cityam 2012-05-24

7/31/2019 Cityam 2012-05-24

1/35

n Markets spooked asofficials tell EU leaders toprepare for a Greek exit

BUSINESS WITH PERSONALITY

MORE BLACK CABS THANTRIES AT TWICKENHAM

Facebook hitby lawsuitover its floatFACEBOOK shares rose three percent to $32 yesterday, reversing thestocks two-day slide.

But the internet idols IPO woesare far from over after Facebookwas yesterday hit by lawsuits fromdisgruntled shareholders.

US law firm Robbins Geller fileda class action on behalf of newFacebook investors, alleging that

the prospectus issued ahead of theIPO was false and misleading.

The suit, which is also directed atMorgan Stanley and MarkZuckerberg, claims that Facebookrevenue forecasts which weredowngraded just days before theflotation were selectively disclosedby the defendants to certainpreferred investors.

The complaint, one of four filedin the last two days, said: Thevalue of Facebook common stockhas declined substantially andplaintiffs and the class havesustained damages as a result.

But Facebook, in its first publicstatement since its f loat last week,said: We believe the lawsuit iswithout merit and will defendourselves vigorously.

The legal filing has triggereddebate about the fairness of therule which prevents analysts linkedto the advising banks publishingforecasts on a company about tofloat, but allows them to discussthe guidance verbally.

Morgan Stanley was issued witha subpoena on Tuesday night overthe same issue of analysts sharingforecasts with select investors.

Nasdaq is also yet to escape thefiring line after receiving a claimfor financial compensation fromKnight Capital, which said lastnight it expects to suffer up to a$35m loss due to trading glitchesduring Facebooks market debut.

The NYSE last nightdenied it wascourting Facebookin the hope the techgiant wouldtransfer its listing

from Nasdaq.

EUROPEAN shares tumbled againyesterday as leaders failed to come toan agreement on how to end thedebt crisis and Eurozone officialstold member states to prepare forGreece to leave the currency.The UK, Germany and Finland all

saw borrowing costs fall to recordlows as investors fled risky assets infavour of their safe haven bonds,while yields jumped again for gov-ernments in Italy, Spain and Greece.

Last nights informal EU summit,as expected, reached no conclusionson how to deal with the crisis.Ahead of the summit, European

Council leader Herman van Rompuyinsisted that the meeting was onlyset to discuss what how we canstimulate growth and jobs, ratherthan being aimed at coming up withhard proposals.

We are preparing the group forfirm decisions in June, he said.The stage had already been set for

deadlock as French PresidentFrancois Hollande argued in favourof jointly-guaranteed eurobonds as ameans of extending German finan-cial power to troubled Greece, Spainand Italy.

However, German chancellorAngela Merkel made it clear shewould not spend more German cashsupporting weak governments debt.

Meanwhile documents emerged

showing the Eurogroup WorkingGroup (EWG) has advised Eurozone

www.cityam.com FREE

BY LAUREN DAVIDSON

FTSE 100 5,266.41 -136.87 DOW 12,496.15 -6.66 NASDAQ2,850.12 +11.04 /$ 1.57 -0.01 / 1.24 unc /$ 1.26 -0.01

INVESTORS FLEETO SAFE HAVENS

ISSUE 1,639 THURSDAY 24 MAY 2012

MORE: Page 9

Certified Distribution

02/04/2012 till 29/04/2012 is 100,668

BY TIM WALLACE

n Summit fails to reachagreement over how tocontain Eurozone crisis

n Strong demand forGerman and UK bonds asyields sink to record lows

members to prepare contingencyplans to work out how they willcope with a Greek exit.

Belgian finance minister StevenVanackere confirmed he was look-ing at how best to cope with the fall-out of a country leaving.

We must insist on efforts to avoidan exit scenario but that doesntmean we are not preparing for even-

tualities, he said. I believe manycountries have their contingency

plans for the things they want toavoid at all cost, and to say that wedont have a contingency planwould be irresponsible.

Markets tumbled on the uncer-tainty, with the Italian FTSE MIBfalling 3.68 per cent, Spains IBEXdropping 3.31 per cent, FrancesCAC losing 2.62 per cent and theFTSE 100 falling 2.53 per cent.

Investors also sold weak govern-ments bonds 10-year borrowing

costs for Italy rose 8.9 basis points(bp) to 5.667 per cent while Spainsjumped 12.6bp to 6.204 per cent.

Meanwhile safe haven bonds felleven further, as Germany sold two-year debt with a zero per centcoupon and its 10-year borrowingcosts dropped 8.4bp to 1.38 per cent,while the UKs fell 9.9bp to 1.77 percent.

Prime Minister David Cameron arrived in Brussels last night

Mark Zuckerbergfaces legal action

Knighthoodfor Applesdesign guru

See Page 13

German bond yields hit new lows

MayMar Apr

1.6

1.8

2

2.2 %

1.3823 May

The FTSE dropped sharply yesterday

MayMarFebDec 2012 Apr

5,250

5,500

5,750

6,000 5,266.4123 May

DEBATE: Page 23

MORE: Page 5, Page 1 8-19

GETTY

7/31/2019 Cityam 2012-05-24

2/35

[email protected]

Follow me on Twitter: @allisterheath

HEWLETT-Packard yesterdayunveiled a restructure which will seeAutonomy founder Mike Lynch leavethe company and 27,000 employeeslose their jobs.

British entrepreneur Mike Lynch,dubbed the British Bill Gates, is afounder of tech company Autonomy,which was bought by HP in Augustfor 6.2bn. At the time it was theUKs most valuable software firm.

Lynch will be replaced by HPschief strategy officer Bill Veghte.

Hewlett-Packard also announced aslew of job cuts which will reduce itswork force by eight per cent. Themove, to be implemented largelythrough early retirements, willgenerate annual savings of up to$3.5bn, the company said.

The revelations came as the UStech company published its secondquarter results.

HP posted a $1.59bn profit, down30 per cent on the same period lastyear, and said revenue fell by threeper cent to $30.7bn.

Chief executive Meg Whitmansaid, We are makingprogress in our multi-yeareffort to make HP simple,more efficient andbetter... but we still have alot of work to do.

Mike Lynch to

leave HP amid27,000 job cutsBY LAUREN DAVIDSON

Fresh blow to London asTungsten delays its floatTUNGSTEN, the British bid vehiclefounded by Edmund and DannyTruell, yesterday announced araincheck on its IPO.

Citing adverse market conditions,the financial services investmentfund said it was postponing its flota-tion, set to raise 200m.The announcement will come as a

blow to the London Stock Exchange,which was expecting to listTungsten shares in June.

The Truell brothers unveiled theIPO plans on 4 May, saying the newlyincorporated company intended totake advantage of the value opportu-nity within the financial servicessector.The proceeds, to be raised from

selling shares at 5, were expectedto be used to fund acquisitions or torecapitalise and grow the companyscurrent assets.The float delay will also be a let-

down for UBS and Numis, the jointbookrunners on the deal.

Tungsten gave no indication yes-terday as to whether it plans toreturn to the markets in the nearfuture.

In a reflection of the tough marketconditions, the disappointing newsemerged just two weeks after O1Properties, the Russian real estateinvestment firm, postponed its IPO.

Web pioneer sues over iTunesA General Electric-owned company issquaring up to Apple in a Pennsylvaniacourtroom over whether its patents wereinfringed when Apple launched its iTunesplatform. The case, which pits two of theUSs biggest companies against eachother, is the latest in a string of high-profile patent disputes involvingtechnology companies.

Copper plan would wreak havocUS manufacturers have attacked plans by

JPMorgan Chase to launch an exchange-traded fund backed by physical copper,arguing that the product would grosslyand artificially inflate prices and wreakhavoc on the US and global economy.

Normal planning service resumedThe worlds largest companies haveresumed normal patterns of successionplanning, suggesting they believe theworst of the downturn is over. Among the2,500 biggest groups by market value,355 replaced their chief executives lastyear, compared with just 290 in 2010,according to research by Booz &Company.

Force end of free current accountsBanks in Britain should be forced to startcharging customers for their currentaccounts, according to Andrew Bailey,executive director of the Ba nk of England,who will call today for an end to so-calledfree banking.

Twickenham Studios back on marketThe studio is back on the market after itsmystery buyer pulled out. The unnamedpurchaser of Twickenham Film Studioshad put forward a 100,000 deposit tobuy the studio out of administration.

Battersea bidder plans car parkOne of the leading bidders for BatterseaPower Station is planning to build a multi-storey car park inside the historic site. Theplans are likely to be hugely controversialwith English Heritage and the Mayor.

FSA warns banks over interest ratesThe Financial Services Authority, chairedby Adair Turner, has warned banks it willtake action over the alleged mis-sellingof interest rate swaps to small businessesif it finds widespread evidence ofbreaches of our rules.

Pandoras loss widens, as sales jumpPandora Media yesterday reported awider loss for its fiscal first quarter onhigher costs, but its revenue jumped 58per cent and the internet radio companyraised its outlook. Its shares rose 11 percent to $11.45 in after-hours trading.

Gupta trial zones in on GS salesmanProsecutors publicly acknowledgedoutside the presence of the federal juryyesterday that David Loeb, a seniorGoldman salesman, provided informationabout Intel, Apple and HP to Rajaratnam.

WHAT THE OTHER PAPERS SAY THIS MORNING

BRITISH engineering got a boostyesterday when BAE Systemssecured a 1.6bn deal to equip andtrain the Saudi Arabian military.

BAE said it will supply 22 newHawk advanced trainer jets, mostof which will be made in Britain,as well as 55 Swiss-made Pilatusaircraft and other training andsupport services.

The contract provides somewelcome relief for the Britishdefence giant, which is battlingagainst shrinking European and

American defence budgets andfierce competition.

