cityam 2012-06-21

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But absence of QE3causes disappointedmarkets to drop

A LS O P LA Y I N G S U N D A Y S

0844 482 5151

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Y I N G D A

A LS O P

GREEK conservative party head Antonis Samaras was yesterday sworn in as Prime Minister at thehelm of a three-party coalitiondedicated to keeping the debt-stricken country in the euro but

demanding softer terms on itsinternational bailout conditions.The agreement between New

Democracy, the socialist party

Pasok and the smallerDemocratic Left comes threedays after the second roundof national elections in asmany months narrowly failedto deliver Samaras’ party enough votes to form a

government on its

own. While all three parties

broadly support the €130bn bailout plan with theEuropean Union and IMF,they have pledged to change

its harsher conditions.The new government plans

to ask its fellow Eurozonemembers for an extra two years to implement fresh

cutbacks worth a total of

€14.5bn, with Pasok leaderEvangelos Venizelos warning this

would be a “big battle”.The reception of Greece’s fellow

Eurozone members to its request will be tested today at a meeting of Eurozone finance ministers inLuxembourg, where Greece’s

much-delayed reform programme will be the priority.“With the help of God we will do

whatever passes from our hands to

get out of this crisis,” Harvard-educated Samaras – Greece’sfourth Prime Minister in just eightmonths – said in his firststatement in office.

The cabinet has not yet beennamed, but Samaras said thefinance minister would be Vassilis

Rapanos, currently National Bankof Greece chairman.

Some traders had hoped for more quantitative easing, but had to make do with Ben Bernanke’s latest Twist

A WORSE than expected outlook for

the US economy has prompted theFederal Reserve to extend its stimulusprogramme known as Operation Twistto the end of the year, although itstopped short of expanding the overallsize of bond purchases.

Markets initially sank last night asthe Fed revealed that it was notlaunching further quantitative easing(QE3) despite stubborn unemploymentand risks to America’s recovery fromthe debt crisis in Europe.

“There were a lot of guys out there with the finger on the ‘sell’ buttonunless they saw balance-sheet expan-sion (QE3),” said LPL Financial’s JohnCanally, explaining markets’ suddendrop upon the Fed statement’s release. Yet investors quickly re-evaluated the

situation on closer reading of the state-ment, and in light of the Fed’s decisionto extend Operation Twist. The Twist, that was due to end this

month, will now see the Fed splash$267bn on long-dated securities – withmaturities ranging from six years to 30 years. To balance out the purchases, it will sell the same amount of Treasury securities with maturities of aroundthree years or less.

“This continuation of the maturity extension programme should putdownward pressure on longer-terminterest rates and help to make broad-er financial conditions more accom-modative,” the Fed’s statement said. The yield on 30-year Treasury bonds

fell off a cliff as the announcement was made, dropping from 2.77 percent to as low as 2.68 per cent. And chairman Ben Bernanke

appeared to leave the door open tomore QE in his subsequent confer-ence, if conditions do not improve.

“Additionalasset purchases

would be among thethings we’d consider

[if required],” Bernanketold reporters. “Our toolscan still provide support

BY KATIE HOPE

FTSE 100 5,622.29 +35.98 DOW M12,824.39 -12.94 NASDAQ 2,930.45 +0.69 £/$ 1.57 unc £/€ 1.24 unc €/$ 1.27 unc

EUROZONE CRISIS: Page 6, 7

LONDON2012

…days to go36www.cityam.com FREEISSUE 1,657 THURSDAY 21 JUNE 2012

BY JULIAN HARRIS

Certified Distribution

30/04/12 till 27/05/12 is 132,076

BUSINESS WITH PERSONALITY

to the economy”.Stocks in New York recovered as

investors absorbed Bernanke’s state-ment, and German chancellor AngelaMerkel made comments perceived by some to be supportive of rescue meas-ures in the Eurozone – although inlater trading shares lost ground againand closed down. The Dow Jones plummeted by nearly

half a per cent on the Fed’s statement;

the index later climbed back, and sub-sequently closed down just 0.1 percent, or 12.94 points, at 12,824.39. And trading on currencies was also

volatile; the dollar originally jumpedon news that more QE did not appearto be in the pipeline, but the euro sub-sequently clawed its way back to hit asession high last night above $1.274.

“The initial read of the Fed statement was somewhat less dovish than many expected because they didn’t really hint at any additional QE measures,”

said Omer Esiner of CommonwealthForeign Exchange in Washington.

“But on second look, maybe themarket is thinking they are flag-ging some deflationary risks…as well as having left thedoor wide open to another

round of QE if conditions get worse.” The Fed said it expected unem-

ployment to come down “only slowly” – an even worse verdict

than their last forecast of “gradual-ly” lower joblessness.Unemployment could be as high as

8.4 per cent this year, the Fed said, upfrom its April forecast of 8.2 per cent.

FED TWISTS AGAIN

THE FORUM: Page 22

Antonis Samaras wantsto renegotiate Greece’sbailout conditions

Greece clinches coalition deal to battle bailout terms

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[email protected]

Follow me on Twitter: @allisterheath

IN BRIEFCommerzbank appeals bonus rulen Commerzbank yesterday lodged

papers with the UK Court of Appeal in abid to annul a judge’s ruling that it mustfork out €52m in bonuses to a group ofLondon-based investment bankers.Pointing to Dresdner Kleinwort’s €6.5bnloss, Commerzbank significantlyslashed the bonuses of 104 bankerswho joined from Dresdner after the2009 acquisition and who were verballypromised hefty bonuses from a €400mpot. A judge ruled in May that thebonuses are due, but Commerzbanksaid it “strongly disagrees”, adding: “Asa matter of law, no binding contractualcommitment was made.” The Germanbank claims it was “reasonable andresponsible” to cut the bonuses in lightof the staggering loss.

JP Morgan sells most of whalen JPMorgan Chase & Co has sold as

much as 70 per cent of thecontroversial position that causedhuge trading losses for the bank, CNBCreported yesterday. The televisionnetwork said the bank had sold 65 percent to 70 per cent of the so-calledLondon Whale position, a hedgingstrategy gone so wrong that in earlyMay JPMorgan conceded it had alreadylost $2bn. JPMorgan said this weekthat it will detail the size of the lossand the status of the position on 13July when it reports earnings for thesecond quarter. Chief executive JamieDimon has declined since announcingthe loss on 10 May to provide specificupdates on the position for fear ofgiving other traders an advantage. Hehas said the bank has made progress incontaining the loss.

Investors gain new powerover bosses’ pay packetsBUSINESS and investor groups yes-terday welcomed plans to giveshareholders binding votes on direc-tors’ pay, which are intended to givefirms’ owners a greater say in assess-ing business performance.

Business secretary Vince Cableannounced the plan, which is set to be in place by 2014, arguing “thereis compelling evidence of a discon-nect between pay and performancein large UK listed companies.” The proposals will see sharehold-

ers given a legally binding vote overdirectors’ pay packets every three years, as well as in every year in which the pay policy is changed.

They will vote on the whole pack-age, including salary, incentives, bonuses, and severance arrange-ments, and the metrics against which performance will be gauged.

“This substantial package of meas-ures strikes a balance, by givingshareholders increased transparen-cy on pay and providing ways tohold Boards to account, withoutgetting them bogged down in day-to-day micro-management,” said John Cridland from theConfederation of British Industry.

Small shareholders’ groupShareSoc also backed the plans, as it believes “Pay in some companieshas become morally indefensible

Banks to get cheap money to lift UKlendingThe government’s new “funding forlending” programme, designed to boostcredit for British business, will cut banks’costs to as little as 1.2 per cent, accordingto people briefed on the scheme. Thesupply of such cheap money to the banksis supposed to encourage them to lend tocompanies and stimulate the sluggisheconomy.

Cern seeking big bang for its bucksThe Cern particle physics research

laboratory is set to become a major hedgefund investor, as it seeks bigger returnsfor its $4bn pension scheme. Geneva-based Cern will allocate over $500m tohedge fund managers in the comingmonths.

Burger King steps up war with rivalBurger King has said that it is ready totake a more aggressive approach to thecompany’s long-running “burger battle”with rival McDonald’s. “We believe we’rein early innings and the value of our brandis very much greater than the value of ourbusiness,” Daniel Schwartz, Burger King’schief financial officer, told the FT.

Oligarchs move to cut off BP’s escapeBP may be forced to sell a stake in itsRussian joint venture to partners at aknockdown price. It is understood that theAAR group of oligarchs has threatened toprevent the British company from sellingits stake in their TNK-BP joint venture to oilmajors such as Shell and Exxon Mobil.

Pension row as doctors set to strikeTaxpayers are subsidising 80 per cent ofdoctors’ gold-plated pensions, thegovernment claimed yesterday, on theeve of the first doctors’ strike in 40 years.

BC and Blackstone team up for IgloA joint bid for Iglo Group from BC Partnersand Blackstone valued at less than €2.6bn(£2bn) is likely to face rejection fromowners Permira. The two firms will todaybid below Permira’s €2.8bn asking priceand could be declined – at least initially.

No end in sight for spending cutsBritain could be facing a decade ofspending cuts, the country’s most seniorcivil servant said last night. Sir JeremyHeywood, the cabinet secretary, said thatwork to balance the public finances wasonly a quarter of the way to completion.

Samsung wins case against AppleApple must pay damages to SamsungElectronics for breaching one of itspatents, a Dutch court ruled. The amountof damages Apple must pay hasn't beendetermined, but he products themselvescan continue to be sold in stores.

Coca Cola takes a swig of shakeCoca-Cola is moving into dairy productsin the US through a distribution pact for ahigh-protein workout-recovery shake forathletes and fitness buffs – Core Power.

WHAT THE OTHER PAPERS SAY THIS MORNING

Vince Cable hopes increased shareholder power will end “rewards for failure”

2 NEWS

BY TIM WALLACE

To contact the newsdesk email [email protected]

H YPOCRISY barely starts todescribe it. Left-wingcomedians – you know, thekind that love to attack the City,

ridicule aspirational values, questionthe motives of those in business and who wear their champagne socialismon their sleeve – are not supposed to

be extreme tax avoiders. So the newsthat Jimmy Carr, one such stand-upcomic – I can’t stand his humour, butmillions love it – is using a dubious(albeit entirely legal) scheme toeliminate most of his income taxliabilities has shocked many.

If you want others to pay more tax,then you should be consistent and pay as much as you possibly can yourself – you should even consider payingmore than you have to by making adonation to HMRC or to government-owned institutions, such as NHStrusts. Those who believe taxes are

EDITOR’SLETTER

ALLISTER HEATH

We need a flat tax with no loopholes to reduce avoidance

THURSDAY 21 JUNE 2012

moral in of themselves – a commit-ment to the common good – shouldpractice what they preach. Yet if theallegations of massive, albeit legal,avoidance involving Carr are right –he hasn’t denied them – a man whospecialises in ridiculing others, oftenin the cruellest of ways, may now endup as the butt of others’ jokes. That said, the overall argument is

far more complex than is usually understood. Here is my take. Peopleshould have the right – and compa-

nies the duty to their shareholders –to legally minimise their tax bills. Idisagree with the left-wing view ontaxes: they are a necessary evil, not amoral good. Taxes should be as low aspossible for reasons of individual lib-erty and economic efficiency. Peoplespend their money better than gov-

ernment employees do; lower taxesand public spending would generatemore economic growth and thusmore resources to be spent on thingssuch as healthcare and education.

Far more money should, over time, be spent on healthcare – but for thatto be viable and efficient we need tointroduce a mixed economy inhealth. Tax money will no longer beable to fund everything. There are les-sons to be learnt in how to reformhealth, education and pensions – andintroduce more private money whilehelping the poor – from the

ISAs, duty free shopping, pension taxrelief – are clearly unintended loop-holes in an extremely complex sys-tem. They need to be abolished. All tax rates are too high, on the

poor and on the rich. The tax systemis trying to raise too much, because itis so inefficient and counter-produc-

tive, and because spending is toohigh. There is only one long-run solu-tion to reduce avoidance: we need amuch simpler, lower and more trans-parent tax system. We need a flat tax with a wide base, where all income –from labour or capital – is taxed atthe same, low rate, with no loopholes.Until we adopt such a system – of thesort outlined by the 2020 TaxCommission, which I chaired – injus-tices and inequities will remain rife.

Netherlands, Australia, Germany,Sweden, Singapore, even France – andmany other progressive countries.

But that doesn’t make the kind of scheme apparently used by Carr right.My issue is three-fold: some extremetax avoidance schemes that are cur-rently legal should be banned; the

present tax system is excessively penalon anybody who doesn’t use suchschemes; and the only way to sustain-ably and fairly reduce avoidance is toscrap the current, deeply defective taxcode and adopt a new, much simplerand flat tax system.

It is unjust that some people can pay virtually no tax while others withidentical circumstances but no accessto expensive advisers have to pay lots.Such extreme schemes – which arenot to be confused with ways of pay-ing less tax that are deliberately pro-moted by the authorities, such as

L A U R A L E A N

/ C I T Y A . M .

and this has been underminingsound business management.”

“It is also contrary to the interests of the owners,” said chairman RogerLawson.

However, accountants’ body ICAEW claimed the move could be harmful.

“Demanding legally binding votesas a matter of routine could damagerelations between shareholders andthe remuneration committee,” said JoIwasaki.

“But there is a role for legally bind-ing votes on an ad hoc basis, for exam-ple if a board were continuously

ignoring the wishes of shareholders.” And law firm Linklaters worries the

plan “could discourage top perform-ers from joining boards” because of the additional scrutiny involved.”

Labour’s shadow business secretary Chuka Umunna argued workers’ rep-resentatives should be added to remu-neration boards to put furtherdownward pressure on pay.

However, Cable pointed out that theplan calls for firms to report on whether they have taken steps toengage with employees.

n Shareholders in publicly listed UK firmswill get a binding vote on directors’ pay

policy every three years.n They will vote on the whole package,covering salaries, bonuses and exactlywhat determines the level of pay.

n That includes severance packages, in aneffort to end “rewards for failure” whenunsuccessful bosses leave the firm.

n The exact level of any director’sseverance package will be publishedswiftly, probably within 30 days.

n If the policy changes it willautomatically trigger a new binding vote.

n Each year directors’ pay will bepublished as a single figure, includingdetails of performance against metrics forlong-term incentives, pensionentitlements and shareholdings.

n An advisory vote on these awards willstill be held every year, as it is now. If amajority votes against, it will trigger a

binding vote the next year.n If a “significant minority” votes against,firms may have to publish a statementexplaining – the Financial ReportingCouncil (FRC) will consult on this.

n The FRC will also determine the point atwhich a vote against becomes“significant.” Vince Cable suggested 25per cent as a possible starting point.

n The policy will be enforced – awardsoutside the pre-agreed levels could seedirectors personally liable under companylaw for making unauthorised payments.

n It is not yet known what will happen todirectors already on long-term contracts,though the government does not intendthe new rules to lead to any retrospectivechanges to any individual’s pay.

VOTES ON TOP PAY

FORUM DEBATE: 3nn

The new jobs website for London professionalsCITYAMCAREERS.com

7/31/2019 cityam 2012-06-21


THE CROWN ESTATE, which owns

Regent Street and other Londonlandmarks, today reported recordprofits and its highest ever property valuation as its super primeproperties continued to outperform.

Net profit, which is paid to the Treasury, was £240.2m in the year to31 March –up four per cent on theprevious year.

The Estate, which owns some of the most sought after addresses inthe country including buildings onSt James’s Street and Pall Mall, saidthe value of its property portfolioreached £8bn for the first time,rising by 11 per cent.

Alison Nimmo, a former OlympicDelivery Authority director, whotook over as chief executive in January, said: “It has been anothertremendous year for The CrownEstate. Our super prime portfolioand active asset management have

been the cornerstones of this strongfinancial performance and resilienceduring recent market volatility.”

The value of Marine Estate, whichincludes most of the UK’s coastline,rose by 23.4 per cent boosted by themassive expansion of its offshore wind farms, which now generate 1.5per cent of the country’s electricity.

Its £300m Quadrant 3 scheme onRegent street is now 70 per cent let,helping to lift the value of its Urbanestate by 4.4 per cent to £5.5bn.

Crown Estatereports recordannual profits

BY KASMIRA JEFFORD

THE BANK of England injected £5bnof emergency liquidity into banks yes-terday in an attempt to mitigate thecosts of unexpected shocks from theEurozone.

Sir Mervyn King announced last week that the Extended Collateral Term Repo (ECTR) Facility would beactivated to counter “market-widestress of an exceptional nature”. All successful bidders will pay inter-

est daily at the Bank rate of 0.5 percent plus a minimum of 25 basispoints.

Loans starting at £5m were allo-

cated among firms according to willingness to pay, with those bidding the highest spreads abovethe bank rate receivingfunds first. The Bank accepted

“the widest variety of collateral” in return,including illiquidassets unaccept-able in existingIndexed Long- Term Repo (ILTR)

Banks snap up£5bn of cheap

loans in auctionBY BEN SOUTHWOOD operations, such as student and con-

sumer loans, mortgage-backed securi-ties and securitised credit card debt. The scheme was last week made sig-

nificantly more generous than firstplanned, by increasing the term of theloans from 30 days to six months anddecreasing the minimum bid from a125 basis point spread over the Bank rate. The change was announced in chan-

cellor George Osborne’s MansionHouse speech.

RBS economist and former central bank official Richard Barwell said“the key goal of the ECTR wasproving that the facility can be

used” and called today’s auction“mission accomplished”.However he warned that if ECTR becomes more than an emer-

gency “safety net”, banksthat are “addicted to offi-cial support” will shifttheir balance sheets indangerous directions.

Chancellor GeorgeOsborne called for bankaid to raise lending

A BRITISH trader and his wife whohelped fund a lavish lifestyle fromillegal share dealing were jailed

yesterday in a landmark casepursued by prosecutors on bothsides of the Atlantic.

James Sanders, who owned and was a director of now-defunct brokerage Blue Index, his wifeMiranda, and James Swallow, a BlueIndex co-director, last monthpleaded guilty to a combined 18counts of insider dealing betweenOctober 2006 and February 2008.

