cityam 2011-11-21

8/3/2019 Cityam 2011-11-21

1/44

FTSE 100 t5,362.94 -60.20 DOW 11,796.16 +25.43 NASDAQ t2,572.50 -15.49 /$ 1.58+0.01 / 1.17 unc /$ 1.35+0.01

Jan 0932

ANALYSISlHousehold finances deteriorated again this month

Apr 09 Jul 09 Oct 09 Jan 10 Apr 10 Jul 10 Oct 10 Jan 11 Apr 11 Jul 11 Oct 11

34

36

38

40

42

46

48

50

44

All readings below this line indicate a decline in households' finances

Finances v. one month ago

www.cityam.com FREE

BUSINESS WITH PERSONALITY

Issue 1,515 Monday 21 November 2011

Certified Distribution

03/10/11 till 30/10/11 is 100,123

THE GOVERNMENT will today launcha scheme to encourage first-time buy-ers to take out 95 per cent mortgageseven as new figures show the largestmonthly drop in house prices sincebefore the financial crisis.

Prime Minister David Cameron andhis deputy Nick Clegg will today unveila plan to help people get on the prop-erty ladder by offering to underwritepotential losses on a proportion ofmortgages for first-time buyers.

The aim is to bring the averagedeposit demanded by lenders from 20per cent down to just five per cent inorder to help those who cannot findenough cash to buy.

Alongside the scheme, the govern-ment will also plough 400m of tax-

payers money into subsidies forhousebuilders to construct 16,000 newhomes. And council tenants looking tobuy their housing will see the discount

fewer sellers in the capital than inNovember 2010.

Asking prices in London fell at aslower rate than elsewhere, down 1.2per cent on October. But the averageasking price for a home in Londonstands at a still-considerable 444,724,compared to 232,144 for England andWales.

Another survey showed yet anotherdeterioration in family finances, stok-ing fears that a miserable Christmas ison the way for the retail sector.

Household finances worsened lastmonth at their sharpest rate since August, measuring 34.6 on Markitswidely-observed index, down from 35in October. All readings below 50 indi-cate a deterioration.

The survey showed that twice asmany households expect theirfinances to worsen in the year ahead

compared to those that forecast animprovement (24 versus 48 per cent).ALLISTER HEATH: P6

GLOOM ON THE HIGH STREET: P23

BY JULIET SAMUEL AND JULIAN HARRISUK ECONOMY

Proudly sponsored by Matching your donations with

BOOST FOR MORTGAGES

HOW YOU CAN HELPPAGES 2,3,4,5

offered on the price double.But the timing could hardly be

worse. The launch of the governmentsscheme to take on hundreds of mil-lions in risky guarantees for highlyleveraged mortgages comes as newdata shows the troubled state of thehousing market.

Asking prices have tumbled by 3.1per cent this month according to thelatest Rightmove index, while a sepa-rate survey has revealed another sharpdip in UK household finances.

The listed value of homes inEngland and Wales fell 7,528 on aver-age this month the largest monetaryfall since December 2007 and thirdlargest percentage fall on record,Rightmove said today.

Markets dislike uncertainty, and sodo people who are deciding whetheror not to enter the property market,

said Rightmoves Miles Shipside.Its no great surprise that those who have braved the stormy condi-tions have had to accept a substantial

haircut on their asking prices.In line with Camerons previous

stance that households must pay offtheir debts, Brits are putting off bigfinancial commitments such as mov-

ing home due to worries over theEurozone crisis and the impendingeconomic slowdown.

Even a significant drop in supply

could not prop up prices. In Englandand Wales, listing numbers thismonth were down 13 per cent onOctober as the run of terrible econom-ic news deterred prospective sellers.

And the number of propertiesplaced on the market in London plum-meted faster than in any other regionin England. There were 16 per cent

AN OPPORTUNITY TOMAKE A DIFFERENCE

8/3/2019 Cityam 2011-11-21

2/44

City A.M. Christmas Appeal2

HELP THEM TO

HELP THEMSELVESTHE CITY A.M.CHRISTMAS APPEALAfrican boy runs in dusty street from current Getty Gallery It Takes More exhibition. Framed original kindly donated by the photographer Harry Hook Stone.

CITYA.M. 21 NOVEMBER 2011

8/3/2019 Cityam 2011-11-21

3/44

City A.M. Christmas Appeal 3CITYA.M. 21 NOVEMBER 2011

8/3/2019 Cityam 2011-11-21

4/44

City A.M. Christmas Appeal4

Creating anOpportunityto transform

lives in AfricaT

ODAY City A.M. is launching its first Christmas appeal.As a newspaper that has become a standard bearer for pri-vate enterprise and individual responsibility, Im delighted

that we have formed a partnership with OpportunityInternational, a brilliant charity that helps poor entrepreneursworldwide build independent and prosperous lives for them-selves by lending them money to grow their own businesses. It isthe perfect charity for City A.M.s readers and for all of those

who believe in the transformative power of capitalism and mar-ket institutions. If you believe in a handup, not a handout, thiswill be the perfect cause for you this Christmas.

Opportunity provides financial services (microloans and sav-ings) and business training to more than 2.3m people (84 percent of whom are women) in 21 developing countries. It also pro-vides innovative micro-insurance that today protects 3.5m lives.The charitys patron is HRH Princess Anne, who has travelled toGhana and other countries in support of its projects.

Our appeal will be asking readers for donations to helpOpportunitys work in southern Malawi. The UK government willmatch every personal donation from our readers pound forpound, immediately doubling its value. We are also launching anonline charity auction, in which readers can bid for a range ofitems (see box on page opposite).

Our series on the appeal will run until the last week beforeChristmas, during which we will carry interviews and profiles of

supporters of Opportunity and also, crucially, of any major newdonors who decide to back our appeal and who want their sup-port to be made public. The phone lines are open.

Many lives have been touched by Opportunity in Africa andmany City folk are already contributing to Opportunity. LloydsBanking Group in particular has committed its resources andpeople to the charitys work on a major scale. We will interviewLloyds executive director Truett Tate to discover what the bankgains from the relationship, as well as others such as JonathanMoulds, Europe president at Bank of America Merrill Lynch andMartin Devenish, partner at Goldman Sachs, who are active inassisting Opportunity. Please give generously if you can andthanks in advance for your support.

[email protected] me on Twitter: @allisterheath

AN INTRODUCTION FROM THE EDITOR

ALLISTER HEATH

THERE are plenty of easy waysto donate to the City A.M.Christmas appeal.

Make your contributiontoday by going online atcityam.com/appealto give bydebit or credit card; sending atext or calling the line below.

We are also offering compa-nies the opportunity to partic-ipate in the appeal ascorporate donors.

If interested, contactJennifer Bradford [email protected] 020 3201 8900.

BY PHONE: by debit or credit card to

01865 725 304

BY TEXT: CITY11 and amount (5 or 10 only) to

70070

HOW YOU CAN HELPCARLOS Morenos life changed forev-er when he received a loan fromOpportunity International. In less

than two years, the hard-upColombian entrepreneur had turnedhis small spice making business intoan 11-man operation growing, dry-ing, packaging and selling more than50 different teas and spices.

That was in 1971 and Carlos wasOpportunitys first-ever customer. Inthe intervening 40 years the organisa-tion has transformed the lives of mil-lions of people in developingcountries.

Headed by Edward Fox, a formerOxfam director, and with HRHPrincess Anne as its patron,Opportunitys UK operation gives peo-ple in poor countries such as Malawiaccess to financial services such as

bank accounts and loans.Opportunity believes poverty is an

economic challenge. It wants to givethe worlds poorest people the chanceto build their own businesses and

save wisely, to work their way to pros-perity.

At its core are micro loans of as lit-tle as 50 per person, for people toinvest in growing a business. Theenterprises could be growing extracrops to sell, or trading food, spices orclothes, where a little extra invest-

ment can get them on the path togrowth. Where clients have growntheir business and want larger loansto take on staff or equipment,Opportunity can supply larger loans.

The aim of our Christmas appeal isto help Opportunity raise funding toexpand into the province of Nsanje insouthern Malawi, an impoverishedregion of Africa where almost half ofpeople live on less than $1.25 a day.

Opportunity runs a network ofbank branches in towns around theregion but has pioneered innovationssuch as mobile banks that drive outto rural villages to give people asecure place to save their money.

Today, it serves more than 55,000microloan clients and has openedmore than 400,000 savings accountsin Malawi.

Through your donations, it cangrow to reach thousands more entre-

preneurs and help to change theirlives for the better.

Back our appeal andmake a real difference

www.cityam.com/appeal

WHY YOU SHOULD GIVE

Text donations may not work from compa-ny mobile phones as these often block

premium messages


8/3/2019 Cityam 2011-11-21

5/44

City A.M. Christmas Appeal 5

The British government believesthat trade and business is thelong-term solution to poverty.

THE only way we are going to beatpoverty in the long run is throughtrade and business, which is why

we will match public donations to this

appeal pound for pound.We want to help people help them-

selves out of poverty, and the coalitiongovernment is determined to back innovative charities like OpportunityInternational.

Our match funding scheme means that any donation made by a City A.M.reader to the papers Christmas appeal is doubled by the UK government,helping tens of thousands of people in one of the poorest and leastbanked regions of Malawi stand on their own two feet.

140average first loan in

Malawi

9.8mOpportunity loansissued in past five

years

96%of all loans repaid

405,000clients with savingsaccounts in Malawi

55average balance insavings account in

Malawi

PLACE YOUR BIDS INOUR ONLINE AUCTIONCITY A.M. is kicking off its firstChristmas appeal by hosting an auc-tion online that is offering a selec-tion of exclusive and unmissablegifts to the highest bidders.

