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FTSE 100 5,9022.70 +47.81 DOW 13,241.40 +160.67 NASDAQ 3,122.57 +54.65 /$ 1.60+0.01 / 1.20+0.01 /$ 1.34+0.01

Calls for PM

to announcedonor probe

DAVID Cameron was last night undergrowing pressure to launch an inde-pendent probe into the cash foraccess scandal as he admitted he hadentertained top Tory donors atDowning Street and Chequers.

Labour leader Ed Miliband slammedTory plans for an internal inquiry intothe allegations as a whitewash,telling the House of Commons: This isan inquiry into the Conservative party,

by the Conservative party, for theConservative party.

Miliband repeated his demand foran independent inquiry into allega-tions that large donors were offeredthe chance to influence a policy com-mittee at 10 Downing Street.

Cabinet office minister FrancisMaude, who took to the despatch boxinstead of Prime Minister DavidCameron, hit back by accusing Labourof blocking reforms during its recent13-year spell in power.

Maude quoted former Labour gener-al secretary Peter Watt, who had previ-ously said: My own party was the

biggest block to reform.Miliband should say sorry on

behalf of his party for blockingchanges, Maude said, while lashingout at trade union funding of theLabour party: Now theyre in opposi-tion, their donors dont just buy policy they elect their leader!

Further criticism of the Tories came

from News Corp boss Rupert Murdoch.What was Cameron thinking? hetweeted. No one, rightly or wrongly,

will believe his story. MORE: P2,4

BY JULIAN HARRIS

POLITICS

Drivers during a previous strike in 2008 brought many petrol stations to a standstill and forced fuel rationing Picture: GETTY

FUEL tanker drivers could cause chaosby disrupting petrol supplies nation-wide in the coming weeks, after theyvoted in favour of strike action.

Unite, which represents drivers sup-plying 90 per cent of the UKs fore-courts, said yesterday that 61 per centof truckers have voted to strike, poten-tially affecting almost 8,000 petrol sta-tions across the country.

Shortages over the Easter breaknext week are a possibility, with Unitegeneral secretary Len McCluskey yes-terday refusing to rule out strikes overthe bank holidays. Seven days noticemust be given before any action

begins. The drivers are protesting against

working conditions, which they claimare putting staff in danger amidgrowing instability in the fuel indus-try, Unite said.

Workers at Wincanton, Hoyer, BP,Norbert Dentressangle and Turners

backed strike action, with a 77.7 percent turnout. Members at DHL votedin favour of industrial action short ofa strike, while staff at Sucklingrefused to back any action.

Energy secretary Ed Davey slammedthe workers, saying in a statement it is

unacceptable and selfish to behave inthis manner and jeopardise our inter-national reputation.

The government has confirmed

BY MARION DAKERSENERGY

www.cityam.comIssue 1,600 Tuesday 27 March 2012 FREE

MAN UTDRECLAIM

TOP SPOTROONEY DOWNS

FULHAM P42

ITS GAME OVER277 STORES TO SHUT AS GROUPENTERS ADMINISTRATION P3

BUSINESS WITH PERSONALITY

that the ministry of defence will trainsoldiers to fill in as tanker drivers tokeep fuel supplies going in the eventof a strike, adding that it has learnedthe lessons of the fuel tax protests in2000, when petrol supplies in parts ofthe country ran dry.

But some on the forecourts are still

worried a strike could devastate retail-ers. Brian Madderson, chairman ofthe industry group RMI Petrol, toldCity A.M. the idea of using the army

was pie-in-the-sky thinking, witheach refinery requiring differentexpertise from the drivers.

If we had had some guidance fromthe department of energy, [retailers]

would have been able to raise stocksabove the current historic low levels.Petrol is hugely expensive, and retail-

ers have cash flow limits but therehas been no leadership or consulta-tion.

The department of energy and cli-

mate change insisted last night thatthe government has been holding reg-ular meetings with stakeholders, andthat the subject of supply has beendiscussed recently.

The Institute of Directors warned ofnationwide chaos if the driversabandon their posts. If the fuel runs

out, firms will not be able to transportgoods, staff will not be able to get to work, said director general SimonWalker.

STRIKE THREATENSUK PETROL SUPPLY

Certified Distribution

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News2 CITYA.M. 27 MARCH 2012

Hedgie angerover EU rulesHEDGE fund and private equity man-agers are growing increasingly angryover an attempt by Brussels to tough-en up a new directive by implement-ing it without proper consultation.

They have also accused theEuropean Commission of rejectingregulatory advice over the introduc-tion of the Alternative InvestmentFund Managers (AIFM) directive.

One hedge fund insider told CityA.M. the commission is trying to pushthrough a hardline text of Level 2 ofthe directive where the technicaldetail is worked out by giving EUnations just a fortnight to respond.

The member states are fumingbecause not only has the Commissionrejected much of the ESMA [regula-tors] advice on implementation, it

has also gone far beyond the originalLevel 1 agreement.

The industry is particularly con-cerned about two areas the protec-tionist implications of the thirdcountries section, which would stopEU investors putting money into non-EU funds, and the way that the direc-tive seeks to curtail leverage.

Last night Syed Kamall, theConservative MEP for London, said thecommission had acted arrogantlyand gone back on what had beenagreed previously. Nobody from theCommission could be contacted.

BY PETER EDWARDS

REGULATION

UNIVERSAL TO SELL $200M OF MUSICCATALOGUESUniversal Music is selling three of itsmusic publishing catalogues in a dealvalued at up to $200m that will helpto maintain Vivendis cherishedtriple-B credit rating as the musiccompany pushes through its planned$1.9bn purchase of EMI.

JEFFERIES TO EXPLOIT ITS RIVALSTROUBLE WITH NEW FINANCE ARMJefferies is looking to set up a corpo-rate lending business in Europe as thefast-growing US investment bankseeks to grab market share fromretrenching rivals. The bank plans toestablish a financing arm this year ina move that would further expand

operations in Europe where it hasquadrupled its workforce to almost

1,000 over the past five years.INSIDER TO FOLLOW RETIRING CHIEFRichemont, the worlds second-biggest luxury goods group by sales,said Bernard Fornas would be retiringas chief executive of Cartier, its pow-erhouse jewellery and watch sub-sidiary.

GOLDMAN EYES TRADING CHANGEGoldman Sachs is considering how toroll out electronic trading technologyto its fixed income business one ofits biggest revenue generators as itprepares for new regulation.Goldmans fixed income, currencyand commodities unit, or FICC, hashistorically been one of the largestprofit centres for the bank.

MAKE GOOGLE CENSOR ILLEGALONLINE CHATTER, SAY MPSGoogle and other internet searchengines should be forced to introducefilters to remove material banned bycourts if they are not prepared to doso voluntarily, according to a parlia-mentary committee. The Attorney-General should also be more willingto prosecute people for contempt ofcourt if they breach injunctionsonline, they said.

TRADER WITH TYPO IN CONTRACT DIDNOT HAVE A POINTJP Morgan Chase will not have to pay atrader whose salary was inflated by amissing decimal point in his employ-ment contract, a court has ruled.

LORD SUGAR: MOANING FIRMS TENDTO BE SKINT The Apprentice star said politiciansmust stop whining about banks notlending money to small companiesand that most firms who complainabout banks are skint.

WOMEN EARNING 43P AN HOUR MORETHAN MEN IN PART-TIME WORKWomen who work part-time are earn-ing more than 40p an hour more thanmen for the first time, official figuresshow. Although overall the gender paygap remains, with women earning 9.1per cent less than men, in part-timework the trend is reversed. Data fromthe Office for National Statisticsshows the higher rate since 1998.

ONCE SHUNNING AD PROMOS, GOOGLENOW FLAUNTS ITSELFAfter years of touting the superiorityof online advertising, Google is tak-ing a decidedly different approach topromote itself in areas where itsrivals dominate. The Internet compa-ny is spending big sums on TV, maga-zine and newspaper ads to promotenew services

JAPAN AIRLINES TAKES DELIVERY OFTWO 787SJapan Airlines took delivery of its firsttwo Boeing 787 Dreamliners yester-day, after a delay of about three yearswhile the plane-maker wrestled withdevelopment and production prob-lems.

WHAT THE OTHER PAPERS SAY THIS MORNING

Taxpayers must not be forced to pay

IT is clear that the current system ofparty funding doesnt work. Partiesrely too much on large donations from wealthy individuals in the caseof the Tories and from trade unions inthe case of Labour. It would be better ifthey were able to tap into lots of small-er donations, rather than a few largeones, something which ought to bepossible if they energised their mem-berships. Some pressure groups have vast numbers of paying members;there is no reason, in the era of inter-net campaigning, that this couldntalso be possible for radically reformed

political parties. The disconnectbetween grassroot members and thefunding of parties is one reason whyall three main ones have been takenover by establishment candidates com-

peting for the centre ground. This hasbeen a disaster for genuine pluralismin Britain and helps to explain whypoliticians have all become less repre-sentative of the public.

