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Issue 1,579 Monday 27 February 2012

FTSE 100 t5,935.13 -2.76 DOW t12,983.02 -1.67 NASDAQ 2,963.75 +0.23 /$ 1.59+0.02 / 1.18 unc /$ 1.34 unc

G20 tells

Eurozone:stump up

THE G20 economies have told Europeit must stump up extra cash to fight itsdebt crisis if it wants more help fromthe rest of the world, piling pressureon Germany to drop its opposition to a

bigger European bailout fund.Eurozone countries pledged yester-

day at a Group of 20 meeting offinance leaders to reassess thestrength of their bailout fund inMarch, which could clear the way forother G20 countries to contributemore funds via the InternationalMonetary Fund.

This will provide an essentialinput in our ongoing consideration tomobilise resources to the IMF, theG20 said in the final communique ofthe two-day meeting .

Germany, as Europes largest econo-my, came under intense pressure tosupport enlarging the regions warchest. But facing political hurdles athome, it has sent conflicting signalsover whether it was ready to move.

Chancellor George Osborne left nodoubt the G20 requires a clear Euro-zone commitment.

We have to see the colour of theEurozones money first and, quitefrankly, that hasnt happened. Until itdoes, theres no question of extra IMFmoney from Britain or probably any-one else, he said.

The G20 is racing to line up massive

international resources worth nearly$2 trillion (1.25 trillion) possibly bylate April.

GREEK BAILOUT: P16-17

BY JENNY FORSYTH

EUROZONE

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George Osborne is under pressure to cut taxes on fuel Graph source: Experian

FUEL prices are set to hit a recordhigh, posing a threat to the economicrecovery and meaning that manymotorists cannot afford to fill uptheir cars but chancellor GeorgeOsborne has ruled out cutting fuelduty in next months Budget.

The average forecourt price for alitre of diesel last week hit a record143.7p, an increase of 26 per cent inthe past two years. A litre of petrolcurrently costs 136.2p and is expectedto break last Mays all time high of137.4p within a month.

Fuel duty campaigners say the highcost of petrol is hitting families anddamaging the UK economy. They areplanning a day of protest in parlia-ment on 7 March.

Quentin Wilson, spokesman forFairFuel UK, which represents theRAC and leading road hauliers, chal-lenged Osborne to act, saying: A cutin fuel duty will stimulate growth,create jobs, boost business confidenceand, crucially, give the chancellormore overall tax yield as a result ofthe growth than he believes he mightlose as a result of the duty cut.

Over half of the price of petrol goes

directly to the Treasury in the form ofVAT and fuel duty.But Osborne hit back at the cam-

paign yesterday, saying he has already

www.cityam.com FREE

put off several tax rises. I have takenaction this year to avoid increases infuel duty which were planned by thelast Labour government, he said.

That involved committing severalbillion pounds of resources and put-

ting a tax on oil companies, preciselyto ameliorate the impact of thesehigh world oil prices on the Britishpublic.

Supporters of the chancellor pointout that he cut duty by one pence inlast years budget and used his

Autumn statement to announce thata planned three pence rise would bedelayed until this August.

Brent crude prices have hit $125 abarrel after the EU announced tradesanctions intended to make Iranabandon its nuclear weapons pro-

gramme. Although the oil price remains

below the 2006 high of $144 a barrel,a strong US Dollar has pushed theprice in sterling up to a record 79.

The consequences have been seen

at the pump, as UK fuel consumptiondropped by 2.4bn litres in 2011,according to figures from the AA.

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News2 CITYA.M. 27 FEBRUARY 2012

A HIGH-PROFILE Liberal Democratpeer yesterday threatened to smashConservative hopes for fairer con-stituency boundaries, arguing dissent-ing Tories must not be allowed to stopreforms to make the House of Lordsmore democratic.

Vocal backbencher Lord Oakeshottwarned Conservative MPs that if theyrefuse to back reform of the Lords,they wont find Lib Dems in parlia-ment at all keen to vote for redistribu-tion of constituency boundaries.

The two policies were included inthe Coalition Agreement, with theparties each valuing one highly.

Conservative MP Philip Daviesopposed Oakeshott on the BBCsSunday Politics show, claiming elec-tions would ruin the Lords.

The point of the House of Lords is itworks, Davies said, arguing it is madeup of highly experienced experts fromall walks of life as well as two hun-dred cross benchers, independent peo-ple who would not be present if thechamber was elected.

Planned parliamentary boundarychanges are set to benefit theConservative party at the next elec-tion. It currently loses out as the size,shape and electoral make-up ofConservative-voting constituenciesmean it needs a higher share of the vote than the Labour party does to

gain a majority in parliament.In the Coalition Agreement drawn

up after the 2010 general election theruling parties agreed to establish acommittee to bring forward proposalsfor a wholly or mainly elected upperchamber on the basis of proportionalrepresentation, as well as promisingto change boundaries.

A Liberal Democrat spokesman toldCity A.M. Lord Oakeshotts views areshared by other party members in par-liament, but that the Conservativesare sufficiently committed to House ofLords reform that the measures will be passed, and constituency bound-aries will be changed in return.

However, Philip Davies cast a meas-ure of doubt on the plans.

I wasnt elected on the coalitionagreement, I was elected by the peoplein Shipley at the General Electionbefore there was any coalition agree-ment, he said, arguing that in the runup to the election I didnt comeacross anybody who said Im onlygoing to vote for you if you reform theHouse of Lords.

Mark Harper, Conservative MP andminister responsible for electoralsreform, reminded his partys MPstheir manifesto pledged to reform theupper chamber, and that the govern-ment is prepared to force throughreforms even if they are opposed bythe Lords.

The committee working on Lordsreform is due to report today.

WELLS FARGO EYES EUROPEAN BANKASSETS TO POWER EXPANSION PLANSWells Fargo plans to increase the sizeof its wealth management and insur-ance divisions through acquisitions as well as buying more assets fromshrinking European banks, its chiefexecutive says. John Stumpf, whosebanks market capitalisation is biggerthan that of any other in the US, toldthe Financial Times he had sore toesfrom kicking the tyres on so manypotential deals.

PIK NOTES POISED FOR RETURNA speculative, often toxic type of debtthat became popular at the peak of theeconomic boom and recently con-tributed to the failure of UK retailer

Peacocks could be staging a return.Payment-in-kind notes are not typical-

ly repaid until their mature. They alsorank low down on the list of creditorsto be repaid should a firm collapse.

BLOOMBERG SERVICE IN $100M REVAMPBloomberg will unveil a $100m-plusredesign of its eponymous marketdata service today, ratcheting up itsrivalry with Thomson Reuters by seek-ing to make its complex 30-year-old sys-tem simpler, more intuitive and easierto navigate.

AXA PLANS PROPERTY LENDING DRIVE Axa is gearing up to lend2bn toEuropean property companies during2012 as one of Europes largest insur-ers bids to cash in on the regulatorypressure curtailing bank financingacross the continent.

HIGH STREET JOBS SURVIVE FLURRY OFFAILURESThe wave of high street failures overthe past year has cost nearly 20,000store workers their jobs. However, twothirds of staff and stores survived theadministration process, according toinsolvency practitioners FRP Advisory.

CBI BACKS CLAMPDOWN ON BLACK BOXTAX DODGESBig business will today back a rule tocrack down on abusive tax arrange-ments as it begins a campaign to high-light its 163bn contribution to theExchequer. Company tax chiefs claimthe corporate worlds reputation isbeing tarnished by some firms engag-ing in dubious tax arrangements.

ROLLS-ROYCE TO SET UP SAFETY COM-MITTEERolls-Royce is to form a safety commit-tee after heavy criticism of the UKmanufacturer for its handling of anengine blow-out on a Qantas A380. Thefirm has hired City heavyweight SirFrank Chapman, chief executive of BGGroup, to chair the committee, whichwill be assembled this year.

DAVID ROSS FACES SHOWDOWN ATCOSALTDavid Ross, the founder of Carphone Warehouse, faces a showdown withhundreds of minority shareholders atoil services group Cosalt today. Theyare planning to revolt against his plansto delist the company next month.

FORD FACES STIFF CHINA HURDLESFord is facing stiff industrywide regu-latory obstacles to future growth inChina, even as the auto maker launch-es a $490m plant to boost its presencethere. The plant opened Friday insouthwest Chinaits third passenger-car plant and fourth overall assemblyplant in China. It will give it much-needed capacity to help propel sales.

HARPERCOLLINS SELLS TEEN WEBSITEHarperCollins Publishers is selling itsteen website Inkpop to a bigger rivalcalled Figment, abandoning a digitalexperiment begun in 2009. Both sitesare aimed at teens who post theirown writing and critique the work ofothers.