Among the unique experiences

we have brought togeth-er are a spectacularevening at sophisticatedeatery Boisdale inCanary Wharf, completewith whiskies, wines,and food by Michelin-trained head chef AndyRose.

For golf aficionados,theres the chance of18 holes with City A.M.

columnist Sam Torrance, formercaptain of the European Ryder Cupteam, on the ChampionshipSunningdale Golf Course in Surrey,with a slap-up lunch to follow.

Those with a nose for news andan interest in the media, the econo-my, business and politics can bid forthe chance to join City A.M. editor

Allister Heath for lunch to digbeneath the headlines.

Football fans will have the oppor-tunity to join Frank Dalleres, CityA.M.ssports editor, who will takethree guests to the exclusive Clublevel of Emirates Stadium to watch

Arsenal play Queens ParkRangers on NewYear's Eve.

Place your bidsover the next fourweeks atcityam.com/auc-tion for yourchance to walkaway with one ofour fantastic gifts.

Bidding opens at9am today and willend at 10pm onSunday 18 December.

Proudly sponsored by Matching your donations with

Opportunity International United Kingdom is registered as a charity in England and Wales(1107713) and in Scotland (SC039692).

OPPORTUNITYIN NUMBERS

INTERNATIONAL DEVELOPMENT SECRETARY

ANDREW MITCHELL M.P.

Catherine Mbaya, one ofOpportunity Internationalsclients in Lilongwe, Malawi.

Picture: Trevor Samson

I am delighted thatCity A.M. andOpportunity Internationalhave partnered for this very specialappeal. Having visited OpportunityInternationals work I have seenfirst hand the difference that itsmicrofinance programmes maketo poor people. A small loan of 140 cantransform a poor persons business andgive them a hand-up out of poverty.I urge readers ofCity A.M. to

generously support this appeal.

HRH THE PRINCESS ROYALOPPORTUNITY INTERNATIONAL PATRON

www.cityam.com/auction


8/3/2019 Cityam 2011-11-21

6/44

News6 CITYA.M. 21 NOVEMBER 2011

Lets not go back to sub-prime loans

THERE are two ways one can address aproblem caused by faulty policies: bytackling its root causes or by address-ing some of its manifestations, andrisk creating more issues thanks tothe law of unintended consequenceswhich plagues all government actions.Regrettably, when it comes to houseprices, the government is largelygoing for the second option, albeit with a small nod towards the first. There are massive problems in thehousing market but todaysannouncement that the governmentis going to partly underwrite mort-

gages for first time buyers and movesome risk onto taxpayers is a terrible,short-sighted blunder.

Developers will also be able to bidfor public money to finish stalled

developments: this implies yet morecorporatism to fund projects nobodyreally wants. Have we all forgotten thesub-prime crisis in the US? Over there,politicians concerned that many poorpeople couldnt afford homes forcedand bribed lenders to lower creditstandards and extend mortgages tothose who couldnt afford them. Inthe short-term, this boosted home-ownership; but it all ended in tears. Itis good to care about the poor andyoung people who cant get onto thehousing ladder; but it is bad to givepeople false hope, to create moral haz-ard or to privatise gains and socialiselosses in the housing market.

The root cause of the problem isthat far too few homes of the rightkind have been built in the rightplaces in recent decades. This wascaused by ridiculous command and

control regulations and planning pro-cedures inherited from the post-warLabour government of the 1940s. Thisartificial scarcity has pushed up houseprices though they are now falling at

an accelerating rate and are alreadydown by 20-30 per cent in real termsacross the UK. Prices fell by 7,528 (or3.1 per cent) last month, the largestcash fall since December 2007 andthird largest percentage fall on record,Rightmove calculates.

The government wants to offerbanks a guarantee to make sure thatfive per cent deposits once againbecome the norm, rather than the 17per cent currently demanded of bor-rowers on average. It is true thatdeposits are often crippling, thoughin part this is merely a return to amore sensible way of lending money.The problem during the bubble wasthat stupid banks lent 95 per cent, 100per cent and even 125 per cent of ahomes value. That was fine wheneverybody was able to meet mortgagepayments and house prices kept going

up. But when the music stopped andprices collapsed, banks repossessedhomes but were left with huge losses.In bad times, deposits need to be largeto protect the f inancial system; small

deposits only work if everybody is surethat house prices are under-valuedand bound to surge. The governmentspolicies will cost the taxpayer dear.

We have just come out of a majorcrisis caused by too much moneybeing lent too cheaply to too manypeople who couldnt afford it, under-written by the state. Lets not do thisagain. A better solution is for the pri-vate sector to be allowed to build farmore homes. But solvent buyers alsoneed to learn some patience itshould be normal to have to scrimpand save for several years before onecan afford a deposit. And the govern-ment needs to accept that not every-body will be able to own their ownhome and that trying to boost creditat any cost is a recipe for disaster.

[email protected] me on Twitter: @allisterheath

NEWS | IN BRIEF

EU in push for joint euro-bondsThe EU does not need a treaty change toissue region-wide euro-bonds, accordingto the European Commission (EC), butwould be best off negotiating one anywayso that the bonds can be underwritten

jointly by Eurozone governments. In a dis-cussion paper for release this week, the

EC attempts to put the issue of euro-bonds on the agenda for any forthcomingtreaty negotiations. The paper suggeststhat governments could be best offangling for euro-bonds without a jointguarantee because they could be issuedquickly and used to push for a commit-ment to share the underwriting of thebonds during any negotiations, the WallStreet Journal reported.

Qantas nears union deadlineQantas Airways hopes to reach an agree-ment with unions by a deadline today, orface a settlement imposed by Australiasindustrial umpire, but a union said a deallooked unlikely in a bitter fight over payand moving jobs to Asia. The airline andthree main unions have until 1pm GMTtoday to reach a settlement, or submit tothe labour umpire unless a three-weekextension of talks is agreed.

EDITORS LETTER

ALLISTER HEATH

Editorial StatementThis newspaper adheres to the system of

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

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

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

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

Maude warnsunion bosses THE GOVERNMENT warned unionsyesterday it is prepared to pass toughnew strike laws and axe the pensionreform deal if public sector workersgo ahead with a planned strike laterthis month.

In a sign the government is losingpatience with the unions, cabinetoffice minister Francis Maude said itwas absolutely within our power to withdraw the concessions it hasalready made.

He said: If they do call out theirmembers on strike at a time of hugefragility for our economy then thecase for reform of the ballot laws willbecome very pressing. I dont senseany appetite amongst most of theunion leaders to go in for protractedprolonged industrial action.

Meanwhile, he announced plans tosimplify the process for firms to applyfor government contracts, in a bid tospur growth. Under current rules itcosts UK firms around twice as muchto win a major government contractthan it would cost a French company.

The changes will include listinggovernment contracts online to breakdown some barriers to entry andoperating an open door policy,whereby firms have greater access togovernment departments.

He told the BBC: We need to makethings better for business in the UK.

BY STEVE DINNEEN

POLITICS

AT LEAST 12 people were killed inclashes between security forces andcrowds protesting against Egypts rul-ing military council yesterday, in someof the worst violence since the over-throw of former president HosniMubarak.

With just a week before voting inthe first free parliamentary election indecades, the confrontations raisedworries about the impending vote.

Protesters camped out for a third

night in Cairos Tahrir Square lastnight, the epicenter of the uprisingthat ended Mubaraks 30-year rule.

Egyptians elect a new parliament ina vote that starts on 28 November, butpresidential powers will stay with thearmy until a presidential poll, whichmay not happen until 2013. Protesterswant a much swifter transition.

Teargas has rained down on demon-strators and police have used batons ina bid to end the protest. Angry protest-ers brandished spent shotgun car-tridges and bullet casings, althoughpolice denied using live rounds.

BYHARRY BANKS

WORLD NEWS

A dozen killed in EgyptEgyptian protesters with empty tear gas canisters yesterday Picture: REUTERS

Cabinet office ministerFrancis Maude unveiledplans to make it easierfor firms to bid for gov-ernment contracts

CAYMAN DIRECTORS COLLECT FUNDJOBS A small group of Cayman Islandjumbo directors are sitting on theboards of hundreds of hedge funds asdemand for independent directorsbooms in the Caribbean tax haven. Aleast four individuals hold more than100 non-executive directorships each,and 14 have more than 70 eachworth as much as $30,000 a year. Oneperson has been listed as on the boards of 567 Cayman entities,almost all of which were hedge funds.

ECONOMISTS WARN PLANS TO CURBMIGRATION WILL HIT UKS GROWTHLeading economists are urgingGeorge Osborne, the chancellor, toinsist that the government rethink aplan to curb immigration that wouldbe deeply damaging to competitive-

ness and growth. In a letter to theFinancial Times today, the group crit-

icises a forthcoming shift in HomeOffice policy that is expected to limit

economic migrants from outside theEuropean Union to a five-year stay.

UBS CONSIDERS BONUS POOL CUTUBS executives are considering cut-ting the groups bonus pool in aneffort to recoup some of the $2.3bn(1.5bn) it lost in the alleged tradingscandal centred on Kweku Adoboli.The Swiss bank last month opted notto eat into bonus accruals when itreported its third-quarter earnings.

STANCHART CUTS EXPOSURE TOEUROZONE DEBT CRISISStandard Chartered has cut its expo-sure to Eurozone banks and boostedbusiness with Chinese financial insti-tutions because of the European debtcrisis but has not axed credit lines toany specific banks despite fears of acredit crunch, according to the banks Asia chief executive. Jaspal

Bindra is also executive director ofthe London-based bank.

ESTUARY AIRPORT IS VITAL FOR THEECONOMY, SAYS JOHNSONBritain faces economic paralysisunless the Government backs a newaviation hub, the Mayor of Londonwill argue today as he takes his cam-paign for a Thames Estuary airport tothe heart of the business community.Construction of a new hub offeringdirect links to the emerging power-house economies of Asia and LatinAmerica will be vital to preserve thecountrys economic status, BorisJohnson will argue.