At the very least, much greatertransparency is required. Sunlight is agreat disinfectant. But one thing iscertain: taxpayer funding of politicalparties would be a terrible mistake,even though that would be the solu-tion that many of todays establish-ment politicians would privately loveto see. Many dont really like theirmembers, who they find irritating orexcessively ideological; they donteven like their donors. But statefinancing would mean members ofthe public would have to fund viewsthey find abhorrent and would turnthe party system into even more of aclosed shop. New parties would never

be able to emerge to challenge theexisting ones (as the ScottishNationalists, Greens and Ukip havedone, to a greater or lesser extent).Radical reform is required but the

nationalisation of politics is the lastthing we need.

BUDGET TRUTHSTwo myths need nailing. The first isthat George Osbornes cuts havealready been huge. The second, evenmore pernicious myth, is thatOsborne is already paying down thedebt (he used such a terminologytwice during his Budget speech).

According to the Institute for FiscalStudies, 88 per cent of cuts to socialsecurity benefits and 94 per cent ofthe cuts to non-investment public sec-tor spending are still to come. The UKis merely two years into a seven-yearprogramme of deficit reductionwhich will see spending fall in realterms (it will continue to go up in cashterms) and state expenditure declineas a share of GDP. Even then, the

deficit wont have been eliminated onthe measure that matters public sec-tor net borrowing will remain at 1.1per cent of GDP in 2016-17. But eventhat requires another election before

the target is reached, and therefore abitter campaign at a time when voterswill be sick and tired of austerity. Isthis really realistic? And as Ian Stewartof Deloitte points out, this is a tinymargin for error given that the gov-ernment is likely to borrow a total of338bn extra between now and then.

That is just too risky for comfort,given the extreme inaccuracy ofmacroeconomic forecasts: Two yearsago the official prediction for UKgrowth in 2012 stood at 3.5 per cent. Ayear ago that had been cut to 2.5 percent. In last weeks Budget it stood at0.8 per cent. The truth is thatOsbornes plans still rely far too muchon ultra-bullish long-term growthforecasts. If they dont materialise, he and the country will be toast.

[email protected] me on Twitter: @allisterheath

MARKETS rose on hopes of morequantitative easing (QE) yesterdayafter US Fed chairman Ben Bernankesaid the recovery may need more sup-port.

The central banker hinted at moremoney printing, arguing more actionshould be taken to push boost jobs.

Despite the recent improvement,the job market remains far from nor-mal, he said. Further significant

improvements in the unemploymentrate will likely require a more rapidexpansion of production and demandfrom consumers and businesses,which can be supported by continuedaccommodative policies.

Stocks rose on the speech, with theDow Jones industrial average risingone per cent in the day, and the S&P500 rose 0.99 per cent.

Positive housing data also helped,with pending home sales up stronglycompared with February 2011,though they fell on last month.

BY TIMWALLACE

US ECONOMY

Bernanke wants more QEFederal Reserve boss Ben Bernanke says further stimulus will boost jobs Picture: GETTY

NEWS | IN BRIEF

Fresh probe for Strauss-KahnFormer IMF chief Dominique Strauss-Kahn was placed under formal investi-gation yesterday by authorities lookinginto a suspected prostitution ring inthe French city of Lille, his lawyer said,following a day of questioning by

judges in a closed courtroom. The

investigation on suspicion of complici-ty in a pimping operation is the latestjudicial headache for the Socialist for-mer-finance minister. The move couldlead to a trial but it falls short ofcharging him.

Bumi to unveil board shake-upNat Rothschild is today set to standdown from the chairmanship of Bumi,the coal miner he helped bring to mar-ket in London last year, at the requestof investors. Indonesian coal entrepre-neur Samin Tan, who became a majorinvestor in London-listed Bumi along-side the Bakrie family last year, is tobecome chairman as part of changesapproved at a board meeting yester-day and expected to be announcedtoday alongside Bumis earnings.Rothschild will remain on the board,sources said last night.

EDITORS LETTER

ALLISTER HEATH

Editorial StatementThis newspaper adheres to the system of

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

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

Syed Kamall said theEuropean Commissionhad destroyed thespirit of talks over theAIFM directive.

4th Floor, 33 Queen Street, London, EC4R 1BRTel: 020 3201 8900 Fax: 020 7248 2711Email: [email protected] www.cityam.com

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MORE THAN 2,000 Game Group staff will be made redundant this weekafter the video games retailer col-lapsed into administration yesterday.

PwC, the appointed administrator,said 277 stores would be shut withimmediate effect, leaving 2,119employees without jobs including 15head office staff.

The remaining 332 stores employ-ing 2,814 people will stay open as nor-mal as PwC attempts to find a buyer torescue the business.

The recent job losses are regret-table but will place the company in astronger position while we exploreopportunities to conclude a sale, saidMike Jervis, joint administrator andpartner at PwC.

Ian Shepherd, who stepped downfrom his role as chief executive yester-day, tweeted: It breaks my heart to seea business made up of such magnifi-cent people come to this and yes, Ithink we should have been able toavoid it.

Game has become the latest casual-ty on the high street after a string ofprofit warnings and the refusal by sev-eral big suppliers including EA Gamesto provide the retailer with new block-

buster releases.Jervis told City A.Mthe chain had suf-

fered high fixed costs incurred fromits vast store portfolio and its ambi-tious overseas expansion, with manyof these loss-making stores funded byits UK operations.

The firm, which trades as Game andGamestation, told customers onFacebook its reward card has beenfrozen, meaning some 19m membersglobally will not be able to redeempoints until further notice.

Game has also suspended its giftcards and warned it would not be ableto offer refunds for products.

PwC said is in talks with several par-ties who have expressed an interestedin purchasing part or all of the busi-ness and its assets. These are said toinclude Gamestop and Hilco.

Sources close to Game said failureto reach an agreement could result inRBS and its lenders taking controlthrough a debt-for-equity swap.

Game in final

battle to findwhite knight

THE Treasury has held talks about sell-ing a stake in Royal Bank of Scotlandto Abu Dhabi, it emerged last night.

Officials have spoken to the emi-rates sovereign wealth funds over thecourse of several months. Sources said,however, that talks have not reachedan advanced stage and a deal is notimminent.

The government owns 82 per cent ofRBS after bailing it out with 45bn in2008. The sale of a small stake couldpave the way for a full privatisationand increase private sector interest byhighlighting demand for the stock.

RBS shares remain well below the49.9p average price paid by the state,however, and closed down one percent at 27.75p last night, meaning tax-payers remain out of pocket.

Earlier this month RBS chief execu-

tive Stephen Hester said the faster thegovernment starts selling its stake, thebetter for everyone.

A Treasury spokesman said: Theaim is to repair and return RBS to fullhealth so that it is able to support theUK economy in the future, and thecurrent strategy is working to achievethat. The governments policy hasalways been to return RBS to the pri-vate sector, but only when it deliversvalue for money for the taxpayer.

Treasury met Abu Dhabi todiscuss start of RBS sell-off

BYKASMIRA JEFFORD

RETAIL

BY PETER EDWARDSBANKING

News 3CITYA.M. 27 MARCH 2012

ANALYSIS l GAME Group PLC

p

8

4

6

2

2.3921 Mar

Jan Feb Mar

PwC partners Mike Jervis and StuartMaddison have been appointed as

joint administrators to Game GroupsUK operations after the retailer for-mally went into administration yester-day.

Mike Jervis oversees PwCs middlemarket practice in London and worksboth in an advisory capacity and takes

appointment roles, assisting in the

reconstruction or sale of businesses.He was named as one of the admin-

istrators of Lehman BrothersEuropean operations in 2008.

In 2006, Jervis was lead adminis-trator of Adams Childrenswear, thechildrens clothing retailer, and he alsoacted as the administrator ofGreeting Card Group which was soldin 2007, securing 1,800 jobs.

Joining Jervis on the team is StuartMaddison, PwC partner responsiblefor business recovery services in theThames Valley and south.

He has contributed to a variety ofrestructurings, with recent appoint-ments including the administration of

Sofas (UK) Limited. Joe Softley

MEET THE ADMINISTRATORS

The government may sell a stake in RBS, led by Stephen Hester Picture: Getty

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Donor dinners: whos been supping with the PMPOLITICS


Michael Hintze

Michael Hintze isthe billionaireowner of hedgefund CQS, andcan be found inthe Forbes richlist. He has madedonations to anumber of seniorConservativesand, like Ruddock,funds the arts and other charitablecauses. Along with his wife Dorothy

he attended the post-election dinnerparty at Number 10 in July 2010.

Andrew Feldman

Current co-chair-man of the Toryparty, LordFeldman raised

funds for DavidCamerons suc-cessful bid for theparty leadershipin 2005. He islisted as attend-ing a thank youdinner at Number 10 on 14 July2010 after the coalition came topower, and was appointed to theHouse of Lords five months later.

David Rowland

The low-profileproperty mogulhad an extremelyshort-lived spell as

Tory treasurer in2010, steppingdown before hehad even startedin the post.The millionairedonor famouslymanages to avoid photos of himselfappearing in public.He attended a dinner at Number 10 inFebruary 2011.

Michael Farmer

Millionaire MichaelFarmer, who madehis fortune bytrading in metals,

is the founder ofhedge fund RKCapitalManagement. Hehas been throwninto the deep end,having beenappointed Conservative party co-treasurer last month. Three monthsearlier he attended a social dinner inthe Downing Street flat.

