Although heis happy that the government is try-ing to ginger up corporate debt mar-kets with its credit easing plan, he ispressing Osborne to consider anotherradical scheme: tax breaks for bigfirms who buy equity stakes in theirsuppliers.

Its often larger companies whoknow who the high growth business-es are, because theyre watchingthem, keeping an eye on them,theyre in their supply chain. Theymight actually want to strengthenthose companies and see thembecome more robust. So I think theremight be a change for tax credits for

large companies that take minoritystakes in smaller firms.

Although we spend most of ourtime talking about what Osborne cando to boost the economy, he says theEurozone crisis largely outside thechancellors control poses thebiggest risk to the UK economy. I askhim to look into his crystal ball to pre-dict an outcome, and his response,while characteristically understated,is more downbeat than I expected. It

is not obvious that there is a sustain-able solution on the cards.He qualifies this rather Malthusian

statement by saying he still thinksthe most likely outcome is somekind of transfer union, which wouldsee the richer European states under-write the debts of weaker peripheralones. Thats the only way we will set-tle this, he argues, because the realtarget is Italy and Spain. In manyways the focus on Greece is a proxyfor what comes after. He has littletime for European politicians, who hesays have exacerbated the crisis withconstant dithering, and fears theymay have wasted all their politicalcapital by letting the saga drag on.

It saddens me that there were anumber of moments over the last 18months when European governmentscould have created a firewall that would have been high enough and

wide enough to keep the markets at bay. But theyve never quite doneenough. So the emerging fire hasjumped the firewall each time.

With that in mind, I ask whetherhis dogged determination to cut redtape can seem a little futile when pit-ted against the storm clouds gather-ing over the Eurozone. On thecontrary, he argues that the Euro cri-sis shows exactly why we need tomake the UK a better place to do business, particularly in areas likederegulation, infrastructure and plan-ning. The Eurozone crisis doesntalter the prescription, he says. It justmeans we must do even more of thesame.

Interview 19CITYA.M. 17 OCTOBER 2011 WORDS BY DAVID CROW

CBI boss John Cridland says the Eurocrisis means it is even more urgent forthe UK to boost its competitiveness

John Cridlandbecame CBIdirector-general inNovember 2010

Picture: Getty

Age: 50Work: A life-long lobbyist, Cridlandjoined the CBI as a policy adviser in1982, rising to become director ofenvironmental affairs and of humanresources policy. He was appointeddeputy director-general in 2000 andtook the top role in November 2010.

External roles: Cridland serves as a UKcommissioner for employment andskills and is on the board of business

in the community. He was a member ofthe low pay commission from 1997 to2007 and vice-chair of the nationallearning and skills council from 2007to 2010. In 2006 he received a CBEfor services to business.

Education: Read history at ChristsCollege, Cambridge.

Family: Married, two childrenLives: Bedfordshire

CV |JOHN CRIDLAND, DIRECTOR-GENERAL OF THE CBI

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THE fate of 11 giant out of town storesowned by Best Buy and Carphone

Warehouse is close to being decided,with a sale or closure the most likelyoutcome.

The joint venture partners thissummer froze the planned openingof a string of new stores and launcheda review into the existing ones afterthey recorded a greater than expect-ed loss in their first year.

Best Buy and Carphone, who each

own 50 per cent of the venture, aresaid to be thrashing out the details,having previously said they want theissue tied up this autumn.

It is understood US-based Best Buyis biding its time to get a fuller pic-ture of the performance of its nativeoperations before making a final deci-sion on the venture.

It is unlikely a rival would be will-ing to buy the entire portfolio ofstores given the choppy economicclimate but an individual sale of the

most viable units is on the cards,with the remainder likely to be shut-tered.

Another option being considered isa downsizing of the existing stores,mirroring the tactics of Best Buy inthe US, where there has been a dip indemand for flatscreen TVs and desk-top PCs.

Regardless of the future of the big box stores, Carphone and Best Buy will continue their successful part-nership in the US, where a string ofmobile phone concession stalls haveseen revenues surge.

Crunch timefor Best BuysUK venture RAIL PASSENGER numbers grew bymore than five per cent over the sum-mer, helped by more travellers switch-ing to public transport as high petrol

prices force drivers to leave their carsat home.

Figures from the Association of Train Operating Companies (ATOC)show that the number of journeystaken in the third quarter of this yearrose by 5.3 per cent to 314.3m, up from298.4 in the same period last year.

The number of train journeys is setto reach 1.3bn for a second consecutive

year. In 2010 ATOC reported that pas-senger numbers reached 1.3bn thehighest peacetime level since 1928.