GREEN DEAL UNLIKELY TO DELIVERPROMISESGovernment ministers have heraldedit as the biggest home improvementprogramme since the Second WorldWar, but their own economists pre-dict the number of homes insulated

under the Green Deal will slump, notrise.

M&S ROW WITH SUPPLIERS SIGNALSHARD TIMES ON HIGH STREETA row has broken out between Marks& Spencer and its supply chain overplans to make them pay towards itsown 600m refurbishment pro-gramme, in a further sign that smallbusinesses are being squeezed as con-sumer confidence falters. The super-market has asked its suppliers to pay1.3pc of their annual sales towards itsstrategy for growth but at leastone major supplier is understood tohave refused to pay, with othersexpected to follow suit.

CARGILL'S PAUL CONWAY GIVES FOODFOR SERIOUS THOUGHTPaul Conway, the vice-chairman of thegiant food company with a key posi-tion in world agriculture, says the worlds seven billion people can be

fed, but warns the days of real-termdeflation in prices is probably over.

PFIZER NEARS SETTLEMENT ONBRIBERYPfizer will pay more than $60m toresolve US government probes intowhether the drug maker paid bribesto win business overseas, peoplefamiliar with the matter said. The set-tlements, expected to be made publicby year-end, come as part of a govern-ment investigation that has changedhow the pharmaceutical industryconducts business overseas in light ofUS antibribery laws.

CHEVRON TAKES BLAME IN SPILLChevrons top official in Brazil said yesterday that the company takesfull responsibility for an oil spill offthe countrys coast and pledged toinvestigate how it made a critical mis-calculation when drilling a well deepbelow the ocean floor. Oil has been

seeping from near a well some 230miles northeast of Rio de Janeiro.

WHAT THE OTHER PAPERS SAY THIS MORNING

8/3/2019 Cityam 2011-11-21

7/44

LIBYA stood firm yesterday over thetrial of Muammar Gaddafis son Saifal-Islam, saying its courts could judgehim fairly, defying the InternationalCriminal Court, which says it is itsright to try him at The Hague forcrimes against humanity.

As news came in of the capture ofGaddafis feared intelligence chief,Abdullah al-Senussi, officials said hetoo, would be given a fair trial inLibya.

The ICC indicted Saif al-Islam forallegedly ordering the killing of

unarmed protesters during the revoltthat ended his fathers 47-year rule.

NEW York officials said yesterday thatpolice have arrested a man trying tobuild a pipe bomb with instructionsfrom an al Qaeda magazine, which heplanned to use against US soldiers.

The suspect identified as JosePimentel, 27 was charged with threeterrorism-related counts and twoother counts.

Beyond soldiers, his intended tar-gets were allegedly police officers andpost offices, police said. Pimentel had been under surveillance since May2009 and was a lone wolf who got

instructions on building a bomb fromal Qaedas Inspire magazine.

POLICIES focused on boosting exportsfrom the UK could provide a 20bn liftto the economy by 2020, theConfederation of British Industry (CBI)will argue today.

The government should ensure anynew legislation is exporter-friendly;help exporters get more credit; and boost the UKs hub and regional air-port capacity, the business group saysin a report compiled alongsideaccountants Ernst & Young.

With the economy facing head-winds from elsewhere in Europe, theCBI has also revealed that seven in 10business leaders say their level of con-fidence has decreased since August.

The continued crisis in theEurozone underlines just how impor-tant it is for the UK to diversify itsexport efforts to high-growth coun-tries, said CBI chief John Cridland.

We need to capitalise on the boom-ing success of the BRIC countries, andlook beyond the curve to future high-growth markets such as Indonesia,Mexico and Turkey. The new middleclasses in emerging economies will

have needs that our niche, high-endproducers are more than able to ful-fil, Cridland added.

The report is expected to receive alargely warm welcome from the gov-ernment. Trade has been a drag ongrowth for far too long, minister fortrade and investment Lord Green said.

We need more companies to startselling overseas and moving out oftheir comfort zones into high-growthmarkets. Only one in five Britishsmall and medium sized firms (SMEs)currently export, the CBI says, com-pared to an average of one in fouracross the EU as a whole.

The share of the UKs globalexports has declined sharply from 5.3per cent in 2000 to 4.1 per cent in 2010, while at the same time Germanysshare increased from 8.9 per cent to9.3 per cent, Cridland said.

The CBI wants all new business reg-ulation to face an export enablingtest, along with greater credit madeavailable to companies through thegovernments Export CreditsGuarantee Department. In the longrun, the group says better educationin languages, science, technology,engineering and maths would help.

SIR ROGER CARR INTERVIEW: P26

CBI: exports

can give us a20bn boost

A US government committee is expect-ed to announce today that it has failedto come up with a plan to make a dentin Washingtons $15 trillion (9.5 tril-lion) debt pile.

The congressional cross-partysuper-committee charged with find-ing $1.2 trillion in budget cuts over adecade is set to announce that it has

failed to agree a package. The failurecomes just three months afterRepublicans and Democrats agreedthat the federal government couldexceed its legally binding debt ceilingon the condition that a deal is struckby the committee this month.

Committee co-chair Jeb Hensarling,a Texas Republican, said: We are wait-ing for the Democrats to put some-thing on the table. If you dont like theRepublican plan... what is your plan to

solve the crisis and ensure the commit-tee does not fail in its duty?The lack of a deal could spook mar-

kets and trigger automatic built-inspending cuts that come into forcefrom 2013, which would fall evenly onmilitary spending and domestic cuts.

Efforts to strike a deal have beenhampered by looming congressionalelections next year, with each sidereluctant to alienate voters by comingto a compromise.

US committee is unlikely tohave agreed budget cut plan

Libya to try SaifGaddafi itself NY police avertterrorist plan

BY JULIAN HARRIS

UK ECONOMY

WORLD NEWS

WORLD NEWS

BY JULIET SAMUELPOLITICS

News 7CITYA.M. 21 NOVEMBER 2011

US President Barack Obama is unlikely to have agreed a spending cut plan Picture: Reuters

8/3/2019 Cityam 2011-11-21

8/44

8/3/2019 Cityam 2011-11-21

9/44

Our Rate: Economy.Your Mood: First-Class.

4250from/night*

* Subject to availability at participating locations. Offer valid FridaySunday nights 1 September 2011 through 15 January 2012. Rates listed are in Pounds perroom, per night based upon single/double occupancy and excludes applicable fees, taxes, gratuities and incidental charges. Book 14 days in advance. Non-

refundable full payment required at booking. Discount relates to Best Available Rate which is a specific rate type that varies depending on time of purchase,

is unrestricted, non-qualified and excludes discount rates. Other restrictions may apply. See HamptonbyHilton.co.uk for details. 2011 Hilton Worldwide

Comfy bed

Free hot breakfast

Free high-speed internet access Earn Hilton HHonors points and airline miles

100% satisfaction guarantee

hamptonbyhilton.co.uk

00800 42678667

8/3/2019 Cityam 2011-11-21

10/44

8/3/2019 Cityam 2011-11-21

11/44

Wednesday 23rd November

www.knowledgetoaction.co.uk/cityam

Learn the secrets of aForeign Exchange trader

VISIT

OUR

TRADING

FLOOR

AND

SEE IT IN

ACTION

OOLF

DART

RUO

TISIV

RO

GNID

T

hL

f

OITCA

TIEES

DNA

NO

NIT

EngieroFehtnraeL

illiam MW,dgeoside Lyua18 Q

tisivottyinutroppo

ynapmocgnihcaoc

oitcAotegdelwonK

artegnahcxEafostercese

ulham SW6 2UZFy,aWorrisilliam M

:taroofgnidartruot

ygnireoylevisulcxesi,

darttsegralseporuE,no

reda

ulham SW6 2UZ

ehtuoy

re

mocasideenuoyllA

usotemit-traproemit-llu

mocnielbaniatsusaetaerC

locdnayawaklaw,pu-tes

oFruoyetamotuaotwoH

tartsgnidartehttuoballA

ou will learn:when y

od Ny 23rednesdaWon

,dgey18 Q

tenretnina,retupm

emocniruoytnemelppu

edartottnawuoyrehtehwem

ehtodneehttastforpruoytcel

oyos,setunim03tsujnisedartxer

ekceSgerGredarTretsaMoseiget

m 6.0ation frgistr(rerembvo

yad

ylpmisuo

re

om 6.00pm)

wledgetno.kwww

aighs quick and strtI

o cY tAODTerRegist

.rettebehtro

ehtdnanoitcennoc

y

.uk/cittion.cooacwledget

d - visitarwortaigh

endancttour aonrm yo c

lruoyegnahcoterisede

p

amy.uk/cit

.eendanc

ei

SPAIN voted to implement deep auster-ity cuts proposed by opposition leaderMariano Rajoy last night, with his con-servative Peoples Party (PP) sailing to alandslide victory over Jos LuisRodrguez Zapateros socialists.

With most of the votes counted lastnight, Rajoys party had 186 seats outof 350 total, whereas the socialistshad 111.

The result gives Rajoy a strong man-

date to pass a budget aiming to get the

countrys deficit down to 4.4 per centof GDP this year, which is estimated totranslate to spending cuts of40bn.

That will mean entering fractiousnegotiations with Spains regional gov-ernments, which account for a largepart of its overspend, although the PPhas promised to avoid cutting theirhealth and education budgets.

Rajoy has also promised to imple-ment sweeping labour market reformsthat force unions to negotiate with

individual firms rather than on an

industry-wide basis and to push forfurther consolidation of Spains troubled savings banks, many of whichhave been nationalised.

