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Date: 16 February 2012

Time: 18.15 – 21.00

FTSE 100 ▼5,890.26 -1.94 DOW ▲12,878.28 +33.15 NASDAQ ▲2,904.08 +2.09 £/$ ▲1.59 +0.01 £/¤ ▼1.20 -0.01 ¤/$ ▲1.32 +0.01

Shamblesas Greecestalls again

GREEK politicians exasperatedobservers and stakeholders last night with yet another delay to crunchtalks over a bailout package neededto avoid a default next month.

A party official blamed this latestmissed deadline on a late arrival of the bailout document: “Political lead-ers will not have the time [yesterday night] to assess the measures.”

Yet there are fears of lingering dis-agreements over necessary austerity measures, after conservative leader Antonis Samaras voiced opposition toplanned cuts to pensions.

The euro lost some of its gainsagainst the dollar after news of thedelay broke. Analyst Louise Cooperfrom BGC Partners said that marketsare not pricing in the real severity of the ongoing debt crisis.

“This [delay in the talks] doesn’tsurprise me at all,” Cooper said.“Eurozone politicians seems to begetting as frustrated as we all are with the Greek political class.”

Talks are expected to resume thismorning with Prime Minister LucasPapademos remaining hopeful of finalising a deal to present toEurozone ministers by tonight.

Yet even if a resolution is found,analysts remain sceptical that thedeal can last. “They come up withgrandiose announcements, but when you look at the detail you think – ‘ohthere’s not much there’,” Coopersaid.

And Capital Economics added in anote: “Even if a second Greek bailoutdeal is soon agreed and implement-ed, it may start to unravel before too

long, prompting a second more disor-derly default. In such a scenario, wethink that Greece may end up leav-ing the Eurozone too.”

EUROZONE: P15, THE FORUM: P22

BY JULIAN HARRISEUROZONE▲

Mick Davis (left) is set to become chief executive while Ivan Glasenberg (right) will be his deputy

GLENCORE could be forced to boost itsoffer for Xstrata after two of theminer’s top shareholders said they would refuse to vote in favour of the£56bn merger.

The two commodities giantsunveiled a deal yesterday that wouldsee Glencore shareholders pay an effec-tive premium of 15.2 per cent onXstrata’s pre-deal share price to bringoff the merger, with the resulting enti-ty renamed Glencore XstrataInternational.

The deal values Xstrata at £39bn, sig-nificantly below the £45bn bid from Vale that it rejected in 2008.

Xstrata investors say Glencore’s offeris not nearly enough. Schroders’Richard Buxton and Standard Life’sPeter Cummings, whose funds togeth-er control 3.6 per cent of the stock, both said yesterday that they would vote against the deal, which requires75 per cent support to get through.

Because Glencore owns 34 per centof Xstrata and is excluded from voting, just 16.5 per cent of shareholder votescould block the merger.

The threat could prompt Glencoreto revise its bid upwards slightly. Onesource close to the deal said that it isessentially being negotiated betweenthe two companies’ chief executives.

The source said: “If these guys think

they need to tweak the deal to get itover the line, they’ll tweak it – butthere is a line.”

But one adviser on the deal said:“Maybe Xstrata should be paying a pre-

BY JULIET SAMUEL

M&A▲

UBS ROGUE TRADING SCANDAL WASA BLESSING IN DISGUISE

BUSINESS WITH PERSONALITY

mium for Glencore. There’s no guaran-tee the deal will go through.”

In addition to arguing over price,investors are also sceptical that thefirms’ boards have their interests inmind.

Buxton said yesterday: “This is a fab-ulous deal for Glencore, it’s probably agreat deal for the Xstrata manage-ment, but it’s a poor deal for Xstrata’smajority shareholders.”

He added that he would need to seethe premium increased “materially”

to change his mind.Xstrata’s chief executive Mick Davisand chief financial officer Trevor Reidhave bagged both of the top manage-ment jobs in the merged entity while

their chairman Sir John Bond will leadthe board.

Their counterparts at Glencore areto take deputy roles, but two sourcesclose to the company told City A.M. this week that Davis will be allowed toreign over the merged company only temporarily until his deputy IvanGlasenberg takes over.

If the deal does go ahead, it will bethe largest M&A transaction since theUS government nationalised AIG for$59bn in 2010 and will be the largest

mining merger ever, according toDealogic. But aside from the price andmanagement issues, the deal is alsolikely to face a challenge from EU com-petition regulators. MORE: P8-9

Certified Distribution

28/11/11 till 01/01/12 is 92,879

BarCap is late entryonto the adviser listBarclays’ investment bank BarCaphas been brought in as an adviser toXstrata, writes David Hellier . Itsappointment came late on Mondaynight, too late for the bank to benamed in the official announcementyesterday. Its inclusion will helpBarCap maintain its climb up the

investment banking tables andcomes after the bank’s US armmade it onto the roster for theFacebook IPO.

BOTTOM LINE P4

www.cityam.comIssue 1,566 Wednesday 8 February 2012 FREE

GLENCORE FACES

SWEETENER CALLXstrata investors threaten to scupper £56bn merger

8/3/2019 Cityam 2012-02-08


News2 CITYA.M. 8 FEBRUARY 2012

No quick fix toUS jobs crisisUNEMPLOYMENT in the US remainselevated and is some way from a signif-icant improvement, the head of theFederal Reserve said yesterday.

Despite positive recent jobs data,Ben Bernanke warned: “Given theanticipated modest pace of economicrecovery, the committee expects thatover coming quarters the unemploy-ment rate will decline only gradually”.

The official unemployment rate willremain above eight per cent towardsthe end of the year, according to pro- jections cited by the Fed chairman.

Bernanke added that many more jobless Americans have given up onfinding work, and are not even includ-ed in the figures. The level of structur-al unemployment is likely to haveedged upwards, he said.

The Fed chief showed no sign of backing down from the ultra accom-modative policies pledged by the cen-tral bank.

Bernanke also advised Congress toextend the tax breaks originally brought in by former President George W. Bush, which are due to expire atthe end of the year.

Yet separate data released yesterday appeared to show some upturn for theUS economy. Consumer credit expand-ed much more than expected inDecember, growing by $19.3bn(£12bn).

BY JULIAN HARRIS

US ECONOMY▲

BOMBARDIER JOBS BELIEVED SAFE Workers at the UK’s last train makerare expected to hear this week thattheir jobs are safe, ending months of uncertainty about the future of thefactory in Derby. Its owner,Bombardier, put the future of the siteunder review in the middle of last year, after the government awarded a£1.6bn order for trains for the cross-London Thameslink route toSiemens, a German rival.

COUNCILS THREATEN JUDICIALREVIEW OF HS2 A group of 18 local authoritiesopposed to a £32.7bn high speed raillink between London and the northhave threatened the government witha judicial review unless it withdrawsapproval for the scheme. A letter fromthe group to Justine Greening, trans-

port secretary, cites five grounds on which it believes errors were made in

reaching a decision it calls “unlawful.”

UNDERUSED AIRPORTS MAKE CASEFOR REGIONS Justine Greening faces growing callsto support the development of region-al airports rather than commitresources to building a hub in the Thames estuary, a scheme seen by many outside the south-east as a cost-ly white elephant. The transport secre-tary this week met Birminghamairport officials who asked that sheuse a report next month on aviationpolicy formally to recognise the roleregional facilities can play in easingcrowding in the south east.

ANC REPORT REJECTS STATE-OWNEDMINESSouth Africa’s mining industry appears to have fended off calls fornationalisation as a report commis-sioned by the ruling African NationalCongress party proposed higher taxes

for the sector but said state owner-ship was not feasible.

CAMERON BACKS NHS REFORMSDavid Cameron will set himself against most of the medical profes-sion today as he vows to pushthrough the government’s controver-sial health reforms against mountingpublic and professional hostility. ThePrime Minister will defy critics by insisting that the reforms are neces-sary and throwing his weight behind Andrew Lansley, his embattled healthsecretary.

LITTLE CHEF OWNER’S PRE-PACK PLAN The private equity owner of LittleChef is putting the chain through apre-pack administration to offload anumber of toxic leases. RCapital, theturnaround specialist that rescuedthe chain five years ago, said yester-day that its hand had been forcedafter landlords refused to renegotiate

rents. Last month, RCapitalannounced plans to close 66 outlets.

PRESSURE ON NEWS CORP MOUNTS ASFBI STEPS UP BRIBERY PROBENews Corporation is under intensify-ing pressure in the US after authori-ties stepped up their investigationsinto allegations of criminal activity, ithas been reported by Reuters. TheNews of the World allegedly madepayments to police officers, totallingmore than £100,000. News Corp iscooperating with the investigations but declined to comment.

RUSSIA CLAIMS ASSAD PROMISEDCESSATION OF VIOLENCE IN SYRIARussia’s foreign minister claimed tohave won a promise of a “cessation” of violence yesterday after meetingPresident Bashar al-Assad in Syria. ButSergei Lavrov’s words were immedi-ately undermined by the Syrian interi-or ministry, which pledged to press on

with the offensive against “armed ter-rorist gangs” in the city of Homs.

TIMES MISLED COURT ON EMAILINCIDENT The editor of The Times has acknowl-edged that the newspaper misled aHigh Court judge about a 2009 emailhacking incident at the paper and hassent an apology to the judge. JamesHarding told a public inquiry probingpress standards that the newspaperregrettably “paid insufficient atten-tion” to a 2009 episode in which areporter hacked into the emailaccount of an anonymous blogger who wrote about police activities.

GM SEEKS CUTS AT OPELGeneral Motors is preparing to dis-close “horrendous” fourth quarterlosses out of its European Opel / Vauxhall unit and is demanding deepcuts from labor unions there, a GMofficial said. The official said the auto

maker’s patience with the money-los-ing operation is running out.

WHAT THE OTHER PAPERS SAY THIS MORNING

UK can’t count on others messing up

THERE are two ways a country can do well. The first is to introduce domesticpolicies that boost work, investmentand innovation, and trigger an entre-preneurial revolution and job-creation.Regrettably, while the coalition hasintroduced a few pro-market policies –such as cutting corporation tax andtweaking some regulations – on bal-ance it has made the UK a less compet-itive country, with taxes up and a tidal wave of regulation nodded through oractively encouraged.

Radical changes to the City wereurgently required but many of the

“reforms” agreed will be counter-pro-ductive, do nothing to prevent anothercrisis and damage a sector responsiblefor hundreds of thousands of jobs andtens of billions in tax revenues. The

growing anti-business culture has also become debilitating. It is lucky for theUK, therefore, that there is another way a country can prosper – if its com-petitors pursue even worse policies. The bad news is that the only majoreconomy that is planning to shootitself in the foot is France, though of course others may join in.

Nicolas Sarkozy is planning to chaseaway what is left of his wholesale banking and fund management indus-try – and hit investors and firms – by introducing a Tobin tax on some finan-cial transactions. The tax won’t becomprehensive but the historicalprecedent is grim: Sweden unilaterally introduced a Tobin tax in the 1980sand almost its entire bond and deriva-tives market moved to London, forcingit to ditch the tax.

But Sarko’s stupidity pales in com-

parison to the utter madness that liesin wait for France after the presiden-tial elections, which increasingly look as if they will see the socialist candi-date Francois Hollande triumph. He

really, really hates finance, capitalismand business; he makes Ed Milibandsound like a moderate, pro-businesscandidate. Hollande is the sort of 1970-style leftist who hates dividends(because he thinks they reduce invest-ment; presumably investors shouldprovide their capital for free) and believes companies should never sack anybody (though resisting technologi-cal change and going bust is hardly good for jobs and productivity).

It won’t be as bad as when FrancoisMitterrand was elected in 1981 andgoverned in coalition with the com-munists (the real deal in those days),nationalised banks and a large chunk of industry, almost bankrupted thecountry and was forced into a humili-ating U-turn two years later. But it willstill damage the economy and is bound to trigger another exodus of

capital and talent from France, a trendthat has been ongoing for decades andhelps to explain why so many City pro-fessionals are French (and why Sarkozy, who hates the fact that

France’s best and brightest have emi-grated, loathes the City so much). Thisis both good and bad news for Britain:good because we will get people andcapital; bad because it will reduce thepressure on the coalition to improvethe UK’s business climate.

France’s elections are also likely totrigger a complete upheaval of EU pol-itics: Hollande hates austerity, which will put him on a collision course withGermany, the IMF and reality. Thatcould force a seismic shift in the com-position of the EU, and even changethe UK’s relationship with it.

The problem for Britain is that wecan’t count on everybody else messingup; we need to get our own act togeth-er. On that front, unfortunately, it ishard to be optimistic.

[email protected] Follow me on Twitter: @allisterheath

BEIJING office rents have soared over75 per cent over the past year, makingChina’s capital more expensive tolocate an office than New York’sMidtown district, new researchshows.

Cushman & Wakefield, a property consultant, said Beijing experiencedthe steepest increase and now ranksas the fifth most expensive officemarket in the world with occupancy

costs averaging $130 per sq ft in 2012. Asia Pacific is experiencing a boom

in office rents fuelled by risingdemand and increasingly limitedsupply, and recorded the highestrental growth globally.

Hong Kong remains the world’smost expensive office market for thesecond year running, followed closely by London’s West End, Tokyo andMoscow. Russia’s capital city enjoyedthe steepest increase in rents of allEuropean markets in 2011– up 41 percent.

BYKASMIRA JEFFORD

PROPERTY▲

Beijing rents outstrip NY

ILLUMINA has rejected as inadequate a$5.7bn (£3.6bn) hostile takeover bidfrom Roche, saying it undervalued thegene sequencing company.

Illumina, which said Roche’s hos-tile bid failed to properly value itsexisting and coming products, recom-mended that stockholders not tenderany of their shares to Roche.

Last month, Roche launched a$44.50 a share hostile takeover bid forIllumina. A deal would give Roche aleading position in the market forgene sequencing.

Roche, which initially offered $40 ashare, was not available to comment but has previously said its $44.50 ashare offer is full and fair.

Separately, Illumina posted better-than-expected fourth quarter earn-ings of $43.5m, or $0.35 per share.

Roche knockedback again in itsbid for Illumina

The cost of renting an office in Beijing is now more expensive than some parts of New York

M&A▲

EDITOR’S 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 Editor’sCode of Practice, a copy of which can be found at www.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]

Federal Reserve chief Ben Bernanke stayeddownbeat over the USunemployment rate, inWashington yesterday

4th Floor, 33 Queen Street, London, EC4R 1BRTel: 020 3201 8900 Fax: 020 7248 2711Email: [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 Gavin BillennessPictures Alice Hepple

CommercialSales Director Jeremy SlatteryCommercial Director Harry Owen

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RBS chief Stephen Hester has taken theunusual step of emailing every staff member at the bank to rally moraleafter its recent political battering.