James Sanders, dubbed by JudgePeregrine Simon as “the driving

Blue Index trader and wife get jail terms for insider dealing

BY HARRY BANKS force behind the criminality”, was jailed for a record four years.Miranda Sanders – who was tippedoff about imminent takeovers by her sister in the US –was jailed for

10 months, as was Swallow.The couple saw their sentences

cut by 25 per cent after pleading guilty, although James initially argued his trades were legitimate.

“This was a case of systematicabuse by approved people of theirprivileged position in the market –

we are determined to stamp outsuch abuse,” said Tracey McDermott, acting head of enforcement at the FinancialServices Authority.

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Miranda and James Sanders had their sentences cut after pleading guilty

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SIR MERVYN King voted to switch theprinting presses back on at the Bank of England this month, but was out- voted by his colleagues on theMonetary Policy Committee by thenarrowest of margins, theMPC’s minutes revealed yesterday.

Despite falling inflationand growing worries overthe impact of theEurozone crisis, theMPC voted by amargin of five tofour to hold ratesand QE.

Inflation fell back to 2.8 percent in the yearto May, its low-est level sinceNovember 2009,and is forecast tofall below the twoper cent target next

year, giving the

BY BEN SOUTHWOOD

AND TIM WALLACE

Bank room to consider delivering fur-ther stimulus.

On top of that, the minutes warnedthe risks “from financial distress with-in the Eurozone had intensified,”potentially warranting action fromthe Bank. The committee even considered cut-

ting the base rate below the currentrecord low of 0.5 per cent to lower banks’ funding costs, but decidedagainst doing so as it could harmmoney markets. The real interest rates faced by depos-

itors are already negative; furtherdownward movements would push even nominalinterest rates close to zero,destroying incentives tosave with UK banks.

Overall, the MPC con-cluded there is “merit in waiting to see how mat-ters evolved” beforeextending QE further.

Joblessness plunges as privatesector job creation acceleratesUNEMPLOYMENT tumbled in thethree months to April, official figures

showed yesterday, while the squeezeon incomes eased to a 30-month low.Employment rose 166,000 to

29.281m, while unemployment fell51,000 to 2.615m, or 8.2 per cent –down from 8.4 per cent in theprevious three months, the Officefor National Statistics (ONS) said.

Figures for the first quarter of the year showed a 39,000 drop in publicsector employment, far outstripped by a 205,000 rise in private jobs.

BY TIM WALLACEMale unemployment fell 49,000 in

the three months to April, to 8.7 percent, while female joblessness fell by 1,000 to 7.7 per cent.

Those new jobs were split betweenpart-time, which accounted for83,000, and full-time, which madeup 82,000. Similarly 83,000 areemployees, while 84,000 are self-employed.

However, the figures also showed a2,000 rise in the number of peopleclaiming jobseekers allowance overthe three month period, and a rise of 8,100 from April to May.

Meanwhile, average regular pay

rose 1.8 per cent to £441 per week,the largest rise of 2012 so far, andaverage bonuses rose 0.9 per cent –rebounding strongly after three

consecutive months of drops. The acceleration in pay growthcoincides with a slowdown ininflation – consumer prices rose 2.8per cent in the 12 months to May.

“Although pay growth continuesto run behind inflation, the squeezehas clearly eased,” said Markiteconomist Chris Williamson. “Pay isnow falling one per cent in realterms, against a peak rate of declineof 3.4 per cent last September.”

Mervyn King wants the Bank

to purchase more assets

THE SLUGGISH economy isshowing no signs of improvingand may even be slowing further,the Bank of England’s agents’report warned yesterday.

Consumer services sold just 0.6per cent more in the threemonths to May than in the sameperiod last year, and growth in thesector slowed further in themonth to June.

Turnover of business services was just 0.8 per cent up on the

Bank: Only manufacturers defyeconomic gloom sweeping UK

BY BEN SOUTHWOOD year, and investment intentionsfor services saw the sameincrease.

Profitability in services hasshown no growth whatsoever, andemployment intentions haveshrunk 0.3 per cent.

On the other hand, firms withstrong balance sheets were stillable to find sources of credit.

One positive nugget was the risein goods exports of 2.1 per cent,led by demand from emerging

markets, itself driving expansionin the manufacturing industry.

VOICE OF THE CITY:Page 6


Employment

143,000 to 15.715m

Unemployment49,000 to 1.49m

Employment

23,000 to 13.566m

Unemployment 1,000 to 1.124m

TOTAL HOURS WORKED 1.6m to 928.2m a week

Full-time Employment Part-time Employment

82,000 to 21.316m 83,000 to 7.965m

EMPLOYMENT

166,000 to

29.281m

UNEMPLOYMENT

51,000 to

2.615m

Claimant countup 8,100 in May

to 1.599m

££Average weekly earnings up 1.4%

Private sectorearningsup 1.3%

Public sectorearningsup 1.4%

EMPLOYEESup 83,000

SELF-EMPLOYMENTup 84,000

*PUBLICSECTOR

EMPLOYMENTdown 39,000

*PRIVATESECTOR

EMPLOYMENTup 205,000

*Q1 2012

King votes for£50bn of QE tofight downturn

7/31/2019 cityam 2012-06-21


A POSSIBLE European financial

transaction tax would be limited inscope and could only apply to buyers of stocks, similar to aBritish stamp duty, a Dutch paperreported yesterday, citingunnamed diplomats.

European finance ministers willtomorrow officially scrap afinancial transaction tax, which would have applied to all financialtransactions and to both buyersand sellers, Dutch daily HetFinancieele Dagblad reported.

Only weak variants of atransaction tax, including a stampduty on stocks, were still underconsideration, the paper said.

A stamp duty in Europe wouldapply to buyers of stocks, and bepresented as a first step to taxationof other financial transactions, thepaper said.

Britain’s government remains

opposed to a European-widefinancial transaction tax and haslong maintained that it would block any move by the EuropeanUnion to introduce such a levy.

Dutch claim aEurope TobinTax is unlikely

BY CITY A.M. REPORTER

GERMAN Chancellor Angela Merkel yesterday shot down reports thatEurozone leaders at the G20 areplanning for rescue funds to snap upthe debt of distressed member statessuch as Italy and Spain. Yet later in the day the idea

appeared to gain support from a sen-ior official at the European CentralBank (ECB) who said that the exist-ing bailout fund, the EuropeanFinancial Stability Facility (EFSF),should already be buying bonds.

“Certainly it’s a mystery why theEFSF was allowed almost a year agoto undertake secondary marketinterventions and governments havenot yet chosen to use that possibili-ty,” Benoit Coeure told the Financial Times.

Yet Coeure rejected the idea thatthe ECB should again gear up itsSecurities Markets Programme (SMP)

to purchase debt. “We do not consid-er that the SMP would be the bestinstrument to use at the current juncture,” he said.

Merkel dismisses debtbuying rescue scheme

BY JULIAN HARRIS The ECB has not bought any debt for three months.

Merkel yesterday denied thatleaders were discussing the use of the EFSF and the plannedEuropean Stability Mechanism(ESM) for buying debt to bringdown borrowingcosts for troubledgovernments.

“I have not heardanything aboutthis,” she said in anews confer-ence. “It istrue that both theEFSF andthe ESM

Disorderly Grexit mayhurt insurers’ ratingsEUROPE’S insurance sector should be

able to withstand a Greek exit fromthe euro, according to a new reportfrom rating agency Fitch, providedthat the exit is “orderly”.

“Most major European insurershave negligible direct exposure tothe sovereign debt of Greece –typically less than one per cent of shareholders’ equity,” Chris Waterman, head of EMEA Insuranceat Fitch said.

But he warned that a so-calleddisorderly exit could have a moreunpredictable effect.

“A disorderly Greek exit could havea materially negative impact on theratings of European insurers withcontagion hitting credit quality andasset values, leading to a squeeze oninsurers’ capital,” he said.

Insurance firms in under-pressureSpain and Italy could be worst hit if Greece was forced to leave the single

currency, due to the large positionsthey hold in their own countriessovereign debt.

David Prowse, a senior director inFitch’s insurance team, suggested

BY HARRY BANKS

that in the event of a disorderly exitregulators could help by “relaxing

rules for assessing regulatory capitalif widespread falls in the market values of financial assets threatenedinsurers’ solvency positions.”

Meanwhile, life insurers weregiven hope yesterday that they couldget more time to adapt to Europe’stough new Solvency II capital rulesunder a proposal from a seniorlawmaker. Life insurers would beallowed to phase in the capitalrequirements for their existingpolicies over seven years under aplan drawn up by Burkhard Balz, theGerman lawmaker tasked withsteering Solvency II through theEuropean Parliament, several sourcessaid yesterday.

“There is an idea on the table toprovide for a transition of existinglife insurance contracts to the new Solvency II regime,” said aspokeswoman for Michel Barnier,

European commissioner in charge of the single market.

“Nothing has been decided yet -the final decision will be taken by the co-legislators.”

“I think the government has todo something considering where

we are. There has to be stimulated growth inthe economy as finance is limited at themoment, especially in manufacturing. It’sabout time it pulled its finger out.”

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

JAMES BRISTOWJUNIPA NETWORKS ”

DO YOU THINK THE BANK OF ENGLAND SHOULD PRINT MOREMONEY? Interviews by William Orrs, Lisa Moravec and Ed Hume-KendallCITYVIEWS

Football fan Angela Merkel willwatch Germany play Greece

THE conservative-led governmentthat took power in Greece ispromising to negotiate softer termson its harsh international bailoutand steer the country through its

biggest crisis for four decades.Prime Minister Antonis Samaras,

a Harvard-educated economist, willhead an alliance of his NewDemocracy party and SocialistPasok rivals –the same discreditedestablishment parties which have

BY HARRY BANKS dominated politics since 1974.New Democracy and Pasok have

little history of cooperation, havingalternated in office from the fall of military rule in 1974 until last year,

when the economic crisis forcedthem to share power in a short-lived national unity government.

The coalition will be the first in

Greece in decades with anunrestricted mandate –last year’s

government and a coalition thattook power in 1989 both hadlimited powers.

THURSDAY 21 JUNE 20126 EUROZONE CRISIS cityam.com

HOW THE NEW GREEK PARLIAMENT LOOKS

Right wing

KKE (Communist)

Syriza

Democratic Left

Pasok

New Democracy Golden Dawn

18 seats**

20 seats

129 seats*

33 seats

17 seats

71 seats

12 seats 28 seats

52 seats

108 seats*

33 seats

21 seats

19seats

41seats

Independent* Includes 50 extra seats for coming first ** Ultra-nationalist party

00 Seats

M y result

une resultLeft wing

Greece’s rival politicians facechallenges as coalition is formed

I think the Bank of England isrunning out of other options,

although I don’t think it will change any-thing in the long run. Slashing interestrates further will not have much of animpact either.

JAN SELLMSS CAPITAL ”

I don’t think it is a particularlyeffective method, it simply props

up the banks. I think keeping the interest rateslow is probably a more effective method ofboosting the economy. Quantitative easing isonly good for the markets in the short term.

ZAHEER ZAFARMIZUHO ”

include the possibility of buying bonds in the secondary market, but this is not in discussion at themoment,” Merkel added.

“I know of no concrete plans. Thepossibility exists of buying bonds with the EFSF and ESM, always with conditionality, but it is apurely theoretical issue regardingthe treaty,” she said, praisingSpain, Portugal and Italy for theirefforts to reform their economies.

On Tuesday night European offi-cials had briefed that measures toreduce borrowing costs were being agreed by Eurozone chiefsat the G20 meeting in Mexico, with Italy pushing the idea of bailout funds buying up debt.

Merkel, who appears to berebuffing the plan, alsorevealed yesterday that she will attend Friday’s Euro 2012quarter final against Greece,despite political tensions

between the countries.

7/31/2019 cityam 2012-06-21


EUROPEANS in heavily indebted

countries have given up hope of an economic recovery, accordingto a study published today, whileGermans and Americans are farmore confident about theircountries’ prospects in the comingmonths.

Just three per cent of recession-hit Spaniards and Italiansdescribe the current state of theireconomies as “good,” the IpsosMori poll shows.

French respondents are almostas gloomy, with only nine per centexpressing satisfaction with thecountry’s situation, just behindBritain at 10 per cent, whichentered a double-dip recession inthe first quarter of this year.

That dour assessment contrastsstarkly with perceptions of theeconomic situation in Germany and Denmark, where 69 per cent

said the current situation is“good,” and Sweden where 64 percent agreed.

Looking ahead, only 12 per centof Europeans expect theireconomies to improve in the nextsix months, down substantially from 20 per cent in April 2010.

Meanwhile respondents in theUS and Germany are far moreoptimistic, with 25 per cent and22 per cent forecasting improvedgrowth.

Confidence atrock bottom introubled states

BY TIM WALLACE

G E T T Y

SPANISH yields dipped below the cru-cial seven per cent level yesterday asthe debt-stricken country insisted thatit had no need for a full-blown bailout.

Spain’s 10-year government bond yield, a gauge of the compensationinvestors demand to lend to thegovernment, fell 27 basis points to6.93 per cent. The dip came ahead of today’s bond sale which seeks toraise up to €2bn in an auction of two-three- and five-year bonds.

Spain again insisted yesterday thatits €100bn banking bailout was notthe forerunner of a broader

sovereign bailout. “Spain has not been rescued because it does notneed to be rescued. Spain has thesupport of its European partners andEuropean institutions,” budgetminister Cristobal Montoro said.

Meanwhile, the equivalent Italian yield fell 15 basis points to 5.77 percent, despite negative data showinga drop in industrial orders in Aprilcompared to the level a monthearlier. According to seasonally-adjusted figures, orders were down

Bond relief forSpain and Italy

as mood jumpsBY KATIE HOPE 1.9 per cent in April compared to

March, due to a four per cent slumpin foreign orders, while the domesticmarket dipped by 0.3 per cent, theNational Institute of Statistics (ISTAT)said.

The figures came as Italian PrimeMinister Silvio Berlusconi suggested areturn to the lira could not be ruledout. “Leaving the euro is not a blasphemy,” he wrote on hisFacebook page. “What would happenif Italy, Spain or Greece went back totheir old currencies? I don’t know,maybe there would be a loss of wealth but I don’t understand why,”he was quoted as saying.

SPANISH GOVERNMENT GENERIC BONDS

May Jun2012 Feb Mar Apr

5

6

7

8 %

6.7440020 Jun

US PRESIDENT Barack Obama yesterday urged Europeanleaders to “break the fever” of

the escalating debt crisis, as headmitted that the ongoingturmoil could hinder his own re-election prospects later this year.

“None of them are going to bea silver bullet that solves thisthing entirely ... in the next weekor two weeks or two months, buteach step points to the fact thatEurope is moving towardsfurther integration rather than

break-up,” Obama told reportersat the end of the two-day G20

Obama urges the Eurozone tobreak the fever of debt crisis

BY CITY A.M. REPORTER summit in Mexico.He said the sense of urgency

among Eurozone leaders wasclear at the summit, which

backed Europe’s goals of

stabilising the currency bloc’sfinancial fortunes.

The President, who is fightingto convince American voters of his economic nous ahead of November’s election, concededafter the summit that Europe’strajectory could affect hispopularity at home.

But he emphasised that for theUS economy, “if we’re doing theright thing, then the politics willfollow”.

President Obama is mindful that Europe’s financial health could affect the US election

THURSDAY 21 JUNE 20127EUROZONE CRISIScityam.com

7/31/2019 cityam 2012-06-21


RUPERT Murdoch’s News Corp madea $2bn takeover offer for Australia’sConsolidated Media Holdings yester-day, boosting top shareholder and bil-lionaire James Packer’s warchest as heabandons media in favour of casinos.

Packer, who has built stakes in casi-nos in Australia, London, Macau andLas Vegas, indicated he would acceptthe offer in the absence of a higher bid for the pay TV stakeholder, in which he holds 50.1 per cent.

For News Corp, which alsoannounced sweeping cost and jobcuts in Australia, a successful bid would double its stake in Australia'sdominant pay TV business Foxtel to50 per cent, and give it 100 per cent of content provider Fox Sports.

Shares in Consolidated Media jumped 10 per cent to A$3.39, just below the A$3.50 a share offer, which was pitched at a 14 per cent premiumto the last close.

News Corp bids

$2bn for Aussiepay TV businessBY HARRY BANKS

The bid by News Corp’s local unit toincrease its pay TV interests came as italso announced a restructuring andunspecified job losses at its Australian business, which controls about 70 percent of the country’s newspapers.News Corp said changes could take upto two years, but insisted there was afuture in print as readers move online.

“Print is not dead,” said Kim Williams, chief executive of NewsCorp’s Australian operations and theformer head of Foxtel.

Australian rules may dent Murdoch’s home advantage

AFTER the calamitous failure of its BSkyB bid, RupertMurdoch’s News Corporationhas decided to advance its pay

TV ambitions in his birth country, bidding A$1.97bn (£1.27bn) for Australia’s Consolidated MediaHoldings. If the deal is accepted and

gains the necessary regulatory approval, it will double the mediagiant’s stake in Foxtel, the islandcontinent’s biggest pay TV f irm, andgive News Corp full ownership of FoxSports Australia.

Murdoch may be hoping to usethis asset to start to regain the globalinitiative in pay TV, just as his Australian newspapers paved the way for later UK and US printacquisitions. Still, that will be harder

to pull off this time around. Fullownership of BSkyB would havepositioned the octogenarian businessman to consolidate hisother European satellite broadcastassets – Sky Italia, which News Corpowns outright, and Sky Deutschland,in which it has a 49.9 per cent share. After today’s deal, the entertainmentcompany’s worldwide television

holdings, including stakes in India’s Tata Sky and New Zealand’s Sky Network TV, still seem dispersed.

There are a few local difficulties as well. Australia gives legal preferenceto free-to-air television for the rightsto big sports events. That’s tricky forMurdoch, who wrote in a 2011 letter

to stockholders that sporting events“deliver the mass audience thatadvertisers crave... and will remain acritical driver of our growth.”