WHAT THE OTHER PAPERS SAY THIS MORNING

Soaring oil prices the great unknown

IT was Donald Rumsfeld, the Bush-eradefence secretary, who loved to sepa-rate events into known unknownsand unknown unknowns. Even theformer can have a huge impact. Onekey trick is to spot possible risks asthey shift from one category to theother. In recent weeks, with the novel-ty of the Eurozone crisis wearing off, aslight feeling of complacency hasdescended upon the City; not so muchexcessive optimism investors andfirms remain generally quite realisticabout most matters as excessive cer-tainty. That is silly: ignorance is the

defining feature of human beings.One of the big known unknowns for

2012 is the possibility of full-scale warin the Middle East. The Iranian govern-ment, one of the worst, most despica-

ble and oppressive in the world, iscommitted to going nuclear; this isanathema, not just to the Israelis, to whom the Iranian theocracy hasrepeatedly signaled its hatred, but alsoto the Saudis and every other Gulfstate. At best, a nuclear Iran would trig-ger an arms race across the MiddleEast and finally destroy the worlds lastpretence at controlling nuclear prolif-eration; at worst it would lead tonuclear war. Its a nightmare, albeitone that has been unraveling in suchslow motion that much of the worldhas become bored with it.

There is a decent chance that a reso-lution may come before the US presi-dential elections but no observerreally knows when, or how. For years,analysts who have predicted an immi-nent attack on Iran have been provedwrong; this could happen again. But

there has already been an ongoingcampaign of targeted assassinationsagainst Iranian scientists, a sophisticat-ed cyber-attack and at least one myste-rious explosion in Iran. The Israelis will

only bomb Iran if they think Americawont; they believe that the US is muchless likely post-elections. BarackObama clearly doesnt want to do any-thing, but may feel compelled to act.

This is where a known unknownmutates into an unknown unknown.US presidents dont win electionswhen the price of petrol is rocketing.So could the mere possibility of con-flict in the Middle East be enough toderail Barack Obamas re-electioncampaign? This is unlikely, of course, but growing fears for supplies including whether Tehran wouldever lob a few landmines into theStrait of Hormuz, closing a key ship-ping lane for oil -- have led to oilprices jumping 11 per cent this yearand have taken US petrol prices totheir highest ever. Equally worryinglyfor George Osborne, petrol prices are

also on the verge of hitting recordshere in the UK, and the price of dieselalready has. Geopolitics could over-shadow his Budget or even com-pletely disrupt it, if the price of oil

continues to go up over the next fewweeks.There are lots of other risks that are

being downplayed. Take the possibilityof the coalition collapsing before thenext election. Comments by LordOakeshott on the BBCs Sunday Politicssuggest it could happen over an issuethat the public would see as trivial:reform of the House of Lords. I doubtthis will destroy the government butthe possibility shouldnt be dismissed. The Eurozones implosion may nolonger feel imminent, but plenty oftruly unknown unknowns could, forthe better or for the worse, overturnthe established order of things. Forgetabout precise predictions; its all aboutadaptability, flexibility and learning tolive with uncertainty.

[email protected] me on Twitter: @allisterheath

Philip Davies opposes the reforms Pic: REX

NEWS | IN BRIEF

Chris Woodhouse to head RACPrivate equity firm Carlyle Group hashired Chris Woodhouse, the formerfinance director of Debenhams, to runRAC, the roadside assistance business itbought last June from Aviva. The movewill see Woodhouse reunited with RobTempleman, who became chairman of

RAC last year and was previously chiefexecutive of Debenhams. The two arewell respected in the private equity busi-ness and worked together on the flota-tion of the department store chain afterpreviously working together on the turn-around of the automotive retailerHalfords.

Bamford: promote UK industryA report by one of Britain's leadingindustrialists has urged the governmentto become champions of manufacturingand cut business taxes to help deliver arevival in the economy. In the reportcommissioned by Downing Street, SirAnthony Bamford, chairman of the con-struction machine company JCB, saysBritain should implement new policies tostrengthen the role of manufacturing inthe economy, while calling for corporateand personal taxes to be lowered.

EDITORS LETTER

ALLISTER HEATH

Editorial StatementThis newspaper adheres to the system of

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

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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

Head of Distribution Nick Owen

The new jobs website for London professionalsCAREERS.com

Lord Oakeshott wants elected Lords Pic: PA

Split on Lordsreform mayend coalitionBYTIMWALLACE

POLITICS

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PRUDENTIAL, Britains biggest insur-er, is considering moving its head-quarters, possibly from London toHong Kong, to escape tough new capi-tal rules for European insurers.

Last night Prudential said it regu-larly reviews its options to max-imise the strategic flexibility of thegroup.

It added: This includes considera-tion of optimising the groups domi-cile, including as a possible responseto an adverse outcome on Solvency II.

Prudential is concerned a conflictbetween Europes Solvency II regimeand US insurance regulations couldforce it to hold billions of pounds ofextra capital against its US-based

Jackson National Life unit if itremains domiciled in Europe.

Solvency II, due to come into forcein 2014, could force European insurersto hold extra cash reserves againstsubsidiaries operating in countriesthat have less exacting capital stan-dards.

This extra capital requirementwould be waived for countries whoseinsurance regulations are deemed by

European regulators to be equivalentto Solvency II. No decision has yet

been taken on whether US capitalrules for insurers are compatible.

Prudential said: There continues to be uncertainty in relation to theimplementation of Solvency II andimplications for the groups business-es. Clarity on this issue is not expectedin the near term.

There has been long-running specu-lation that Prudential could shift itsheadquarters to Asia in recognition ofthe regions large and growing contri-

bution to its growth.Prudential generates 45 per cent of

its sales in Asia, and has secondarystock market listings in Hong Kongand Singapore.

Pru considers

moving its HQto Hong Kong

HSBC will become the first bank todisclose the pay packages of its topeight executives when it unveils itsannual results for 2011 today.

The bank will be the first to com-ply with new proposals being put for-

ward by the Treasury, which wouldsee each bank provide pay details ofthe eight top executives outside the

boardroom. The disclosure follows on fromlast years Project Merlin when theUKs biggest banks including HSBC

were forced to publish the pay oftheir five highest-paid executives,although they did not have to identi-fy them.

HSBC is also expected to announceplans to claw back parts of the bonus-es handed out to some of its middle-ranking bankers before its NHFA

subsidiary was fined 10m by theFSA for mis-selling unsuitable prod-ucts to pensioners. The story was firstreported by Sky News.

Stuart Gulliver, HSBCs group chiefexecutive, will see his own bonus for2011 marked down as a result of theFSA fine, sources said, even thoughhe had no role in the mis-selling.Gulliver is expected to take homemore than 12m in cash and sharesif he has achieved all his targets.

HSBC to unveil pay packagesfor its top eight executives

BANKS are set to line up for more easymoney on Wednesday when theEuropean Central Bank offers anunlimited volume of cheap loans forthe second time in as many months.

Lloyds Banking Group and RoyalBank of Scotland have both said theyare attracted by the so-called three-yearLong-Term Refinancing Operation(LTRO) because of its incredibly low oneper cent interest rate. Yesterday,Spanish bank BBVA also said it wouldseek around11bn (9.3bn) of funds.

At the first LTRO in December, 523

banks gorged on loans worth 489bn,and analysts expect a similar take up at

this weeks repeat auction. The first LTRO, launched shortly

after Mario Draghi took the reins at theECB, appears to have worked wondersin the short-term.

It meant cash-flush banks no longerhad to worry about rolling over a big

batch of maturing bonds. The threat of a catastrophic bank

failure evaporated, and governmentbond yields in Italy and Spain, previ-ously driven sky-high by a buyersstrike,started to fall. Business confidencerose, as did stock markets.

But it is unclear whether banks arelending the money to the real econo-

my, with several parking largeamounts of cash at the ECB.

Banks line up for more cheapcash as ECB offers new loans

BYHARRY BANKS

INSURANCE

EUROZONE

Prudential, headed by Tidjane Thiam, generates 45 per cent of sales in Asia GETTY

BYKASMIRA JEFFORDBANKING

News 3CITYA.M. 27 FEBRUARY 2012

ANALYSIS l Prudential PLC

p

20 Feb 21 Feb 22 Feb 23 Feb 24 Feb

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ROYAL Bank of Scotland (RBS) is con-sidering appointing the former chiefexecutive of RSA to be chairman of itsinsurance arm as it prepares to spinoff the division.

Andy Haste, 50, took control of RSAin 2003, turning the group around bycutting costs and closing its loss-mak-ing US operation.