His email reveals that the total costof restructuring the bank so far has been £38bn from write-downs andrestructuring charges, which he saysare “ahead of schedule” and “a meas-ure of our recovery success” in over-hauling the failed behemoth.

The losses have been offset by £33bn

in earnings, he assures staff, which has“allowed us to afford to take the costsof ‘clean up’ from our risky inheri-tance”.

He hints that if the bank had notgenerated such profits, it would have been unable to crystallise losses on its bad assets, leaving them all still on bal-ance sheet.

But the note also voices Hester’s con-cern that the toxic political environ-ment could hinder the bank’sprogress.

“There is no doubt that our positionin the spotlight makes the job harder. And we can’t know how much damagethat will do to RBS or the interests of those we serve, whether as customersor shareholders,” Hester writes.

“We should try to be strong, to doour jobs, to deal with facts not fears,”he says.

Hester: RBS

overhaul has

cost £38bnBHP Billiton last night warned theEurozone debt crisis could hamper itsgrowth as it reported its first half-yearprofit drop in two years.

The world’s largest miner also saidlonger-term demand from China would slow as it posted a seven percent fall in attributable profit beforeexceptionals to $9.94bn (£6.25bn) forthe six months to 31 December.

It said a “disorderly unwinding” of European government debt is a key risk and that prices had fallen as con-cerns about the continent hit demand.

“We expect volatility in commodity markets to persist as the European sov-ereign debt crisis and general weak-ness in the manufacturing andconstruction sectors across key mar-kets are expected to weigh on cus-tomer behaviour and sentiment.”

The mining juggernaut benefitted,however, from stronger growth in theUS and a rebound in Japanese busi-ness.

The Anglo-Australian giant is stick-ing to its plan to splash $27bn on proj-ects, as part of an $80bn spending planover the five years to 2015, counting onthe expansions to drive growth.

Iron ore made up half of the group’searnings, with underlying profit fromthe core ingredient in steel rising 36per cent to $7.9bn.

Eurozone fearsfor BHP Billitonas profits drop

BY JULIET SAMUEL

BANKING▲

News 3CITYA.M. 8 FEBRUARY 2012

SANTANDER said it would put aside afurther €2.3bn (£1.92bn) to meet new Spanish government rules on badproperty assets.

The Eurozone’s largest bank by mar-ket cap said it needed a total of €6.1bnof provisions. It has already bookedsome €1.8bn against 2011 results and €2bn was already covered in an exist-ing buffer. It said an additional €900m

would come from capital gains on itssale of Banco Santander Colombia.

Meanwhile, Santander UK said ithad beaten its lending targets agreedunder Project Merlin.

The bank, which is run by AnaBotin, lent £8.7bn to businesses in2011, compared to a commitment of £6.7bn. It said £4.3bn of the cash wentto small and medium sized businesses. The targets are agreed with the Treasury but use different lending def-initions from the Bank of England.

Santander’s €6.1bn billto cover property fears

Ana Botin beat UK lending targets despite group fears over property Pic: REUTERS

BY PETER EDWARDS

BANKING▲

Extracts from Hester’s letter to staff

Dear Colleagues,… the purpose of this message is simply to giveyou my perspective, and it is this:RBS is full of good people, doing their bestacross a multiple set of challenges…

… RBS is still in its loss making phase … over thelast 3 years we have generated over £33bn of pre-impairment profits from improving ourCore businesses... This has allowed us to affordto take the costs of “clean up” from our riskyinheritance, in loan losses, disposal costs andrestructuring charges (£38bn so far)…… On a personal note, thank you to those manypeople who have given me messages of supportin recent days.It's much appreciated.Best,

BY PETER EDWARDS

MINING▲

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BP yesterday tried to draw a line underthe Gulf spill crisis as it hiked its divi-dend and reported a surge in profits.

The company said it was “vigorous-ly” preparing for a flurry of law suitsin connection with oil spill claims tostart later this month.

Analysts were divided over whetherBP would settle beforehand, as chief executive Bob Dudley made it clearthat the company would fight if theterms on the table were not “fair andreasonable”.

The oil major said replacement costprofits – the standard measurementfor the industry – for the threemonths to the end of December 2011 was $7.6bn (£4.8bn).

That compares with $4.6bn for thesame period in 2010.

For the whole year, BP’s profits were$23.9bn compared with a $4.9bn loss

in 2010.BP raised its quarterly dividend by

14 per cent to eight cents a share – itsfirst hike since the Gulf of Mexico spill.

Dudley added: “BP is on the rightpath, working to grow value. Weexpect financial momentum will build as we complete payments intothe Gulf of Mexico Trust Fund.”

BP has so far paid out $8.8bn indamages claims for the DeepwaterHorizon rig blast nearly two years ago, which killed 11 workers.

BP dividend

up as profitsbounce backBY JOHN DUNNE

ENERGY▲

THE INDONESIAN shareholders incoal giant Bumi yesterday fired a shotacross the bows of co-chairman NatRothschild by saying they were confi-dent of garnering sufficient supportto oust him.

Samin Tan and Indonesia’s BakrieGroup, who together own 29.9 percent voting rights in Bumi, said last week they were seeking to oust finan-

cier Rothschild and other key direc-tors from the board of the London-listed coal miner.

They require more than 50 per centapproval from shareholders. And yes-terday Tan said: “We are very confi-dent, otherwise we wouldn’t havedone what we have done, because we believe we have the vision to help beautify the asset.”

He added that he would cut Bumi’sdebt and create shareholder value.“We just want to achieve a board that

is cohesive, collaborative.” The Bakries – who set up their ven-ture with Rothschild just over a yearago – sold half their stake in Bumilast November to a group backed by Tan as they sought to pay off debts.

Tan has proposed himself andIndra Bakrie as co-chairmen – the rolecurrently held by Rothschild – andhas also tabled resolutions to removefour other directors including JamesCampbell, a former Anglo Americanhead of coal.

Rothschild in the firing line asBumi investors stage a revoltBYHARRY BANKSRESOURCES▲


Samin Tan is calling for a boardroom shake-up at Bumi Picture: REUTERS

ANALYSIS l BP PLC

p

1 Feb 2 Feb 3 Feb 6 Feb 7 Feb

490

485

480

475

470

486.507 Feb

ANALYST VIEWS: IS BP ON THE RECOVERYPATH AFTER THE GULF SPILL? Interviews by John Dunne

“

MALCOLM GRAHAM-WOOD | VSA CAPITAL

Despite the apparently positive mood I would have waited until afterthe settlement of the case before I increased the pay-out, and as I have saidbefore BP were paying out too much in dividends before Macondo... They arebeing more optimistic about life than more solid industry peers.

”

“

STUART JOYNER | INVESTEC

We continue to believe that BP will settle sooner rather than latergiven the US presidential election and we see a 50 per cent chance this will occurin the next few weeks. We continue to believe the $42bn of provisioning is broadlyright, i.e gross negligence is not a likely outcome in our view. Buy rating.

”

“

RICHARD HUNTER | HARGREAVES LANSDOWN

In all, BP’s status as a recovery play is progressing well. The companyhas marked a further milestone in its route back to relative normality, whilst thedividend outlook is promising. The general market consensus of the shares as a

buy should be consolidated after these numbers.

”

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GLENCORE and Xstrata’s $90bn(£57bn) merger faces a long road toreach regulatory and competitionclearance.

While bigger commodities tie-inshave been cleared in the past – suchas the deals that formed Rio Tintoand BHP Billiton – merging a clear-ing house with a miner couldencounter new hurdles, analysts said

yesterday after the blockbuster deal was officially unveiled.

“Many governments may take theopportunity to review Glenstrata’sinfluence on their food and industri-al and energy imports and exports so

... it might be forced to relinquishsome of its other roles” said NeilDwane, chief investment officer ofRCM, a unit of Allianz GlobalInvestors, an Xstrata shareholder.

The enlarged group would be the world’s number three for copper out-put, number one in zinc and lead,number six in coal and number fivein nickel, according to analysts atNumis.

And Glencore already accounts for28 per cent of global traded volumesin thermal coal, while it makes up50 per cent of the market in copperand 60 per cent of zinc trading.

Soaring prices of these commodi-ties may have boosted Xstrata’s bot-tom line (see above left) but price

volatility in the past year has drawn

Glencore’s deafaces long roaBYMARION DAKERS

MINING▲

THE MANAGEMENT of Glencore andXstrata yesterday released results for

2011 and calculated their potentialcombined firepower as they moved toconvince shareholders to back a merg-er.

Xstrata, the smaller of the twofirms, generated revenues of $33.9bn(£21bn) for the full year to 31December. Its net profit before excep-tional items was up 12 per cent on theprevious year to $5.78bn.

The company – which employs70,000 people in 20 countries – said it

had made cost savings of $391mthroughout the year, mainly in its coaloperations. However, it expanded itscopper resources during the period.

Meanwhile Glencore saw revenues

of $186.2bn during the year it wentpublic in London. It said its net profitrose to $4.06bn, up seven per cent onthe previous year.

The company revealed that strongermetal prices had helped offset weak-nesses in its agricultural commodities

business. Glencore chief executive IvanGlasenberg branded the results“solid”, adding that 2012 had started“strongly”.

The combined Glencore-Xstrata

group would have reported revenuesof £131.7bn, with profits of £10.2bn in2011, according to figures jointly released by the companies.

It is estimated that £500m in effi-

ciency savings could be achieved by the merger, mainly on the marketingfront.

Both companies said in a statement:“Glencore and Xstrata managementteams will be deployed according totheir key strengths.

“Operating assets will be integratedinto the existing Xstrata businessunits, while marketing will be man-aged by the existing Glencore manage-ment teams.”

Results give hint of synergies


BY JOHN DUNNE

MINING▲

Barclays Capital was alast minute entrant ontothe adviser list, City A.M . learned yesterday.

The Bob Diamond-ledbank, which made itonto the Facebook IPO,declined to commentlast night.

BarCap’s inclusioncame late on Mondaynight as the final touch-es were being put to thedeal. Inclusion will helpit maintain progress inthe investment bankingleague tables.

Of the 18 investmentbanking advisers to themerger, there is proba-bly one individual namethat stands out most:

that of Michael Klein,

formerly of Citigroup.The star banker hasbeen acting as a sound-ing board between thedirectors on both sidesand has played animportant role in get-ting the two companiestogether.

Getting onto the ros-ter of a deal of thismagnitude is pretty spe-cial for a banker actingas a consultant ratherthan as part of an insti-tution. It's the kind of mandate that's awardedvery rarely, reminiscentof BP asking PhilipLambert to advise it onits ultimately unsuc-cessful acquisition of

Rosneft.

Citi's DavidWormsley, who tookseveral months off to gotravelling after hisinvolvement in a dra-matic court disputewith Nomura's GuyHands, is leading theofficial advisory teamfor Glencore alongsideMorgan Stanley'sMichael Antakly. LikeWormsley, the MorganStanley man worked onGlencore's flotation lastyear.

Goldman Sachsremained on the side-lines during theGlencore flotation butthe bank is on the rosterthis time around as one

of Xstrata's advisers. Its

ADVISERS ON THE UK’S MEGA-MERG

SIR JOHN BOND,CHAIRMAN

MICK DAVIS,CHIEF EXECUTIVE

£10.2bn

THE NEWMANAGEMENT

TEAM

IVAN GLASENBERG,DEPUTY CEO

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with Xstratato clearance

THERE was a time when UK institu-tional shareholders could be relied

upon to back mangements in theirtakeover aspirations, or at least keepquiet about the whole thing untilthey had had time to digest all thedetails.

But yesterday both Schroders andStandard Life’s David Cumming (nearleft), accounting for a total of around 3.5 per cent of Xstrata’s shares, very pub-licly slammed the merger

proposals for the Glencore Xstratadeal even before they had held one-to-one meetings with management.Schroders’ Richard Buxton (below

right) has been here before. He pub-licly last year criticised the board of Charter for not agreeing to a bid fromMelrose. In the end, Charter wastaken over by Colfax, which came in with a higher offer. To some, this

undermined Buxton’s outspokenstance throughout the whole bid.Of course, investor opposition

might be a negotiating tool that leadsto better terms for Xstrata sharehold-

ers. But sources close to the company were fairly dismissive last night:“Would you put your family money behind Buxton or Ivan Glasenberg

and Mick Davis? I know what I would do.”

Fund managers voice objections early

BYDAVID HELLIER

FUND MANAGEMENT▲


focus towards the dominance of the biggest players in the market.

Xstrata chief executive Mick Davissaid he expected the deal to becleared in Europe with few prob-lems, as the two firms have beentreated as a singular entity since2006, when Xstrata took overFalconbridge.

“But this is a tricky situation;there are some overlaps, so the regu-lator may decide to take a freshlook,” one antitrust lawyer added.

China, the firm’s biggest market,and South Africa in particular couldsnarl the deal in red tape and compe-tition hearings, analysts have said.

Chinese authorities gave mixedsignals about the mega-merger yes-terday, with industry group China

Nonferrous Metals Industry Association welcoming the deal butothers voicing concerns over compe-tition.

And in South Africa, analysts atCredit Suisse and elsewhere expectthe merged firm to eventually makeanother takeover approach for fel-low miner Anglo American.

But even if the firm eschews arisky bid for Anglo, followingXstrata’s failed offer in 2009, somemarket watchers including Numispredict regulatory trouble regard-less.

Moody’s, on the other hand,seemed upbeat about the deal: itplaced both Glencore and Xstrata onreview for a credit rating upgrade yesterday.

team is led by BrettOlsher, who has workedwith Xstrata in the pastand is known to haveclose ties with MickDavis, the mergedgroup's chief executive.Also on the Xstratateam is Deutsche Bank,whose Nigel Robinson isno stranger to big deals,and JP Morgan’s IanHannam, a long-timeadviser to Davis.

JP Morgan alsomissed out on theGlencore flotationbecause of Hannam’sclose links to Xstrata.Nomura’s WilliamVereker is anotherXstrata adviser.

By David Hellier

BOB DIAMOND MICHAEL KLEIN

WILLIAM VEREKERDAVID WORMSLEY

%

OWNERSHIP STRUCTURE

XSTRATA

GLENCORE

55

45

p

b 2 Feb 3 Feb 6 Feb 7 Feb

443.257 Feb

p

,200

,250

1,100

1,150


1,2007 Feb

he Glenstrata tie-up in numbers

8/3/2019 Cityam 2012-02-08


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A BULLISH GlaxoSmithKline claimed yesterday that it will defy the trend of dwindling pipelines that is plaguingthe pharmaceutical industry.

GSK announced that financialreturns from its laboratories rose toaround 12 per cent, up from 11 percent two years ago and closing in onits target of 14 per cent.

Chief executive Andrew Witty citeda string of drugs in the final stages of development, boasting of “increasing

signs that we can replenish ourpipeline on an ongoing basis”.