Despite difficult financial times,more people are choosing to go bytrain when travelling to work and on

business, visiting friends and family,

or just taking a well-earned break,Michael Roberts, the chief executive of

ATOC, said.The sale of cheap advance tickets

for those who book early have almostdoubled in the last four years, withalmost a million bought each week,the association said.

Journeys in London and the SouthEast grew by 5.8 per cent. The numberof long distance journeys rose by 4 percent while regional journeys were up

by 4.4 per cent.

Train journeysset to return topeacetime high

Carphone Warehouse boss Charles Dunstone is reviewing the fate of Best Buy in the UK

BY STEVE DINNEEN

RETAIL

TRANSPORT


ANALYSIS l Carphone Warehouse

p370

360

350

340

10 Oct 11 Oct 12 Oct 13 Oct 14 Oct

347.0014 Oct

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NewsCITYA.M. 17 OCTOBER 2011 21

HSBCAntonio Simoes, group head of strategy

and planning, has been appointed to thenew position of head of retail banking

and wealth management, Europe. JohnFlint, CEO of HSBC Global AssetManagement, has been appointed aschief of staff to the group CEO andgroup head of strategy and planning, andSridhar Chandrasekharan, global head of

wholesale at HSBC Global AssetManagement, has been appointed asCEO of HSBC Global Asset Management.All three appointments are effectivefrom 1 January 2012, subject to boardand regulatory approval.

Russell InvestmentsThe independent financial services firm

has appointed Crispin Lace and NickSpencer as directors of the Consultingand Advisory Services team. Lace joinsfrom Mercer, where he was a memberof the asset allocation committee, andSpencer joins from GAM, where he led

the institutional business for UK,Ireland and the Netherlands.

IP GroupThe intellectual property developerhas appointed Mike Humphrey to theboard of non-executive directors.Humphrey is the group chief executiveof Croda International.

Redefine InternationalThe diversified income property firm hasappointed Greg Clarke as an independ-ent non-executive director and chairmandesignate of the company. Clarke willsucceed the current chairman, Philippe

de Nicolay, who will retire from theboard in November 2011.

Metro BankThe high street bank has appointedserial entrepreneur Luke Johnson, cur-rently chairman of the Giraffe restau-rant group and Patisserie Valerie, as anon-executive director.

CITY MOVES | WHOS SWITCHING JOBS Edited by Harriet Dennys

The Crown EstateIan Marcus has been appointed as a non-executiveof The Crown Estate, effective from 1 January2012. Marcus is currently chairman of Europeanreal estate investment banking at Credit Suisse,

chairman of the Bank of England CommercialProperty Forum, and chairman of The PrincesRegeneration Trust. Previous roles have includedpresident of the British Property Federation andchairman of the Investment Property Forum.

+44 (0)20 7557 7245morganmckinley.com

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

in association with

WALL STREET WEEK AHEAD

G20 and US earnings set to be positive catalysts

AREVIVAL in hopes that theEurozone crisis can and will becontained will continue to spurstocks higher this morning.

The mood of the market certainlyseems to be leaning towards the posi-tive, and that will likely be reinforced

by news from Paris at the weekendthat the G20 have agreed that the IMFshould consider new ways to provideon a case by case basis short-term liq-uidity to countries facing systemicshocks.

The FTSE 100 index is called toopen up around 50 points at 5,516.

Germanys DAX 30 index is expectedto open up 61 points at 6,028, and theFrench CAC 40 is forecast to openhigher by 30 points at 3,247.

Whilst Europe will inevitably con-tinue to play its part with marketdirection, recent encouraging newsfrom the US has also been responsiblefor the current boost in global stocks.

Retail sales data on Friday rose at

their fastest pace in seven months,demonstrating how American con-sumers are shrugging off past con-cerns about global recession. A waveof big-name earnings due out this

week could well help push the mar-kets even higher, with the tone set bystellar results out from Google on

Thursday. Companies due to reportinclude Goldman Sachs, Bank of

America, Morgan Stanley, IBM, Coca

Cola and Apple. Apples shares closed at a recordhigh, and came within a whisker ofthe intraday lifetime high, on Fridayat $422, with sales on the new iPhone4S expected to reach between twoand two and a half million units fol-lowing the launch last Friday.

Further evidence that we could bein early year-end rally mode comes

from the VIX volatility index, whichclosed 8 per cent lower, down for aremarkable ninth day in a row.Consistently lower levels on the VIX -the so-called fear index, are oftenregarded as heralding a period ofincreased risk appetite.

Martin Slaney is director of global prod-uct management at GFT

MARTINONTHE MARKETS

THE coming week is likely to becrucial for the direction offinancial markets until year-end, with Eurozone stability at

stake as well as the latest test of theone bright spot for investors, corpo-rate earnings.

