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FTSE 100 5,545.38 +100.56 DOW 12,153.68 +259.89 NASDAQ 2,678.75 +53.60 /$ 1.61+0.01 / 1.170.03 /$ 1.38+0.01

EUs Montinamed asItalian PM

MARIO Monti, former EuropeanCommissioner, was appointed PrimeMinister last night by Italian PresidentGeorgio Napolitano.

He replaces Silvio Berlusconi, wholost his majority in parliament last week during a vote on a routinefinance bill and resigned on Saturday.

Markets and Eurozone leaders hopeMonti will usher in a period of calmafter the panic of the last few weeks.

Monti, who previously worked forGoldman Sachs, was appointed sena-tor for life by the President last week.His role is to push through fiscal andstructural reforms to stem the crisishitting the country and boost its long-term competitiveness.

The president of the republic hasreceived Senator Mario Monti and con-ferred a mandate to form a govern-ment, the presidential palaceannounced in a statement.

He is expected to form a govern-ment of technocrats other expertEurozone insiders who are deemed tobe above the politics that led to paraly-sis and a lack of the reforms necessaryto save Italy from the deepening crisis.

The unelected Monti will have togain backing from a majority of parlia-mentarians. So far the centre-leftDemocratic Party has backed him, andBerlusconis PDL has offered condition-al support. We must be united facing

a crisis that was not born in Italy, not born out of our debt or our banks,Berlusconi said yesterday.

ALLISTER HEATH: P4

BY TIM WALLACE

EUROZONE

Chancellor George Osborne is on the lookout for good ideas to stimulate growth without spending cash Picture: REUTERS

CHANCELLOR George Osborne is intalks with institutional investors aboutgetting private cash to fund billions ininfrastructure projects as part of a des-perate bid to get the economy movingdespite the global debt crisis.

Among the ideas being mulled byHM Treasury is the establishment ofan infrastructure investment fund tochannel private money from pensionand mutual funds into building tollroads, houses and power plants.

Adam Marshall, policy director atthe British Chambers of Commerce,told City A.M.: A single investmentvehicle is a possibility, though it maybe a single fund or several project byproject, or sector specific.

But he added that the initiativeneeds to include a deregulation ofplanning, with separate approval fromministers for major projects to createan attractive investment environment.

The scale of the potential funds isalso not clear despite reports suggest-ing that Osborne could target 50bnover an undetermined time period.

The infrastructure focus will formone part of a broader package that theTreasury hopes will stimulate growthwhile sticking to its deficit reductionplan.

Among the other measures likely tobe in the growth package unveiled intwo weeks are: A credit easing scheme that will

OSBORNE IN HUNTFOR GROWTH PLANBY JULIET SAMUEL AND TIM WALLACEPOLITICS

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channel public money into small busi-ness loans to cut the cost of credit. AsCity A.M. revealed on Friday, banks havepitched a 4bn scheme, with the gov-ernment fronting up to 800m.

However, both banks and Bank ofEngland executive director AndrewHaldane argue that it is more impor-

tant to adjust capital rules so thatlending to small firms is more attrac-tive for banks in the long-run. A partial merger of national insur-

ance and income tax to simplify firmstax returns and make the true rate oftax more transparent. Some tax relief for energy-intensivefirms, as revealed by City A.M. lastmonth. This could involve exemptingsome from the floor on carbon pricing. An overhaul of the planning system

to create a presumption in favour ofletting projects go ahead. Employment law reforms to makehiring people cheaper. But the Liberal

Democrats have vowed to temperDowning Streets central policy recom-mendation, which is to let firms getrid of workers for being unproductive. Another possibility is that theTreasury acts on talks with banks overtweaking the UKs liquidity rules to beless strict by, for example, indicating

behind the scenes that it would be sup-portive of a more liberal Bank ofEngland governor when the timecomes to replace Sir Mervyn King.

Issue 1,510 Monday 14 November 2011

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News4 CITYA.M. 14 NOVEMBER 2011

UKs plan tocut sick bills WHITEHALL Mandarins are under-stood to be close to finalising a dealaimed at cutting the UKs 13bn sick-ness absence bill.

Officials hope to have new rulesready by the end of the month to dis-courage sick leave, includingenrolling workers on a health insur-ance scheme.

The plan could see workers aswell as employers pay health insur-ance contributions, but they wouldthen have quick access to occupation-al health services, in theory speedingup their recovery and getting themback to work quicker.

The recommendations are likelyto be made following a review led byformer director general of theBritish Chambers of Commerce

(BCC) David Frost.Insurance companies could also be

liable for long-term sickness bills, sav-ing the public purse or employer con-tributions.

Under Frosts leadership, the BCCcampaigned for the government toreduce the burden of regulation inthe UK, while also throwing its weight behind the plans to reduceBritains large public deficit.

John Longworth, a former seniorexecutive at both Asda and Tesco, was named as successor over thesummer.

BY STEVE DINNEEN

HEALTH

Even Super-Mario may not save Italy

THEY call him Super-Mario, for rea-sons that arent quite clear. But MarioMonti, Italys non-elected new primeminister, will certainly need super-powers if he is to save Italy from ruin,and prevent a major recession in theEurozone and hence in the UK. Italysmain problem is that its economy hasbarely grown since joining the euroand that its costs have soared, pricingit out of world markets. Unless costs(including real wages) are slashed,spending hacked back and real free-market reforms imposed to boost pro-ductivity, Italy will face Armageddon.

Yet in theory at least, Montis jobshouldnt be impossible. While Italysnational debt is dangerously high, itsbudget would be in surplus withoutdebt interest payments. Italys private

sector is not excessively leveraged: pri-vate sector debt is just 129 per cent ofGDP, against 211 per cent in the UK.The problem is the public debt at 120per cent of GDP, crippling red tape,corruption, an unreformed public sec-tor and vast unfunded state liabilities.

Fortunately, the Italian state ownsplenty of assets, from shares in majorcompanies worth tens of billions to2,500 tonnes of gold worth 100bn. The shares could be sold at a goodprice , providing much-needed liquidi-ty. The gold could be used as collateralfor the bond markets, allowing Italy toraise 300bn, with the first third ofpotential bondholder losses in theevent of losses insured.

Let us hope that Monti doesnt gofor the lazy option of a one-off wealthtax on private households bankaccounts and homes. Italians are

wealthier per capita than Americansor Germans, but such a move wouldbe bound to be copied elsewhere andwould reduce the pressure on politi-cians to sort out their own affairs

violating private property rights is notthe way to go. What is required is afair and efficient tax system and amassive crackdown on tax evasion.

Wealthy Italy shouldnt need an IMFbailout, or even the monetisation ofits debt by the European Central Bank.It should refuse all outside help andmarshal its own resources. But thatmeans painful change, and tacklingthe tyranny of the status quo, thepower of vested interests and the sta-tist/welfarist/corporatist ideologywhich has proved to be so powerful athalting reforms in Europe andAmerica. Public sector workers will goon strike at any hint of a shake-up. It ishard to see how Monti will smashthese obstacles.

He is a distinguished academic but his decisions while he was aEuropean Commissioner were decid-

edly mixed. He was right to stopGermany subsidising Landesbanken.But his f lagship anti-trust case againstMicrosoft in the early 2000s did noth-ing to enhance competition (the inter-

net and innovation from Google andApple turned out to be much morepowerful than anything Brusselscould dream up) and helped damageMicrosoft without making consumersbetter off. It will go down in history asa case study in futility. Let us hope heis more focused on what actually mat-ters this time around.

Montis task will be to convince theItalian public to change and thepolitical establishment to allow himto push through austerity and supply-side measures far more radical thananything Silvio Berlusconi was plan-ning. There will be lots written aboutMontis supposedly super-normalqualities over the next few days butthe stark reality is that the odds aremassively stacked against him.

[email protected] me on Twitter: @allisterheath

UNIVERSAL expects it will have tomake divestments in some marketsfollowing the acquisition of EMIsrecorded music division by its parentcompany Vivendi.

Sources close to the firm told CityA.M. no decisions will be made untilafter regulatory clearance has beengranted a process expected to takebetween eight and 10 months.

The source said the firm has not

identified which markets are mostlikely to be affected, nor which divi-sions could be at risk.

The source also said Vivendi has noplans to sell off Universal in the wakeof the EMI deal.

Universal chairman and chief exec-utive Lucian Grainge told City A.M.:EMI should be commended for itsresilience over the last few years.

Following the regulatory process, we plan to reinvest in their artistsand in new music, and preserve thehistoric legacy of their past.

