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Bob Diamond insisted that he did not feel personally culpable for what he said were the actions of 14 traders who manipulated the Libor rate

BOB Diamond yesterday told MPsthat he feared Barclays could havebeen nationalised if the bank did notreduce its Libor interest rate submis-sions in October 2008.At that time Barclays was reporting

funding costs at the top end of thescale, even though other banks werein much worse condition.

They might say to themselves, Mygoodness, they cant fund. We need tonationalise them., Diamond told theTreasury select committee.

We were desperate. We had 6.7bnof equity being raised. If rumours goton the market that we couldnt fundthen maybe we wouldnt have beenable to complete the equity raising.

Meanwhile, in a sign of the strainedrelations between Barclays and theFinancial Services Authority (FSA),committee chairman Andrew Tyrierevealed that the regulator hadexpressed concerns to the boardabout Diamonds appointment aschief executive in 2010. Then inFebruary this year just four months

before the bank was fined 290m forits role in the Libor scandal the FSAsaid the bank needed a change of cul-ture, according to Tyrie.

They felt there were some culturalissues, Diamond admitted, but

insisted these were related to mana-gerial behaviour lower in the organi-sation.

Barclays former chief executive

used his appearance to attack thebanks rigging of the crucial Libor

rate but blamed rogue traders, sayinghe did not feel personally culpable.He was also reluctant to expand on

the details of the crucial phone call

between himself and Paul Tucker,deputy governor of the Bank of

England, made at the height of thefinancial crisis.Following this call Diamonds right-

hand man, Jerry del Missier, got the

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impression that the Bank of Englandwas encouraging a reduction in theLibor rate, even though Diamondconfirmed that was not his interpre-tation of the conversation.

He could not explain how delMissier, who resigned from the bankjust hours after Diamond on Tuesday,had come to that conclusion.

But it was the bankers claim thathe only became aware of the fullextent of the Libor-fixing scandal lastmonth that produced gasps of aston-ishment in the committee room.

Labour MP John Mann came closestto breaking Diamonds resolve,telling him: Youre either complicitin whats going on, grossly negligentor grossly incompetent. The buckstops with you.

However the former Barclays manrefused to comment on Manns sug-gestion that he should waive part ofhis pay-off, saying only that it was amatter for the board to consider.

MPs were left disappointed by thelack of answers produced during themarathon session.

Committee member David Ruffley

MP told City A.M.: For an intelligentman he didnt seem to be in controlof his organisation.

DIAMOND FEAREDNATIONALISATIONCommons grilling of ex-Barclays chief also reveals the banks increasingly strained relations with the FSA

BY JAMES WATERSON

FORMER BANKIA BOARD AT CENTRE OF CRIMINAL PROBE

MURRAY INTO LAST FOUR

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[email protected]

Follow me on Twitter: @allisterheath

GETTY

Row grows as chancelloraccuses Balls of Libor roleSENIOR Labour politicians fiercelydenied any involvement in the Liborfixing scandal yesterday, afterGeorge Osborne said those aroundGordon Brown were clearlyinvolved in rate rigging, and formerBarclays boss Bob Diamond said thebank was in regular contact withministers.

Meanwhile Labour MPs said BobDiamonds failure to answer all theTreasury select committees (TSC)questions showed the need for ajudge-led inquiry into the scandal,while Tories insisted time is still ofthe essence a debate which will befully played out in today when MPsvote on the type of inquiry to hold.

Osborne yesterday said he had hissuspicions that Ed Balls knows morethan he is letting on about whyBarclays entered falsely low interestrates in its Libor submissions.

My opposite number [Ed Balls],who was the City Minister for part ofthis period and Gordon Brownsright hand man for all of it so he hasquestions to answer as well, he toldthe Spectator magazine.

But shadow Treasury ministerChris Leslie hit back, saying thechancellor was making false allega-tions with no evidence.

This is desperate stuff fromGeorge Osborne lashing out in a

BOB Diamond frustrated MPsyesterday by failing to answercritical questions and raising morequestions about the banks actions.

Treasury select committee (TSC)chairman Andrew Tyrie calledDiamonds recollectionssomewhat implausible, and saidhe hopes to speak to the Bank ofEnglands Paul Tucker veryshortly to find out more details.

Tucker has asked the TSC toquestion him as soon as possible.

Other members of the committeewere also disappointed withDiamonds answers, pointing inpart to good media trainingletting him to avoid giving details.

It was a real shame he has notdone the bank justice by repeatedlysaying he loves Barclays and that ithas a great culture when all of theevidence points to the contrary,

Andrea Leadsom MP told City A.M.On the specifics of criminality,

that he was unable to answer whyno compliance officers picked upthe manipulation even whentraders were shouting about itacross the room when officers werethere is just incredible.

David Ruffley MP added, someof his answers raise more questionsand I will be asking that formerchief executive John Varley come toanswer some of the questions thatDiamond wouldnt.

MPs urious at

slippery Bobsquestion dodge

Chancellor George Osborne said Labour MPs were clearly involved in the Libor scandal

2 LIBOR SCANDAL

BY TIM WALLACE

BY TIM WALLACE

To contact the newsdesk email [email protected]

WHAT a shame. Yesterdaysgrilling of Bob Diamond,Barclays swashbucklingformer boss, while not quite

a damp squib, did not really clarify agreat deal. There were someintriguing revelations including thatthe relationship between the FSA and

Barclays had been bad for months andthat Diamond was worried that thegovernment would nationaliseBarclays in 2008 but the clash was nogame-changer. This is a great pity. Ahuge number of unansweredquestions remain not least, why didnobody in government, the regulatorsand the Bank of England do anythingabout Libor? They clearly knew thatsomething was up. And why didDiamond really quit? Who told theboard that he had to go? What exactpowers did they use for that? As toDiamond, his performance was poor.

EDITORSLETTER

ALLISTER HEATH

Pity Osborne isnt this passionate when talking about growth

THURSDAY 5 JULY 2012

There were inconsistencies in what hesaid and it is unclear why he didntknow about the investigation in hisown bank.The government hasnt done as

badly as I feared it might on this. Foronce, it has generally resisted thetemptation to engage in extreme pop-ulism. That is the right decision: pun-ishing wrongdoing is very different towaging all out-war on the City and try-ing to smash a key sector. That wasalso Boris Johnsons point yesterday.

There should be an unprecedentedcrackdown on those who lie and cheat but that should not mean demonis-ing everybody in the City.A judge-led inquiry would drag on

for too long, cost a fortune and debili-tate too many large institutions, ren-dering them incapable of functioning

properly, hitting the supply of creditand other services and destroying jobs.There would be no guarantee that itwould come up with the rightanswers, apart from on narrowspecifics involving wrongdoing; whenit comes to broader questions of eco-nomics or policy, judges are not theones we should turn to for answers.The government is also right to pointout that this crisis took place underLabour; it is extraordinary howGordon Browns errors have been for-gotten by so many.

But the governments critique of

politics; for him, all of this is just agame. He wants to hit Ed Balls where ithurts, presumably to gain one or twopoints in the opinion polls; he doesntreally seem to care how he does this,what he sacrifices or what the side-effects could be.The reality is that the economy is

doing increasingly badly. GDPprobably shrank in the second quarter.At this rate, it could even shrink in thethird quarter. This is a disastrous turnof events. Why isnt Osborne as pas-sionate about trying to tackle this ashe is engaging in partisan politics?Perhaps somebody should call for aLeveson-style inquiry into why we arenow in a recession. Im being facetious,of course, but the chancellor nowneeds to get back to his day job.

Labours record is extremely incom-plete: partly because Osborne is contin-uing exactly the same monetarypolicy, conducted by the same person-nel, he never highlights the role ofexcessively low interest rates infuelling the crisis or the Banks failureto fulfil its role as a lender of last resort

when liquidity dried up. Another,increasingly baffling blunder, is thatthe government ought to be muchmore vocal in calling for allegedwrongdoers to be prosecuted and, ifconvicted, jailed. Traders who manipu-lated Libor for their own gain ought tofall into that category. The UK needs tobe very tough on law-breakers inevery walk of life.

It is also extraordinary how muchGeorge Osborne appears to beenjoying himself taunting Labour andtrying to work out how to catch out EdMiliband. Osborne only cares about

frenzied way that demeans the officeof the Chancellor of the Exchequer,he said.

Its now increasingly clear thatGeorge Osborne isnt interested in get-ting to the truth, only in playing partypolitics.

In parliament David Cameronaccused the opposition of trying toavoid facing up to their own actionswhen in government.

However, shadow chancellor Ed Ballsargued he was not in the Treasury inthe time period in question, while for-mer City minister Lord Myners claimed

to know nothing of any discussionsabout Libor manipulation.

Meanwhile Labour MPs said the bestway to fully investigate the Libor scan-dal and the culture of the bankingindustry was with a judge-led inquiry.

To really get into the detail, thenitty gritty, you need all day to inter-view someone which is performedbetter by a judge than in the setting ofa parliamentary committee, TSCmember John Mann told City A.M.

But the Prime Minister called for aswift and decisive investigation inparliament.