He spent eight years as chief execu-tive before stepping down at the endof 2011. At the time he said he had

no immediate plans plans to returnto work, although he has continuedto be a non-executive director of ITV.

Haste is understood to be on ashortlist for the top job that includesPatrick Snowball, the former head of

Aviva UK who is currently runningSunCorp in Australia.

Richard Harvey, the former chiefexecutive of Aviva and Labour peerLord Myners, the former CityMinister, are also thought to be possi-

bilities for the job.

The bank is being forced to spin offDirect Line Group known as RBSInsurance until earlier this month to meet conditions attached by theEuropean Union when it approvedstate aid given to the bank in 2008.

RBS aims to sell a minority stake inDirect Line through an initial publicoffering before the end of 2012, fol-lowed by another sale in 2013.

The new company is likely to be amember of the FTSE 100 and could be

worth as much as 5bn. An RBS spokesman declined to

comment.

Andy Haste inline for RBSinsurance job THE MULTI-BILLION dollar legal caseinto the Deepwater Horizon rig disas-ter has been postponed at the eleventhhour to give BP and lawyers for more

than 120,000 plaintiffs more time toreach a settlement.

BP was due to go on trial today inNew Orleans over its part in the 2010Gulf of Mexico oil spill, which killed 11

workers in the explosion.The news came after chief executive

Bob Dudley said the oil giant was pre-pared for the trial to last until 2014.

Hopefully we will reach someagreements and we will be able toreduce the uncertainty and move for-

ward. But the appeals process has vari-ous different branches it could godown in terms of time so it could be alot longer than that [2014], he told theSunday Telegraph.

BP DeepwaterHorizon trialdelayed a week

Andy Haste may become the first chairman of Direct Line Group Picture: REX

BY JAMESWATERSON

INSURANCE

OIL & GAS


ANALYSIS lRoyal Bank of Scotland Group PLC

p


29.5

29.0

28.5

28.0

27.5

27.0

28.5324 Feb

ANALYSIS lBP PLC

p


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TROUBLED credit card insurer CPPfaces the loss of its banking facilitiesunless it can reassure lenders that its

business is secure.Barclays, Santander and Royal

Bank of Scotland (RBS) are consider-ing whether to withdraw financial

backing from the York-based firmwhen the existing arrangement ends

next year. The firm currently has bor-rowings of around 40m.CPPs local MPs Julian Sturdy and

Hugh Bayley have now written to RBSchief Stephen Hester, saying theystrongly urge the bank to place theimportance of local jobs at the fore-front of any discussions with the busi-ness. The company employs 1,300people in the UK.

Last week the firm was hit by newallegations of mis-selling from the

Financial Services Authority (FSA),raising fears that it could go out ofbusiness.

However on Friday it struck a deal with the regulator under which it will investigate thousands of pasttransactions and invest 10m-15m inchanging its practices.

Shares in CPP were suspended lastMonday and the firm has sinceannounced it will not be paying a div-idend for the 2011 financial year.

CPP future still at risk asbanks withdraw backingBY JAMESWATERSONINSURANCE


RAMBOURGS NEW FUND SET TO LAUNCH

GUILLAUME Rambourg is set to launch Verrazzano, his new hedge fund, on Thursday.The former Gartmore star trader survived a nine-month investigation by the UKsFinancial Services Authority that failed to find any evidence of wrongdoing. His new vehi-cle will be based in Paris and he is expected to raise up to $1bn (635m) in client funds.

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CHINESE low-cost smartphone manu-facturer Huawei is further encroach-ing on the territory of waningtechnology veterans such as HTC as itlaunches the worlds fastest smart-phone, the Ascend D quad.

The worlds number two networkequipment maker specialises in sub-$200 smartphones and is swiftly steal-ing customers from its pricier rivals.

In its 2010 financial year, Huaweigenerated revenues of 185.2bn

Chinese yuan (18.5bn) and pocketedprofits of 23.76bn yuan up 24 and 30per cent respectively on the previous

year. Alongside its market rival ZTE,

Huawei has been held partiallyresponsible for declining income atfirms such as HTC, which saw fourthquarter revenues fall by 23 per cent onthe third quarter and expects sales todrop a further 35.5 per cent in thecoming three months.

Huawei is also one of the reasons

global champion Apple only ranksfifth in the Chinese phone market.

And now the telecoms group is setfor further growth as it launches the

worlds fastest smartphone a 4.5inch touchscreen handset on Googles

Android 4.0 operating system, avail-able from April 2012.

This announcement follows a busy year for the phone maker, whichteamed up with EverythingEverywhere in 2011 to upgrade its 2Gnetwork and is a favourite to win thecontract to update the network to 4Glater this year.

Huawei also donated 50m towardsthe development of a mobile networkon the London Underground beforethe project fell through.

World fastestsmartphonefrom Huawei MAGIC circle law firms in the UK boastthe highest ratio of female partners inthe whole of Europe, a report hasrevealed this morning, even though

just 16 per cent of partner positionsare held by women.

The UK tied with Holland as theEuropean country with the mostfemale partners, but both still lag well

behind markets further afield such asChina, where women make up 28 percent of legal partnerships despite apopulation that comprises 119 men forevery 100 women. City firm Linklatershas the highest proportion of womenamong UK firms, with 23.5 per cent ofits partnership made up of women.

The research, carried out by legalrecruiter Laurence Simons, shows thatSpain has the lowest proportion offemale partners, at just 6.3 per cent.

Germany fared only slightly better, with 9.6 per cent, while just 13 percent of partners at French law firmsare women.

Its certainly good news that the UKis leading the way in ensuring genderdiversity at the highest level, saidLucinda Moule, managing director ofLaurence Simons. But ultimatelythese results demonstrate the desper-ate need for top-tier firms to make bet-ter provision for the promotion of

women.

UK has highestratio of femalelegal partners

BY LAUREN DAVIDSON

TECHNOLOGY

LEGAL SERVICES

Founded in 1987 by Ren Zhengfei, Huaweisheadquarters are in Shenzhen, China. Huawei, a partner of BT, announced inJanuary it had bought a fibre-optic cableresearch laboratory in East Anglia for $10m.

FAST FACTS | HUAWEI


THE FORMER executive chairman ofMarks & Spencer has voiced disdain atthe businesses withdrawing from thegovernments unpaid work experiencescheme for jobless people.

Sir Stuart Rose told DermotMurnaghan, One or two of them haveshown a little less than backbone.

Calling the outrage provoked by thescheme baffling, Sir Stuart said:

Weve got a budget next week, wevegot the economy which has beenthrough terrible times, weve got aneed to get peoples confidence going[and] get the country back to work.

Sir Stuart, who stacked shelves andswept floors as a management traineein M&S 40 years ago, thinks thescheme is valuable for getting youngpeople into the routine of waking upearly and looking presentable.

He said, There is some plan to sabo-tage this, which I think is nonsense.

Stuart Rose says fury atjobless scheme is baffling

Sir Stuart Rose voiced approval of the unpaid work experience scheme Picture: GETTY

BY LAUREN DAVIDSONPOLITICS

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Fuel consumption figures for the Volvo S60/V60 DRIVe in mpg (l/100 km): Urban 54.3 (5.2) to 57.7 (4.9), Extra Urban 67.3 (4.2) to 72.4 (3.9),Combined 62.8 (4.5) to 65.7 (4.3). CO2 emissions 119 g/km to 114 g/km.* Based on 36 months, 60,000 miles. Source: KWIKcarcost January 2012. ** Off icial fuel figures for the Volvo S60 DRIVe. Based on a combined cycle. Based on 2011/12 benefit in kind tax rates for the Volvo S60 DRIVe ES for a 20% taxpayer.

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REFORMED tax incentives couldboost UK oil output by up to three bil-lion barrels and increase overall taxrevenues, according to an industrybody that believes George Osborne isconsidering its plan.

Oil and Gas UK hopes the chancel-lor will extend the field allowance taxbreaks which allow increased devel-opment of challenging oil fields those which are small, composed ofultra-heavy oils, or at high tempera-tures and pressures.

The industry body also hopes formore certainty around tax relief onfacilities that will be decommis-sioned.

Such measures could cost the tax-man a total of 110m, but may earn

that back as they would help max-imise the UKs reserves and keep theindustry going, providing jobs and

energy security, a spokesperson said.We are very encouraged by the

positive course the conversations with the Treasury have taken, shetold City A.M.

The Treasury refused to commentahead of next months budget.

Last year the industry was hit by anextra 2bn in taxes described by theEnergy and Climate Change SelectCommittee as an opportunisticraid, which damaged confidenceand could reduce investment.