BY STEVE DINNEEN

MEDIA

Vivendi to keep UniversalUniversal chief executive Lucian Grainge praised EMIs resilience

NEWS | IN BRIEF

Exxon Mobil signs Kurdish dealIraqs Kurdish region has signed anexploration deal with Exxon Mobil, aKurdish official said last night, confirm-ing a deal Iraq has said could jeopardisethe US oil giants southern oilfield con-tract. Natural resources minister AshtiHawrami said the Kurdistan Regional

Government (KRG) signed a contractwith Exxon in mid-October for sixexploration blocks in the semi-autonomous region. Iraqs central gov-ernment has said Baghdad wouldconsider a deal between Exxon and theKRG illegal and a violation of the com-panys contract to develop Iraqs 8.7bn-barrel West Qurna Phase One oilfield.

Japans GDP rebounds 1.5 per centJapan's economy grew 1.5 per cent inJuly-September from the previous quar-ter following three quarters of contrac-tion as exports and consumptionrebounded from a slump caused by theMarch earthquake, government datashowed this morning. The quarter-on-quarter rise was in line with the medianestimate for a 1.5 per cent increase andfollows a 0.5 per cent contraction in theprevious quarter.

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

Former BCC directorgeneral David Frosthas led the review intoways to cut sicknessabsence in the UK

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 Owen

Head of Distribution Nick Owen

PRIVATE EQUITY GROUPS BOOST STAKESIN HOT FUNDSInvestors in the secondary leveragedbuy-out fund market are using furtherleverage to finance such purchases,adding another layer of risk and stir-ring up memories of the debt-fuelledprivate equity boom ahead of thefinancial crisis. While private equitygroups in Europe and the US are find-ing it harder to raise capital, the mar-ket for stakes in their pre-crisis fundshas become so hot that some investorshave taken on loans to be able to payhigher prices for such assets.

WELFARE REFORM TARGETS WORKERSHOURS Workers claiming state help withchildcare and housing costs will beexpected to seek longer hours, or risksanctions that could include loss of

benefits or a requirement to undergotraining, in a radical shift in Britains

welfare system. The proposals willmake it one of the most demanding

regimes in the world, say experts. Theaim is to ensure that people work asmany hours as they can, reducing the benefits bill for a cash-strappedTreasury, and, in the process, crackingdown on the black economy by provid-ing an incentive for self-employed peo-ple to declare earnings accurately.

EVERYTHING EVERYWHERE TO REPAYPARENTS LOANSEverything Everywhere, the UKmobile operator jointly owned byDeutsche Telekom and France Telecom, is planning to pay back875m ($1.4bn) of loans to its two par-ent companies in a step towards mak-ing itself a wholly independentoperation. The group has lined upseven banks to lend it the money tocarry out the move, according to bankers close to the process. If thefacility gets final approval, it could be

one of the largest new borrowingfacilities in the UK this year.

RED TAPE PUTS STRANGLEHOLD ONSELL-OFF OF ROYAL MAILPrivatisation of Royal Mail will notbegin until at least 2013 and mightnot even be complete before the endof the Governments present term,well-placed sources have confirmed.The state-owned national postal serv-ice faces months of regulatory issues,all but ruling out any sale, partial orotherwise, next year.

REDGHOST METERS ADD 15M TOBRITAINS SWOLLEN GAS ANDELECTRICITY BILLSEnergy companies are allowing thou-sands of households to avoid payingfor their electricity and gas leavingothers to foot their bill. According tofigures obtained by The Times, about20,000 households and businesseshave ghost meters that have not

been registered by any energy suppli-er. The annual cost is around 15m.

BANKS WRITE OFF RECORD LEVEL OFCORPORATE DEBTSBritains banks and building societieshave been writing off more of theircorporate debt than at any time onrecord, official data shows. In thethree months to June, write-offs ofloans to non-financial corporationsalmost tripled to 2.94bn, accordingto the Bank of England. The only timethe level of losses had ever come closewas in the fourth quarter of 2009, asBritain was emerging from recession,when write-offs were 2.5bn.

TOBACCO SECTOR WANTS FREEZE ONCIGARETTE DUTYThe tobacco industry has demandedGeorge Osborne freeze cigarette dutyin this months Autumn Statementafter research found sin taxes dontencourage people to give up. The

number of smokers in Eastern Europedid not fall when prices soared.

NOBLE IN TALKS TO HIRE GOLDMAN'SALIREZAOne of the top executives of GoldmanSachs Group in Asia is in talks to become chief executive of troubledcommodities trader Noble Group,just days after Goldman announcedthat he was leaving the investmentbank, a person familiar with the mat-ter said. Yusuf A. Alireza is leavingGoldman after 19 years at the firmand after just 10 months as co-presi-dent in the Asian-Pacific region,excluding Japan.

IBM, CHINESE FIRM FORGE E-COM-MERCE PACTInternational Business Machines andChinese electronics retailer SuningAppliance Co. have struck a deal tocreate e-commerce and Web technol-ogy centres in China and the US. IBM

will help Suning develop a technolo-gy centre in Nanjing, China.

WHAT THE OTHER PAPERS SAY THIS MORNING

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News 5CITYA.M. 14 NOVEMBER 2011

ITALIAN lender Unicredit will tap upinvestors for 7.5bn (6.4bn) in cash asit scrambles to pass a new round ofEuropean stress tests.

The banks strategic committee willthis morning unveil the recommenda-tion to meet requirements by raisingmoney rather than holding an assetfire-sale, making it Europes first bankto formally announce its capital-rais-ing plan in response to regulatorsdemand that EU banks find 106bn in

new cash.Rivals could now feel under pres-

sure to unveil their own plans quicklyto avoid missing out on limitedinvestor appetite for bank equity.

As part of its strategic review,Unicredit will also announce that it isclosing its in-house equity cash broker-age in the City. The move will costaround 150 jobs, leaving the bank

with just under 1,000 staff in London.The lender will also reveal plans to

offload 10 per cent of its assets, but

not over the same short timescale asthe capital-raising, which must becompleted by the middle of next year.

Much of the new capital is expectedto be raised in Germany and Austria,

where Unicredit has a large presence.Its strategy review will see the bank

refocus on growing markets such asRussia, Poland, Turkey and the CzechRepublic.

City A.M. understands that Unicreditis being advised in the capital-raising

by a syndicate of banks made up of itsown in-house team, Bank of AmericaMerrill Lynch and Mediobanca.

Unicredit toraise 7.5bnnew capital TAMARA Mellon has stepped down aschief creative officer of Jimmy Choo,the shoe brand she co-founded 16years ago, following its 500m acqui-

sition by European luxury goodsgroup Labelux in May.

Labelux, which also owns the Swissbag designer Bally and fashion labelDerek Lam, announced yesterday thatMellon will leave Jimmy Choo thismonth followed by chief executive

Joshua Schulman, who will step downearly next year.

Jimmy Choo has been sold fourtimes since Mellon, a former Vogueaccessories editor, founded the label

with the eponymous Malaysian-bornshoemaker in 1996.

Vienna-based Labelux bought thecompany from private equity firm

TowerBrook, who in turn acquired

Jimmy Choo in 2007 for 185m, driv-ing the brands expansion overseasand introducing other accessories.

Jimmy Choo now encompassesmore than 120 stores in 32 countries

worldwide and is a regular red-carpetfavourite among celebrities. It hitsales of 150m last year.

Mellon and Schulman will leave fol-lowing its transition to Labeluxs own-ership and management control,the group said.

Labelux was founded in 2007.

Jimmy Choosfounder Mellonmakes her exit

Mellon will leave Jimmy Choo 16 years after founding the footwear brand. Picture: REX

BY JULIET SAMUEL

BANKING

RETAILING

ANALYSIS l UniCredit

8 Nov 9 Nov 10 Nov 11 Nov

0.81

0.83

0.82

0.80

0.79

0.77

0.78

0.76

0.75

0.82511 Nov

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MORE NEWSONLINE

www.cityam.com

PoliticsHome.comPoliticsHome.com

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

In association with PoliticsHome.com

In partnership with

To what extent do you think the departureof Silvio Berlusconi will improve or worsenItalys financial crisis?

Improvesignificantly

Improvesomewhat

Make nodifference

Worsensomewhat

Worsensignificantly

5

%51

6

38

32

THE majority of our CityA.M./PoliticsHome.com panel thinkGreece will leave the euro withinthe next year, with an overwhelm-ing 78 per cent saying that theindebted countrys exit is likely.