Saudi Arabias official newsagency SPA quoted an unnamedofficial at the Saudi defenceministry as saying the Hawks

would help train the Saudi airforce to be able to use the fighter

jets ... efficiently.Most of the Hawks will be made

at BAEs plants in Samlesbury andWarton in Lancashire according toBAEs statement yesterday. Theplanes are not due to be delivereduntil 2016.

Yesterdays deal is the secondbig contract win for BAE in asmany days it also bagged a328m deal to supply Britainsnext generation of submarines.

Shares in BAE closed down oneper cent at 271.5p, outperforminga broader fall in the FTSE 100.

BAE wins 1.6bn

deal to buildSaudi airplanes

Edmund Truells investment vehicle has postponed its London flotation

2 NEWS

BY HARRY BANKS

BY LAUREN DAVIDSON

To contact the newsdesk email [email protected]

WHEN in doubt, blametraders. After all, its easierto attack anglo-saxonspeculators than to actually

try and sort out massive governmentover-spending, a corporatist anduncompetitive economy, animploding welfare state and a dodgy

currency. So it should have come asno surprise that the latest assault onthe City was led by Anni Podimata, aGreek socialist EuropeanParliamentarian and a member ofone of the parties that helped destroyGreece. MEPs yesterday voted toimpose a pan-EU financialtransactions tax, a move which theUK government has pledged to block.The idea of a Tobin tax is based on

the flawed view that trading or spec-ulation is a bad thing. The reverse istrue. Individuals buying and selling tomake a profit (with or without the

EDITORSLETTER

ALLISTER HEATH

UK must lead by example and abolish stamp duty on shares

THURSDAY 24 MAY 2012

use of high-frequency programmes)help the process of price discovery,make markets work better, enhanceliquidity, ensure resources are pricedcorrectly and help oil the cogs of theeconomy. Exchanges must of courseput in place robust systems to avoidflash crashes but that is no argu-ment in favour of taxes. Things onlygo truly wrong when there is a bubble but these are usually caused by cen-tral banking errors and traders arethe ones who help to deflate them

again. Rather than making the econo-my more stable, most empirical stud-ies find that transactions taxesactually increase the volatility ofprices by reducing the depth of mar-kets, at least in the short term.The biggest losers from a transac-

tion tax would be investors and

savers, including pensioners. As arecent IMF paper put it, the burdenwould fall on owners of traded secu-rities, at the time the tax was intro-duced, as the value of stocks, bondsand derivatives fell. By making itmore expensive for companies toraise finance, a Tobin tax woulddepress investment and thus growth.As the IMF says: In the long run, cap-ital owners would therefore not bearthe burden; it would fall on workers,who as a result of the smaller capitalstock would be less productive andreceive lower wages. Once again,

merely opposing the EU. It shouldalso axe our disastrously inefficientstamp duty on equities, our very own,albeit more limited version of theTobin tax. A report by Lord Forsythfound that the higher transactioncosts caused by stamp duty depressshare prices by up to 10 per cent. One

study suggests that if the levy wereabolished the increase in the marketcap of the FTSE All Share could hit150bn; the 4bn a year the tax raisesis poor value. Oxera found that abol-ishing it would cut the cost of equityfor firms raising capital by 7-8.5 percent, with technology firms payingup to 12 per cent less. The govern-ment should not just oppose the EUsplans it should lead by example andabolish stamp duty on shares.

socialist politicians who believe theyare helping the poor will actuallyhurt them.

Proponents of the tax are wrong tobelieve that it would have helped pre-vent the crisis. Its root cause was thatbanks were exposed to unreliableloans based on bubble-level property

prices. Many collateralised debt obli-gations were held for long periods,not constantly traded; a Tobin taxwould have done nothing to preventtheir popularity. The Eurozones crisishas nothing to do with traders either.

Even the European Commissionsown impact assessment found that atransaction tax on securities could,without the application of mitigatingeffects, reduce future GDP growth.The Danish economy minister saidthe measure could destroy hundredsof thousands of jobs.The UK should go further than

The $425m flotation was alsobooked for the London StockExchange.At the time, a spokesperson for O1

Properties said it would considerrelaunching its flotation at anothertime, and its delay was not due to alack of interest from prospectiveshareholders.

Richard Cormack, co-head of equitycapital markets at Goldman Sachs,told City A.M.: Its not an enormoussurprise that [O1 Properties] did notmake it to the finish line. The LondonIPO market has had a more difficult

time lately than certain others.Worried eyes will now be turned in

the direction of Megafon, anotherhigh-profile listing expected to land inLondon later this year.

Goldman Sachs and Morgan Stanleyare advising the Russian telco, con-trolled by Alisher Usmanov, on its$4bn flotation.Tungsten hit the headlines earlier

this month when its founder EdmundTruell said the fund would considermaking an offer for the insuranceunits of RBS and Lloyds, although ithad yet to approach either bank.

Autonomy founderMike Lynch willleave HP

The new jobs website for London professionalsCITYAMCAREERS.com

7/31/2019 Cityam 2012-05-24

3/35

THAI energy giant PTT yesterdaytrumped Shells offer for Cove Energywith a 1.22bn bid.

The board of Cove recommendedthe new offer equivalent to 240pper share leaving Shell to decideon whether to try to outgun PTT.

Cove has an 8.5 per cent stake inmassive gas finds offshore northernMozambique and its east Africanassets have attracted suitors.Just hours before a deadline for

investors to accept Shells 1.1bn bid,the companys management saidthat it had switched to the improvedoffer from PTT.

It had previously supported Shellsoffer, which followed a PTT bid thatbeat Shells opening salvo inFebruary. Cove shares yesterdayjumped by more than 10 per centafter PTTs fresh bid was confirmed.Whoever buys Cove will have to pay

a capital gains tax to Mozambique,

which Shell has estimated at around$200m. Cove will also be forced to

PTT beats Shelloffer for Covein bidding war

BY JOHN DUNNE pay Shell a 11.1m break fee underthe terms of the deal agreed in April.

Cove chief executive John Cravenand two other directors are in line fora combined windfall of more than35m under the proposals and thefigure ticks up with every bid.

Craven said in a statement yester-day: The bid from PTT represents sig-nificant value for shareholders andconfirms the world class nature ofCoves East African assets. Covesmain asset is an 8.5 per cent stake inthe Rovuma Offshore Area 1 inMozambique.

Spain completes 9bn rescue ofBankia, but debt woes continueSPAIN said yesterday its rescue of

problem lender Bankia would costat least 9bn (7.2bn), while alsosaying that it is seeking ways to helpits highly indebted regions meethuge refinancing needs.

The countrys weak banks andoverspending regions are at theheart of the European debt crisisdue to concerns that expensive bail-outs of ailing lenders and regionscould force the country to seekinternational aid.

BY HARRY BANKS Losses at Bankia, Spains fourthlargest bank, are central to investorfears that the fragile financial

system could become morevulnerable as default rates rise in arecession.

Economy minister Luis de Guindostold a congressional committee thatthe state would have to put at least9bn into saving Bankia, which hesaid would be fully nationalised inthe process.

At the same time governmentsources said de Guindos and othertop officials were at odds over how to

help the countrys 17 autonomousregions refinance 36bn in debt thatcomes due this year.

Bankias new management teamwill undertake a completeassessment of the lenders capitalneeds and will present its plan inmid-June, de Guindos said.Thegovernment will recapitaliseBankias parent group BFA using thestate-backed bank restructuringfund, the FROB, and then will fundBankia through a capital increaseincluding preferential shares forexisting shareholders.

GOOGLES Android mobile platform has not infringed Oracle's patents, a Californiajury decided yesterday, in a boon for its chairman Eric Schmidt. The verdict puts anindefinite hold on Oracles quest for damages in a legal fight between the two SiliconValley giants over smartphone technology.

JURY DEALS BLOW TO ORACLE IN GOOGLE CASE

THURSDAY 24 MAY 20123NEWS

cityam.com

SHARES in the London StockExchange sank seven per cent

yesterday after two Italian bankssold their stakes at the bottom endof the price range offered.

UniCredit and Intesa Sanpaolo,the third and fourth-largestshareholders respectively, sold acombined 11.5 per cent stake at960p a share, just days after they

were downgraded by a creditratings agency.

Shares in LSE group fall aftermajor Italian banks cash out

BY PETER EDWARDS The price was at the very bottomof the 960p-1,000p range provided

by the offer terms sheet onTuesday, valuing UniCredits 6.1per cent stake at 197.6m (158m)and Intesas 5.4 per cent holdingat 172.5m.

The sale price was 5.6 per centbelow the LSEs closing share priceon Tuesday of 1,017p and the

banks holdings were placedthrough an accelerated book

build, with Morgan Stanley actingas bookrunner.

Cove Energy PLC

23 May17 May 18 May 21 May 22 May

230

235

225

240

245

250

255 p250.0023 May

7/31/2019 Cityam 2012-05-24

4/35

7/31/2019 Cityam 2012-05-24

5/35

A SUPREME Court ruling that thegovernment had breached an aspectof EU law yesterday brought theprospect of 5bn-worth of tax refundscloser for companies.

The ruling means that BritishAmerican Tobacco, lead claimant inthe case alongside five other multi-national companies, now has theright to recover any tax wrongly paidextended back until 1973.

The long-running Franked InvestmentIncome case will now be referred to theEU Court of Justice meaning a conclusivevictory remains elusive.

Ruling suggests5bn tax refund

BY KATIE HOPE

GETTY

BARCLAYS lost $650m (414m) on itssale of a $6.1bn stake in US fund man-ager BlackRock yesterday after itscrambled to offload the shares tocomply with incoming capital regula-tions.

The sale, which was managed by alist of 36 book runners led by Barclays,Bank of America Merrill Lynch andMorgan Stanley, valued the shares at$160 each. They were given a valua-tion of $182 when Barclays acquiredthem in 2009 as part payment for itssale of Barclays Global Investors toBlackRock.