This problem has led some tosuggest Murdoch’s next move might be to acquire a free-to-air Australianasset. Ten Network Holdingsperhaps, of which his eldest sonLachlan is a director and non-executive chairman. However, thatstrategy may bring its own risks.

Another 25 per cent of ConsolidatedMedia is owned by the largestshareholder in rival Seven WestMedia,which may fear a competitor with free-to-air ambitions takingsuch a powerful position. SevenGroup Holdings could still resist theNews Corp bid.

What’s more, the immediatemarket conditions in Australianmedia are tough. The bid wasaccompanied by the news of NewsCorp cutting two thirds of its eastcoast print divisions, and the rivalFairfax Media announcing almost2,000 layoffs. Pay TV is not exempt.Foxtel’s chief executive announcedin February that Australia “remainsa tough environment in which to win new customers”.

But Murdoch has always declaredthat the News Corp ethos is to seeopportunity where others see only challenge. Foxtel has just completeda merger with Austar, the region’s biggest rural subscription TV provider. And if his bid forConsolidated Media goes through,

Murdoch will end a rival Australianmedia empire, this one built up by his old sparring partner, Kerry Packer. Half of Consolidated Media isowned by Packer’s son James, now keen to sell his last controllinginterest in a media company in orderto invest in casinos. Whatever thechallenges, for Murdoch media isstill the better bet.

Marc Sidwell is City A.M.’s managingeditor.

BOTTOMLINE

MARC SIDWELL

PRIME minister David Cameron yesterday brutally spoke outagainst people who avoid payingtax, calling them “morally wrong”.

The comments came after it wasunearthed that a string of celebrities and high earners wereunderstood to be involved insevere tax avoidanceschemes.

Responding toallegations made by TheTimes that comedian

Jimmy Carr cuts his tax bill by millions of pounds,Cameron said it was “very dodgy”.

“Think of all thosepeople who work

Cameron brands tax avoidersas dodgy and morally wrong

BY LAUREN DAVIDSONhard, they pay their taxes, and outof that post tax income they saveup to go to see Jimmy Carr[perform]. He is taking that money and stuffing it into somewhere hedoesn’t have to pay taxes. That isnot fair, and that is not right,” thePrime Minister said in a series of TV interviews yesterday.

Carr was outed as being part of K2, a legal Jersey-based scheme whereby the majority of anindividual’s income is received asan offshore loan, rather than asalary, which renders ituntaxable.

Cameron said he had not yethad time to read or

respond to claims thatGary Barlow, who wasrecently awarded anOBE, is also involved

in tax avoidance.

THURSDAY 21 JUNE 20128 NEWS cityam.com

Consolidated Media Holdings Ltd

20 Jun14 Jun 15 Jun 18 Jun 19 Jun

3.0

3.1

3.2

3.3

3.4

3.5 A $ 3.3820 Jun

Carr said “I pay what I haveto and not a penny more”

7/31/2019 cityam 2012-06-21


G E T T Y

SHARES in Aer Lingus soared 15.4 percent yesterday after Ryanair’s latesttakeover bid, though the budget carri-er said after the markets closed thatthe offer undervalues the firm. Aer Lingus, which has been subject

to three takeover offers from Ryanairsince listing in 2006, urged its share-holders to take no action for now afterthe €1.30 per share approach late on Tuesday.

The former Irish flagship carriersaid there is “significant uncertainty”over the likelihood of the bid succeed-ing, given previous and ongoing com-petition probes.

Ryanair’s existing 29.82 per centstake in Aer Lingus is under investiga-tion by the UK CompetitionCommission, and the firm’s previoustakeover attempts were stymied by European competition bodies. And the Irish government, which

owns a 25 per cent stake in AerLingus, also said yesterday it has con-cerns about the bid, which values the

Aer Lingus saysno to Ryanair’stakeover bid

BY MARION DAKERSfirm at €694m (£560.3m). Taoiseach Enda Kenny said his gov-

ernment would not be forced into afire-sale of its holding, telling the Dail:“The government would be concernedobviously in terms of competition, interms of consumer facilities, in termsof price and access to the country.”

Ryanair has said it would likeIreland’s support, but could run AerLingus even if the state won’t sell out.

“In our view, the chances of thisrenewed bid being approved haveimproved, but not necessarily decisive-ly so,” said Espirito Santo analysts.

DAVID Cameron used his trip to Mexico to unveil 25 trade deals linked to the centralAmerican nation. The Prime Minister, who met with Mexican President Felipe Calderónyesterday, said firms including healthcare group Bupa, InterContinental Hotels andengineer JJ Churchill have pledged to expand business in Mexico, while tortilla makerGruma Maseca is spending £42m on expanding its factory in Coventry.

BRITISH AND MEXICAN FIRMS CELEBRATE DEALS

Aer Lingus Group PLC


0.95

1.00

1.05

1.10

1.15

1.20 € 1.1020 Jun

OTKRITIE Securities swung to a£55.9m loss last year – from a£2.5m pre-tax profit in 2010 – afterit was hit by a major fraud scandal.

In accounts filed with CompaniesHouse, Otkritie –putting a numberon the scam for the first time – saidan “exceptional [£65.9m] wasincurred in relation to a fraudulenttransaction in warrants.”

Otkritie is currently taking legalaction against former staff who

were allegedly at the centre of acomplex fraud plot.

Otkritie seesred over fraud

BY LAUREN DAVIDSON

BORIS Johnson has pledged to makean £8.3m pot available to fund anOlympics bonus for bus drivers andavert strike action tomorrow.

The Mayor yesterday told theLondon Assembly that money fromthe Olympic Delivery Authority could be used to compensate thecity’s bus drivers for workingduring the Games, in line withother transport staff. The Uniteunion, which has said up to 21,000

staff could strike, will meet with bus firms today to discuss the offer.

Boris pledgesbus bonus cash

BY MARION DAKERS


Biggest deal in years for WPPas it buys digital agency stakeSIR MARTIN Sorrell’s ad company

WPP yesterday agreed to buy amajority stake in AKQA, one of the world’s most prestigious digitalmarketing agencies.

In an deal that gives AKQA anenterprise value of $540m (£343m), WPP bought General Atlantic outof its 80 per cent stake and took anundisclosed amount of the 20 percent owned by management.

The private equity firm made aprofit on its investment, for which

BY LAUREN DAVIDSON it reportedly paid around $250 to$300m in 2007.

AKQA founder and chief

executive Ajaz Ahmed andchairman Tom Bedecarre willcontinue to run WPP’s new subsidiary, which will operate as astand-alone brand within the adgiant’s empire.

Bedecarre will also head up WPP Ventures, a new Silicon Valley-basedcompany charged with the missionof exploring new digital investmentopportunities for the global group.

Founded in 2001, AKQA – which

has racked up 19 Agency of the Yeartitles – employs 1160 people acrossthe US, Europe and Asia.

Counting Google, Nike andUnilever among its clients, AKQA rolled in $189m last year and is setto generate revenues of $230m in2012.

WPP boss Sir Martin Sorrell saidhe was “thrilled” to announce thedeal. “We have admired [AKQA’s]creativity and technological skillsfor a long time,” he added.

AKQA rejected a $600m bid fromad giant Dentsu two years ago.

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BANK of Ireland announced

yesterday that former LloydsBanking Group executive ArchieKane is to be its next governor.

Kane retired from Lloyds last yearafter holding the position of groupexecutive director for insurance andScotland.

“Bank of Ireland has made a lot of progress in raising capital whilstremaining in private ownership,” hesaid. “I am looking forward to working to address the challengesand opportunities which face theBank.”

The 60-year-oldreplaces Pat Molloy, who oversaw therecapitalisation of the troubled bank during the creditcrunch and the sale of a 35 per cent stake toUS investors led by

the billionaire Wilbur Ross.

Former Lloydsdirector to headBank of Ireland

BY JAMES WATERSON

G E T T Y

ASSET MANAGER Liontrust yesterday

announced that it has attracted new investors and significantly boostedits assets as it edges towards prof-itability. The firm managed to grow its rev-

enues by 54 per cent in the year to 31March, reducing its losses from£4.6m to just £237,000, assisted by asubstantial £3.4m in performancefees.

Chief executive John Ions praisedhis firm’s results: “We enjoyed netinflows in all four quarters in the year, totalling £152m. This hasextended our sequence of net posi-tive sales to seven successive quar-ters.

“Liontrust’s success is a testamentto a number of factors; primarily ourcontinued excellent fund perform-ance. 89 per cent of Liontrust’s unittrust funds outperformed theirrespective sectors in the 12 months

to 31 March 2012.” Acquisitions have helped Liontrust

increase its assets under manage-ment from £1.3bn in March 2011 to£2.1bn at the close of business on 18

Sage targets growth inBrazil with £125m deal

BY JAMES WATERSON June – a 60 per cent increase.

Most notably it received a £581m boost when it bought the fund man-

agement unit of Walker Crips for£12.3m in March.Sarah Ing, an analyst with Singer

Capital Markets, said: “Liontrust hasmade significant progress and has broadened into Asia and emergingmarkets equities, expanded salescapability in the UK and internation-ally. We also expect that during thecourse of this year, free cash flow willturn positive which offers theprospect of a return to dividend pay-ments in due course.”

Shares in the firm closed up 1.6 percent at 97p.

SAGE was advised on the acqui-sition of Folhamatic by CitigroupGlobal Markets. Heading up itsteam was Charles Lytle, who waspoached from ABN Amro’sHoare Govett business in 2005.Lytle’s departure caused a spatbetween the banks, with theDutch bank claiming Citigrouphad attempted to steal an entiredivision worth of staff. It fol-lowed the exit of Hoare Govett’schief executive, Nigel Mills, andfour of his team – AndrewChapman, Tom Reid, AndrewThompson and Chris Zeal – just aweek earlier.

ADVISERS

CHARLESLYTLECITIGROUPGLOBALMARKETS

Liontrust Asset Management PLC


95.75

96.00

96.25

96.50

96.75

97.00 p 97.0020 Jun

We see the Folhamatic deal as a sensible strategic move and it seems morewill follow. The valuation is rich, but reflects exposure to businesses with criticalmass and recurring revenues in emerging markets. This deal is reminiscent of

the old Sage tried and tested M&A model which worked well until Emdeon.

ANALYST VIEWS

”“

This deal is interesting – in some ways it is a return to the good old days of

Sage’s acquisitive growth. In others, it is quite different – paying a reasonably full pricefor a business already operating at very strong Ebitda margins ... Sage is buy-ing a smaller lookalike, which should generate revenue growth.

”As a cash deal it is unsurprisingly earnings-enhancing, although not as

earnings enhancing as buying back shares would be. Overall, Sage is paying up

for growth. Recent weakness in the shares means we move up to Add onan unchanged 300p target price.

”

IS THE FOLHAMATIC DEAL AGOOD MOVE FOR SAGE?

Interviews by Elizabeth Fournier

JULIAN YATES INVESTEC

“

GARETH EVANS CANACCORD GENUITY

“

WILL WALLIS NUMIS

Archie Kane leftLloyds in May 2011

NYSE Euronext yesterday announced that cross-channeltransport operator Eurotunnel

would become the first listedstock on its London market.

This means that for the firsttime London Stock Exchange (LSE)has had genuine competition forlistings in the capital.

Eurotunnel currently has a duallisting with the LSE in London andNYSE Euronext in Paris but it hasdecided to abandon the former.

“Our London listing has not had

Eurotunnel becomes first firmto list on NYSE Euronext London

BY JAMES WATERSONenough liquidity. A single tradingplatform and a single order book

will simplify access to our stock,”said Jacques Gounon, Eurotunnel’schairman and chief executive.

Shares in the firm will begintrading on NYSE Euronext Londonon 19 July. The LSE listing will becancelled on the following day.

NYSE Euronext London was origi-nally announced in July 2010 but

has taken until now for the marketto attract its first issuer. It hopes toattract international firms whodesire a London listing but wantaccess to a Europe-wide market.

NYSE Euronext president Dominique Cerutti promises a “superior alternative” for listings.


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Liontrust eyes profitas assets jump 60pc

SAGE Group entered the fast-growing and relatively undevel-oped Brazilian software market yesterday by buying FolhamaticGroup, a provider of account-ing, tax, payroll and regulatory software to small businesses. The company expects to pay

£125m for 75 per cent of Folhamatic. The rest o f t he equi ty wi ll be

retained by Folhamatic founderand chief executive MauricioFrizzarin, who will continue torun the business, Sage said.

Sage software is used by morethan 6m small and mediumenterprises (SMEs) and it aimsto tap in to the 90 per cent of

BY HARRY BANKSBrazil’s SMEs that do not yet useany business software.

“[The deal] provides us with amarket-leading position in thelarge and rapidly growingBrazilian market,” chief execu-tive Guy Berruyer said. The company added that the

acquisition would immediately boost earnings per share.

The deal values Folhamatic, which increased revenues 13per cent to £42.4m last year, at13.4 times forecast 2012 earn-ings, Sage said.

Shares in Sage closed up 5.44per cent at 267.5p yesterday,having fallen nine per centsince it reported last monththat first-half revenue growthhad slowed to two per cent.

Milan Radia, an analyst at Jefferies, said it made sense forSage to increase its presence infast-growing regions such as Brazil,adding that the company was pay-ing a “fair price” for an asset withsome unique qualities in the mar-ket.

Sage Group PLC


250

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270 p 267.5020 Jun

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IN BRIEFSJ Berwin gets revenue boostn Law firm SJ Berwin said yesterdaythat revenues for its 2011-12 year hadcome in at £180.1m, a marginalincrease on last year as it consolidatedgains made in the previous 12 months.The average profit per partner at thefirm also rose slightly to £635,000,having increased by 40 per cent in the2010-11 financial year.

US Healthcare Locums suit endsn Shares in beleaguered nursing andsocial services group HealthcareLocums (HCL) climbed as much as 20per cent yesterday after the companysaid that a US lawsuit against it hadbeen dropped. HCL was being sued inthe US by an outfit called PermianMaster Fund. The firm’s shares paredearly gains yesterday to close up 3.7per cent at 3.5p.

Xchanging hires Espirito Santon Business outsourcing groupXchanging said yesterday it had hiredEspirito Santo Investment Bank as its joint corporate broker, joining CitibankGlobal Markets on its advisory team.

May trading picks up for pubsn Trading for pubs and restaurantsacross the UK improved in May,boosted by warm weather at the endof the month, a study releasedyesterday showed. The Coffer PeachBusiness Tracker reported thatcomparable sales in May rose 2.6 percent on the year, following a fall oftwo per cent in April.


Kesa independent director Alan Parker will take over as chairman in September

DFS upbeat as it launches storesDFS yesterday hailed an “improvingtrend” in its performance and said itcontinued to gain market shareafter stepping up its expansion inthe third quarter of the year.

The sofa retailer, which runs 91stores in the UK, reported a 21 percent fall in underlying earnings to£44.5m in the nine months to 28 April.

Despite the slump in profits, DFSsaid its 12 store openings this yearin places including TottenhamCourt Road and Old Kent Road inLondon, were expected to add toprofitability in the final quarter of

BY KASMIRA JEFFORDthe year.

“We will also continue to benefit from our increased UK manufacturing capacity andimproved marketing efficiency”,chief executive Ian Filby said.“Despite the difficult tradingenvironment for the retailsector, we expect todeliver a robust resultfor the year.”

Sales fell eight percent in the period to£446.8m compared with £486m in 2011.

However this was a slightimprovement on the 10 per

cent decline in the first half.DFS said that costs relating

to the launch of new storesreduced earnings by £3.1mduring the first nine months.

It also booked a further£500,000 cost after

expanding its UK manufacturing capacity and shifting more of itsproduction to two factoriesin south Yorkshire andDerbyshire. Filby said DFS iscreating 500 new retailingand manufacturing jobs inthe UK via its expansion.

Ian Filby said the firm iscreating 500 new jobs

SWEDISH fashion retailer H&M yesterday posted a 23 per cent jump in second quarter profits, boosted by strong sales of its Springcollection, in spite of the toughretail environment.

The company reported a netprofit rise of 5.2bn krona (£474m)in the three months to 31 May, upfrom Skr4.3bn last year, beatingconsensus forecasts.

Sales excluding VAT increased by 15 per cent to Skr31.7bn.

Gross margins, which suffered in

Spring sales help H&M post jump in second quarter profits

BY KASMIRA JEFFORD the first quarter of the year,remained flat at 61.7 per cent fromthe same period last year.

“The spring collections have been well received by our customers asshown by our increased marketshare in a fashion retail marketthat continues to be challenging,”Karl-Johan Persson, chief executivesaid.

H&M currently has 2,575 shops worldwide. It said it was on trackto open around 275 new stores this

year, also launching in five newcountries –Bulgaria, Mexico,Latvia, Malaysia and Thailand.

KESA ELECTRICALS, the electronicsretailer that sold its loss-makingComet chain earlier this year, yester-day said it is to rename itself Darty asit swung into the red. The UK-listed group, which owns

French electricals group Darty, report-ed a pre-tax loss of €313.9m (£253.3m)in the year to 30 April, compared to a €30.7m profit the previous year.

The loss was due to €274m of excep-tional charges following the sale of Comet and €70.5m of costs from storeclosures at its troubled Spanish andItalian businesses.

Chief executive Thierry Falque-Pierrotin said the markets through-out Europe had been “exceptionally difficult”, prompting the retailer tohalve its full year dividend.

“In France last year, the [electricals]market declined by around four percent. We expect it to decline furtherthis year, mainly due to vision [TV sales] but maybe not to a four per centlevel”, Falque-Pierrotin said.

Kesa lamentsEU troubles as

losses widenBY KASMIRA JEFFORD Profits at Darty France fell 28 per

cent to €107m, while its DevelopingBusiness, which includes stores inItaly, Spain and Turkey, slumped 33per cent to a €41m loss. The group pledged to improve its cus-

tomer service, online offering andoperational efficiencies to grow salesthis year despite tough economicheadwinds.

Kesa, which will be renamed Darty on 31 July, also announced that chair-man David Newlands would bereplaced by senior independent direc-tor Alan Parker in September.