Also attending Camerons events:n Lord John SainsburyThe supermarket magnate is aConservative peer in the House ofLords and has donated consistentlyto the party. He and Lady Sainsburyattended the dinner in July 2010.nMurdoch MacLennanMacLennan is not a major donor tothe Tory party, but he did attend thepost-election dinner in 2010. He ischief executive of the TelegraphMedia Group.nMichael FreemanMichael Freeman, of property groupArgent, was a guest at the July 2010dinner.

Anthony Bamford

Billionaire SirAnthony is chair-man of JCB,which makesmachines for theconstructionindustry. He isbelieved to havedonated in excessof 2m to theparty in recentyears and attended the thank youdinner at Downing Street in the sum-mer of 2010, along with his wife,Lady Bamford.

Paul Ruddock

Sir Paul Ruddockis another hedgefund chief to havemade significantdonations to theConservativeParty. He foundedLansdownePartners in July1998 and is alsoa keen fundraiserfor the Victoria & Albert Museum. Hiswife Jill is also a supporter of thearts. They both attended a dinner atDowning Street in July 2010.

Henry Angest

Angest heads upone of Britainssmaller financialservices groups,Arbuthnot, andhas donatedrepeatedly to theConservatives inrecent years. InNovember 2011he attended adinner at David Camerons DowningStreet flat for long-term supporters

of the party, with whom the PM has astrong relationship.

Ian Taylor

Oil chief IanTaylor leads VitolGroup, one ofthe worldslargest independ-ent energy trad-ing companies.He has donatedover half a millionpounds to theConservativessince 2006, and was subsequentlyinvited to attend the same dinner asAngest (above) for long-term sup-porters, in November of last year.

Michael Spencer

Like PeterCruddas, MichaelSpencer is a for-mer Conservative

treasurer. Justlast month theIcap chief attend-ed a dinner inDowning Streetwith his partner.He has added tohis fortune through the spread bettingindustry via his interest in City Index,which is owned by investment vehicleIPLG. He is a major Tory donor.

THE CONSERVATIVES yesterday pub-lished a list of large donors who haveattended dinners at the PrimeMinisters official residences since the

coalition was elected in 2010. Tory co-treasurer Peter Cruddasresigned on Sunday after being caughtsuggesting that big donors could influ-ence Number 10 policy.

Meetings between large donors andleaders of political parties are allowedunder current rules. Yet oppositionleader Ed Miliband said the claims showa breaking down of the lines betweensupport for a political party and the waygovernment policy is determined.

R h B

BMW recalls 109,000 UKcars in battery fire scare

BMW, the worlds largest premiumcarmaker, is recalling about 1.3m carsfor repair worldwide due to a possibleproblem with a battery cable cover inthe trunk.

The recall, announced yesterday,affects about 109,000 cars in Britain,BMW said. It concerns 5 and 6-SeriesBMWs built between 2003 and 2010.

BMW said it was writing to carowners offering a free repair, which

would take between 30 and 60 min-utes in a BMW workshop.

In some remote cases, the batterycable cover inside the boot of these vehicles may be incorrectly mount-ed, it said.

This can result in the electricalsystem malfunctioning, the vehiclefailing to start and, in some cases, tocharring or fire, the company said,adding it was not aware of any acci-dents or injuries to people due to theproblem.

Fewer than one per cent of the carsBMW has so far inspected for the

issue have exhibited the problem andthere have been no reports of fires.

AUTOMOTIVE

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NEW JOBS

NEW COMPANIES

EVERYDAY

CAREERS.com

WWW.CITYAMCAREERS.COM

OVER

OR SCAN HERE

2000

FINANCE, LEGAL & I.T

SALARIES UP TO

JOBS 300K

40p per unit, as well as lager at 39.6

per cent on average and 55.7 per centof sales under the level.The impact would be quite sub-

stantial even for more moderatealcohol consumers, the IFS believes.

The minimum price is also beingimplemented in an inefficient man-ner, the think-tank warns.

The policy could also lead to sub-stantial transfers of revenue to thealcohol industry. It would seemmore sensible to establish a floor

price through the tax system by

treating different types of alcoholmore consistently, and allow theserevenues to flow to the exchequerinstead.

However, the Home Office rejectedthat view, telling City A.M. alcoholsold at a loss benefits the heaviestdrinkers and costs the rest of us.Supermarkets can use any extra prof-its to lower the price of other goodsand make the average shopping bas-ket cheaper.

IFS: Minimum price willhurt moderate drinkers

Picture: Laura Lean / CITY A.M.

BY TIMWALLACE

POLITICS


NEW RULES pushing up the price ofalcohol will affect almost half ofdrinks sold at off-licences and hitmoderate drinkers, a study by theInstitute for Fiscal Studies claims.

Home secretary Theresa Mayannounced the government is look-ing into a minimum price of 40p perunit, arguing last week that higherprices will crack down on a signifi-cant minority in this country whodrink dangerously and who causedisproportionate harm.

However, analysis of off-licencesales by the IFS shows 47 per cent ofunits of alcohol sold will be affected

by the minimum price.Cider and sherry drinkers will be

worst affected, with an average pricein 2010 of 30.6p per unit price and

80.3 per cent of sales falling underthe proposed 40p f loor.

Fortified wine sales will also behit, with an average unit cost of39.6p and 63 per cent of sales below

MONITISE has made its first acquisi-

tion in its almost ten-year history withClairmail, the US-based mobile bank-ing software firm.

The British financial services tech-nology company forked out $173m(108.5m) to buy its rival, which willaccount for 26.5 per cent of the com-

bined group, worth almost 400m.The acquisition of Clairmail, which

grew revenues by 90 per cent to $18min 2011, will see Monitise work for athird of the top 50 North Americanfinancial institutions and reach 13mconsumers on four continents.

Chief executive Alastair Lukies, whofounded Monitise in 2003, said:Monitise has established itself as the

worlds number one platform andecosystem of choice in the hugelyexciting mobile money industry. Thistransaction further enhances this lead-ership position.

The future of payments, the inter-

net, retail and social networking is allmobile, he added.

Monitise already provides services toRBS and Lloyds TSB, and works closely

with Visa, its biggest shareholder.

Monitise buysUS rival firmBY LAUREN DAVIDSON

TECHNOLOGY

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ABERDEEN Asset Management wasone of the biggest risers on the FTSE100 yesterday after it pulled in moremoney amid calmer global markets.

It posted a six per cent rise in fundsunder management to 184.4bn in thetwo months to the end of February asinvestors rediscovered their appetitefor risk.

Chief executive Martin Gilbert saidmoney had flowed into higher-marginproducts such as emerging markets

equities.He told City A.M. that sentiment had

improved after the Eurozone crisiseased but declined to say it had beendealt with definitively. I dont knowwhether it would come back. I thinkmost people are pretty cautious.

Shares in Aberdeen, which joinedthe FTSE 100 earlier this month, closedup 4.36 per cent at 260.80p after it ben-efited from the rally in global markets.Central banks have pumped cheapcash into the financial system this

year, with the European Central Bankpouring in more than 1 trillion(836bn) since late December.

Yesterday Aberdeen said fixed-income outflows had slowed signifi-cantly from previous quarters and itcontinued to see positive interest for both emerging market debt and its Asian local currency short-durationproduct.

It also said it had recently beenappointed to two new mandates in itsproperty business, which it expects tofund during the second half of itsfinancial year.

Return to calm

in the market

aids Aberdeen

Aberdeen, led by Martin Gilbert, won the fund manager prize at the City A.M. awards 2011

BY PETER EDWARDS

ASSET MANAGEMENT


ANALYSIS l Aberdeen Asset Management PLC

p265

260

255

250

245

260.8026 Mar

20 Mar21 Mar 22 Mar 23 Mar 26 Mar

Quality better than quantity THE real story behind Aberdeensimproving fortunes is not just that itis running more money in its funds,but that it is running better money

too. Most of the new inflows aregoing into high-margin productssuch as its emerging markets equi-ties business, which saw net inflowsof 2.74bn in the five months to theend of February.

The Asia Pacific equities businesshas also been attracting investors,pulling in a net 408m over thesame period, as have global equities, which attracted 732m of netmoney. Typically, these funds boast

margins of between 60 and 90 basispoints.

The same cant be said for theareas where Aberdeen is experienc-

ing net outflows, namely its fixed-income business, which experiencedan overall net outflow of 2.4bn. That suits Aberdeen down to theground, as these funds typically havelower margins of between 20 and 30basis points. In a choice over quantityand quality, quality triumphs again.

BOTTOMLINEAnalysis by David Crow

MANGANESE Bronze, the maker ofLondons traditional black cabs, hasposted a narrower annual loss asoverseas demand for its vehiclesgrew and margins increased.

The Coventry-based companreduced pre-tax losses to 2.6m in2011, down from 6.3m the yearbefore, and said it is well positionedto place a profit in 2012.

Sales of new taxis in Londonincreased four per cent to 1,074 vehi-cles, but sales in the rest of the UKmarket fell by almost a third to 428.