The PPs victory follows a spike inMadrids borrowing costs on Friday,

when it was forced to pay close toseven per cent to sell 10-year bonds, alevel viewed as a bail-out threshold.Rajoy has said that Spain must ditchits ostrich policy approach of stick-ing its head in the sand.

Spanish opposition winsstrong mandate for cuts

Spains new Prime Minister, Mariano Rajoy, has won a landslide victory Picture: Reuters

BY JULIET SAMUEL

EUROZONE


NEWS | IN BRIEF

EU avoids making any budget cutsThe EU avoided cuts to its budget afternegotiations between member statesresulted in a two per cent spending rise, inline with Eurozone inflation. MEPs wanteda five per cent rise, but met with opposi-

tion from austerity-focused governmentsall over the continent. However, memberstates failed to agree on cutting spendingprogrammes in line with the budget, mean-ing the EU could run out of funds this year.

Ackermann calls for EFSF boostThe Eurozone must avoid issuing euro-bonds and should focus on boosting thesize of its bailout fund to stop contagion,Deutsche Bank CEO Josef Ackermann hassaid. We need the firewall to cope with

the spillover effect, if it occurs, he said,according to Bloomberg. The stabilityfacility should be increased, he added,referring to the European FinancialStability Facility (EFSF) or bailout fund.

8/3/2019 Cityam 2011-11-21

12/44

UBS could begin legal action this weekagainst protesters who have taken overa disused City building owned by theSwiss bank.

The banks lawyers spent the week-end considering their next step afterthe Occupy London group made theempty block its third site after settingup outside St Pauls Cathedral and atFinsbury Square. The UBS site on SunStreet in Hackney was also used bysquatters during the G20 meeting inLondon in 2008.

Activists, who repossessed the UBSbuilding by using ladders to scale thewalls in the early hours on Friday, saidthey had targeted the bank because ofthe bailout it received from the Swissgovernment in 2008 and because of therogue trading scandal earlier thisyear. Suspect Kweku Adoboli is due toenter a plea when he appears atSouthwark Crown court tomorrow.

The start of the occupation came justhours after UBS announced more cutsat its investment bank.

The occupiers set up a Bank ofIdeasand yesterday ran a series of talksfrom academics and campaignersincluding one entitled Where Next?Continuing the Struggle after theEviction.

They also hosted a speech by AllessioRastani, the controversial trader whosaid he dreams of another recessionevery night. Yesterday the group held aconference for about 40 representa-tives of camps from around Britain andIreland.

A spokesman for UBS said the bankis taking appropriate actionalthough the protest is not thought tohave had any impact so far on the activ-ities of the wealth manager.

Meanwhile the legal case brought bythe City of London Corporation againstthe St Pauls protesters is expected toopen in the High Court this week.Members of the camp ignored ademand to clear around 200 tents fromthe highway by Thursday evening.

Activists have said they will stay aslong as they can and received a visitfrom fashion designer Dame VivienneWestwood at a rally on Saturday.

UBS to battleOccupy camp

A protesters banner in Hackney mocks UBS three keys logo Picture: Getty

BY PETER EDWARDS

POLITICS

News12

8/3/2019 Cityam 2011-11-21

13/44

THE collapse of talks between insur-ance takeover specialist Resolutionand rival Phoenix Group has clearedthe way for a rival bid from buyoutfirm CVC Capital or Swiss Re.

CVC has opened talks over a deal tobuy all or part of Phoenix, it emerged yesterday, as Resolution broke offnegotiations over a deal.

City A.M. understands the two par-ties could not agree on the price, withResolution unwilling to pay 1.2bn

for the entire business, which wouldrepresent a 40 per cent premium toPhoenixs closing price on Friday. Thegroup, set up by Clive Cowdery to buyweak life insurers, will now look atbuying smaller firms to go alongsideFriends Provident.

Resolution declined to commentbeyond a statement saying talks withPhoenix have now terminated.

A deal would have brought backunder Cowderys control a group ofclosed life funds he sold for nearly

5bn in 2007 to Pearl, an earlier incar-nation of Phoenix backed by finan-cier Hugh Osmond.

Phoenix, created from a restructur-ing of Pearl last year, remains bur-dened by 2bn in debt incurred tofinance that deal but is thought tohave received 10 recent approaches.Chairman Ron Sandler said the boardwould look at any proposals.

Swiss Re, whose Admin Re unit spe-cialises in buying insurers that areclosed to new customers, is alsothought to have approached Phoenixbut refused to provide confirmation.

No Resolutionfor Phoenix inbuyout talks THE treasury only had until 2013 tosell a majority stake in Northern Rock,chancellor George Osborne will reveal

today in a sharp rebuttal of Labourscriticism that the government sold theloss-making lender at a bad time.

In a letter replying to a note fromshadow financial secretary ChrisLeslie, Osborne writes that the govern-ment was bound to sell the bank inthe next two years under the terms ofthe agreement entered into by the pre-vious government with the EuropeanCommission.

The deadline, which is the same asthat given to Lloyds to sell 632 branch-es, had not been made public untilnow: knowing the government was aforced seller could have given biddersthe upper hand.

Osborne suggests that the tighttimeline made selling the Rock quick-ly even more imperative, since itslosses were chipping away at the1.4bn in equity injected into the bankby taxpayers in 2010.

He also hits back at suggestions thatthe bank could have been mutualised:We did not receive any final bids frommutuals, he writes, adding that tomutualise the Rock in the absence of abid would have meant essentially giv-ing away value.

Osborne: I had2013 deadlineon sale of Rock

The value of RBS chief executive Stephen Hesters bonuses has fallen Picture: Reuters

BY PETER EDWARDS

INSURANCE

BY JULIET SAMUEL

BANKING


ANALYSIS l Phoenix Group Holdings

p

14 Nov 15 Nov 16 Nov 17 Nov 18 Nov

505

500

495

490

485

480

475

470

492.1018 Nov

RBS chiefs bonus suffersas share price plummets

RBS chief executive Stephen Hester haslost out on millions of pounds inpotential bonuses since taking the jobthree years ago, as the value of thebanks stock has fallen.

When Hester took over as chief exec-utive in November 2008, RBS shares were worth 46p each. By the end ofFriday their value had fallen by morethan half, closing at just 20.5p.

The estimated 10m hit to Hestersvarious share schemes shows just how

much bank pay packages have

changed in the wake of the financialcrisis.

Starting in 2009, RBS switched to ashares-only deferred bonus scheme forexecutives, which Hester agreed towaive last year.

On top of 4.8m shares ownedthrough a medium-term performanceplan, Hester also holds 8.6m sharesunder a long-term incentive plan. Worth more than 4.2m when theplan was approved, his potential stakewould now be worth just 1.76m.

BANKING

8/3/2019 Cityam 2011-11-21

14/44

TWO American pension funds havelaunched legal action against sevenbanks, claiming they concealed prob-lems over MF Globals $6.3bn (3.99bn)exposure to European sovereign debt.

Royal Bank of Scotland, GoldmanSachs and JP Morgan Chase, as well asformer MF Global boss Jon Corzine, areamong those named in the suit.

The registration statements andprospectuses for $900m of MF Globalnote offerings failed to show how thecompany was using high leverage, wasinvesting heavily in risky European sov-ereign debt and not properly segregat-ing client assets from its own, claim theIBEW Local 90 Pension Fund inConnecticut, and the Plumbers andPipefitters Local #562 Pension Fund

The filing said the banks helped draftthe offering documents and sell thenotes, pocketing $21.2m of fees, andthat the quality of their due diligenceinvestigation was a substantial factorin the collapse of the futures brokerage.

It is one of the first attempts to recov-

er cash from the futures brokerage, which collapsed on 31 October. Theother lenders named in the writ areBank of America, Citigroup, DeutscheBank and Jefferies Group. DeutscheBank could not be reached last nightand all the other banks declined to com-ment.

Separately JP Morgan is lining up abid for MF Globals 4.7 per cent stake inthe London Metals Exchange. A sourcesaid: There are multiple partiesinvolved. Itll be done in the short term.

JP Morgan already has a 6.2 per centstake and Goldman is also a majorshareholder in the LME, which hasmade itself open to a 1bn takeover. Theexchange was founded in 1877 and stilloperates an open outcry ring.

The Chicago Mercantile Exchangeand the IntercontinentalExchange havealso been named as likely bidders butMF Global administrator KPMG couldnot be contacted last night.

Meanwhile the location of about$600m of MF Global customer funds isstill unclear although KPMG has saidclients will get back some money beforeall positions are finally settled.

MF Global rowdrags in banks

Clients of collapsed MF Global may see some of their cash soon Picture: Reuters

BY PETER EDWARDS

FINANCIAL SERVICES

News14

8/3/2019 Cityam 2011-11-21

15/44

Driving down the cost of trading

Apply for a Next Generation spread betting account

today at cmcmarkets.co.uk

Spreads may widen dependent on liquidity and market volatility

Apple, the Apple logo, and iPhone are trademarks of Apple Inc., registered

in the U.S. and other countries. App Store is a service mark of Apple Inc.

You wanted

tighter spreadsSo here they are

Spread bet US 30, UK 100, Germany 30, EUR/USD,

USD/JPY on our Next Generation platform from

just 0.7pts

Losses can exceed your initial deposit

0.7ptsSpreads fromjust

8/3/2019 Cityam 2011-11-21

16/44

COMPASS, the catering firm, willreveal plans this week to return upto 500m to shareholders by buying

back shares.Analysts expect the group, which

serves four billion meals each yearin more than 50 countries, toannounce the buyback alongside itsfull-year results, with profits expect-ed to exceed 1bn.