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WHAT THE OTHER PAPERS SAY THIS MORNING

THE RISE AND FALLOF BOB DIAMOND

1996Bob Diamond is appointed chie executiveo Barclays Global Markets.

1997Barclays ounds BarCap investment bankrom its Barclays de Zoete Wedd (BZW)unit. Diamond is involved rom the start.

2005Barclays traders start to manipulate theLondon Interbank Oer Rate (Libor) whileDiamond heads the British banks invest-ment banking operations.

2008Barclays reuses aid rom the British gov-ernment during the financial crisis and sellsshares to Abu Dhabi and Qatar instead.

Diamond heads up the purchase o theNorth American business o collapsed bankLehman Brothers.

2011Diamond takes over as chie executive on 1January, three months earlier than planned.He takes over rom John Varley, who is step-ping down ater six years.

2012The government orders a review into theworkings o Libor ater Barclays is oundguilty o manipulating it and fined 290m.Bob Diamond resigns on 3 July. Chie oper-ating ofcer Jerry del Missier also resigns.Diamond appears beore the Treasury selectcommittee on 4 July.

VW to buy rest of Porsche for4.46bnVolkswagen has agreed to buy theremaining half of Porsches carmakingoperations that it does not already ownfor 4.46bn. The two car groupsyesterday finalised plans to speed up thecreation of the combined car group. Theintegration will take effect from 1 August.

Etihad to hold on to Aer Lingus stakeEtihad Airways is not willing to sell its 3

per cent stake in Aer Lingus, raising freshdoubts over Ryanairs takeover bid for theIrish flag carrier. James Hogan, chiefexecutive of the fast-growing Gulf airline,said that Etihad was backing Aer Lingusscurrent management and its strategy.We are not selling, he said.

Fiat warns Italian plant at riskFiats chief executive said the carmakermay need to close another plant in Italy ifhe does not secure further cost-cuttingconcessions from its workforce. SergioMarchionnes warning came amid signsthat PSA Peugeot Citron and Ford Motorare also preparing to break Europeslongstanding taboo on closing car plants.

King of the pension funds to sign offafter investor piles inThe private equity entrepreneur Edi Truellwho founded Pension Corporation plansto stand down after securing aninvestment that values his buyoutbusiness at more than 1 billion.

Malaysians win BatterseaIt was confirmed last night that Malaysiandevelopers have bought Londons derelictBattersea Power Station for 400 million,dashing Roman Abramovichs hopes.

Ulster bank customers still waitingfor problems to endRoyal Bank of Scotland has admitted someUlster Bank customers will continue toface problems with their bank accountsalmost a month a fter computer glitchessparked a crisis at the lender.

Italys deficit to doubleItaly has almost doubled its deficitforecast as Germany halved its,underscoring the lag of sinner states.

Doubts Arise Over Proposal For EUBanking RegulatorEuropean leaders, who last week set anend-year deadline to create a newpoliceman to oversee Eurozone banks,have set themselves a timetable thatofficials admit they will struggle to meet.

EU Gives Universal Music More TimeUniversal Music Group was granted moretime to respond to concerns from EuropeanUnion regulators over its proposedacquisition of EMIs recording arm.

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PROTESTERS in Robin Hood costumeschanted their disapproval, armedpolice patrolled the corridors andmembers of the Treasury select com-mittee limbered up for battle.The circus was waiting for its star

attraction one Robert Diamond Jr. to kick off the greatest show in finan-

cial regulation history.And then the questioning began.Hamstrung by a format that gave

each of the committees 13 membersa seven-minute slot to impersonatePaxman, we learnt a little about a lot.Mostly we learnt that Diamond is avery capable politician when it comesto not answering questions.

Chairman Andrew Tyrie began withthe tone of a headmaster punishing aformer star pupil not angry, justincredibly disappointed.

Diamond givesMPs a lesson in

evasivenessBut Diamond refused to dish the

dirt, infuriating the committee byinsisting on using their first names.

Labours John Mann responded byadopting the role of the angry PEteacher Why were you sneaking offwithout permission, Diamond? Andwhat did you do with the schoolsLibor rate?

That behaviour was reprehensible,it was wrong. I am sorry, I am disap-pointed and I am also angry, was atypically detail-free response.

No one could doubt Diamonds com-mitment to the bank that sacked him he loved it. He loved how it is anincredible institution. But most of all

Bob Diamond loved his 17m job atBarclays because of the people.You see, everything would have been

fine were it not for the traitors. Thetraitors, Bob? Thats a bit strong. Ah,its just the way he pronouncestraders in that monotone drawl.Three painful hours later he was off,

still reeling from the revelations thatbrought down his career, still refusingto turn down a final payday, still fail-ing to explain how the scandaloccurred on his watch.

THURSDAY 5 JULY 20123LIBOR SCANDALcityam.com

: Did you receive a nod and a winkfrom Paul Tucker

: He did not give an instruction.He said there was a perception inWhitehall that our Libor submissions werehigh, relative to other banks submissions

There was absolute corruption in thisbank, with former staff asking their matesat Barclays to alter rates for their benefit,with traders rewarded based on theprofits of their own trading books, not

based on the banks performance.

Andrea Leadsom, Conservative

On who the senior figure in Whitehallis: I would only be speculating andits not appropriate to do that. Pauldidn't mention who he was referringto. I don't know, senior people.

Bob Diamonds best quotes

: Were you shocked at senior figuresasking you to fiddle Libor submissions?

: I was appreciative that PaulTucker was trying to do his job, telling usministers may think we had troublefunding.

There were two chief executives runningthe firm over the period, and seniormanagers were too frightened ordisinterested to speak to them. Whatdoes that say about the culture at thefirm?

George Mudie, Labour Michael Fallon, Conservative

Andrew Tyrie, Conservative

When I read the emails from thosetraders, I got physically ill. It'sreprehensible behaviour and if you'reasking me should those actions bedealt with, absolutely."

"I was not aware that Jerry (delMissier) had a miscommunication

or a misunderstanding, Jerry didn'tsay that to me."

"I don't know if Marcus (Agius) hadconversations with regulators, that isa conversation for him to have withyou, I did not discuss that with him."

Sketch byJames Watersonin Westminster

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BANK of England deputy governorPaul Tucker made a pre-emptive striketo distance himself from the Libor fix-ing scandal yesterday, asking to givehis own evidence to MPs on the topicas soon as possible.

Before ex-Barclays boss BobDiamond had even appeared at theTreasury select committee (TSC) yes-terday, Tucker raced to clear hisname, saying in a statement he iskeen to clarify the position withregards to the events involving theBank of England, including the tele-phone call.

Diamond revealed onTuesday a memorecounting a phone callwith Tucker in 2008, inwhich the Bank officialseems to hint he knowsof widespread fixing.Yesterday he told the

TSC that Tuckerdid not tell himto alter hisbanks submis-

Tucker keen to

give his side ofLibor phone call

BY MARION DAKERS sions for the Libor, but had relayedthat senior people in the govern-ment were concerned that Barclaysfigures were too high.

Diamond conceded that BarclaysLibor submissions fell after Tuckerscall, which he said was not recorded,noting that this coincided with animproving market.While some market-watchers fretted

that Tuckers involvement could scup-per his chances of replacing SirMervyn King as the Banks governor,others noted the lack of a smokinggun yesterday.

Diamond seemed to show that themotives [of the call] were pure, saidAndrew Goodwin, economist at theErnst & Young Item Club. There was arisk of him saying something particu-lary toxic, but it turned out to not bethe case.William Hill has suspended betting

on the next Bank governor untilTucker gives evidence.

MICHAEL Fallon of theTreasury select committeevoiced a question yesterdaythat must be on many

peoples lips. After passing on PaulTuckers message from the Bank ofEngland in October 2008, how did

Bob Diamond manage to know solittle for so long about the Libormanipulation at Barclays thatfollowed?

Diamond dodged, I cant putmyself in Jerrys shoes. Jerry DelMissier, Barclays chief operatingofficer until the scandal forced hisresignation on Tuesday, has alreadybeen investigated personally by theFSA, which accepted his actionswere the result of misunderstanding

Tuckers telephonic concern, takingit as a nod and wink from the Bankand Whitehall for a Libor squeeze.But that doesnt answer theobliviousness higher up of whatwent on thanks to hismisapprehension.

Yet the rest of the world is hardlyin a position to point f ingers. Anarticle suggesting that Libor was out

BOTTOMLINE

MARC SIDWELL

Paul Tucker wantsto give his evidencesoon

THURSDAY 5 JULY 20124 LIBOR SCANDAL

cityam.com

It isnt just Diamond that missed Libors warning signsof sync with other market measuresappeared in the Wall Street Journalback in May 2008. It didnt mentionBarclays hardly surprising as theevidence seems to show Barclays assomething of a holdout when itcame to underreporting its

borrowing costs, at least untilTuckers fateful phone call but itwas on the money about Liborsproblems. The world at large, it isnow clear, didnt pay that story asmuch attention as it deserved. But itwas enough to get the attention of agroup of academics, variouslyspecialists in derivatives accounting,conspiracies and manipulations,banking and credit risk.