Forty-six per cent said it was verylikely that Greece would no longer

be part of the euro by this time nextyear, while almost another third (32per cent) see the departure as some-

what likely. Just 19 per cent saidthat a return to the drachma was

unlikely. As new Prime Minister LucasPapademos begins his first full weekin charge ending weeks of politicaluncertainty, he faces the prospect ofhaving to negotiate a default sce-nario in his first month in power,with Greece only sitting on enoughcash to survive until mid-December.

As for Italy, more than half of ourpanel (50.8 per cent) said that ex-Prime Minister Silvio Berlusconis

departure from government wouldmake no difference to Italys

financial crisis. But 40 per cent weremore optimistic, expectingBerlusconis exit to improve thecountrys woes.

Our panel was also scepticalabout the potential for Lloyds chiefexec Antnio Horta-Osrio to returnto his role, after he went on leave forillness. Thirty-nine per cent sayHorta-Osrio is unlikely to return,

versus 30 per cent that expect himto come back.

BY ELIZABETH FOURNIER

EUROZONE

Greece will leave the euro withinthe next year, says our City panel

Verylikely

Somewhatlikely

Neither likelynor unlikely

Somewhatunlikely

Veryunlikely

Dontknow

5

%

32

12

3

7

1

46

How likely do you think it is that Greecewill leave the euro within the next year

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MARIANO Rajoy, leader of the PeoplesParty which is expected to win nextSundays Spanish general election, hascalled for swift labour market and fis-cal reforms to be implemented.

He aims to pass a budget stabilitylaw to build on Septembers constitu-tional ammendment which limits thepublic deficit and debt, aimed atinstilling investor confidence.

By the summer, the 2012 budgetshould be approved, the restructuringof the financial sector should be in itsfinal stages and the labour market

reform should be approved, he saidyesterday.

NOMURA analysts have cast doubt onthe possibility of achieving Eurozonestability, despite Mario Montisappointment as Italian PrimeMinister, which is meant to bringhope to the embattled currencyunion.

The banks economists studied theincentives guiding the actions of theEuropean Central Bank (ECB) andmember states, and concluded thatmember states have strong incentivesnot to behave in the manner the ECBwould like.

If the ECB is hawkish on inflation,it risks damaging weak countrieseconomies in the short run, warnsanalyst Kevin Gaynor.

Yet if it is dovish, individual govern-ments can benefit from a loose mone-tary policy and stave off unpopularreforms, risking long term damage.

Whatever it does, the ECB risksdamaging its reputation and harm-ing member states.

One solution, Gaynor argues, is tobring in the IMF to remove fiscal inde-pendence from countries, allowingthe ECB to run a loose monetary poli-

cy while firm reforms are put inplace.

Alternatively, the ECB could takemore control of each national central banks foreign currency and goldreserves to make bad behaviour andpossible withdrawal from theEurozone less palatable.

In Italys case, a semi-independenttechnocratic government is being cre-ated. The unelected Monti was madeinto a senator last week by PresidentGeorgio Napolitano, before hisappointment as Prime Minister lastnight.

Monti, who has a reputation as atough Eurozone insider, is in theprocess of putting together a smallgovernment of expert ministers,expected to be announced today.

Napolitano hopes Monti will gainsufficient support in parliament topush through the required fiscal andeconomic reforms that could save thecountry from a deeper crisis.

German chancellor Angela Merkel,too, backs this approach to drivingthrough reforms.

I hope that confidence in Italy isrestored, which is crucial for a returnto calm throughout the Eurozone,she said.

Analysts cast

doubt on theeuros future

GERMAN chancellor Angela Merkelrepeated her call for Eurozone statesto give more powers to Brussels andpush toward fiscal and politicalunion yesterday.

We want to keep the euro, alongwith all the other states that have it.But that requires a fundamentalchange of our policy and moreEurope, she told Germanys ZDF tele-vision.

Step by step we want more Europe.That means the EU and the Eurozonewill grow together, otherwise people

wont believe that we really want toovercome our problems, she added.

We need moreEU, says MerkelQuick reform inSpanish sights

BY TIMWALLACE

EUROZONE

EUROZONE

EUROZONE

EU insider Mario Monti plans to push through reforms to save Italy from its financial crisis Picture: REX

News 7

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PARTNERS at boutique investmentadvisory STJ have seen their share ofprofits skyrocket since the firm wasset up in 2008, its most recentaccounts show.

Financial statements for STJ Advisors filed at Companies Houseon Friday show that the profit poolavailable to the nine members ofthe firms partnership was 4.85mfrom March 2010 to March this year,an average of 539,000 each.

Of that, the partners drew3.63m, an average of 403,000 perperson.

The boutiques success will dis-please some bankers at bulge brack-et banks, whom STJ has accused oftalking down the value of f loats to

the detriment of clients looking toraise capital.STJs bumper profits during 2010-

2011 compare to a more modestaverage profit share of 110,000

between four partners fromSeptember 2008 to March 2010, of

which they drew an average of63,000 each.

Comparing the same two periods,revenues rose from some 720,000to more than 6.68m during 2010-2011.

STJ specialises in debt and equitycapital-raisings and has been on sev-eral high-profile deals behind thescenes, such as the initial publicoffering of Spanish savings bankBankia, and the pulled float ofHochtief Concessions and

Telefnicas attempted float o Atento. Earlier this year, City A.M.revealed the depth of the animosity

between some independent advis-ers and larger investment banks,

with each blaming one another fora seizure in Londons capital mar-kets, which have still not reopened.

Profits soar atSTJ Advisors

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The Queen (right) laid the firstwreath yesterday at LondonsCenotaph, as part of

Remembrance Day Sunday,honouring the UKs fallen sol-diers. Politicans past and pres-ent, including (left to right inleft-hand picture) Gordon

Brown, Ed Miliband, Tony

Blair, Nick Clegg, John Majorand David Cameron, turnedout for the occasion. War veter-ans (below) and war widowsmarched past the Cenotaphand observed the two-minutesilence held as Big Ben chimed11am. Other members of the

Royal Family, including theDuke of Edinburgh, PrinceWilliam and his wife Kate (see

front) and Prince Charles, alsoattended. Pictures: REUTERS

Some bankers will curse this success

YOU might think that news ofsurging profits at an advisoryfirm would be a cause forcheer in the troubled invest-

ment banking industry.But STJ Advisors, the boutique

operation run by former Nomurabanker John St John, has a powerfulgroup of enemies at Londons top

bulge bracket banks. They will behoping that the firm is not stillenjoying the same success it report-ed at the beginning of the year.

Like many independent advisers,STJ trades off distrust between capi-

tal-raising clients and large invest-

ment banks, staking a claim as anunconflicted, independent voice.

But STJ has a particularly aggres-sive style, explicitly accusing larger

banks of distorting issuing prices,a claim that has understandablyinfuriated its rivals.

Unfortunately for them, STJs suc-cess looks like a sign that firms aresufficiently nervous about the stateof Londons capital markets that they

want another hand on the tiller.

BOTTOMLINEAnalysis by Juliet Samuel

BY JULIET SAMUEL

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LEGAL & General and private equityhouse Bridgepoint are set to battle itout for control of investor supermar-ket Cofunds.

The insurer, which is the largestshareholder with a 25 per cent stake,has expressed its interest to Cofundsand Mark Gregory, the executivedirector of savings at L&G, recentlyapproached Cofunds chairmanCharlie Eppinger with a written pro-posal.

Tim Breedon, the chief executive ofLegal & General, wants to build itsfund platform before he retires fromthe insurer at the end of 2012.

Potential bidders for Cofunds have been told, however, that a full saleprocess will not begin until next year,City A.M. understands. A deal could

value the business at up to 200m.Bridgepoint is not thought to be

actively preparing a bid but it couldopen formal discussions with the

board of Cofunds in the New Year. The private equity giant is best

known for its investment in highstreet brands such as Fat Face andPret A Manger but does have experi-

ence in financial services. In 2006 itsold its interest in wealth manager

Tilney to Deutsche Bank for a report-ed 250m profit.

A deal for Cofunds could provecomplex, however, given the stakesheld by institutional investors. As wellas Legal & General, technologyprovider IFDS owns 24 per cent andUS investor Newhouse Capital owns18 per cent. British fund managers

Threadneedle and Jupiter own 20 percent and 10 per cent respectively andPrudential owns three per cent ofshares. Bridgepoint and Legal &General declined to comment.

Cofunds, which has 34bn underadministration, said it did not com-ment on market speculation.

L&G to battle

buyout groupfor CofundsBY PETER EDWARDS

M&A

L&G chief executive Tim Breedon retires next year

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""#$%&!