Yesterdays sale price of $160marked a two per cent discount totheir closing price on Tuesday, whichwas $163. BlackRock itself boughtback $1bn of the shares.

Since Barclays acquired them, hold-ing onto large equity stakes in finan-cial firms has become extremelyexpensive for British banks becausethe FSA is enforcing a strict version ofthe Basel III capital rules.

That is in contrast to the rulesenforced on the continent, where cap-

Barclays loses$650m on sale

of BlackRockBY JULIET SAMUEL ital regulations do not attach such a

high risk-weighting to equity in otherfirms.

In the UK, the BlackRock holdingincurs a 250 per cent risk-weighting,meaning that Barclays had to holdreserve capital against losses in thestake as if it owned 10bns worth ofstock.

The high opportunity cost of doingso meant the bank was keen to sell upas soon as the three-year lock-in periodit had agreed with BlackRock expired.

The banks next accounts couldbook the sale as a profit, becauseBarclays wrote them down to a valueof $148 at the end of last year.

Barclays Bob Diamond has to deal with regulations that dont affect his French rivals

Barclays PLC


180.0

182.5

177.5

185.0

187.5

190.0

192.5 p 180.5023 May


cityam.com

A deal that shows Europesuneven playing field in action

THREE weeks ago, GeorgeOsborne told other EU financeministers that he was notprepared to sign up to capital

rules that would make him looklike an idiot due to their hugeloopholes for French and Germanbanks.

One week ago, Osborne signed up to

those rules.So while Barclays took a 400m hit

from selling off its BlackRock sharesdue to the FSAs punitive treatment ofthe asset in regulations, the banksFrench rivals, many of which ownstakes in insurers, will have not haveto contend with such inconveniences.This is precisely the kind of cost that

UK banks are referring to when theymoan about an un-level playingfield. Alone, it is hardly crippling, butit is one of many examples.

The rule itself is one of Basels lessunreasonable ones, if you accept thepremise of standardising risk assess-ment. Letting banks count minoritystakes in other firms towards theircore capital means the capital iscounted twice, by the bank and thefirm whose shares it owns. And it canbe hard to turn stock into cash quickly.

Osbornes capitulation shows thatdefending the Citys long-term competi-tiveness is low on his list of priorities.

BOTTOMLINE

JULIET SAMUEL THE head of global sales at ResearchIn Motion has left to take on a

leadership role in another industry,the BlackBerry maker said last night.

London-based Patrick Spence was a14 year company veteran widelyconsidered a rising star for RIM. Hewas promoted to the global sales rolein July last year after serving asmanaging director for Europe, theMiddle East and Africa. RIM has seena steady stream of departures in thepast year as its once-dominant marketshare has slipped amid fiercecompetition from Apple.

RIM loses headof global sales

BY KATIE HOPE

7/31/2019 Cityam 2012-05-24

6/35

7/31/2019 Cityam 2012-05-24

7/35

IN BRIEFIreland to invest 2bn in propertyn Irelands bad bank plans to invest2bn (1.6bn) in building projects inan attempt to bolster jobs in thecountrys property sector. NAMA, setup in 2009 to take property loans offthe books of Irelands strugglingbanks, said it will plough cash intoboth half-finished projects and newbuilds with a focus on commercial realestate.

Fears over bailout fund staffnAn external consulting firm chargedwith evaluating the structure ofEuropes new permanent rescue facilityhas raised questions about whether itwill have enough staff to functioneffectively. In a 12 May letter addressedto Klaus Regling, the head of the blocstemporary rescue fund, partners at A.T.Kearney warn that the approved staffof 75 for the European StabilityMechanism (ESM) may prove toosmall if the debt crisis rumbles on forseveral years.

EU members most open to traden EU member countries and their closepartners in north and central Europemake up 12 of the 20 nations that are

most open to international trade,according to the World EconomicForum. Its latest Enabling Trade Indexputs the US at 23, down from 19 in 2010.Finland rose by six places to sixth place,and Britain, at 11th place, rose from 17th.

GETTY

IMF leader Christine Lagarde haswarned Greece that it must pay theprice of remaining in the Eurozoneas she marvelled at the inconsisten-cies in the countrys recent elec-tions that favoured anti-bailoutparties.

Lagarde said: Efforts have to bemade and have to be shared. Greecehas to be a member that also imple-ments its programme and alsoundertakes efforts, which it has to apoint.

It has to do a lot more. That isabsolutely the case. It had a long way

to go, it has made efforts, and theGreek population has made hugeefforts, but they have more to do,said Lagarde, who leads the fundhelping to bail out Greece.

There are more structural reformsto be had, there is more tax to be col-

Lagarde tellsGreece to take

its medicineBY MARION DAKERS lected and that has a price.

She told the BBC that the Eurozonenations had to be prepared for all sit-uations and solutions includingGreece leaving the currency bloc.

She added that it is quite remark-able that the Greek population hasvoted in a way that is not conduciveto the formation of a governmentwhile continuing to take bailoutfunds.

There is an inconsistency betweensending away those political groupsthat support the Eurozone and bythe same token saying we want to bepart of the Eurogroup and have theeuro as our currency, but it has a

price.She said the other euro bloc nations

should weigh up further support ofGreece, depending on whether theyconsider the integrity of the zone assufficiently beneficial so as to justifyadditional investment.

Consumer sentiment plummetsas Italians fear deepening crisisCONSUMER confidence plummetedin Italy this month, official surveydata showed yesterday, as thecountry continues to strugglethrough tough economic reforms.

The confidence climate index fellfrom 88.8 to a record low of 86.5,according to statistics agencyISTAT.

The drop was led by a fall in theeconomic climate component from71.6 to 64.4, while the balanceconcerning the unemploymentoutlook rose from 106 to 113.

Confidence had remained

BY TIM WALLACE surprisingly strong early in the year,rising from 91.4 in January to 93.8in February and 96.1 in Marchdespite Prime Minister MarioMontis planned austerity measures.

However, the deepening of thecrisis in Greece, building worries inSpain and the implementation ofsome structural reforms in Italyhave all knocked confidence sincethen, leading to the two consecutivemonthly falls in the index.

Inflexible labour markets havebeen blamed for much of the loss ofcompetitiveness in Italy, and Montihopes that liberalising theindustries, including taxi driving

and pharmacy, will give theeconomy a boost in the mediumand long-term, despite the short-term disruption it causes for thosealready in the sectors affected.

Christine Lagarde told Greece there is a price to pay if it wants to stay in the Eurozone

Italian consumer confidence hits record low

121008060402009896949280

90

100

110

120

130

THE EUROPEAN Parliament votedoverwhelmingly in favour of an EU-

wide financial transactions tax(FTT) yesterday, with leadingproponents arguing the FTT is anintegral part of an exit from crisis.

The tax, of 0.1 per cent on equitytrades and 0.01 per cent onderivatives, was supported by 487MEPs and opposed by 152.

Finnish MEP Sirpa Pietikainensaid the tax represents a faircontribution from the financialsector for the damage caused in thefinancial crisis, and that it will stopdamaging speculation in markets.

She called for the tax to cover thewhole EU, hitting out at opposition

MEPs demand transactions taxon European financial sector

BY TIM WALLACEfrom countries like the UK whichare holding negotiations hostage,and suggested the tax couldinitially cover a smaller group ofmore cooperative nations beforelater expanding.

To cover the whole EU, the taxwould need the unanimousagreement of all member states.

Greek MEP Anni Podimata saidthis is a strong signal of what theEuropean Parliament can achievedespite different national views.

This is what we can achievewhen we put EU citizens interestsabove everything else.

Podimata rejected claims thattrading activity will simply moveout of the EU to avoid the tax,arguing the cost of relocation ishigher than paying the tax.


cityam.com

Explore new horizonsfrom London

Dubai from 341

Johannesburg from 515

Buenos Aires from 663Return fares, including taxes

Fares quoted are for return economy class flights from London Heathrow via Amsterdam, including taxes and charges, and are subject to change.Fares are also subject to availability and exchange rate variation. Please check for exact fare at klm.com at time of booking. Book by 12/06/12.Travel periods vary. Credit card surcharge will apply. Specific booking conditions and the General Conditions of Transportation of KLM and AIR FRANCEapply. Prices correct at 10/05/12.

7/31/2019 Cityam 2012-05-24

8/35

INCREASED popularity of buy-to-let

mortgages powered lender Paragonto a 13.4 per cent rise in profit to44.8m for the six months to March.

Chief executive Nigel Terringtontold City A.M. he is delighted thatthe profit growth was driven byimproved revenues rather than cost-cutting.

For the first time since the creditcrunch [the buy-to-let] balance sheethas expanded. At the same time wedid the UKs first buy-to-letsecuritisation since 2007, he said.

Buy-to-let is a very strong androbust market for many years tocome were only halfway througha transformation of the market.Banks are not actively chasing newbusiness so it presentsopportunities for smaller lenders.

Paragon has used its strongcashflow to enable Idem Capital its portfolio investment business

to acquire loan portfolios frombanks as they deleverage.

Shares in the FTSE 250 firmclosed yesterday up more than fiveper cent.

Paragon profitrises on returnof buy-to-let

BY JAMES WATERSON

GETTY

THE INVESTMENTS made by privateequity and venture capital firmshave continued to outperform rivalasset classes despite a turbulent yearfor the industry.

The internal rate of return theaverage annual return over each ofthe past ten years hit 14.3 per centin 2011, compared to 5.9 per cent fortotal pension fund assets and 4.8 percent for the FTSE All-share index,according to research from theBritish Private Equity & VentureCapital Association (BVCA). This wasdown from the 14.6 per centachieved in 2010.

Over a five year period, UK privateequity produced an annual returnof eight per cent, in contrast topension fund assets that generated

3.5 per cent and the All-Share index,which returned 1.2 per cent.