In a recent trading update thegroup, led by chief executiveRichard Cousins, said a healthycashflow meant that it could boostpayouts to shareholders or fundmore acquisitions.

The Surrey-based companyembarked on an aggressive acquisi-tion spree this year, spending over400m buying up smaller rivals.

That included its recent acquisitionof Cygnet Foods, a giant schoolcatering firm.

Analysts at Barclays Capitalexpect Compass to give more detailson the success of previous acquisi-tions and their future strategy andsaid the firm is likely to announce a

500m cash return probably in theform of a share buyback. The bank forecasts that the

groups pre-tax profits will increase10.5 per cent from 922m to1.03bn, on sales up 8.7 per cent to15.7bn.

Sales in the UK and Ireland, whichaccount for 10 per cent of groupearnings, will be down one per centon the previous year as companiescut their spending on catering andhospitality amid government auster-ity measures and a slow economicrecovery.

In its recent interim managementstatement, Compass remained cau-tious over its outlook in the UK andEurope but overall it remained posi-tive about opportunities to grow the

business. The groups shares closed down

1.06 per cent to 562p on Friday.

Compass to

give 500mto investorsBYKASMIRA JEFFORD

LEISURE

TWELVE top managers at Swiss pri-vate bank Sarasin, including its chiefexecutive Joachim Straehle, have writ-ten a letter to the banks board tofend off a takeover by Julius Baer, it isunderstood.

It is understood the letter was writ-ten by practically the whole top level

of management at Sarasin, meaningthe bank would likely see an exodus

of top staff if Baer were to take over. A spokesman for Sarasin declined

to comment.Sarasin, one of a host of smaller pri-

vate banks in Switzerland, said lastmonth Rabobank was looking at alloptions for the 46 per cent of Sarasinit owns, which corresponds to 68 percent of voting rights. Sarasins man-agement said earlier it hoped Dutch

Rabobank will make a decision thismonth about its controlling stake.

Sarasin executives in bid tothwart Julius Baer takeoverBANKING

THE SEARCH for a new chief execu-tive for Mitchells & Butlers is set todrag on with no fixed deadline, asthe pub group struggles to attractcandidates.

There will be no update on the hir-ing process when M&B announces itsfull-year numbers tomorrow, eventhough some analysts were expect-ing one. The results are forecast to

show a 10 per cent drop in sales to1.77bn with some improvement inthe closing months of the year.

The troubled pub operator hasdrawn up only a longlist of candidatesto replace interim chief executive

Jeremy Blood, who left last month.M&B declined to name either the

candidates on the list or to give atime-frame for any announcement.Suggestions that chairman Bob Ivellhas approached as many as 12 candi-dates for the role were dismissed as

inaccurate. There is a good list of can-didates and the search is ongoing,said a spokesperson.

Last week, Robin Young was pro-moted internally to operations direc-tor and Kevin Todd to businessdevelopment director, as long-servingsenior executives Amanda Coldrick,Roger Moxham and Adam Martin leftthe company. Each of the groups nine

brands is to have its own operationsdirector, replacing the previous three-channel structure.

Mitchells & Butlers drags itsheels over CEO replacementBYHARRIET DENNYSLEISURE


ANALYSIS l Compass Group PLC

p

1 4 No v 1 5 Nov 1 6 No v 1 7 N ov 1 8 Nov

572.50

570.00

567.50

565.00

562.50

560.00

557.50

556.00

562.0018 Nov

Executive chairman Bob Ivell is leading the search to replace interim CEO Jeremy Blood

8/3/2019 Cityam 2011-11-21

17/44

8/3/2019 Cityam 2011-11-21

18/44

EX-BP CHIEFENERGISES

WELL-OILEDGALA NIGHT

THE OIL Councils gala dinner was a slickaffair, with commodities executives sum-moning the energy to fly in from the

worlds exploration powerhouses:Houston, South Africa, Abu Dhabi, Kuwaitand, last but not least, Aberdeen.

The 650 oilmen were among the firstto take advantage of the Tower ofLondons semi-permanent marquee,erected over the moat for the Christmascorporate entertaining season, for their

black-tie oil meets money event that brought together bankers, oil execu-tives, lawyers, investors and privateequity names.

At the top table was Lord Browne of

Madingley, the former chief executive ofBP-turned managing director of privateequity energy specialist RiverstoneHoldings, who gassed about what was inthe pipeline with Julian Mylchreest ofBank of America Merrill Lynch, TimChapman of RBC Capital Markets andCarl Hughes of Deloitte.

Browne outlined how the industry canbetter collaborate to manage risk in hisevenings speech but not even the SunKing can control the sectors wildly fluc-tuating share prices, said The Oil

The Capitalist18 CITYA.M. 21 NOVEMBER 2011

EDITED BY

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

THE CUBAN missile crisis wasnothing compared to the fussthat ensued when the new fur-niture for Gaucho Broadgatewas detained as a suspectpackage by HM Customs &

Excise. No matter that the dubi-ous shipment was from Italyand not Havana, as first sus-pected, Gaucho will be withoutdesigner dcor for its newcigar and cognac lounge untilChristmas. Not that the lack ofUmbrian hardwood botheredten American bankers from JP Morgan, Citi, UBS and Credit Suisse, whoticked up a Hemingwayesque bill last Wednesday by ordering 13 CohibaBehike and Montecristo cigars and 13 large measures of Delamain andRichard Hennessy cognac. Unlucky for someones expense account, clear-ly, judging by the 3,000 damage. At least they left a 10 per cent tip.

BILL OF THE WEEKOil Council guestspeaker LordBrowne ofMadingley

Picture: ChrisSharp

Councils CEO Ross Campbell. There isfunding, there are deals and there have

been some good discoveries of late, hesaid. But investors are very risk con-scious and equity prices are still volatile.

BIRTH CONTROLFORMER Tulchan spinner AndrewHonnor is now in the final trimester

of his nine-month non-compete periodbefore he can launch his new financialPR business so The Capitalistthought it

was time for a chat.Obviously, Honnor cant be seen to be

marketing the new venture before hisgestation time is formally up in mid-February. But he did let slip that the newcompany will be called Greenbrook, afterHonnors home in Brook Green, and it

will be based in a small office near BondStreet, specialising in private equity,hedge funds and special situations.

Something the man who has whiledaway his non-compete time in NewsInternationals crisis-managing commsteam knows all about. It has not beendull, put it that way, said Honnor on hismonths with James Leveson inquiryMurdoch and the gang.

CARDS ON THE TABLEMOVE over Monte Carlo The Capitalisthears an extremely high-end pokergame is taking place tomorrow night at

The Savoy. The evening of gambling for agood cause is being organised by theQuintessentially Foundation, the philan-thropic arm of City concierge serviceQuintessentially, and players includecomedian David Walliams, ZacGoldsmith and female poker championLiv Boeree. To join the Texas Holdemgame, held in aid of SOS Children, [email protected]

8/3/2019 Cityam 2011-11-21

19/44

8/3/2019 Cityam 2011-11-21

20/44

Book Gatwick to Aberdeen,

Inverness, Jersey or Guernsey beforethe end of November and get

FREEpre-assigned

seat

FREE20kg bag

FREEuse of debit

cards

For all bookings made between21st and 30th November for

travel until end of March 2012Keeping London on the move

Promotion only available on London Gatwick to Aberdeen, Inverness, Jersey and Guernsey or v ice versa. For travel from 21.11.11 to on or before

31.03.12. Free pre-assigned standard seating, standard fees will apply if selecting extra legroom. Free bag applies to up to 20kgs in weight, standard

fees apply if selected alternative options. Free transaction fee for all payment options, please n ote credit card supplements apply. Book by 30.11.11.


German strong-arm tactics could backfire

IF a week is a long time in politics,two weeks covering affairs of statein Italy can seem like an eternity.But having covered the fall of

Berlusconi and the rise of Montis

technocrats, theres some reliefthings moved along quicker than Iand investors feared.

Less than two weeks ago it was still

conceivable Berlusconi might hangaround until elections in Februarybut theres nothing like a bond mar-ket blowout to concentrate minds. Aday later he stepped down.

At that point the European CentralBank (ECB) decided to step in to bring yields back down again, hitting 6.3per cent last Monday. But then withsigns of Monti having problems get-ting cross party approval for themakeup of his cabinet, the ECB sat back and yields started to rise. On

Wednesday Monti had his cabinet,confidence votes were assured andthe ECB was again in heavily trying tocap the increase.

The pattern is set. Do the rightthing and you'll get support, dont doit and youre on your own. Its astrong arm strategy that we first sawused over Greece. Here Europes lead-ers moved from doing whatever wasnecessary to protect the euro, to pub-licly saying; Yes its possible to leave.But this is a high risk strategy.

Admitting the euro can break upmeans investors will start pricingthat in, which is exactly whats hap-pening with rising core bond yields.

The biggest danger is this fastbecomes a runaway train that nobodycan stop. Germany refuses to counte-nance the answer is fiscal transfer.

For Germany the ultimate end is fis-cal union, where all budgets havebeen centrally approved and, to qual-ify, every member has to become likethem. Quite apart from whether thisis the right economic structure forEurope, how do we get to this Utopia?

The Germans insist its only bywince inducing reform. But remem-ber youth unemployment rates thatare already well over 40 per cent inSpain and Greece, and close to 30 percent in Ireland, Portugal and Italy.

The Germans and the Eurocratsseem to think the people of Europewill put up with anything to keep theeuro if they can sell the idea that the

crisis will be used to create the type ofcurrency zone we should have had inthe first place. Recent polls in Greeceshow 70 per cent want to stay in theeuro. Even in Italy, quite a few individ-uals told me theyd be happy to havethe Germans run things, on the basisthat at least the sums would add upand thered be no corruption.

