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ALLISTER HEATH: Page 2

THE GOVERNMENT suffered a blood-ied nose late last night after PrimeMinister David Cameron endured thebiggest rebellion from his own partysince arriving in Downing Street overtwo years ago.Around 90 Tory MPs voted against

the House of Lords reform bill,despite the coalition dropping themost contentious element of the leg-islation earlier in the day.

In a humiliating climbdown to getLabour on board, the governmenthad scrapped the so-called pro-gramme motion a strict timetablerequired to force the reformsthrough in time for the next sched-uled general election in 2015.The Labour party which promised

reform of the upper house in its 2010manifesto pledged to support thebill so long as the timetable wasremoved, arguing that the issuerequired more time for debate.With all three main parties sup-

porting the bills second reading, itpassed by 462 votes to 124. But unlessa timetable is reintroduced, perhapsafter the MPs summer break, thereforms stand little chance of pro-ceeding into law.

Opponents in the Commons plan touse delaying tactics to prevent thebill from progressing.

And the large scale of the

Conservative rebellion against a keyLiberal Democrat measure nowthreatens to tear the coalition apart.

Senior Lib Dem David Laws hit outat the Tories following the vote, argu-ing that they could crack the coali-tion apart if the bill is destabilised.My colleagues in the party will say:Look, if the Conservatives are notkeeping their promises to us, whyshould we keep our promises tothem? So thats very dangerous,Laws told the BBC.Yet many Conservatives remain

vehemently opposed to the propos-als, which would involve the electionof some peers to 15-year fixed terms.

Peterborough MP Stewart Jacksontook to Twitter to warn the PMagainst pursuing the reforms.Memo to David Cameron: Not agood idea for our party morale toram through two major issues (EUand Lords Reform) using Labour MPsvotes, he wrote.

Last night Ealing Central and ActonMP Angie Bray was sacked from herposition as parliamentary privatesecretary to cabinet office ministerFrancis Maude, after defying theTory whip in order to vote againstthe bill.

Fellow Conservative MP ConorBurns also lost his government jobdue to his opposition to the bill.

FTSE 100 5,664.07 +36.74 DOW M12,653.12 -83.17 NASDAQM2,902.33 -29.44 /$ 1.55 unc / 1.26 unc /$ 1.24 unc

See Page XX

BY JULIAN HARRIS

COALITION INCRISIS OVER

LORDS PLANS

www.cityam.comISSUE 1,671 WEDNESDAY 11 JULY 2012

BY DAVID HELLIER &

LAUREN DAVIDSON

Diamond: unfair and unfounded to say I was not candid

MORE: Pages 2 , 3 FORUM: Page 17

BOB Diamond yesterday accusedthe Treasury select committee oftarnishing his reputation as theLibor scandal surrounding thebank he once ran continues tounfold.

In a letter to chairman AndrewTyrie, the former Barclays bossexpressed dismay at the sug-gestion that he was less thancandid with the committee lastweek, calling the implication

totally unfair and unfounded.MPs comments that evidence

from Diamond and Barclayschairman Marcus Agius did notmatch up have had a terriblyunfair impact upon my reputa-tion, which is of paramount con-cern to me, added Diamond.

Diamonds fightback comes asit emerged shareholders inBarclays have expressed theirconcern at the involvement ofBank of England governor SirMervyn King in the former chiefexecutives departure, a banking

analyst said yesterday.I know a number of sharehold-

ers in Barclays who are outragedat the role of the Bank ofEngland, Ian Gordon of Investectold City A.M.yesterday.

The majority of shareholderswere behind Bob Diamond afterthe Libor report was first pub-lished and both the FSA reportand the US authorities congratu-lated Barclays on its opennessand thoroughness and exonerat-ed senior members of the man-agement.

The messages from the regula-tors have been inconsistent andin the end they played to thegallery, said Gordon. BobDiamonds removal was popularso they asked for it. It is a prettyshameful state of affairs.Agius confirmed yesterday

that he had been summoned byKing to a meeting at which theremoval of Diamond wasrequested on the grounds thatregulators had lost confidencein him.

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EVA Rausing, one of the UKs richest women, has been founddead at her Belgravia home, police confirmed yesterday. The48-year-old mother of four was an heiress through marriageto the 5.4bn Tetra Pak carton empire. Police are treatingRausings death as unexplained after a postmortem failedto shed light on the matter, but her death is thought to berelated to a drugs overdose. A 49-year-old man, arrestedearlier on suspicion of possession of drugs, has since beenre-arrested in connection with her death.