Britain’s largest drug maker saidthat up to 30 programmes willprogress into late-stage clinical devel-opment in the coming three years,including treatments for hepatitis C,melanoma, and another flu vaccine.

GSK reported profit after tax for2011 of £5.26bn, up from £1.63bn theprevious year.

However, the results narrowly missed investor forecasts and shares

ended down 0.95 per cent at 1,406p.Figures before major restructuring

showed earnings per share of 28.4p inthe final three months of the year, upfrom a loss of 7.5p per share at thesame point in 2010.

Analysts, on average, had forecastsales of £7.33bn and earnings pershare of 29p, according to research by

Thomson Reuters. Turnover in quar-ter four was down three per cent on a

year earlier, at £6.98bn.GSK also said it lost £315m from

price cuts imposed by governments inEurope and the US.

Upbeat Glaxoputs faith indrug pipeline BANKING software groups Misys and

Temenos said yesterday they hadagreed some of the key terms of a pos-sible £2bn all-share merger betweenthe peers, a deal which would seeMike Lawrie relinquish his position aschief executive of Misys.

Guy Dubois, currently chief execu-tive of Temenos, will act as CEO of thecombined group and Stephen Wilson,currently finance chief of Misys, willcontinue in the same role at the com-

bined company.Misys said in a statement that

Lawrie had told the board he would be“pursuing a new opportunity”.

Misys shareholders will ownapproximately 53.9 per cent of themerged group, with Temenos share-holders owning the remaining 46.1per cent.

The new company will be listed inLondon, with a possible secondary list-ing on the Swiss stock exchange, Misyssaid yesterday.

“It is expected that the combination will yield significant cost savings andoperational synergies through scaleefficiencies and cross-selling opportu-nities,” the groups said in a statement.

Lazard and Morgan Stanley areadvising Temenos, while BarclaysCapital and JP Morgan Cazenove areacting for Misys.

Misys chief toleave as part of £2bn merger

BY JULIAN HARRIS

PHARMA▲

US EQUITIES▲


ANALYSIS l GlaxoSmithkline PLC

p


1,430

1,420

1,410

1,400

1,390

1,380

1,406.007 Feb

YAHOO chairman Roy Bostock andthree other directors last night saidthey would step down as the strug-gling company ploughs ahead withits overhaul, including a possible dis-posal of its stakes in Alibaba Groupand Yahoo Japan.

The group last night said it hasappointed IBM veteran Alfred

Amoroso and ex-eBay chief operat-ing officer Maynard Webb as inde-pendent directors.

Bostock and fellow board mem-

bers Vyomesh Joshi, Gary Wilsonand Arthur Kern will not stand forre-election at the next shareholders’meeting, the chairman said in a let-ter to shareholders released yester-day.

Their departures follow that of founder Jerry Yang, who was blamedfor turning down a rich acquisitionoffer by Microsoft Corp near theheight of Yahoo’s valuation.

Chief executive Carol Bartz leftabruptly last September.

TECHNOLOGY

▲

Yahoo chair follows trailof bosses out the door

Chairman Roy Bostock is leaving the troubled internet company

8/3/2019 Cityam 2012-02-08


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EASYJET founder Sir Stelios Haji-Ioannou has won the backing of GlassLewis, an influential shareholderadvisory body, in his latest campaignto curb excessive top-level remunera-tion packages at the budget airline.

The US firm, which advisesinstitutions holding £9.6 trillion worth of investments, has rec-ommended that shareholders vote down the directors’ remu-neration report at the annual

general meeting on 23February.

Sir Stelios (pictured) is furi-ous with the firm over a pay deal that could award tenexecutives shares worthsome £8m over the next

three years based what he called“phoney” bonus calculations.

Glass Lewis’ report said: “We areconcerned that the company’s long-term remuneration structure fails toadequately align executive and share-holder interests.”

In a statement released yesterday,Stelios – who controls a 38 per centstake – said the report marked “a sig-nificant step in forcing our board toput shareholder interests first –ahead of their own”.

Glass Lewis also advised NewsCorp investors in October

last year to vote againstthe re-election of RupertMurdoch’s two sons inprotest at the phone-hacking scandal.

EasyJet declined tocomment.

Stelios winsbacking frominvestor body

ONE of Facebook’s investors intends tomake waves about the social network’s corporate governance rules, which will hand shareholders negligi- ble say in the company when it floatslater this year.

Pension fund the California State Teachers’ Retirement System(CalSTRS) is planning to send a letterto the firm, which outlined its corpo-rate governance structure last Wednesday in its IPO filing.

When Facebook goes public,

Zuckerberg – who owns 28.4 per centof the company – will control 56.9per cent of the vote due to agreements with certain investors and the dual-class stock, which gives private sharesten times the voting power of publicly traded shares.

He also reserves the right to namehis successor at Facebook, which as acontrolled company does not needmajority independent directors.

Janice Hester-Amey, a portfoliomanager in CalSTRS’ corporate gover-nance office, said: “We are in the beginning stages of talking toFacebook.

“Not that we want to tellZuckerberg how to run his company... but it will be very hard to influencehim except if he’s got some kind of aconscience.”

She added: “I think there should besome more respect for capital – nomatter how brilliant you are.”

CalSTRS, which has a portfolio worth around $145bn (£91bn), investsin Facebook through two of its privateequity managers and is likely to buy shares in the website’s public offering.

The second-largest US pension fundcampaigned last year for companies todisclose their political donations.

Lloyds bank announcesalmost 1,000 job lossesLLOYDS Banking Group announced990 job cuts yesterday, which thepart-nationalised bank said formedpart of last year’s broader plans toaxe 15,000 jobs across the company.

Around 990 positions are set to goas a result of site closures in LTSBScunthorpe, LTSB Dudley and HBOSRomford and HBOS Newcastle.

The roles will come from withinthe group operations, group execu-tive functions, risk, wholesale andinsurance divisions.

Lloyds’ group operations division, which carries out back office pro-cessing, is consolidating its activities

in fewer sites, reducing these from27 to 15, and is expected toannounce more redundancies andsite closures during the course of this year.

David Fleming, national officer forthe Unite trade union said: “Already some 28,000 employees have losttheir jobs as a result of the past poormanagement decisions at the top of this organisation. Now staff acrossthe LBG insurance, HR, wholesale,retail and group operations will faceuncertain future.”

The bank has announced plans tocut 15,000 jobs as part of a restruc-turing designed to save £1.5bn a year.

Pension fund wags finger atFacebook’s governance laws

BYKASMIRA JEFFORD

TRANSPORT▲

BANKING▲


NEWS | IN BRIEF

Mixed results for Royal LondonRoyal London has announced a six percent increase in new business during 2011,despite a dreadful performance from itsasset management arm. The UK’s largestmutual life and pensions company bagged£3,291m of new income but income at itsRLAM division plummeted by 67 per cent

to £379m.

Electra PE is ready to spendElectra Private Equity said it expects totake advantage of the gloom in the buyoutsector as it reported a rise in net assetvalue (NAV). Basic NAV per share inched2.3 per cent up to £23.77 and climbed 2.1per cent to £22.71 on a diluted level forthe quarter to 31 December. The firm hasan investment capacity of more than£400m and said it is in a strong positionto invest as private equity firms face fund-ing pressures, banks sell off assets andcompanies look for equity top-ups.

Retailers pledge warranty actionDixons, Comet and Argos, Britain's threebiggest electrical retailers, have promisedthe UK’s competition watchdog they willimprove the transparency of the extendedwarranties market to avoid a full-blowninvestigation. The Office of Fair Trading

said yesterday its third study in just over adecade of the extended warranties mar-ket found consumers may not be gettingthe best value for money. The three retail-ers have offered to improve the informa-tion they provide, including the availabilityof alternative warranty providers.

Floods in Thailand have assisted Amlin’s catastrophe business Picture: GETTY

Amlin and Beazley bothbullish despite disasters

A STRING of disasters across the worldhave dented profits at many insurers – but Beazley and Amlin yesterday looked upbeat about their positions.

Amlin, the biggest listed insureroperating in the Lloyd’s of London

market, said it was able to increase rev-enue during January, largely due tostrong demand for catastrophe rein-surance.

The firm expects to take a hit of £50m-£70m from last year’s Thaifloods, while its loss from the enor-

mous Costa Concordia shipwreck would be below £10m.

And Beazley said that while its earn-ings plummeted 75 per cent on last year, the firm posted a pre-tax profit of $62.7m (£39.7m) – and could be theonly Lloyd’s insurer to have mademoney in 2011, according to analysts.

Andrew Horton, chief executive,said the firm could boast “a strong per-formance in the worst year on recordfor insured natural catastrophes”.

He also said he expects rivals to look at bidding for Hardy Underwriting fol-lowing Beazley’s revived interest.

INSURANCE▲

BY LAUREN DAVIDSON

TECHNOLOGY▲

8/3/2019 Cityam 2012-02-08


8/3/2019 Cityam 2012-02-08


EUROPE’s biggest travel group TUI Travel said its bookings have outper-formed the UK market as it reaped the

benefits from strong online sales andtroubles at its rival Thomas Cook.

The tour operator, which also owns Thomson and First Choice, said yester-day total UK summer bookings wereflat in the quarter, compared to a 14per cent drop across the industry.

Chief executive Peter Long said theoperator had seen a boost in bookings

last month due to a fall in consumerconfidence at rival Thomas Cook,

which required emergency fundingfrom banks in November following astring of profit warnings.

“I think we are clearly a beneficiary of the uncertain environment that ourcompetitor is operating in. We havealways said that was likely,” Long said.

While Thomas Cook sought to reas-sure customers that it was still safe to

book, TUI placed full-page advertise-ments in the press stressing it was “in

really great shape”. Total revenues for the group were

up five per cent to £2.845bn in thethree months to December compared

with the period last year.But TUI said it had racked up a fur-

ther £23m in operating losses takingthe total in the quarter to £109m, aspolitical unrest in the Middle East last

year had continued to drive touristsaway from North Africa destinations.

TUI’s investors mounted a protestagainst director pay during yesterday’s

AGM, with 21 per cent voting againstthe remuneration package.

TUI benefitsfrom Thomas

Cook troublesSHOP PRICE inflation dropped in

January, figures out today from theBritish Retail Consortium (BRC)showed, as last year’s VAT rise fell outof the calculation.

Overall, inflation dropped to 1.4per cent from 1.7 per cent inDecember, helped by falling com-modities prices and declining freightcosts, as well as ongoing promotionsand discounts.

Food prices rose 3.7 per cent in the year to January, down from 4.2 percent a month earlier and their slow-est rate in 18 months, while non-foodprices stayed still after a 0.3 per centrise in 12 months to December.

Clothing, furniture and electricalall saw prices fall over the year, withelectrical recording their fastest defla-tion in three years.

“Further falls in the official rate of inflation, which are expected duringthe coming months, should be a

boost to customers’ budgets and, cru-cially, should help to improve con-sumer confidence,” said the BRC’sStephen Robertson.

Meanwhile Experian’s footfall data,out yesterday, showed visits to shopsfell 2.5 per cent in January compared

with the same month of 2011, thoughretail parks experienced a 4.9 per centincrease in footfall.

Inflation slowsas shops keepcutting prices

BYKASMIRA JEFFORD

LEISURE▲

UK ECONOMY▲


ANALYSIS l TUI Travel PLC

p


210

205

200

195

190

205.707 Feb

MOTHERCARE HIRES JOOLS OLIVER

TROUBLED baby products chain Mothercare has hired Jools Oliver, the wife of celebritychef Jamie Oliver, to create a new collection of newborn and children’s clothing, bedding and accessories. The retailer, which runs over 1,300 stores in 60 countries including Early

Learning Centre stores, said the products are set to hit the shelves in the UK and overseason 17 August. Picture: GETTY

8/3/2019 Cityam 2012-02-08


CHANCELLOR George Osborne gave aconfused view on the banker-bashing bonus debate yesterday, at first callingthem “unacceptable” and then casti-gating others for creating an “anti- business culture”.

Speaking at a dinner held by theFederation of Small Businesses,Osborne (pictured) said: “Of courserewards for failure are unacceptable –and those who believe in the free mar-ket are the first to say so. But… thereare those who are trying to create ananti-business culture in Britain – and we have to stop them.”

But parliament also delivered amixed message yesterday evening as Labour’s oppositionday motion to reintroduce a 50per cent bonus tax was defeated by 295 to 244 votes, despite lack-lustre turnout on the govern-ment benches.

The motion, which was original-ly intended to be a vote purely onRBS chief executive StephenHester’s bonus until he waived it, is non-bind-ing but is a potent sym- bol of parliament’s

will.It called for employee representa-

tion on remuneration boards and apermanent reinstatement of Labour’sone-off bonus tax for all banks “direct-ly or indirectly supported by the tax-payer”.

Shadow business secretary ChukaUmunna said it should apply to all banks because even those not bailedout get an “implicit subsidy” from being too big to fail – a claim disputed by Barclays.

Umunna said: “We are [talking]...about the enormous sums paid toinvestment bankers and a select few senior executives in the sector.”

He added: “If the claim that we areall in it together is to mean any-

thing, the reintroduction of that[bonus] tax is a must.”

But Umunna came under firefor his past as a lawyer in whichhe drew up bonus packageagreements for banks. In

response he argued: “My experi-ence of advising... on such

arrangements has con- vinced me that we

must reform the way in whichthe system works.”

PERMANENT jobs increased in January for the first time in four months,according to recruitment consultancy data from KPMG, published yesterday.

However, unemployment continuedto climb despite the rise in permanentplacements, the report showed.

The study’s permanent staff place-ment index rose from 48.5 inDecember to 51.2 in January, recording

growth in placements for the firsttime since September.

Any figure above 50 indicates expan-sion.

Temporary staff billings declinedmore slowly than in December withan index of 49.4, up from 49.0, whilethe rate of vacancies growth slowed toa 27-month low of 52.1.

Demand was greatest for engineer-ing and construction staff, withindices of 57.7 for permanent staff and58 for temporary, and lowest in thehotel and catering industry at 44.8 and

47.5 for permanent and temporary respectively.

INDUSTRIAL production fell sharply in Germany at the end of 2011, accord-ing to official data released yesterday,denting hopes that the Eurozone pow-erhouse would keep growing.

Output fell 2.9 per cent in themonth to December, figures from theeconomy ministry showed – thelargest monthly fall since the start of 2009.

In the whole quarter Germanindustrial output fell 1.9 per cent, which Capital Economics believes willtake 0.6 per cent off GDP. That repre-sents the first decline in GDP in 10quarters.

“It the absence of an offsettingacceleration in service sector activity,it looks likely that German GDP con-

tracted pretty sharply at the end of the year,” said analyst JenniferMcKeown.

Construction output fell 6.4 percent from November and capital goodsproduction dropped 3.6 per cent.

Other data showed both the CzechRepublic and Hungary are experienc-ing strong industrial growth, whileFrench trade figures hit a recorddeficit as import growth exceededincreases in exports.