Its quite a theory. Ive got a feelingit will be tested to destruction. Ross Westgate is co-anchor of CNBCsWorldwide Exchange.

CNBC COMMENT

ROSS WESTGATE

NEWS | IN BRIEF

Weber supports me, says ErmottiSwiss bank UBSs strategy to slash riskyassets by almost half and pay its firstdividend since the financial crisis has the

full backing of Axel Weber, its newly-crowned chief executive Sergio Ermottisaid yesterday."Axel Weber is 100 percent behind our strategy," Ermotti, whowas named permanent chief executivelast week, said. Ermotti took over as

interim chief executive after OswaldGruebel quit in September over thebank's $2.3bn rogue trading scandal. Therelationship between Ermotti and Weber,

who will be proposed chairman at theannual general meeting in May next year,will be closely scrutinised, as sourceshave said Weber was not entirely sold onErmotti as chief and instigated a searchfor outside candidates.

8/3/2019 Cityam 2011-11-21

21/44

8/3/2019 Cityam 2011-11-21

22/44

THOMAS Cook is set to close about 200high street travel agencies as the trou-

bled tour operator prepares to unveil amassive overhaul of its UK operations.

The closures follow Thomas Cooksrecent merger with Co-ops travel busi-ness that left the operator with 1,350high street shops. At the time of thedeal, the group warned that 75 shops

may be axed, but sources now claim itis closer to 200.Thomas Cook declined to comment

on the number of closures, only stat-ing that the outcome of a review

would be revealed alongside its resultson Thursday this week.

The debt-laden company, Europes biggest tour operator after Tui, hasissued three profit warnings since

August last year, prompting the depar-ture of it chief executive MannyFontenla-Novoa in August.

Shares have fallen 80 per cent sinceJanuary, closing on Friday at 41.62.

Thomas Cook toclose 200 stores

200 Thomas Cook travel agencies are expected to be shut down. Picture: PA


BYKASMIRA JEFFORDLEISURE

ANALYSIS l Thomas Cook Group PLC

p

14 Nov 15 Nov 16 Nov 17 Nov 18 Nov

47

46

45

44

43

42

41

40

41.6218 Nov

Its the internet, stupidIT is hardly surprising that ThomasCook is closing 200 shops. Itsbranch network, which swelled to1,350 following its ill-judged mergerwith Co-operative Travel, is simplytoo big.

The real problem is that the travelagent will struggle to replace forfeit-ed revenuesbecause its online plat-form and product is not fit for

purpose.As early as 2007, more than halfof consumers started buying theirholidays online. Today, that numberstands at 68 per cent, according toIpsos Mori.

Yet Thomas Cook sells just 25 percent of its holidays over the internet,a staggeringly low number whenone considers the huge structuralchange that has taken place in thetravel industry. Compare that tonearest rival Tui Travel, which sells40 per cent of its holidays online.

It's not a platform problem alone.Thomas Cook's product one-size-fits-all package holidays is hope-lessly ill-suited for today's traveller,who wants unique, bespoke holidays.

Closing the shops is only half theanswer. Building an internet busi-ness years too late is the nextdaunting task.

BOTTOMLINEAnalysis by David Crow

8/3/2019 Cityam 2011-11-21

23/44

THE UKs high streets have sufferedthe sharpest drop in footfall since lastDecembers freezing weather, newresearch reveals, painting a gloomyretail picture ahead of the crucialChristmas trading period.

Footfall in stores and shopping cen-tres across the country fell by 2.3 percent between August and Octobercompared with the same period last

year, figures from the British Retail

Consortium (BRC) and retail analystsSpringboard revealed today.

The number of visitors on the highstreet and in shopping centres fell by2.5 per cent, while at out-of-town shop-ping areas, footfall was down by 2.0per cent.

The West Midlands, Scotland andNorthern Ireland fared the worst

while the South East held up the best.Over the last 12 months high

streets have on average seen thebiggest drop in retail traffic, which

is down 2.7 per cent.The BRC said soaring utility bills and

low wage growth continued to forceshoppers to cut back.

This toxic mix has left people withless money to spend this Christmasthan last and thats stopping peopleshopping, Stephen Robertson, BRCdirector general, said.

Unseasonably mild weather has alsobeen putting consumers off stockingup on winter clothes, forcing retailersto cut prices and offer early promo-tions to boost trading.

Retailers will be hoping the quietquarter reflected in these figures is theresult of households postponing theirseasonal spending rather than can-celling it altogether, Robertson said.

Meanwhile, John Lewis sales acrossits department stores in the week end-ing 19 November were 85.2m, up 11.6per cent on the previous week.

But its sales last week were down 3.2per cent last week from a year earlier,

which the retailer blamed on the mildAutumn weather deterring shoppers.

High street ishit by plungein customersBYKASMIRA JEFFORD

RETAIL

NewsCITYA.M. 21 NOVEMBER 2011 23

THE EMBATTLED retail sector willclaim a fresh casualty this week when

Arcadia Group, the conglomerate that

includes Topshop, Dorothy Perkinsand BHS, reveals that its profit hasplunged by a third.

Billionaire chief executive Sir PhilipGreen is expected to report that pre-tax-profits at Arcadia have fallen toaround 140m for the year to the endof August, down from 213m last year.

The results on Thursday this week will be further dire evidence of theconsumer downturn, which has hit

high street retailersthis year.

Arcadia, whichalso includes MissSelfridge and Evans,is one of the UK's

largest privatelyowned clothingretailers with over2,500 outlets.

In August, SirPhilip warned sen-ior staff that prof-its would fall andthat the market

would be toughfor some time.

BYKASMIRA JEFFORD

RETAIL

Profits set to shrink atSir Philip Greens Arcadia

8/3/2019 Cityam 2011-11-21

24/44

REID Hoffman, the founder ofLinkedIn, expects Facebook to final-ly pull off its long-awaited IPO in thefirst half of next year.

Mark Zuckerbergs (pictured) com-pany is keen to cash in on thebumper demand for tech IPOs, withthe social network expected to break every record in the bookwhen it finally lists.

Its value has increased exponen-tially as investors salivate over theprospect of getting their hands onthe golden stock. Some privateshare sales are said to have valuedthe company at $100bn (63bn) andthe Kingdom of Saudi Arabia hasdenied offering $150bn for thesocial network.

However, the float has beenpushed back several times as the

company waits for markets to settleand some analysts had expectedFacebook to wait until the secondhalf of 2012.

Hoffman, who cashed in whenLinkedIn topped out its IPO pricerange, raising $743.4m and valuingthe business at $4.25bn, says thetime is almost right forFacebook to float.

Facebooks hopes ofattaining a sky-high valua-tion were boosted when it was revealed it had dou-bled its first half profits to$500m on revenues ofaround $1.6bn.

Facebook is now seen asone of the most importantfirms in the world toadvertisers, with itsability to target adsto specific demo-graphics makingit a hit with glob-al giants includ-ing WPP.

Facebook also

gets a 30 per centcut of sales of vir-tual goods, suchas digital cars or

animals, that enhance the experi-ence in social games such asFarmVille.

In January, Facebook said it hadraised $1.5bn from investors includ-

ing Goldman Sachs and DigitalSky Technologies, as well asthrough a private offering tooverseas investors conducted byGoldman Sachs.

Groupon beat the high-point of its price range in its

IPO earlier this month albeit ata lower price than it had ini-

tially hoped for rais-ing $700m in a

float that valuedit at $13bn.

It succeeds Yandex as the biggest teIPO of the year,with the Russiasocial network

achieving amarket cap of$11.2bn in itsIPO.

Investors preparefor Facebooks IPOBY STEVE DINNEENTECHNOLOGY

AS attention in the Olympus account-ing scandal turns to whether fundsused to cover up losses were fun-nelled to criminal groups, scrutiny isset to increase on deals not yet in thespotlight, including a $780m (493m)investment in technology firm ITX.

Olympus and affiliated firms havespent $4.1bn on 57 acquisitions since2000 in a bid to diversify operationsand grow outside Japan. The largestwas its $2.2bn buyout of British med-ical equipment firm Gyrus in 2008.

To date the scandal has centred ona $687m advisory fee tied to theGyrus deal and its purchase of threeobscure, loss-making domestic firmsfor $773m between 2006 and 2008.

But the spotlight is likely to fall onITX now too. Olympus has written offa third of its investment in the firmand still carries 23bn (190m) in ITX-related goodwill on its books.

Olympus probewidens to takein ill-fated dealfor $780m ITX

TECHNOLOGY


THREE quarters of technology, mediaand telecoms firms have been the subject of cyber attacks in the last year,according to new research by Deloitte an increase of 13 per cent on 2010.

A fifth of technology firms saidthey suffered up to 20 breaches in thelast year, with experts warning therisks are increasing as hackersbecome more sophisticated.

Mobile devices are expected tobecome the top security threat facedby companies in the next 12 months.

Some of the best-known firms inthe world have fallen victim to hack-

ers over the last 12 months, with Sonyexperiencing the biggest ever breach which resulted in information onmore than 100m of its customersbeing accessed by cyber criminals.

Games giants Nintendo and Sega both suffered relatively minoattacks, while Google reported a flur-ry of hacking activity, including asiege on its Android mobile operatingsystem and attempts to hack into theemail accounts of senior US govern-ment officials.

Some of the hacks have beenclaimed by a group calling itselfLulzSec, which claims to be carryingout the attacks to draw securitybreaches to the attention of compa-nies and for their own amusement.

Others like the attack on Googleand similar attempted breaches firmsincluding Lockheed Martin appearto originate from within foreign

states.Deloitte warns that despite the

increase in cyber crime, the amountspent on IT security remained staticlast year.