The survey of 501 UK managedfunds showed that BVCA membersinvested 18.6bn globally in 2011,

BY PETER EDWARDS down nine per cent from 2010.The figures come after a turbulent

period for buyout firms, with theEuropean sovereign debt crisisdepressing deal values. The industryalso had to withstand a series ofattacks, with Labour leader EdMiliband criticising asset strippersand vultures and US Republicanpresidential candidate Mitt Romneycoming under fire for his previousrole as a co-founder of Bain Capital.

These data show that privateequity and venture capital continueto weather the UKs weak economicclimate and deliver long-termreturns to investors, said Joe Steer,research director at the BVCA, whichproduced the report with PwC andCapital Dynamics.

In the face of uncertainty of thedirection of the global economy,

prolonged Eurozone weakness andfinancial market volatility, returnsthis year remained positive, and overthe longer term continue tooutperform other asset classes.

Buyout firms beatthe slump to recordmajor gains for 2011

A BATTLE between two Israeli-Russian billionaires over profitsfrom the Angolan diamond indus-try kicked off yesterday in the HighCourt, with witnesses including achief Rabbi and the former head ofIsraeli intelligence agency Mossad.Arkady Gaydamak is suing his ex-

business partner Lev Leviev in anattempt to enforce an agreementthat he claims was signed in 2001,detailing how profits from thepairs mutual interests in Angolashould be split.

Cross examination of Gaydamakbegan yesterday, with the Russianbusinessman claiming in a writtenstatement that he was the victimof a conspiracy between Mr Leviev,[and his associates] GeneralKopelipa and Mr Sumbala seekingto deceive me into agreeing to settlemy well-founded claims against Mr

Leviev for nothing.Gaydamak spoke to the court via

BY ELIZABETH FOURNIER a video link from Israel.He claims he is entitled to roughly

half Levievs diamond assets inAngola as a result of an agreementsigned in December 2001, definingthe pairs business relationship anddistributing assets from their busi-nesses.

But the only signed copy wasplacedw i t ht h echiefRabbi

o fRussia

Rabbi Berel Lazar who says he hassince lost or destroyed the document.

Gaydamak says Leviev made partialpayments under the agreement until2005, but that since then he has beendenied commission and dividendsworth as much as 3m per month.

Leviev, however, denies that theagreement was ever signed, and is alsodisputing its contents.The so-called King of Diamonds,

who made his fortune battling DeBeers monopoly over the sale of roughdiamonds, also claims Gaydamaksigned away his rights to the assets in2011, in a disputed settlement agree-ment, without payment.

Gaydamak says he was induced tosign the settlement by General ManuelHelder Viera Dias an Angolan stateminister known as Kopelipa who isalso head of the countrys securityservice. Leviev denies Kopelipa was act-ing as his agent. The case continues.

Arkady Gaydamak (left) is suing LevLeviev in the High Court

BUILDING society Nationwiderecorded a 10 per cent rise inprofits to 304m during the year to

April 2012 as it ramped upmortgage lending and retreatedfrom commercial real estate.

The mutual also said yesterdaythat it is planning to diversify intosmall business (SME) lending and

will over time develop and offer afull range of services to SMEs.

Nationwide boosts mortgagelending and expands into SMEs

BY JULIET SAMUEL Nationwide is keen to expandinto the space left by larger playersthat are deleveraging. Its grossmortgage lending grew by 44 percent to 18.4bn in part by buying1.2bns worth of housing assets.

It wants to grow its retailbusiness in part to make up for

shrinking its portfolio ofcommercial property assets, whichtotal 11.2bn. It also took a 103mcharge to compensate customersfor mis-sold insurance products.

THE SERIOUS Fraud Office hasbegun the defence of its actionsfollowing the controversial arrestof property tycoons Vincent andRobert Tchenguiz last year.

SFO counsel James Eadie told theHigh Court that at the time ofKaupthings collapse Robert andcompanies connected to him owed

the bank around 1.6bn.Robert Tchenguiz owned shares

Robert Tchenguiz and allies owed 1.6bn toKaupthing, fraud office tells the High Court

BY HARRY BANKS in Kaupthing as well as its largestshareholder Exista, also the bankssecond-largest debtor.

Icelands Special InvestigationCommittee has already noted a bigincrease in loan facilities to theyounger Tchenguiz betweenJanuary 2007 and October 2008.

According to the minutes of theloan committee of Kaupthingsboard, the bank lent money to

Tchenguiz in order for him to meetmargin calls from other banks.

Vincent Tchenguiz has alreadypursued Kaupthing for damagesafter the banks winding-upcommittee refused to recognise histrust as a priority creditor. Hereached a settlement last year.

The brothers this week began ajudicial review into their arrests.Neither man was charged and theycontinue to protest theirinnocence. The SFO has admitted

errors and is reviewing Vincentsstatus as a suspect.

Nationwide chief executive Graham Beale is expanding the mutuals loan book.

THURSDAY 24 MAY 20128 NEWS

cityam.com

Russian billionaires inHigh Court showdown

7/31/2019 Cityam 2012-05-24

9/35

THE WORLD Bank yesterday cut itsgrowth forecasts for China this year

as it called on the country to rely oneasier fiscal policy to boostconsumption rather than stateinvestment.

The bank now expects thecountrys economy to expand 8.2 percent in 2012, down from an earlierforecast of 8.4 per cent and downsharply from the 9.2 per centexpansion recorded for last year.

The slower rate of increase forecastfor Chinese growth, the worldssecond largest economy and heavilyexposed to the Eurozone through itsexports, is stark enough to dragdown the World Banks forecast forall East Asia from 7.8 to 7.6 per cent.

Chinas near-term policychallenge is to sustain growththrough a soft landing, it said.

With external demand likely toremain weak for the foreseeablefuture, East Asias continued high

growth rates will need to be linkedless to an export-oriented model.

It suggested measures to supportconsumption such as tax cuts, whilesteering clear of huge stateinfrastructure spending, which theChinese government relied uponduring a similar downturn in 2008.

Elsewhere, recovery in Thailandand Japan following last yearsnatural disasters is lifting growth.

World Bankcuts its Chinagrowth figures

BY MARION DAKERS

WHEN former New York prosecutorEliot Spitzer led his assault on WallStreet investment banks in the wakeof the dot com crash, his brief was toseparate analysts from the bankersselling a deal like Facebook.Whereas pre crash, analysts used to

join a companys management dur-ing a share sale roadshow and getsubsumed into the whole process,these days those aligned with the

sponsoring banks are required tokeep their distance and are not evenallowed to publish research.The rules brought in by Spitzer

were designed to prevent analystsfrom bigging up clients shares toinvestors mainly for the purpose ofhelping their counterparts in thecorporate finance department to sellthe deal.

On the increasingly problematic

Spitzerreformsfail to prevent

IPO squabblesflotation of Facebook, it is the nega-tive view of lead bank MorganStanleys analyst in the wake of a reg-ulatory filing from the company thatis causing some investors blood toboil. The analysts negative viewswere conveyed orally because theyarent able to be published these daysduring the float process, yet this hasled to claims that some investors havebeen favoured over others.

One lawsuit filed yesterday claimsthat Morgan Stanley selectively dis-closed to certain preferred investorsits view that Facebooks forecastswere being revised downwards.

Morgan Stanley says the new infor-mation was already in the marketbut unless Facebook shares recover,the bank will face a testing few days,especially since it increased its pricerange ahead of the float.

HAS FACEBOOKS FLOAT FLOPSURPRISED YOU? Interviews by Anaam Raza

I was a little surprised and Id like to know thereasoning behind it, but I dont think it deserved

it. If it had started off low and let the shares appreciate then itcould have prevented embarrassing headlines.

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

JONATHON DRYERDEUTSCHE BANK

Not really. And in the current economic climate

theyre bound to come down even further. Ididnt buy the shares because there was no point in pay-ing the difference in currency but now Im glad I didnt.

KETAN PATEL

HSBC

Not at all. Its social media how do you reallyascertain the value of this stuff? Facebooks

shares were definitely over hyped and over priced and Ithink theyre going to come further down.

MUKESH HIRANIBANK OF AMERICA

Write-off costs drag Pinewooddown despite revenue growthPINEWOOD Shepperton made a losslast year as the film studio took a hitfrom the failure of its movie setdevelopment project.

Project Pinewood a plan to buildreplicas of landmarks includingfamous cities, a castle and a collegecampus was blocked in January,costing the company 7.6m in write-off costs.

Expenses relating to the PeelGroup offer, in which the property

BY LAUREN DAVIDSON investment company gained 73 percent of Pinewoods shares afterattempting a hostile takeover, set thestudio back 3.3m.

Pinewood Shepperton posted a2.9m loss for the 15 months to 31March, compared to a profit of5.8m for calendar 2010.

But one-off costs aside, businesswas booming at the film productiongroup, with revenues upsubstantially to 62.9m. Filmrevenues grew to 44.9m, boosted bythe filming of blockbusters Dark

Shadows, starring Jonny Depp andHelena Bonham Carter, at PinewoodStudios and Wrath of the Titans atShepperton Studios.

The group said it was in goodshape looking ahead, with the newJames Bond film Skyfall still inproduction at Pinewood and acontinuing rising demand for thestudios facilities.

Pinewoods mega portfolioincludes most James Bond films aswell as the Harry Potter series.

Its shares rose 9.2 per cent to 332p.

CITYVIEWS

Eliot Spitzer changed the way that US IPOs could be marketed by investment banks

Morgan Stanley pays price for havingindependent analyst, writes David Hellier


cityam.com

Float awayStretch out in KLM Business Class from London

Lima from 1,743

Bangkok from 1,913

New York from 2,215

Return fares, including taxes

Fares quoted are for return business class flights from London Heathrow via Amsterdam, including taxes and charges, and are subject to change. Fares arealso subject to availability and exchange rate variation. Please check for exact fare at klm.com at time of booking. Book by 12/06/12 (except New Yorknonstop flights operated by Delta, book by 29/05/12). Travel periods vary. Credit card surcharge will apply. Specific booking conditions and the GeneralConditions of Transportation of KLM and AIR FRANCE apply. Prices correct at 10/05/12.