Export sales more than tripled to705 vehicles in 2011.

Manganese Bronze, which is 20per cent owned by Chinas largestprivate car maker Geely Automobile,said it shipped 500 vehicles to Azerbaijan in February 2012 andmore orders are pending.

Shares of the London-listed compa-ny, which have lost nearly a fifth oftheir value since the begin-ning of this year,dropped five percent to 25p.

Black cab firmcuts losses ongrowth abroad

AUTOMOTIVE

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COUTTS has been fined 8.75m forsignificant, widespread and unac-ceptable failings in its money laun-dering controls, its second regulatorypenalty in four months.

The private bank, which is owned by Royal Bank of

Scotland, was foundto have made inade-quate checks onclients who are con-sidered politically

exposed persons people whose promi-

nent position inpublic lifem i g h th a v em a d et h e mvulner-able toc o r -r u p -tion.

Despite finding no evidence ofmoney laundering the FinancialServices Authority (FSA) issued thefine after finding deficiencies inthreequarters of the high risk cus-tomers files that were reviewed.

Problems identified include a fail-ure to gather sufficient informationto establish the source of wealth ofsuch clients and assess adverse intel-ligence about prospective and exist-ing high risk customers.

The bank, led by chief executiveMichael Morley (pictured), said itaccepted the judgement: Coutts has

cooperated fully and openly with theFSA throughout the investigation.Coutts accepts the findings regardingcertain failures to meet the relevantregulatory standards betweenDecember 2007 and November 2010.

Coutts, which counts the Queenamong its clients, faced a 12.5m fineif it had not agreed to settle at anearly stage. In November it was fined6.3m for failings related to the saleof a fund product during the run-upto the 2008 financial crisis.

Coutts finedover client

cash checks

SOUTH Koreas enormous national

pension fund is to open an office inLondon, boosting the governmentsattempts to attract foreign investmentin British infrastructure.

The $320bn (200bn) fund is lookingto double the size of its existing over-seas portfolio to around $60bn and hasalready spent a substantial sum onBritish projects in the last two years,snapping up HSBCs headquarters inCanary Wharf, buying a stake inGatwick airport and backing severallarge property developments in the

capital.Deputy Prime Minister Nick Clegg

made the announcement following ameeting in Seoul with the funds

chairman Jun Kwang-woo.Were ramping up our sales pitch

abroad Britain is open for business. Were making sure the UK doesntmiss out because investors dont knowwhats on offer or about our long-termstrategy to deliver world-beating infra-structure. [The funds] decision to openin London is testament to the econom-ic opportunities in the UK, Clegg said.

The office, due to open in June, will be the funds second internationaloffice, after New York.

Koreas 200bn pensionfund comes to in London

BY JAMESWATERSON

BANKING

BY JAMESWATERSON

CAPITAL MARKETS


Nick Clegg announced the deal after a meeting in Seoul Picture: REUTERS

HSBC has begun talks about offload-ing its Mauritius retail banking and wealth management division as itcontinues to target better investorreturns.

The bank is believed to havereceived three approaches for thearm, the origins of which go back tothe middle of the nineteenth century.

Yesterday HSBC, Europes largestbank, confirmed it was in talks butdeclined to comment on any bids. TheMauritius division has a network of11 branches and offices.

HSBC said it remained committedto the market there, where it wouldstill invest in its commercial bankingdivision.

The bank has begun a widespreadasset-selling programme over the lastyear, as part of chief executive StuartGullivers plans to cut annual costs by

$3.5bn (2.2bn), focus more on fast-growing Asian markets and boost itsoverall profitability.

Earlier this month it agreed to sellits general insurance businesses toFrances AXA Group and AustraliasQBE Insurance Group for $914m incash. HSBC also sold its majority stakein its Middle Eastern private equityarm last week and disposed of itsbanking operations in Costa Rica, ElSalvador and Honduras for around$800m in January.

HSBC mulls anew asset saleto lift returns

BANKING

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TOTAL lending will not be boosted bythe governments credit easingscheme, the Office for BudgetResponsibility (OBR) warned yesterday though the programme should shiftthe balance of lending towards smallfirms.

The governments national loanguarantee programme aims to give

20bn of support to lending, loweringsmall- and medium-sized enterprises(SMEs) borrowing costs by one percent-age point.

However, the credit easing scheme begins with only a 5bn tranche,which the OBRs Robert Chote said willhave little impact on total lending.

The magnitude does not justifymaking an adjustment to our forecasts

Im not saying it is a waster of time,but there will be no material impact

from the first tranche, he told theTreasury Select Committee.

Furthermore, by the time the full20bn has been implemented, the OBRbelieves the economy will have recov-ered and credit will be flowing again,limiting the usefulness of the pro-gramme.

However, the OBR did stress SMEswhich had planned on borrowing any-

way will benefit from lower interestrates on their debts.

OBR: Credit easing will have little impact

SPAINS La Caixa agreed last nightto the takeover of smaller rival

Banca Civica by its listed armCaixaBank, creating Spains b iggestbank by domestic assets.

CaixaBank offered 1.97 per sharefor Banca Civica in an all-share dealvaluing the whole bank at 980m.

A second wave of consolidation inthe Spanish banking sector is underway as lenders look to raise capitallevels to cover losses sustained aftera decade-long property and con-

struction bubble collapsed in late2007. With about 285bn in assets,

CaixaBank is around four times thesize of Civica and the move willform Spain's biggest bank in Spains

domestic market, outstripping evenSantander and BBVA.

CaixaBank will not request statefunds for the takeover and will pay back the 977m that Banca Civica

has received from the state-backedrestructuring fund FROB. The banks said they hoped to

finalise the deal and get theapproval of their shareholders by 30June.

Spanish banks to mergeBYHARRY BANKS

BANKING

COMMODITIES traders could face lim-its on the positions they can take,aimed at cutting down on speculationif regulators get their way in negotia-tions this week.

EU policymakers also want to ban banks from giving outside brokersdirect access to markets as part of asweeping crackdown on computerisedhigh-frequency trading (HFT), aEuropean Parliament report said yes-terday.

The report was the assemblys ini-tial response to a draft law aimed atreining in computerised or algorith-mic trading and other advances intechnology which have made it hard-er for supervisors to see the full pic-ture and control markets.

The EC proposed the draft law,known as MiFID II, last year and it isnow before parliament and EU statesfor approval, with changes expected.

Markus Ferber, the German law-maker who is steering the measurethrough parliament, said in his reportthat a tougher crackdown on HFT wasneeded than outlined in the draft law.

HFT has increased volume on manyexchanges and the Federation ofEuropean Securities Exchanges urgedcaution on Monday about taking suchradical measures.

We need to do some homeworkfirst. I dont think Ferber wants to killthe market but wants to be on the safeside, said Judith Hardt from theFederation of European SecuritiesExchanges.

Other exchange officials said a banon direct market access and requiringminimum periods for orders woulddamage liquidity and force people torisk their capital when they don't

want to. They were also dismayed thatFerber wants to harden controls onthe size of positions commoditytraders can hold.

EU near toban on hightech trading

BATS GLOBAL Markets is pushingahead with plans to move its Chi-Xplatform, Europes largest share trad-ing venue, to its own technology aftera software bug forced the exchangeoperator to take the embarrassingstep of pulling its own listing lastweek.

The third-largest US stockexchange was due to be the first list-ing on its own marketplace but asoftware bug caused its share price toplummet from $16 to less than a centbefore trading was halted.

Later in the day, BATS took theextremely rare step of withdrawingthe IPO altogether and said it wouldreturn money to investors who hadbought its shares.

Still, BATS Europe, wholly ownedby BATS Global Markets, said it wouldswitch Chi-X Europe to its own in-house developed platform nextmonth as scheduled, in a movewhich will make Chi-X faster and cutcosts.

A spokesperson for BATS Chi-XEurope said on Sunday that it hadcompleted the first dress rehearsalwith no issues.

BATS, which is owned by many ofthe worlds largest banks and tradingfirms, was formed in 2005 and hastaken on the New York StockExchange and Nasdaq in the tradingof stocks.

But its desire to challenge estab-lished markets in listings took a hitafter the debacle last week. The abili-ty to list other firms formed a corepart of the BATS own businessmodel.

The company has stressed Fridayssoftware bug was found in technolo-

gy related to changes it had made toenable its IPO in the US and tradingin Europe was not impacted.

BATS completed the acquisition ofChi-X three months ago for $300m.

BATS stickswith Chi-Xtech move

La Caixa chief exec Juan Maria Nin Genova has agreed the buyout deal Picture: GETTY

BY JAMESWATERSON

CAPITAL MARKETS

BY TIMWALLACE

UK ECONOMY

BYHARRY BANKS

REGULATION

The OBRs Robert Chote said overall credit levels are unlikely to be affected

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GUY Hands has sought to move onfrom his troubled investment in EMI by agreeing a 276m deal to buyGarden Centre Group (GCG).

His Terra Firma vehicle beat compe-tition from several private equity rivalsto take the retailer off the hands ofLloyds after the bank, 41 per cent tax-payer owned, and Sir Tom HuntersWest Coast Capital took a write-off.