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ANALYSIS l Cofunds investors

25%

24%

20%

18%

10%

3%

ANALYSIS l Legal and General Group PLC

p

7 Nov 8 Nov 9 Nov 10 Nov 11 Nov

108

106

104

102

100

108.0011 Nov

OVER half of the people in the UK saythe phone hacking scandal hasreduced their level of trust in theUKs media, according to a surveycommissioned by broadcaster PBS.

The level of mistrust rises furtherstill when asked about newspapersspecifically, with 58 per cent of peo-ple saying the scandal had taintedtheir opinion of the industry.

Three in four people think mediaoutlets sometimes lie to their audi-ences, while over half say content inthe UK media has been dumbed

down in recent years. Traditional media, especially TV

(64 per cent) and radio (58 per cent),are still the most trusted media withthe UK public, with websites also scor-ing highly at 55 per cent.

Newspapers were trusted by just 38per cent, with magazines languishingat just 25 per cent. Blogs ranked low-est, with just nine per cent of peopletrusting them. Despite the glut of sto-ries broken on Twitter in recentmonths, social media, which alsoincluded Facebook, scored a trust-rat-ing of just 15 per cent.

In the US, traditional media againleads the way on trust, with newspa-pers viewed as trustworthy by 44 per

cent of Americans, followed by TVand magazines both on 42 per cent.

Phone hacking casts a shadowover the UK media landscapeMEDIA

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FOUR in 10 wealthy Britons do nottrust their children to protect theirinheritance, according to a reportpublished this morning.

And the higher an individualswealth, the more likely they are tocut people out of their will.

Barclays Wealth has estimated thatfive per cent of those with disposablewealth between 1m to 2m (exclud-ing first homes) have disinheritedsomeone. Yet among people with

over 10m in disposable wealth, astaggering 13 per cent have booted afamily member or other unluckyassociate off their will.

In the case of wealth that hasbeen inherited, tensions around enti-tlement may lead to disputes, saidCatherine Grum of Barclays Wealth.

It is surprising just how many wealthy respondents report experi-encing such conflict and the impactthat source of wealth can have onthis, Grum added.

Over a third (37 per cent) of highnet worth individuals in the UK haveencountered family conflict as aresult of inheritance issues, the sur-vey also revealed.

Yet despite the problems, and awider perception that earned wealthleads to more happiness than inherit-ed funds, 94 per cent of respondentsremain committed to passing onwealth, the study showed.

The survey follows an unrelatedcampaign, kicked off this month, toconvince rich people to include morecharity donations in their wills.

The Legacy10 campaign notes thatpeople who leave at least 10 per centof their estate to charity will see theirinheritance tax rate slashed from 40per cent to 36 per cent, starting fromApril next year.

Seven per cent of all giving in theUK comes from the top 100 familyfoundations, a report from PearsFoundation and Cass Business School will reveal this evening. The reportwill encourage comfortably wealthypeople to start more foundations.

Inheritanceissues stokefamily feudsBY JULIAN HARRIS

PERSONAL FINANCE


ECONOMIC WOES GIVE BIRTH TO GOLD BUGS

ECONOMIC troubles are prompting more investors to turn to gold, says BullionVault, whichtoday reports a 129 per cent growth in volume of its online exchange to 1.57bn, in the 12months to 31 October. Savers rarely regret the decision to steer clear of governments whichaddress economic problems by printing money, said CEO Paul Tustain. Picture: GETTY

US-Pacific trade pact falters

BARACK Obama, the US President,announced plans for an ambitiouscross-Pacific free trade pact from hishome state of Hawaii yesterday, yetbehind closed doors disputes threat-en to scupper any agreement.

In a private discussion withChinese President Hu Jintao over theweekend, Obama raised the ongoing battle between the countries over

Chinas weighing down of the yuan.Obama told Hu the American peo-

ple and US businesses were growingincreasingly impatient and frustratedwith the pace of change in the US-China economic relationship, senior White House aide Michael Fromantold reporters.

And relations with Japan were alsostrained over the weekend, afterJapanese authorities denied a WhiteHouse statement that said the Asianstate would place all its economysgoods and services on the negotiationtable for possible liberalisation.

It is not true that Prime MinisterNoda made such a comment in the

summit meeting. We pointed out tothe US side that the statement inquestion is not true and asked forexplanation, a Japanese governmentstatement said.

The Japanese government facesstrong pressure from lobby groupsthat support ongoing protectionismto defend their industries from for-eign competition, such as farmersand doctors.

Yet the Japanese authoritiesremain supportive of agreement

between nine members of the Trans-Pacific Partnership (TPP).

BY JULIAN HARRIS

WORLD ECONOMY

GROWTH in Londons business activi-ty has plummeted to near-stagnation,according to the latest purchasingmanagers index (PMI) from LloydsTSB and Markit.

The index fell from a reading of54.4 in September to a 14-month lowof 50.4 last month, the survey

showed. Scores of above 50 indicatesome economic expansion.

Behind the overall slowdown wasa sharp moderation in new ordergrowth, which in turn enabled firmsto complete work outstanding, saidNeil Mahoney of Lloyds TSB.Meanwhile, firms again displayed areluctance to hire, with job creationonly marginal in October.

Input prices continued to rise forthe capitals firms, although input

price inflation remains lower thanthat suffered elsewhere in the UK.

Londons business growthslows to a 14 month low

LONDON ECONOMY

PRIVATE sector firms are still lookingto boost employment over the nextyear, yet fresh regulation threatens tothwart the creation of temporary jobsand the governments migration cap iscausing difficulties for employers.

Firms are finding the [work permitmigration] cap difficult to navigate,states a report from the Confederationof British Industry (CBI) and HarveyNash today. Among the complaints,nearly two thirds (62 per cent) citedincreased complexity, while half report-ed a lack of clarity over the rules.

Another fresh piece of regulation --the governments new AgencyWorkers Directive is blamed for only16 per cent of employers expecting touse more temporary workers over thenext year. One in five say they will usefewer temps, the CBI research states.

Nonetheless, small and medium-sized enterprises (SMEs) are leadingthe UKs tentative jobs recovery, thesurvey says. Nearly half (47 per cent) ofemployers expect their headcounts tobe larger this time next year. With 19per cent predicting job cuts at theirfirms, the survey reports a positive 28per cent balance towards job creation.

Among companies with fewer than250 employees, a larger positive bal-ance of 35 per cent expect to recruitmore staff.

Fresh red tapehindering jobcreation in UK

EMPLOYMENT

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A FORMER executive at Olympus haspiled more pressure on to the board ofthe scandal-hit company by calling forthe return of its ousted president andchief executive.

Koji Miyata has launched a cam-paign for the re-instatement ofMichael Woodford (pictured), who wasfired from the group after questioninga series of controversial payments that

were eventually revealed to be hidinglosses made on acquisitions.

It also emerged over the weekendthat Olympus could face charges from

Japans securities watchdog.Miyata, a previous head of Olympus

medical systems business who servedas a director for 11 years, has posted

online a 1,300 word message to work-ers in which he says Olympus endo-scopic business is not indestructibleand warns that the groups future asan independent company is at stake.

A lot of you are surely thinking, as Idid initially, that things will work outsomehow. Friends, the Good ShipOlympus is listing and is in real dangerof sinking.

Partners and customers who havesupported Olympus over the decadesare beginning to abandon our compa-

ny. Clearly, reinstating Michael as pres-ident and coming completely clean

with the global community is the firststep in revitalising Olympus.

Last week Edinburgh fund managerBaillie Gifford also called for the re-instatement of Woodford, who is will-ing to return to his former job. Hecould not be reached yesterday butsaid in a message to supporters:What an extraordinary letter fromKoji Miyata. This is already havinga tremendous impact in Japan.

It came as sources said JapansSecurities Exchange andSurveillance Commission (SESC)might recommend that a levy beimposed on the maker of cam-eras and endoscopes for makingfalse financial reports, whichcould prevent the company from

being delisted. A de-listing wouldenable Olympus to draw aline under the affair.

The SESC may,however, urge thatcriminal charges besought against for-mer executives andothers involved indubious mergerand acquisitiondeals used fordecades to hide

large investment losses.On Saturday GIC, Singapores sover-

eign wealth fund which had a 2.17 percent stake as of the end of March,

became the first major investor toshow it had lost confidence inOlympus when it said it has sold mostof its stake.

Politicians in Japan fearthe fall-out from the

scandal will hit thecountrys other tech-nology firms andlast weekSoutheastern AssetManagement, thelargest foreignshareholder in

Olympus, said delist-ing would harm for-

eign investment.