The French trade deficit hit a recordhigh of €69.4bn (£57.8bn) in 2011, up35 per cent on the year.

Imports rose 11.7 per cent in the year, largely driven by demand forenergy, while exports rose by 8.6 percent. Car and aerospace exports wereparticularly weak, though luxury goods, grains and drinks all registeredhealthy growth.

Glimmer of hope in UK jobmarket as builders hire

UK ECONOMY▲

THE EXTRA £50bn of quantitative eas-ing (QE) widely expected to beannounced tomorrow could be thelast, according to analysts at RBCCapital Markets – removing the sup-port the Bank of England has given thegilt market.

If next week’s inflation report showsinflation on track to hit its target inthe medium term, it may indicate theend of QE as the Bank’s Monetary Policy Committee will no longer needto push down rates by buying bonds.

That would see the Bank stop its weekly purchases in May, allowing yields to move upward, RBC said.

“In each of the last four months theBank bought around £8bn more giltsthan the Debt Management Officesupplied, and over the next three,assuming £50bn more QE isannounced tomorrow, they will buy £5bn more each month,” said RBCCapital Market’s Sam Hill. “If QE endsin May, that balance will shift and thegilt market will grow by £12bn eachmonth – a major change to the dynam-ic which may push up yields on 10-year bonds by 20 to 40 basis points.”

Factors including a worsening of theEurozone crisis may throw this predic-tion off course, but it remains Hill’scentral forecast.

Meanwhile Fathom Consulting willtoday urge the Bank to buy mortgage- backed assets “weighing down com-mercial banks’ balance sheets”.

End of QEwill push up

bond yieldsUK ECONOMY

▲

MPs waver

over bashingbank bonusesBY JULIET SAMUEL

POLITICS▲


The UK mood is improving but remains fragile

THE LATEST YouGov HEAT (Household Economic Activity Tracker) report reveals that thepublic felt more confident about

the economy in the first month of

2012 than in any month of 2011 exceptfor April. The HEAT Index rose to 92(on a scale of 0-200), which, apart fromthat April spike, is the highest levelsince mid-2010.

An interesting twist behind thesetop line figures is that the bump has been driven by a shift from negative toneutral sentiment, with no increase inthe numbers of people feeling positive. We are not yet ready to feel optimisticabout the economic future but worrieshave eased slightly.

While overall confidence in theeconomy is higher, the threat that weface from unemployment has becomean increasing worry. Last year it out-

stripped inflation, interest rates andenergy prices as an area for concernand is now considered a major threatto the economy by 27 per cent of thepopulation (up from 16 per cent in

early 2011). This concern is reflected inthe views of those who are unem-ployed and seeking work. In July, 41per cent thought it likely they wouldfind work in the next six months, com-pared to 30 per cent who thought itunlikely. And today, more peopleexpect to still be out of work in sixmonths than think they’ll be back in a job with those numbers now 32 percent likely and 36 per cent unlikely.

Rising economic confidence offers

some positive signs for the economy, but that rise has been prompted by amovement to neutral sentiment. Andas unemployment fears show, there

are still major areas for concern. Fornow, we can call the mood improving but fragile.Stephan Shakespeare is thechief executive of YouGov

BRANDINDEX

STEPHAN SHAKESPEARE

ANALYSIS l Unemployment major threat

Nov 20122011 MayMar Jul Sep

35

30

25

20

15

10

5

0

ANALYSIS l YouGov household economicactivity tracker index

Nov 20122011 MayMar Jul Sep

94

96

92

90

88

86

84

82

80

78

“I think it is more positive than the beginning of the year – there are indications of some businesses investingmore money. Although some people are still losing their jobs, unemployment hasn’t been rising as steeply as lastyear. The media is starting to be more positive, which is having a good effect on confidence.”

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CITY VIEWS: DO YOU FEEL MORE OR LESS POSITIVE ABOUT THE ECONOMYTHAN YOU DID AT THE START OF THE YEAR?* Interviews by Phoebe Torrance

“I feel more negative – from my experi-ence I can see the market double-dip-ping again. I worry that things might re-lapse back to the immediatepost-Lehman era.”

STEPHEN CAVANAGH | CSIS

“It is only a couple of months into theyear and so far it has not changed. I feltnegative about the economy at the endof last year, and I still feel negativeabout it now.”

STEVE PENNY | SKYLINE OFFICE LTD

BY TIMWALLACE

EUROZONE▲

* These views are those of the individuals below and not necessarily those of their company

Lower industrial production is expected to have hit German GDP

Surprise drop in DecemberGerman industrial output

8/3/2019 Cityam 2012-02-08


8/3/2019 Cityam 2012-02-08


Arnaud Theatre, directed by Adrian Noble,the former artistic director of the RoyalShakespeare Company, and starringCharles Edwards as George VI and Jonathan Hyde as Lionel Logue.

There is one notable departure from thefilm, notes Renney – the backgroundmusic when the newly non-stutteringKing addresses the nation in the finalscene has been changed from Beethovento the more patriotic Elgar.

WHAT GOES ON TOUR...MUCH mirth for City workers yesterday afternoon, after a list of rules for a Hooray Henry trip to Dubai found its way intoinboxes across the Square Mile.

The four young City boys going on therugby-watching tour describe themselvesas “the G4”, “known for its density of oiland its capability to dominate social,political and economical [sic] spheres”.

The tour rules, of which there are 13,make for interesting reading.

Mentioning parents’ salaries once a day comes high up the list, as do “compulsory chants” about “how oily and rich we are”.Cheating on girlfriends is encouraged butcalling them is frowned upon, reinforced by the fact that “everyone has each others’ backs”.

The list quickly went viral around theCity, finding its way into the inbox of workers at Clifford Chance, Barclays Wealth and Linklaters, much to the shameof the culprits. But The Capitalist is feelingkind, so we will spare the blushes of thefour charmers.

To recap more generally, however, thepresident of the “G4” is an insurance bro-ker, the captain works in marketing buthas spent time “scrutinising EU justice”,the vice captain is a Singapore-basedlawyer, and the senior vice president is“tipped to be the next big thing in the world of shipping”. Just as long as his bosses see the funny side of this latestepisode...

INDEPENDENCE DAY A DECLARATION of independence fromNigel Farage yesterday, as the UKIP leaderreceived the Freedom of the City of London

– amusingly, on the twentieth anniversary of the Maastricht Treaty, which paved

the way for the euro.Unsurprisingly, there was

no tribute to the exchangerate mechanism when Farage(pictured left) was inductedas a freeman. Instead, heswore an oath to “maintainthe franchises and cus-toms of the City, and to

keep this city harmless”.“I only wish that all

members of parliament would swear thesame,” added Farage. “Or at the very leastanybody involved in setting Treasury,trade or European policy, as it seemsapparent that keeping the city ‘harmless’is the least of their concerns.”

HUMMING BIRDSSYLVIA ANN Hewlett is an economist,author, and the chair of the imaginatively named Hidden Brain Drain Task Force – aglobal body “committed to fully realising

female and multicultural potential”. And it was with this role front of mind

that Hewlett addressed a City audience atEversheds on why keeping the engines of the BRIC economies “humming” isincreasingly dependent on women.

In these countries, as Hewlett pointedout with back-up from fellow speakersHelen Wyatt of Unilever and Eversheds’ Audrey Williams, female earnings areincreasing twice as fast as male earn-ings, and women now control two-thirdsof consumer spending.

BEHIND THESCENES FOR

OSCAR HIT’SLEGAL FIXERPAUL RENNEY, a lawyer at Keystone Law,almost collected the Bafta for The King’sSpeech – except the film’s producers werefaster out of their seats than he was.

Renney, as the hit’s legal adviser, was astand-in at the event for screenwriterDavid Seidler, who was “annoyed” at not being flown over from the US by theorganisers – this was before the Windsorfamily drama swept the board at last year’s Oscars. “I texted him to let himknow he had won, though – that was when the heat started to build up,” saidRenney, the behind-the-scenes agent cred-ited with making the f ilm possible.

The former entertainment partner at Theodore Goddard – the firm whosefounder advised King’s Speech anti-hero-ine Wallis Simpson – was introduced toSeidler by his client Joan Lane at a readingof the play at Islington’s Pleasance the-atre. From there, he went through the“arduous” process of agreeing the rightscontracts and advising Seidler on Royalprotocol, which made it into the screen-play as “the odd deferential pause”.

The original play of The King’s Speech iscurrently showing in Guildford’s Yvonne

The Capitalist17CITYA.M. 8 FEBRUARY 2012

EDITED BY

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

Eversheds’ chairman John Heaps with Hewlett

Colin Firth and Helena Bonham-Carter in the film of The King’s Speech

8/3/2019 Cityam 2012-02-08


TALKTALK upped its full-year profitguidance and raised its expectedearnings per share yesterday despitecontinuing to haemorrhage cus-tomers throughout its third quarter.

The former Carphone Warehousesubsidiary shed 43,000 net broadband accounts in the period, leav-ing TalkTalk with around 4mcustomers.

This year has seen the telecomsgroup fined £3m and ordered to pay out £2.5m in compensation by Ofcom after the media regulatorreceived more than 1000 com-plaints about TalkTalk for incorrect-

ly billing former subscribers.However, TalkTalk said it expects

broadband users to bounce back togrowth by the summer.

The company reported flat quar-ter-on-quarter revenues of £422m,down five per cent on last year,although broadband revenue grew two per cent to £312m.

TalkTalk chief executive DidoHarding said: “Churn has stabilisedand we remain confident of areturn to total net adds in the firsthalf of 2012.

“Our strong financial perform-ances give us confidence as we look ahead to delivering an excitingstrategic agenda throughout 2012,including the launch of our TV

proposition.” YouView, TalkTalk’s collaboration

with Britain’s major TV channels, isscheduled to launch in the spring.Shares jumped 11 per cent yester-day.

TalkTalk takings updespite user exodus

Winning run for 888 asgamblers play at home

BY LAUREN DAVIDSON

TELECOMS▲

GAMBLERS’ love of internet pokerhas helped gaming firm 888Holdings to post record revenue.

The company said full year rev-enue increased 26 per cent with thenumber of customers gambling onits websites growing.

At 31 December, 888 had 10.6mcasino, poker and sport real money registered customer accounts, up22 per cent from a year ago.

The figures support evidencethat cash-strapped Britons are stay-ing at home as the country teeters

on the brink of a double-dip reces-sion. The trend has also been spot-

ted by firms making video gamesand supermarkets which run “dinein” offers on food and drink.

Yesterday 888, which operatescasino, poker, sport and bingo brands, posted revenue of $331m,(£208m) up from $262m a year ago.

The firm has continued its win-ning run at the start of 2012. Average daily revenue during thefirst 35 days of the first quarter was25 per cent higher than the averageduring January 2011 and two percent up on the average in thefourth quarter of last year.

Analysts at Investec hailed the“robust” figures but warned of the

impact of changing tax rates in con-tinental Europe.

BYPETER EDWARDS

GAMING▲


ANALYSIS l Talktalk Telecom Group Plc

p


130.0

127.5

125.0

122.5

120.0

131.507 Feb

PC sales take a

hit as e-readerdemand rises

PC shipments to the UK droppedat an annual rate of 19.6 per centin the fourth quarter of 2011,totalling 2.9m units and markingthe UK’s fifth consecutive quarter-ly shipment decline according toGartner data.

Hit by the economy and growthin smartphones, tablets and e-readers, the Christmas period saw PC shipments slide further from a15.9 per cent drop during the restof the year.

HP retained its top spot with618,000 shipments in the fourthquarter, but Apple was the only

vendor to gain market share,growing to 9.1 per cent.

TECHNOLOGY

REVENUE GROWTH DISAPPOINTS AT DISNEY

Walt Disney, which is set to re-release its classic Lady and the Tramp, last night reported a quarterly revenue increase that fellshort of Wall Street expectations as media networks and theme parks gained but revenue at its movie studio declined. Theoperator of television networks ESPN and ABC, led by Robert Iger (inset), posted fiscal first-quarter revenue of $10.8bn (£6.8bn),a one per cent gain from a year earlier. Analysts on average had expected revenue of $11.2bn for the quarter.

8/3/2019 Cityam 2012-02-08


BELLWAY said the UK housing marketremained “resilient” ahead of the key spring selling season, but warned thatthe growth rates were set to slow.

The housebuilder sold 2,455 homesin the first half of the year – up five percent on the same period in 2010 – while the average selling price climbed8.7 per cent to around £183,000,thanks largely to a surge in privatesales, which rose by 15 per cent.

Finance director Keith Adey said thegroup’s operating margin is set toreach double digits in the six months

to 31 January, helped by the cheaperland bought since the 2008 crash.

However, he cautioned that margins would grow “at a more sustainablepace” going forward.

Bellway said visitor numbers to itssites gave “early indications” of aresilient market ahead.

Bellway seesresilient UK

market aheadBYKASMIRA JEFFORD

PROPERTY▲

OVER a third of properties for sale inthe UK have been reduced in price atleast once since coming onto themarket, research from Zooplashowed yesterday, as owners struggleto sell.

The average discount now standsat £19,580, or 7.5 per cent of the ask-ing price, and more than £1,000higher than the discount a year ago.

“This new high indicates sellers

have come to terms with marketrealities,” said Zoopla’s NicholasLeeming.

“Serious sellers must do theirhomework and follow the advice of their agent before settling on an ask-ing price – otherwise they may wellfind their property on the marketfor longer than they’d hoped.”

The total amount reduced fromthe asking prices of all propertiescurrently for sale across the country stands at £2.5bn.

House sellers knock £20,000off prices to drum up interestPROPERTY

▲

STRONGER revenue from sales andoutsourcing helped global commer-cial property agent CBRE to surprise Wall Street last night despite leasingrevenue falling in the Americas.

The group posted a 16 per cent fallin fourth-quarter net income fell to$79.8m (£50.2m), or 25 cents per share.Earnings excluding charges rose 29

per cent to $149.3m, or 46 cents pershare, beating analysts’ average fore-cast of 44 cents per share.

Quarterly charges of $69.5m wererelated to CBRE’s acquisition of assetmanagement businesses from INGREIM and to layoffs.

Revenue rose seven per cent to$1.76bn, trailing the $1.86bn forecast-ed. But Europe fared better, with rev-enues rising nine per cent.

Mike Strong, chief executive of the

Europe, Middle East and Africa divi-sion, said the figures “demonstrate theeffectiveness of our long-term strategy of building a trusted, broad based busi-ness that delivers results for clients, whatever the market environment”.

The Los Angeles firm estimated2012 earnings, excluding charges, of $1.20 to $1.25 a share, versus analysts’average forecast of $1.25.

Its stock fell one per cent in afterhours trading following the report.