The investigation of the team

showed even deeper grounds forconcern than the original article.The draft study by Rosa Abrantes-Metz, Michael Kraten, Albert Metzand Gim Seow was posted by theSocial Science Research Network in2008 (go to its website and search for

Libor manipulation). Laterversions were peer reviewed,discussed at a 2010 conference andpublished in January of this year bythe Journal of Banking and Finance.The conclusions were not exactlyhidden.

While the study did not find asmoking gun for effectivemanipulation of the Libor rate, itdid identify statistical evidence ofpatterns that appear to be

inconsistent with those that arenormally expected to occur underconditions of market competition.Whats rather more embarrassingfor all concerned is their observationthat many of these markers werereadily available for review by

market analysts at the time.Its easy to point the finger at theman in the hotseat, and say whydidnt you know what was goingon? Diamond has rightly paid forthat. But the larger question in thisscandal remains why everyone choseto ignore a problem that, until theCFTC cried foul, was apparentlyhiding in plain sight.

Marc Sidwell is City A.M.s managingeditor.

NEXT BANK OF ENGLAND GOVERNOR OTHER CONTENDERS

Gus ODonnell

Known by hisinitials GOD, theformer head of thecivil service hasseen his chancesrise in recentmonths, withPaddy Power quoting odds of 7/4. But hiscloseness to Labour could be dangerous.

Adair Turner

The chairman ofthe FinancialServices Authorityand House ofLords memberhas slipped in therankings sinceApril, and Paddy Power now puts himfourth favourite at 6/1.

John Vickers

The face of therecent bankingregulationchanges couldprove a popularchoice outside theCity, but he remains an outsider at 20/1from Paddy Power (faring better at

Ladbrokes, with odds of 16/1).

Jim ONeill

A Goldman Sachseconomist ashead of the Bankof England? TheMancunian whocoined the Bricacronym was thedark horse of the contest, but has been

recently quoted at 4/1.

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Analysts argue lawsuits fromLibor are unlikely to succeedLAWSUITS against Barclayslinked to Libor-fixing are unlikely

to succeed based on yesterdaysevidence to the Treasury selectcommittee, analysts have said.

Barclays finance boss has toldanalysts that the bank has notsuffered any deposit flight as aresult of recent events during aconference call.

And number crunchers atEspirito Santo Investment Banksaid the probability of anylitigation being successful

BY MARION DAKERSagainst Barclays appears to bequite low.

They noted that civil law caseswould require proof that the rate

was in fact lowered difficult toshow given that Barclays oftenposted figures towards the top ofthe pack of banks who submittheir rates, the analysts said aftera call with chief financial officerChris Lucas.

In what may prove pivotal tomany litigation cases, none of theauthorities have accused Barclaysof any intention to manipulatethe ultimate Libor rates as a

result of conduct during thefinancial crisis, they added.

There are several class actionand individual lawsuits in the

pipeline linked to the Liborscandal, involving more than adozen banks.

Most of the pending cases havebeen consolidated before afederal judge in New York, whileCharles Schwab has filed its owncase against the banks, claimingit bought about $660bn of fixed-rate and floating-rate securitiesaffected by the alleged Libormanipulation.

DAVID Cameron yesterday weighedinto the debate over Bob Diamonds

bonuses, arguing that the formerBarclays chief executive should not

be paid a golden goodbye.Speaking before the Commons,

Cameron said it would beinexplicable to the public andcompletely wrong for Diamond toreceive a pay-off after resigning from

the bank, which was fined 290mlast week for rigging interest rates.

But he refused to supportLabours calls for a judge-led inquiryinto City culture and practices.

Cameron: no diamond pay-offBY LAUREN DAVIDSON Diamond could face having

millions of pounds worth ofunvested share awards annulled.

At the Treasury select committeemeeting yesterday, Labour MP

Andrew Love asked Diamondwhether he agreed there should berecognition in his final pay off ofwhat went wrong.

The ex Barclays boss said that wasa question for the board, claiming, Ihave not asked them nor has it been

of interest to me.Labour MP John Mann said: He

should get no pay-off, in fact heshould be repaying the bonuses thathe and his bank fiddled.

THURSDAY 5 JULY 20126 LIBOR SCANDAL cityam.com

The PM said the public would be baffled if Barclays ex CEO received a golden handshake

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THE FOCUS on why nationalisedSpanish lender Bankia went aheadwith a stock market listingintensified yesterday as thecountrys national court opened acriminal investigation into the floatnaming 33 former board membersas suspects.

The probe, launched following acomplaint by small Spanish politicalparty Union Progreso y Democracia,accuses Bankia, its parent companyand 33 former board members offraud, misappropriation of fundsand the falsification of its 2011annual results.

It is the third criminalinvestigation into Bankia, but thefirst to cite specific individualsincluding former executivechairman Rodrigo Rato, once headof the IMF, as suspects.

Chief operating officer FranciscoVerdu, named as a suspect, resignedfollowing disclosure of the probe.The other 32 had resigned shortlyafter Bankia was bailed out.

Under Spanish law the crimescarry jail sentences of up to six

Former Bankiaboard focus of

criminal probeBY KATIE HOPE years, but analysts yesterday saidconvictions were unlikely.

The bank had to be bailed out lessthan a year after its float, withhundreds of thousands of Spanishretail investors seeing theirinvestments all but wiped out.

The criminal probe meansattention is likely to turn to thefloats advisers and underwriters.

Lazard, where Rato had workedafter leaving the IMF, and STJAdvisors were originally appointedto advise on the float.

The syndicate of banks sellingshares in Bankias initial publicoffering was led by Bank of AmericaMerrill Lynch, Deutsche Bank,

JPMorgan and UBS. Other banks hadsmaller roles.

A source at a bank involved inthe float said yesterday it had tohand over files on the deal.

However, a banker at one of theglobal coordinators of the float saidhe believed they were safe fromlegal challenges because risks wereexplained to investors in the pre-float prospectus. Its like attackingthe people who sold the tickets forthe Titanic, he said.

THURSDAY 5 JULY 20127NEWScityam.com

QHow did Bankia comeabout?

AFormed in January2011 from the

merger of seven smallregional savings banks (cajas) which

had lent aggressively into Spainsproperty bubble it became thecountrys fourth largest lenderovernight, with over 4,000 branches,25,000 employees and massiveexposure to the property bubble.

QWhat went wrong?

AIt needed to boost the proportionof its top flight, tier one, capital to

meet regulatory requirements and afloat was the quickest way to do this.With little international appetite forthe shares, the bulk was sold toSpanish retail investors, who saw it asa safe investment, raising3.3bn.

QWhat happened next?

AIn February, Bankia reported 2011profits of309m for 2011, but three

months later it reported losses for thesame period of3bn. The governmenttook it over in May, injecting 19bnafter it became clear it did not haveenough capital to cope with the scaleof property losses. This forced Spainitself, whose finances were weakenedby the downturn, to ask the EuropeanUnion for a bailout loan of as muchas100bn to clean up its banks.

The rise and fall ofSpains Bankia

QAand

THE SHARD, the latest tower to dominate Londons skyline, will be inaugurated today as itcelebrates its external completion at a record height of 309.6m. Lasers will beam from the95-storey London Bridge skyscraper to buildings including the London Eye and Tower Bridge.It was designed by Renzo Piano and developed by Sellar Property with the state of Qatar.

EUROPES TALLEST TOWER CELEBRATES OPENING

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GROWTH in the all-important serv-ices sector slowed to an eight-monthlow in June, according to influentialsurvey data published yesterday,undermining hopes that the econo-my could come out of recession inthe second quarter.

Markits purchasing managersindex (PMI) came in at 51.3 lastmonth down sharply from 53.3 inMay, indicating a sharp slowdownin growth in the sector and drop-ping towards the 50 mark whichindicates no change in output.

New sales rose at their slowestpace for 18 months, with the indexsliding from 54.8 to 51.3, and the

business expectations index alsoslowed sharply.The intensifying Eurozone crisis

and the lost day of work over theJubilee are both to blame in part,

BY TIM WALLACE said Markit.The weak reading comes on top of

this weeks gloomy manufacturingand construction PMIs, whichshowed output falling in both sec-tors in June leading economists topredict another quarter of recession.

These figures confirm our viewthat GDP is likely to have contractedin the second quarter, said Nida Alifrom the Ernst and Young Item Club.

The decline in business confi-dence is also a genuine cause forconcern. The experience of lastautumn demonstrates how a deterio-ration in sentiment can rapidlyaffect activity, as it leads to compa-nies placing investment and recruit-ment plans on ice.

However, employment still contin-ued to grow in June, though at aslower pace that component of theindex declined slightly from 52 inMay to 51.7 in June.

THE BANK of England is already on course tosplash 325bn on asset purchases as it strivesto stimulate a flat and endangered economicrecovery. Yet many economists feel thesituation is bad enough to warrant even morequantitative easing (QE).

David Kern of the British Chambers ofCommerce yesterday warned that more QE isnot risk-free, and could be counter-productive

by propping up inflation.Yet seven of our MPC disagree enough to

vote for either 50bn or 75bn more assetpurchases to be scheduled for the comingmonths. Last time around the Monetary PolicyCommittee (MPC) voted 5-4 against more QE.Today, the balance could tip in favour of

governor Mervyn King and his fellow doves.