Sourcessaid

the SESC will make a final decision onits recommendations to the FinancialServices Agency after seeing theresults of a third-party panel investi-gating the case, as well as corrected

versions of Olympus financial state-ments. The panels report is due inearly December.

The SESC believes Olympus con-cealed losses, which could haveexceeded 130 billion yen (1.05bn) attheir peak, were cleared by 2008 andthat there is nothing wrong with thefirms current financial position,according to Japanese media.

Police, prosecutors and regulatorsare believed to be joining forces in arare collaborative effort to examinethe cover-up while politicians are con-sidering legal changes to tighten cor-porate governance controls.

Olympus ex-director ralliessupport for axed WoodfordBY PETER EDWARDS

TECHNOLOGY


Calls to attach strings to central banks liquidity

CENTRAL banks risk introducingmoral hazard by providing liquidityto banks unconditionally, accordingto a report out last night from theCommittee on the Global FinancialSystem (CGFS), a part of the Bank forInternational Settlements (BIS).

The European Central Bank (ECB),now led by Mario Draghi (picturedright) has been a major provider of

liquidity to troubled banks since thestart of the financial crisis.

If such banks believe they willalways be provided with foreign cur-rency liquidity by central banks intimes of crisis, this could cause anunwelcome delay in needed domes-tic adjustments and in reducingexisting imbalances, the reportsaid.

This expectation of help couldfuel risk-taking and tempt banksand other financial institutions torun larger currency and maturitymismatches.

The report cites the InternationalMonetary Funds (IMF) aid model as

an example of one which attach-es strings to any assistance,partly eliminating the risk ofmoral hazard arising.

IMF conditionality has beeninstrumental in containingmoral hazard, the CGFSreport argued.

Aid to governments fromthe IMF tends to be condi-tional on various structur-al changes beingimplemented, to avoid

countries taking aid dur-ing a crisis and doing

nothing to prevent anothersuch crisis from occurring.

For example, the Greek gov-ernment must cut back on itspublic spending and regain

competitiveness with wageand pension freezes if it

wants to receive bailout loans fromthe IMF.

However, overallthe report claimedcentral banks per-

formed well inaddressing recent

liquidity crises.Thanks to the co-operation mecha-

nism of the Basel process, the reportsaid central banks remain wellplaced to address future surges andshortages in global liquidity.

Meanwhile, Bundesbank presi-dent Jens Weidmann yesterdayargued against ECB intervention in

bond markets, claiming it shouldnot be a lender of last resort for sov-ereigns.

This would violate treaty agree-

ments and undermine Eurozone sta-bility, he told the FT.

BY TIMWALLACE

REGULATION

TIME LINE | OLYMPUS ROW

14 OctoberOlympus fires British MichaelWoodford, six months after he wasmade president and just two weeksafter becoming chief executive, afterhe persistently asked why the compa-ny had spent around $1.3bn (807.8m)on obscure fees and acquisitions. Thecompany said it was due to manage-

ment issues

20 OctoberWoodford requests police protectionfrom Scotland Yard.

26 OctoberOlympus chairman Tsuyoshi Kikukawaresigns after criticising Woodford.

9 NovemberBaillie Gifford, the Edinburgh-basedfund manager, calls for the reinstate-ment of Woodford. Investment manag-er Iain Campbell says Olympus currentmanagement is now discredited.

10 NovemberTokyos stock exchange warns Olympusit will be de-listed after 62 years as apublicly traded company if it fails toreport earnings by 14 December.

12 NovemberGIC, Singapores sovereign wealth fund,says it has sold most of its holdings inOlympus over concern about paymentsmade by the group.

13 NovemberSources say Japanese securitieswatchdog the SESC may recommendthe imposition of a levy on Olympus forfalse financial reports.

ANALYSIS l Olympus Corp

JPY

7 Nov 8 Nov 9 Nov 10 Nov 11 Nov

1,100

1,000

900

800

700

600

500

460.0011 Nov

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THE traditional areas where businesssectors have operated for decades arechanging as companies hunt foraffordable and convenient officespace, according to new research pub-lished today.

While the City has always been thehub for banks and insurance it is also

becoming a magnet for IT firms andthe changing makeup of the area isreflected across other zones in thecapital.

The new map of business Londonshows a variety of such changes asfirms migrate to new areas.

The map, drawn up by DeVonoProperty, reveals a new business

belt sweeping around Kings Crossand Paddington, where hundreds ofoffices have been built in recent

years. The areas have benefited from

strong transport links while space is

not as squeezed as it is in areas likethe Square Mile.

Recent tenants to move to this areainclude Gazprom and Ricoh, who are

based in the relatively new EustonPlace complex.

Meanwhile in the financial sectorthe research highlights the numberof hedge funds which now operatefrom Mayfair, while property compa-nies also prefer to ply their tradefrom the glamorous location.

DeVono co-director Adam Landau

said that London Bridge was shootingup the rankings as a desirable loca-tion for financial services.

It is an important extension of theCity south of the river with leadinglegal practitioners, consultants andaccountancy firms such as PwC andErnst & Young having their headquar-

ters there. It is seeing a massiveupgrade with developments such asthe Shard, which will be the tallest

building in Western Europe. The map showed that more fashion

companies were moving intoClerkenwell, while new media com-panies were heading towards Victoria

away from their traditional heartlandin Shoreditch. According to the mapfewer government workers are basedin Victoria than before.

Meanwhile Holborn is still an areathat attracts lawyers and account-ants, although more recruitmentfirms are heading there.

City business map re-drawn

THE US IPO market could see its busiest week in more than a year,with nine companies aiming to beginfundraising in the next five days.

The prospective deals include a$114m (71m) capital raising on theNasdaq from consumer review web-site Angies List, and a $578m offeringfrom Delphi Automotive on the New

York Stock Exchange.But the companies are likely to

have to show price flexibility in theface of recent market volatility, suchas the massive stock dive last

Wednesday sparked by Italys surgingbond yields.

Other businesses, all seeking lessthan $250m each, include beddingretailer Mattress Firm Holding, invest-ment manager Manning & Napierand biopharmaceutical company

Clovis Oncology.InvenSense, which makes motion-

processing technology for consumerelectronics, is getting off the blocksafter delaying a planned deal in early

August. Meanwhile Hollywood spe-cial-effects firm Digital DomainMedia Group is returning to the mar-ket after putting its deal on holdsince April 2008.

The last time there was such a bigline up of initial public offerings wasin December 2010.

Bumper weekfor US IPOs asnine start deals

Accountants

Accountants

BY JOHN DUNNE

LONDON BUSINESS

MARKETS


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HMV HAS launched its first store dedi-cated to technology in LondonsSquare Mile in a bid to reverse itsdeclining CD and DVD sales in the runup to the crucial Christmas tradingperiod.

The so-called techshop, located inLand Securities One New Change mallnear St Pauls, comes after the trou-

bled retailers recent expansion intoconsumer technology as demand forCDs and DVDs wanes.

HMV, which has issued four profit warnings this year, is pinning itshopes on customers seeking technolo-gy gadgets such as iPads, speakerdocks as well as headphones, whichhave been enjoying bumper sales.

Around 10m gadgets are expectedto be sold in the UK by the end of2011 equivalent to a market value of

more than 150m, HMV said. The retailer, which has closed 29stores and sold its Canadian businessand its Waterstones bookshops,reported a 15.1 per cent slump in like-for-like sales for the first quarter to 3September.

HMV signed a short-term lease withlandlord Land Securities last week forthe site in One New Change as it trialsthe store and plans to open a secondsite before Christmas.

HMV turns the music offto open first tech store

HMV has been shifting its focus from CDs to consumer technology. Source: HughThompson

BYKASMIRA JEFFORDRETAIL


NEWS | IN BRIEF

John Lewis sees sales dipDepartment store group and traditionalretail bellwether John Lewis said itssales had dipped slightly last weekcompared with the same week a yearago, as mild autumnal weather and a

difficult economic backdrop deterredshoppers. The employee-owned busi-ness said yesterday that sales in theweek to 12 November were 76m, upsix per cent from last week but down

0.8 per cent from a year ago, on strongcomparatives. With very strong fig-ures from last year against us, milderweather than is seasonal and the tur-bulent economic climate, our resultsshow that our customers are beginning

to think seriously about Christmas,said retail director Andrew Murphy. Inthe week to 5 November John Lewisreported a rise of 4.4 per cent indepartment store sales.

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A SERIES of private equity houses arelining up to bid for the National

Fostering Agency (NFA) fromSovereign Capital.