Profits fall as CBRE starts tofeel the heat in the AmericasBY PETER EDWARDS

PROPERTY▲


ONE HYDE PARK LOOKS FOR RETAIL BUYERS

The developer of One Hyde Park, the luxury residential and retail complex in London’s Knightsbridge is looking to sell one of its stores on the ground floor for at least £21m. Project Grande, a joint venture between Candy & Candy and the Qatar Prime Minister, hasappointed Savills to sell the space rented by the Abu Dhabi Islamic Bank. Picture: GETTY

ANALYSIS l Bellway PLC

p


780

790

770

760

750

740

785.507 Feb

8/3/2019 Cityam 2012-02-08


FREE Australian Migration Seminar(including special briefing on IELTS English Test)

For further information and to registerplease call 020 8346 3450 or email

Denise Furman [email protected]

No obligation seminar in central Londonproviding advice on the key requirementsfor migration to Australia. The majorprocessing changes to be introduced on1 July 2012 will be explained.A representative from British Council(IELTS) together with Mr Ivan Chait RMAno 9253612, one of Australiaʼs leadingregistered migration consultants willanswer your questions and give you theessential facts. Private consultation alsoavailable.

ARCELORMITTAL, the world’s largeststeelmaker, yesterday forecast animprovement in the first half of 2012from a weak end to last year, with aclear pick up in North America butstill concerns about Europe.

The company, which makes aroundseven per cent of global steel, said yes-terday steel shipments would return tothe level seen at the start of last yearand its mining output would continueto grow.

Prices were recovering, but still below year-ago levels.

Core profit at an Ebitda level in thefirst six months would be lower than a year earlier, but above the level in thesecond half of 2011, ArcelorMittal said.

“We see an increase in shipmentsand in prices in Q1 both in Europe andthe United States and so the steel mar-ket is better than in the second half of 2011,” finance chief Aditya Mittal said.

“The economic situation in Europedoes remain a live concern, but we are

seeing an improvement in sentimentcompared with the fourth quarter,” hesaid on a conference call.

Mittal said global steel demand wasexpected to rise by 4.6 per cent this year, with a contraction of 1.3 per centin Europe.

The company said core profit in thefourth quarter fell 29 per cent to$1.71bn.

However, it did slip into an unex-pected loss – of $1bn – in the quarter,due to impairment and restructuringcharges for idling European opera-tions and a big tax hit.

ArcelorMittal

thinks outputwill pick up

Toyota raises full year outlook

TOYOTA Motor raised its full-year prof-it forecast by more than a third yester-

day as it cuts costs, trims spending andexpects Japanese government schemesto boost sales, though the guidance was still some way below analysts’expectations.

Japan’s number one carmaker now expects operating profit – earningsfrom its core operations – for the yearto the end of March of ¥270bn(£2.2bn), a drop of 42 per cent from

last year, and lagging a consensus fore-cast of ¥331bn from 23 analysts.

Toshiyuki Kanayama, senior marketanalyst at Monex Securities, said therevised profit guidance was a bit of a

disappointment. “But the market islooking at the next financial year. Thekey for Toyota shares will be whetherprofit [next year] will rise to around ¥800bn.”

Toyota, which has a market value of $135bn -- more than rivals Honda,Nissan and Suzuki combined -- raisedits annual forecast for net profit, which includes earnings made in

China, by 11 per cent to ¥200bn.October-December operating profit

jumped 51 per cent to ¥149.7bn from a year earlier, well ahead of the averageestimate of a small decline to ¥93.9bn.

Those results defied the impact of astronger yen and the disruption to pro-duction and supply chains from wide-spread flooding in Thailand that battered Toyota just as it was recover-ing from the March earthquake in Japan.

Toyota reckons the Thai floods willcost it 240,000 vehicles in lost produc-tion worldwide.

BYHARRY BANKS

INDUSTRIALS▲

COCA-COLA reported better-than-expected quarterly results yesterday

and announced a new cost-savingsprogram yesterday that it will use to boost its brands and mitigate highercommodity costs.

Coke’s results were “solid” giventhe weak global economy, saidConsumer Edge Research analyst BillPecoriello.

Coke’s new productivity pro-gramme is targeting annual savings

of $350m (£220.3m) to $400m by theend of 2015. The company also raisedits target for savings from the integra-tion of its North American bottling

operations by $200m to $250m.Coke said global revenue rose fiveper cent in the fourth quarter to$11.04bn as it gained market share inseveral drink categories.

Quarterly net income was $1.65bn,down from $5.77bn a year earlier, when the company recorded a gainrelated to the acquisition of its North American bottling operations.

Coca-Cola’s cost savings addan extra fizz to strong resultsCONSUMER

▲

ANGLO American’s shareholders are“very supportive” of the company in itslegal battle against copper producinggiant Codelco in Chile, chief executiveCynthia Carroll said yesterday.

“We are very confident about ourlegal position. We have acted withinour rights and we are in no doubtabout that,” Carroll said at a miningindustry gathering.

Anglo American’s director of strate-gy and business development Peter Whitcutt said the miner expectedCodelco would engage in “sensibleconversations” over the firm’s assets insouth Chile, and failing that expectedto pursue the matter in court.

Anglo has argued Codelco has inval-idated its option by attempting to exer-cise it pre-emptively.

Carroll declined to comment on theimpact of the planned $90bn takeoverof rival miner Xstrata by commoditiestrader Glencore, a tie-up to create adeal-driven powerhouse which ana-lysts say could have Anglo in its sights.

She said Anglo, focused on growthprojects including the Minas Rio ironore operation in Brazil, would be stick-ing to its plan of developing its ownassets.

Anglo chief confident in

Chile fight


SWATCH CATCHES LUXURY MARKET BOOM

STRONG demand for expensive watches in China helped Swatch Group clock up an 18 per cent rise in 2011 profits and build some sales momentum for the current year. Net profit at the Swiss-based group, known better for its colourful plastic watches than for ownership of high-end brands such as Omega and Breguet, rose 18.1 per cent, in line with expectations, to1.276bn Swiss francs (£868.7m) in 2011.

BYHARRY BANKS

MINING▲

BYHARRY BANKS

AUTOMOTIVE▲

NEWS | IN BRIEF

Lagardere in €900m writedownFrance’s Lagardere said it will take a

writedown of €900m on the value of itsproblem-plagued sports business and itsstake in pay-TV unit Canal+ as it report-ed stagnant revenue for 2011. Themedia-to-aerospace conglomeratereported full-year revenue of €7.66bn inline with analysts estimates yesterdayand confirmed its forecast of core mediaoperating profit declining 5-12 per centin 2011. The results cap a tumultuousyear for Lagardere in which it scaledback profit goals twice.

Low & Bonar results impressShares in Low & Bonar jump as much as12 per cent to touch a four-month highyesterday, after the supplier of yarn, fab-ric, and fibre reported better-than-expected full year pre-tax profit,boosted by new product sales and ahigher contribution from emerging mar-kets. Revenues at the group rose 13 percent year-on-year to £388.7m, while

profits before tax jumped to £23.4m –26 per cent higher than a year ago.

What do you think of the government’s plansto reform the UK’s National Health System?

In association with PoliticsHome.com Apply to join today at www.cityam.com/panel

AS health secretary Andrew Lansley’s controversial plansto reform the NHS return tothe House of Lords, we’re ask-ing our Voice of the City pan-ellist what they make of thegovernment’s proposals tooverhaul Britain’s health

services. The bill has received wide-

spread opposition from doc-tors, nurses and other health workers, but Lansley insistshe has the “full support” of Prime Minister DavidCameron over the package of

reforms. To wade into the debate

and have your say, you canapply to join the panel –made up of business andfinance professional acrossthe City – atwww.cityam.com/panel.

PoliticsHome.comPoliticsHome.com

In partnershipwith

ANALYSIS l ArcelorMittal SA

€


16.40

16.60

16.80

16.20

16.00

15.80

16.697 Feb

8/3/2019 Cityam 2012-02-08


Akin GumpAkin Gump Strauss Hauer & Feld hashired Tim Pearce and Ian Meade, for-merly of Simmons & Simmons, to its

London office. Pearce and Meade spe-cialise in the launch of hedge funds andfunds of hedge funds, and will workwith the firm’s funds teams and clients

in New York, Washington DC, Dallas,Abu Dhabi and Beijing.

GreySpark PartnersThe capital markets consultancy hasopened its new office in Hong Kong, tobe led by Andrew McLauchlan, partner

and managing director, Asia Pacific.McLauchlan was previously based inLondon as a partner at the firm.

GowlingsThe Canadian law firm has poached sixmembers of the equity capital marketsteam of Cobbetts to join its Londonoffice. Andrew Wright, Charles Bond,Sefton Collett and Dominic Prentis joinas partners, with senior lawyers Susan

Johnston and David Brennan.

VanguardSimon Vanstone has joined the fundmanager as head of its European institu-tional business. Vanstone was previouslyEuropean chief executive and chief mar-

keting officer for AXA Rosenberg.

EvershedsTim Armsby, a partner and energy infra-structure specialist at Trowers &Hamlins, has been hired as a partneracross Eversheds’ Middle East offices.

MercerThe HR consultancy has appointed infra-structure specialist Toby Buscombe as a

principal in its alternatives boutique.Buscombe joins from Australia-basedconsulting and asset management bou-tique Access Capital Advisers.

Loch AssociatesThe employment law practice has

appointed Dean Jones as a partner tolead its City-based London office. Jonespreviously worked at Bird & Bird andspecialises in employment law.

Eros InternationalThe Indian film group has appointedMichael James Kirkwood as a non-executive director. Kirkwood is cur-rently chairman of Ondra Partnersand Circle Holdings.

CITY MOVES | WHO’S SWITCHING JOBS Edited by Harriet Dennys

+44 (0)20 7092 0053morganmckinley.com

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

in association with

Eurozone fearshalt rise on goodfundamentals

B

RITAIN’S blue-chip indexclosed flat yesterday after

staging a late recovery ontalk that Greece was mak-ing progress towards securing a bailout deal and avert a messy default.

The FTSE 100 gauge endedthe session 1.94 points lower at5,890.26 as gains among banksand oil stocks offset heavy loss-es in the mining sector, which was hit by signs of slowingdemand in China and a mixedreception to a proposed merger between Glencore and Xstrata.

The prospect of avoiding achaotic default of Greece, which would batter theEuropean financial sector andspark contagion fears in Italy and Spain, helped financialshares, with banking and non-life insurance stocks ending theday up 0.8 per cent and 0.7 per

cent respectively.Pending a solution in Greece,

the general market sentimentremained subdued and defen-sive shares such as pharmaceu-tical and food and beveragegroups featured among the topgainers, along with oil stocks, which are regarded as a safesource of dividend in a high

crude price environment.Underperforming peers wasdrug-maker GlaxoSmithKline, which reported disappointingfourth quarter results.Xstrata was the biggest FTSE

100 faller, shedding 4.9 per centafter commodities traderGlencore inked a $41bn all-share deal to buy the 66 percent of the miner it did notalready own at a lower premi-um than some had expected.

Glencore will offer a 15 per-cent premium to Xstrata shareprice last Wednesday, below the20 per cent premium some ana-lysts had expected, causing twokey Xstrata shareholders to say they would vote against thedeal on valuation grounds..

The deal came as the broadermining sector fell for a second

consecutive session on signsdemand from China is slowing.

THELONDONREPORT

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

ANALYSIS l Halfords Group PLC

350

340

330

320

310

300

290

Dec Jan Feb

p 329.707 Feb

HALFORDSPanmure Gordon has upgraded the car and bicycle parts retailer from“hold” to “buy” and raised its target price to 375p from 300p, despitedowngrading its pre-tax profit forecasts by eight and 10 per cent respec-tively for the next two years. The upgrade is made on the basis that thebroker expects Halfords to continue to generate enough free cash flow topay its dividend, giving it a sustainable yield of 6.7 per cent.

ANALYSIS l Capita PLC

700

680

660

640

620

Dec Jan Feb

p

633.007 Feb

CAPITAEspirito Santo has downgraded the outsourcing company from “neutral” to“sell” and lowers its target price from 660p to 560p, after what it considersto be a disappointing start to 2012 for contract conversion. The broker seesthe group’s prospect of securing the army recruitment contract as less posi-tive than the market perceives, so factors greater caution into its forecasts,reducing organic growth expectation for 2012 from four to two per cent.

ANALYSIS l ASOS PLC

1,800

1,600

2,000

1,400

1,200

Dec Jan Feb

p1,889.00

7 Feb

ASOSJP Morgan has upgraded the online fashion retailer to “overweight” from“neutral” with a target price of 2,525p, seeing considerable opportunitiesfor further growth over the next few years. The broker expects annualearnings per share growth of 20 per cent over three years, underpinned byboth international potential and conservative UK assumptions, putting thecompany in the upper echelons of growth companies in the UK.

Qatar Financial Centre AuthorityBob Wigley, chairman of Yell Group and formerchairman of Merrill Lynch Europe, Middle Eastand Africa, has been appointed as a non-executivedirector of the Qatar Financial Centre Authority.In the new role, Wigley, who was appointed as an

ambassador for UK business by David Cameron in2011, will promote Qatar to the global fund man-agement industry as a regional hub for assetmanagement. He is also chairman of Expansysand Stonehaven Search, and a non-executivedirector of Orca Exploration .


New from City A.M., we bring you the latest

THE BEST ROLES NEED

THE BEST CANDIDATES.

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FTSE subduedas hopes pinnedon a Greek deal

MORE NEWS ONLINE www.cityam.com

@

U

S stocks rose slightly yes-terday, but with the out-

come of discussions on a bailout package for Greeceuncertain, investors are unlikely to make big bets in coming days.

The Dow Jones industrial aver-age was up 33.07 points, or 0.26per cent, at 12,878.20. TheStandard & Poor’s 500 Index wasup 2.72 points, or 0.20 per cent,at 1,347.05. The NasdaqComposite Index was up 2.09points, or 0.07 per cent, at2,904.08.

The S&P has gained almostseven per cent in 2012 on better-than-expected economic figures, boosting bellwethers such asMicrosoft to yearly highs andApple to a record high.

In a sign of underlying confi-dence, the 10-day moving aver-age of stocks posting 52-week highs on the NYSE is at 203, the

highest level since May 2010,according to Thomson Reuters

Datastream. The 10-day moving average of

stocks hitting 52-week lows hasdropped to just eight.

Still, the market continues to watch the Eurozone for any signof a setback in resolving the sov-ereign debt crisis.

“There’s a tug of war betweenfundamentals, which areimproving, and the macro back-drop of geopolitical risk fromEurope,” said Andrew Goldberg,market strategist at JP MorganFunds in New York. “We’re still waiting on Greece, but at thesame time we’re almost beingforced to pay attention to theimproving data.”

Greece’s government ispreparing a document with alist of painful reforms needed toclinch a new, €130bn bailoutfinancing package that is criticalto the country avoiding a disor-derly default. Political partieslast night again delayed makinga decision on accepting thereforms.