Kesa Electricals PLC


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PROFILE: ALAN PARKERALAN PARKER is certainly used to acomplicated retail conundrum. The Citygrandee, who will take over as chairmanof Kesa in September, has had his handsfull of late rescuing baby products chainMothercare, where he was parachuted inas chairman last August to help revive itsflagging UK business. Mothercare’sformer chief executive Ben Gordon

stepped down, a turnaround plan wasput into place and former Lovefilm bossSimon Calver was hired to lead thebusiness, bringing with him strong onlineexpertise. And now as chairman of Kesa,the French electronics chain battlingagainst tough trading conditions inEurope, Parker will be expected to dishout the same tough love.As analysts at Liberum Capital noted,

given that Kesa announced its seconddividend cut yesterday, it is no greatsurprise to see the chairman, DavidNewlands, stepping down.Until 2010, Parker served as chiefexecutive of leisure business Whitbread,which under his six-and-a-half yeartenure saw its share price more thandouble and £2bn returned to investors.

Before joining Whitbread in 1992, heserved as managing director of the hotelchain Holiday Inn in Brussels andFrankfurt. Parker, who attended one ofthe first catering degree courses offeredat the University of Surrey, is also a non-executive at a number of firms includingfund manager Justice, which recentlybought Burger King. He is also presidentof the British Hospitality Association.

7/31/2019 cityam 2012-06-21


RIO Tinto said yesterday it will spend$3.7bn (£2.4bn) to increase iron oreoutput in Australia by a further 25 percent to 353m tonnes a year by 2015,shrugging off forecasts of waningdemand and a global supply glut.

Rio Tinto, the world’s second-largestminer of iron ore after Brazil's Vale,currently runs its mines at an annualrate of 230m tonnes and had already put in place work to take output to283m tonnes.

Rio Tinto’s board approval for thelatest expansion, which will cost$5.2bn all up, with $1.5bn comingfrom joint venture partners in themines, comes despite pressuresmounting in the sector to curb capitalspending and return more cash toshareholders jittery over slowing glob-al growth. At a rate of 353m tonnes, Rio’s

Australian mines would be supplyingnearly a third of the world trade iniron ore.

“We are mindful of short-termuncertainties, and remain fully com-mitted to a balanced approach toinvestment, while maintaining a sin-gle A credit rating and a progressivedividend policy,” Rio Tinto chief exec-

Rio Tinto bets

$3.7bn on ironore in Australia

BY HARRY BANKSutive Tom Albanese said in a state-ment.

Rio Tinto also said it had committeda further $501m to fund its share of infrastructure development at itsSimandou iron ore prospect inGuinea, a joint venture with China’sChinalco.

Iron ore is gold for mining compa-nies, which have found a ready marketin Asia for all they can mine and get toa port. The ore sells for around $135 atonne but for Rio costs only $30 to pro-duce, delivering hefty profit margins.

Rio is pushing ahead at the sametime that BHP Billiton and FortescueMetals have major expansions under- way in Western Australia’s Pilbararegion and a raft of smaller miners aretrying to develop projects.

Procter & Gamble cuts forecastsas slower growth in Europe hitsSLOWER growth in China, Europeand the US prompted Procter &

Gamble (P&G) to cut its growthforecasts yesterday. The world’s largest household

product maker is expecting lowergrowth rates as it has cut costs by £6.35bn.

Its chief executive, BobMcDonald, said at an investorconference in Paris yesterday, thatthe company would adjust strategy to focus on big markets and new products.

BY CITY A.M. REPORTERMcDonald said growth in

developed markets, making up 60per cent of sales, had dropped off significantly, while in emerging

markets, it suffered mandated pricecuts in Venezuela and import curbsin Argentina.

“We have seen sequentialdeterioration in the rates of marketgrowth in both the US and Europe,and there has been a slowdown inthe rate of market growth inChina,” he said.

Procter & Gamble has forecastedgrowth to be two to three per centdown from four to five per cent in

April to June, while the corequarterly earnings target wastrimmed from 79-85 cents to 75-79cents per share.

McDonald said it would take timeto reverse the negative trends, andexpected little improvement in the2013 fiscal year which starts 1 July.He forecast underlying sales growthof two to four per cent, and said2013 core earnings would be flat toup by a mid-single digit percentage.

P&G is currently undergoing arestructuring plan to cut 5,700 non-manufacturing jobs and $10bn worth of costs by the end of 2015/16.

IN BRIEFPetrofac wins Mexico contractn Mexico's state oil monopoly Pemexyesterday awarded four contracts to drillmature oil fields in the second round ofbidding to open up the country'snationalised oil industry to more privateinvestment. The Panuco area in Veracruzwent to a joint bid from Schlumbergerand drilling firm Petrofac. Petrofac saidthe contract, which runs for 30 years,should be signed by August this year andoperations could begin in 2013. Thecompanies committed $17.5m ininvestment at the Panuco fields for thefirst two years, Petrofac said.

Costain gets fifth Crossrail mandate

n Engineer Costain, in a Skanska joint

venture, yesterday secured its fifthCrossrail contract to do £40m worth ofwork surrounding the project. The workwill take until August 2018 to complete.“This further contributes to the strengthof our order book, of which 90 per cent isrepeat business,” said Costain chiefexecutive Andrew Wyllie.

Cluff Gold makes Yaore discoveryn Cluff Gold yesterday unveiled“significant” drilling results from itsYaoure project in the Ivory Coast. Thefindings further confirmed the area’spotential, according to Cluff. The firmsaid that it is now increasing the numberof diamond drill rigs on site from three tofour, in order to test the upside potentialof the site.

Rio Tinto PLC


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A GOVERNMENT companies watchdog yesterday abandoned its bid to penalise directors of aChristmas saving scheme which

collapsed in 2006 leaving tens outof thousands of savers out of pocket.

The Insolvency Service, part of business secretary Vince Cable’sdepartment for business,innovation and skills, said it wasdiscontinuing High Court actionagainst both former bosses atFarepak and its parent firm –European Home Retail.

Business secretary Vince Cable

Case against Farepak directorsand parent company collapses

BY KATIE HOPEsaid he was “deeply disappointed”

by the decision.“Without doubt, we need to

reflect on this result, consider what options are on the table andseek further legal advice if

needed,” he added.Lawyers representing theInsolvency Service had asked Mr

Justice Peter Smith to disqualify former bosses at Farepak – and itsparent firm – from being company directors. Former bosses contestedthe disqualification applications.

The high court judge beganhearing evidence last monthfollowing the start of the trial inLondon.


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SECURITIES and ExchangeCommission chairman Mary Schapiro will brief Congresstoday on her case for tighteningthe regulation of money marketfunds, arguing they remain athreat to the economy.

In testimony prepared for aSenate Banking Committeehearing, Schapiro argues thatreforms put in place in 2010 aftera run on some funds in 2008 were not sufficient.

“The next run might be evenmore difficult to stop, however,and the harm will not be limitedto a discrete group of investors,”she said in prepared remarksobtained by Reuters. “The toolsthat were used to stop the run onmoney market funds in 2008 areeither no longer available orunlikely to be effective inpreventing a similar run today.”

To buttress her case, Schapiro

will point to the results of a staff survey showing that on 300occasions since the 1970s aparent company has had to stepin to provide support to one of itstroubled funds.

“Despite these risk-limitingprovisions, money market fundscan – and do – lose value,” shesaid.

Several Federal Reservegovernors have backed morefund restrictions, but Schapirohas so far been unsuccessful ingaining enough support withinthe commission for increasedsupervision of the $2.6 trillionindustry.

She has said that further stepsare needed to stop potentialproblems at money funds fromspreading throughout thefinancial system, as happened inthe 2008 credit crisis when theReserve Primary Fund “broke the buck” with its net asset valuefalling below $1.

UK GYM chain Fitness First hasavoided administration aftercreditors yesterday backed plans torestructure its lease agreements, thecompany said, prompting the sale of around half of its UK gyms and a£600m debt write off.

Creditors overwhelmingly approved a Company Voluntary Arrangement (CVA) –which lets acompany with debt problems reach a voluntary agreement with its business creditors over therepayment of that debt. The CVA enables a rent renegotiation onsome of the 79 gyms it is set to keepas prior rent commitments wereunsustainable. Fitness First will now seek to sell 67 of its UK gyms. Thesale should happen in the next few weeks and a number of rival gymoperators have expressed interest.

The company’s wider financialrestructuring can also kick in now the CVA has been approved.

Creditors ofFitness Firstapprove rescue


THE SERIOUS Fraud Office suffereda fresh knock yesterday as four banks won a court case blocking itsattempts to seize documents linkedto a derivatives probe in Italy. JP Morgan, Deutsche Bank, UBS

and Depfa Bank won a judicialreview against the SFO and thehome secretary, quashing the watchdog’s request for papers thatare wanted by authorities in Milan.

Lord Justice Gross said the SFO hadan “obvious lack of authority” to acton the Italian prosecutors’ requests,and quashed its decision ongrounds of unreasonableness.

But the judge said he has a “con-siderable degree of sympathy” withthe SFO’s actions and those of thehome secretary, who passed on theItalians’ requests to the watchdog.

BY MARION DAKERS The case relates to a criminal andcivil investigation into debt swapsarranged for the City of Milan between 2005 and 2007.

Italian prosecutors argue that the banks did not tell Milan what they were charging for the swaps. The banks deny charges of fraud and set-tled a separate civil case earlier inthe year, agreeing to unwind someof the transactions. The SFO wrote to the banks in 2011,

requiring them to produce account-ing information and correspon-dence linked to their dealings withMilan, at the behest of Italian prose-cutors. The watchdog recently installed

David Green as its new director as ittries to move on from its investiga-tion into property tycoon Vincent Tchenguiz, which was officially dropped on Monday.

SEC chair fights fortighter regulation


ALL FIGURES REFER TO COST PER SQUARE FOOT

PRIME CENTRAL London

residential house prices will grow by six per cent this year in starkcontrast to the rest of the UK, newresearch from CBRE shows.

The property specialist said

average house prices in London’stop postcodes have grown by 35 percent over the last three years and

are now 16 per cent above their2007 peak.

Mark Collins, CBRE’s head of residential said growth is likely tocontinue “as the lack of

developable land means supply willalmost never satisfy demand.”

Prime homes in London typically

attract between £1,500 and £2,500per square feet while super primeproperties sell for more than £3,000per sq ft. This can only be matched

by Monaco and Hong-Kong.

Prime London house prices to grow six per cent

Social network LinkedIn plays down lawsuitbrought in the wake of online password leak


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THE SOCIAL networking siteLinkedIn has talked down a$5m (£3.18m) lawsuit afterRussian hackers leakedmembers’ passwords.

Earlier this month, 6.5m passwords for the website werehacked, and the lawsuit claimsLinkedIn cut corners on security measures. The network is the largest pro-

fessional one of its kind and

holds the private information of over 150m top business figures.

BY ED HUME-KENDALL Katie Szpyrka, a member of LinkedIn, has decided to go tocourt against the social network.Filing a $5m lawsuit against themedia giant, she has based herattack on the grounds of a breachof contract after Russian hackersundermined LinkedIn’s 100 percent privacy policy.

LinkedIn has said that there wasno damage caused to membersand that it disabled the “at risk”accounts when they learned of thetheft.

“It appears that these threats aredriven by lawyers looking to take

advantage of the situation,” saidDarain Faraz, a spokesman forLinkedIn.

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LondonPRIME $2,300 — $3,800SUPER PRIME $2,300 — $3,800

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7/31/2019 cityam 2012-06-21


A team from Deloitte is taking to thesaddle to tackle the CARE Gold bike

ride on Sunday for poverty relief charity CARE International. The ride follows the Olympic route, which measures about 130 miles. The Deloitte team says it ismotivated by CARE’s work, tacklingpoverty in 87 countries, “We arekeen to support CARE, it providesextra motivation for us as ridersthrough the donations peoplemake,” say Deloitte. Places are stillavailable: carechallenge.org.uk/goldor call 020 70916111.

Deloitte takesto the saddle

H ATS off to Saira Khan, the TV presenter and business- woman who has justcompleted a tour of 72

primary schools with the BBC. The former Apprentice star has

been teaching children about business and showing them how tothink about cash flows, profits andmarketing techniques.

Tomorrow she is visiting GillespiePrimary School in Arsenal as an invi-tee of its newly-formed magazineclub.

She will be grilled by pupils whoare fast gaining some skills in theirinterviewing techniques, havingalready quizzed the former BluePeter presenter Andy Akinwolereabout his open water swimming andmembers of the Arsenal Ladies football team, as well as their own head-master.

Apprentice starSaira Khan goesback to school

Saira is ready for the challenge.“Discussing money, how to make itand trying to make lots of it are nottopics the British people are comfort-able talking about.

“But money is a subject that domi-nates all our lives. For me money, work and business have been avenues by which I have been able to recog-nise and realise my own potential,

help others and live a comfortablelife. It is for these very reasons I wantchildren as young as eight to startthinking about money, how they want to make it, what they would liketo do with it. With that i want toplant a seed in their psyche that witha strong hard work ethic, self belief and taking a few risks in their life,like moving away from their hometown to find a job or go abroad to getsome work experience, they canachieve whatever they want.” TV presenter Saira Khan has been busy enthusing young children about business

Got A Story? [email protected]

15cityam.com

cityam.com/the-capitalistTHECAPITALISTThe RBC Race for the Kids, whichraises money for Great Ormond

Street Hospital, will be holding itsannual race this Sunday, 24 June inBattersea Park.This is a family-themed event and is

open to the general public. RBC, whichstands for the Royal Bank of Canada,will be there in force, including co-headof investment banking Doug Gouzmanand European CEO Harry Samuel.Last year's Race for the Kids raised over£400,000 towards the development ofthe Great Ormond Street Hospital.There are over 560 RBC runners (upfrom 500 last year) taking part in therace.


7/31/2019 cityam 2012-06-21


taxpayers specifically,” he said.

“Short-selling bans in Europeand bond purchase penalties inBrazil are a foretaste of thefuture.”

Jenkins also highlighted theextraordinary damage to thesingle market caused by theEurozone crisis, as a Greek exitfrom the Eurozone stopsinternational investors puttingcash into the country.

“In the absence of cross borderrisk, deposits in Dresden couldfund assets in Athens. Trading books could boom confident thatcounterparty risk was free from

concern for capital controls,” heexplained.

“But the Greek turmoil hasintroduced a degree of doubt.

The spectre of cross borderrisk is back.”

HEDGE funds could face moreregulatory difficulties on the nearfuture as governmentsincreasingly step into markets tocontrol capital flows and promotestability, top Bank of Englandofficial Robert Jenkins said

yesterday.“The days of instant market

pricing and limitless liquidity may be fading,” the financial policy committee (FPC) member

warned a group of traders and investmentmanagers.

“Confronted withsudden surges in cross

border flows, elected governments willattempt to intervene inthe interests of stability

generally and to

protect their

MONETARY easing could be on the way, Bank of Japan minutes suggest-ed yesterday, as the country record-ed its first ever current accountdeficit with the EU.

Governor Masaaki Shirakawa warned in a speech yesterday thatthough “major turmoil has beenavoided following the outcome of the Greek election…Greece ispressed to implement fiscal andstructural reform while the econo-my slumps sharply.” With “close attention” on Europe’s

uncertain future, the committeerefrained from increasing its assetprogramme, but some membersstressed that it should “stand ready to take appropriate actions”. The small shortfall, of just over

¥11bn (just under £90m), stems fromrevitalised Japanese consumptionand a strong yen, combined with“sluggish” EU demand, and came

BoJ may raise

QE to combatweak EurozoneBY BEN SOUTHWOOD

despite increased Japanese exports.In the minutes of the most recent

BOJ meeting, the conflicting goals of short-term economic growth andmedium- to long-term fiscal consoli-dation are given as reasons forEuropean demand stagnation.

Barclays Research expects Japanese“exports will continue to increase” but also that “imports will increasedue not only to demand for energy, but also to support the post-earth-quake reconstruction”.

Japan trade balance with EU

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Robert Jenkins warnsrules are unpredictable


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Awards night Wednesday 17 October

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SHARD’S LITTLE SISTER IS COMPLETEDTHE 17-storey newbuilding that willlive in the shadowof The Shard hasbeen officiallytopped out – theterm given whenthe last beam orbrick of a newbuilding is laid. ThePlace –developed

by Sellar PropertyGroup on behalf ofthe London BridgeQuarter – is a600,000 sq ftoffice complexdesigned byarchitect RenzoPiano. The Shardwill be inauguratedon 5 July.

Bank official: Hedge funds facerisks from regulators and Grexit

BY TIM WALLACE

7/31/2019 cityam 2012-06-21



LONDON REPORT

SciensTim Wilkinson has been

appointed president of SciensFund of Funds ManagementHoldings, part of the SciensCapital Management Group. Priorto joining the firm he wasmanaging director at RussellInvestments, and spent 15 yearswith Citigroup, latterly as globalhead of transition management.Wilkinson started his career at SG Warburg Securities.

Banque HavillandThe family-owned bank has announced the appointment ofNicholas Parker as chief executive of private banking. He joins from Citi Private Bank, where he was managingdirector. Parker started his banking career at NatWest, andhas held senior roles at Coutts, Merrill Lynch and Barclays.

PwCLuisa Affuso has been appointed as a director in the

business services firm’s economics team. She previouslyspecialised in competition economics at RBB Economics,the expert advice company, and has held academicpositions at both the University of Cambridge and theLondon Business School.

Costain GroupThe engineering and construction group has appointedMark Rogerson to its board as chief development officer. He joins from Serco, where he was involved in the servicecompany’s brand development efforts. Rogerson joinedSerco in 2004, where he served successively as managingdirector of its defence operations and civil aviation businessand its head of operational efficiency.

VocaLinkPaul Stoddart has been appointed managing director of

strategy and business development at the internationalpayment specialists. He joins from Barclays Bank, where hewas responsible for mergers and acquisitions and assetdisposals for Barclaycard. Stoddart has also held seniorpositions at RBS WorldPay.