The Priory Group, which is backedby Advent private equity and runs therenowned Roehampton rehabilita-tion clinic, is believed to have made

an approach already. TeachersPrivate Capital, the private invest-ment arm of Ontario TeachersPension Plan, is also believed to have

made a bid while private equitygroup Blackstone is thought to bemulling over an approach.

The Priory declined to comment.Advent, Sovereign and the NFA couldnot be reached.

Private equity houses circle NFA

PRIVATE EQUITY

BUSINESS Secretary Vince Cable hassaid he has sympathy with the pro-testers at St Pauls Cathedral but ques-tioned the aims of the camp.

Yesterday he told the BBC he hadsympathy with the emotions that lie behind Occupy LSX but stoppedshort of giving an endorsement.

Some of their recommendationsarent terribly helpful, but thats not

the point. I think it does reflect a feel-ing that a small number of peoplehave done extraordinarily well in thecrisis, often undeservedly, and largenumbers of other people whoveplayed no part in causing the crisishave been hurt by it.

His comments are a contrast tothose of David Cameron, who has crit-icised the camp and last weekmocked the protesters as comatose.

Cable spoke out hours before much

of London, including the protesters,observed two minutes silence as partof Remembrance Sunday.

The previous day about 6,000 peo-ple joined the Lord Mayors Show pro-cession. Alderman David Wootton,the 684th Lord Mayor of London,received the traditional St Pauls blessing in a different area of thegrounds because of the presence ofOccupy LSX.

MORE: THE CAPITALIST, P20

Cable sympathises with theCitys Occupy LSX protesters

POLITICS


Torch relay break-down

Samsung

Other

BA

Coca-Cola

BT

Visa

Lloyds

%

4%

22%

20%

14%

4%

17%

17%

Brought to you by

IN ASSOCIATION withRepskan.com, the media monitor-ing and analytics platform, City

A.M. is measuring the relativeOlympic media buzz around the

partners for the London 2012Olympic and Paralympic Games,week by week. The leaderboard,right, reflects their ranking overthe past week, in this case fromWednesday 2 November toWednesday 9 November.

Due to the announcement of theroute of the 70-day torch relay,mentions about the Olympicsspiked to over 10,000 mentionson 8 November.The main torch relay sponsorsdominated the discussion butsome of the other sponsorspicked up share of voice throughdiscussion stimulated by thetorch relay.With a story gaining strong localinterest there was a significantnumber of mentions in theregional newspapers and on

Twitter.

REPSKAN LONDON 2012 OLYMPICSBUZZ ANALYSIS

Brand Position change

Samsung 1

Lloyds 5

Coca-Cola 1

BA 14

BP 11

Adidas -1

Mcdonalds 5

Visa -7

Cadbury 3

Acer 6

Olympic Media BuzzLONDON 2012 PARTNERS

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NEWS | IN BRIEF

Rabobank decision awaitedSarasin hopes Dutch Rabobank will makea decision this month on its controllingstake that allows the Swiss private bankto remain independent, its management

told staff in an internal memo. Sarasinconfirmed a SonntagsZeitung newspaperreport that chairman Christoph Ammannand chief executive Joachim Straehlewere in close contact with Rabobank.

Batteries for electric cars probedRegulators are investigating the safety ofbatteries used to power electric vehiclesafter a General Motors Volt caught firefollowing a crash test. The National

Highway Traffic Safety Administrationsaid it has asked automakers for theirrecommendations for minimising fire risk,though it does not believe the Volt orother such cars were at more risk of fire.

Blame selfishness, not capitalism, for our woes

ILOVE a protest. So long as itinvolves a point worthy of consid-eration, and preferably a brazier,Im there.

Ive spent quite a while wander-

ing around the OccupyLSX site read-ing the bumf and trying to lookinconspicuous. No mean feat when

youre 62 and wearing full TV studiomake-up, but still.

I think most people can empathisewith the calls for genuinely independ-ent regulators and solidarity with theoppressed.

But the issues always come back tocapitalists versus anti-capitalists and Isimply dont buy the analysis.

Protesters are lumped together asanti-capitalists, which over-simplifiestheir complaints. The most radicalfree-market capitalists agree that

bank bailouts are nonsensical.

And capitalists are cast as the bad-dies, which is simply lazy.

Capitalism itself doesnt make peo-ple vile. Having money doesnt makepeople obnoxious. People on average

incomes and poor people are quitecapable of being obnoxious too.But capitalism does reward some

people with lots of cash and givesthem a platform from which to

broadcast their unpleasantness.In an ideal world the wealthiest

would intersperse extravagant acts ofconsumption with extravagant acts ofcharitable selflessness. But the factthat this doesnt necessarily happenis no surprise. You cant force selfless

behaviour on people under any eco-nomic system.

Ultimately people need gainfulemployment, whatever the ideology.

The best people to employ others are

those who run business and aretherefore in a position to pay and thatgets us back, one way or another, toprivate ownership of the means ofproduction i.e. capitalism.

Theres nothing intrinsic to capital-ism that requires greed, cold-hearted-ness or blind materialism.

So, if were not to blame capitalismfor the current wave of dissatisfac-tion, who are we to blame?

Selfish prats. They can be found

across the political spectrum and inall socio-economic groups. They makepoor decisions and screw things upfor everyone else. Try removing capi-talist from any slogan and replace it

with selfish prat and youll find itmakes much more sense.I dont have the answers to the

worlds economic woes, but Im pret-ty sure of this: Any political or busi-ness leader or any average Joe would

be well served by looking at any deci-sion they have made and askingthemselves Am I being a selfishprat?

Beccy Meehan is an anchor at CNBC.Follow her on Twitter @BeccyMeehan

CNBC COMMENT

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SIR STELIOS Haji-Ioannou has uppedthe ante in his long-running battlewith the board of EasyJet, the airlinehe founded, issuing a string ofdemands and claiming the firm hadtried to turn his brother against him.

The colourful businessman, whostill owns 38 per cent of EasyJet,demanded a doubling of the firmsdividend, changes to the way it pub-lishes information about its earningsand more voting rights for sharehold-ers over commercial issues.

He said he specifically wants infor-

mation about the profitability of indi-vidual routes and a shareholder vote

orders of new aircraft.Stelios also said Sir Mike Rake had

tried to pit his brother and fellowshareholder Polys Haji Ioannouagainst him in order to lessen hisinfluence over the company.

In September Stelios told the air-line he is planning to launch a rivalairline called Fastjet, promptingEasyJet to vow to take necessaryaction if the new venture infringeson the rights of the airline and itsinvestors.

The shock move reignited a rowthat appeared to have cooled afterEasyJets management promised to

pay out a special dividend of 190mto shareholders.

EMIRATES airline placed a block-buster order for 50 Boeing 777 jetlin-ers at the Dubai Air Show yesterday,underscoring the confidence brim-ming among fast-growing Gulf air-lines despite growing fears of stallingglobal growth.

The Dubai government-owned car-rier, expanding its role as the worldslargest operator of Boeings most prof-itable plane, said the deal was worth$18bn (11.2bn), the largest commer-cial order by value in the US plane-makers history.

Emirates chairman Sheikh Ahmed bin Saeed al Maktoum said: Thisorder represents a milestone -- it is thesingle largest dollar value (order) inthe Boeing history.

The 777 has served Emirates verywell in terms of seat costs ... especiallywhen we see the fuel price is quitehigh.

Fuel costs took a big toll on the air-lines first half profits, sending themdown 76 per cent.

Emirates said it had adequatefinancing in place for 2012, andplanned no new bond issues. Sheikh

Ahmed said the airline, whichlaunched a heavily oversubscribed$1bn bond in June, would consider abond if needed and if the timing wasright, adding we dont have a push.

Including options to buy 20 moreof the twin-aisle aircraft and otheragreements, the total deal is worth$26bn, Emirates and Boeing said.

The airline planned to eye a mix offunding options for the order, includ-ing Islamic finance, he added.Delivery of the aircraft is slated tobegin in 2015.

James Albaugh, chief of Boeingscommercial division, said the orderwould sustain thousands of US jobs.

Boeing delivered 127 commercialaircraft in the third quarter, includ-ing 100 of its best-selling 737 narrow- bodies and 21 widebody 777s. Theplanemaker, which gets paid for itsplanes at delivery, set its commercialairplane delivery guidance for 2011 atabout 480, down from previous guid-ance of 485 to 495.

Qatar Airways is expected to place a$6.5bn order for 50 fuel-saving A320neo jets and five A380s from Airbus, and Kuwait lessor Alafcoplans to boost a provisional order for30 Airbus A320neos.

Emirates to

spend $18bnon new jets

NEARLY two thirds of British business-es suffered disruption to their supplychain because of last winters bad weather, a high-level panel led byinsurance firm Zurich has found.