Oil industryhopes for taxreform boostBY TIMWALLACE

UK ECONOMY

KINGFISHER, the struggling Indian air-line, received another blow yesterday,after its main lender State Bank ofIndia said it would not consider anyfresh loans until it raises new equityitself.

Desperately strapped for cash,Kingfisher stands on the brink of col-

lapse after multiple flight cancella-tions and the resignation of dozens of

its pilots.Kingfisher, which has not turned a

profit since it was founded in 2005and is carrying debt of at least $1.3bn(818.7m), has asked for $409m-$613min loans from banks to carry out itsday-to-day operations

Meanwhile, the Times of Indiareported Kingfisher had received re-capitalisation offers worth 8bn rupees

from two Indian investors, who wouldget a combined 24 per cent stake.

New blow for Kingfisher as leadlender refuses to loan more cash

AVIATION

WARREN Buffett has told investorsthat he has identified a successor toreplace him as chief executive ofBerkshire Hathaway, but he stoppedshort of revealing the name.

In his annual letter to Berkshireshareholders, the 81-year old investorinsisted he had no intention of step-ping down but said the eventualtransfer of power will be seamless,

adding there were two backup candi-dates as well.He said the board had picked an

individual to whom they have had agreat deal of exposure and whosemanagerial and human qualitiesthey admire.

There has long been speculationover who will replace Buffett, whohas been at the helm of Berkshire for47 years.

Though the successors name is notknown, commentators suggest Ajit

Jain, who runs Berkshires reinsur-ance business and is highly praised byBuffett, may be next in line.

The letter also praised BurlingtonNorthern chief Matthew Rose, Geicoauto insurance boss Tony Nicely, util-ity firm MidAmericans Greg Abeland reinsurer General Res chief TadMontross.

Berkshire also published its annualresults, which showed it ended 2011with $37.3bn (23.5bn) cash in hand,even as profits fell in the last quarter.

Berkshires Warren Buffetthas identified his successorBYKASMIRA JEFFORD

FINANCIAL SERVICES


The Sage of Omaha Warren Buffett has no intention of retiring yet Picture: REUTERS

ANALYSIS l Projected UKCS Reservesand Resources as at 1st January 2011

Billion barrels of oil and gas equivalent

Source: DECC/Oil & Gas UK

30

25

20

15

10

5

0-0.81

6

3-4

1-3

1-4

3-9

Production in 2010

Existing Fields and SanctionedInvestments

Probable

Possible

Undeveloped Discoveries

Yet to Find

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THE Sun on Sunday, the new tabloidfrom the News International stable,sold 3m copies on its debut yesterday,according to Rupert Murdoch.

Murdoch took to microbloggingwebsite Twitter to reveal that sales ofthe title had topped the companysexpectations.

He said: Reports early, but new Sunedition sold 3m!

Last week Murdoch said he would be very happy if the title, whichcost 50p at launch, were to sell morethan 2m copies on its first day in cir-

culation.A News International spokesperson

said a positive response had beenreceived from retailers, with many sell-ing out of the new tabloid.

Rupert Murdoch announced on 17February he would launch the newtabloid after nine Sun journalists werearrested in the preceding few weeks.

The News of the World closed in July2011 in the wake of the phone hackingscandal, despite having 2.67m regularreaders. Some took up the SundayMirror, the Daily Star Sunday or thePeople, but 1.3m seem not to havelatched onto another newspaper,leaving a solid market for the SunsSunday version. The Sun sells 2.75m

copies a day during the week, andabout 2.85m on Saturdays.

BT is considering launching its ownmusic service, putting it in directcompetition with the likes of ApplesiTunes and Spotify.

A BT spokesperson said, Werekeen to launch a music service this

year, but the business model has tomake sense.

He declined to comment on thenature of the product or its expectedtimescale, but said: We have offeredto set aside our margins to get thisoff the ground but much will dependon how eager the music industry isto work with us.

BTs music player, likely to be anunlimited streaming service for sub-scribers or a download store likeiTunes, has been in the pipeline formore than a year but the companyhas struggled to tie down a deal withthe major record labels.

The telecoms group was tight-lipped about which potential indus-try partners it has approached or isin talks with.

If BTs plans come to fruition, thegroup will join a host of telecomscompanies that offer special deals

with music streaming services.In November 2007 Vodafone

announced a partnership withOmniphones MusicStation andtowards the end of last year both

Virgin Media and Orange launchedmusic streaming deals.

Virgin offers six months of freeaccess to Spotify Premium for someof its broadband customers, whileOrange offers free membership toDeezer for customers on its premiumtwo-year service plan.

But Skys attempt to penetrate themusic market was less successful,

with the broadcast giants Sky Songslasting just over a year before closingin December 2010 due to lack ofdemand.

BT looking to

launch a newmusic player

Sun on Sunday sells 3m copiesaccording to Murdoch tweet

BY LAUREN DAVIDSON

TELECOMS

MEDIA


ANALYSIS l BT Group PLC

p


221

220

219

218

217

216

215

214

216.5024 Feb

SpotifyLaunched: April 2006Number of tracks: 15m+Number of paying users: 3mCost per month: 9.99 for premiumDeal with Virgin MediaLaunched: November 2011Deal: Six months of free access toSpotify premium for some ofVirgins broadband customers

DeezerLaunched: October 2008Number of tracks: 13mNumber of paying users: 1.2mCost per month: 9.99 for premium+Deal with OrangeLaunched: September 2011Deal: Free access to Deezer on Orangespremium two-year service plan (whichcosts 25 to 80 a month)

MusicStationLaunched: June 2007Deal with VodafoneLaunched: November 2007Deal: 1.99 a week

Sky SongsLaunched:October 2009Number of tracks: 5mCost: 4.99 a monthClosed: December 2010We just didn't see theconsumer demand we'dhoped for.

Apple iTunesLaunched: January 2001Cost: free

iTunes

SkySongsClosedD

ecember2

010

Music streaming services and their telecoms tie-ups

BT boss Ian Livingston is thinking of launching a music service Picture: GETTY

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Gillard retains job as PM AUSTRALIAN Prime Minister JuliaGillard today won a leadership voteagainst rival Kevin Rudd, despite polls

showing a government under herleadership would be decimated at thenext elections in 2013.

Gillard emerged victorious fromthe prime ministerial showdownagainst Rudd and said she hoped the

result would end months of bitterleadership infighting within the rul-ing Labor Party and give the govern-

ment time to reconnect with voters.Polls showed Labor had a better

chance of an election victory underRudd and critics warned the govern-ment could lose up to 25 of its 72lower house seats under Gillard.

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take the first step by earning your FRM certification. Visit the Global Association

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ECB is banking on second shot of cheap money

ACRONYMS abound when it comes tothe global financial system. Firstthere was Tarp the 2008 US Troubled Asset Relief Programme which described the $700bn used to

buy or insure troubled bank assets.Fast forward to December 2011, andthe European Central Bankembarked on its first three-year LongTerm Refinancing Operation or LTRO.

The ECB lent European banks 489bnover three years at incredibly lowinterest rates.

It was hoped that banks would takethe cash to lend to businesses and to buy government bonds from theItalians, Spanish, and Portuguese.This would help lower the cost of bor-rowing for these peripheral countriesand alleviate their debt burden.

At the time, we didnt knowwhether it would work. But the cheap

money seems to have done the trick,at least if you look at the falling bond yields of peripheral countries. Thishas allowed the ECB to dramaticallyscale back its own purchases of sover-

eign debt.Nor did we know how many bankswould participate in the programme.In the event, more than 500European banks took up the offer ofcheap euros, proving the stigma ofgoing cap in hand to the ECB formoney has vanished.

Now LTRO Mark II is upon us. Thesize of LTRO II could range from200bn to 1 trillion. Many of myguests say that if banks dont take up

the offer, it could be interpreted as abad thing. But you could also arguethat low uptake is a sign that banksare now strong enough to survivewithout the cheap cash.

Currently, the banks in northernEurope seem to be suggesting thatthey wont take part in LTRO II,although the same cant be said ofthe southern European financials.According to ING Research, most ofthe take-up for LTRO Mark I camefrom the countries with stressed-outbanking sectors such as Italy, whichaccounted for 23 per cent of funds borrowed, followed by Spain on 22per cent and equally notably

France on 14 per cent.Last week, I interviewed Alec

Young, a global equity strategist fromS&P Capital. He told me that Europematters a lot less to the rest of the

world since the LTRO kicked in. Hesaid: A few months ago, every assetclass was driven by Europe, but sinceLTRO, Europe is being driven byEurope, leaving other asset classes togo about their business.