JP MORGAN Chase & Co has beenhit with a lawsuit brought on

behalf of employees whoseretirement holdings fell in valueafter the largest US bank revealed asurprise $2bn (1.3bn) trading lossearlier this month.

The complaint, filed in the USDistrict Court in Manhattan, alsonames individual defendants,including chief executive JamieDimon and Ina Drew, who steppeddown last week as head of

JPMorgans chief investment office,where the loss occurred.

JPMorgan sued over employeeretirement plan losses in the US

BY CITY A.M. REPORTER The defendants were accused ofviolating their duties to 401(k) andother retirement plan participants

by including company stock as aninvestment option, hiding thestocks risk, and failing to moveparticipants to safer choices.

The plans suffered hundreds ofmillions of dollars of losses, thecomplaint said. If defendants haddischarged their fiduciary duties toprudently manage and invest theplans assets, the losses suffered bythe plans would have beenminimized or avoided.

JPMorgan did not immediatelyrespond to requests for comment.

7/31/2019 Cityam 2012-05-24

10/35

IN BRIEFTetley tea owner sees income falln Tata Global Beverages suffered a 36per cent drop in net income in thelatest quarter, as the owner of Tetleytea was hit by one-off costs, itannounced yesterday. Sales rose 11 percent to 17.24bn rupees (198m) butrestructuring expenses knocked netincome for the three months to Marchdown to 542.1m rupees. The firm,

which has a tie-up with Starbucks, ison track to open its first Indian storesthis year.

Hogg Robinson upbeat for 2012nHogg Robinson, the corporate travelservices group, yesterday reported a 18per cent rise in annual pre-tax profit to34.1m while revenues grew from358m to 374.2m. Chief executiveDavid Radcliffe said the difficultmacroeconomic outlook will keeptrading conditions challenging but saidHogg Robinsons strong pipeline ofnew business opportunities will allowthe company to make good progressin the year ahead.

Dell shares hit by weak outlookn Shares of Dell plunged 17 per cent

yesterday after a disappointing revenueforecast spurred fears that global techspending is weakening faster thananticipated and raised doubts aboutthe PC makers strategy. The stockplunge erased more than $4bn fromthe companys market cap. Dell sharesclosed 17.2 per cent lower at $12.49 onthe Nasdaq. Earlier in the day, it fore-cast revenue of $14.7bn to $15bn in thecurrent quarter, well short of analystsaverage forecast of $15.4bn.

GETTY

House of Fraser earnings drop

as it invests in new warehouseHOUSE of Fraser saw adjustedearnings before interest, tax,depreciation and amortisation drop16 per cent to 58.6m in the year to28 January as it invested in a seconddistribution centre.

The department store, whichruns 63 sites across the UK andIreland, said it built a newwarehouse in Northamptonshire,

BY KASMIRA JEFFORDlast summer, to help support itsonline business, after relaunchingand redesigning its website.

Don McCarthy, chairman ofHouse of Fraser said: Consideringthe market conditions, uncertaintyin the economy and theunseasonably warm autumn webelieve our results are in line withfashion retailers in our sector. 2011was another year of investment forus, as we continued to focus on the

fastest growing areas of ourbusiness.

Despite the fall in earnings, grossprofits were up 3.8m to 399.1mand like-for-like sales over the yearnudged up three per cent. Ownbrand sales also jumped 17 per centhelped by the launch of Mary byMary Portas in womenswear andHowick Tailored in menswear.

In the first 13 weeks of the year,like-for-like sales rose by 2.6 per cent.

THURSDAY 24 MAY 2012 cityam.com10 NEWS

BURBERRY yesterday said it had seenan outperformance in mens clothingand tailoring as the luxury brandreported a 26 per cent jump in full-year profits.

The 156-year old British heritagebrand reported an underlying pre-taxprofit of 376m in the year to 31March, on revenues up 24 per cent toalmost 1.9bn.

Chief executive Angela Ahrendtssaid the success of its new London tai-loring initiative helped drivemenswear sales up by 26 per cent inthe period, while sales of non-cloth-

ing products such as leather goodssaw a 50 per cent increase in sales.Ahrendts said Burberry would be

opening its first menswear-only storein Knightsbridge in the fall, as it looksto benefit from a growing trend ofmen dressing smartly.The launch is part of a wider expan-

sion plan to increase store space by 12-14 per cent in the year, opening a net15 new outlets in both flagship andemerging markets.

Burberry said it will spend around

Male shoppershelp Burberry

beat recessionBY KASMIRA JEFFORD 180-200m, with about one third of it

going towards larger format storessuch as its new Regent Street storeopening in the autumn.

Sixty to seventy per cent of all theluxury goods sold around the worldtake place in just 25 cities. Burberryhas been underpenetrated in theseflagship markets versus our peers,Ahrendts said.

Burberry said wealthy shoppers fromAsia, the Middle East and emergingmarkets remained sheltered from theglobal economic downturn.

Its shares closed 1.2 per cent loweryesterday at 1,369p hit by profit taking.

Burberry Group PLC


1,350

1,375

1,300

1,325

1,400

1,425

1,450

1,475 p 1,369.0023 May

A 24 per cent rise in pre-tax profits defies some of the economic gloom,whilst the companys exposure to some strong local markets continues to propelprospects...Whether this momentum can be maintained is of some concernto investors, while the situation in Europe is undoubtedly a drag on growth.

ANALYST VIEWS

Burberry has excellent strategic growth opportunities in a luxury mar-ket with strong long term growth credentials. There are significant geographicaland product mix opportunities plus operational leverage still to comefrom infrastructure investment over recent years.

Burberry reported another strong set of results, in line with expectations.

The very creditable outcome reflected continued buoyancy in the global luxurymarket, the addition of new space, extension of the Burberry franchise intonew product areas and further improvements in operational efficiency.

HOW ARE BURBERRYSPROSPECTS FOLLOWINGTHESE RESULTS?Interviews by Kasmira Jefford

RICHARD HUNTER HARGREAVES LANSDOWNE

FREDDIE GEORGE SEYMOUR PIERCE

SAM HART CHARLES STANLEY

Own brand sales jumped 17 per cent helped by the launch of Mary Portas in womenswear

Angela Ahrendts has defied the downbeat economy to deliver booming sales

7/31/2019 Cityam 2012-05-24

11/35

ALAMY

ONLINE supermarket Ocado yester-day announced an acceleration insales growth for the second quarter,raising hopes that the firm has over-come last years distribution prob-lems that damaged consumerconfidence.

Shares in the company, whoserange includes products supplied byupmarket grocer Waitrose, rose 6.8per cent after it said sales in the quar-ter to 13 May were likely to be 13 percent higher than the same periodlast year.This compares with 10.9 per cent

growth in the first quarter.Operational performance at our

Hatfield customer fulfilment centrecontinues to improve and is nowoperating at record levels of capaci-ty, the firm said in a statement.

A number of new enhancementshave gone live which will enable usto continue to expand our capacity,significantly extend our range, andimprove our operational efficiency.

Ocado also confirmed its secondfulfilment centre in Warwickshire is

Ocado points tofresh growth as

revenues surgeBY JAMES WATERSON on track to open in early 2013.

But Philip Gordon, an analyst atPanmure Gordon, retains doubtsabout the long-term viability ofOcado in the face of strong chal-lenges from rivals who includeOcados key supplier Waitrose.

Ocado is still losing market shareonline. With the competitive environ-ment likely to get tougher, we thinkthat it will struggle to demonstrateoperational leverage...its competitorshave sharpened up their act, he said.

Ocado has yet to turn a year-end pre-tax profit since it was founded in2001 and its shares have slumpedfrom a 2010 IPO price of 180p.

Ocado Group PLC


117.50

115.00

112.50

110.00

107.50

105.00

102.50

100.00

p 107.8023 May

TRANSPORT operator FirstGroupsaid yesterday that full-year profitmore than doubled a lift fuelled

by strong performances from itsUK rail and US coach businesses.

The bus and rail companyreported a pre-tax profit of279.9m for the year to the end ofMarch, up from 126.5m last year.

It said revenues increased 4.1per cent to 6.68bn but that theoutlook was uncertain.

The company said it expected2012/13 margins at its British busunit to be hit by the tougheconomic climate, especially in

FirstGroupprofit doubles butUK bus arm faces tough road

BY JOHN DUNNE the North of England andScotland, rising fuel costs andreduced funding to the industry.

Chief executive Tim OToole saidthe bus unit was in for a shake-up

with some parts of the business tobe offloaded.

He added: We are acceleratinga comprehensive plan that willdeliver sustainable growth inrevenue and patronage andimproved returns.

This includes repositioning ourUK Bus portfolio through aprogramme of business and assetdisposals. The company hiked thefull-year dividend by seven percent to 23.67p.


cityam.com

FirstGroup plans a shake-up of its UK bus business by offloading parts of the division

STANSTED Airport operated as

normal yesterday in spite ofindustrial action by baggagehandlers.

Members of the Unite and GMBunions working for contractorSwissport staged the first of threeplanned walkouts yesterday as partof a dispute over work rotas.

Unite claims that Swissportsmeasures would mean ramp staffwork 14 extra days a year with noadditional pay.

Further strikes are planned forover 26-28 May, and 2-6 June,meaning disruption is possible overthe diamond jubilee bank holidays.

But Swissport said thatcontingency plans meant passengersdid not experience delays yesterday.

The company handles cargo andbaggage for a number of airlines atStansted including Ryanair, Monarchand Thomson.

Paul Bouch, Unite regional officer,said: Swissport has forced ourmembers backs to the wall. Aftereight weeks of talks the company isstill determined to press ahead withits unreasonable roster and holidayallocation changes.