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Weak servicesector knocks

recovery hopes

THE PROFITABILITY of Britishcompanies slipped slightly in thefirst three months of the year,according to figures from theOffice for National Statistics (ONS)released yesterday.

The rate of return on privatenon-financial companies slipped0.2 percentage points to 12.1 per

cent in the first quarter thelowest rate since mid-2010.

However, when North Sea oil andgas firms are excluded, grosstrading profits grew 2.7 per cent.

BY MARION DAKERS Manufacturing firms remainedat the bottom of the heap forprofitability, with an unchangedreturn rate of 4.9 per cent, downfrom 5.4 per cent a year ago and 8.3per cent in 2010. Services firms,meanwhile, showed a 0.1percentage point uptick to 15.7 percent in the quarter.

Ernst & Young figures for theONS paint a mixed picture of

corporate health: there was surgein profit warnings at the start ofthe quarter, at the fastest pacesince early 2009, which tailed offrapidly by March.

A slowdown in profits at oil companies affected the overall figures

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7/31/2019 Cityam 2012-07-05

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double savings in the

DFS summer sale

Deputy 3 seater sofa. Accent cushions not included unless otherwise stated. Credit subject to acceptance. Credit is provided by external finance companies as determined by DFS. 4 years interest free credit from date of order. Delivery charges apply. Sale price applies from

30.07.12 to 09.09.12. After sale price applies from 10.09.12 - see instore or online for de tails. Mobile charges may apply whe n calling 0800 110 5000. DFS is a division of DFS Trading Ltd. Registered in England and Wales No 01735950. Redhouse Interchange, Donc aster, DN6 7NA.

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

4 years interest free credit on everything

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saleprice

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7/31/2019 Cityam 2012-07-05

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IN BRIEFClegg pushes co-op firm model

n Deputy Prime Minister Nick Cleggyesterday unveiled a new professionalbody - the Institute for EmployeeOwnership and a FTSE benchmark forcompanies run as employeepartnerships, following a report on themby employment lawyer Graeme Nuttall.

Aegis practises its French

n Aegis has built up its French footprintwith the purchase of six companiesformerly owned by W Garden andothers, with assets worth 5m (4m).The acquisitions will merge into AegisiProspect operations in France in thethird quarter of this year.

Advertising spend on the up

nAdvertising spend increased by 1.1per cent in the first quarter of this yeardespite economic turbulence, accord-ing to the Advertising Association. Andthe prognosis is positive, with expendi-ture expected to improve over the restof the year, growing 2.5 per cent in2012 and 4.4 per cent next year.

Canada boosts Travelzests profits

nUpmarket travel operator Travelzestyesterday posted a rise in half-yearprofits after a strong performance inCanada. Pre-tax profit jumped to 1.9min the period, compared to 884,000 ayear earlier.

BBC

US technology giant Apple yesterdaylost a key London court ruling againstTaiwans HTC, just as reports emergedthat its hotly anticipated smaller andcheaper iPad would be on sale by theend of the year.

The production ofApples latest iPad isalready under way,according to the WallStreet Journal. The newmodel nicknamedthe mini iPad isexpected to feature ascreen thats seven toeight inches

diagonally, less thanthe current 9.7-inchversion.

It is believed thatApple could sell the

BY KATIE HOPE device for just $199 (127) less thanhalf the cost of the present iPadwhich ranges between 399 and699.

Meanwhile, in the patent disputewith HTC, the judge ruled that HTChad not infringed four technologiesthat Apple had claimed as its own.The technologies included the slide-

to-unlock feature, whichthe judge said was anobvious development inthe light of a similarfunction on an earlierSwedish handset.

The ruling preventsApple from banning itsrivals products in the UK.

Apple declined tocomment yesterday.

The mini iPad is expectedto go on sale for just 127

THE BBC yesterday appointed aninsider as its new director general

who will take the helm when MarkThompson retires from the joblater this year.

George Entwistle, 49, pippedother front-runners Caroline

Thomson, BBC chief operatingofficer, and Ed Richards, boss ofOfcom, to the post.

Head since last year of BBCVision, where he oversees all the

George Entwistle named thefifteenth BBC director general

BY LAUREN DAVIDSON major channels, Entwistle joinedthe broadcaster in 1989 as a

journalism trainee.Raised in Yorkshire and

educated at Durham University,the former Newsnight editor cantake credit for introducing BBC2sThe Culture Show but was alsoresponsible for the broadcasters

much-criticised coverage of theDiamond Jubilee last month.

Entwistle will earn a yearlysalary of 450,000 just twothirds of Thompsons 671,000 pay.


Former Newsnight editor George Entwistle will take the helm this autumn

Independent Debt Capital Markets LLP is acting as the Lead Manager on this issue.

Please refer to the information booklet dated 3 July 2012 and the offering circular dated 29 June 2012 (theOffering Circular).

Primary Health Properties PLC is the legal entity that will issue the bonds and references to Primary Health Properties in this advertisement are references to Primary

Health Properties PLC. The contents of this advertis ement, which have been prepared by Primary Health Properties PLC, have beenapproved solely for the purposes

of section 21(2)(b) of the Financial Services and Markets Act 2000 by Mirabaud Securities LLP which is authorised and regulated by the Financial Services Authority.

Independent Debt Capital Markets LLP (incorporated in England with Par tnership No OC350101) whose registered office is 33 Grosvenor Place, London SW1X 7HY,

is an appointed representative of Mirabaud Securities LLP . This is an advertisement and is not a prospectus for the purposes of EU Directive 2003/71/EC(the Directive) or Part VI of the Financial Services and Markets Act 2000. A prospectus has been prepared and made available to the public in ac-cordance with the Directive please see the Offering Circular. Investors should not purchase any bonds referred to in this advertisement except on

the basis of information contained in the Offering Circular. Investors may obtain copies of the Offering Circular on the website of the London StockExchange and in hard copy at the registered office of Primary Health Properties PLC at Ground Floor, Ryder Court, 14 Ryder Street, London SW1 Y6QB. Before buying or selling the bonds you should make sure that you fully understand the risks, which are set out in full in theOffering Circular, and determine thatthe bonds are appropriate for you. Primary Health Properties, Independent Debt Capital Markets LLP and Mirabaud Securities LLP do not provide legal, tax, accounting

or investment advice in relation to the bonds and are not responsible for any advice you may receive from any third party. You should be aware that securities involve a

variety of risks and you should seek independent advice if in any doubt as to the suitability of an investment in the bonds for your circumstances.

The information contained herein may only be released, published or distributed in the United Kingdom, Jersey and Guernsey.The information contained herein is not for release, publication or distribution in or into the United States, Australia, Canada,

Japan, South Africa or in any other jurisdiction where it is unlawful to distribute this document.

Landlord to the NHS

Lead Manager: Independent Debt Capital Markets LLP

For more information, visit www.phpgroup.co.uk

Important InformationInvestors should note that the market price of the

bonds could fall below the face value during the life

of the investment. If you choose to sell the bonds

prior to the end of the life of the bonds you may get

back less than your original investment.

Furthermore,in theeventthatPrimaryHealthPropertiesbecomes

unableto pay itsdebtsin full orbecomesinsolvent,you may lose

someor allof your investment.The bondsarenot coveredby the

UK Financial ServicesCompensation Schemein theunlikely

event of the failureof Primary Health Properties.

Primary Health Properties PLC, one of the

UKs largest providers of modern primary

healthcare facilities, is offering the 5.375%

bonds 2019, available to buy until 16 July 2012.

The bonds pay a fixed rate of interest of

5.375% per year until July 2019. Interest is

paid twice a year in arrear in July and January

each year with your investment paid back in

full on 23 July 2019.

The minimum initial investment is

2,000 and bonds can be bought and

sold in multiples of 100 thereafter.

Investors can buy and sell their bonds in

the open market at any time (during

market hours and in normal market

conditions) and prices can be checked

on the London Stock Exchange website.

To buy the Primary Health Properties 5.375% bonds

2019, you need to contact your stockbroker or any

of the authorised distributors listed. If you are in

any doubt as to the suitability of the bonds for your

circumstances, you should seek independent advice

from a tax adviser and/or investment professional.

Authorised Distributors: Barclays Stockbrokers www.barclaysstockbrokers.co.uk/

Investment-Choices/IPO/pages/at-a-glance.aspx | Killik & Co www.killik.com/bonds

Mirabaud Securities www.mirabaudsecurities.com | Peel Hunt www.peelhunt.com

Redmayne-Bentley LLP www.redmayne.co.uk/php | Selftrade www.selftrade.co.uk/php

Winterflood Securities www.winterflood.com

5.375%per annumPrimary Health Properties5.375% Bonds 2019

Mini iPad eyedby Apple as it

loses HTC battle

7/31/2019 Cityam 2012-07-05

12/23

THE SERVICE sectors of economiesthroughout the Eurozone continuedto contract in June, according to datareleased yesterday, although separatefigures showed wide differences inlevels of unemployment.The Eurozones fall in total econom-

ic output eased slightly in June,according to Markits latest compositepurchasing managers index (PMI).