Three quarters oftech firms hit by

cyber criminalsBY STEVE DINNEENTECHNOLOGY

Coca-cola Olympic mentions by category

Regional News

Topicals

Twitter

Blogs

Other

National News

%

8%

4%

39%

27%

7%

13%

Brought to you by

IN ASSOCIATION with Repskan.com, themedia monitoring and analytics platform,City A.M. is measuring the relative Olympicmedia buzz around the partners for theLondon 2012 Olympic and ParalympicGames, week-by-week. The leaderboard,right, reflects their ranking over the pastweek, in this case from Wednesday 2November to Wednesday 9 November.

Coca-Cola hasregained the higherground this weekthanks to well received announcementsthat they plan to recycle all the plasticbottles from the London 2012 Olympicand Paralympic games. They estimate thatthey will recycle 80m plastic bottles dur-ing the course of the Games as part oftheir pledge to help deliver worlds mostsustainable games. This news was pickedup by various influential newspapers andenvironmental sources and spreadthrough social media, gaining a stronginterest in people interested in environ-mental or sustainability issues. It account-ed for approximately 27 per cent of allCoca-Colas Olympic related mentions.

TOP TEN PARTNERS BY MENTIONS

Brand Position change

Coca-Cola 3

Visa 6

BT 11

BP 1

Lloyds -4

McDonalds 1

EDF 9

Samsung -7

BMW 3

Deloitte 5

Olympic Media BuzzLONDON 2012 PARTNERS

ANALYSIS l Successful tech IPOs this year

Renren LinkedIn Yandex Pandrora Groupon

12

13

11

10

9

8

7

6

5

4

3

2

1

0

Market cap after IPO (bns)

100mCustomers data

breached in attack

472%rise in Android mal-

ware this year

200,000bank card holders

info accessed

ZEROdata lost in attack

this year

1.3mcustomers data

breached

8/3/2019 Cityam 2011-11-21

25/44

WWW.SGMARKETMASTER.CO.UK

WIN SUPERCAR CLUBMEMBERSHIP WORTH 10,000

JOIN OUR FANTASY TRADING CHALLENGE

Now anyone can try fixed-risk trading, without risking a single penny for real. Build the ultimate virtual portfolio from our range of

Covered Warrants, Turbos and Super10s, and you could win 25 days in your favourite supercars. Plus, with a host of educational

materials, and many more chances to win, youve really got nothing to lose. Entry is free, so register today.

7th November 5th December 2011

For more information on Leveraged Products call 0800 328 1199 or visit us online at www.sglistedproducts.co.uk

Covered Warrants, Turbos and Super10s are leveraged products and suitable for sophisticated retail investors. The underlying assets may be volatile andboth gains and losses could be greater than those incurred by the underlying asset itself. As the issuer, any failure by Societe Generale Acceptance N.V. tomake payments due may result in the loss of all or part of your investment. This is a marketing document issued in the UK by the London Branch of SocieteGenerale. Societe Generale is a French credit institution (bank) authorized by the Autorit de Contrle Prudentiel (the French Prudential Control Authority).Societe Generale is subject to limited regulation by the Financial Services Authority in the UK. Details of the extent of our regulation by the Financial Services

Authority are available from us on request. Any reproduction, disclosure or dissemination of these materials is prohibited.

REGISTER FREE NOW AT

SGMARKETMASTER.CO.UK

8/3/2019 Cityam 2011-11-21

26/44

Interview26 CITYA.M. 21 NOVEMBER 2011

The captain of industry who saysthe UK needs to be more like AsiaCBI president SirRoger Carr tellsAllisterHeath and David Crowthat Britain must livewithin its means

FROM the CBIs offices on the secondfloor of the Centre Point tower, youget a great view of the constructionsite that will eventually become the

Tottenham Court Road Crossrail station. Itis fitting that the CBI, which was one ofthe railways biggest supporters, is so closeto the action, and a reminder that the busi-ness lobby has real clout. Indeed, as the

government desperately searches for poli-cies to boost growth, its ideas and opinionsare in demand more than ever before.

Sir Roger Carr, the organisations presi-dent and one of Britains most respectedcaptains of industry, strikes a contrast toits airy, modernised offices. Dressed in asombre navy suit, a sober tie and a whiteshirt with gold cufflinks, he seems moresuited to the panelled boardrooms of yore;his stylish rimless glasses offer the onlyhint of modernity. Despite the old-schoolimpression, however, Carr is clear thattimes have changed.

Although he accepts that the economyis challenging and the Eurozone is inten-sifying the difficulties, he says the realproblem is that the balance of power inthe world has shifted from west to east.

The UK and Europe are coming to theend of a very long period where there wasa sense of entitlement. We had wealth, wehad an ever-increasing standard of living,and we expected the standard of our chil-drens lives to be better than our own.

Thats the experience of my, very fortu-nate, generation.

We looked to other parts of the world,where people didnt earn very much butsaved a lot, and saw their savings as fuel forour debt. Now suddenly thats stopped, the

brakes gone on. Just because you wereborn in a certain part of the world does notentitle you to a certain standard of living.

To survive in the new world, Britain,Europe and the US must adopt the princi-ples of the emerging economies, says Carr.You learn, you apply yourself, you workhard, and you earn. He cautions the trans-formation will be very painful and verysocially disturbing, pointing to thegroundswell of protest in Greece and Italyas a portent of things to come.

Although Carr says the outlook fordomestically-focused companies will bechallenging for the foreseeable future,he is not all doom and gloom. He reels off alist of large companies, includingBurberry, Jaguar Land Rover, and RollsRoyce, as well as Cambridge-based techfirms such as Autonomy and Arm, who areperforming well.

These companies all share a real com-petitive edge and crucially distribu-tion into high-growth, emerging markets,says Carr. Smaller businesses who also tryto harvest new markets, such as Tyrellscrisps and Nichols, the maker of Vimtodrinks, are also posting record profits and

building strong balance sheets, he says.The difficulty is converting the balance

sheet strength into the next round ofinvestment, which is about confidenceand certainty. That is the thing that hin-ders the positive companies. It sits like a

blanket over the entire economy.For Carr, this is where the government

needs to do more. He offers warm praisefor the coalitions actions thus far, citingcorporation tax cuts, apprenticeships and most importantly the deficit reductionplan as important achievements. Yet hesays the government still isnt doingenough to boost growth and cut red tape.

There is a recognition at the highestlevel of government that regulation must

be reduced. The direction of travel is rightbut the pace is not adequate, he says.

He calls on the chancellor to liberatecash from the current budget by involv-ing the private sector more fully in thedelivery of public services, and to spendthe proceeds on shovel-ready road proj-ects, toll roads and boosting the hous-

ing market. Roads and housing are thetwo things that can impact employment

most rapidly, he says.Carr hit the headlines when he was

appointed CBI president last year, byappearing to suggest he supported the 50prate on high earners. Friends say his quotes

were used out of context, but at any rate heis far less equivocal in our interview.

Although he says he is sympathetic withthe timing, he is clear that the 50p rateneeds to come down because effort andreward must be encouraged.

On executive pay, he defends businessless emphatically than some might expect,arguing that firms must overhaul theirremuneration structures to make themfairer and more transparent. We have tomake sure that the way we behave, the

way we pay and govern ourselves, warrants

the respect of the general public. Anyreward for failure is completely unaccept-able. Good principles and transparency

you need both those things to win backpublic trust.

He is adamant that you can onlychange public opinion by demonstrating

you are a force for good, by not doingthings that provide opportunity for criti-cism. In turn, government, the oppositionand regulators must stop demonisingunpopular companies such as banks andenergy firms.

As chairman of Centrica, Carr knowsmore than most about the deterioratingimage of energy firms, who have becomeeven less popular than banks after theypassed rising wholesale energy costs ontocustomers. The energy companies have

been demonised by all commentators in away that does not reflect the position ofthe businesses. Nobody profiteers becauseits different to make anything other than

a very modest margin.Energy companies are an easy target for

politicians, because the rising price oftheir products is contributing to theincreasing cost of living. But Carr is san-guine about the risks posed by overallinflation, which has remained high,insisting the drivers are well under-stood. They have been commodity

based, and things like VAT, one offs that inthe passage of time simply come out ofthe maths. I think its reasonable to saylooking forward we will see more tolera-

ble increases in inflation. And we have notseen an uptick in wage claims. I think oneshould never be complacent but the realissue is finding growth.

Before Centrica, Carr gained notoriety asCadbury chairman during the 2009 Kraft-Cadbury takeover battle. Although the

American company eventually took overCadbury, it was forced to pay a 50 per centpremium, in large part due to Carrs spirit-ed defence. Subsequently, he was instru-mental in changing the takeover code infavour of bid targets.

Would Cadbury have been taken overunder todays code? It would be muchmore difficult, says Carr. The process

would have been more challengingbecause we suffered a six month attack, which wouldnt be allowed under therules of the new scheme. They would havehad to have funds in place. All of that

would have changed the dynamic, thoughit may not have changed the outcome.

As Cadbury chair, it fell to Carr toexplain to an angry public why it was rightto sell to an American buyer. Now asCentrica chair, he is a lightning rod foranger over soaring energy bills. As CBI pres-ident, his message for government, busi-ness and the public is just as hard to

swallow. The world has changed, and wemust too.

Age: 64

Current: President of the CBI; chairman ofCentrica; deputy chairman and senior inde-pendent director of the Court of the Bankof England; senior adviser to KohlbergKravis Roberts.

Previous: Chief executive of Williams;chairman of Chubb; chairman of ThamesWater; chairman of Mitchells & Butlers;chairman of Cadbury.

Other: Fellow of the Royal Society for theencouragement of the Arts, Manufacturersand Commerce; visiting fellow at SaidBusiness School, Oxford; companion of theInstitute of Management; knighted in the2011 New Year Honours for services to

business.