The revised roster would avoidthe necessity of imposingcompulsory redundancies,Swissports spokesman said.

Talks between the unions andSwissport broke down last week.

No delays atStansted asstrikes begin

BY MARION DAKERS

Glaxo warns it will drop $2.6bn

bid unless poison pill removedGLAXOSMITHKLINE (GSK) saidyesterday it would not proceed withits $2.6bn (1.7bn) offer for HumanGenome Sciences unless the USbiotechnology company dropped apoison pill shareholder rights planimposed to block the deal.

Human Genome adopted thestockholder rights plan earlier thismonth in an attempt to ward off

BY CITY A.M. REPORTERGSK in what is becoming anincreasingly acrimonious battlebetween the companies thattogether sell new Lupus drugBenlysta. The British company istaking its $13-a-share offer direct toinvestors after Human Genomesboard said it was inadequate.

The plan allows shareholders tobuy additional shares at a discount ifone investor buys or launches atender offer for more than 15 per

cent of the groups stock without theboards approval, effectively blockingan unwanted bidder.

Because Human Genome hasadopted a poison pill, GSK has addeda condition to its of fer requiringHuman Genome to redeem the pillor, alternatively, GSK being satisfiedin its reasonable judgment that thepill has been invalidated or isotherwise inapplicable to GSKsacquisition, GSK said yesterday.

Serco in talks with Amec oversale of nuclear advice business

OUTSOURCER Serco said yesterdaythat it was in talks with Amec overthe sale of its technical consulting

business (TCS).Sercos TCS provides provides

safety advice to the nuclearindustry.

Amec, an engineeringconsultancy to the energy sector,has yet to make any formal offerthe two companies said.

Serco bought TCS for 75m in

2001. It has revenues of 70m peryear.

Amec said last month it isexpecting double digit revenue

growth in 2012 and has a strongorder book.

Analysts had expected thecompany to start makingacquisitions.

A statement from FTSE 100-listed Serco said: There is nocertainty that a transaction willproceed. A further announcement

will be made in due course.

BY JOHN DUNNE

7/31/2019 Cityam 2012-05-24

12/35

Credit subject to acceptance. Credit is provided by external finance companies as determined by DFS. 4 years interest free credit from date of order. Delivery charges apply. After event prices apply from 28.05.12 - see instore or online for details. Accent cushions n ot included

unless otherwise stated. Mobil e charges may apply when calling 0800 110 5000. DFS is a division of DFS Trading Ltd. Registered in England and Wales No 01735950. Redhouse Interchange, Doncaster, DN6 7NA.

Visit your nearest store, order direct at www.dfs.co.uk or call free on 0800 110 5000 24 hours a day, 7 days a week

4 years interest free credit on everything

Or pay nothing until January 2013 then take 3 yearsinterest free credit

0%REPRESENTATIVE

APR

No deposit with 4 years interest free credit. 48 equal monthly payments of 12.06. Or pay nothing until January 2013 then 36 equal monthly payments of 16.08. 0% APR. Total 579.

50%OFFNUVO COLLECTION

SOFAS

ABODE

3 SEATER

HALF PRICE

579AFTER EVENT PRICE

1158

12.06A MONTH

NO DEPOSIT

NO INTEREST

EVER

half price

ends Sunday

New

Tottenham

CourtRoad

storeopens

SATURDAY9AM

7/31/2019 Cityam 2012-05-24

13/35

G E T T Y

University. His lecturers remember abright student who had little interestin computers; he took a first withsome ease. After college, Ive joinedLondon design agency Tangerine as aconsultant for bathroom fittingsmaker Ideal Standard. It was in 1992,when Apple hired Tangerine, that Ivebegan dealing with the firm, thenstruggling in the face of Microsoftsdomination of the PCs. Fed up design-ing taps, he soon moved to SanFrancisco and joined the Apple staff.When Jobs returned to Apple five

years later, he soon spotted Ive, andpromoted him to chief designer. Thepair enjoyed a warm and relativelycalm relationship, a rarity with thefamously irascible Jobs, although

regulator said it would now not

propose any remedial action. Itwill review responses to itsrevised finding before reachingits final verdict.

The provisional finding was areprieve for BSkyB which hasclashed repeatedly withregulators in recent years overits dominance of pay-TV, puttingat risk its ability to lurecustomers with the offer ofexclusive movie and sportscontent.

The Competition Commissionhad previously found that Sky'ssubscriber base of more than10m homes gave it an advantageover rivals who struggled to bidfor the rights to first-runHollywood movies.

While the commission notedyesterday that BSkyB still heldthe rights to the movies of all six

major Hollywood studios for the

first subscription pay-TV

window, it said Netflix and theAmazon-owned Lovefilm hadalready acquired rights toseveral other studios.

Virgin Media said it stronglydisagrees with the commissionand that Skys dominance hadled to higher prices and lessinnovation.

A BT spokesman said: Wecannot see how this is in the bestinterests of consumers.

DAVID CROW

British Sky Broadcasting Group PLC


680

685

690

695

700

705 p 693.0023 May


cityam.com

777777"7"77735"47$7((777+-)&.7777 1('767(*72-777767777

77.77$77$777$777"77$7"777777777"!77-77,/)&.777"77777"77"77$-

77#7!777777$77!777747%7-7777!$767.7.7.7.7.7$7767777!077$77777$77757!77777!7777!$77$77-

777"777

ASK most Britons to name a

famous designer, and they willprobably offer Sir James Dysonor Terence Conran. Although

both are distinguished, neither canlay claim to something asgeneration-defining as the iPhone. Itwas designed by Essex boy JonathanIve, who was yesterday knighted forservices to design. Its strange, then,that Ive or Jony to his friends isnt better known, but it is a state ofaffairs that perfectly suits thepublicity-shy 45 year-old.When his late boss Steve Jobs was

still alive, Ive was always in his shad-ow. Jobs cult status meant that otherApple executives took a back seat. YetIve is almost as important as Jobs wasto the companys success. He hasdesigned every Apple product sincethe firms renaissance, from the orig-inal Bondi-Blue iMac and white iPodto the iPhone and iPad.

Born in Chingford in 1967 andbrought up by his teacher father, Ivewas educated at the local compre-hensive before studying at NewcastlePolytechnic, now Northumbria

Jobs tendency to take credit for

Apples designs could sometimeswound Ive. Those who know Ive sayhis capacity for hard graft is the keyto his success. Often working 70-hourweeks, he involves himself in every-thing from initial design to manufac-turing, regularly travelling to Chinato oversee work in Apples factories;when working on a new product, hehas little time for anything else.

During Ives first five years at Apple,his talent went unspotted. At thetime, the firm was rudderless,obsessed with market research, con-stantly trying to conform to industrystereotypes in order to take onMicrosoft instead of finding a nicheof its own. Legend has it that Ive hadalready designed the Bondi-Blue iMaclong before Jobs returned, but thethen Apple management thought ittoo avant-garde.Apple has barely put a step wrong

since Jobs died, and much of that isdown to his hard-headed replacement,former chief operating officer TimCook. But it is in Ive make that SirJony that the soul of Jobs lives on.

Essex boy who becamedesigner to a generation

Apple designer Jonathan Ive was knighted for services to design yesterday

New movie streaming services let Sky of the hookSKYSubscribers: 10m to general pay-TV packages

Price: 20 for basic TV package, plus individual rental prices

Exclusive contracts with: all big six Hollywood studios;

MGMs entire Bond back catalogue from October 2012

AMAZONS LOVEFILMSubscribers: 2m as of January 2012

Price: from 4.99/month for online streaming

Exclusive contracts with: Exclusive contracts with:

Sony, Warner Bros, STUDIOCANAL, ITV, ABC, and BBC

NETFLIXSubscribers: International streaming members totalled

3m in March 2012 does not provide a UK breakdown

Price: Unlimited streaming from 5.99/month

Exclusive contracts with: DreamWorks Animation (from

2013); Lionsgate UK; MGM; Momentum

Sky Movies is cleared in probethanks to Lovefilm and NetflixSATELLITE broadcaster BSkyB nolonger dominates the pay-TVmovie market following thearrival of new entrants Lovefilmand Netflix, the competition

watchdog said yesterday in areversal of its initial findings.

But the decision drew angryresponses from Skys main rivalsBT and Virgin, who said its SkyMovies channel reducescompetition.

Laura Carstensen, chairmanof the Competition Commissioninvestigation, said: Lovefilmand Netflix offer services whichare attractive to manyconsumers and they appearsufficiently well resourced to bein a position to improve therange and quality of theircontent further.

Given the findings, the

BY HARRY BANKS

7/31/2019 Cityam 2012-05-24

14/35

If you werent at the Le MeridienHotel last night, theres a goodchance youre behind on the latestCity gossip.

The Piccadilly hotspot played host tothe third annual M&A Network din-ner, chaired by former Sunday Timesbusiness editor and FTI Consultingguru John Waples. Proceeds went tothe charity Norwood.The panel included Mark Florman,

chief executive of BVCA; RichardClarke, KPMGs UK head of corporatefinance; Michael Kalb, senior manag-ing director at private equity firm SunEuropean Partners; and Claude

Littner, chairman of Viglen and regu-lar interviewer on The Apprentice.The well-informed group debated

the reputation of private equity andthe state of the M&A market whatshot and whats not.

Norwood, a favourite of celebs suchas Simon Cowell and RichardDesmond, offers community supportto people with learning disabilitiesand children and families in need.

Not too different, Norwood M&ANetwork member Marc Cohen tells TheCapitalist, from the M&A world.Everyone knows everyone it has itsown special community bond.

The new notes will be donated to charity and sold to the public as part of the Royal Bank of Scotlands jubilee celebrations

There was a seaof blue over the

weekend afterChelsea won theEuropean ChampionsLeague. But yesterdaythere was a splash ofred as Spanishmodels converged onthe City to advertiseBetVictors moneyback deal on aSpanish victory in theupcoming Europeanfootball finals.