But for me the key issue is still this:Will peripheral countries be able tocope with their debt burden withoutthe direct intervention of the ECB?Louisa Bojesen is a CNBC AnchorFollow her on Twitter @louisabojesen

CNBC COMMENT

LOUISA BOJESEN

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NATIONAL broadcaster ITV is expectedto show an upturn in fortunes in itsannual earnings this Wednesday onthe back of mega-hit TV showDownton Abbey and a rise in industry-wide advertising revenues.

Analyst consensus expects the televi-sion group to report pre-tax profits of361m, showing a growth of 12.5 percent on 2010.

But Numis analysts think ITV will

report earnings of 365m before tax, a13.7 per cent rise on 2010 rising to ashigh as 395m if national advertisingrevenue grew its expected two per centinstead of coming in flat.

ITV has experienced a change in for-tunes since current chief executiveAdam Crozier took the helm in 2010.

Former Royal Mail chief executive,ex-boss of Saatchi & Saatchi and theman who gave Sven-Gran Erikssonthe England job while head of theFootball Association, Crozier has eradi-

cated more than 600m of debt andhas led the broadcaster into the black.

ITVs plan now will be to cement itsonline presence and nurture its in-house creative productions crucial inmaintaining royalties from a back cat-alogue of programmes as it loosensits reliance on advertising revenues.

Looking to the year ahead, theEuropean Football Championship isexpected to boost ITV, which is gainingmarket share as Channel 4 takes a hit.

Shares closed three per cent up onFriday at 80.1p.

Downturn forITV is haltedby Downton

ITV, led by Adam Crozier, has been boosted by hit show Downton Abbey Picture: GETTY

BY LAUREN DAVIDSON

MEDIA

NewsCITYA.M. 27 FEBRUARY 2012 13

BOTTOMLINEAnalysis by David Crow

Crozier hasno time forbackslappingPITY poor Simon Fox, chief execu-tive of HMV, who turned down

the top job at ITV in 2009. Despitebeing the frontrunner to lead thefree-to-air broadcaster, he decidedto stay on at the music retailer toimplement his turnaround plan.Alas, it looks highly unlikely thatthe turnaround of ailing HMVwill ever be completed. Instead,Fox could be soaking up the gloryover at ITV.

That job falls to Adam Crozierinstead, who was brought in bycolleague and chum ArchieNorman, the ITV chairman. ButCrozier will have little time for backslapping follWednesdays strong numbers. Heknows that the recovery in ITVsfortunes is mainly cyclical thebroadcaster has benefited from arecovery in the TV advertisingmarket.

The structural overhaul has yet

to really begin. A new digitalstrategy and some kind of pay- wall are on the cards, as is arenewed focus on in-house pro-duction. Until we see more detailon these areas, Croziers good for-tunes like Foxs travails aremainly down to luck.

ANALYSIS l ITV PLC

p


81.0

80.5

80.0

79.5

79.0

78.5

78.0

77.5

80.1024 Feb

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VEDANTA, the FTSE 100 mining giant,has announced plans to merge severalof its Indian subsidiaries to create anew $20bn (12.6bn) business.

The group, controlled by British-based tycoon Anil Agarwal, has over adozen Indian units producing oil toaluminium and copper to zinc.

The consolidation is expected tolead to the creation of a new business

that would have an implied marketvalue of around $20bn.Vedanta said, as a first step, it will

merge non-ferrous metals producerSterlite Industries into sister concernand iron ore miner Sesa Goa.

The boards of the companies haveapproved the issue of three shares ofSesa Goa for every five shares held inSterlite.

Its unlisted unit Vedanta Aluminium, along with MadrasAluminium, will then be transferred

to the merged company, to be namedSesa Sterlite.Vedantas 38.8 per cent holding in

oil and gas producer Cairn India, which it acquired last year, will betransferred to Sesa Sterlite, along withrelated debt of $5.9bn. Sesa Goaalready holds 20 per cent in CairnIndia directly.

The restructuring was necessary,especially after the acquisition ofCairn India, because it was a largeacquisition and they needed to do

things in a much more organised wayin India, said JagannadhamThunuguntla, head of research at SMCInvestments .

After the share transfer, Sesa Sterlitewould be listed in India and also listAmerican Depositary Shares in New

York. Vedanta will own 58.3 per cent inSesa Sterlite post-restructuring.

This transaction is a natural evolu-tion, leading to simplification of thegroups structure, said Vedanta.

Vedanta merges Indian unitsto create firm worth $20bnBYHARRY BANKSMINING


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IN ASSOCIATION with Repskan.com, themedia monitoring and analytics platform,City A.M. is measuring the relativeOlympic media buzz around the partnersfor the London 2012 Olympic andParalympic Games, week by week. Theleaderboard, right, reflects their rankingover the past week, in this case fromWednesday 15 February to Wednesday

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Maintaining itsplace in the topten, despite a slightfall, Samsung haswon significant online coverage, especially inmarketing and PR networks, with theannouncement it is launching a social mediacampaign designed to personalise theOlympic experience for viewers.The project will show how users are con-nected to athletes on the US Olympic team the seven degrees of separation theory willprobably come into play. With people moreconnected than ever, this campaign promis-es to be highly engaging. News of the cam-paign spread quickly online, especially tomarketing professionals. Such interest at

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Regional News

Topicals

Twitter

Blogs

Other

National News

%

3

49

31

7

2

8

Vedanta is controlled by UK-based billionaire Anil Agarwal Picture: GETTY

ANALYSIS l Vedanta Resources

p


1,550

1,500

1,450

1,400

1,350

1,500.0024 Feb

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A DEADLINE of 8 March nextThursday has been set for privateholders of Greek debt to participatein the proposed bond swap,required to significantly cut thestruggling states debt burden.

The debt swap is a crucial part ofGreeces latest bailout, which isexpected to see the Mediterranean

country receive a 130bn (110bn)rescue package in time to avoiddefaulting on repayments due on 20March.

The target came as the Institute ofInternational Finance (IIF), the bodyrepresenting private debt holders,urged governments to grant extrafunds to the IMF, and for austeritymeasures to be slowed.

The IMF has a clear responsibilityto not only advocate key economicreforms, but to help restore marketconfidence and foster a stable envi-ronment in private capital markets,the IIF said in a statement.

The group also called for moredebt-sharing across the Eurozone, inan effort to relieve the burden onailing peripheral governments.

The Fiscal Compact needs to provide for risk-sharing movingtowards more mutualisation of the

fiscal burden will help weaker Euro Area members with much-neededadjustment and structural reform,it said.

Yet the sentiment is unlikely to beshared in Germany, where calls foreven higher contributions to thebailout programme face resistance.

Yesterday German finance minis-ter Wolfgang Schaueble said thatboosting bailout funds risked erod-ing incentives for reforms in indebt-ed states.

And a fellow member of his gov-ernment broke ranks by calling forGreece to leave the euro.

Greeces chances to regenerateitself and become more competitiveare certainly greater outside thecurrency union than they are if itstays in the Eurozone, said Hans-Peter Friedrich, a leader of the con-servative Christian Social Union(CSU).

Friedrich told the magazine DerSpiegel that he endorsed creatingincentives to prompt Greece intoexiting the single currency.

Political strife continued inGreece throughout the weekend, with a breaking scandal over an

unnamed MP who allegedly sent1m abroad in the troubled run upto the latest bailout agreement.

Finance minister EvangelosVenizelos has said that authorities will examine large transfers ofmoney out of Greece made in thelast few weeks.

Deadline set for privateholders of Greeces debt


BY JULIAN HARRISEUROZONE

FOR MORE NEWS

www.cityam.com

Charles Dallara wants more fiscal risk-sharing across governments Picture: GETTY

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THE City has given a resoundingthumbs down to the latest Greek

bailout package, with t hree-quarters (74per cent) of our Voice of the City panel-lists saying it is highly unlikely thatthe130bn (110bn) rescue package will

be its last.The finding of our most recent sur-

vey, run in association withPoliticsHome.com, suggests that busi-ness sentiment towards the bailout isoverwhelmingly pessimistic, with fewerthan one in 10 (eight per cent) of ourpanel seeing a successful resolution aseither highly or somewhat likely.

Though the UK will not contribute

directly to the bailout pot, it is likely tosupply up to 1bn of funds through reg-ular contributions to the InternationalMonetary Fund, which is expected to beon the hook for 20bn.

When weighing in on how Greece

should deal with its current crisis, theopinion of our panel is even more decid-ed, with 83 per cent saying thecountry should default on its debtimmediately and quit the singlecurrency and 70 per cent see-ing it exiting the euro as a high-ly or somewhat likely result ofits economic woes.

Just 16 per cent feel Greecewould be better off staying inthe euro, with a slightlyhigher number 21 per cent saying it is either some-

what or highly unlikelythat this will be the out-come.