In the case of the Eurozone, there istalk of a binary moment next week-

end in which a European leaderssummit either comes up with thegoods to assuage concerns about thedebt crisis or disappoints again.

The former might well be taken asa reason for a sustained rally inriskier assets such as equities. The lat-

ter would almost certainly spark asell off.

A comprehensive plan for solvingthe Eurozone debt crisis at the sum-mit in Brussels has been flagged byGermany and France, raising expecta-tions on markets. Some idea of whatis at stake for investors can be seen intheir actions over the past few weeks.

World stocks as measured by MSCIare up more than 12 per cent since

hitting a low on 4 October. At the same time, yields of both

long term US bonds and coreEurozone debt have risen well offtheir lows. Part of this is in responseto expectations of a Eurozone debtroadmap. But it also reflects extreme-

ly bearish positioning throughout thenorthern hemispheres summer

months.Asset allocation polls at the end of

September showed safe-haven cashholdings at levels that can be a count-er indicator for a rally. In effect,investors hold cash so that they canput it to work quickly if the invest-

ment climate changes which maybe happening.

MARTIN SLANEY

18 Jul 5 Aug 25 Aug 5 Oct15 Sep

6,000

5,200

5,600

ANALYSIS l FTSE

5,466.3614 Oct

18 Jul 5 Aug 25 Aug 4 Oct14 Sep

7,500

5,500

6,500

ANALYSIS l DAX

5,967.2014 Oct

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ANALYSIS lWhitbread

1,650

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1,350

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1,615.0014 Oct

WHITBREADAnalysts at UBS say Costa and Premier Inn owner Whitbread, which reportsfirst half results tomorrow, is its most preferred stock in the leisure and tobac-co sector. The investment bank is forecasting revenues of 889m, ebitda of183m, and earnings per share of 69.6p. Whitbreads restaurants continue todrag down on growth but Costa and Premier Inn are performing well. UBS

rates the stock a buy with a price target of 2000p.

DIAGEOAnalysts at ING expect Diageo to report organic sales growth of four per centwhen it updates the markets on first quarter trading on Wednesday. Most ofthe growth will be driven by Latin America, Africa and Asia-Pacific, whileNorth America could also put in a decent performance. However, ING saysEurope is a black box due to the euro crisis and bad weather hurting beer

sales. ING rates the stock a hold with a target price of 1,294p.

LVMHAnalysts at Helvea expect luxury group LVMH to report ongoing sales growthwhen it updates the market on its third quarter tomorrow. It expects thewatch and jewellery divisions to have recorded the best growth, althoughprofits could be hurt by the strong Swiss franc. Helvea thinks it will take sometime to determine whether the luxury sector can weather the economic tur-

moil. Until then, it rates the stock accumulate with a target price of 140.

ANALYSIS lDiageo PLC

1,300

1,200

1,100

Aug Sept Oct

p

1,292.0014 Oct

ANALYSIS lLVMH Moet Hennessy Louis Vuitton SA

130

120

110

100

Aug Sept Oct

114.4014 Oct

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THE owner of Saga and the AA,Acromas, lost almost 500m last yearas the interest payments on its mas-sive debt pile took their toll.

Acromas, taken private in June2007 for 6.3bn by Charterhouse,Permira and CVC, posted a 458mpre-tax loss during the 12 monthsended January, 13.4 per cent narrow-er than a year earlier. It now owes itscreditors 6.6bn, up three per cent.

Andrew Goodsell, Acromas chief

executive, described the results asrobust, with group turnover up11.4 per cent to 1.84bn, including953m from Saga and 883m fromthe AA.

But operating profit, which rose31.7 per cent to 241.6m, was effec-tively wiped out by debt interest pay-ments of 335.4m. More than 350mwas also rolled up into shareholderloans.

Acromas, which has long been thesubject of flotation talk, said its busi-

nesses are growing and its debt isexactly where it should be.

Goodsell said: This robust per-formance has been achieved againsta very difficult economic backdrop.As measures taken to reduce the pub-lic sector deficit begin to take effect,consumers are starting to feel thepinch.

Acromas was set up in 2007 afterits private equity owners bought Sagaand the AA in June 2007, funded by4.8bn of bank borrowings and1.5bn of shareholder loans.

In July Acromas agreed to buy

Nasdaq-listed Allied Healthcare for$175m (107m), six months after its124m acquisition of NestorHealthcare.

Debt weighson owner ofAA and Saga ABERDEEN Asset Management is tak-ing its long-running 8m tax disputeto a new tribunal hearing.The claim, which attempts to

cityam 2011-10-17

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