Got A Story? Email

[email protected]

14 cityam.com

cityam.com/the-capitalistTHECAPITALIST

Patriotic celebration, orquantitative easing by the backdoor? The Royal Bank of Scotland hasunveiled its contribution to theDiamond Jubilee festivities in the formof a commemorative 10 note.The bailed-out bank yesterday showedits appreciation for its de facto ownerwith 2m worth of royal purple andgreen tenners.RBS needed to replace some of itsageing notes anyway, so sadly the issue

wont do much to pour cash into theeconomy, beyond a charity auction ofsome of the collectible currency.The bank notes will be treated as legalcurrency, with the serial numbersstarting with TQDJ short for TheQueens Diamond Jubilee.Loyal subjects can buy themselves aleaf or two of numismatic history bymail order between now and the end ofJune.Dont hold your breath for similar

celebratory notes south of the border,however. The Bank of England, whoseboss Sir Mervyn King last week warnedthat the jubilee bank holidays couldkeep the country in recession, hassettled instead for a royal addressand an exhibition at the Banksmuseum to mark the occasion.Given the amount of flak Sir Merv hasalready taken for QE2, its notsurprising QEII holds little sway over onThreadneedle Street.

THURSDAY 24 MAY 2012

Top panel at Norwood

M&A Network dinner

Royal Bank of Scotland commemorates QEII

7/31/2019 Cityam 2012-05-24

15/35

WORSENING political and economic

turmoil in the Eurozone has knockedinvestment in Europes shopping cen-tres and stores to its lowest level since1997, new research shows.

European retail property invest-ment fell to 3.69bn in the first quar-ter of 2012, down from 12.6bn in thesame period in 2011 and 9.3bn in theprevious quarter, according to proper-ty consultancy CBRE.

It was the lowest since the six-month period after Lehman Brothersfiled for bankruptcy in September2008, and was the sectors worst quar-ter in eight years barring the periodof Lehmans collapse, CBRE said.

Michael Haddock, senior director ofEMEA research, said the market washit by a lack of attractive stock, asowners of properties sat on themamid the economic uncertainty.

Theres nothing available of thequality that people want to buy...the

thing that would help retail invest-ment activity recover would be arenewed interest in poorer qualityretail assets, which would be predicat-ed on an economic recovery.

European shopinvestmenthits fresh low

BY A CITY A.M REPORTER

LONDON property group GreatPortland Estates (GPE) impressedinvestors yesterday with an improvingportfolio and a record year for leasings.Annual pre-tax profits took a batter-

ing, down 36 per cent to 155.2m, asthe firm spent on development andrefurbishment work.

But the groups net asset value rose11.9 per cent in the year to 403p.

Chief executive Toby Courtauld saidGPE enjoyed a strong 2011, and thatcentral London is likely to remain astronghold for international investorslooking to make safe investments.

Last year, GPEs rental values grew

7.8 per cent on a like-for-like basis,picking up towards the second half.

New developments totalling almosthalf a million square feet of space arein progress, and the firm has already

Strong Londonmarket helps

Great PortlandBY MARION DAKERS secured 16.7m of pre-let income.Great Portlands shares defied the

gloomy market to jump 2.8 per cent.Earnings suffered a temporary hit,

but we believe Great Portlands portfo-lio of individually selected assets inthe supply-starved West End will pro-vide large development profits overthe coming years, said Peel Hunt ana-lysts in a note.

Shaftesbury profits rise as WestEnd sites fend off retail gloomTHE PROSPEROUS West Endcontinued to shelter Shaftesburyfrom the wider gloom in the retailsector as the London property firmposted a 15 per cent jump in firsthalf profits.

The company, which owns 500properties across Londons keytourist hotspots including CarnabyStreet and China Town reported apre-tax profit of 16.1m in the sixmonths to the end of March, upfrom 14m a year earlier.

The estimated rental value of itsportfolio also rose by 4.7m over thesix month period to 96.9m.

Net asset value was up 1.5 percent to 470p a share, driven by a1.4 per cent uplift in the value ofthe portfolio to 1.74bn.

Chief executive Brian Bickell saidthat throughout the first half ofthe year Shaftesburys portfoliohad been virtually fully let asdemand for space in West End

BY KASMIRA JEFFORDlocations remained healthy.

Tenant demand fromrestaurants, cafes and bars, whichmake up 35 per cent of income wasparticularly strong.

Londons reputation as adestination of world renowncontinues to grow, and thissummers major events theQueens Diamond Jubilee and theOlympics will put the city firmlyin the worlds spotlight, he said.

These events are a uniqueopportunity for London to promoteits many attractions to a globalaudience.

Shaftesburys three principalvillages, Carnaby, Covent Gardenand Chinatown, all grew in valueby around 1.6 per cent. Its Sohoholdings around Berwick Streetsuffered a 2.7 per cent decline.

The company said the areacontinued to suffer from afragmented ownership, adilapidated public environment,rundown buildings and astruggling street market as it

works on plans to improve andregenerate the area.

Over the year, the group made29.4m of acquisitions, of whichover 90 per cent was in Soho, andthe rest in Covent Garden and alsowon planning approval for twomajor schemes in Carnaby.

John Manser, Shaftesburyschairman since 2004 and a non-executive director since 1997, alsoannounced he will retire after nextyears annual meeting. JonathanLane, currently executive deputychairman, will take his place.

IN BRIEFHicl portfolio in rapid expansionn Hicl, which invests in infrastructureprojects, said yesterday that its portfoliohad increased by 34 per cent in the yearto the end of March. The company saidits assets are worth around 902mcompared with 673m the year before.Hicl announced a second interimdividend of 3.5p, taking the total pay-out for the year 6.85p. That is a rise of2.2p on the previous year. Meanwhiletotal revenue was 48.1m comparedwith 37.4m.

Telecom Plus signals tough 2013n British utility supplier Telecom Pluss

full-year profit rose 12 per cent but it said

its profit growth in 2013 would berestricted to about 10 per cent by a needfor additional investment and the loss ofmarketing support from a partner.This year the company which suppliesgas, electricity, fixed and mobile tele-coms and broadband has to operatewithout a 3m marketing contributionfrom power supply partner NPower.However, pre- tax profit for the year tothe end of March rose to 30.7m from27.5m a year ago. Revenue rose 12.6 percent to 471.5m. Services suppliedclimbed 18 per cent, compared with a 12per cent increase last year. Its customerbase went up by about 12 per cent to415,000. It raised its full year dividend by23 per cent to 27p a share.

Aveva acquires Bocad for 14mn Engineering software group Avevayesterday announced that it had bought3D specialist Bocad. The deal is worth14m. Richard Longdon, chief executiveof Aveva said: This acquisition furtherextends Avevaa position in theEngineering & Design market providingthe most comprehensive 3D design soft-ware for plant and marine. Were excitedabout the opportunity to unlock the com-mercial potential for Bocad's leadingtechnology. Bocad has offices inBelgium, Germany, Malaysia, Canada andFrance. A total of 90 staff from the firm which specialises in 3-D designs for steel,will come with the acquisition.

GPE secured a pre-let for its 240 Blackfriars development earlier in the year

Shaftesbury PLC


510

515

520

525

530

535 p 511.0023 May


cityam.com

FREE landline numberfor 12 monthsWith Vodafone One Net Expressand the BlackBerry Bold9900

Business

Terms apply. Subject to credit check. Lines open Mon-Fri 8am-8pm,Sat 9am-5pm. Calls from landlines are free. Standard network chargesapply to calls made from a mobile phone.

Work smarter with the latestBlackBerry 7 OS

High-res touchscreen withfaster web browsing

BlackBerry Bold9900 smartphone

Free

Get this offer on th e Vodafone Business Single Plan600 mins Mins to UK mobiles or landlines (starting 01, 02, 03)

Standard UK texts250 texts

3000 mins Mins to other Vodafone UK mobiles

UK mobile internet & email usage on your phone500MB

BT Openzone Wi-Fi2GB

30a month

BlackBerry , RIM, Research In Motion and related trademarks, names and logos arethe property of Research In Motion Limited and are registered and/or used in the U.S.

and countries around the world. Used under license from Research In Motion Limited.

24-month contract. 30 a month for the first12 months and 40 a month thereafter.Prices exclude VAT

Call

Visit your local store today,search 'Vodafone Store'

08080 996 730

The newjobs websitefor London

professionals

The newjobs websitefor London

professionals

C

ITYAMCAREE

RS.c

om

Great Portland Estates PLC


375

380

385

390

395 p 392.9023 May

7/31/2019 Cityam 2012-05-24

16/35

Copyright2012UnitedParcelServiceofAmerica,Inc.

Port ofTilbury

Hampden ParkGlasgow

St. James ParkNewcastle

Old TraffordManchester

Ricoh ArenaCoventry

MillenniumStadiumCardiff

Copyright2012UnitedParcelServiceofAmerica,Inc

.

For the details, go toups.com/london2012

Thirty million items have already begun to converge

on the UK for the Olympic and Paralympic Games.

This massive operation could have a negative

climate impact. But as the Official Logistics

Supporter of London 2012, UPS is determined to

minimise it. We will measure, manage

and mitigate the emissions from our

own logistical operations supporting

the Games.

MEASURING OUR IMPACT

The first step in solving any problem is

to understand it, to quantify it. To that end,

UPS is measuring the carbon footprint

from all our own logistical operations

for London 2012. That includes

transporting from warehouses to

the sports venues and back again;

and from installing to dismantling.

To do so, we had our methodology certified by The

CarbonNeutral Company. Our process follows the

CarbonNeutral Protocol, the global standard for

ensuring the integrity of carbon-neutral certification

programmes. Our goal is to arrive at a credible,

comprehensive and certifiable number so we can

then take concrete steps to manage and mitigate it.