Despite Greek leaderspromising to implement

an extra 325m in cuts and agreeing to con-stant supervision fromEurogroup membersto oversee reforms our panellists remain

sceptical that the countrys flailingeconomy can return to growth in thenear future, with less than 50 per cent

of respondents expecting growthbefore 2020.

Just one per cent see some growth within the next 18 months, while

the largest proportion of thosesurveyed (23 per cent) do

not expect economicexpansion until 2022or later.

The City was alsouncompromising on

Greek debt levels, with panellists

insisting debtmust fall to 100per cent of GDP

or less in orderto be sustain-able.

When will the Greek economy return to growth?

%23

17

159

23

13

11

2012-13 1%

2014-15 13%

2016-17 17%

2018-19 15%2020-21 9%

2022 or later 23%

Don't know 23%

How likely is it that Greece will leave the euro as a result ofits present economic crisis?

%

13

39

31

7 8 3Highly likely 39%

Somewhat likely 31%

Neither likely nor unlikely 7%

Somewhat unlikely 13%

Highly unlikely 8%

Don't know 3%

How likely is it that this Greek bailout deal will be its last?

%7516

44

1

2

Highly likely 4%

Somewhat likely 4%Neither likely nor unlikely 2%

Somewhat unlikely 16%

Highly unlikely 75%

Dont know 1%

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

BY ELIZABETH FOURNIER

EUROZONE

Latest bailout is unlikely to be its last, as

City still expects Greece to exit the euro

PoliticsHome.comPoliticsHome.comIn partnership

with

NEWS | IN BRIEF

Former BP boss plans new firmFormer BP chief executive Lord Browneof Madingley is understood to be planningto launch a giant new North Sea oil com-pany. Browne, who runs the Europeanarm of American investment fundRiverstone, is reportedly negotiating withFairfield Energy, which is a North Seaproducer controlled by private equity firmWarburg Pincus.

Harvey Nichols opening in KuwaitBritish luxury fashion retailer HarveyNichols is set to open a store in KuwaitCity its seventh venture outside the UKand Ireland. The company said it will bein The Avenues Mall, the largest shoppingdestination in Kuwait and spread acrosstwo floors and 10,000 square metres ofretail space. The opening in September ispart of a $500m (315m) mall expansion.

Petrobras CEO: fuel price to riseThe new chief executive of Brazils state-controlled oil company Petrobras, Mariadas Gracas Foster, said the companyneeds to raise fuel prices to keep in stepwith higher oil prices, while maintainingthe practice of buffering pump prices toshield consumers from volatility. He wasspeaking to Brazils Estado de Sao Paulonewspaper.

Act of Valor triumphsMilitary drama "Act of Valor" won thebattle of the box office over the weekend,with $24.7m (15.6m) in US andCanadian sales, studio estimates releasedyesterday showed. Second place went toTyler Perrys Good Deeds, which rung up$16m at north American theatres fromFriday to yesterday. In third place wasJourney 2: The Mysterious Island.

Report: Iran denies Greece oilIran has refused to give Greece a ship-ment of 500,000 barrels of crude oil in aretaliatory measure against EuropeanUnion sanctions on the Islamic stateslifeblood, oil, the semi-official Fars newsagency reported yesterday. Oil tankersthat had come to transfer 500,000 bar-rels of Iranian oil to a refinery in Greecehad to go back empty-handed, it said.

Greek PM LucasPapademos has agreedto 325m in extra cuts

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profile, he then spent eight years in private equity. But he called time on hishigh-flying career to spend more time

with the McGregor-Smith children oncehis wife decided to join Mitie, andretrained as an opera singer.

When The Capitalistcaught up with theMitie chief executive last Thursday, shestill hadnt had a chance to see her husband in La Traviata. Heres hoping shegot her skates on the run came to anend on Saturday night.

GHOST AT THE BANQUETTHE great and good of the mobile phone

world yesterday kicked off the biggestevent in the industrys calendar. Beforethe likes of Google and Microsoft arrivetoday, Samsung, HTC, Sony and Huaweilaid out their plans for the year. But thereis a ghost at the banquet. Every release ismeasured against the standards of a com-pany that has no intention of gracingMobile World Congress with its presence:

Apple. Rumours abound that Apple execu-tives maintain a shadowy presence at theevent, peering unseen from around everycorner. In hushed tones people even say anearly version of the iPad 3 is somewhereon site. By not even turning up Apple has,once again, stolen the show.

TAXING TIMES FOR KENVeteran banker basher and Labour may-oral candidate Ken Livingstone has neverminced his words when it comes to taxavoidance, saying earlier this year: Theserich bastards just dont get it... everybody

should pay tax at the same rate on theirearnings and all other income.

So it must be embarrassing to see hispersonal accounts splashed across TheSunday Telegraph, including allegationsthat by putting all his earnings through alimited company, he (perfectly legally)avoided at least 50,000 of tax in one year.Over to you, comrade!

OPERATICDUET FOR

MITIE BOSSAND HUBBY

WHAT connects Mitie, the FTSE250 support services company, with opera? It isnt just thatMitie is responsible for manag-

ing the facilities at the Royal OperaHouse in Covent Garden. The 19m con-tract, which sees Mitie providing clean-ing and security services to the2,256-seater venue, is certainly impor-tant to chief executive Ruby McGregor-Smith but she shares a personalconnection to opera as well.

Her husband, Graham McGregor-Smith, is an opera singer who has justfinished a run of La Traviata at the South

Hill Park theatre in Bracknell(coincidentally, the Verdi masterpiece isalso playing at the Royal Opera House).

They say opposites attract, but MrMcGregor-Smith wasnt always in thearts business. Like his wife, he trained asa chartered accountant before taking astring of financial jobs at brewer Scottishand Newcastle. According to his LinkedIn

$!44%).$!%.3#/!-..*)%#$.%-%,!.!,4'#!..!(!%*)-/'.).)%#%.'(!%%)0!-.*,!.!,%-$%,()*"%,,%))*)!2!/.%0!%,!.*,*"-!/.*+%*/*0),*(!.!,1-$%!",!.%0!""%!,*")!(*'1$%$%)'/!,%)#%)#%#,*.$!,.*.$!

!.!,'-*-!,0!--!+/.3$%,()*".$!)#'%-$.%*)'+!,),!-%!).*".$!*3'!'!0%-%*)*%!.3!-.%''"%)-.%(!.*1,%.!,!#/',"***'/()"*,.$!44%).$!%.3*)44%-&%)'3-+*)-*,!3#'*'"/)()#!,!,!!)--!.)#!(!).

$#(%"&(&+!((#%&'#(&!!'$#$#++#((*$#++!'(#$#(!$*&'(#()))++"$"

The Capitalist18 CITYA.M. 27 FEBRUARY 2012

Got A Story? Email [email protected]

When TheCapitalistcaught up

with RubyMcGregor-Smith, shehadnt had achance to seeher husbandin La Traviata

Rentokil InitialAngela Seymour-Jackson, the formerhead of RAC Motoring Services, has

been appointed as non-executive direc-tor of Rentokil. Seymour-Jackson, whoresigned as chief executive of RAC in

December after just a year in the role,will take up her position on 5 March,the pest control company said in astatement on Friday. Seymour-Jacksonis a member of the Chartered Instituteof Marketing and the CharteredInsurance Institute. She has also heldroles as distribution director at AvivaUK Life and Norwich Union Insurance.

WainbridgeWainbridge has launched a super-prime residential development andinvestment arm that will cater fordemand from wealthy investors forluxury properties in areas includingLondon, New York, Paris and the South

of France. The real estate companysaid Christophe Leriche, former Hinessenior project director, has been hiredas the head of France at the newinvestment vehicle, WainbridgeEstates. Leriches appointment will alsohelp provide further access to value-added office based investment oppor-tunities in the Parisian market,Wainbridge said in a statement.Leriche spent 17 years at Hines in avarious number of senior roles and pre-viously worked for BouyguesImmobilier for six years.

LPM OutsourcingLPM Outsourcing (LPMO), has promot-

ed operations and client accountsdirector Madeleine Bowd to the role ofmanaging director. LPMO is a specialistin back office administration for theleasing and asset finance sector and asubsidiary of Five Arrows Leasinggroup, the asset finance arm ofRothschild banking group. Bowd joinedthe firm 25 years ago after spendingthree years working in various posi-tions within the operations departmentof Xerox finance. I am pleased to beselected for this challenging new posi-tion, as the leasing industry increasing-ly looks towards outsourcing to cutcosts and improve service levels, shesaid in a statement.