London Bullion Market Association (LBMA)Ruth Crowell has been promoted to the position of deputychief executive at the gold and silver market tradeassociation. She has worked at the LBMA for six years, mostrecently as its commercial director. Crowell previously heldpositions at White & Case and Norton Rose, and acted as amonitor at the UN Commission on Human Rights in Geneva.

Lawrence GrahamBrett Israel has been hired as partner and head ofrestructuring and insolvency by the private capital law firm.He joins from Bird & Bird, where he was the UK-based headof its international corporate restructuring group.

WHO’S SWITCHING JOBS Edited by Tom Welsh

+44 (0)20 7092 0053morganmckinley.comSPECIALISTS IN GLOBAL PROFESSIONAL RECRUITMENT

Stocks sink ondisappointingFederal action

US stocks edged lower yesterday after the Federal Reserve actedto aid the fragile economy with stimulus measures that

were in line with marketexpectations but went no further.Stocks rallied in recent days in thehope that the US central bank wouldextend Operation Twist, a bond- buying program designed to lower

long-term rates and stimulategrowth. But investor hopes of additional Fed action wentunfulfilled.

Concerns about weakened demand were highlighted by Dow componentProcter & Gamble, which cutgrowth forecasts early yesterday.Shares of the world’s largesthousehold product maker fell 2.9 percent to $60.39. Another disappointing outlook

came from Bed Bath & Beyond, which projected a weaker-than-expected profit for the currentquarter after markets closed. Itsshares fell 10 per cent to $66.25 inextended trading. Trading was volatile after the Fed

announcement about midday.Declines picked up during Fedchairman Ben Bernanke’s afternoonnews conference but then weremostly erased. The Nasdaq compositeindex even ended slightly higher. The Dow Jones industrial average was down 12.94 points, or 0.10 percent, at 12,824.39. The S&P’s 500Index was down 2.29 points, or 0.17per cent, at 1,355.69. The NasdaqComposite Index was up 0.69 point,or 0.02 per cent, at 2,930.45. The benchmark S&P 500 index had

risen for four days in a row andaccumulated gains of about sevenper cent from a five-month low hitearlier in June as many investorsanticipated some Fed action to aidthe f lagging recovery. While the Fed is “willing to take

action if needed, they’re not givingenough detail as the market wants. There’s a disconnect between whatmarkets want and what the Fed is willing to commit to,” said Alec

Young, global equity strategist at S&PEquity Research in New York. Tech stocks were the day’s biggest

gainers, rising 0.2 per cent. JabilCircuit led the sector as expectationsrose that it had retained a key mobile phone customer, sendingshares 6.8 per cent higher to $20.75. Wall Street continued to keep a close watch on Europe for any development out of the region withrespect to its sovereign debt issues.

Adobe Systems slid 3 per cent to$31.99 after the maker of Photoshopand Acrobat software cut its full-yearrevenue outlook and warned about weak demand in Europe. About the same number of stockstraded on the New York Stock Exchange rose as fell on Wednesday while slightly more stocks fell on theNasdaq than rose. Volume was light, with about

6.57bn shares traded on the New York Stock Exchange.

SHARES in Invensys surged by 27 percent yesterday on talk of a bid fromUS rival Emerson Electric. Therumours suggested Emerson was

mainly interested in the company’scontrols business and not the raildivision, but would be willing to buy the whole lot to achieve its aims. That wasenough to see Invensys jump 54p to257p, valuing the company at more than£2bn.

Meanwhile, expectations for moremonetary stimulus sent Britain’s topshare index to a seven-week high yesterday, but investors cautioned thosegains may be vulnerable if the Eurozonedebt crisis deepens further.Investors were beefing up their equity holdings ahead of the US FederalReserve’s expected decision to extend its bond-buying programme, dubbedOperation Twist and aimed at shoring upthe US jobs market. The US central bank said after theEuropean market close that it would buy $267bn in longer-dated securities by theend of 2012.“We are positioned for Operation Twist

to be mentioned in the Fed statement, so we’re not selling before the meetingresults, but we reinvested in equities two weeks ago so we have a good profitmargin at this point,” said Lorne Baring,managing director of B Capital WealthManagement.“We still expect a bumpy ride as investorslack confidence there will be progress atthe sovereign level in Europe. A worsening situation in Europe couldcause us to take prof it once more.” The FTSE 100 index rose 35.98 points, or0.6 per cent, to 5,622.29. Trading volumestotalled 96 per cent of the 90-day average. The index was up around 360 pointsfrom a six-month low hit in late May, when poor US jobs data startedspeculation about further central bank support. The Bank of England also signalled

yesterday that it was close to releasing a wave of new money into the shrinking

British economy because of the worsening Eurozone debt crisis.

Shore Capital expected such a move by the Bank would reverse some of thestrength seen in sterling over the past sixmonths, benefiting exporters from theUK.

It highlighted global stocks such aschip designer Arm Holdings, engineerIMI and technology firm Smiths Group, which all gained between 2.3 per centand 2.6 per cent on the day. Also on Shore’s list was software

company Sage Group, which rose 5.5 percent as it increased its global exposure by acquiring a 75 per cent stake in Brazil’sFolhamatic Group, leading brokers toupgrade their expectations for the stock.Meanwhile shares in insurance group Aviva jumped 4.7 per cent as it unveiled job cuts in its regional UK offices. Whitbread, which impressed the market with its first-quarter results on Tuesday,rose a further 4.7 per cent yesterday.

On a thin day for corporate news, ITV jumped three per cent on speculation of a buyout and engineering groupInvensys gained a whopping 26.6 percent on talk of a bid from US rivalEmerson.

On the down side, Severn Trent saw itsshares slide to the bottom of the FTSE100 fallers’ list as it went ex-dividend.United Utilities followed it lower,dropping two per cent.

Experian and Land Securities, down 0.4and up 0.3 per cent respectively, alsotraded ex-dividend.Further afield, the FTSE Eurofirst 300index of top European shares rose 0.5 percent.

Invensys surges 27 per cent astalks of bid from US resurface

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CHEMRINGJP Morgan rates the defence firm “overweight” and has trimmed its

target price from 512p to 491p after weaker than expected first halfresults. The broker points out that Chemring needs to make 67 per centof its earnings in the next half in order to meet targets – though itsorder book, up 14 per cent to top £1bn, means this could be possible. JPMorgan maintains that the firm is the lowest-rated UK defence firm, andis trading at a material discount to its peers.

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p


525.0020 Jun

GREENE KINGDeutsche Bank rates the pub chain “buy” and has raised its price targetfrom 635p to 665p. Greene King has done more than any other publicly-traded pub firm to improve its business, the broker believes, and is ontrack to build on its 2010 strategy change. Given the firm’s exposure tothe wealthiest regions of the UK, Deutsche forecasts strong retailgrowth in the mid-teens this year.

TUI Travel PLC172.50

170.00

165.00

160.00

162.50

157.50

167.50

p


172.1020 Jun

TUI TRAVELNomura has started covering the holiday firm with a “neutral” ratingand a target price of 168p. While TUI has benefited from problems atrival firm Thomas Cook, the broker is worried that the tour operatormodel as a whole is outdated, and is struggling to see real growthemerging from a cost-cutting strategy. However, Nomura thinks the firm

is faring better than Thomas Cook, which has been given a “reduce”rating and a price target of 6p.

FTSE

5,600

5,650

5,450

5,550

5,500


5,622.2920 Jun

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JOBSoftheWEEK

YOUNG lawyers face an uphill strugglein their battle to reach partnership.Rapid, pre-recession growth in legalservices seemed to offer so much to

graduate lawyers. But this growth hasstalled, and now opportunities for internalpromotion are severely restricted. Many willfeel frustrated that previous avenues forprogression have appeared to close off. Jeremy Black, partner in Deloitte’s profes-

sional services group, says that these eco-

nomic adjustments have resulted in a“fundamental change in the career path forgraduate lawyers.” A previously “highchance of an ultimate promotion to part-ner” has been reduced to a slimmer likeli-hood. But the news is not all grim. Both theeconomic background, and regulatory changes following the 2007 Legal Services Act, are creating new opportunities tothrive, despite all the bad news. Younglawyers just need to adapt to survive.

UNDERSTAND YOUR FIRMBlack says that the relative ease with whichlawyers could previously reach partnership were “predicated upon firms achieving

Make the hard road to legalpartnership easier to tread

Young lawyers can still advance rapidly despite economic troubles, writes Tom Welsh

exponential growth.” Although it’s notimpossible that such growth could return,the key stumbling block for a young lawyer’scareer prospects is a negative, cautious atti-tude among law firms. “Previous recessionshave been regarded as temporary blips by the legal sector, which has been able torecover within a few years. However, thisrecession has transformed the legal land-scape, and a return to previous levels of growth are not expected for a long time.”

Understanding this reticence is vital. As inany hierarchical structure, career prospectsare dependent on adjusting personal priori-ties and skills to the needs of the widerorganisation. As Black says, “law firms willcontinue to focus on motivating theirupcoming stars through interesting work and, possibly, international opportunities.”If you can engineer your own career andskills growth towards your firm’s aspira-tions, you will be more likely to be nurturedin turn.

Of course, each firm will have its ownambitions. But Guy Adams, director andhead of private practice Europe at LaurenceSimons, a specialist legal recruiter, high-

lights one area that will prove vital in com-ing years. Those that have “mastered the business development side of being lawyer,”particularly those who are adept at “creat-ing strong client relationships” will do well.Black adds that “there may be opportunitiesfor those in the sector that are very IT liter-ate.” By developing these particular skills, inline with both broad market trends and spe-cific firm ambitions, lawyers could easetheir rise, despite wider difficulties.

NEW LAWS FOR LAWYERS The Legal Services Act of 2007 sought to lib-eralise the market for legal services inEngland and Wales. As a consequence, vari-ous legal activities no longer have to be car-ried out by solicitors or barristers. Law firmsare also now able to accept external invest-ment. While to some degree precipitating expan-

sion, this liberalisation is likely to limitcareer prospects for some. Black believes “it will inevitably reduce opportunities forthose with low level legal skills and limitedlegal training.” Low value, large volume work will be outsourced, and young lawyersmay find it more difficult to gain exposureto the full range of legal skills at the begin-ning of their career.

But regulatory changes also create oppor-tunities. Many lawyers will no longer have todeal with the more tedious administrative work. As such, more challenging areas of practice can be focused on – a chance toshowcase excellence and promise. Of key importance in taking advantage of thesenew challenges is finding a specialism andmining it competitively. “Become immersedin the area in which you want to practice,”says Adams, “both internally within thefirm and externally within the wider mar-ket.”

A UNIQUE SELLING POINTStraitened times may mean that it is moredifficult for young lawyers to reach partner-ship. But it’s certainly not impossible. AsBlack says, you just need a “unique sellingpoint,” a way of “standing out from peers inan increasingly competitive market.” What this selling point should look like is

more difficult to determine. But a strongability to build relationships with clients –in other words, to bring in money – willnever prove unattractive.

And be adaptable. Be f lexible and drive your career forward by developing skills to your firm’s advantage. But equally, if yourdevelopment seems to have stalled, don’t beafraid to consider a move to another firm, oreven to an in-house position. Sensiblelawyers will consider all possibilities.

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PLENTY of successfulentrepreneurs don’t haveMBAs. For many, to be anentrepreneur is to possess a

constellation of hard-wiredpersonality traits – an appetite forrisk, an eye for an opportunity, thepersonality to carry investors on anexciting bandwagon from start-up toIPO. Surely these qualities can’t betaught? Many business schoolsdisagree. An increasingly noticeablepart of their offering, whether as partof MBA programmes, or as stand-

alone courses, are classes devoted totraining entrepreneurs andequipping them with the skills totake an idea and run with it. A cynic might argue that schools are

playing with the media zeitgeist –that teaching entrepreneurship ispart of an eye-catching strategy to cap-ture attention while they continue toplod along with a core offering forcorporate-minded executives. But thenumbers, and the money, tell a differ-ent story. Cass Business School hasinvested £10m in an entrepreneur-ship fund for promising start-upideas. Professors tell of increasingnumbers of students who are leavingprofessional careers and, armed only with a vague idea or desire to starttheir own firm, are using MBA pro-grammes as a springboard.

But is an MBA really the right choicefor a potential entrepreneur?

Programmes can cost in the region of £40,000 for a year – wouldn’t thatmoney be better spent renting officesor investing in market research? For

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some it will not be the right choice.But, if you do want to start your ownfirm, and perhaps lack the confi-dence, the broad business knowledge,or even the idea to take that desireforward, an MBA could prove useful.

THE MECHANICS OF ENTREPRENEURSHIP According to John Mullins, associateprofessor of management practice inmarketing and entrepreneurship atthe London Business School, “many people who want to start a businessrealise they have not yet developed allthe skills they need. It’s a generalistgame,” he says – the first few years of a start-up may require gettinginvolved with all areas of the new business. An MBA can provide thisgeneralist knowledge and experience.

Julie Logan, professor of entrepre-neurship at Cass Business School,

agrees. An MBA gives you “a raft of useful skills, like learning how to build a brand from the start and how to deal with the financial side of a

firm. Even if you start a business in ateam,” says Logan, “you still have toset your hand to everything.”

Many schools also offer targetedentrepreneurship or start-up electivesoutside their core curriculum. BothCass and the London Business Schoolrun focused courses that seek todevelop an understanding of the life-cycle of a typical start-up. “In our sec-ond year, we have a portfolio of eightdifferent courses which take studentsthrough the entire life-cycle of a start-up,” Mullins explains. Cass offers anentrepreneurship summer school which takes students through theprocess of starting a firm. “Studentscan’t get onto the summer courseuntil they have written an in-depthanalysis of their business idea,” Logansays. If they are successful, “we takethe best of the theory and combine it

with what they need in practice.

SOWING THE SEEDS OF AN IDEA Learning the practical mechanics of

entrepreneurship is useless withoutan idea. To some extent an MBA canprovide the tools to enable a studentto discover a market opening – by teaching about systematic marketresearch, or how to test financial fea-sibility. But professors won’t provide you with an idea, only the skills toidentify the good from the bad. Where an MBA might prove useful

in reaching that elusive eurekamoment is in the culture and loca-tion of the business school – in theconversations students have amongthemselves and their professors, andin the collaborations between schoolsand nearby businesses.

Conrad Chua, head of MBA recruit-ment and admissions at the JudgeBusiness School, part of theUniversity of Cambridge, says that“Cambridge MBA students get

involved with local businesses andorganisations at a very early stage of their MBA.” Situated amid the SiliconFen, a cluster of high-tech businesses,many of which have connections withthe university, Chua thinks Judge hasan advantage for potential entrepre-neurs because of the lessons thesestart-ups can offer students.

“Collaborative projects give studentsa glimpse into the entrepreneurialspace,” says Chua. Whether thatglimpse leads to a practical businessplan is another issue. But by meeting with successful entrepreneurs, learn-ing how they reached their ideas, andseeing how academic research at busi-ness schools or elsewhere in the university has translated into practicalideas, Chua thinks MBA students canaccelerate their idea generation.

FROM SEEDCORN TO HARVESTBut entrepreneurship shouldn’t besimplified into a single model of ideaplus business knowledge equals prof-it and expansion. It’s a messy game, asrisky as it is exciting. According to theEntrepreneur’s Advice Bureau, 90 percent of businesses fail within the firstthree years, and a UK business goes bankrupt every 12 minutes.

Business schools have a stakein their alumni’s future suc-cess. It reflects well on them.In 2010 Cass Business School

launched a venture capitalfund to provide growth equi-ty to start-ups run by people with a link to the school. Of course, seed capital can be found elsewhere, but where businessschools may have anadvantage is in theirready-made, easy toaccess package of expert support,experience andfacilities.

“It’s difficult to be successful,and definitely lonely ,” saysMullins. “Wedon’t just say go off, goodluck.” London

Business School has an incubator pro-gramme, which provides early stagestart-ups linked to the school withoffice space, angel investors and men-tors. “These start-ups can bounceideas off each other. They’re in differ-ent sectors, so there’s real cama-raderie,” Mullins says.

It’s difficult to measure whetherthis commitment by schools toremain involved in their graduates’careers has an identifiable effect onsuccess rates. But their readiness toassist former MBA students with their business ventures is a convenientalternative to having to build connec-tions and raise capital without assis-tance.

A MOMENT OF REFLECTION An MBA is not an entrepreneurialdegree in itself. As Chua says, “anMBA will not create an entrepreneurout of someone who does not havepassion in the first place.” MBAs are broad-based business degrees,designed to assist any professional with their career development.

But they can also be a time forreflection, an opportunity to con-sider where and how you want to

build your career. This is why MBAs can be so attractive to apotential entrepreneur.

If you do have that vagueidea to start your own

firm, and you don’thave a well-thoughtthrough idea, anMBA will provide you with the toolsand experiences toconsider youroptions.

But if youdecide entrepre-neurship is toorisky, and youalready have asettled career,

you can climb back on the cor-porate ladder

with all the

advantages of a business degree.

An MBA can act asa time for reflection, toconsider how to buildyour future career

‘

They’re not appropriate for everyone, but an MBA could make thedifference between business success and failure, says Tom Welsh

Business schools are often able to offer app

Stelios Haji-Ioannouis a Cass graduate

7/31/2019 cityam 2012-06-21


with a leg up21BUSINESSEDUCATION


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If you’d like to become part of this outstanding group, you can find outmore about our MBA Programme at go.mbs.ac.uk/scholarships.Apply by the 28th of June for September 2012 entry.

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SUSAN Cooper is founderof Accutrainee, a start-upthat aims to reduce costsand increase flexibility for

law firms by outsourcing theirtrainee solicitor needs. Thecompany employs the traineesand seconds them out whenrequired. Cooper is a formerlawyer – she spent several

years working at Hogan Lovellsand then in the constructionindustry – and, of course, her

legal experience “helped a lotin reaching my eurekamoment.” But she’s also a

graduate of Cass BusinessSchool’s Executive MBA (EMBA)programme, and she creditsthe experience as being “hugely instrumental in developing theidea.”