MANAGING OUR OPERATIONS

For London 2012, we will be using our fleet of

electric vehicles as well as some state-of-the-art

biomethane tractor trailers. These are the biggest

vehicles we use, and by making the substantial

investment of converting them to run on a diesel/

biomethane mix, we will substantially reduce

their carbon footprint.

But how these vehicles are powered is only

part of the story. We also investigate

how theyre driven. To accomplish this,

we use customised vehicle telematics,

a wireless technology that gives

us a vast array of data. This

information is invaluable:

it helps us plan the most

efficient routes, reduce idling

time and lower fuel emissions

of our vehicles.

MITIGATING OUR FOOTPRINT

While we can greatly reduce our emissions

for London 2012, we cannot eliminate them

altogether. But we will mitigate the remaining

footprint through purchases of high-quality, Gold

Standard carbon offsets that come with their own

third-party validations. Through these purchases

we will mitigateto the high standards of the

CarbonNeutral Protocolthe climate impact of our

logistical operations for London 2012.

Which brings us to this: what were doing

for London 2012 we can do for your company.

Reducing logistical carbon footprints is good for the

environment and business. Yours, for instance.

THE LOGISTICS FOR LONDON 2012 COULD HAVE

A HUGE CLIMATE IMPACT. HERES WHY IT WONT.

UPS will purchase high-quality carbon offsets forvarious environmental projects around the world.

Reducing our logistical carbon footprint means thatwhoever wins whatever medals, we all win.

From the dockside to thevenues and back again: weare measuring all our ownlogistical carbon emissions.

30 million items are needed for the London 2012 Games. A transportation challenge, certainly, but also an environmental one. UPS is using logistics to solve both.

7/31/2019 Cityam 2012-05-24

17/35

ADRIAN Beecroft, the venture

capitalist who has produced aradical set of employment reformsfor the government, yesterday hitout at business secretary VinceCable, calling him a socialist whoappears to do very little to supportbusiness.

Beecrofts long-awaited jobsreport was released on Monday andcontains proposals to roll backemployment law by making iteasier to sack workers, discouragingfrivolous employment tribunals andexempting firms with fewer thanten employees from new EuropeanUnion regulations.

But the business secretaryappeared to block proposals toallow no fault dismissals after hisaides said the plan was bonkers.

In response Beecroft told theDaily Telegraph that Cablesobjections were ideological not

economic and people find it veryodd that hes in charge of business.

He also said the Conservatives arekeen to tackle business concernsabout employment law but the LibDems will have none of it.

At yesterdays Prime MinistersQuestions Labour leader EdMiliband said the proposals showedthat the nasty party is back.

David Cameron replied that hewould consult on no-fault dismissalbut only for micro-businesses.

Beecroft lashesout at Cableover briefing

BY JAMES WATERSON

GETTY

BUSINESS secretary Vince Cable yes-terday unveiled the governmentsEnterprise and Regulatory Reformbill and claimed that it will makeBritain one of the most enterprise-friendly countries in the world.

Measures in the bill, announced aspart of this months Queens Speech,include changes to the employmenttribunal system, introducing a newCompetition and Markets Authorityand giving a binding shareholdervote on executive pay.

It also sets out the purpose of thegovernments 3bn Green

Investment Bank.We want to make sure the right

conditions are in place to encourageinvestment and exports, boost enter-prise, support green growth andbuild a responsible business culture,Cable said.

[The bill] will help ensure that peo-ple who work hard and do the rightthing are rewarded, he added.

In an attempt to cut down the num-ber of employment tribunals, busi-nesses will be encouraged to use

Enterprise Billpromises to cut

tribunal costsBY JAMES WATERSON conciliation services.

Proposals to cut red tape includemerging parts of the Office of FairTrading with the CompetitionCommission to form a new organisa-tion that promises to speed up adju-dication on competition issues.The bill will also hand shareholders

a binding vote on executive pay deals,raising the prospect of furtherinvestor rebellions in the vein of therecent so-called shareholder spring.

Details of the required level ofshareholder backing will be pub-lished before parliament enters thesummer recess.

But Labours shadow business secre-

tary Chuka Umunna said the bill failsto provide a compelling vision foreconomic growth, adding that busi-nesses are right to question whythere are not more measures to givethem the help they need to grow andtake on extra workers.Alexander Ehmann of the Institute

of Directors said it offers little to sat-isfy those in search of worthwhilederegulation with only the changesto employment tribunals getting tothe red meat of the issue.


cityam.com

Business secretary Vince Cable promises his bill will reward people who work hard

n Employees must contact conciliationservice ACAS before seeking a tribunalhearing, in an attempt to settle moredisputes without costly legal proceedings.

n Measures to ensure less complexemployment disputes can be dealt withquicker and cheaper through a new R apidResolution scheme, giving businesses theconfidence to take on new staff.

n Improving small businesses access toadvice on complying with regulations inareas such as trading standards.

n Creating a new Competition andMarkets Authority to ensure dynamic andopen markets with faster decisions.

n Setting the purpose of the UK GreenInvestment Bank in legislation andensuring its independence so it can helpthe transition to a green economy.

n Giving shareholders of UK quotedcompanies binding votes on directorsremuneration.

n Encouraging investment in design byextending copyright protection for mass-produced art (e.g. designer chairs, lamps)to the life of the creator plus 70 years.

n Putting a time-limit on new regulationsvia sunset clauses, forcing departmentsto repeatedly make the case to keepregulation or face having it scrapped.

WHATS IN THE ENTERPRISE BILL?

7/31/2019 Cityam 2012-05-24

18/35

Charlie Bean believes pension funds have complained too much about QE lowering yields

THURSDAY 24 MAY 201218 NEWS

cityam.com

QUANTITATIVE easing (QE) has not

hurt pension funds nearly as muchas they claim, the Bank of EnglandsCharlie Bean said yesterday andcomplaining about the impact ofthe policy may be distractingtrustees from genuine long-termthreats.

Although QE is designed to pushdown gilt yields, which reducesreturns for pension funds investingin the bonds, Bean pointed to otherpositive effects. He said that funds

BY TIM WALLACE already holding gilts saw the valueof those assets and equities rise.

Equity prices rose substantially

once QE was actually under way by around 50 per cent during QE1and around 10 per cent duringQE2, he told a National Associationof Pension Funds conference.

In both cases, the switch fromdecline to growth coincides withthe commencement of assetpurchases.

Bean also warned pension fundsthat spending so much of their timeand effort objecting to QE could

mean they miss other importantthreats.

The excessive focus on QE as a

cause of low long-term risk-freeinterest rates risks distractingattention from other factors drivingyields which may present a moredurable challenge to the sponsorsand trustees of pension funds, heexplained.

Those other factors include therush of investors into the UKs safehaven gilt market, slowingeconomic growth, and the deepEurozone crisis, he said.

BY TIM WALLACEfrom the Eurozone, the MPC was inpart constrained by high inflation,which appeared likely to remain ele-vated over the near term.

Furthermore, by the end of the fore-cast period, the risks of inflation beingabove or below the target were broadlybalanced, the MPC believes, limitingthe action it can take to raise demand.Yet not all economists believe extra

QE will help raise GDP. We have ourreservations about the effectiveness ofQE gilt yields are already depressedat record lows and, in an uncertainenvironment, the impact on assetprices is likely to be limited, said NidaAli from Ernst and Youngs Item Club.

The Bank needs to think of otherways to ease monetary policy.

The jobs market remains very weak

2005 2007 2010 2012

-3

-2

-1

-5

-4

0

1

2

3

4 Scores

Manufacturing

Businessservices

Consumerservices

COUNTRIES that are struggling toboost growth should consider open-ing up their economies more to glob-al trade, according to the OECD.

Measures to seal off nationalindustries, while politically popular,only sustain or exacerbate the sub-optimal status quo, claims thepaper on international trade.

Since 1970, manufacturing

workers in open economies enjoyedpay rates that were between three

BY MARION DAKERS and nine times greater thaneconomies classified as closed.

The study also suggested thatallowing companies to use offshoretrading bases can actually help raiseemployment and wages.

Offshoring and outsourcing bydeveloped countries twocommonly-cited negative aspects ofglobalisation often complement,rather than replace domestic jobs,while creating new, higher-wage

opportunities in developingcountries, the report added.

OECD urges more opentrade asway to boost economic growth

THE BANK of England stands ready totry to boost the economy with moremonetary stimulus, the minutes ofthe most recent Monetary PolicyCommittee (MPC) meeting showedyesterday, as inflation is at last start-ing to fall.The committee voted by a margin of

eight to one against re-starting thequantitative easing (QE) programme,but for several members, the deci-sion was finely balanced.

Further monetary stimulus couldbe added if the outlook warranted it,the minutes concluded.

Over the past month the economyhas been expanding, according to theBanks agents, but only very slowly.

Consumer demand is rising, privatesector investment intentions point toa small rise in capital spending overthe coming year, and goods exportgrowth remains strong, particularlyto emerging markets, the report said.

However, construction output con-tracted again, private sector employ-ment levels are set to remain flat andsome businesses have revised down

their growth forecasts for the year.Despite this weakness and risks

SeniorBank official hits outatpensionfunds gilt complaints

More QE on theway if growthdeclines further

7/31/2019 Cityam 2012-05-24

19/35

GETTY

Clothes shops were particularly hit as shoppers cut back on summer purchases

Retail sales growth ground to a halt in April

Apr 12Jun 11Jun 10Jun 09

4

5

2

1

0

3

67

8

9

%c

hangeonyear


cityam.com

20 Tottenham Court RoadLondon, W1T 1BW

0845 634 0320Also available at Selfridges, Technology HallLower Ground Floor

Samsung recommends Windows7

Samsung Series5 Ultrabook

cityam 2012-05-24

Documents