Specifically, the data revealed poorservice statistics in the big fourEurozone economies Spain regis-tered 43.4, Italy posted 43.1, Francejumped to 47.9, and Germanyslumped to 49.9.All figures below 50 indicate eco-

nomic contraction. PMI correlatesclosely with GDP, and since servicesmake up a large portion of theseeconomies, the negative figures areominous bellwethers for economicactivity.Yet the bad news contrasted with

mildly positive retail results releasedby Eurostat yesterday, which showedvolume of trade in the EU was up 0.6per cent in May compared to April.

Services data

points to euroarea recessionBY BEN SOUTHWOOD

And separately, the statistics bodyshowed how unemployment levels var-ied widely between Eurozone leadersand laggards in 2011.The statistics showed an astonishing

62.8 per cent rate of long-term unem-ployment among the jobseekers inCampania, Italy. This compares withfour per cent of those out of workbeing long-term unemployed inAland, Finland.

There were also deep cleavagesbetween north and south in youthunemployment. In the German regionof Tbingen just 4.3 per cent of youngpeople were seeking work, whileCeuta in Spain had youth unemploy-ment of 65.8 per cent.

France unveils tax raid on homeowners, energy firms and banksFRANCES new socialist governmentannounced tax rises worth 7.2bn

yesterday, including heavy one-offlevies on wealthy households andbig corporations.

In the first major raft ofeconomic measures since FrancoisHollande was elected president inMay, the government singled outlarge companies and the rich.

British owners of second homesin France are set to be hit by highertaxes on rental income and capitalgains tax on property sales.

BY CITY A.M. REPORTEROverall, an extraordinary levy of

2.3bn on wealthy households and1.1bn in one-off taxes on largebanks and energy firms were

central parts of an amended 2012budget presented to parliament.The law, which includes tax

increases on stock options anddividends and the scrapping of anexemption on overtime, shouldeasily receive approval by a 31 Julydeadline after the socialists won acomfortable parliamentarymajority at elections last month.

Hollande says the rich must paytheir share as France battles to cut

its public deficit from 5.2 per centof GDP last year to an EU limit ofthree per cent in 2013 despite astagnant economy and rising debt.

We are in an extremely difficulteconomic and financial situation,finance minister Pierre Moscovicisaid. In 2012 and 2013, the effortwill be particularly large. Thewealthiest households and bigcompanies will have to contribute.

A grim assessment of publicfinances on Monday by the stateauditor warned that 6-10bn ofdeficit cuts were needed in 2012and a hefty33bn in 2013.

Markit Eurozone PMI and ofcial GDP

2012201020082006200420022000

55

60

65

50

45

40

35

30 -3

-2

-1

0

1

2% 50 = no change

GDP

PMI

THE TROIKA met in Athensyesterday to check on Greecesprogress with their austeritypackage.

Christine Lagarde, head of theInternational Monetary Fund

which makes up the Troika alongwith the EU and EuropeanCentral Bank commented thattheir purpose in Greece was notto renegotiate the bailout deal.

This intention will not sit wellwith the coalition government,which seeks concessions to meetits deficit targets, in exchange

for speeding up the privatisationaspects of the deal.

Troika lands toinspect GreeceBY BEN SOUTHWOOD

MARIO MONTI committed Italy tobudgetary discipline, in a joint pressconference with Germanys premierAngela Merkel yesterday.

Though the estimate of Italysbudget deficit for this year wasrevised up to two per cent, Merkelpraised measures taken by Montisince he took over from SilvioBerlusconi. Monti touted the labourreforms he managed to pass throughthe Italian legislature.

Lombard Street Research said:The euro-establishments contemptfor Keynes is showing its inevitable

results: deficit ratios in Spain andItaly are mounting, not falling.

Monti-Merkelshow unityBY BEN SOUTHWOOD

THURSDAY 5 JULY 201212 NEWS cityam.com

Madagascar

Morocco

WesternSahara

ZeelandNetherlands2.7%

NiederbayernGermany2.9%

CeutaSpain29.3%

MurciaSpain25.4%

AndalucaSpain30.4%

OberbayernGermany2.8%

TirolAustria2.5%

SalzburgAustria2.5%

CanariasSpain29.7% RunionFrance29.6%

Unemployment figures vary widely across Europe

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Got A Story? [email protected]

13cityam.com

cityam.com/the-capitalistTHECAPITALIST


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TheCity A.M. Christmas Appeal, which raised1.5m in total, has enabled OpportunityInternational to expand its grassroots bankingservices to the south of Malawi. The southernregion is one of the poorest areas in the country.Im delighted to share with you how the CityA.M. appeal is already making a big difference.

What are we using your money for?Were lending to small businesses and creating jobs

With your support weve been able to providesmall loans to 2,464 micro businesses betweenJanuary and May. In turn this has created orsustained 3,700 jobs. The average loan size isjust 94 and typically lent to traders sellinglocal products in a marketplace.

Were reaching more peopleOur team is now able to directly reach morepoor people. Weve built two new bankbranches in the south of Malawi so we arenearer and more convenient to the poor peoplewe aim to serve.

Were training people to run good businessesWe are training and mentoring thousands ofentrepreneurs in simple business managementskills. Better run businesses mean more jobsand more money in the pocket to feed andeducate children.There is much more to do.By the end of 2014 we aim for 26,000households to hold savings accounts and15,000 micro-entrepreneurs and farmers willhave accessed small loans creating andsustaining 22,500 new jobs.

Our work is more than numbers though.By giving people a hand-up, not a hand-out,

you have enabled poor people to take controlof their own life, to lift themselves out ofpoverty.A poor person holds their head a little

higher when they buy their child a schooluniform for the first time or put more food onthe table.Thank you to the readers ofCity A.M. and the

UK governments Aid Match for your support.

RUTH runs the Yamikau Mulungucorner shop, which opened in2001 at the edge of Nsanje marketin southern Malawi. She sells a

range of groceries and small householditems.

Ruth recently took out her first loanfor 76. She used the loan to build upher stock. She also decided to diversifyand buy some rice which she stores tosell when there is a shortage. She has

finished repaying her first loan and iskeen to take another. Ruth feels thather business has improved a lot sincetaking out her loan. Buying more stockhas increased her profit which hasresulted in her feeling more confidentand able to make better decisions.

The City A.M. appeal is helping moreMalawians like Ruth to grow their

businesses and build a better future fortheir families and local communities.

Proudly sponsored by

Opportunity International United Kingdom is registered as a charity in England and Wales (1107713) and in Scotland (SC039692).

How readers make a big differenceEDWARDFOXCHIEF EXECUTIVEOpportunity International UK

Opportunity Malawi Client Ruth, with her daughter, Innocent

RUTH, THE HAPPY SHOPKEEPER

Opportunity International is doing great workin making access to financial services a realityfor some of the poorest people in Malawi. Thegenerosity of the readers of City A.M., whichwe're matching pound for pound, will helpcreate jobs and income for thousands ofpeople. I welcome Opportunity International'sdecision to report to supporters on theirresults six months after their appeal.

Andrew Mitchell,secretary of state for

International Development

There are few things more pleasing than to

see people recover their self belief and theirself-esteem, to see them becomeindependent, able to feed their families andsupport their loved ones through their work,not by getting a handout. It is a privilege forme to contribute to OpportunityInternationals development and success

Tidjane Thiam,supporter of the City AM appeal and CEO of Prudential

CHRISTMAS

APPEALREVIEW

6MONTHSON

Matching yourdonations with

7/31/2019 Cityam 2012-07-05

14/23

IN BRIEFCarillion in contract delaysn Uncertainty caused by the Euro-zone crisis has put the brakes onsome infrastructure projects in theMiddle East and Britain, supportservices and construction firmCarillion said yesterday. Carillion,which maintains some of Britain'srailways and military bases and has astrong construction presence inCanada and the Middle East, saidmarket conditions in the first sixmonths of 2012 had been challenging,although its pipeline of potentialwork had grown to 35bn.

Bunzl is buoyed by acquisitionsn International distribution groupBunzl yesterday said it had boughtMMH Holding and its subsidiaries fromMarkus Meier, Daniel Meier and RetoHofmann. The firm said the acquisitionextends its reach in Switzerland, amarket it entered two years ago withthe purchase of Weita. The business,which trades under the nameDistrimondo, reported revenues ofSwFr17.3m (11.5m) last year.

Hunting is trading in linen Energy services company Huntingsaid yesterday that it is trading in line.The company said it had been boostedby a pick up in work in the Gulf ofMexico as companies step up work fol-lowing a period blighted by theDeepwater Horizon BP spill. Huntingchief executive David Proctor said:Trading in the first six months of theyear has been underpinned by strongdrilling activity in North America.

GETTY

TULLOW Oil said yesterday said itexpected record first half revenuesbut also revealed that it would behit by $440m (281m) of write-downs on projects.Tullow said that it was on course

to record revenue of $1.15bn(734m) in the six months to 30June, compared to $1.06bn the yearbefore.