“I always had the underlyingdesire to set something up, butI wasn’t sure what that would

be,” she says. The economiccrisis in 2008 encouraged herto commit to an EMBA, a

business degree designed forprofessionals with several yearsof experience. She believes theprogramme gave her theconfidence, knowledge andthinking space to translate a

vague desire to become anentrepreneur into a strongly-

researched model – and asuccessful business.

The EMBA was “a turningpoint in my thought process onhow to take things forward,”she says. “I took everything I’dlearnt on the course, and put itinto the scenario of setting upan actual business.” The course

gave her a “basicunderstanding of the pitfalls in

start-ups, and grounding andknowledge of various different

business disciplines and howthey work together in an actual

firm.” The breadth of theprogramme, covering financialanalysis, management, strategy and professional development,

was not geared towardsentrepreneurs specifically. Butas a consequence of gainingthis broad insight, Cooper feltcapable of dealing with allaspects of her new firm.

Critically, she could count on

the support of her school beyond graduation. Seedcapital from itsentrepreneurship fund “washugely helpful for my purposes,” she says. It wasn’t

easy to get this funding – thesame as with any other privateequity fund – but “the supportthat came with it, including astanding board which I haveaccess to every day,” gave herthe ongoing advice to make her

business a success. She foundsupport and advice from therest of her EMBA cohort lessuseful, but says it did her noharm.

Cooper is critical of the viewthat business schools can becounterproductive forentrepreneurs – that they cansometimes encourage arestrictive model of businessthinking that discouragesinnovation. “I struggle to seehow the kind of character thatis blinkered by a course that ismeant to widen your

understanding could besuccessful as an entrepreneur,”she says.

In Cooper’s view, you don’thave to have a business degreeto be successful as anentrepreneur, “but it willprovide you with the tools tohelp you along your way.”

Tom Welsh

The journey of an idea from aclassroom to the boardroom

e space and support to their entrepreneur graduates

Susan Cooper, founder of Accutrainee

7/31/2019 cityam 2012-06-21


THOSE expecting Barack Obamato provide a rousing campaignspeech in Ohio were leftdisappointed. Instead, thePresident decided to make

headlines the following day, issuingan executive order halting thedeportation of illegal immigrants who meet certain criteria. It’s a movethat may well have reinvigorated thePresident’s re-election prospects.

Immigration is one of the mostemotive issues among Latinos, whoare expected to make upapproximately 10 per cent of theelectorate this year and will play akey role in the outcome of races inNew Mexico, Nevada, Colorado,Florida and even possibly Arizona.

Obama will be hoping that this

WITH Greece on life supportfrom the European Unionand Spain squirming inthe financial vice grip of itsinsolvent banks, talk of an

Italian bailout is nigh. Without agrowing economy to generate wealth,Italy is having a hard time convincingcurrent and prospective bondholdersthat it can pay its debts. But throwingmoney at Italy’s problems won’t makethem go away.

Substantive structural reform is the

only way to restore prosperity, by spurring competitiveness and entre-preneurship. High taxation, a com-pletely inflexible labour market, andpoor governance stand in the way.

Italy’s tax wedge – the difference between before-tax and after-tax wages – is the fourth highest in theEurozone. Italy’s tax on consumption,the value-added tax (VAT), is only 2 percent below that of Greece andPortugal, which are at 23 per cent.Making a bad situation worse, PrimeMinister Mario Monti’s December 2011reform package raises VAT to 23 percent starting in October.

FLIGHTS STRAIGHTFROM £63

ONE

WAY*

cityam.com/forum

High taxation, an

inflexible labour market,and poor governancestand in the way

In association withTHEFORUM

Twitter: @cityamforum on the web: cityam.com/forum or by email: [email protected] Agree? Disagree? Got a sharp comment?

The Forum wants you to join the debate. Top responses will be reprinted in The Forum.

‘

22THURSDAY 21 JUNE 2012

MATTHEW MELCHIORRE

Super Mario must radically reformItaly to avert an enormous disaster

High taxes discourage employment. A 2010 study by Primož Dolenc andSuzana Laporšek of Slovenia’s

University of Primorska found that EUcountries with higher tax wedges hadlower employment growth. Increasesin the tax wedge had a strong negativecorrelation with employment growth.Given Italy’s mile-high tax rates, it’s nosurprise that it suffers the second low-est rate of employment – at 56.9 per-cent – within the monetary union.Greece is dead last at a dismal 55.6 per-cent.

At the heart of Italy’s employmentproblem is its rigid labour market, in which firing workers is virtually impossible. Incompetence cannot con-stitute grounds for dismissal. In fact,

the law states that worker incompe-tence is the fault of the employer, notthe employee. Employers may only dis-miss employees if they can prove “con-crete and wanton negligence” on thepart of the employee in a labour court.Rigid labour laws cover 87 per cent of the entire Italian workforce, accordingto Datagiovanni, a statistical agency that studies Italy’s youth.

Entrepreneurs are extremely hesi-tant to hire new help and expand their businesses because they don’t want to

take the risk of hiring a worker for life.Italy has the smallest proportion of employment in medium-sized firms within the entire EU. It also has thehighest proportion in micro-firms,those with fewer than 10 employees.

Monti’s labour reform this spring was geared more to placating unionsand party leaders, than to making thelabour market more flexible.Businesses may now fire workers intimes of economic distress, but only after they dish out up to 24 months of severance pay and prove their financialstraits to a labour judge. And it madetemporary work contracts – the only

hope of employment for many of Italy’s work-starved youth – moreexpensive to enter into.

Italians know drastic changes to theirlabour market are necessary. In aautumn 2011 Eurobarometer survey,Italians identified labour reform as themost important policy initiative need-ed to get out of the economic crisis.

Italian businesses have a relatively poor security on investment, due inlarge part to poor and declining gover-nance. Over the past decade, Italy hasplummeted in the World Bank’s World Governance Indicators in con-trol of corruption, rule of law, and gov-ernment effectiveness. In the latest

rankings, Italy stands below Greece inall three categories.

Italy’s broken court system is a testa-ment to this. The average time to adju-dicate a lawsuit is nearly three and ahalf years. Italy ranks last of all OECDhigh income countries in contractenforcement, according to the WorldBank. That’s discouraging to entrepre-neurs who rely on an effective legalsystem to protect their property andtheir contracts.

But despite Monti’s failure to enact

real reform, he seems to be Italy’s only hope of averting complete disaster. With Berlusconi waiting in the wingsand the rise of the populist Five Starprotest movement, the alternatives toa weak Super Mario are his videogame nemeses, King Bowser and Walluigi.

Super Mario had to face his rivals tosave the Mushroom Kingdom. Montimust face down cowardly politicians,intransigent union leaders, and anonerous tax regime to save Italy. Matthew Melchiorre is an adjunct analyst

at the Competitive Enterprise Institute. Helived, worked, and studied in Italy.

move not only wins him votes, butpushes the Latino community todisplay the fervour and enthusiasmthey displayed four years ago. Italready appears to have paid somedividends, with a poll showing 73per cent of Latinos backing Obama, versus 26 per cent for Mitt Romney.Half of Latino voters (up from 14 per

cent) are now more fired up to vote

for the President in November. ThePresident can’t win without them.

Ostensibly Obama’s move may also curry favour among the widerelectorate. Polls indicate thatsupport for the policy is running at64 per cent to 30 per cent in thePresident’s favour, especially amongindependents. But despite what thePresident’s closest advisers say, few will believe that Obama’s move isanything but naked politicking. Theadministration has hardly been tooaccomplished at downplayingpolitics when selling principle. Andtherein lies the risk. After all, it wasonly 12 months ago when thePresident told supporters that hedidn’t possess the authority to take

such action. Many members of

Congress – and the constitution’schecks and balances – wouldcertainly argue that’s still the case.

In the long term, the President’sactions are likely a setback for morecomprehensive solutions to America’s 11.5m unauthorizedimmigrants. Not surprisingly,executive orders have the tendency to poison the well with Congress. And rather from a position of strength, the President was forcedinto taking these drastic measuresafter Republican Senator MarcoRubio, a possible vice presidentialpick for Romney, had proposed alegislative solution similar to hisexecutive order. To Democrats thatmatters little. Most feel that the

President has halted Romney’s

momentum, forcing him to stoptalking about the economy andinstead discuss immigration, anissue the Republican nominee has yet to nuance. It’s up to Romney whether he takes the bait.

But having assuaged green, gay and now Latino supporters (a dealon student loans is next), Obama’scampaign runs the risk of appearing parochial, especially if the President continues to fail in hisefforts to convey a convincingmessage on how his second term would reinvigorate the one issuethat unites every voter: theeconomy.

Ewan Watt is a Washington, DC-basedconsultant. You can follow him on

@ewancwatt

THE WHITEHOUSE RACE

EWAN WATT

Obama is banking on Latino votes but the economy is the issue that unites

7/31/2019 cityam 2012-06-21


ROM YOUR OFFICE

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23

Corporate charity[Re: Government should stop meddling and leave pay decisions to shareholders, yester-day]Elaine Sternberg is right to criticisegovernment for trying to force companies toact in the interests of society rather thanshareholders. But aren’t many firms doingexactly this of their own account? It’s finefor companies to conduct corporatephilanthropy if shareholders have voted todo so, or if it is in the constitution of thecompany. But many social responsibilityschemes seem more like opportunities formanagement to pursue personal charitableagendas, while the owners pick up the bill.Executives should think twice before tryingto appear responsible at o thers’ expense.Chris Morgan

Euro fatigue[Re: Why Germany could eventually lose patience with the euro , Tuesday]The euro is a political rather than aneconomic project, so economic logic doesnot apply. The political classes in Europe willcontinue with their current obsession (theforcible union of incompatible economies)until they’re forced to stop by devastation.

James Tolan

[Re: Just 42 per cent of Greek people are for austerity , yesterday]Few turkeys will vote for Christmas, just asfew Greeks want to continue with EU-imposed cuts. Sadly, they have no choice, soall this navel gazing about their hopes anddreams is of zero consequence.

Ben Giff

ALBERT Einstein famously quipped that insanity isdoing the same thing overand over again andexpecting different results.

A lesson, perhaps, that chancellorGeorge Osborne and Sir MervynKing, governor of the Bank of England, should heed. The Bank of England and the

Treasury have announced they’re working together on an £80bn

“funding for lending” scheme, providing banks with cheap debt in thehope of expanding business andconsumer lending. Does this soundfamiliar? Have we already forgottenthe bold claims of Project Merlin, orthe £325bn already pumped into theeconomy through quantitative eas-ing (QE)? We’ve become accustomed to big

numbers. To put £80bn into context,it’s nearly equal to the Departmentof Education’s yearly budget andpretty much what the UK financialservices sector paid in tax in 2011.It’s a deluge of money. We have clients who are champing

at the bit to hire staff, roll out new products and export to new mar-kets. All of them are technology companies, and for most of them£1m in extra working capital is thedifference between bumping alongand taking off. Unfortunately, theirretarded development is a result of the absence of venture capital andthe unwillingness of banks to lendto businesses with intangible assets. We believe that the bank bailouts,

QE1, QE2 and Project Merlin add upto billions of reasons to show thatit’s not a volume of supply problem. And it’s evidently not a demandproblem – the clamouring of SMEs,starved of growth capital, confirmthat daily. And it’s patently not aproblem of political will.

Self evidently, it’s a distribution

TOP TWEETSGreece has formed a new government. Onceagain, Greek voters have rearranged thedeckchairs on the Titanic.@spygun

Julian Assange isn’t oppressed. He’s ridicu-lous. By claiming asylum, he makes his apolo-gists look ridiculous too.@mfullilove

Cameron can posture all he likes over theFalklands. But they’ll be difficult to defendnow we have no aircraft carriers.@thefullprice

Even Vince Cable is now using the phrase“shareholders spring”. Stop it. It’s inaccurate.@HRBullets

Will Vince Cable’s proposals to strengthenshareholder power be good for business?

YESIt’s a good outcome. These proposals give shareholders more

leverage and that will encourage companies to take note of theirviews. Nobody wants unseemly public rows every year but, equally,companies need to be clear about the links between pay andperformance. The series of negative votes in this year’s AGM seasonis a sign of pent up frustration on the part of shareholders about arange of performance and pay issues. We need better dialogue andthere are signs that is starting to happen. The public concern aboutpay is understandable. But we mustn’t lose sight of the fact thatwhat really matters is whether companies deliver value to theirshareholders. If incentives are cutting across that, or failure is beingrewarded, then that is sending the wrong message. Shareholderswill continue to keep their eyes on the big picture.Richard Saunders is chief executive of the Investment Management Association.

Richard Saunders

NOThomas de Freitas

While Vince Cable’s crackdown is in tune with current mood music,

giving shareholders ultimate power is a false goal. Europe is facingthe economic plight of Japan – two lost decades of stumblinggrowth. The only way to stimulate prosperity is by incentivisingpeople to lend, invest, create, and innovate. The masses will vote fora quick fix: they can see that cutting executive pay might providedirect redistribution to their own dividends in the short term. But theprudent approach would be to see executive pay as an investment inthe right person to steward an economically important enterprise.Then shareholders will benefit from future dividends, employees willgain more stable employment, and babies and pensioners will eatlike kings. The current economic climate should be an argument tobolster executive investment, not cut it.Thomas de Freitas is managing director and director of specialist markets at Communicate Recruitment Solutions.

RAPIDresponses

and a product problem. The distribution mechanism – through retail banks – is hampered by banks’ out-

dated credit processes, atrophiedlocalised branch expertise and com-puterised bureaucracies. This is not breaking news – it was raised as longago as 2009 in the Rowlands Report. The product problem is a conse-

quence of the banks’ inability tomeasure risk for anything withoutan obvious track record, underwrit-ten by tangible assets. This has led toan obsession with debt – the very instrument that got us into themess in the first place. If you lend£1m, the best return you can expectis a little more than your money back – this makes a lender very cau-tious. If, on the other hand, youinvest £1m in equity, you have achance of much greater returns. This £80bn has to get to the places

where it’s needed, and in a formthat doesn’t prohibit it being sup-plied in the first place. And it needsto move quickly. Last week, the“funding for lending” promise wasthat £5bn a month would flow. If that is not to silt up the balancesheets of the retail banking sector,radical changes in distribution andproduct design must happenurgently.

However, if the funds don’t flow,the banks – King’s and Osborne’sgrowing responsibility – will benefit-from the cheap money. PerhapsEinstein’s dictum need not apply. Ken Olisa OBE is chairman and founder

of Restoration Partners.


KEN OLISA

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Banks are unable

to assess risks oflending to SMEs

7/31/2019 cityam 2012-06-21


Diving below Microsoft’s SurfaceMicrosoft has unveiled its iPad rival – but what exactly do we know about it? We take a look under the hood

THURSDAY 21 JUNE 2012 cityam.com24

LIFE&STYLE WORDS BY

STEVE DINNEEN

Samsung Galaxy TabThe number one rival to the all conquering iPad is theGalaxy Tab. The 8.9 inch version offers something Apple

doesn’t – it will fit into your pocket. It’s a well builtmachine but the £400 price tag is steep.

BlackBerry PlaybookBlackberry promised much with the PlayBook, includingtrue multi-tasking between applications. Unfortunately,

lack of 3G and a whopping price tag meant nobody both-ered to buy one.

Motorola Xoom 2The original Xoom was the first Android tablet, so theXoom has had plenty of time to gestate. It’s light and rel-

atively speedy and the screen is crisp. The problem is, itlacks a discernable reason to buy it over an iPad.

Asus Eee Pad Transformer PrimeRunning the latest version of Android and comingequipped with a quad-core Nvidia Tegra 3 processor, this

is one of the most adept rivals to the Surface. Androidfans should look no further.

TECHNOLOGY

n THE SCREENFirst-off, the Surface has a bigger screenthan the iPad, at 10.6 inches, compared to9.7 inches. The iPad, though wins onresolution – its retina display sets thestandard, squeezing in an incredible2048x1536 pixel coverage (that’s a lot).The Surface comes with a not too shabby1080p resolution.

n THE HARDWAREThe regular Surface is likely to housequad-core Nvidia Tegra 3, making itsignificantly nippier than the iPad(assuming the operating system lives upto Apple’s seamless iOS). The Surface Pro

packs Intel’s Core i5 chip, making it, intheory at least, one of the fastest tabletson the market.

MICROSOFT this week unveiled the Surface tablet PC, itsbiggest hardware project since that launch of the Xbox in2001. The device will be released to coincide with the releaseof its completely revamped Windows 8 operating system.

These are interesting times indeed for the tech giant. At present,specific details – including, vitally, pricing – are thin on the ground.Here’s what we know for sure:

n HOW THICK/HEAVY IS IT?The regular version is actually thinner thanthe latest iPad, at just 9.3mm, comparedto 9.4mm. It is slightly heavier at 676g,compared to the iPad’s 662g. The SurfacePro is an altogether bulkier creature, at13.5mm thick and 903g. Holdingsomething that heavy in your hands for along time is going to be an arm-ache.

n THE KICK-STANDThe in-built rear stand is Microsoft’ssolution for watching movies. WhileApple would never allow something tospoil its clean lines and curves, it’s arather nifty solution to holding the devicein your arms for hours on end. It’s furtherevidence that Microsoft sees the tablet as

the heir to the laptop throne.

n WHAT’S INSIDE?There are two versions of the Surface –the regular one, running RT (the mobileversion of Windows 8), which featuresARM chips, and the Surface Pro, whichruns the full version of the OS. Mostconsumers will probably opt for thelighter, slimmer RT version, whilebusinesses may favour the Pro.

n THE COVER/KEYBOARDOne of the most innovativedevelopments is the brightly coveredcover-cum-keyboard. It’s a great solutionto the inescapable fact that typing longemails on a tablet isn’t very much fun. Ifit is as good as it looks, it could bringtablets closer to replacing laptops for

most casual users.

THE TABLET RIVALS WHAT IS THE COMPETITION LIKE?