Apax, CCMP Capital and DukeStreet are also thought to have beeninterested in a deal for GCG, which haslong been a target for buyout firms asLloyds seeks to shrink the vast loanbook it inherited from its takeover ofHalifax Bank of Scotland.

GCG, which has 129 centres acrossEngland and Wales, operates under brands such as Wyevale, Blooms,Bridgmere and Country Homes and

Gardens. It has not published perform-ance figures for last year but City A.M.understands the price of yesterdaysdeal represents a multiple of 8.5 on itsearnings before interest, tax, deprecia-tion and amortisation for 2011. Aspokesman for GCG declined to com-ment on an estimated Ebitda of 32m.

Hands said: The Garden CentreGroup has enormous potential and wesee considerable opportunity to help itgrow through focussed, strategicinvestment. It already has a leadingposition in a very fragmented marketwith long-term growth prospects.

A spokesman for Hunter said: WestCoast Capital wrote its stake off severalyears ago, we made a little bit of thatback through this deal and have nowexited.

Lloyds took control of the GardenCentre Group in 2009 after a debt-for-equity swap diluted Hunters stake toabout 20 per cent.

Hands findinggreen fingersin 276m dealBY PETER EDWARDS

PRIVATE EQUITY

THE CHIEF EXECUTIVE ofAstraZeneca, Britains second-biggestpharmaceuticals company, wasawarded a total pay package of morethan 9m last year, against 5.5m in2010.

The companys annual report pub-lished yesterday showed that DavidBrennans basic salary rose 2.5 percent to 997,000 in 2011 in line with

pay rises across the group, and thiswas bolstered by an array of bonusesand share awards.

His 2011 total pay package asreported by the group was 3.37m,including 1.32m cash bonus.Brennan also received a 5.6m one-off share award from 2008, whichwas released to him last year.

The report said Brennan and chieffinancial officer Simon Lowths cash bonus was 16 per cent lower than

2010, because AstraZenecas revenueand core operating profit declined.The company has been struggling

to develop new drugs to fill its medi-cine cabinet and replace revenueslost due to drug patent expiries.

In sign of further woes, a US judgeyesterday refused to grant the com-pany an injunction to delay thelaunch of generic versions of its top-selling antipsychotic treatmentSeroquel.

AstraZenecas chief lands abumper 9m pay packageBYKASMIRA JEFFORD

PHARMACEUTICALS


GCG is about to fall into new Hands (left) with Hunter (right) exiting Pictures: GETTY

ROTHSCHILD acted as the financialadvisor to The Garden Centre Groupand to lender Lloyds Banking Group.

Majid Ishaq, a London-based man-aging director at Rothschild, led theteam.

Ishaq told City A.M. that GardenCentre was attractive because of itsmid-market position and its middleclass customer base.

The chain owns about 70 per centof the properties from which it oper-

ates, Ishaq said, saving it money on

rent and meaning it avoids the regularnegotiations with landlords which arefaced by many high street retailers.

Ishaq has worked on a series of pri-vate equity deals includingBridgepoints acquisition, in Decemberlast year, of online cycling retailerWiggle, which counts former Asdachief executive Andy Bond among itsinvestors.

Ishaq also worked on one of thelandmark deals of 2010, when Pets atHome was bought by private equityfirm KKR for 955m.

He was part of the Rothschildteam which worked for Bridgepoint,the seller. A spokesman for TerraFirm said the buyout firm did nothire a bank or lawyer specifically for

this deal.

ADVISERS: ROTHSCHILD

MAJID ISHAQ

ROTHSCHILD

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THE NUMBER of new patented inven-tions in the UK rose by 29 per cent lastyear the biggest leap in a decade as2,992 patents were granted.

The figures, set out in a report fromlaw firm Reynolds PorterChamberlain, will come as good newsfor chancellor George Osborne, who inlast weeks Budget said he wanted theUK to be at the forefront of innovationand the technology hub of Europe.

But the number of patent applica-tions submitted dropped to 15,343 lastyear, following a declining trend overthe last decade. Some 20,196 patentswere applied for in 2002.

RPC intellectual property partnerDavid Cran, who wrote the report, saidthe lower number of applicationsreflects the economic downturn, ascompanies tread more carefully withtheir investment budgets.

BLP head of intellectual propertySimon Clark told City A.M.: People

have been tightening their belts andare no longer filing speculative appli-cations in the hope some will be grant-ed, so the quality of applications hasprobably increased.

The boom in IP grants is expected togrow in light of Patent Box thegovernment initiative which will cutthe tax rate on profits generated frompatents to 10 per cent from April 2013.

Cran called scheme a Budget high-light and said it will substantiallyincrease the UKs competitiveness.

He added that the reforms made tothe UK Patent County Court, includingcapping to 50,000 the cost of losing, were crucial in encouraging innova-tion and removing fears of bankruptcyfor small businesses wishing to sue forpatent infringement.

Last years surge was driven by thevehicles and transport industry, which was granted the most number ofpatents at 689 up 68 per cent on theprevious year. Health and surgerypatents jumped 53 per cent to 480.

UK sees surge

in number ofpatents filedBY LAUREN DAVIDSON

INNOVATION

EASYJET, Europes second-largest low-cost carrier, said yesterday it expectedits first-half loss to be narrower thanpreviously thought as cost controlsand better marketing help it throughtough times.

EasyJet said it now expects a first-half loss of 110m to 120m downfrom previous estimates of 140m to160m.

European airlines have struggled toovercome a toxic mix of high oilprices and sluggish demand in recentmonths, with low-cost airlines expect-ed to pick up more business as strug-gling consumers trade down.

In a difficult environment for allairlines, improvements in revenuemanagement combined with market-ing and website initiatives haveenabled EasyJet to take advantage asweaker competitors have left the mar-ket over the last couple of months,the company said.

Two months ago EasyJet postedstrong growth in quarterly revenue,helped by an uplift in the number ofbusiness travellers flying with the air-line and milder winter weather.

Since the start of the year, some air-lines, including loss-making Spanairand Hungarian flag-carrier Malevhave ceased operations, leaving gapsin the market.

EasyJet lossesnarrowing ascosts reducedAVIATION


Andrea Orcels move to UBS could end in tears

THE decision by UBS to hire starinvestment banker AndreaOrcel is pure box office. Orcel,one of the highest paid bankers

of all time (known by some as theGeorge Clooney of banking for hislooks), is a big recruit.

His impending arrival at UBSmarks a statement of intent from thegiant Swiss bank. It may have slipped

down the league tables the latestDealogic first quarter figures out yes-terday show UBS in 12th position inglobal mergers & acquisitions com-pared to ninth last year and it mayhave suffered reputationally from therogue trader scandal, but some inter-pret this appointment as saying incapital letters that it still means busi-ness in investment banking.

Cynics are not so sure. They say

that Orcel, whose clients includeSantander and UniCredit (but notmany more, they say), is a deal junkiefirst and foremost who is inevitablyunsuited to managing an investment banking team as he must do as co-

head of the US investment bank.They say his hire owes much to hisfriendship with UBS chief executiveSergio Ermotti, whom he has knownfor years, and that although he was atMerrill Lynch for 20 years he wouldhave moved much sooner if the rightoffer had come along.

They query how he will get on withsome of the remaining leading lightsat UBS such as Simon Warshaw and

also question how long his workingrelationship with Carsten Kengeter(with whom he will be co-head ofinvestment banking) will last.

One banker said yesterday: I sup-pose this shows that the UBS invest-

ment bank still has a pulse. Butstrategically it would have been muchsmarter for the bank to have acquiredsomething like Moelis.

Moelis is the boutique set up by theformer star of UBS, Ken Moelis, thathas done so well in the US and Asia where UBS could do with beingstronger than it is.

Like a marquee signing in the world of professional sport (think

Cristiano Ronaldo when he movedfrom Manchester United to RealMadrid), the Orcel arrival at UBS willbe hotly awaited, but it is far fromclear what the outcome will be.

Sources close to the bank were yes-

terday downplaying its impact, asidefrom saying that the bank had hired aterrific banker who would add to analready established team. This isbusiness as usual. I dont know whatthe storm is about. Others are onlytoo happy to predict that there will bea storm and it wont necessarily be aneasily navigable one.

Follow me on Twitter @[email protected]

INSIDE TRACK

DAVID HELLIER

ANALYST VIEWS: IS EASYJETS STRATEGYPROVING SOUND? Interviews by John Dunne

JAMES HOLLINS | INVESTEC

EasyJet is driving better-than-expected yields, as well as benefitingfrom the failure of competitors. The cost efficiencies have also helped. But thereare a number of headwinds in the second half, including fuel costs.

DOUGLAS MCNEILL | CHARLES STANLEY

Chief executive Carolyn McCalls second full year in charge is shaping upnicely. Our forecasts were already somewhat above consensus so are likely to staywhere they are. Cost performance also looks better than thought.

RICHARD CURR | PRIME MARKETS

EasyJet has exceeded expectations and the fact this has come in spiteof a huge hike in the fuel bill shows just how powerful a force for growth the lowcost carrier has become. It is the success story of the industry.