The FTSE 100 oil explorer said itsfirst half figures would include a$700m pre-tax profit related to thedisposal of two-thirds of itsUgandan interests to Total andChinas CNOOC for a headline$2.9bn.

It said first-half net debt would beabout $700m, while capital expen-diture on developments and explo-ration came in at around $900m.Tullows share of production at its

wells rose by three per cent to77,400 barrels a day, and the firmsaid its offshore Jubilee field inUganda was progressing well.

However, projects in Ghana andNamibia were shelved triggering

Tullow is hit by

$440m chargebut sales surgeBY JOHN DUNNE

costly writedowns.Chief executive Aidan Heavey said:

The ongoing remediation of theJubilee field is progressing well andsignificant exploration wells areplanned for the East African Riftbasins, the West African TransformMargin and the twin basins inSouth America in the second half of2012.The company is scheduled to

release its first-half results on 25July.

Shares in the firm closed 1.9 percent lower yesterday as investors reg-istered their disappointment withthe writedowns.

Topps Tiles enjoys uplift in salesdespite a bank holiday setbackTOPPS TILES, the tile and wood-flooring specialist retailer, yesterdayposted a sales rise in the thirdquarter of the year despite seeingtrade disrupted by the diamondjubilee weekend.

Sales at stores open more than ayear rose 2.1 per cent in the 13weeks to 30 June compared with a1.9 per cent decline in the samequarter last year.

But this marked a slowdownfrom the 4.5 per cent rise reportedfor the first seven weeks of thequarter, implying that like-for-like

sales fell around 0.7 per cent in thelast eight weeks.

KASMIRA JEFFORDWe have had a double bank

holiday weekend in thesecond half of the quarter,which did bring down thewhole number, chiefexecutive MatthewWilliams said, adding thatthe group ended theperiod in positiveterritory.

We are happy withthat number overalland we are confidentthat we are takingmarket share in whatcontinues to be atough environment for

discretionary products.Williams remained wary

on the impact of the Olympics onthe business, saying it was likely tohave some effect but customerswere likely to delay homeimprovement projects rather thancancel them.

We have strong plans in terms oflogistics to counteract anyeffects of disruptions, he said.

The retailer opened threenew stores in the quarter,bringing its total estate to323. It plans to open afurther three sites by theend of its financial year.

Tullow chief Aidan Heavey has written down the value of some projects

Tullow Oil PLC

4 Jul28 Jun 29 Jun 2 Jul 3 Jul

1,420

1,440

1,460

1,480

1,500

1,520p

1,502.004 Jul

We remain positive on the company, which has an industry-leadingexploration track record and has consistently created value for shareholders. Inaddition, we believe ownership of highly prospective assets leaves thegroup vulnerable to bid speculation in a consolidating industry.

ANALYST VIEWS

The $2.9bn Ugandan farm-down has strengthened the balance sheet

and will help Tullow to finance its high impact drilling plans. Furthermore, itsexploration success continues with the most notable being the largebasin Ngamia-1 discovery in Kenya. Our recommendation is Accumulate.

Tullow has taken the opportunity to tidy up balance sheet asset values.

Of the $440m of write-offs, $80m of unsuccessful exploration was as expectedafter dry holes in Sierra Leone, Cote D'Ivoire and Tanzania. Tullow tradesabove the company's historical 15 per cent to 20 per cent premium. Hold.

WHAT IS THE OUTLOOKFOR TULLOW IN 2012?

By John Dunne

JONATHAN JACKSON KILLIK & CO

TONY SHEPARD CHARLES STANLEY

SANJEEV BAHL NUMIS

Michael Williams says theOlympics will delay sales

TAYLOR WIMPEY said yesterdaythe UK housing market remainedstable despite wider uncertaintyin the Eurozone and the globaleconomy, as it continued to growsales.

In a first-half trading update,Britains second largesthousebuilder said it sold 5,083homes in the six months to 1 July,up from 4,707 the same time last

year, with average selling prices upfrom 168,000 to 175,000.

The average private netreservation rate rose to 0.6 salesper outlet per week from 0.56,

with the average selling pricerising to 175,000 from 168,000.

Homebuilders have beenbenefiting from a shortage of

Taylor Wimpey predicts stable

outlook for UK house marketBY KASMIRA JEFFORD

supply of new homes in Britain inspite of a weak economic climateand the economy slipping backinto recession.

Chief executive Peter Redfernsaid this tightness in supply hadhelped offset the difficulty buyersface in securing mortgages.

But shares in the company fellalmost three per cent yesterday,

with analysts saying that the toneof the statement was morecautious than anticipated.

Mortgage lending continues tobe restricted, although thecompany said it was encouraged

by the introduction of the NewBuyscheme.

Nevertheless, its order book

grew to 960m as of 1 July, upfrom 932m a year earlier.

THURSDAY 5 JULY 201214 NEWS

cityam.com

Lord Sugar unveils set-top boxYouView after years of delaysAFTER years of delays, new set-topbox YouView was yesterday unveiled

by proud chairman Lord Alan Sugar.A joint venture by the BBC, ITV,Channel 4, Channel 5, BT, TalkTalkand Arqiva, digital channel providerYouView will allow the user to flickback through seven days of missedTV shows as well as browse extra on-demand content.

But eyebrows were raised at theretail price of YouView, which willset the purchaser back 299 when it

BY LAUREN DAVIDSONhits stores at the end of this month although broadband providers couldoffer their customers a significantlyreduced price.

Lord Sugar said he expects thiscost to drop to as low as 99 in twoyears, calling YouView just acarcass of the product it will bethen, but the next generationFreeview has suffered criticism.

Greenwich Consulting partnerOlivier Wolf said: This was anunderwhelming launch coming twoyears too late. Had this launched in2010, the service would have been a

clear success... but today YouView[lands in] a very different market.

But YouView chief executiveRichard Halton said: Has the

market changed? I dont thinktheres a product out there that doeswhat this does. Were blazing atrail.

The product is aimed at the 12mor so Freeview households, not thetech-savvy early adopters, he added.

The cost of the project has totalled70m so far 10m per partner.

BRITAINS largest dry-cleaningchain said it plans to shut around100 loss-making stores by the endof the year as it becomes the latestcasualty on the high street.

Johnson Services Group said themove would leave it with 460stores and affect several hundred

back office and warehousing staff.It did not specify how many jobs

would be lost or the location ofthe stores that will close.

The company said the shopsearmarked for closure suffered a4.3 per cent fall in like-for-likesales in 2011, while the continuing

Johnson to shut over a fifth ofdry-cleaning outlets this year

BY KASMIRA JEFFORDshops like-for-like sales rose 0.3per cent in the same period.

The move is part of a 24mrestructuring programme to helpincrease profitability across itsdry-cleaning arm, which has beenhit by tough economic conditions

and the continued squeeze inconsumers disposable income.Johnson has already closed more

than 50 outlets in recent years.The company also supplies

workwear rentals, linen rental forhotels catering and corporatehospitality.

Executive chairman John Talbotsaid these divisions continued totrade well.

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British Airways owner expectsOlympics to hit premium trafficBRITISH Airlines owner IAG reporteda six per cent jump in like-for-like pas-

sengers numbers for June yesterday.But the firm, which is running anadvertising campaign urging Britonsto stay in the country during theOlympics, repeated its forecast thatthe Games will dampen premiumtraffic figures during the summer.

IAG said it carried 5.05m passengersin June, up 11.6 per cent, or 6.1 percent once it strips out the boost fromnew routes introduced during theyear.

Measured in revenue passengerkilometres, traffic rose by an underly-ing 5.9 per cent.

Group premium traffic grew by 5.3per cent compared to the previous

BY MARION DAKERSyear, with 9.6 per cent growth in non-premium traffic.

Custom from domestic passengers,which includes Brits and Spanish fly-

ers using sister firm Iberia, rose 25.4per cent on a year ago to 1.16m thanksin part to new routes from Madridand the acquisition of BMI.

Iberia reported an overall 3.2 percent rise in revenue passenger kilome-tres to 4.47bn, while British Airwaysfared even better with a 7.1 per centlike-for-like rise to 11.31bn.

But the groups cargo operationscontinued to experience weakness,with cargo tonnes carried falling anunderlying 0.6 per cent to 507m kilo-metres last month. The fall widens to2.3 per cent in the year to June.

IAGs overall load factor, a measureof how full its flights are, rose an

underlying one percentage point to76.1 per cent.

Budget carrier Ryanair has report-ed a 6.3 per cent jump in passenger

numbers in June compared to a yearago. The Irish airline said it carried7.79m passengers last month, on a flatload factor of 84 per cent.

IN BRIEF

Etihads revenues take offn Revenues at Etihad Airways were up31 per cent in the second quarter as theAbu Dhabi-based airline continued toexpand its its global network. Theunlisted airline, which recently picked upa 4.99 per cent stake in Virgin Australiaand holds a minority stake in Aer Lingus,said second-quarter revenue rose to$1.25bn. It did not provide profit figures.

Passenger numbers in the quarter rose34 per cent to 2.55m.