7/31/2019 cityam 2012-06-21







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7/31/2019 cityam 2012-06-21


I T MIGHThave been BenedictCumberbatch sipping brandy ashe sauntered down the catwalk.Or a triumphant Richard James

celebrating his debut catwalk show.Maybe it was the sight of Jon Hammposing with a cocktail at the MrPorter party as Alexa Chung rockedthe decks behind him. There areplenty of contenders for the mostmemorable moment from last weekend’s inaugural men’s fashion week –what is beyond doubt is thatLondon Collections: Men showedexactly why British menswear is stillat the forefront of the fashion world.

Hackett set the scene early on witha Gatsby-inspired collection,showcasing the best of classic chic.Cream suits with peaked lapels were

THURSDAY 21 JUNE 201226 LIFE&STYLE FASHION

BENEDICTCUMBERBATCHThe Sherlock starmay haveclaimed to be“terrified” by thecatwalk but hestole the show atthe Spencer Hartevent, wearing ablack dressinggown and smok-ing a fat Cubancigar.

ALEXA CHUNGThe model-come-presenter wasseemingly every-where at LondonCollections: Men,turning up atshows, posing forsnappers andspinning thedecks for thegathered celebri-ties at the MrPorter party.

JON HAMMThe Mad Men star ispure A-list and it’s tes-tament to the draw ofLondon Collections:Men that he clearedspace in his scheduleto jet to the UK tomake an appearance.He also proved that itisn’t only his famouscharacter Don Draperwho has an eye for anelegant suit.

HOLD ME CLOSER TINIE TEMPAHElton John donned a purple suit as he turned up toshow support for the Richard James collection, sit-

ting next to London-based rapper Tinie Tempah forthe exclusive show.

3

1. Spencer Hart placed a focus onmismatched trouser and jackets >>2. Oliver Spencer showed off thetrend for short-cropped trousers >>3. Richard James, on his catwalkdebut, was bang on trend withsome classically-inspired casualsuits >> 4. Pringle puts a fresh spinon classic knitwear >> 5. Lee Paton,an up-and-coming designer, mixedhigh fashion with wearable style >>6. Hackettimpressed with boldchecks... and some bowler hats

There is hope for Cool Britannia yet

joined on the catwalk by vintage grey checks and seersucker blazersreminiscent of the 1920s man abouttown. The show was wrapped up with a troupe of models wearing bowler caps and carrying black umbrellas – a reminder that going to work doesn’t mean you shouldn’tlook sharp. Knitwear was anothermainstay of the Hackett collection, with brown patterns worn underpaler suits. For the moreadventurous, print trouserscontinued their crossover from the women’s catwalks, with paisley designs making an appearance.

The classic 20s theme ran throughmany of the 60 shows, which wereheld over three days. Savile Row stalwart Richard James – whose

debut show was attended by the likesof Elton John and rapper Tinie Tempah – held one of the last showsof the weekend in the opulentsurroundings of The Gallery onConduit Street. The chandeliers,though, were outshone by theglittering loafers paired with thespring/summer 2013 range of linensuits, coming in dandyish shades of baby blue and pink. Grey check waspresent once again, with shock-blue velvet jackets also prominent.

For the sartorially forward-thinking, James showed off a rangeof short suits – hopefully next year we’ll get some sun to wear them in.

Ultra-sharp menswear tailorSpencer Hart stuck to its own brandof classic with a range of suits

celebrating youth culture and theenduring appeal of 60s Hollywood. The range – preceded by a group of modern dancers – was notable foran emphasis on mismatchedtrousers and blazers. Oversizedpockets abounded and trousers thatfinish at the ankle, paired withloafers, were mainstays. The show was rounded off by Cumberbatch’scameo, with the Sherlock Holmesstar being escorted down the aisle by a towering model as he neckedhis glass of brandy.

There were a host of more casual brands on display, with Tinie Tempahshowing his support for ChristopherRaeburn, a designer he has a long-standing admiration for. TheRaeburn show started with a rather

baffling video that seemed to likenthe brand’s finely crafted toggles andzips to the plumage of an owl, butpicked up with a tour de force show of his trademark rugged outdoors wear.

The weekend stayed in full swinglong after the shows had packed up, with celebrity-packed after partieslasting long into the night. MrPorter’s Friday night bash was a veritable who’s who of the fashion world, with Alexa Chung DJing to thelikes of David Gandy and Mad Menstar Jon Hamm.

British Fashion Council chief executive Caroline Rush says she’salready working on next year’s event.On the strength of this, a year will bean awfully long time to wait.

The who’s who of the fashion world flooded to London Collections. Steve Dinneen reports

CELEBRITY SKIN WHO MADE WAVES AT THE SHOWS?

1 2 3 4 5

6

7/31/2019 cityam 2012-06-21


TV & GAMES 27cityam.com

T E R

R E S T R I A L BBC1

SKY SPORTS 16pm Live T20 Cricket 9.30pm

Ashes Memories 10pm Football’s

Greatest 10.30pm You’re on Sky

Sports! 11.30pm Ringside

12.30am Ashes Memories 1am

T20 Cricket 3am Ringside

4am-6am T20 Cricket

SKY SPORTS 27pm Live Winning Post 9pm

Ringside 10pm Time of Our Lives

11pm WWE 1am WWE 2am NRL

Fulltime 2.30am Super League’sSupermen 3.30am-4am Premier

League World

SKY SPORTS 36.30pm Super League’s

Supermen 7.30pm Golf 8pm Live

PGA Tour Golf 11pm European

Tour Golf 1am Golf

1.30am-4.30amPGA Tour Golf

BRITISH EUROSPORT7pm UEFA Euro 2012 Show

7.30pm Olympic Dream

7.45pm Jez 8pm MotoGP 9pm

British Superbikes 10pm MotoGP

10.30pm Euro 2012

12.30am-12.45am The Box

ESPN5.45pm Major League Soccer

7.30pm FIM Super Enduro World

Championship 8.30pm 30 for 30

11.30pm Press Pass 2012 12am

UFC 147 Countdown Show 1am

NBA Action 1.30am NBA

Countdown 2am Live NBA

Basketball 5am-6am 30 for 30

SKY LIVING7pm Criminal Minds 8pm Four

Weddings 9pm Battle of the

Brides: A Caribbean culture

enthusiast and a biker clash.

10pm The Biggest Loser USA

11pm Bones 12am Criminal Minds

1am Maury 1.50am America’s

Next Top Model 2.40am Medium

3.30am Bones 4.20am Nothing

to Declare 5.10am-6am Jerry

Springer

BBC THREE7pm Top Gear 8pm Don’t Tell the

Bride 9pm Russell Howard’s Good

News 9.30pm Live at the Electric

10pm EastEnders 10.30pm Dead

Boss 11pm EastEnders 11.30pm

Family Guy 12.15am Russell

Howard’s Good News 12.45am

Live at the Electric 1.15am Dead

Boss 1.45am Cherry Healey: How

to Get a Life 2.40am Don’t Tell

the Bride 3.40am Snog, Marry,

Avoid? 4.10am-5.05am Cherry

Healey: How to Get a Life

E47pm Hollyoaks 7.30pm How I Met

Your Mother 8pm The Big Bang

Theory 8.30pm How I Met Your

Mother 9pm 2 Broke Girls

9.30pm Don’t Trust the B**** in

Apartment 23 10pm Rules of

Engagement 11pm Alan Carr:

Chatty Man 12.05am The Big

Bang Theory 1.05am Scrubs

1.35am How I Met Your Mother

2am Rules of Engagement

2.20am The War at Home

2.45am Desperate Housewives

3.30am 90210 4.15am-6am

Greek

HISTORY7pm Storage Wars 7.30pm Pawn

Stars 8pm Ice Road Truckers

9pm Ax Men 10pm Storage Wars

11.30pm Pawn Stars 12am

American Pickers 1am Storage

Wars 2am Ice Road Truckers 4am

Lock ‘n’ Load 5am Pawn Stars

5.30am-6am AmericanRestoration

DISCOVERY7pm Bear Grylls 8pm Gold Rush

9pm World’s Toughest Drive

10pm Auction Hunters 11pm

Deadliest Catch 12am World’s

Toughest Drive 1am Auction

Hunters 2am Auction Kings 3am

American Chopper: Senior Versus

Junior 3.50am Ice Pilots 4.40am

Bear Grylls 5.30am-6am

Destroyed in Seconds

DISCOVERY HOME &

HEALTH7pm Dress of Your Dreams 8pm I

Didn’t Know I Was Pregnant 9pm

Untold Stories of the ER 10pm

The Real Sleeping Beauty 11pm

Your Kid Ate What? 12am Untold

Stories of the ER 1am The Real

Sleeping Beauty 2am Your Kid

Ate What? 3am Dress of Your

Dreams 4am A Baby Story

5am-6am Birth Stories

SKY17pm The Simpsons 8pm

Futurama 8.30pm The Simpsons

9pm An Idiot Abroad 10pm A

League of Their Own: Unseen

11pm Road Wars 12am Brit Cops:

Law & Disorder 1am Road Wars

1.55am Armed and Dangerous:

Ultimate Forces 2.50am So You

Think You’re Safe? 3.45am

Medical Emergency 4.35am Real

Filth Fighters 5.05am-6am Don’t

Forget the Lyrics

BBC2 ITV1 CHANNEL4 CHANNEL5

S A T E L L I T E &

C A B L E

Due to Euro 2012 coverage,the following schedule is

subject to change.6pm BBC News 6.30pm BBCLondon News 7pm The One Show:

Best of Britain

7.30pm EastEnders: BBC News

8.30pm Call the Midwife

9.30pm CHOICE Would I Lie

to You?10pm BBC News 10.25pm RegionalNews 10.35pm Question Time11.35pm Match of the Day 12.15am

Holiday Weatherview 12.20amCountryfile 1.20am SntiquesRoadshow 2.20am Crime and

Punishment 3.05am Fake Britain3.50am Great British RailwayJourneys 4.20am-6am BBC News

6pm Eggheads: Quiz show,

hosted by Jeremy Vine.

6.30pm Great British Railway

Journeys

7pm The Hairy Bikers: Mums

Know Best.

8pm Ocean Giants

9pm The Men Who Made Us

Fat: The history of super-sizing,value meals and king-size

snacks.

10pm CHOICE Mock the Week

10.30pm Newsnight: Weather

11.20pm Hitler’s Children

12.20am The Culture Show

12.50am BBC News4am-6am BBC Learning Zone

Due to Euro 2012 coverage,

the following schedule is

subject to change.

6pm London Tonight

6.25pm ITV News

6.50pm Emmerdale

7.20pm Euro 2012 Live

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10.30pm London News10.35pm Piers Morgan’s Life

Stories: Bruce Forsyth

11.35pm Caroline Quentin:

A Passage Through India

12.30am Jackpot247; ITV News

2.35am ITV Nightscreen4.30am-5.30am The Jeremy Kyle

Show

6pm The Simpsons

6.30pm Hollyoaks

7pm Channel 4 News

7.55pm 4thought.tv

8pm Country House Rescue

9pm The House the 50s Built

10pm 24 Hours in A&E

11.05pm The Secret Millionaire

12.05am Random Acts12.10am America’s Serial

Killer: True Stories1.25am All in the Best PossibleTaste with Grayson Perry 2.20am

Let Our Dad Die: Channel 4Dispatches 2.45am Time TeamUSA 3.40am Ancient Egyptians

4.35am Deal or No Deal5.30am-6.15am Countdown

6pm Home and Away

6.30pm 5 News at 6.30

7pm Big Body Squad: 5 News

Update

8pm CHOICE Marco Pierre

White’s Kitchen Wars: 5 News

at 9

9pm The Boy They Call Fish:

Extraordinary People10pm Big Brother

11pm Big Brother’s Bit on the

Side

12am SuperCasino3.55am Great Artists 4.20am

Michaela’s Wild Challenge 4.45am

Michaela’s Wild Challenge

5.10am-6am Wildlife SOS

Fill the grid so that each

block adds up to the total

in the box above or to the

left of it.

You can only use the

digits 1-9 and you must not

use the same digit twice in

a block. The same digit may

occur more than once in a

row or column, but it must

be in a separate block.

COFFEE BREAK

Using only the letters in the Wordwheel, you have

ten minutes to find as many words as possible,

none of which may be plurals, foreign words or

proper nouns. Each word must be of three letters

or more, all must contain the central letter and

letters can only be used once in every word. There

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

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

each row, each column and each 3x3 block contains all the

numbers from 1 to 9 to solve this tricky Sudoku puzzle.

Copyright Puzzle Press Ltd, www.puzzlepress.co.uk

KAKURO

QUICK CROSSWORD

LAST ISSUE’SSOLUTIONS

KAKURO

WORDWHEEL

SUDOKU

SUDOKU

QUICK CROSSWORD

WORDWHEEL

15 10

45

4 24

17 29

19 7

13 27

24 16

39 5

9 11

45

26 29

14

23

9

42

14

4

28

16

21

11

20

30

28

16

17

29

16

10

44

3

7

12

ACROSS

1 Squeeze or press

together (9)8 Sound (5)

9 Genetic copy (5)

10 Historical period (3)

11 Inflexible (5)

13 Separate part of

a whole (5)

15 Foot traveller (5)

18 Attack on all

sides (5)

20 Rapid bustling

commotion (3)

21 Mark ___, US

swimmer who

won seven gold

medals in the 1972

Olympic Games (5)

22 Patty Bouvier’s

twin sister in TV’s

The Simpsons (5)

23 Spiritual leader of the

Christian Church (9)

DOWN

2 Due (5)

3 Rate of travel (5)4 Provide a brief

summary (5)

5 Strangle (5)

6 Political theory

favouring the abolition

of governments (9)

7 Heavenly (9)

12 Frozen water (3)

14 US musician and

record producer,

former husband of

Tina Turner (3)

16 Shrimp-like planktonic

crustaceans (5)

17 Edge tool used

in shaving (5)

18 Domineering (5)

19 Spicy sauce

to accompany

Mexican food (5)

E

U

S

R

AT

I

B

L

S I N U S C A D E T

C E L H R W

A C T U A T E A C E

L V S C A

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S C A R E C R A B S

A R M H T

L E T C L A M B E R

E E E S A U

S C R E E E I G H T

7 5 8 9 8 9 6 7

5 2 6 8 3 9 7 4 1

1 4 6 2 5 8 3

5 3 5 1 4 1 2

9 4 6 7 5 8 2 9

1 2 3 9

4 1 3 2 4 7 6 1

9 6 8 3 1 9 8

5 3 8 6 9 4 7

7 3 2 9 1 5 6 8 4

3 2 1 7 2 3 4 1

The nine-letter word was

COMPRISED

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BBC1 BBC2 ITV1 CHANNEL4 CHANNEL5


WOULDI LIETO YOU?BBC1, 9.30PM

Withcomedian JackWhitehall,

newsreader EmilyMaitlis,actor JimCarterand writer, producerand

director Armando Iannucci.

MOCK THEWEEK

BBC2,10PM

Dara O Briainis joinedbyguests Carl

Donnelly, Jo Caulfieldand Milton

Jones for another roundof the

satirical newsquiz.

MARCOPIERREWHITE’S

KITCHEN WARSCHANNEL5, 8PMThefirst semi-final, throwsdownthe culinary gauntletto threecouples fromExmouth, Goring-on-Thames andLiverpool.

TVPICK

7/31/2019 cityam 2012-06-21


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AIDAN O’Brien hasdominated the Gold Cup(3.45pm) for the last sixseasons, with five wins

and an agonising second, andFAME AND GLORY is strongly fancied to repeat his heroics of twelve months ago.

He comfortably saw off Opinion Poll that day andproved that this marathon two-and-a-half mile trip holds nofears. In fact, he saw off that very same rival for a second time overa slightly shorter trip here in theLong Distance Cup last Octoberand I can see no reason why he won’t finish in front of theGodolphin runner again.

Fame And Glory made a solidreappearance in a Listed event atNavan last month where he car-ried a Group One winner’spenalty and showed all his best battling qualities to beat thegame Unaccompanied by a neck. That victory, over a now probably inadequate one mile and sixfurlongs, would have blown allthe cobwebs away and it’s impor-tant to remember that my selec-tion has an extraordinary recordin the month of June. In four

starts in the sixth month of the year over the last three seasons,only Sea The Stars has beatenhim in the 2009 Investec Derby.

He has the natural blend of stamina and speed required to win this unique contest and four wins at the highest level at amile and a half and shorter aretestimony of the latter. Admittedly, he is not always themost consistent of performers, but he has tended to be at hispeak on the days that matter. Hecan be backed at evens withCoral and that seems a fair priceabout one so talented with nostamina doubts.

Frankie Dettori has switchedfrom Opinion Poll to Colour Vision at the last minute and theformer Mark Johnston runnercaught the eye with a really

impressive win in the SagaroStakes at Kempton. The four-

year-old showed a blistering turnof foot to wear down MelbourneCup runner-up Red Cadeaux andis clearly progressing. He fin-ished third to Fame And Glory here in October and connectionsclearly expect him to get closer

this afternoon.However, he’s not guaranteedto stay this marathon trip and a bigger danger may come from John Oxx’s Saddler’s Risk whoreadily saw off Opinion Poll inlast season’s Yorkshire Cup. He’llappreciate the better ground and will strip much fitter for his reap-pearance. Oxx doesn’t bringhorses over to Ascot for the day out and I expect the four-year-oldto chase Fame And Glory home.

I’ve been so used to ploughingmy way through monster fieldsthis week that I have to admit I was a little surprised that only 12 two-year-old colts stood theirground in today’s opener. TheNorfolk Stakes (2.30pm) has tra-ditionally been a happy huntingground for punters with sevenof the last nine runnings going

to colts priced at 6/1 or shorter.Now, my eyes are immediately

drawn to the Mick Channon-trained CAY VERDE whostepped up from a pleasingdebut behind Englishman atNewbury to beat Tuesday’s Windsor Castle Stakes winnerHototo over this course and dis-

tance by two and a half lengthson his second start. He then went on to win a decent Listedevent at the Curragh last time beating Dylanbaru, who fin-ished third behind Hototo on Tuesday, relatively comfortably.

He looks really professionalfor one so young and has alsodemonstrated an ability to han-dle all sorts of ground. The draw won’t play a part as there areonly the 12 runners and he looksthe one to beat.