Boosting the Dow, however,Coca-Cola rose 0.8 per cent to

$68.55 after it reported better-than-expected quarterly results.

THENEW YORKREPORT

8/3/2019 Cityam 2012-02-08


O VER the last few weeks, negotiations

over a potential write-down of Greece’sdebt have taken us here and there, and back again – and at the time of writing,

they remain unresolved. But whatever the out-come of the talks between the Greek govern-ment and its creditors, let’s not forget the bigger picture – ultimately, the currentapproach to Greece’s enormous economicproblems is failing. Another bailout along with a “voluntary” Greek restructuring cannot be put together in a way that makes it politi-cally acceptable and/or economically viable –it simply will not return Greece to solvency. The insistence on greater austerity, despite EUleaders’ recent talk about growth and jobs, isreaching its political and civil limit in Greece. While Greece clearly needs to consolidate its budget, it cannot live on austerity alone.

Even if a deal can be agreed between theGreek government, its bondholders and theEurozone, it will most likely fall well short of the debt reduction (or funding stream) neededto give Athens breathing space. As thingsstand at the moment, the immediate debtreduction under a restructuring would beminimal, leaving Greece’s debt burden hover-ing worryingly above 140 per cent of GDP.Furthermore, in a best case scenario, Greece would still have a 120 per cent debt to GDPratio in 2020 and would need to find a scary €252bn (£210.24bn) before then to stay afloat(if it meets all of the targets laid down but theEU/ECB/IMF troika). All of this points to adepressing prediction: even with the haircutcurrently being discussed, Greece could still be forced to undergo a full default within thenext few years. The numbers simply do notadd up.

Apart from all the economic complicationsthis would throw up, a full default after two bailouts and a voluntary restructuring would be political dynamite. A massive amount of Greek debt would be held by taxpayer-backedinstitutions – specifically the ECB, theEurozone bailout fund (EFSF) and the IMF.

Given the seniority of the IMF, most of the loss-

es would fall on the Eurozone. Opposition totaxpayer-funded bailouts is already at feverpitch in the AAA-rated countries – how will voters in these countries respond when theirmoney is actually lost? This is a hugeunknown.

This begs the question, should the officialsector accept losses this time around, to avoidpotentially greater and more painful losses ina Greek default down the road? On one level,this would be the most sensible option – by far. But on another level, it’s a huge ask fromthe Eurozone and the ECB, since, again, itinvolves explaining to taxpayers that theirmoney has gone missing.

The ECB, in particular, has got itself into a

very difficult position, owing to its legally questionable government bond buying pro-gramme, which some Eurozone governmentshave now become dependent upon. If the ECB was to take losses, it would probably be seen ashaving directly financed Greece (against itsstatute). The ECB would instantly see its credi- bility and reputation as the heir to theBundesbank demolished. Would the Germansaccept this?

But don’t forget, avoiding losses could alsohave huge consequences. It effectively announces the ECB as senior to private bond-holders, sending reverberations into the bondmarkets given that it owns €220bn of Eurozone sovereign debt. Is there a pragmaticsolution then? Possibly.

Losses on EFSF loans would be compensated

by smaller future aid to Greece and the reduc-

tion in political tensions between Greece andthe rest of the Eurozone.

Meanwhile, the ECB could take a partial write-down, which will not have a materialimpact on its balance sheet. The ECB pur-chased its Greek bonds at around a 30 per centdiscount. It could accept a 30 per cent writedown without taking any losses, which wouldgive Greece some additional debt relief (and would provide some good will to investors). Another option would be for the bonds to be bought by the EFSF (at cost price) and thensubmitted by the EFSF to the voluntary restructuring. The EFSF could absorb the loss-es without the legal and political fallout. Evenso, the ECB would have to admit failure, sinceit always claimed it would hold the bonds tomaturity.

Admittedly, setting a precedent of officialsector losses would raise huge questions over whether Portugal and Ireland will request sim-ilar treatment. However there are now no easy options. The current course of a second Greek bailout could just as easily have knock-oneffects in the form of a second round of tax-payer-backed rescues. We have always arguedstrongly against taxpayers taking losses but,unfortunately, this is one of the few plausibleoptions we’re now left with.

Raoul Ruparel is the head of economic research for Open Europe.

22 The ForumCITYA.M. 8 FEBRUARY 2012

Even with the haircut beingdiscussed, Greece faces full

default in the next few years

The Eurozone is almost outof options – taxpayers mustprepare to take their losses

cityam.com/forum

RAOUL RUPAREL

Agree? Disagree? Got a sharp comment?The Forum wants you to join the debate.

COMMENT NOW ON

Twitter: @cityamforum;

on the web : cityam.com/forum;

or by email: [email protected].

Top responses will be reprinted in The Forum.

8/3/2019 Cityam 2012-02-08


8/3/2019 Cityam 2012-02-08


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The Aussie dollar has seen support fromrising US dollar denominated commodi-ty prices as well as from its attractive yield differential against the othermajors. With the US, British and Japanese central banks holding theirinterest rates at close to zero and the Australian overnight rate being held at4.25 per cent, the yield differentialagainst the Australian currency presentsan attractive proposition for carry traders borrowing in one of these low yield currencies to purchase the high- yield Aussie dollar. The dollar-Aussie dol-

lar move is particularly attractive afterthe Fed announced its intention to con-tinue to supress interest rates until 2014.“I like the Aussie dollar-dollar carry tradefor one simple reason: complacency,”says David Rodriguez, quantitative strate-gist for FXCM. “Markets are so cosy andcomfortable with recent US S&P 500strength that forex options’ expected volatility levels on the Australian dollar-dollar pair are near their lowest since2008.” Rodriguez adds: “Complacency has markets in a trance and fuels risk-taking – I doubt this rally will end beforethe music stops.”

Carry on carry trading the

Aussie dollar as rates heldThe Australian yielddifferential presents anattractive proposition,writes Craig Drake

The Aussie dollar-

dollar trade continuesto carry profits.

Picture: GETTY

THE TIPSTER

HUNTING

FOR EURO

BULL GAINS

THE euro-dollar pair continues tohold onto ground above the$1.3000 level, but the nerve of thebulls is being tested as discussions

in Greece drag on. Recent data has indi-cated that there are fewer euro shortsthan there were at the beginning of theyear, so can euro-dollar continue to pushhigher? Capital Spreads quotes$1.3100-$1.3101.

Aussie dollar-Japanese yen is theultimate risk barometer and isapproaching a major resistance level at¥82.80. It could be a rocky road, but if it can climb this hurdle then we maysee gains back to the ¥85.00 summer2011 highs. Forex.com currently offers aprice of ¥82.70- ¥82.74.

Tuesday’s surprise holding of interestrates by the RBA sent the Australiandollar shooting sharply higher againstthe US dollar to its highest levels sinceAugust last year. It remains to be seenwhether it can sustain these gains giventhat the RBA will likely have to cutrates later this year, in the event of aslowdown in China. CMC Markets’spread on Aussie dollar-dollar is$1.07691-$1.07698.

Sterling has had a great run in recentweeks as it has rallied almost in astraight line from $1.52 to $1.59. Butthis bullishness could run out of steamas the market awaits the Bank of England’s interest rate decision tomor-row. Market experts are looking for ahike in the quantitative easing programto £325bn, flooding the market withfurther money and reducing the valueof sterling. ETX Capital quotes sterling-dollar at $1.5810-$15812.

Aussie dollar has been screaminghigher since the start of the year.Investors have piled into the high-yield-ing currency as risk appetite has grownon the expectation of further centralbank intervention and an improvingoutlook for the global economy. Aussiedollar-Canadian dollar has brokenabove Ca$1.0660 – the high seen backin October and this should now act assupport. GFT quotes Ca$1.0750-Ca$1.0752.

Craig Drake

24 Wealth Management | FX

THE Reserve Bank of Australiacaught the markets by surpriseafter holding interest rates yester-day – contrary to the expected cut.

With December retail figures contract-ing, house prices dropping an average of 4.8 per cent year-on-year and housing con-

struction in a 20 month slump, traders were poised for a 0.25 per cent cut in ratefrom the current 4.25 per cent overnightrate. Despite the lacklustre domestic out-look, the Australian central bank insteadappears to have put its faith in the ability of external demand to hold up the Australian economy. The central bank policymakers took the gamble thatChinese growth and some form of lastingsolution to the European mess woulddrive demand for Australian commodi-ties.

“With growth expected to be close totrend and inflation close to target, theBoard judged that the setting of mone-tary policy was appropriate for themoment,” said RBA governor GlennStevens, adding: “Should demand condi-tions weaken materially, the inflationoutlook would provide scope for easiermonetary policy.”

Richard Wiltshire, chief FX dealer atETX Capital, saw relatively light flowsafter the initial spike in Aussie dollar andits crosses – local banks were good sellersfrom the highs from the first move up toaround $1.0800, but turned into buyersin the dips in the pair. “During theEuropean session, despite a bit of early morning follow through after the RBA onhold surprise, Aussie dollar met someprofit taking,” says Wiltshire. “They will be monitoring demand going forwardand the risks remain for a cut at futuremeetings, so that’s being factored intothe price action.”

8/3/2019 Cityam 2012-02-08


8/3/2019 Cityam 2012-02-08

http://slidepdf.com/reader/full/cityam-2012-02-08 26/32ʻ

ʻ

The City’s hottest dinner ticket –the Square Mile Salute – isalmost upon us again: and this

year the organisers are hopingeven to surpass last year’s fantasticevening.

The charity event will see a bakers’dozen of the country’s finest chefs pre-pare amazing canapés and caviar andan unbeatable six course feast accom-panied by specially matched

Boutinot wines andBillecart-Salmon cham-pagne. Raymond Blanc willlead culinary mastersincluding of John Williamsof The Ritz, Philip Corrick from The Royal AutomobileClub, Queen’s Chef Mark Flanagan and chef to HisSerene Highness Prince

Albert of Monaco ChristianGarcia.

Guests will then have achance to bid on a numberof genuinely money-can’t-

buy prizes in the charity auction, including fourdays skiing with one of the

Alpine sport’s legends, Olympic cham-pion Franz Klammer.

The event will raise money for fourmilitary charities; Help for Heroes, ABF

The Soldiers Charity, The Royal BritishLegion and the Household Cavalry Operational Casualties Fund (HCOCF).BlackRock, Vice President of Investment Companies, Alex MacEwenknows first hand the good work thecharities carry out for the forces. He isthe Chief Executive of HCOCF, and wasseverely wounded as a officer servingin Iraq.

Event Organiser Anne Donoghue,Managing Director of Chamberlain’s,says the event underlines the close rela-tionship between the City and theforces, with many former servicemenand women now plying their trade in

A feast fit for

money for our

A NIGHT

UNDER THE

MICHELIN

STARS

Brought to you by

In association with

In support of our wounded heroes,Square Mile Salute presents thebest of London’s highlife.

B O O K A T A

B L E

T O D A Y

22ND FEBRUARY 2012AT THE GUILDHALL

From Michelin main courseto Monaco race course.

Experience an evening of gourmetdining with a once in a lifetimeauction including an exclusiveviewing of the Monaco GrandPrix and the Royal Reception.

www.squaremilesalute.org

Square Mile Salute26

the City.She said: “In this digital age, with the

ability to do deals at the click of a but-ton, Square Mile Salute is a great exam-ple of the continuing relevance of amore traditional way of doing busi-ness; sharing good food, wine and con-

versation with friends and businessassociates. This evening we demon-strate the strong bond between the City and the hospitality industry and insupporting such a great cause we canshow that the City has a big heart.

“London is home to some of the bestrestaurant food in the world. The hospi-tality industry depends upon a thriv-ing City and Square Mile Salute simply aims to deliver restaurant standards ona much larger scale.”

“Chamberlain’s Events are proud to

"Last year’s Square Mile Salute wasa fantastic success, which saw thecream of London’s culinary andbusiness talent coming together fora very worthy cause. Hopefully thistime they can dig even deeper.”

ʻ

ʻWe are committed to providingthe most amazing feast for ourguests to savour in the beautifulsurroundings of Guildhall and inturn help to raise funds for such a

deserving cause.”

Chamberlain’sreturns Square MileSalute to Guildhall toserve up a City treat

BORIS JOHNSON

RAYMOND BLANC

8/3/2019 Cityam 2012-02-08


co-ordinate a partnership betweenthe finest food and wine suppliers, The Academy of Culinary Arts and aninternationally esteemed team of chefs brought together at Guildhall todeliver what we believe to be quite sim-ply the best banquet in the City.”

The chefs are confident they canachieve their lofty targets after afinal tasting took place atChamberlain’s restaurant inLeadenhall Market presided over by

President of The Academy of Culinary Arts Brian Turner.Providing musical accompanimentto the evening will the Military Wives Choirs, who scored aChristmas number one with theirsingle Wherever You Are.

Make sure you book now to avoid disappointment. The event will take place on 22 February. Tables of 10 are priced at £3,500 plus VAT. For more information contact [email protected]

a king to raise

real heroes

Brought to you by

In association with

From Michelin main courseto Monaco race course.

Experience an evening of gourmetdining with a once in a lifetimeauction including an exclusiveviewing of the Monaco GrandPrix and the Royal Reception.

www.squaremilesalute.org

22ND FEBRUARY 2012AT THE GUILDHALL

In support of our wounded heroes,Square Mile Salute presents thebest of London’s highlife.

B O O K A T A

B L E

T O D A Y

Special feature 27

(main) Laura King of King’s Fine Foods serving caviar to guests at last year's Square Mile Salute;(right) Former champion Alpine ski racer Franz Klammer, who will takeauction winners on a tour of the Alps; (below) BlackRock, Vice President of Investment Companies, Alex MacEwen, chief executive of HCOCF, one of thecharities involved; (below) Alex serving in Iraq;(below left) The MilitaryWives Choirs, who will provide entertainment.

PICK OF THE AUCTION LOTS

Guest of Francois Roland-Billecart in ChampagneAccompanied by John Williams of TheRitz, stay in House of Billecart-Salmon asFrancois' guest. Dinner with Francois andJohn; tour of the vineyards and golf.

A day with the HouseholdCavalryIncludes a tour of the Mounted Regimentstables and cavalry black horses, an hourlong coach ride in Windsor Great Park

and Officers Mess lunch.

Internship at City A.M.A great opportunity to work with theCity’s leading newspaper and see fromstart to finish what it takes to bring a

newspaper to life each day.

Work experience withBlackRockA rare opportunity for someone wantingto gain experience at a global AssetManagement company.

Luxury Game reserve stayFour days for 10 people at RoyalMadikwe 5-star game reserve andsafari in an unrivalled slice of Africa'swilderness.

Skiing with Franz KlammerFour days skiing next winter in thepremier skiing locations in Italian,German and Austrian Alps, hosted andpersonally guided by OlympicChampion Franz Klammer.