Unite calls off London bus striken The Unite union yesterday called offtodays bus strike, pledging to continuenegotiations over bonuses for driversover the Olympic period. Transport forLondon intervened in the disputebetween the union and bus firmsyesterday, offering to give a 50 per centshare of any extra revenues made duringthe Games to bus staff, on top of 8.3moffered by the Mayor. No decision hasbeen made on the strike set for 24 July.

Heggessey leads Boomerang MBOn Cardiff-based independent televisioncompany Boomerang was the subject ofa management buyout led by formerBBC1 controller Lorraine Heggessey. The7.1m takeover will see Boomerangbecome Boom Pictures, with ex TalkbackThames boss Heggessey its executivechairwoman. The deal has beenapproved by 81 per cent of Boomerangs

investors , who will receive 77p pershare, a 51 per cent premium onWednesdays share price.

Betfair jumps on horse racing dealn Betfair yesterfday signed a five-yearprofit-sharing deal with British Racingwhich will see the online bettingexchange hand over 10.75 per cent of allits UK revenues generated from horse-racing bets. The deal is in place ofBetfairs current voluntary HorseraceBetting Levy, and will guarantee aminimum of 40m of funding over thenext five years.


LONDON REPORT

B

RITAINS top share index edgeddown in thin trade yesterday,

moving within a tight range asinvestors awaited central bankmeetings today that many expect toresult in fresh economic stimulus.A US holiday contributed to low vol-

umes across the market, at less thanhalf the 90-day daily average, withmany investors preferring to wait onthe sidelines ahead of the EuropeanCentral Bank and Bank of Englandmeetings.

The market is lacking in a directionat the moment and if you see some pol-icy responses the market could possiblycontinue this upward move but if youdon't, they may struggle to make fur-ther progress from here, said ChrisBeauchamp, market analyst at IG Indexin London.

Londons blue-chip index ended down3.26 points, or 0.1 per cent, at 5,684.47points.

British broker Icap, down 1.1 per cent,

was among the most actively tradedstocks, as investors sold out fearing it

could be dragged into the Libor scandalthat has already cost Barclays hundreds

of millions of pounds in fines.ICAP has said that it has never beeninvolved in setting Libor rates, butrather acts as a broker of cash depositsand derivatives based on Libor. The bro-ker also said it is co-operating fullywith the investigations.

A fresh batch of weak data gaveweight to those calling for fresh stimu-lus, with the UK service sector expand-ing in June at the slowest pace sincelast October, especially as second-quar-ter earnings hove into view.

FTSE ends flat in thin trade with USshut and all eyes on central banks

BESTof the BROKERSBritvic PLC

28 Jun 29 Jun 2 Jul 3 Jul 4 Jul

p340

320

325

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335

310

315

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303.504 Jul

BRITVICNumis rates the drinks firm hold andhas a target price of 320p. The brokerthinks the miserable weather hasdampened Britvics third quarter sales,having endured the wettest June onrecord, and reckons the firm will see a 2.1per cent drop in revenues to 318.2m,dragging annual growth to 0.1 per cent.

DASHBOARDCITYYOUR ONE-STOP SHOP FOR JOB MOVES,BROKER VIEWS AND MARKET REPORTS

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FTSE

5,650

5,700

5,500

5,450

5,550

5,600


5,684.474 Jul

Moneysupermarket Com Group PLC


p134

130

132

128

126

129.004 Jul

MONEYSUPERMARKETUBS has upgraded the price comparisonsite from neutral to buy and hasinched up its target price from 7.58p to7.76p. The broker thinks the firms recentacquisition of Money Saving Expertreduces its reliance on Google forcustomer leads and adds 16 per cent toearnings.

Halfords Group PLC


p235

225

230

220

215

210

205

208.004 Jul

HALFORDSSeymour Pierce rates the retailer holdbut has cut its target price from 270p to220p. The broker now expects Halfords toreport a six per cent fall in like-for-likesales in its first quarter update on 19 July,and in the long-term is worried aboutmanagements track record of squeezing

costs too hard in order to hit targets.

PsigmaPsigma InvestmentManagement hasappointed Nina Krishna tothe newly-created role ofchief operating officer. Sherecently worked as chiefoperating officer for globalbanking, markets andprivate banking for HSBC inDubai. Krishna has 30years experience in theindustry, and has heldsenior roles at JP Morgan, UBS. She started her career at

Chemical Bank.

Just RetirementThe specialist life assurance group has announced theappointment of Alex Duncan as its chief risk officer. He

joins from Old Mutual, where was most recently directorof finance capital, and where he was previously head ofUK acquisitions and head of corporate finance anddevelopment.

UBS Global Asset ManagementMalcolm Gordon has been named head of UKinstitutional client relationship management at the assetmanagement branch of UBS. He joins from Hermes FundManagers, where he was head of client relations. Gordon

has over 17 years experience in the industry, includingeight at F&C Asset Management.

London MiningThe iron-ore resource company has appointed JamesNorth as chief operating officer. He joins from BHPBilliton, where he was general manager of its Newman

joint venture iron ore mines. North has over 20 yearsexperience in mining and minerals, and has also workedfor Rio Tinto, BMA Coal and Mount Isa Mines.

Simmons & SimmonsThe law firm has expanded its finance practice with twonew London partner hires. Alan Davies joins fromLinklaters, where he was a founding partner in itsderivatives and structured property group. Piers

Summerfield also joins from Linklaters, where he was amanaging associate.

Speechly BirchamRose Carey has been appointed head of the law firmsimmigration practice. She spent the last four years at USfirm Squire Sanders, and has been a specialistimmigration lawyer for the past 10 years. Carey hasparticular experience acting for high net worthindividuals and investors.

Impetus TrustThe venture philanthropy investment firm has appointedAlan Morton as an investment manager. He was mostrecently director of private equity for Prudential AssetManagement Singapore and Prudential Vietnam. Morton

previously worked for Silverfleet Capital Partners, theLondon-based mid-market private equity firm.

WHOS SWITCHING JOBS Edited by Tom Welsh

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

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FOLLOWING the ratification ofthe US Constitution, BenjaminFranklin quipped that in thisworld, nothing can be said tobe certain, except death and

taxes. Due to the creativejurisprudence of Chief Justice of theSupreme Court John Roberts,President Barack Obama can bethankful that the death of his healthcare reforms has been avoided.

By declaring the Affordable CareActs individual mandateconstitutional, under Congressspower to lay and collect taxesrather than its ability to regulatecommerce, the conservative Robertshanded Obama an unexpectedpolitical victory and an opportunity

to bookend a legislative saga that has

THE spotlight in the Libor rate-fixing scandal has moved.Questions are being asked aboutthe culpability of the FSA,which may well have ignored

repeated warnings about Liborcalculations from marketparticipants. The role of the Bank ofEngland and the Treasury is also beingquestioned.

Of course, regulators are not toblame for the actions of those atBarclays and elsewhere. However, we

need to question the narrative thatthis problem all began with deregula-tion and then the development oflight-touch regulation under GordonBrown.

Given the millions of paragraphs offinancial regulation and the existenceof more than 3,000 compliance offi-cers at large banks such as HSBC, wecan dismiss the idea that we have light-touch regulation. But, those who sug-gest that there has been deregulationare not wholly wrong. More things arepermitted these days but thosethings that are permitted are morehighly regulated.

FLY TO EDINBURGH FIVEGET A TICKET TO ANYW

cityam.com/forum

The key question

is not how muchregulation there isbut who regulates?

In association withTHEFORUM

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

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

16THURSDAY 5 JULY 2012

PHILIP BOOTH

Trust has lost all of its value in ourstate-regulated financial markets

The key question though is not howmuch regulation there is, but whoregulates? Perhaps the most impor-tant change in the 1980s was not

deregulation, but a move from regula-tory institutions that emerged withinthe marketplace to statutory regula-tion.When Elinor Ostrom, the late Nobel

Laureate, visited the Institute ofEconomic Affairs last March, she wasinterested in the analogy betweenfinancial regulation emerging in themarket and community managementof environmental resources. She wasfascinated by the fact that, when thestock exchange first started in a coffeeshop, those who did not settle theiraccounts were put on a board underthe heading lame duck; the

exchange expelled people for badbehaviour; and it made the rules forcompanies that wanted a listing andfor individuals and companiesinvolved in trading. In order to preventconflicts of interest, on the Londonexchange, companies could not tradeon their own book and also give adviceto clients. The motto became myword is my bond and the untrustwor-thy would not get business. This allended with a transfer of regulatoryauthority to the state.