Carolyn MCall has led EasyJet to high-flying progress Picture: GETTY

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12 The Capitalist Got A Story? Email [email protected]

PAINTING A PICTURE OFRBS PAST AND PRESENTAuctioneers at Bonhams, the fine arthouse, are hoping that all the (mainly bad) news about the Royal Bank ofScotland and the debate about Scottish

independence may have a beneficialimpact on the demand for a portrait being sold next month in the firm'sEdinburgh office.

Bonhams is auctioning a portrait of Archibald Campbell, third Duke ofArgyll, the founder of RBS and one of31 Scottish Commissioners who negoti-ated the 1707 Act of Union withEngland. The painting, which is esti-mated to fetch 20-30,000, is by AllanRamsay, an eigh-teenth century por-trait painter.

Chris Brickley ofBonhams said: Theemergence onto themarket of this major work by Ramsaycould hardly be moretimely with RBS con-stantly in the newsand vigorous debate

taking place over thefuture of the Unionbetween Scotland andEngland in whichCampbell played apersuasive role.

Ramsay enjoyed the

Dukes patronage and friendship formore than twenty years and paintedhim a number of times.

But surely if its newsworthiness

were after ,there must be some moreappropriate RBS-related candidates forportrait subjects.

Step forward anybody that owns por-traits of the recently de-knighted FredGoodwin or even the de-bonusedStephen Hester. Its not obvious whatthe Goodwin work might fetch but itcould easily be a collectors item.

HMV's Oxford Street store yesterday hosted a charity head shave in supportof the Teenage Cancer Trust. Those who had raised 50 each were given a

free hair cut in front of the store's lunchtime shoppers in an event timed to coincidewith the release of the comedy 50/50. Picture: Laura Lean / CITY A.M.

HAIR CUTS FOR FREE AT HMV

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BRITISH gas producer BG Group andits partner Ophir Energy have dis-covered a bigger than expected gasdeposit off the coast of Tanzania,the pair said yesterday.

BGs shares jumped 1.8 per centafter it said it had come closer tothe minimum volumes requiredfor a liquid natural gas develop-ment.

The discovery made at theJodari-1 well had recoverable

mean resource estimated at3.4 trillion cubic feet (TCF).

That is above the estimateof 2.2 TCF and prompted BGand Ophir to issue upbeatstatements to the market.

Ophir, backed by steel

magnate Lakshmi Mittal (pictured),said the cumulative resources foundin its blocks were now about 7 TCF.London-listed Ophir holds 40 percent of the three blocks.

Its shares surged 18.8 per cent to477.6p, and chief executive NickCooper hailing the results.

This is a very strong start to ourfive-well 2012 Tanzania drillingcampaign and the Metro-1 drill-ship will now move to drillMzia-1, which is targeting mean

recoverable resources of 4.6TCF, Ophir said.

Investec analyst Stuart Joyner said the findannounced yesterdayis the strongest possible start to the five- well 2012 Tanzaniadrilling campaign.

BG and Ophirshares up onlarge gas find

RUSSIAN tycoon Oleg Deripaska isready to buy Rusals 25 per cent block-ing stake in Norilsk Nickel to resolve ashareholder dispute at the worldslargest aluminium producer, a sourceclose to the Rusal board said.

Deripaskas gambit seeks a way outof a row with minority shareholderViktor Vekselberg, who quit as Rusalschairman two weeks ago, saying thefirm was in deep crisis and overbur-dened with debt.

A buyout of the stake by Deripaska,Rusals chief executive and largestshareholder, at a price reported to be

around $9bn (4bn), is likely to beresisted by minorities and may not bepossible to finance, bankers and ana-lysts say.

Rusal bought the holding inNorilsk Nickel, the worlds largestminer of nickel and palladium, for anestimated $14bn at the top of themarket in 2008, and the company isstill carrying an $11bn debt burden asa result.

No official proposal has beenmade, but it would be the only rightand beautiful way to resolve the prob-lem, the source said on condition ofanonymity.

As a result, Rusals debts would

fall, the company would be able topay out dividends to shareholders,raise its share price and concentrateon its aluminium projects.

The Vedomosti business newspapersaid yesterday that Deripaska was pre-pared to offer around $9bn for thestake, representing a premium ofaround three per cent to Norilsksclosing share price on Friday.

Vedomosti, citing four sources, saidDeripaskas holding company En+might pay $4.4bn in cash and assumea $4.6bn loan to Rusal from state-con-trolled Sberbank secured against theNorilsk stake. Norilsk shares roseafter the reports.

Salamander profits risebut production is lower

SALAMANDER Energy recorded apre-tax profit for 2011 but produc-tion slipped, i t said yesterday.

The oil and gas group swungback into the black as it saw a prof-it of $112.6m (70.5m) in the 12months to 31 December.

The previous year the companyrecorded a $113.7m loss. Revenuesrose from $323.4m to a record$408m, but still missed consensusforecasts of $464m.

Average daily output in 2011 fellto 18,600 barrels of oil equivalentsper day (boepd), compared with20,300 boepd in 2010. This is

expected to fall further in the cur-rent year, to 12,000-13,000 boepd,due to the sale of the ONWJ andSES production sharing contracts(PSCs).

The group assured that produc-tion rates should exceed the 20,000boepd mark once again in 2014 dueto increased volumes from theBualuang field and the start of pro-duction from the Kerendan andSouth Sembakung developments.

2011 was an important year. Wehave also materially grown ourreserve base, said chief executiveJames Menzies.

No dividend was paid and none isbeing planned.

BY JOHNDUNNE

ENERGY

METALS ENERGY

NEWS | IN BRIEF

Total hit by North Sea gas leakTotal UK has shut down oil and gas pro-duction from its Elgin Franklin platformin the North Sea and evacuated staff fol-lowing a gas leak on Sunday, the compa-ny said yesterday. Total UK said thatoperations had ceased and that all 238personnel had been accounted for and

no injuries had been reported. A gascloud was visible from seven miles away,witnesses said yesterday. The peak pro-duction capability for the Elgin Franklinfield is 280,000 barrels of oil equivalentper day, 175,000 barrels per day con-densate and 15.5m cubic metres of gasper day (mcm/d), according to Total. Thecause of the leak was still unknown andinvestigations were ongoing, Total said.

Kenya announces first oil findKenya yesterday announced its first oildiscovery, saying it was found in thenorthern part of the country whereBritish explorer Tullow Oil has been con-ducting exploratory drilling. The firmsaid the discovery was beyond ourexpectations, helping send the compa-ny's shares up 6.6 per cent to 15.70.Kenya and its neighbours in east Africahave become an international hot spotfor oil and gas exploration after com-

mercial oil deposits were found inUganda and natural gas in Tanzania andMozambique. President Mwai Kibakisaid in a statement that Tullow hadestablished oil and would drill morewells in the area to ascertain the com-mercial viability of the find.

BOWLEVEN said yesterday that two ofits exploration wells in the DoualaBasin in Cameroon have found oil, as

the West Africa-focused oil firmreported a narrower first-half loss.

Bowleven, which has been in thenews lately after Turkmenistan-focused Dragon Oil revealed it was inthe early stages of making a bid forthe firm but last month walked away,

said one of the wells tested high qual-ity light oil.

The company added it was fullyfunded for its current explorationand appraisal programme on Etindeand Bomono two exploration sites

in Cameroon.Meanwhile the firm reported a loss

of $5.5m (3.4m) for the six months to31 December, compared with a loss of$15.7m a year earlier.

Bowlevens Aim-listed sharesbounced 19.6 per cent to 105.5p.

Bowleven pares losses asit strikes oil in Cameroon

The explorer has struck oil in Cameroon Picture: GETTY

BYHARRY BANKS

ENERGY

Deripaska poised to snap upRusals Norilsk Nickel stake

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BORIS Johnson has announced an all-out push towards automation of theTube network, pledging that he willnever again buy a Tube train thatrequires a driver.

It is time for London to learn fromother metro networks and get thebenefits of automatic train control. Itis time to move forward with traincaptains along the lines of theDLR with all the efficiency benefitsthat will bring, and absolutely no lossof safety, Johnson said at the launchof his transport manifesto in Euston.

He also pledged to take on what hecalled hardline union barons whocause disruption to services.

But despite the bold promiseLondoners are unlikely to see any ben-efit in the short term. Only the Victoria, Jubilee, Central andWaterloo & City lines are capable of

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Floats fall by 69pc this year

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COMPANIES raised a third less capitalon stock markets during the first

three months of 2012 as they did dur-ing the same period last year, accord-ing to figures released yesterday bydata provider Dealogic.

And the number of initial publicofferings (IPOs) dropped an enormous69 per cent in the first three monthsof 2012 to just 314 deals worldwide,suggesting investors remain suspi-cious of new floats.

The data showed that the totalamount of equity raised on capitalmarkets (ECM) was just $139.8bn(87.1bn) in 972 deals, the lowestquarterly figure since the start of

2009.For the second quarter running,the Americas recorded the highestECM volume of any world region,with $60.2bn raised in 342 deals.

However Dutch cable firm Ziggohas achieved the only float above$1bn in the year to date, while inter-net-related IPO volume declined by 81per cent to $712m in the first quarter.