Five Nights on Albany inthe BahamasTrip of a lifetime. The resort that is thevision of Tavistock Group and golfing

legends Tiger Woods and Ernie Elsand home to James Bond's CasinoRoyale.

Monaco Grand Prix and RoyalReceptionFour nights at Fairmont Monte Carlo.Exclusive Grand Prix viewing point at theFairmont Hairpin bend and an invitationto Prince Albert of Monaco's reception.

The Savoy’s Royal Suite andBoodles diamondsChauffeured in The Savoy’s Phantom,overnight stay in the Royal Suite, 24hour butler service, dinner in Savoy Grilland £3,000 of Boodles jewellery.

A davenport made fromNelson’s HMS Victory wood

Nina Campbell Interiordesign consultationWorld renowned interior designerNina Campbell will provide a profes-

sional consultation in your home.

8/3/2019 Cityam 2012-02-08


T E R

R E S T R I A L

ROGER& VAL HAVEJUSTGOT IN

BBC2,10.00PMThe couple return from a wedding,hoping for news of Val’s application tobecome deputy headteacher. DawnFrench and Alfred Molina star.

LIVEFA CUP FOOTBALL

ITV1, 7.30PMMiddlesbrough v Sunderland (Kick-off 7.45pm). Adrian Chiles introduces

coverage of the fourth-round replay atthe Riverside Stadium.

10 O’CLOCKLIVE

CHANNEL4,10.00PMNew series of the satirical currentaffairs show, with David Mitchell,Jimmy Carr, Charlie Brooker andLauren Laverne.

BBC1

SKY SPORTS 17pm Sky Sports News 7.30pm

Live Scottish Premier League

Football 10pm You’re on Sky

Sports! 11pm FIFA Futbol Mundial

11.30pmFootball’s Greatest 12am

Scottish Premier League Football

1amCopa Del Rey Football

2.30am Football’s Greatest 3am

Scottish Premier League Football

4amCopa Del Rey Football

5.30am-6am A League Football

SKY SPORTS 27pmGolf 7.55pm Live Copa Del

Rey Football 10pm Boots ’n’ All

11pm Inside the PGA Tour

11.30pmEuropean Tour 12am

International One-Day Cricket

2amBoots ’n’ All 3am-4am Golf

SKY SPORTS 37pm Trans World Sport 8pm

International One-Day Cricket

10pm Boots ’n’ All 11pm Trans

World Sport 12am Pool 1amMax

Power2am-4am Cage Rage

BRITISH EUROSPORT7pm Live Africa Cup of Nations

9pmWednesday Selection

9.05pm Equestrian 10.05pm

Riders Club 10.10pm European

Tour Golf 10.40pm Golf Club

10.45pm Yacht Club 11pmAlpine

Skiing 12am-12.30am Cycling

ESPN5.45pm Serie A 7.00pm Live

Serie A 7.30pm Live Coppa Italia

9.45pmGerman Cup Football

11.30pmPress Pass 2012 12amLive NBA Basketball 2.30am

ESPN Kicks: Extra 2.45am

Snowboard FIS World Cup

Magazine 3.15am Planet Speed

3.45am Goal Show 4.15am Serie

A – Rivals 4.45am Serie A Review

5.15am Press Pass 2012

5.45am-6am ESPN Kicks: Extra

SKY LIVING7pmCriminal Minds 8pm Pushy

and Proud: Pamper Parlour

Mums 9pmKids Who Have It All

10pm Criminal Minds 11pmBones12am CSI: Crime SceneInvestigation 1.50am Maury

2.40am My Wife and Kids

3.30am Bones4.20am Nothing

to Declare 5.10am-6am Jerry

Springer

BBC THREE7pm Snog, Marry, Avoid? 8pm

Don’t Tell the Bride 9pm Sun, Sex

and Suspicious Parents 10pm

FILM I Love You, Man 2008.

11.40pm Family Guy 12.25amAmerican Dad! 1.05am Sun, Sex

and Suspicious Parents 2.05am

Strictly Soulmates 3amDon’t Tell

the Bride 4am Snog, Marry,Avoid? 4.30am-5.30am Junior

Doctors: Your Life in Their Hands

E47pm Hollyoaks7.30pm

How I Met Your Mother 8pm

FILM Monster-in-Law 2005.

10pmFILM Porky’s 1982.

12.05amThe Big Bang Theory

1am Scrubs 2am How I Met

Your Mother 2.25am Rules of

Engagement 2.45am Greek

3.30amUgly Betty

4.10am-6amSwitched

HISTORY7pmMounted in Alaska 7.30pm

Pawn Stars 8pm Ice Road

Truckers: Deadliest Roads 9pm

Swamp People 10pm Storage

Wars 11pm Tony Robinson Down

Under 12am Pawn Stars 12.30am

Mounted in Alaska 1am Swamp

People 2am Tony Robinson Down

Under 3amOnly in America 4am

Deep Sea Detectives 5am-6am

Cash Cowboys

DISCOVERY7pmBear Grylls: Born Survivor8pmWhale Wars 9pmAmericanChopper: Senior Versus Junior

10pm Carfellas11pmDeadliest

Catch 12am Bear Grylls:

Born Survivor 1am American

Chopper: Senior Versus Junior

2amCarfellas3amWheeler

Dealers3.50am Mythbusters5.30am-6am Destroyed in

Seconds

DISCOVERY HOME &

HEALTH7pm Supernanny US 8pm Jon

and Kate Plus 8 9pm TraumaTeam 10pm Embarrassing Bodies

11pm Untold Stories of the ER

12am Trauma Team 1am

Embarrassing Bodies 2am Untold

Stories of the ER 3am Supernanny

US 4amA Baby Story 5am-6am

Bringing Home the Babies

SKY18pm Obese: A Year to Save My

Life 9pmBrit Cops: War on Crime

10pm Fringe. Peter tries to find

his way home. 11pm Mad Dogs12am Dog the Bounty Hunter 1am

99 Most Bizarre 1.50am Fringe

2.40am Road Wars 4.20am Lion

Man 5.10am-6am Don’t Forget

the Lyrics

BBC2 ITV1 CHANNEL4 CHANNEL5

S A T E L L I T E &

C A B L E

TVPICK6pm BBC News

6.30pm BBC London News

7pm The One Show

7.30pmRip Off Britain: News

8pm Super Smart Animals

9pm MasterChef 10pmBBC News 10.25pm Regional

News 10.35pmNational Lottery

10.45pm Kevin Bridges What’s theStory? 11.15pm Film 2012 with

Claudia Winkleman: National

Lottery Update 11.55pmFILM The

Dark. 2005. 1.25amWeatherview

1.30am Sign Zone: See Hear 2am

Natural World: Jungle Gremlins of

Java 3amHairy Bikers’ Best of

British3.45am Celebrity Antiques

Road Trip 4.45am-6am BBC News

6pm Eggheads

6.30pm Britain’s Heritage

Heroes

7pm Escape to the Country

8pm Bees, Butterflies and

Blooms

9pm Versailles

10pmCHOICE Roger & Val

Have Just Got In: New series.Comedy, starring Dawn French.

10.30pmNewsnight: Weather

11.20pmFILM Guerrilla: The

Taking of Patty Hearst:

Documentary about the

heiress-turned-militant. 2004.

12.50amBBC News4am-6amBBC Learning Zone

6pm London Tonight

6.30pm ITV News

7pm Emmerdale

7.30pm CHOICE Live FA Cup

Football: Middlesbrough v

Sunderland (Kick-off 7.45pm).

10pm ITV News at Ten

10.30pm London News

10.35pmPiers Morgan’s LifeStories: Joan Collins:

11.35pmKidnap and Ransom:

12.30am The Zone; ITV News

Headlines2.35am FILMRio Bravo: Western,

with John Wayne and Dean Martin.

1959. 5am-5.30amITV

Nightscreen

6pm The Simpsons

6.30pm Hollyoaks

6.55pm 4thought.tv

7pm Channel 4 News

7.55pm Channel 4 Presents –

2012: Will Bayley – Part Two

8pm How to Cook Like Heston

8.30pm The Fabulous Baker

Brothers9pm One Born Every Minute

10pmCHOICE 10 O’Clock Live

10.55pmRandom Acts

11pm The Inbetweeners

12am Music on 43.20am 902104amFILM The

Men. 1950. 5.25am-6.10am

Countdown

6pm Home and Away

6.30pm 5 News at 6.30

7pm Cowboy Builders: 5 News

Update

8pm Benidorm ER: 5 News

at 9

9pm NCIS

10pm Law & Order: Criminal

Intent11pm Law & Order: Special

Victims Unit

12am Poker: The Big Game1am SuperCasino4amHouse

Doctor4.25amWildlife SOS

5.10am Michaela’s Wild Challenge

5.35am-6amMichaela’s Wild

Challenge

6 23 12

45

7 21

24 31

5 13 6

15

8 11 12

34 9

20 22

45

4 11 13

14

10

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17

32

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Fill the grid so that each block

adds up to the total in the box

above or to the left of it.

You can only use the digits 1-9

and you must not use the

same digit twice in a block.

The same digit may occur

more than once in a row or

column, but it must be in a

separate block.

COFFEE BREAKCopyright Puzzle Press Ltd, www.puzzlepress.co.uk

KAKURO

QUICK CROSSWORD

LAST ISSUE’SSOLUTIONS

KAKURO

WORDWHEELUsing only the letters in the Wordwheel, you have

ten minutes to find as many words as possible,

none of which may be plurals, foreign words or

proper nouns. Each word must be of three letters

or more, all must contain the central letter and

letters can only be used once in every word. There

is at least one nine-letter word in the wheel.

SUDOKU

Place the numbers from 1 to 9 in each empty cell so that each

row, each column and each 3x3 block c ontains all the numbers

from 1 to 9 to solve this tricky Sudoku puzzle.

SUDOKU

QUICK CROSSWORD

ACROSS

1 Savagely cruel (6)

6 Request ora repeatperormance (6)

7 Make moist (6)

8 Blur (6)

10 Forbidden (5)

13 Go backwards (7)

16 Printer’s mark,indicating aninsertion (5)

18 Rectifies (6)

20 Hurt or upset (6)

21 Ancient Greek city,site o the Templeo Apollo (6)

22 Hypothesis (6)

DOWN

1 Bathroom fixture (5)

2 Walk silently (6)

3 Transparent opticaldevice (4)

4 Small, graceul animalo the woods (3,4)

5 Conused scufe (5)

9 Reuse o processedgrapes, etc (4)

11 For a short time (7)

12 Roman love poet,born in 43 BC (4)

14 Ironic parody (6)

15 Bamboo-eating mammal (5)

17 Hot alcoholic drink (5)

19 Eject fluid rom

the mouth (4)

R

A

R

B

ES

R

Y

P

B E A R U P O P

O L I N F O R M

D R E D G E F E

E X A R B I T E R

G R I E G C N

A S L A N D E R P

F A O R A T E

E A R S H O T T W

C T B E A T I T

M E X I C O L E

T C E N D E A R

1 7 5 2 3 3 1

2 8 7 9 5 3 8 6

6 9 7 8 1 2 6

3 5 2 4 1 1 7 9

8 9 2 3 9 8

4 1 9 3 1 2 4 6

8 2 2 7 4 1

9 3 1 9 6 4 8 7

4 2 1 2 3 5 1

8 7 4 9 6 5 9 5

9 5 8 9 7 6 2

WORDWHEELThe nine-letter word was

IMPLEMENT

Lifestyle | TV& Games CITYA.M. 8 FEBRUARY 201228

8/3/2019 Cityam 2012-02-08


Making the Olympics a laboratory

for new ways to sell a global brand

GlaxoSmithKline’shead of global brandcommunication tellsCity A.M. why 2012is win-win for GSK

Q.WHAT WAS YOUR BRAND’SPRIMARY REASON FOR BEINGINVOLVED WITH THE GAMES?

A. As a key British company, we really want to make sure that we can do whatever we can to make the Games

a success. Rather than just writing acheque, we wanted to make a material con-tribution based on what we’re good at –and what we’re good at is science. What better way to really bring that science to lifethan to be the official laboratory groupservices provider for the Games?

The Games this year are going to be moretested than any before. There’ll be 6,000drugs tests performed across the Olympicand Paralympic Games. What we canprovide is the understanding of scale and the technical know-how to deliver that.

This is the first time that apharmaceutical company hasprovided the drugs testingservices for any Games. Whatpreviously would be done isthat the organising commit-tee would approach an aca-demic institution or theleading anti-doping centres inthat country and pay for the serv-ices. In this instance, the London

organising committee, Locog,approached our chief executive, Sir Andrew Witty. Because we are the UK’s largest phar-maceutical company and given the ability we have to bring that scale to the testing, it was felt to be a win-win opportunity for usto partner with King’s College London.Scientists from King’s are the ones physical-ly performing all the tests in the laboratory but we are providing the building, thestate-of-the-art equipment, the infrastruc-ture, and helping to facilitate everything sothe scientists can really focus on the jobthat has to be done during the Games.

Q.WERE THERE ANY ISSUES THAT WEREHARD TO RECONCILE TO GET BOARDAPPROVAL?

A.Not really. The event was based

where our headquarters are; the val-ues of the Olympic and Paralympic

Games are very aligned with our own at

GSK. At the heart of our values programmeis integrity and transparency, which fits

very well with thedrug-testing and really

wanting to maintain the

integrity of the Games andthe health of the athletes. And we’vecome in as a Tier Three sponsor, which hasa relatively modest investment level com-pared to some of the other partners.

Q.HOW HAVE YOU STRUCTURED YOURBUSINESS TO MAXIMISE OLYMPICOPPORTUNITIES?

A. The Olympic partnership was really the first significant global partner-ship that we’ve done for GSK at the

corporate level. And although the laborato-ry side started running as soon as the deal was agreed in November 2009, it wasn’tuntil the middle of 2011 that we started toreally focus on how we were going to acti- vate and maximise the opportunities wehave, acknowledging that while the exter-nal rights are only usable in the UK, wehave a global workforce of 100,000 that wecan talk to internally. Because of all that,

we’ve put together the newly-formed global brand communication team. I’m head of

this team, under which falls the Olympicsand we’ve just signed a partnership withMcLaren as well. This has actually been a

real catalyst for the organisation andalthough we’re not even through theGames yet there’s overwhelmingly been apositive response, so I’m hoping thatthere’ll only be more of these types of opportunity in the future.

In September last year we put the sign upon our headquarters, which is the biggestsign for the 2012 Games in London. I think 26m cars are going to go past between when we put it up and the Games so it’s areally visible sign of our support.

Q.HOW ARE YOU USING THE TICKETALLOCATION YOU WERE ABLE TO BUYFROM LOCOG AS A SPONSOR?