CITY MOVES | WHOS SWITCHING JOBS Edited by Kasmira Jefford

+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

PacePace has appointed Roddy Murray as its newchief financial officer as part of chairman AllanLeightons overhaul of the ailing set TV top-boxmaker. The firm, which issued a string of profitwarnings last year, said Murray will take overfrom Stuart Hall on 6 March, who is leaving afterfive years in the role. Chief executive Neil Gaydonand chief operating officer David McKinney havealso left the firm since December. Murray joinsfrom the plumbing and heating group BSS, whichwas taken over by Travis Perkins in 2010.

Mitie, run by RubyMcGregor-Smith, isresponsible for man-

aging the facilities atthe Royal OperaHouse

Picture: LauraLean/City A.M.

Tax activist: Ken Livingstone GETTY

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London SouthendAirport...because you want

to park your car,not buy the airport

With parking from 6 per day without pre-bookingand ten European destinations on sale now!



HALF of Britons do not expect to buy ahouse until they are in their forties, asurvey showed today, while the hous-ing market stayed flat again throughFebruary.

Average rents rose to 890 permonth at the end of 2011, but 61 percent of renters cannot afford to buy,according to a survey published today by FindaProperty.com, with half ofrespondents saying they do not expectto buy a home until they are over 40.

Housing activity did jump thismonth, with a 35.7 per cent rise in thenumber of sales agreed, according toHometracks monthly national hous-ing survey.

The number of property listings

jumped 15 per cent and the number of

new buyers registering with agentsrose 18.1 per cent the biggestincrease since February 2007.

However, despite this increasingactivity prices stayed flat for the sec-ond month in a row, after a 0.2 percent fall in December.

The rise in demand is also set to beshort-lived.

Activity amongst first time buyerslooking to beat the stamp duty holiday which ends on 24 March has pro- vided an additional and artificialboost to the figures, said HometracksRichard Donnell.

Data out today from Lloyds TSBshows house prices in east Londonhave risen by over 60,000 since it wasannounced in 2005 that the Olympicswere coming to the area.

However, that amounts to growth of

30 per cent, only slightly higher than

the 25 per cent average across Englandand Wales, and house prices in the 14postal districts closest to the gamesremain 22 per cent lower than the cap-itals average.

Over the long term, prices in theEast End are likely to be supported byimproved infrastructure and transportlinks, said Lloyds Suren Thiru.

House prices flat asBritons stuck renting

Many Brits are likely to be renting long after having children Picture: GETTY

BY TIMWALLACE

HOUSING


GOVERNMENT plans to introduce awage-based limit on migrants settlingin the UK risks damaging Britainsattractiveness to important workers,business groups have warned.

The Home Office wants new rules, which will only allow non-EU immi-

grants earning over 35,000 to settlehere, and limit the time foreign house-hold staff can stay in the UK.

However, businesses fear the econo-my will be hit as a result.

Sometimes the rhetoric is off-put-ting the government has to make itclear that it welcomes the best interna-tional talent here in the UK, said Adam Marshall from the British

Chambers of Commerce (BCC).The BCC also fears the plans fail to

account for regional wage differences.Meanwhile the Trades Union

Congress worries about the welfare ofhousehold staff. Under new proposalsto be announced this week, staff would have to stay with the familythat employs them regardless of theirtreatment, or face deportation.

PROSPECTS for pay in the IT industryare their brightest since the pre-reces-sion years, according to a survey outtoday, indicating the worst may beover for the industry.

The ReThink IT survey found 59 percent of directors in the industry expectsalaries for staff to rise in the yearahead, up from 47 per cent last year

and 55 per cent in 2007. Forty-threeper cent plan to hire more staff, upfrom 36 per cent in 2011.

This is the first really positive out-look that we have had from IT direc-tors since the credit crunch began,said ReThinks Michael Bennett.

IT directors have been continuallyasked to do more with fewer staff butit may be that this is finally coming toan end.

UK ECONOMY

BY TIMWALLACE

UK ECONOMY

Businesses warn government not toscare off talented international workers

IT industry sees signs of growthas hiring intentions hit new high

ANALYSIS l house prices are falling in most areas

%

% country with price rises

Price rising

Price falling

Feb 07 Feb 08 Feb 09 Feb 10 Feb 11 Feb 12

60

40

20

-20

-40

-60

-80

% country with price falls

0

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STIFLING regulations and a risingnumber of defaults are forcing banksto cut down on lending, a new reportfrom Ernst & Young warns this morn-ing.

Banks are being forced on a diet,according to the firms Marcel VanLoo, who said: on the one hand theyare being asked to hold more capital

but on the other they are facing ongo-ing unresolved macro-economicinstability.

The result is increasingly conserva-tive policies from banks both in theUK and elsewhere in Europe, theresearch shows.

Lenders appear concerned over fac-ing an increasing number of defaults,resulting in greater losses. Regarding

loans to services firms Britainslargest sector over half of the sur-

veyed banks expect the risk of defaultto increase.

It is not just banks in the UK whoare expecting defaults to rise, thisconcern about existing loans is con-sistent across Europe as the contin-ued economic uncertainty impactsmore and more businesses, addedSteven Lewis from Ernst and Young.

Yet a separate report, also releasedthis morning, shows more upbeat fig-ures for firms in the UK.

Insolvencies fell in January to the

same level seen at the start of last year, data from Experian revealed down from 0.11 per cent in Decemberto 0.07 per cent last month.

The improvement was led by mid-sized businesses with 101 to 500employees.

Red tape anddefaults hitbank lending

Cost of living raises debtburden for households

THE RISING cost of everyday livinghas tightened the debt noosearound the necks of millions ofBritons, a debt counselling charity

will announce today.Nearly a quarter of households

disposable income (23.8 per cent)goes towards interest payments onloans, on average, the ConsumerCredit Counselling Service (CCCS)found at the end of last year.

Interest payments actually fell by2 per week in the final quarter,compared to quarter three, yetinflation pushed up the cost of liv-ing and further eroded house-

holds levels of disposable income. And despite slowing inflation at

the beginning of this year, the out-look remains grim, the CCCS warns.The demand for debt advice is fore-cast to remain high and rise in thecoming years as unemployment

worsens across the UK, it said.Middle-aged and elderly people

in particular will be increasinglyaffected by debt problems, thecharity said. The report predictsthat CCCSs share of clients over theage of 45 will rise from an historic28 per cent in January 2005 to a pro-

jected 47.6 per cent by December2014.

BY JULIAN HARRIS

BANKING

PERSONAL FINANCE


Availability of new loans to factoriesshows modest signs of improvement

THE AVAILABILITY of credit toBritish manufacturers has pickedup modestly at the start of this year,according to industry group EEF.

A balance of three per cent of fac-tories reported that the availabilityof new lines of borrowing hasimproved in 2012, the group saidtoday.

Yet the EEF maintains that lend-ing still needs to improve, pointingto continuing decline in the avail-ability of finance from existingsources. This measure declined to anegative balance of minus nine per

cent in the first two months of the year worse than the minus fiveper cent recorded in the final quar-ter of 2011.

We have to view an improve-ment in credit conditions as posi-tive, said EEF economist LeeHopley, but the absence of a trendshowing that availability is increas-ing and costs are coming down on aconsistent quarter on quarter basisindicates that there is more work to

be done. The group is urging the govern-

ment to push through the NationalLoan Guarantee Scheme, intendedto direct 20bn of lending from the

banks towards small businesses guaranteed by the state.

Companies with turnover of lessthan 50m will be able to apply forloans, under the scheme.

This must have an impact on thecost of borrowing which translatesinto a greater appetite amongstfirms to approach banks forfinance, Hopley said.

The growth in business invest-ment that our economy needs iscontingent on manufacturers hav-ing the confidence to commit totheir capital expenditure plans and

being able to access finance at theright price.

MANUFACTURING

RETAILERS will be looking for signs ofgreen shoots this week, with therelease of two important gauges forthe UK high street.

The CBIs distributive trades surveywill shed light tomorrow on the cur-rent fortunes for British shops.

And a separate survey oWednesday, from GfK NOP, will revealif consumer confidence is continuingits recovery in 2012.

The widely-regarded index surprised to the upside in January, rising

by four points, with increases in allfive categories of the study.

And the news was bolstered by offi-cial figures from the Office forNational Statistics (ONS), whichshowed a 0.9 per cent lift in sales (in

both volume and value) in Januarycompared to December following a

0.6 per cent jump (by volume) inDecember, compared to November.

Yet independent surveys from theBritish Retail Consortium (BRC) andCBI were considerably less positive,raising questions as to the true pic-ture on the UK high street.