Revenues at investment banks suf-fered as a result, dropping to $3.1bnfor ECM revenue. JP Morgan toppedthe rankings with earnings of $263mfrom such deals while Citi leads the

global bookrunner volume rankingwith $13.1bn and a 9.4 per cent mar-ket share.

Although the quarterly figures arepoor there is reason to be optimisticthat a revival is underway. Total ECM volume in March has been strongwith $65.4bn raised on the markets,the highest monthly total since July2011.

Boris Johnson and Ken Livingstone clash over transport. Picture: Laura Lean / CITY A.M.

BY JAMESWATERSON

CAPITAL MARKETS


NEWS | IN BRIEF

Qantas to set up budget airlineChina Eastern Airlines has joined withAustralias Qantas to set up a regionallow-cost carrier, marking the firstmove by a big Chinese airline into thegrowing but overcrowded no-frills sec-tor. China's third-largest airline by mar-

ket value and Australia's top carrierwill invest up to $198m over threeyears in the equal joint venture, whichwill start in mid-2013 with threeAirbus A320 aircraft, Qantas said yes-terday. The fleet would expand to 18aircraft by 2015, and China Easternsaid it expected the venture to be prof-itable in its third year.

Lufthansa hit by strike actionGerman airline Lufthansa has warnedpassengers that up to 400 flights willbe cancelled today as ground handlersat Germanys largest airports go onstrike. Ground handlers in Frankfurt, thecountry's biggest hub, are set to walkout this morning, while Cologne, Munichand Stuttgart will also be hit by indus-trial action. Workers in the Verdi unionare striking in a row over pay rises forpublic sector employees.

UK Vauxhall plant still at riskUnions fighting to keep OpelsEuropean plants open have said theywill not engage in plant-by-plant nego-tiations in talks over parent firmGeneral Motors restructuring. TheVauxhall factory at Ellesemere Port inCheshire, which employs 2,100 people,is among the sites at risk in an over-haul that insiders say could cost 30per cent of GMs capacity in Europe.Opel managers are set to present abusiness plan to the supervisory boardtomorrow.

Ken offers a fare cut as

Boris pushes investmentTransport has become the definingissue of this mayoral campaign, withvoters facing the choice between onecandidate that promises a fare cutand another that says fare rises are anecessary evil to fund investment.

Ken Livingstones campaign experi-enced a surge in support after he setout the Fares Fair pledge to cut thecost of transport by seven per centand then freeze it throughout 2013.He promises to build a cross-river

tram and says Boris Johnson wastedfunds on vanity projects such as thenew Routemaster bus.

Johnsons plans revolve aroundincreasing capacity on existing servic-es and lobbying for TfL to control ofsuburban rail routes, which he claimswill keep costs down and help delayfuture fare rises. Johnson also says hewill introduce 600 new Routemasters,expand the cycle hire scheme and cuttube delays by 30 per cent.

BYJAMESWATERSON

MAYORALELECTION

handling automatic trains while pro-curement of new rolling stock thatcould operate without a drivers cabwill only begin this year. As a result itcould be 2022 before truly driverlesstrains are on the network.

Ken Livingstones spokesperson said:This is a fantasy project. Even Johnsonadmits that it is unlikely that a singledriverless train will be introducedwithin the next decade.

Just like the promises he has bro-ken to keep ticket offices open, openthe tube an hour later, deliver a no-strike deal and reverse the Blackwalltunnel this will no doubt be dropped ifJohnson were ever re-elected.

Services that rely on train captainswould still leave the network vulnera- ble to industrial action, thoughJohnson says he will lobby governmentto require at least fifty per centturnout for strike ballots to be valid.

Meanwhile the row over a thirdrunway at Heathrow has been reignit-ed, with Johnson promising to blockdevelopment even though the govern-ment appears to be warming to theidea to boost the UKs air capacity.

ANALYSIS l Top five banks by ECM bookrunner value Q1 2012

JPM

United States

percentmarketshare

Europe Asia Pacific Japan

12.0

14.0

6.0

8.0

10.0

4.0

0.0

2.0

CITI GS MS CS

ANALYSIS l Global ECM volume by quarter

2009

1Q 2Q 3Q 4Q 2Q 3Q 4Q 2Q 3Q 4Q1Q 1Q1Q

2010 2011 2012

400

350

Numberofdeals

DealValue$

300

250

200

150

100

50

0

2,500

2,000

1,500

1000

500

0

Deal value $1bn

Deals

S o u r c e : D e a l o g i c

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SPAINS reforming Prime Minister wasyesterday forced to reiterate his com-mitment to slashing the budgetdeficit and shaking up the economyafter facing setback in regional elec-tions.

Mariano Rajoy had hoped his cen-tre-right party would gain an absolutemajority for the first time in Andalucia, but only won 50 of theregions 109 seats.

A stronger showing would havemade it easier for the PM to pushthrough spending cuts as hestrives to hit an already revised5.3 per cent budget deficit tar-get for the year.

Rajoy faces a general strikeon Thursday before he presentshis budget on Friday, but said heintends to stay the course withhis tough reforms we will passa very, very austere budget, hepromised.

However, investors wereunnerved by the weak electionnews, with stocks falling 0.69 percent on the IBEX index.

Rajoy won a general election

late last year on promises that hewould steer Spain through the sover-eign debt crisis and make reforms toput the economy on a sound footing.

Meanwhile German ChancellorAngela Merkel confirmed she is pre-pared to increase the Eurozonesfinancial firewall ,which aims toreassure investors that the strongercountries are prepared to bailout theweaker nations if necessary.

The current 440bn (368bn)European Financial Stability Facility isdue to be replaced with the perma-nent European Stability Mechanism

in July, and had been expected tocome in at around 500bn.

However, speaking at ameeting of her conservativeChristian Democrats party,Merkel said she could imag-ine that the two rescue fundscould run in parallel so that

a total of 500bn in newfunds were available for

problem countries.

Spanish Prime Minister MarianRajoy (left) still plansto cut spending

Spain vows to

press aheadwith reformBY TIMWALLACE

EUROZONE

HOPE returned to firms and con-sumers in the Eurozone in March, with survey data showing increasingconfidence in Germany and Italy.

Shares rose on the upbeat stats,with the DAX up 1.2 per cent and theEurostoxx 50 up 0.57 per cent.

German business sentiment rose forthe fifth month in a row to 109.8, from109.7 in February, on the Ifo index.

This suggests the economy remainsresilient, said Capital EconomicsJennifer McKeown. The index measur-ing expectations now suggests growthshould remain around the fourthquarters healthy rate of two per cent.

Meanwhile consumer confidencejumped in Italy, according to nationalstatistics body Istat.

The index rose from 94.4 inFebruary to 96.8 in March also thehighest in eight months.

Confidence surge inItaly and Germany

EUROZONE

Italian PrimeMinister MarioMonti said he wasconcerned aboutcontagion fromSpain if it didntkeep finances inorder. Spain cer-tainly made pro-found reform of thelabour market butit did not pay the

same attention topublic finances,he warned yester-day.

Picture: GETTY


Bank of England: Britaingained from the Feds QE

AMERICAS money printing cut thecost of borrowing for the UK govern-ment, according to research publishedby the Bank of England today.

Although the aim of the US FederalReserves quantitative easing (QE) pro-grammes were to lower long terminterest rates in the US and so boosteconomic growth there, the studyrevealed spillover effects which helpedlower interest rates in the UK, too.

US policy surprises also lowered

UK, Canadian and German govern-ment bond yields by one third to one

half of the corresponding change inUS Treasury yields, the study found.

The Feds QE amounted to $600bn(376.2bn) between November 2010and June 2011, and lowered the inter-est rates on US Treasuries by 15 basispoints, according to economistJonathan Wright, whose research wasused in the Banks quarterly stats.

That suggests the British govern-ment saw its lending costs fall by between five and 7.5 basis points.Corporate yields in the US fell around

10 basis points, Wright believes, and soUK firms also saw interest rates fall.

WORLD ECONOMY

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AN EXTRA one million new homesare needed for Britains rental sec-tor, a survey revealed this morning,as a shortage of properties sendscosts rocketing for tenants.

Rents have shot up by an averageof 5.2 per cent over the last year,

with Savills expecting an eye-water-ing 20 per cent spike over the nextfive years.

Tenants in London and the southeast are the most stretched by theirrental bills. A typical two-bed prop-erty in the capital costs 53 per centof a local persons average earnings well over the UK-wide average of31 per cent.

Proximity to London tends toequate to higher rents, with an aver-

age of 10,300 for a two bed proper-ty in the south east compared to6,170 in the north east, the report

added. Rents in London range from9,980 per year in Bexley to anastonishing 48,230 in Kensingtonand Chelsea.

Difficulties in securing a mort-gage have resulted in more peoplestaying in the rental sector.Rightmove, which co-authored thereport, estimates that thesetrapped renters make up over halfof the UK rental sector.

More than a quarter of this demo-graphic are aged over 40, it said.

By 2016 demand for private rent-ed accommodation could reach onein five households, resulting in arequirement for an additional 1.1mrental homes, the report said.

In London, private rentingalready accounts for 27 per cent ofall homes (900,000), having overtak-en social renting in 2010, which

now accounts for just 24 per cent oftenure (783,000 homes), its calcula-tions showed.