Richard Hannon’s Annunciation is sure to put up a bold show, but he was well andtruly put in his place by CliveCox’s Reckless Abandon atDoncaster and it is hard to seehim reversing that form.

Fame And Glory bids for back-to-back victories in the Ascot Gold Cup


THEPUNTER RACING TRADERBILL ESDAILE PREVIEWS THE ASCOT GOLD CUP AND NORFOLK STAKES

n Pointers…

CAY VERDE 2.30pm Royal AscotFAME AND GLORY 3.45pm Royal Ascot

Fame And Glory to provehe is the next staying star

It was a really hard choice getting off Opinion Poll inthis afternoon’s Gold Cup ashe is one of my favouritehorses. He looked as good asever at Sandown last time inthe Henry II Stakes having

won in Dubai before that.However, he loves soft

ground and even thoughthere is rain forecast, I'mnot sure there is enougharound to make the going

any worse than good.Colour Vision will love theconditions and I suppose Iultimately opted for him ashe is the fresher of the pairand definitely has moreimprovement in him. He

was seriously impressive atKempton last time and isonly a four-year-old. He beatRed Cadeaux that day whohas since gone on to win the

Yorkshire Cup, so the formstacks up well.

Obviously, the favouriteFame And Glory will beincredibly hard to beat if the same horse that wonlast year's race turns up.

I've got a couple of ridesfor Jeremy Noseda and onefor Ger Lyons today, but the

big one is the Gold Cup and

let’s hope we’ll becelebrating.

FRANKIE’STHOUGHTS

FRANKIE DETTORI

7/31/2019 cityam 2012-06-21


29

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ALL OF TODAY’SASCOT RACES

THIS year’s Investec Oaksturned out to be a messy race and the unluckiestfilly in the field was

undoubtedly John Gosden’s THEFUGUE. William Buick’s mount was almost brought down on the back straight, but finished withsuch a rattle that she wouldsurely have won had she not met with that interference.

I normally treat Epsom form with extreme caution at Royal Ascot, but there is a three-week gap this year, compared with thenormal fortnight, and The Fugueshould take all the beating inthis afternoon’s RibblesdaleStakes (3.05pm). She has to turnaround the Oaks form withShirocco Star and I fully expecther to do just that.

Hughie Morrison’s filly hadthe run of the race at Epsom andstill couldn’t get past the front-running Was. She is obviously very talented, but on both occa-sions this season Darryll Holland

has tried to play his cards very late and she hasn’t quite come up with the goods.

The Fugue has a better draw install four than her Epsom con-queror and it was hard not to beimpressed with her when easily winning the Musidora Stakes at York last month. A return to amore conventional track will suitand I expect Buick to have her ina handy position throughout,ready to pounce turning into thehome straight.

Vow was one place behind theselection in the Oaks and sheshould also prefer this track, while the Queen’s Momentary beat Shirocco Star at Newbury and has had a nice break sincethen. Dermot Weld’s PrincessHighway has won both her startsthis season and is respected, but The Fugue has to be the bet at 2/1 with Coral.

The Britannia Handicap(4.25pm) is always one of themost competitive races during

Royal week and three of the lastfive winners were priced 20/1 orlonger. It’s often a stepping stoneto bigger and better things andlast year’s winner Sagramorcame out and finished second toCarlton House in the Group Three Brigadier Gerard atSandown a few weeks ago.

Richard Hannon’s Cai Shenproduced a brilliant performanceto finishsecond off top weight 12months ago and I fancy the stable to go one better this time with DEMOCRETES, who looksreally well-handicapped off amark of 88. The CadeauxGeneraux colt has been runningprimarily over six furlongs, buthis breeding suggests a step up toa mile is exactly what is required.

I was really impressed with hisrun behind Mince at Newmarketlast time where he was stayingon powerfully up the hill andRichard Hughes takes themount. It’s hard to know if hisdraw in stall 16 is a positive, but

the opening two days have sug-gested that the middle of thetrack is the place to be and helooks solid each-way value at 16/1 with Coral.

Another horse I’ve been fol-lowing this season is RogerCharlton’s TRADER JACK and heshould also be backed from rightnext door in stall 15. He won hismaiden on soft ground at FfosLas in November, but was clearly in need of the run on his season-al reappearance at Sandown when he finished last of six.

He proved that form all wrongat Goodwood next time whenfinishing second to Grandeur, who has a big chance in the Tercentenary Stakes later on thisafternoon. He travelled like the winner that day, but didn’t really see out the 10 furlong trip, so thedrop back to a mile should suitperfectly. Charlton won this racein 2008 with Fifteen Love and Trader Jack should go close at14/1 with Star Sports.

I HAVE already talked up thechances of Trader Jack in theBritannia, so I just can’t ignorethe aforementioned

GRANDEUR in the following Tercentenary Stakes (5.00pm). Jeremy Noseda’s Verglasgelding was very impressive atGoodwood and then didn’treally seem to handle thecamber at Epsom on Derby day.He still managed to finishsecond and was only beaten aneck by Wrotham Heath, whoreopposes today 6lb worse off.

This is a very tight Group Three and there are a numberof others with the potential toimprove. Starboard produced agutsy performance to win atDoncaster last time and he stillhas an entry in the Coral-Eclipse. He was firmly put inhis place by Fort Bastion atNewmarket the time beforelast, though, and he needs tostep up again.

Tales Of Grimm andStipulate were behind Cogito

at Sandown last month andcould progress from that, while Crius has potential butmust carry a 4lb penalty. The

German challenger Energizeris a fascinating entry and is thetop rated runner in the fieldfollowing his fourth place inthe German 2,000 Guineas behind Caspar Netscher.However, a bigger dangermay be the unexposed William Haggas runnerMukhadram who won well at HQ last timeon only his secondcareer start.

Another bigfield for today’sconcludingrace, the KingGeorge V Stakes(5.35pm),means there

is plenty of each-way value to be had in what looks atrappy affair.

OPEN WATER hasn’t won

since springing a surprise in aSandown maiden but Andrew Balding’s charge has a smartlevel of form to his name andlooks more than ready for thestep up to a mile-and-a-half. Onhis second start he was only beaten by subsequent Derby runner-up Main Sequence,

before a credible third ina Newmarkethandicap on groundthat perhaps wasn’t ideal.

The son of Orpen then ran acracker on Derby

day, again givingthe impression a

step-up in trip and areturn to a lessidiosyncratic course

would see him go

well. His draw isn’tideal, but at 16/1 with

Star Sports, he looks worthchancing each-way.

Mark Johnston is always ahandler the bookies fear at the

Royal meeting and hisFENNELL BAY has a decentchance of giving the Scottishtrainer a fourth win in the racein the last decade. Typically fora Johnston horse, Fennel Bay isa tough sort and with theexcellent Joe Fanning on boardhe could just outbattle themup the home straight.

Although quite exposed, hestill appeals at 12/1 on the back of a good Sandown win and off a low weight. His ability tohandle cut in the ground isalso a positive if the rainarrives.

The Fugue, owned by Andrew Lloyd Webber and trained by John Gosden, can win today’s Ribblesdale Stakes to make up for her disappointment at Epsom

n Pointers…THE FUGUE 3.05pm Royal AscotDEMOCRETES e/w 4.25pm Royal AscotTRADER JACK e/w 4.25pm Royal AscotGRANDEUR e/w 5.00pm Royal Ascot

OPEN WATER e/w 5.35pm Royal AscotFENNELL BAY e/w 5.35 pm Royal A scot

Progressive Grandeur has the class to step up to next level

Trust TheFugue tobounce backfrom unlucky

Oaks defeat

Jeremy Noseda has a

decent chance withGrandeur

7/31/2019 cityam 2012-06-21


ENGLAND midfielder ScottParker has warned team-matesthey will have to stop his old foeMario Balotelli if they are toovercome Italy on Sunday andreach the semi-finals of theEuropean Championship.

Tottenham’s Parker andBalotelli, of Manchester City,clashed last season in thePremier League when the Italianearned a four-game ban for

stamping on Parker’s head.Balotelli has scored just once

so far in the tournament, a latestrike in a 2-0 win over Republicof Ireland, as the Italiansfinished runner-up to all-conquering Spain in Group C.

But Parker still fears theflamboyant 21-year-old, who hasplayed an important if episodicrole in City’s ascent to the apexof English football, with 27 goalsin two seasons since joining fromInter Milan.

“He’s been in the PremierLeague for a year now [sic] and we’ve all seen how brilliant hecan be and what he can bring.He’s a very good player andsomeone we are going to have tokeep our eye on,” said Parker.

“We now look forward to thequarter-final against Italy. We getan extra day, which is key for us, we’ll go and prepare for thatgame like we’ve prepared for allthe others, and hopefully wecan get the result.”

Skipper Steven Gerrard,meanwhile, has urgedEngland not to allow the euphoria of winning theirgroup tounderminepreparationsfor thequarter-finalagainst CesarePrandelli’smen.

“It was fantastic to top thegroup and we need to enjoy itnow but then dust ourselvesdown because it will be a very tough game against the Italians,”said the Liverpool captain.

“They are a very tough teamto beat. They are good

defensively, have got afantastic keeper in

[Gianluigi] Buffon,and they’ve also gotmatchwinners inthe ranks.

“They aresimilar to us and it

will be a very closegame. Let’s notunderestimate them onelittle bit.”

Parker warns England overItaly danger man Balotelli

CHELSEA favourite Didier Drogbaadmits the seeds for his transfer toChinese club Shanghai Shenhua were sown a year ago during theLondon club’s pre-season tourof Asia.

Drogba, 34, yesterday confirmedhis departure after eight successfulseasons with Chelsea and will joinformer team-mate Nicolas Anelka atthe club he believes represents thegreatest personal challenge.

“I considered all the offers I havereceived in the past few weeks, butfeel Shanghai Shenhua is the right

move for me at this time,” saidDrogba.

Drogba charmed by Shanghaimove a year before transfer“I’m looking forward to a new

challenge and a new culture. WhenChelsea went to China last year, wehad a great time and I met someamazing fans.”

One of Drogba’s first appearances,incidentally, could be againstManchester United, against whomthe striker made his Chelsea debutin August 2004. United travel toChina to play Shenhua on 25 July and defender Rio Ferdinand hasalready taken to Twitter to expresshis excitement at the prospect of again competing with his old rival.

“Looking forward to playingDidier Drogba when MUFC [United]

play Shanghai Shenhua in Shanghaion 25th July,” Ferdinand tweeted.

WEST Ham will sign midfielderMohamed Diame on a free transferfrom Wigan when his contractexpires on 1 July.

Diame, 25, has agreed a three-yeardeal with the Hammers and becomes their third signing aftergoalkeepers Jussi Jaaskelainen andStephen Henderson were recruitedto offset the departure of England’sRobert Green.

“His potential is really good andhe is ready to go and compete in thefirst team straight away because he’shad three years in the Premier

League already,” said West Hammanager Sam Allardyce.

West Ham sealDiame signingBY DECLAN WARRINGTON


cityam.com/sport

BY FRANK DALLERES

BY SPORTS DESK STAFF

@cityam_sport

F

O L L O W O

U R T E A M

@ c i t y a m_

s p o r t

ENGLANDREPORT

TREVOR STEVEN

SPORT

HOW Chelsea won the ChampionsLeague, I’ll never know. The samemight be said for England toppingtheir Euro 2012 group by three points.

The two achievements were based onsimilar ingredients, offering hope that RoyHodgson’s men could progress further, butthere are some glaring concerns at thetournament’s halfway stage.

England’s biggest positive has been theirresults. The draw with France set the toneand bred a confidence that helped themfight back to beat Sweden and Ukraine –

wins they scarcely deserved.Hodgson has achieved a great deal in a

short time. Tactically he has been smart,choosing a reliable formation and selectinghis team wisely. Using Andy Carroll againstSweden, for instance, showed he had donehis homework.

Communication-wise he has also suc-ceeded, with the players seeming to under-stand their roles well and, crucially, playingwith a little less anxiety and fear than theydid under Fabio Capello.

On the other hand, results are about theonly to thing to write home about becausethe level of play has been poor.

England’s inability to retain possessionmay be a familiar complaint but it is a

major problem. Misplaced passes and a fail-ure to work harder when they have the ballleaves them chasing more than they wouldneed to and blunts their attacking threat.You can only play when you have the ball,after all.

It’s naive to think England can becomemaster technicians overnight so Hodgsonwas right to prioritise solidity and hope fora platform from which to build. There ismuch room for improvement, but they’vedone well.

Trevor Steven is a former England footballer who played in both the 1986 and 1990 World Cups and the1988 European Championships. He now works as a media commentator and talent scout.

MARK

POSITIVES

NEGATIVES

VERDICT

B

England and Tottenham midfielder Scott Parker (centre) believes Italy striker Mario Balotelli (below) to be a threat

ITALY forward AlessandroDiamanti believes his team-mates talent to be superior toEngland’s so they shouldtherefore be confident of

victory in Sunday’s EuropeanChampionship quarter-final.

Diamanti has a reasonableknowledge of English football

because of a year spent with West Ham from 2009 and is

adamant that they have noreason to be concernedabout England’s ability.

“English football as a business with the stadiumsand fans’ behaviour is about30 years ahead of us,” hesaid. “However, on the pitchItaly are stronger thanEngland and our football isof a higher quality. Werespect England, but wedon’t fear them.”

BY DECLAN WARRINGTON

We’ve no fear of inferiorThree Lions, says Diamanti

7/31/2019 cityam 2012-06-21


31

G E T T Y

IN BRIEFFerrari drop big Vettel hintn FORMULA ONE: Ferrari hinted at apossible future move for Red Bull’sSebastian Vettel, with team principalStefano Domenicali revealing hebelieves the German would work wellalongside current driver FernandoAlonso. “I think they are bothintelligent guys and they could easilyco-exist together,” said Domenicali.“But I wouldn’t advise him to as he’sstill too young. Usually a driver endshis career at Ferrari, therefore it couldhappen one day.”

Springboks make three changesn RUGBY UNION: Flanker JacquesPotgieter will make his debut forSouth Africa in Saturday’s final Testagainst England in Port Elizabeth.Potgieter, who replaces WillemAlbertz, is one of three changes to theside. Full-back Gio Aplon replaces PatLambie and inside centre WynandOlivier comes in for Frans Steyn.“Injuries have forced us to make anumber of changes, which providesan opportunity for players like Gio,Wynand and Jacques to put up their

hands,” said Springboks coachHeyneke Meyer.

Thomas to miss Londonn OLYMPICS: European triple jumpsilver medalist Nathan Thomas hasruled himself out of London 2012 as aconsequence of a back injury sufferedlast month. “I have been forced toaccept the painful reality that I amunable to compete at this weekend’sAviva 2012 Trials and accept that I willbe unlikely to compete at the OlympicGames later this year,” he said.

After last night’s match, goal-line technologyis no longer an alternative but a necessity

‘

cityam.comTHURSDAY 21 JUNE 2012

Andy Murray’s back haslately proved problematic

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Results

TRAINER Aidan O’Brien declared So You Think to be back on top formafter the odds-on favourite deniedthe Queen a jubilee winner on day two of Royal Ascot.

The Australian colt, ridden by O’Brien’s 19-year-old son Joseph, heldoff the monarch’s Carlton House inthe 150th Prince of Wales’s Stakes, with Farrh third.

The trainer, who enjoyed furthersuccess with Ishvana in the Jersey Stakes, said: “We expected a big runtoday, we felt like we had him in aplace that he was never in before with us, which is incredible.”

Tom Tate’s Prince of Johanneclaimed his second major handicapin the Royal Hunt Cup, while TomDascombe’s Ceiling Kitty was a 20-1 winner in the Queen Mary Stakes.

So You Think

back to its best

after Ascot winBY FRANK DALLERES

Trainer Aidan O’Brien believes So You Think (left) to once again be at his best after victory in the 150th Prince of Wales’s Stakes

Henman: Murray has to be fitif he wants to win Wimbledon

FORMER British No1 Tim Henman believes Andy Murray’s only barrier to winning at Wimbledonis purely physical and that he willhave to be in peak condition next week to succeed.

Murray was yesterday seededfourth for the All England Clubgrand slam but doubts remainover his fitness after a back injury undermined him at theFrench Open before hisshock early exit fromQueen’s last week andHenman, a Wimbledoncrowd favourite in hisprime, believes themen’s scene ispresently sostrong that the world No4cannotpossibly hope to

succeed withouttruly being athis best.

“It’s not easy if you’ve been in afew finals and you’ve lost them,”Henman, who made the semi-finals at SW19 on four occasions,told City A.M. “But Murray’s biggest challenge is far more aphysical issue than a mental issue. The physical issue of having to beat probably two of [Roger]Federer, [Rafael] Nadal or [Novak]

Djokovic insuccessivematches – that isgoing to take an

incredibleperformance.Especially when you’re thinkingin a grand slam,and it’s the best

of five sets. It’sprobably the

biggest challenge intennis now.

“He obviously wasn’t100 per cent healthy [at

the French Open] and I’d

say his biggest priority now is

to make sure his back is 100 percent for Wimbledon.”

Henman’s own route to grandslam success was ultimately blocked by several greats, initially during the era of Pete Samprasand Andre Agassi and then that of Federer, but the Englishman isadamant that, with Wimbledonstarting on Monday, overcomingMurray’s rivals – Djokovic, Nadaland Federer, respectively the world’s top three – represents aneven greater challenge.

“There’s no doubt that this isprobably the toughest era in themen’s game ever,” he said at anHSBC coaching session for youngsters in Islington. “The topthree are going to go down asthree of the greatest players of alltime, and Murray’s up againstthem. That challenge, if you’re 100per cent fit and healthy, is toughenough, but if you’re not then Ithink it’s virtually impossible.Fingers crossed he’s going to be

healthy going into Wimbledon.”Tim Henman is an ambassador for HSBC, Official Banking Partner to theWimbledon Championships, www.wimbledon.com/hsbc

BY DECLAN WARRINGTON

EXCLUSIVE

Fifa President Sepp Blatter on Ukraine’s ghost goal against England

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