The panel, which included officialsfrom the governments departmentfor Business Innovation and Skills andthe Association of British Insurers, was

brought together to create a greenpaper on how businesses can betterprepare for extreme weather events,such as floods and snow, which affect-ed 64 per cent of UK firms last year..

The meeting, held in Westminsterlast week, came after a survey released by the Business Continuity Instituteand Zurich said 51 per cent of 550firms across 60 countries namedharsh weather as the main cause dis-ruption to their business in 2011.

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Extreme weathercosts UK business

Stelios makes series of demandsto EasyJet board as fight rolls on

BY STEVE DINNEEN

TRANSPORT

AVIATION

Emirates, led bychief executive TimClark, has spent$18bn on newBoeing jets

Picture:Laura Lean / CITYA.M.

BYKASMIRA JEFFORDECONOMICS


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The Capitalist20 CITYA.M. 14 NOVEMBER 2011

EDITED BY

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

ONCE absorbed in the oriental-inspired boudoir, there is no choicebut to succumb to the infectious con-cept that is Kumo, claims the PR frip-perie for the new Knightsbridge sushibar. For once, the froth merchantsmay have a point, judging by theantics of six brokers who got suckedin by the low-lit Japanese den untilone in the morning on a recentSunday night out. So what madethem stay so long and more impor-tantly burn through north of 2k infive hours? Warm beef salad, scal-lops with pak choi, fried squid andseabass fillet all played their part,but this column suspects the fourbottles of pinot grigio, one of DomPrignon and another of theextremely sought-after vintage

Dom Prignon ros may have exert-ed the greatest pull.

BILL OF THE WEEK

The Capitalisthears, for the wedding ofone banker dealing in European debtmarkets to his paediatrician wife,who started their party with a trip on

the London Eye to get the best view ofthe money-to-burn spectacle.

More bangs, as one wedding guestnoted, for his buck. FORUM, P. 27

DISASTER RESPONSEDOES Andrew Gowers regret beingquite so dogmatic on the subject ofwhy Britain should join the euro inhis former incarnation as editor ofthe Financial Times?

While Gowers was at the helm between 2001 and 2005, the pinkpaper was famously firmly in the sin-gle currency camp but now the eurohas wreaked financial devastationand social collapse, the avuncularsage has issued a mea culpa.

There were strong argumentsthat the continent of Europe need-ed greater stability in its currencyarrangements, Gowers told TheCapitalist. But there were birthdefects when [the euro model] wasdesigned and the implementation

made it worse.So theoretically the model was

sound, but in practice it was flawed a PR masterstroke of a U-turn from

the man who went on to stage-man-age the comms for Lehman too bigto fail Brothers and BPs Gulf ofMexico disaster.

SPEAKING OUTWHEN you are a woman working inthe City, you have got to speak up infact, it is life or death, says ChristineBrown-Quinn, co-founder of theWomen in Business Superconference.

No shrinking violet herself the ex- banker once told her manager atSwiss Bank exactly why he needed heron a project Brown-Quinn is nowtelling fellow aspiring professional women how to compete withoutbecoming a man.

It is difficult, but people respectyou if you assert yourself they knowyou are not a wallflower, speakers ather conference told delegates fromfirms including Standard Chartered,KPMG and Reed Smith to the sound ofglass ceilings smashing.

BANKER GETS MORE BANGS FOR HISBUCKS AT MAYORS SHOW WEDDINGNO NEWS is good news, says the Cityof London Corporation, which yes-terday breathed a sigh of relief afterthe St Pauls protesters decided torespect the fact the Lord MayorsShow is a community event.

There was no disruption, not evenshouting, said a City of Londonspokesperson on Saturdays walking,marching pageant of the nationslife, where the 684th Lord Mayor of

London David Wootton was inaugu-rated with an 123-float procession.

We are not against the traditionof the ceremony; we are against theundemocratic way the Lord Mayoris elected, said a spokesperson forthe St Pauls brigade. So we didntinterrupt the ceremony as we did-nt want to spoil the mood.

The non-intervention policy leftthe streets from Mansion House to

the Royal Courts of Justice clear forthe three-mile pageant, whichinvolved 6,200 people and over 40charities, including representativesfrom the new Mayoral charity appealFit for the Future, which will primari-ly benefit the trauma unit at theRoyal London Hospital.

The parade culminated in the LordMayors fireworks over the river, which made the perfect backdrop,

David Wootton, the 684th Lord Mayor of London, arrives at the Royal Courts of Justice

At my bank everyonecan get a bonus.At the end of 2010, The Co-operative Group shared over 70.5m in profits

with its members. And you can also bank with us in 245 branches of

Change to a bank you can bank on by calling 0800 169 9369.

As a member you are required to hold and retain one share in The Co-operative Group, this will be paid for through the deduction of 1 from your first share of the profitspayment. To qualify for a share of the profits payment members must have earned a minimum of 2 worth of membership points, within the qualifying period. Membership

terms and conditions apply. Products not eligible to earn points are affinity and partnership products, offshore, fixed rate and fixed term savings accounts and bonds. Lines

are open from 8am until 9pm, Monday to Friday and 9am until 6pm, Saturday and Sunday. Calls may be monitored or recorded for security and training purposes. For BTcustomers, calls to 0800 numbers are free. Call charges from other providers may vary. Current account applicants must be a UK resident and 18 years or over. Credit facilities

provided by The Co-operative Bank are subject to status and our lending policy. The Co-operative Bank is authorised and regulated by the Financial Services Authority(No. 121885), subscribes to the Lending Code and the Financial Ombudsman Service and is licensed by the Office of Fair Trading (No. 006110). The Co-operative Bank p.l.c.,

P.O. Box 101, 1 Balloon Street, Manchester M60 4EP. Registered in England and Wales No. 990937. Britannia is a trading name used by The Co-operative Bank p.l.c.

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UBS is widely expected to name inter-im head Sergio Ermotti as its perma-nent chief executive when it updatesinvestors this week.

It is also set to present plans to cutthe size of its investment bank, wherealleged rogue trader Kweku Adoboliworked, in order to focus on less riskywealth and asset management.

The bank has brought forward theappointment of Ermotti because itwants to end the power vacuum cre-ated by the resignation of OswaldGruebel, who left in the aftermath ofthe $2.3bn (1.4bn) trading scandal inSeptember.

This would allow the new boss tooutline his strategy believed toinclude a bolstering of its cash equi-ties, foreign exchange and invest-ment banking advisory work at theinvestor day on Thursday.

Ermotti could also announce an

extra 1,500 job cuts, Swiss newspaperTages-Anzeigerclaimed last week.

The suave Swiss executive has beengroomed as a possible successor toGruebel since he joined UBS as headof Europe, Middle East and Africa inApril from UniCredit.

He is seen as the continuity candi-date who could shore up the confi-dence of regulators in Berne, who want to see UBS and rival CreditSuisse cut their balance sheets again.

Juerg Zeltner, head of UBS private bank, and Ulrich Koerner, the cost-cutting chief operating officer, weresaid to be angling for the job whileoutside candidates had includedDeutsche Bank risk chief HugoBaenziger, who insisted he was com-mitted to his current job, and BillWinters, the former chief executive of JP Morgan. The American has since been touted as a replacement forAntonio Horta- Osrio if he is unableto return to work at Lloyds.

UBS declined to comment.

Cuts loom asErmotti set towin UBS postBY PETER EDWARDS

BANKING

Sergio Ermotti may cut jobs in his first week in the UBS top job Picture: REUTERS

News22

More Evolution jobs to goafter Investecs takeover

EVOLUTION is preparing to axe morestaff once its takeover by SouthAfrican investment group Investec iscompleted next month.

The broker-turned-wealth managerhas made around 60 staff redundantin the last 10 days and City A.M. under-stands more job cuts are planned,although no decision on numbers hasbeen made so far.

The 210m deal a reduction onthe 233m value announced in

September is due to be completed

on 13 December, clearing the way forInvestec to restructure the business.

Evolutions chief executive AlexSnow will take a seat on Investecs board and become executive chair-man of its UK investment bank.

Only 56 per cent of Evolutionsshareholders voted either for oragainst the offer at the general meet-ing called to approve the deal.

Evolution itself agreed to take overBNP Paribas Private InvestmentManagement in August.

Last night a spokesman for

Evolution declined to comment.

BANKING

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HMRCs use of powers to seizebusiness assets grows four-fold

News 23

Markets hoping foreconomic decisions

WEDNESDAYS sharp sell-offacross major global stockindices showed just how skit-tish markets are currently.