Rental sector

needs million

new homesBY JULIAN HARRIS

HOUSING

INFLATION is expected to stay abovethe Bank of Englands two per centtarget in the coming year, accordingto a YouGov survey released yester-day.

Expectations in March eased downslightly to a median rate of 2.7 percent, from 2.8 per cent in February.

Predicted price pressures remain

well below the mid-2011 peak of 3.9per cent, however.

In the longer run over the nextfive to ten years respondents antic-ipate stubborn inflation, with theexpected level staying at 3.4 per centin Marchs poll.

The consumer price index meas-ure of inflation measured 3.4 percent in February according to theOffice for National Statistics (ONS),

with the Bank of England saying

that price pressure should dip toaround target level this year.

Inflation expectations for thisyear are steady at 2.7 per cent

UK ECONOMY

THE UK Border Agency was slammed by the governments watchdog thismorning, over its implementation ofnew rules on foreign students com-ing to Britain.

Labour MP Margaret Hodge, chairof the committee of public accounts,said: This is one of the most shock-ing reports of poor management lead-ing to abuse that I have seen.

Before 2009, students from outsidethe European Economic Area couldswitch colleges and study on differentcourses without having to inform thegovernments Border Agency.

Yet since 2009, students have hadto be sponsored by a licensed collegeand could not switch without apply-ing to the agency.

Enforcement of new measures,known as Tier 4, has been riddled

with flaws which were predictable

and could have been avoided, theNational Audit Office (NAO) said.NAO chief Amyas Morse said: The

[Border] Agency regards students whodo not comply with their visa condi-tions as a low priority compared withillegal immigrants and failed asylumseekers.

The agency does little to ensurethat people leave the UK when their

visa extension requests have beenrefused, the report added.

Border Agency slammed forbig flaws in student systemBY JULIAN HARRIS

MIGRATION


Rental costs in London are on the rise Picture: GETTY

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SOFT drinks maker AG Barr saw rev-enues jump 6.6 per cent to 237m lastyear, buoyed by strong growth in itsexotic juice range.

The Cumbernauld, Scotland-basedcompany said pre-tax profits were up6.2 per cent to 33.6m, excludingexceptional items, led by highdemand for Rubicon and KA juices.

The exotic drinks grew revenues15.7 per cent contributing to anoverall 9.4 per cent boost in Barrs stilldrinks division, compared to 3.8 per

cent across the market.Barr added that it was on track to

launch a Rubicon ice cream andpush-up ice lolly range this month.

Despite a slow start to the yearimpacted by significant competitorpromotional activity to which we

chose not to respond, sales of Irn Brujumped seven per cent in the secondhalf of 2011 as the limited editionFiery Irn Bru sold over 3.5m units.

AG Barr confirmed that it plans toinvest 20m in building a factory andwarehouse in Milton Keynes, set toopen in the summer of 2013.

The drinks company upped itsfull-year dividend 10 per cent to27.95p.

Taste for theexotic boostsBarrs profits

ENERGY regulator Ofgem wants gassuppliers to pay money into an indus-try-wide pot to cover the cost of fight-ing gas theft, a problem that has costconsumers 138m per year since2009, the watchdog said yesterday.

Suppliers are expected to imple-ment all changes proposed by the reg-ulator by the end of 2013 and couldface a fine if they are found not tocomply with the rules.

Gas theft usually refers to con-sumers not paying for gas they use bytampering with supply systems to

bypass their meters and has cost eachhousehold around 6 a year over thepast three years, Ofgem said, citing agroup of industry experts.

We want to see suppliers takemore action to reduce gas theft, which threatens the safety of con-sumers and industry workers as wellmaking gas more expensive, Andrew Wright, Ofgems senior partner formarkets, said.

Under the proposals, gas suppliersshould pay money into a joint pot rel-ative to the number of sites they sup-ply and will be rewarded in

proportion to the number of theftsidentified in their segments.

Each supplier will have a targetnumber of thefts to detect within aone-year period.

Ofgem initially proposed toexclude Britains largest gas supplier,British Gas, from the scheme,because the companys techniques totackle gas theft are more advancedthan those of other firms.

The current proposal would pre-vent other suppliers from being hitdue to the better performance ofBritish Gas, Ofgem said.

Roche digs in as pharmafirm extends Illumina bid

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ROCHE Holding yesterday extended its$5.7bn (3.6bn) cash bid for US genedecoder Illumina for a second time asthe Swiss drugmaker sticks to its M&Astrategy of playing a long game.

Roche is offering $44.50 per sharefor Illumina, but analysts expect thecompany ultimately to raise its offerfor the San Diego-based group.

Illumina, which has adopted a poi-son pill defence strategy for Rochesunsolicited bid, said that Roches offerremained grossly inadequate.

Illumina is positioned to create farmore value than Roche has offered.Our shareholders clearly agree, thecompany said in a statement.

Only about 0.1 per cent of Illuminasshares outstanding have so far beentendered to Roche, the Basel-basedcompany said. Roche urged Illuminashareholders last week to take up itsoffer, originally made in January,which it views as full and fair.

The next stage in Roche's hostile bidis Illuminas annual general meetingon 18 April, for which Roche hasnamed a slate of director candidatesfor election to Illuminas board in abid to gain control.

Greenhill and Citigroup are advis-ing Roche on the deal and Davis Polk & Wardwell is acting as legal counsel.Illuminas financial advisers areGoldman Sachs and BofA Merill Lynch.

Ofgem plans to get tough ongas suppliers to fight theft

BY LAUREN DAVIDSON

CONSUMER

ENERGY

PHARMA


Irn Bru

+2.7% +6.9% +66.6%Rubicon KA

LAUNCHING SOONRubicon ice cream tubsand push-up ice lollies

NEWS | IN BRIEF

Smiths Group wins Doha contractTechnology firm Smiths Group has won a100m contract to provide airport securi-ty detection machines to Doha Airport, asthe Qatari hub renews its systems aheadof the football World Cup in 2022. Thedeal, announced yesterday, is the biggestsingle-airport contract that Smiths detec-

tion arm has ever won, and will see thecompany supply hi-tech scanners to theNew Doha International Airport, which isdue to be completed early next year.

Wessex rejects Total approachWessex Exploration has rejected anypotential offer that Total was planning tomake for the firm, deeming the suggestedoffer price inadequate. Total revealedearlier this month it was considering mak-ing a 10p-per-share offer for the Aim-list-ed oil and gas explorer, valuing it ataround 72m. But Wessex said yesterdaythat after consulting with shareholdersthe potential bid was inadequate tosecure their support for any offer whichTotal might consider at this level.

Big Yellow on a pre-downturn highBig Yellow said yesterday its March occu-pancy level will be above the previousSeptembers level for the first time in five

years. The storage company said wholly-owned occupancy of its 32-strong portfo-lio is at 64 per cent, up from 59.3 per centthis time last year. The group, which lastweek discovered its service could be sub-ject to VAT, has six trading days of the fis-cal year remaining.

ANALYSIS l A G Barr PLC

p1,250

1,240

1,230

1,220

1,210

1,228.0026 Mar

20 Mar21 Mar 22 Mar 23 Mar 26 Mar

EXOTIC JUICES BUMP UP AG BARR'S PROFITS

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RathboneRathbone Investment Management,the wealth management serviceprovider, has announced that Evangelos

Assimakos is joining the firm.Assimakos joins from Turcan Connell,the solicitors and asset managers,where he has worked for five years.

BradyThe leading supplier of trading and riskmanagement solutions for metals,energy and soft commodities hasappointed Jon Hobbs as chief technolo-gy officer. Hobbs has worked at Brady

for the past seventeen years, mostrecently heading up the metals devel-opment team. Brady has expanded rap-idly in the last few years, and Hobbswill work to define group technologystrategy, align it with business goalsand articulate this strategy to clients.

Oriel SecuritiesThe independent UK corporate andinstitutional stockbroker has

announced that Andrew Small andChloe Ponsonby have been hired by thefirm. Small joins from Evolution in May,and Ponsonby joins from Altium Capitalin April. Their appointments will addsenior sales expertise and client rela-tionships to Oriels UK sales capacity.

ReThinkThe recruitment and consultancy com-pany has appointed Steve Wright aschief financial officer and member ofthe board, with immediate effect.Wright was previously director offinance and operations at RPInternational, a telecommunicationsrecruitment company. He has held sen-ior roles at Computer People and

Thomson NETG. Wright was alsofinance director of Hot Group, a listedrecruitment services firm acquired byTrinity Mirror in 2005.

DarbyDarby Overseas Investments, the pri-

vate equity arm of Franklin TempletonInvestments, has announced the hiringof two new executives. S Scott Gregoryhas been appointed managing director,and will report to senior managingdirector David Mathewson. ArkadiuszPodziewski has been appointed princi-pal and head of Darbys Warsaw office,and will focus on supporting and devel-oping the firms operations and funds incentral and eastern Europe.

CITY MOVES | WHOS SWITCHING JOBS Edited by Tom Welsh

+44 (0)20 7092 0053morganmckinley.c

cityam 2012-03-27

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