See Pages 4 and 11 and The Forum, Page 17

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Follow me on Twitter: @allisterheath

FSA had warned Barclaysof aggressive behaviourREGULATORS warned Barclays bankabout its aggressive interpretation ofmarket rules just four months before itwas hit with a 290m fine for abusingthe Libor interest rate, it was revealedyesterday.

Lord Turner, the head of the FinancialServices Authority (FSA), wrote toBarclays chairman Marcus Agius on 10April this year to spell out concernsabout the cumulative impression creat-ed by a pattern of behaviour over thelast few years at the bank.Yesterday the FSA released selected

correspondence between itself andBarclays in which the regulator high-lights a series of concerns about thebanks restructuring of bad debts, finan-cial reporting techniques and corporatetax arrangements.

In one letter Turner says the FSA hasbeen left with the impression thatBarclays has a tendency continually toseek advantage from complex struc-tures or favourable regulatory interpre-tations.While Bob Diamond had told the

Treasury select committee that regula-tors were happy with Barclays, Agiusyesterday admitted to the same group ofMPs that relations with t he FSA werestrained.

Parts of the letters between the regula-tor and the bank were redacted, andthey appeared to be part of a longer

China opens door to foreign hedgiesChina has given foreign hedge fundspermission to tap its wealthy citizensinside the country for funds to investoverseas, according to people in theindustry. The move represents anotherimportant step by China to open itscapital account a process that involvesdismantling regulations separating Chinafrom international markets.

Rail chairman wades into pay stormThe constant sniping at Network Rail

about its executive bonus scheme has tostop or the organisation will lose talent tothe private sector, its outgoing chairmanhas warned. Rick Haythornthwaitecautioned that any intervention bypoliticians would seriously damage thecompanys ability to attract talent.

Seeking the right pitch over EMIUniversal Music, the record companybehind Rihanna, will propose toregulators in the coming weeks amanifesto for restoring music industrygrowth as it seeks to save its 1.2bn bidfor EMIs recorded music business, itschief executive has said.

Property owner opens door to floatDeutsche Annington Immobilien Group, aGerman property vehicle owned by GuyHands private equity firm Terra Firma, hasproposed a 4.3 billion debt restructuringin a move that could pave the way for apossible flotation of the business.

Vue looks at big picture in GermanyVues purchase of Cinemaxx, a Hamburg-based operator of multiplex screens, in adeal worth 175m is being touted as thenext step in its expansion across Europe.

Government to retain NATS stakeThe Government has abandoned plans tosell off its 49 per cent stake in the NationalAir Traffic Service amid fears the groupcould have fallen into foreign hands.

Portugals recession set to easeThe Portuguese economy is set to shrinkby three per cent this year instead of 3.4per cent forecast previously, the nationalcentral bank has said. The economycontracted by 0.1 per cent in the firstquarter of the year, which was less thanexpected.

Levi slips on weakening salesLevi Strauss fiscal second-quarter profitslid 38 per cent as the jeans makersrevenue declined in Asia and Europe and ascotton costs continued to increase,reflecting a challenging global economy.

AMR to explore merger optionsAmerican Airlines parent AMR plans tosound out potential partners about amerger or other investment deals in comingweeks, said people familiar with the matter,setting the stage for a showdown over theairlines path out of bankruptcy.

FRENCH president FranoisHollande said that the spectre ofthe Libor scandal had increasedinternational suspicion towards the

banking sector, as he made his firstofficial visit to the UK yesterday tomeet with both Prime MinisterDavid Cameron and the Queen.

There have been a fewrevelations in Britain that mean wehave to be wary in our respectivecountries, he told reportersfollowing a press conference by thetwo leaders outside No 10, sayingthat the scandal showed the needto closely control and regulate

banks behaviour.Though Hollande visited London

in February during his presidentialcampaign, he did not meet theBritish Prime Minister. Tensions

between Cameron and the socialistleader have heightened furtherafter Hollande recently announcednew tax hikes that could hammerBritish owners of secondhomes in France.

But yesterdayHollande, during anawkward exchange of

jokes with Cameron,appeared to claim thatholiday homes wontface higher taxes.

Hollande wary

of banks afterrates scandal

Lord Turner said Barclays tax arrangements had an unfavourable impact on the firm.