CV | ROGER CARR

Sir Roger Carr in hisoffice in the CentrePoint tower atTottenham CourtRoad

Businessmust behavein a way thatwarrants therespect of thepublic. Anyreward forfailure is notacceptable.

There is arecognition ingovernmentthat regulationmust bereduced butthe pace is not

adequate

8/3/2019 Cityam 2011-11-21

27/44


REGULATION of bonuses con-tributed to a 12 per cent hike in City

workers base pay during the yearto September, a survey reveals thismorning.

Standard pay at the top spikedeven more sharply with managingdirectors earning 21 per cent morethan a year earlier, as firms lookedto attract the top managers withhigher basic remuneration.

Standard practice in the bank-ing sector when you are trying torecruit senior executives had beento buy out their current bonus andoffer them a guaranteed bonus,explained Mark Cameron of

Astbury Marsden, which conducted

the research.As the banks can no longer offer

those kinds of packages because ofchanges to the FSAs RemunerationCode, they are forced to attract tal-ent by offering high base salaries.

Economic optimism earlier inthe year also contributed to highersalaries, the report says. Yet bad eco-nomic news in the recent monthshave dampened expectations overCity pay.

Pay rises in the last six monthswere far rarer and now City employ-ees are expecting the impact of theEurozone crisis to produce very

weak bonuses, Cameron added.The average level of base pay in

the City came in at 83,000 in the12 months to the end of September,the report said, while the average

for managing directors reached237,000 per annum.

The sharpest pay hikes came when workers were promoted ormoved to a new employer, the sur-

vey revealed, resulting in averagewage increases of 15 per cent and20 per cent respectively.

People who stayed in their cur-rent jobs enjoyed wage rises of onlyeight per cent, however.

The threat of redundancy hasprompted City workers to beginstaking out new job opportunities,separate surveys revealed earlier inthe month.

Morgan McKinley reported anine per cent rise in the number ofpeople seeking new employmentopportunities in financial services,in October.

Bonus rules lift Cityworkers base payBY JULIAN HARRIS

REMUNERATION

BILLIONS of pounds worth ofannual costs are endured by pen-sion funds due to excessive trad-ing by fund managers, a reporthas claimed today.

Research by SCM Private statesthat 3.1bn in unnecessarycosts are hidden from investorseach year.

The hidden pension fund deal-ing costs that we have identifiedcould be removed simply through

investing via index funds, com-mented SCM Private founder Alan

Miller, a former asset manager.Levels of transparency within

the savings industry are shocking-ly poor both in terms of trans-parency of fees and transparencyof investments.

Miller is expected to call on theFinancial Services Authority (FSA)to force or encourage fundmanagers to reveal costs of trad-ing.

In research over 1,000 individ-ual UK pension funds, the groupfound a turnover of 128 per cent

for the average portfolio. SCMPrivate estimates that this adds

0.7 per cent in costs per year to anaverage UK pension fund, that isnot disclosed to investors, thereport said.

Over 20 years of investing forretirement, the charges are theequivalent of 15 per cent ofsomeones pension evaporating,the group claimed.

The average 15-year return ofthe unit trusts held in the individ-ual pension funds was just 4.2 percent per annum, so saving muchof the needless dealing costs can

increase returns substantially,the report concluded.

Unnecessary trading costs wipe offbillions from pensions, report claimsPENSIONS

NEWS | IN BRIEF

Call to hold off auto-enrolmentThe government should hold off its auto-enrolment pension plan for two years,the Institute of Directors will arguetoday. The plan which will force com-panies to automatically enrol workers ina pension scheme unless they activelyopt-out will hamper consumer spend-

ing and result in more wage freezes, thebusiness group says. If the governmentdefers auto-enrolment at next weeksAutumn Statement, it will have done sobefore most businesses have even con-sidered the impact of the new rules,said the IoDs Simon Walker. A fewmonths ago when we asked, one in fiveof our members did not even know thelegislation was coming into effect fromnext year. The IoD said the businessesshould be able to join the scheme volun-tarily, at first.

Pay freezes up in manufacturingNearly one in five (17.3 per cent) pay set-tlements in the manufacturing sectorare resulting in frozen wages, accordingto data released today by industry bodyEEF and JAM Recruitment. Despite per-sistently high inflation, the average set-tlement for pay in factories slipped to2.4 per cent in the three months to the

end of October, down from 2.5 per centto September. Signs of pay freezesincreasing could be a first sign of com-panies responding to the growing eco-nomic uncertainty, said the EEF.

CHINA will make the yuan more flexible in either direction and recentreforms to make the currency moremarket-oriented have begun to achievesome results, Premier Wen Jiabao saidon the weekend.

The comments probably do not sig-nal an imminent widening of the

yuans daily trading band, but theyunderscore Beijings intention to intro-duce two-way fluctuations in the yuanto dampen expectations that Chinascurrency could only appreciate.

Pointing to recent bets in overseasmarkets that had caused the yuan to

hit the bottom end of its trading bandseveral times, Wen said such a fallcould not have been engineered.

China will continue to closely mon-itor the yuans trading movements ...

and will strengthen yuans tradingflexibility in either direction, the pre-mier was quoted as saying in anevening news bulletin on state broad-caster CCTV.

Wen also told US President BarackObama that the trade imbalance

between the two countries was a struc-tural issue and that maintaining thehealthy development of bilateral trade

was essential for both countries andthe world, according to the broadcast.

Wens comments on the yuan werein line with recent central bank movesto encourage its value to fluctuatemore widely within the daily trading

band. The Peoples Bank of China(PBOC) allows the yuan to rise or fall

0.5 per cent from its daily mid-point.Some analysts and traders have

argued that the central bank has beenlaying the groundwork for a wideningof the trading band.

Chinese authoritiesmay permit a more

flexible currencyBYHARRY BANKS

ASIAN ECONOMY

Newbury Racecourses 2011 Sportingbet Winter Festival the UKs most prestigiousfixture in the Jump racing calendar will be held from Thursday 24th Saturday 26th

November 2011. Day Two of the festival, 25th November, will see Gentlemens Day, theracecourses answer to the ladies days that have dominated the summer season, fol-lowed by the Hennessy Gold Cup on Day Three - one of the most important long dis-

tance handicap races of the season.

In celebration of the Winter Festival, the

racecourse has teamed up with AtlasHelicopters and Donnington Valley Spa to offer

City A.M readers an exclusive luxury travelpackage.

For a total price of 2,975 the offer entitles CityA.M readers to half price Premier ticketsto the Winter Festival on all three

days, a helicopter transfer fromLondon to Newbury Racecourse, a

nights stay in Donnington Valley Spain an

executive bedroom, including a fullEnglish breakfast, full use of the spa and

health club facilities, a three coursedinner in their Winepress restaurant and a drink

reception before dinner with a Hennessycocktail and canaps.

FESTIVAL BREAKDOWN:Thursday 24th November Newbury Day

A day for Newbury locals offering free ticket

to Newbury residents and partnering with localbusinesses for a day of Jump racing.Friday 25th November Gentlemens DayIncorporating six Jump races and special events

including a gentlemens winter style competi-tion.Saturday 26th November HennessyGold Cup Day

The prestigious Hennessy Gold Cup

is the feature of this three day festi-val. The day is the largest of

Newburys winter fixtures and is oftenattended by the stars. Following the racing

there will be an after party in The White Room.To book this exclusive luxury package pleasecall Newbury Racecourse on: 01635 40015. Formore information on Gentlemens Day andNewbury Racecourse please visit: www.new-bury-racecourse.co.uk

EXCLUSIVE RACING PACKAGEINCLUDING HELICOPTER,

RACING, DINNING AND HOTEL

| READER OFFER

Premier Wen Jiabao said yuan flexibility would be strengthened Picture: Reuters

8/3/2019 Cityam 2011-11-21

28/44

STAGECOACH millionaire Sir BrianSouter could launch a surprise bid forEdinburgh airport when its forcedsale goes through next year.

Souter Investments hopes to takeadvantage of the CompetitionCommissions decision to makeowner BAA sell some of its airportsover monopoly fears.

The tycoon whose plans for the450m asset are understood to be atan early stage may seek to form aconsortium with another interestedparty.

Carlyle Group is seen as an earlyfront-runner in the process, withGlobal Infrastructure Partners and 3i both owners of airlines also linkedto a bid. Edinburgh investmentbanker Ben Thomson is also under-stood to be mulling an approach andappears to be a likely candidate toform a consortium with Souter.

BAAs banks Citigroup and BNPParibas will formally kick off the salein January, with sources close toSouter telling City A.M. his interestremains speculative until he has seenthe paperwork.

A spokesman for Souter declined tocomment.

The Perth-based transport boss,famous for his coach empire, is nostranger to the airline industry. Alongwith his sister Ann Gloag, he owned amajority stake in small Scottish air-line Suckling, purchased for 5m.Souter, who was chairman of the air-line, sold his stake back to itsfounders in 2006.

The Competition Commissionruled in July that BAA must sellStansted and either Glasgow orEdinburgh airport. The decision wasthe culmination of a two year battle between BAA and the watchdog,which said the airport operator exertsa dominant hold on UK airports.

BAA chief executive ColinMatthews said he was dismayed bythe ruling and confirmed therewould be a judicial review into thecase, which is slated to take placenext month. The group, controlledby Spains Ferrovial, also argued thatbeing forced to sell in a torrid marketcould destroy shareholder value.

BAA posted a 17 per cent rise inprofits in the first nine months of the year, lifted by a surge in trafficthrough Heathrow.

ENGINEERING giant Tomkins is clos-ing in on a sale of its tyre safety arm,with a string of private equity firmsunderstood to be monitoring theasset.

The firms valves and gauges busi-ness could also b

cityam 2011-11-21

Documents