A. We are very proud that we under-stand we are the only partner to beusing 100 per cent of our tickets for

employees and their personal guests. So weare running a global ticketing competition where you can nominate a colleague of any

grade around the world to receive ticketsand it’s for demonstration of key ideals

which are aligned to the Olympic andParalympic values of excellence, integrity,friendship and equality.

Q.WHAT ARE THE MOST CRUCIALCOMMERCIAL OPPORTUNITIES OFTHE GAMES FOR YOU?

A. We want to use this with key stake-holders to enhance our reputationand for people to think a bit differ-

ently about a big pharmaceutical company,to see GSK really getting in there and usingthe science that we have in a very real way to help make the 2012 Games the cleanestpossible. Also, engaging and having a high-ly motivated workforce is a very importantpart of any business. The reaction we’veseen to date has been unprecedented fromall corners of the earth – it went beyondexpectations in a very positive way. We’realso investing in legacy by working on edu-cation projects, including Scientists inSport, for secondary students. GSK’slifeblood is the science and we want it to bea really engaging part of education.

Kerry O’Callaghan is the head of GSK’s globalbrand communication team.

This has been

a real catalystfor GSK, andI’m hoping itwill just bethe start

170 DAYS TO GO

COUNTDOWN

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Giving the future of British science a sporting chance

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Sport30

THE CHANCES of West Ham movinginto the Olympic Stadium appear tohave receded after legacy chiefs theOPLC launched a search for a stadiumsponsor.

The OPLC’s move means theHammers will not be able to sell nam-ing rights to the venue as part of any deal to relocate from Upton Park afterthe Games.

It also poses a second potential dis-incentive to an agreement with WestHam, in that the eventual sponsorcould be a competitor of a Hammers-affiliated brand.

The Championship high-fliers are

among 16 parties to have expressedinterest in leasing the Olympic Park’s

£486m centrepiece from 2014. A decision on which bid or bids

have been successful is scheduled to be made in May, when the identity of the stadium sponsor is also setto be announced.

The Hammers’ original agree-ment to move into the stadium

was scrapped in October amidfears of a lengthy legal delay,after a complaint to theEuropean Commission.

West Ham vice-chairmanKarren Brady (right) this

week reiterated theirdetermination to strike anew deal, following sug-gestions their interest hadcooled.

“I wouldn’t be dragging my body to all the meetings, or

reading through a 900-page docu-ment every night if we weren’t still

committed,” said Brady. The club have previously

made clear their desire to sellnaming rights if they moveto the Olympic Stadium.

The stadium is set tohouse a range of sports, with athletics prominent

and the running track retained, while rugby union and cricket havealso been mooted.

Tottenham, who lostout in the original bid-ding process, have ruledout another attempt andare committed to building

a new stadium in northLondon.

TOTTENHAM manager Harry Redknapp has been made to sweat onhis fate after the jury in his trial foralleged tax evasion failed to reach a

verdict last night. The 12 jurors will reconvene and

continue their deliberations atSouthwark Crown Court this morn-ing on the 13th day of the high-pro-file trial. Judge Anthony Leonard hasasked for a unanimous verdict and,although a result is expected today,the process could in theory run into

tomorrow or even Friday.Redknapp denies claims he cheated

the public revenue by receiving pay-ments totalling £189,400 into an off-shore account named after his petdog Rosie. Former Portsmouth chair-man Milan Mandaric, who paid thesums into the Monaco account, alsodenied two charges of tax evasion.

Redknapp, the favourite to succeedFabio Capello as England manager,

was in court again yesterday for the judge’s summing up.

Leonard urged the jury to ignoreany footballing allegiances when hesent them out to consider the argu-ments shortly before lunchtime. Hesaid: “Football is an emotive subject,

stirring in an individual anythingfrom deep passion to resentment.”

Jury out on Redknappas verdict proves elusive Hammers in Olympic setback

THE Football Association madethe correct call in stripping John

Terry of the England captaincy and the governing body must

now act decisively in conjunction with manager Fabio Capello by

appointing Steven Gerrard as theChelsea defender’s replacement.

Capello clearly thinks otherwise, but with Terry’s court case delayeduntil after the EuropeanChampionships there is no way the FA could have let him lead his country this summer with allegations of racism, which he strenuously denies,hanging over him.

Having dealt with that issue, thereis no reason for the FA and Capello todelay naming Gerrard as the fourthpermanent skipper of the Italian’sreign. The temptation might be to

wait until the friendly againstHolland later this month but a swiftresolution would be preferable, ratherthan letting the situation drag on.

There are only a handful of viablecandidates and for me Gerrard is theobvious choice, despite him not hav-ing featured for his country sinceNovember 2010. He’s just about themost experienced member of thesquad and, having captained such ahigh-profile club in Liverpool for thelast nine years, he’ll easily be able tocontend with the additional pressurethat accompanies the job.

Scott Parker is another name beingtouted but I have my doubts whethera player who has only just establishedhis place in the side is ready for such asignificant promotion.Trevor Steven is a former Everton andGlasgow Rangers winger who represented England at the 1986 and 1990 World Cup.

FA right to acton Terry – nowappoint Gerrard

FOOTBALL COMMENT

TREVOR STEVEN Capello urged to hand Tottenham midfielderthe armband as managers unite to backItalian in simmering row with FA

Parker backedfor Englandcaptain’s job

EMBATTLED England managerFabio Capello has been urged tomake the best of his dispute withthe Football Association by appoint-ing Tottenham midfielder ScottParker as his new captain.

Capello, at loggerheads with Wembley chiefs over their decisionto strip John Terry of the captaincy,is due to meet FA chairman DavidBernstein this week for talks aimedat calming the row.

A fragile truce is the most likely outcome but the FA is not expectedto budge on its insistence thatChelsea skipper Terry should notlead the national team while allega-tions of racial abuse – which hedenies – hang over him.

That will leave the Italian need-ing to select a new captain for thesummer’s European Championship,and Spurs goalkeeper Brad Friedel

believes he should look no furtherthan the in-form Parker.

“Playing with Scotty for the lastsix months or so you can see,

whether he has the captain’s armband on or not, he is going to be acaptain,” said Friedel.

“He is a top pro around the club,he lives his life right, and on thepitch he covers in front of the back four the best that I have played

with. Also when the right or left back go forward he is always look-

ing at where

the gaps arethat he cancover, and

the amount of metres he covers in

a game is immense.”Liverpool talisman Steven

Gerrard and Manchester City goal-keeper Joe Hart are also among thefavourites to inherit the armband,

but 82-cap former United Statesinternational Friedel rates Parkerat least their equal.

Capello triggered the row on Sunday when he publicly criticised the FA’s decision. Itfollowed the adjournmentof Terry’s trial, over claimshe racially abused QPR’s

Anton Ferdinand, until afterEuro 2012.

The England manager yes-terday received backing forspeaking up from two of thePremier League’s most respectedmanagers.

Manchester United’s Sir AlexFerguson said it was a “difficult sit-uation”, adding: “When you have acaptain that is an important part of that team you don’t want to losehim, so I can understand there’s alot of discussion about it.”

Chelsea manager Andre Villas-Boas, who has backed Terry sincethe claims surfaced, said: “He hasthe right to his opinion and to sharethat defence with the player.”

BY FRANK DALLERES

FOOTBALL▲

Parker shoreplace Tersays Friede

Picture:

BY FRANK DALLERES

OLYMPICS▲

BY FRANK DALLERES

FOOTBALL▲

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FORMER world champion KimiRaikkonen announced his officialreturn to Formula One after a two- year absence yesterday by setting thefastest time on day one of pre-seasontesting in Jerez.

The sport’s regulations meant the32-year-old, who will drive for Lotusthis year, had to wait until yesterday to try out his new team’s 2012 car,having previously been restricted todriving a two-year-old model in the build-up to the new season.

Raikkonen has spent the last two years competing in the World Rally

Championships but displayed few signs of ring-rust, setting the pacefrom early in the day.

The ex-Ferrari man began by clock-ing a lap of one minute 20.5 seconds, before bettering that mark by nearly a second. Indeed, his fastest time wasquicker than the best lap set by any car in testing at Jerez before the startof last season.

Red Bull, who dominated the 2011campaign from start to finish, saw their pre-season test programmedelayed by the late arrival their new car’s right wing, while Britain’s Jenson Button was restricted to only

a handful of laps in the new McLarendue to routine systems checks.

Raikkonen leaves rivalstrailing on comeback

SARACENS fly-half Charlie Hodgsonlooks set to continue his England ren-aissance against Italy on Saturday after his main rival for the No10 shirt Toby Flood was sent back to his clubLeicester yesterday.

Head coach Stuart Lancaster hasdecided that Flood, who made hiscomeback from injury for the Tigerslast Saturday and has spent the lasttwo days training with the nationalteam, needs more game time beforemaking his Test return.

Meanwhile, England have been warned to expect an atmosphere

every bit as hostile as the cauldron of Murrayfield when they meet Italy inthe second match of their Six Nationsdefence in Rome.

But having tamed the Edinburghcrowd in their opening fixture, assis-tant coach Andy Farrell believes thenew-look England side have the nerveto cope with the occasion.

“We are not concerned about whatlies ahead because the culture we aretrying to drive gets us in the rightplace all the time,” Farrell said.

Frozen pitches forced England totrain indoors yesterday at Canary Wharf’s London Soccer Dome, but

Farrell played down the effect it would have on their preparations.

Hodgson to keep Englandplace as Flood’s sent home

Results

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SPORT | IN BRIEF

Millwall edge FA Cup thrillerFOOTBALL: Millwall are through to theFA Cup fifth round where they will face

Bolton at the New Den following a dra-matic 3-2 win over Southampton at StMary’s. The Lions were 2-1 down with13 minutes left but goals from DanyN’Guessan and Liam Feeney, who struckin injury time, turned the tie on its head

Parks retires from Scotland dutyRUGBY UNION: Scotland fly-half DanParks announced his retirement frominternational rugby last night, just fivedays before the Six Nations clash withWales. Parks, 33, won his final cap in lastSaturday’s defeat against England inwhich his error resulted in CharlieHodgson scoring the game’s only try.

Davies and Ferris both citedRUGBY UNION: Wales lock BradleyDavies and Ireland flanker StephenFerris have been cited after Sunday’s SixNations clash between the two sides.Davies was yellow-carded for a tip-tack-

le on Donnacha Ryan, while Ferrisreceived an identical punishment for histackle on Ian Evans. Both players willappear before an independent SixNations disciplinary committee today.

Contador calls ban an injusticeCYCLING: Spain’s Alberto Contador hasdescribed his two-year ban for failing adrugs test as a “terrible injustice”.Contador plans to appeal after beingfound guilty of doping for testing posi-tive for clenbuterol during the 2010Tour de France. On Monday he wasstripped of his 2010 Tour victory andwill miss this year’s event as well asLondon 2012.

AFTER their Test mauling at thehands of Pakistan it wasinevitable that England, ham-strung having made Alastair

Cook their one-day captain, woulddrop one of their senior batsmen

ahead of the limited overs seriesagainst the same opposition.

With Cook undroppable, any one of Kevin Pietersen, Eoin Morgan, Jonathan Trott or Ian Bell could have been sent home early, but it’s the lat-ter who has paid the price for hisinability to pick Saeed Ajmal.

Bell clearly hasn’t had the best of tours but he’s hardly alone in thatrespect and were Cook, who strugglesagainst spin just as much, not beinggroomed to inherit the Test captaincy from Andrew Strauss he may wellhave lost his place.

With the Warwickshire stalwartout of the way Pietersen is promoted back up to the top of the order toresume a role he took on with somesuccess during last year’s World Cup before injury brought about a prema-ture end to his tournament.

Hopefully the increased responsibil-ity will help drag him out of a slumpthat is holding England back in all for-mats of the game.

Meanwhile, the traditional routeinto the Test team via county cricketsimply doesn’t exist any more, so youngsters Jos Buttler, a gifted big-hit-ting batsman, Hampshire’s left-armspinner Danny Briggs as well as Jonny Bairstow should be looking to use thisseries as a means of propelling them-selves into the five-day setup.

The return of Tim Bresnan, whomissed the Test whitewash with anelbow injury and is practically anautomatic selection, means the expo-sure of the aforementioned trio might

be limited. But should Samit Patel andRavi Bopara, both of whom are enter-ing the last chance saloon, fail againtheir chances will arrive.

After outperforming GraemeSwann in the Test series Monty Panesar could be forgiven for wonder-ing what he has to do to break into theone-day team, particularly consider-ing how much cricket England aredue to play in the subcontinent overthe next few years.

But for all his improvement,Panesar still offers little with the batand even less in the field – with the way one-day cricket has evolved yousimply can’t afford to carry anyone.

Andy Lloyd is a former England Test crick- eter who made 17,211 first-class career runs.

Bell the unfortunate victim

of Cook’s undroppable status

ONE DAY SQUAD: Alastair Cook, JamesAnderson, Jonny Bairstow, Ravi Bopara,Tim Bresnan, Danny Briggs, Stuart Broad,Jos Buttler, Jade Dernbach, Steven Finn,Craig Kieswetter, Eoin Morgan, Samit Patel,Kevin Pietersen, Graeme Swann, JonathanTrott

TWENTY20 SQUAD: Stuart Broad, JamesAnderson, Jonny Bairstow, Ravi Bopara,Tim Bresnan, Danny Briggs, Jos Buttler,Jade Dernbach, Steven Finn, Alex Hales,Craig Kieswetter, Eoin Morgan, Samit Patel,Kevin Pietersen, Graeme Swann

ENGLAND | ODI AND T20 SQUADS

HOW THIS WOMAN PLANS TOSTOP OLYMPIC DRUG CHEATSAND WHY LONDON 2012 WILL BE THECLEANEST GAMES YET: PAGE 29

Bell has been dropped from England one-day squad Picture: GETT Y

RMBAND OPTIONS

STEVENGERRARD

PROS: Captains ahigh-profile club inLiverpool and hasplenty of ChampionsLeague and interna-tional tournamentexperienceCONS: RecentEngland appearanceshave been limited byinjury and his fitnessis an ongoing concern

JOE HARTPROS: England’sundisputed No1 enjoy-ing the season of hislife and a great com-municator with asqueaky clean imageCONS: Goalkeepershistorically do notmake for the bestcaptains and at just24 years old he maynot be ready to takeon the responsibility

CRICKET COMMENT

ANDY LLOYDSHLEY COLEOS: The most cappedmber of the Englandad and an automaticice who is preparing

appear at his fifthor tournamentNS: Checkered disci-ary record off thed and is far from uni-sally popular with

gland supporters.oed againstzakhstan back in 2008

ARETH BARRYOS: A senior memberhe squad with a cleanimage and has cap-

ned England on occa-n in the pastNS: The Manchestery midfielder has fallenwn the England peck-order following theergence of Scottker and is probablyy a short-term optionbest

BY FRANK DALLERES

RUGBY UNION▲

BY JAMES GOLDMAN

FORMULA ONE▲

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