Figures to shedlight on outlookfor UKs stores

RETAIL

ECONOMISTS VIEWS: ARE RETAIL SPENDINGAND CONSUMER MORALE ON THE UP? by Julian Harris

DAVID MILLER | CHEVIOT ASSET MANAGEMENT

As inflation pressures dissipate, the lack of wage growth becomes lessof a problem people realise they have money to spend and get their con-fidence back. Yet its too early for a recovery to be apparent

MICHAEL HEWSON | CMC MARKETS

Its going in the right direction. When I saw retail figures in January Ithought we were reading the wrong line. Is it sustainable? Unclear. Theseconsumer confidence figures still arent great on a long term basis.

HOWARD ARCHER | IHS GLOBAL INSIGHT

We expect the CBI survey to show that the balance of retailers report-ing that sales were up year-on-year rose to -12 per cent in February ... Thiswould still be appreciably below the overall average of +3 per cent in 2011.

Consumer confidence unexpectedly improved in January Picture: GETTY

8/2/2019 Cityam 2012-02-27

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BEST OF THE BROKERS

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

ANALYSIS lHays

90

75

70

65

60

80

85

Dec Jan Feb

p84.10

24 Feb

HAYSCitigroup has downgraded the global recruit-ment company from hold to sell followingfirst-half results last week, which saw earn-ings before tax of 63m in line with esti-mates. The broker is sceptical about HaysUK business, saying that it lacks strategic

direction. Though it lifts its target price to75p on earnings upgrades, the rating is cutdue to shares trading well above that price.

TodayA diverse group of FTSE 100 reporterswill kick off a busy week in the corpo-rate calendar this morning, with bank-ing giant HSBC likely to be top of manyinvestors watch list. Analysts areexpecting the banks geographicaldiversity to offset any potential weak-ness in it investment banking division,

with profits expected to hit 14bn more than double the amount thatBarclays posted last week.

Away from banking, AssociatedBritish Foodswill be looking to contin-ue the strong growth in revenue in itssugar and agriculture businesses, which drove revenue growth at thegroups last update in mid-January. Itwill also be hoping that the drop incotton prices will have fed through toprofits at its budget retail chainPrimark.

Also reporting are distribution andoutsourcing firm Bunzl, FinancialTimes-owner Pearson and EssarEnergy, which will be hoping to put itsrecent Indian tax troubles behind it forthe time being to focus on its full-yearearnings. Among the mid-caps, house-builder Bovis, manufacturing groupCookson, insurer Hiscox and defencetechnology firm Ultra Electronicswill

all release full-year results.

TuesdayBellwether Persimmonwill be lookingto continue the upbeat trend set byhousebuilders Barratt and GallifordTry when it reports full-year results on Tuesday, though consensus forecastsare for revenue to fall 2.5 per cent toaround 1.53bn. The companys ex-London focus means it may be morevulnerable to regional weaknesses, butanalysts at Northland say activity hasremained constant across the UK,underpinning revenue growth in linewith expectations.

Joining it will be Costa Coffee andPremier Inn-owner Whitbread, which was weighed down last week by ashort-term trading sell rating fromanalysts at Credit Suisse, who areexpecting subdued growth in revenueper available room at Premier to mean

the group pre-close update will disap-point markets. Also reporting will besupport services giant Serco, whichhas been trading strongly ahead of itsfull-year results.

Among the smaller companiesupdating markets today are mediagroup UBM and speciality chemicalscompanyAZ Electronics.

WednesdayBroadcaster ITV (see p13) is one FTSE100 reporter to look out for on Wednesday, along with StandardChartered, the second Asia-focusedbank to report this week. Profits areexpected to outperform the majorityof its UK banking peers.

International Airlines Group is alsoexpected to turn in an impressive full- year performance, with profits fore-cast to have doubled over the year asthe Iberia-BA tie-up begins to reaprewards.

Elsewhere, Capital & Counties andTaylor Wimpeywill provide more per-spective on the property sector, whileCarillion, National Express, Sage andSportingbetwill also report.

ThursdayMan Group is the one to watch as wemove into March, with consensus out-look not good for the alternativeinvestment management business.Copper focused miner Kazakhmys,which has already announced it metall its major output targets in 2011.

Stagecoach, Bwin.party and com-munications group Spirent areamong the smaller firms updatingthe market.

FridayA quieter day to finish off the week, with engineering groupIMI leadingthe FTSE 100 reporters. IMI has beenon the acquisition trail recently,snapping up small businesses in Italyand Brazil, so investors will belooking for a positive outlook on syner-gies from the tie-ups. Laird,BBA Aviation and Rentokil willalso report.

THE WEEK AHEAD BY ELIZABETH FOURNIER

A RALLY on Wall Street will be put tothe test this week, with the S&P 500at its highest level since before thecollapse of Lehman Brothers in 2008.

The broad index is up 8.6 per cent

for the year, closing at 1,365 on Friday.The S&P 500s close was the highestsince June 6, 2008, a few monthsbefore Lehman Brothers went bank-rupt as the global credit crisis hit.

While the swiftness and magni-tude of the gains have created con-cerns that the market is due for apullback, a break above 1,370, whichwas 2011s intraday high, could trig-ger more buying as investors fearmissing out on further gains.

We reached an exhaustion pointand an inflection point. The senti-ment is bullish and the money flowhas gotten bullish, and thats freak-ing people out a bit, said JamesDailey, of TEAM Asset Strategy Fundin Harrisburg, Pennsylvania.

Whats more likely, or normal, would be a 5 to 7 per cent decline(from current levels), but if we moveabove 1,370, that could be the next

leg up.The S&P 500 has struggled to climb

above 1,370, but the level has thrownup strong resistance.

Last week, the Dow Jones industrialaverage and S&P rose about 0.3 percent and the Nasdaq Compositeadded 0.4 per cent to close at its high-est since mid-December 2000.

Oil prices will also be in focus afterBrent crude futures closed at $125.47per barrel on Friday, the highest sincelast April, on fears of worsening ten-sions between Iran and the West.

The movement in the euro will also be closely watched for hints aboutmarkets appetite for risk. On Fridayit rose to its highest in more than twomonths against the dollar and hit itsstrongest versus the yen in nearlyfour months. The European CentralBank is expected to makeavailable another round ofcheap money this week.

THE WALL STREET

WEEK AHEAD

ANALYSIS lSt. James's Place

380

320

340

360

Dec Jan Feb

p 373.1024 Feb

ST JAMESS PLACENomura has maintained its neutral ratingon the wealth manager, but raised its targetprice to 370p following strong 2011 resultslast week. The broker sees possible changesto pension rules and economic uncertaintyas challenges to achieving growth in 2012,but says SJPs business model is one of thebest in the sector (although warns this mayalready be priced in).

ANALYSIS lLancashire Holdings

800

740

720

700

680

760

780

Dec Jan Feb

p 772.0024 Feb

LANCASHIRE HOLDINGSDeutsche Bank downgrades the specialityinsurance group from buy to hold witha target price of 870p based on its current

valuation, which the broker sees as havingthe companys earnings power for 2012already priced in. The broker says the com-panys 2011 results were decent consider-ing catastrophe losses, and sees goodunderwriting opportunities for this year.

ANALYSIS lEasyjet

420

400

380

360

440

460

480

Dec Jan Feb

p

448.8024 Feb

EASYJETUBS has downgraded the budget airlinefrom buy to neutral and reduced its tar-get price from 490p to 480p, saying it doesnot see sufficient upside to the shares giventhe firms strong performance since the startof the year. The broker says there is a lack ofvisibility on summer bookings, which are keyto the full year results, and is concerned thatrising oil prices will add to fuel costs.

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AT A time when energy bills are soaring,

many families will be angry thatBritish Gas reported profits last weekof over 500m. It follows the news ten

days ago that EDFs profits rose to almost1.6bn and announcements from the otherBig Six energy firms are due in the comingweeks. But politicians and policy makers needto be careful not to jump to conclusions intheir attempt to meet public concern withgovernment action.

It is understandable that energy prices havebecome a political hot potato. Combined gasand electricity prices have risen by 75 per centsince 2004 while the number of deaths fromhypothermia has doubled over a similar peri-od. But although right wing think tanks arewrong to blame the price spike on the cost ofrenewables (which have contributed just 7 percent to the increase), the left are misplaced in blaming profiteering.

Compass, the pressure group, and theIndependent have recently launched a cam-paign calling for a 1997-style windfall tax,with price caps to stop the cost being passedonto customers. But it is not clear what, if any-thing, a one-off regulatory intervention likethis would do to bring down costs and pricesin the energy market. The opaque nature ofenergy company accounts means that it ishard to apportion the true nature of profitsderived from their separate wholesale, retailand energy efficiency service businesses. Butthese profits do not appear to be consistent with profiteering.

The main source of high energy bills hasbeen the soaring co

cityam 2012-02-27

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