The slump in Italian bond prices did the

damage as yields flew higher.The situation calmed down towardsthe end of the week as the political sit-uation in Greece and Italy becameclearer. Former ECB vice presidentLucas Papademos was sworn in as thenew Greek prime minister on Friday, while ex-European CommissionerMario Monti is expected to replaceSilvio Berlusconi.

Investors feel that both appoint-ments increase the chances that diffi-cult economic decisions will finally bemade. However, agreeing to takeunpalatable measures is quite differentfrom implementing them. Greek andItalian policymakers have to persuadetheir respective citizens that furthereconomic hardship now will ultimate-ly lead to better times in the future.

Meanwhile, there is a feeling thatItalian 10-year bond yields would stillbe well above 7 per cent without con-

siderable intervention from the ECB inthe secondary market.

The FTSE 100 index is called to opendown 5 points at 5540. The GermanDAX is expected to open down 7 pointsat 6050 and the French CAC 40 is fore-cast to open down 4 points at 3145.

Tomorrow sees the release of UKinflation numbers. The Bank ofEngland (BoE) will be hoping for signsof easing pricing pressures with the CPIticking back down towards 5 per cent.A reading above 5.2 per cent is likely toattract criticism of the Bank followinglast months controversial decision bythe MPC to increase quantitative easingby 75bn. We will also see US PPI andRetail Sales tomorrow, and the BoEreleases its quarterly inflation reporton Wednesday. US Housing Starts,Building Permits and the Philly FedManufacturing Index are all releasedon Thursday.

The US third quarter earnings sea-son is rapidly winding down now.

According to Thomson Reuters, of the90 per cent of S&P constituents whohave now reported, 70 per cent havebeaten estimates. This is helping to per-suade many investors that the US econ-omy will emerge relatively unscathedfrom the ongoing debt crisis in Europe.This view may prove to be overly opti-mistic.

Martin Slaney is director of global productmanagement at GFT

MARTINONTHE MARKETS

MARTIN SLANEY

5 Sep15 Aug 23 Sep 13 Oct 2 Nov

5,800

5,000

5,400

5,200

5,600

ANALYSIS l FTSE5545.38

11 Nov

6 Apr il 2008 - 5 April 2009 6 April 2009 - 5 April 2010 6 April 2010 - 5 Apr il 2011

8000

7000

6000

50004000

3000

2000

1000

0

ANALYSIS l HMRC seizure of business assets quadruples in just two years

1675

4899

7004

HMRC has massively increased its useof powers, allowing it to seize the

assets of late-paying businesses in anurgent effort to increase its tax take, anew report has revealed.

Data obtained by law firmMcGrigors shows that the number oftimes HMRC has used its powers of dis-traint to seize assets of late-payers hasquadrupled in the last two years, risingfrom 1,675 cases in 2009 to 7,004 in theyear to April 2011.

The law and tax specialist firmpoints out that in some cases, HMRCsuse of distraint may be over-zealousin seizing the very assets that a busi-ness needs to trade through its diffi-culties, and effectively forcing somecompanies into insolvency.

McGrigors partner Stuart McNeill,explains: HMRC is under huge pres-sure to collect unpaid tax, but at thesame time they are facing cuts in their

staffing levels...It is almost inevitablethat this is resulting in a more aggres-sive approach and short cuts.

Without making a proper commer-cial assessment of the firms mediumterm viability, HMRC risk sacrificingfull payment in a few months time forfar less cash up front, said McNeill.

A spokesman for HMRC responded:Only a very small number of business-es who have long term outstanding taxdebts are collected in this way.

We support businesses in genuinedifficulty through allowing time topay whilst taking firm but proportion-ate action against those who dontpay.

ECONOMY

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BEST OF THE BROKERS

To appear in Best of the Brokers email your research to [email protected]

ANALYSIS lRexel

13.4

13.2

13.0

12.8

12.6

12.4

9 Nov 10 Nov7 Nov 8 Nov 11 Nov

12.8511 Nov

REXELNomura rates Rexel, the French-based electri-cal supplies company as buy against a sec-tor rating of neutral, with a target price of

18.00 (15.00). The bank views Rexel as ahigh quality company with the potential togrow organically through specific growthdrivers in the market and notes its solid cashflow. However, the broker has cut its full yearestimates for 2012 by six per cent due to areduction in growth prospects for Europe.

ANALYSIS lEnel SpA

3.40

3.35

3.30

3.25

3.20

3.15


3.2811 Nov

ENELCitigroup rates Enel as sell after the Italy-based energy company reported earningsbefore interest, tax, depreciation and amorti-sation of13.284m in the nine months toSeptember 30, above its forecast of13.1bn.The broker says stronger-than-expectedSlovakia and Balkans activity and growth ofthe Italian distribution division helped offsetthe poor performance of its Italian genera-tion business.

ANALYSIS lDairy Crest Group PLC

345

340

335

330

325


p337.60

11 Nov

DAIRY CRESTUBS rates Dairy Crest as neutral and main-tains its price target of 336p despite thegroup posting pre-tax profits of 43.7m,beating the banks expectations of 41m.UBS says that whilst management has donea good job maintaining earnings, its large liq-uid milk operations struggle to grow top-line,and with competition intense Dairy Crestgenerates relatively poor returns. The brokersees better value elsewhere.

CenkosThe stockbroker has appointed equities

analyst Sandy Chen to its institutionalequities research department. Chens for-mer roles include head of emerging

European banks research at CreditSuisse and UK banks analyst at CollinsStewart and Panmure Gordon. He alsofounded retail banking start-up Walton& Co, where he remains a director.

PwC

The Big Four firm has appointedRichard Laikin as head of its UK watergroup. Laikin started his career at PwCand re-joined the company as a direc-tor in the power and utilities consultingteam at the end of 2010.

RBS InsuranceNeil Manser has joined RBS Insurance as

head of investor relations. Manser mostrecently worked at the general insurerBrit Insurance, where he led investor andratings agency relations.

IveaghThe Guinness family office and asset

management boutique has appointedRichard Ford as chief executive. Fordwas most recently CEO of WH Irelandand has previously worked at SpencerHouse Capital Management, ORNCapital and Fidelity Investments.

Cazenove CapitalCarter Holloran has joined the fund man-

ager as a high yield credit analyst,reporting to Cazenove Capitals head ofcredit Peter Harvey. He joins fromEuropean Credit Management, where hewas an analyst specialising in Europeanindustrial credit.

Aureos CapitalThe private equity fund manager special-ising in emerging markets has appointedMarlon Sahetapy as a principal responsi-ble for Europe, Middle East and Africa toexpand its private sector investor base.He moves from Hermes Focus AssetManagement, where he was director,marketing and investor relations.

CITY MOVES | WHOS SWITCHING JOBS Edited by Harriet Dennys

+44 (0)20 7092 0053morganmckinley.com

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

in association with

Crest NicholsonThe house builder has appointed Trevor Selwynas managing director of a newly formed Londondivision. The new division will have an annualturnover of 100m, developing mid-range sitesin and around the capital. Selwyn was formerlyat Countryside Properties, and spent his last

seven years there as land director for subsidiaryCopthorn Homes. He left in 2009 to establishproperty developer Team Homes, a specialist inmixed-used developments in north, south andeast London.

WALL STREET WEEK AHEAD

WALL Street is stuck in a high-ly volatile range as investorshoping for a rally into theend of the year are brow-

beaten by Europes unfolding crisis.For months, investors have been

enthusing about valuations, earningsand, more recently, signs of animproving economy. Those may begood reasons why stocks should rally,

but even the most ardent are startingto sound a bit glum.

The political intrigue in southernEurope has flummoxed investorsStateside. Papademos has replacedPapandreou. Berlusconi is, well,Berlusconi. The headlines and thesubsequent volatility seem relentless.

It literally just changes consistent-ly each and every night, said JeremyZirin, chief US equity strategist at UBS

Wealth Management in New York.

Earlier last week, there were wor-ries about a potential Italian default

and now weve seen government andregime change in two of the periph-ery nations.

Events in Europe over the weekendcould end up shaping the start of thetrading week in US markets.

Italys Senate approved a new budg-et law, clearing the way for approvalof the package in the lower house onSaturday and the formation of anemergency government to replacethat of Prime Minister SilvioBerlusconi.

In Athens, former EuropeanCentral Bank policy-maker LucasPapademos was sworn in as Greekprime minister, replacing predecessorGeorge Papandreou after days ofpolitical wrangling. He is tasked withmeeting the terms of a bailout plan.

For the markets to continue torally, we would need to see marketconfidence

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