Other such mechanisms developedin banking. Mutual societies, trusteesavings banks (TSB) and unlimited lia-bility partnerships all developed topromote trust in an era where therewas often no regulation and no protec-tion. Trust and reputation were veryimportant when promoting a brand.Governance mechanisms that ledfirms to be technically inefficient wereoften valued because they promotedtrust.There is evidence that the develop-

ment of deposit insurance and thegreater government oversight of theactivities of financial institutions

undermined the attractiveness ofthese institutions so that, when theywere free to turn into proprietarybanks, they did so. Some of these insti-tutions were literally destroyed by gov-ernment. The TSB had no definedownership, so had to be nationalisedin order to be privatised.A reputation for prudence came to

have no market value and, naturally,most institutions became big, remote,shareholder-owned institutions oper-ating at the level of maximum techni-cal efficiency nothing else mattered.Of course, any institution that is toobig to fail, and which is therefore ableto take one-way bets with other peo-ples money, also attracts exactly the

wrong sort of people into the industry.We must reverse the trend. We

should abolish deposit insurance andensure that the providers of capitalsuffer the losses when banks fail.Prudence must matter when wedecide to whom we give our money.Financial regulation must again beallowed to evolve within the market. Astart could be made if politicians resis-ted regulation of new sectors such aspeer-to-peer lending. Economist TimCongdon has also suggested that the

Bank of England could be the regula-tor of the banking system on a contrac-tual basis in return for lender of lastresort facilities: those not wishing toavail themselves of that facility couldbe unregulated. This may help too.

The polycentric institutions of gover-nance that grew up in financial mar-kets have been destroyed. Startingagain will be difficult, but the alterna-tive of statutory regulation is not work-ing.Professor Philip Booth is editorial and pro-

gramme director at the Institute of EconomicAffairs and professor of insurance and riskmanagement at Cass Business School.

sapped much of the life out of thePresidents term. Having witnessedvarious setbacks and controversiesover the past few months, Obamaneeded this. But the SupremeCourts ruling may also be apoisoned chalice.

The ruling hardly had time topercolate before congressional

Republicans were accusing the

President of slapping $1 trillion(640bn) of taxes on Americans,breaking a campaign promise in theprocess. Its not a tax, said theObama administration, its apenalty. 60 per cent of the US publicagreed with the court: its a tax.

Early indicators showed MittRomney, Obamas presidentialchallenger, gaining momentumfrom the ruling, growing hiscampaign fund by $6.7m from over70,000 donors. A poll of likely votersgave him a lead over Obama in 15battleground states. In addition, 31per cent of Republicans indicatedthat they were now more motivatedto vote in November, almost twice asmany as Democrats. The jubilation

emanating from the White House is

slowly sapping away.But the semantics of the

individual mandate are not withoutrisk for Romney. Mindful of the facthe implemented similar health carereforms in Massachusetts, hiscampaign initially stated that heagreed with the dissent of JusticeAntonin Scalia which clearly statesthe mandate was not a tax.However, clearly under pressurefrom congressional Republicans andthe partys base, Romney lateracknowledged that the SupremeCourt has spoken it is a tax.Romney will remind voters that thisis a much more than a health caremandate, but a federal tax hike onfamilies, the middle class and, most

importantly, job creators in an

economic downturn.Almost lost in the continued fall-

out from the Supreme Court rulingwas the news that USmanufacturing contracted at itsfastest rate since October 2001. Arevival had been central to Obamasre-election hopes. Whether thesefigures are indicative of animpending recession is open fordebate but if, as expected, theDepartment of Labour releases adisappointing jobs report tomorrow,it will be yet another sign thePresident is running out of room formanoeuvre in his pursuit of asecond term.

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

on @ewancwatt

THE WHITEHOUSE RACE

EWAN WATT

Obamas healthcare victory could prove a poisoned chalice in November

7/31/2019 Cityam 2012-07-05

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TIMESERE FREE*

cityjet.com/freeflight

17

Systemic failure[Re: Crisis threatens UKs entire politico-financial establishment, yesterday]This crisis is not essentially about greed ormalfeasance by commercial banks, butabout the toxic environment created bydecades of misconceived policies bygovernments, and enablors and abettors incentral banks. The Barclays affair ispotentially explosive, so lets hope themedia start asking the right questions.Before we can hope to get out this mess, itmust be fully explained how we got into it.

Richard Arnopp

Any measure that can be manipulated will bemanipulated if there is a reward attached.Libor is but the latest example.

Henk Bakker

Scottish socialism[Re: Would a vote for Scottish independencebe a boon for its businesses?, Tuesday]The Scottish National Party argues that inde-pendence would allow Scotland to utilise allthe economic levers to provide the stable andsupportive environment Scottish businessesdemand. But business conditions are moststable when governments dont interferewith economic levers (like tax credits forresearch, or changing the regulatory environ-ment). And the stability of a non-interven-tionist government is what businesses needto grow and promote consumer choice.Independence would swap light-handedcontrol from Whitehall with heavy-handedcontrol from Holyrood. Will Scotland alsotake its own share of the debt with it?

Andrew Bates

SCIENTISTS at the EuropeanOrganisation for NuclearResearch (Cern) announcedyesterday that they haveidentified a new heavy

particle with all the propertiesexpected of the Higgs boson firstpredicted to exist in the 1960s. Thisis not the first new particle thatexperiments at the Large HadronCollider at Cern have discoveredsince operation began in 2009, nor

(hopefully) will it be the last. So whyhas this result got physicists andothers so excited? Why could this beone of the most significantadvances in science in the last 40years? And why did hundreds ofthousands of non-scientists connectto the web (itself invented at Cern)to watch the announcement live?The goal of particle physics is to

understand the way that natureworks at its most fundamental level:what are the basic building blocks ofmatter and how do they interact? Inthe 1960s and 70s, theoretical physi-cists developed an astoundingly suc-cessful standard model to describeeverything known about fundamen-tal particles, and the forces betweenthem, and to make predictions thatcould be tested. Experimental physi-cists have been testing this modelever since. So far it has proved ahighly accurate description of theway the universe works.

The Higgs boson was the only fun-damental particle predicted by thestandard model that had not beenobserved. If it has been discovered, itis confirmation that the theory iscorrect. But that is only part of thestory. The Higgs boson is also adirect glimpse into the underlyingstructure of the theory, which otherparticles (like electrons or quarks)just do not provide. The work ofPeter Higgs and his theoretical col-leagues did far more than predict a

TOP TWEETSBob Diamond: I have an obligation to140,000 people. Im sure shareholders willsay he has an obligation to them.@Josh_CityIndex

The Libor problem isnt banking, but how cen-tral banks screw up everyone except cronies.@DouglasCarswell

After Fifa placed England fourth in the world,the Higgs Boson discovery isnt the mostastonishing news from Switzerland yesterday.@sixthformpoet

George Entwistle is to be the new BBC head,despite the shambles of the Jubilee river pag-eant coverage he was responsible for.@Rich_rocks

As Barclays rate-fixing revelations continueto emerge, should this be the end for Libor?

YESThere has to be a more honest and efficient way of establishing

market interest rates than having banks submit whetherfraudulently or not where they think they might be able toborrow from or lend to their competitors, and then crudelyaveraging the results. One answer might be to allow truly freemarkets to operate. Firstly, take a blind sampling of actual trades(a mystery shopper, if you will) drawn at random from anynumber of executed transactions. They could be easilyanonymised to ensure confidentiality on both sides. Suchsampling should also be conducted by an independentintermediary so as not to encourage gaming the system. But whywill nobody dig further, and ask why the Bank of England itselfshould have a monopoly on fixing interest rates? Its about timewe had a proper free market in the price of money.Tim Price is director of investment at PFP Wealth Management.

Tim Price

NOPhilip Salter

Libor shouldnt be scrapped. In fact, it cant be scrapped. If

politicians and regulators try to step in, they will be alteringcontracts worth hundreds of trillions of dollars, putting the wholefinancial system at risk. A heavy-handed change will result in aninstant and colossal redistribution of wealth from one set ofcontracting parties to another. The resulting systemic and legalbacklash would be swift and expensive. Nobody can disagree thatany criminality associated with this scandal needs decisive action;however, in an effort to be seen to be getting tough on banks,politicians and regulators must ensure that they dont make thingsworse. Libor could be reformed from within. Adding more banks Euribor has 43 versus Libors 16 would be a start. For better orworse, the global financial system depends upon Libor. Regulatorsshould leave the market to judge whether the index is still of merit.Philip Salter is business features editor of City A.M.

RAPIDresponses The Higgs boson

discovery is onlythe first chapter

new particle: it explained why basicforces (like electromagnetism) arethe way they are, and why particles

can have mass. This could be thefirst direct validation of our under-standing of some very basic proper-ties of the universe.

Physicists have spent 40 years look-ing for the Higgs boson. It was one ofthe main motivations for buildingthe Large Hadron Collider. Now theymust study the new particle careful-ly to really confirm whether itsproperties are those that were pre-dicted. Any discrepancy could be thesign of a more fundamental, morepowerful theory lying beyond ourcurrent understanding. The field ofparticle physics could be analogousto Christopher Columbus reachingAmerica and not the Indies: insteadof finishing the last chapter of thestandard model, the discovery of theHiggs boson could be the opening ofa whole new world for exploration.This discovery will not bring

cheaper energy or larger televisions,at least in the foreseeable future.Instead, it represents a triumph ofhuman intelligence in understand-ing the secrets of nature, anddemonstrates that thousands of sci-entists, engineers and techniciansfrom across the globe can collabo-rate to produce a single, significantadvance in knowledge. We under-stand more about the universe, andperhaps our place in it, than before.Dr Joel Goldstein is a reader in physics at

the University of Bristol and the BristolCMS group leader. http://cms.web.cern.ch


JOEL GOLDSTEIN

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