2 NEWS

BY ELIZABETH FOURNIER

BY JAMES WATERSON

To contact the newsdesk email [email protected]

YOU may not care about thegovernments bizarre obsessionwith trying to replace theunelected House of Lords with

an almost equally strange upperchamber. If so, you are not alone thepublic has completely switched offfrom the arcane, introspective world

of the Westminster village.Ordinary people want to talk aboutgrowth and jobs, not about irrelevantniceties. They want a political elitethat focuses on fixing an economythat probably shrank by 0.2 per centin the second quarter, not one thatconstantly wants to rejig the politicalrules to advance its own power base.

But the fact that such a huge num-ber of Tories rebelled still mattershugely: it means that the coalition isnow in near-terminal crisis. Therecould be an election much soonerthan most people in the City realise

EDITORSLETTER

ALLISTER HEATH

Massive revolt by Tory MPs is beginning of end for coalition

WEDNESDAY 11 JULY 2012

and even if the government stumbleson, it is now even more weakened andin even greater disarray. Given thatthe Labour party is way ahead in thepolls, and that the Liberal Democratsmay not now allow a change in elec-toral boundaries to reduce the sys-tems bias against the Conservatives,this bodes ill for David Cameronschances of staying in office.

Ed Miliband could easily becomePrime Minister sooner rather thanlater, with Ed Balls, the architect of

much of what went wrong during thebubble years, our new chancellor ofthe exchequer.

But its not all doomed for the coali-tion or not quite yet anyway. It stilljust about has the time to fight back,though that would require a dramat-ic shift in economic policy. The only

hope is a set of emergency supply-sidereforms after the summer to incen-tivise companies and individuals toinvest and work while not increas-ing spending any more than alreadyagreed. If such a plan doesnt materi-alise in the next few months and tobe honest I have given up hope thatthe present chancellor and businesssecretary would ever countenancethis the coalition might as well packit in. There is no way GeorgeOsbornes fiscal plans will be met: thegrowth isnt there. All of the job-destroying tax hikes have come

accounts for close to 50 per cent ofGDP, ever-higher public debt, privatesector deleveraging and excessivelyharsh capital and liquidity rules thatare reducing the supply of credit.The coalitions last remaining pub-

lic interest rationale for stickingtogether is to deal with the public

finances. When it eventually becomesapparent that that too has comeunstuck another couple of quartersof GDP contraction should do thetrick there will be nothing apartfrom the love of the trappings ofpower to keep Lib Dems and Toriestogether. One should never underesti-mate the self-preservation instincts ofpoliticians but the future is lookingvery bleak indeed for Britains braveexperiment in coalition politics.

through, and spending is falling slow-ly in real terms. But Osbornes six-yearplan to get rid of most of the deficitwas always predicated on hopelesslyoptimistic growth forecasts.The lack of growth is not all

Osbornes fault, of course. The impactof the Eurozone is clear. An analysis

by Capital Economics shows that thevalue of exports to non-EU countriesin May was seven per cent above itslevel at the end of 2011 but thatexports to EU countries were downfive per cent. Goods exports to non-EUcountries exceeded exports to the EUfor only the second time since 1998.

But Britain is also being draggeddown by still high inflation (that iscutting real wages and wealth), anti-growth and anti-wealth taxes, crip-pling labour, product market andplanning regulation, an anti-businessclimate, a bloated state that still

chain of correspondence.Defending the bank, Agius told the

Treasury select committee yesterday: Idont wish to be pedantic but I dontregard this as damning. I regard this as afirm letter from our regulator.

Despite this he said that the correspon-dence released by the banking watchdogwas a very important letter and reas-sured MPs it was one we took very seri-ously.Hollande is raising

taxes on the richFORUM: Page 16

The new jobs website for London professionalsCITYAMCAREERS.com

WHAT THE OTHER PAPERS SAY THIS MORNING

FSA concerns about Barclays governanceProtium dealIn 2009 Barclays transferred $12.3bn(7.7bn) of toxic assets to an off-balance sheet Cayman Islands vehiclenamed Protium. This raised FSAconcerns about accounting practices.

Banking stress testBarclays gave FSA officials theimpression that it was trying to spin

the banks capital position in order topass the crucial European BankingAuthority stress test.

CVA positionsBarclays is accused of choosingvaluations clearly at the aggressiveend of the acceptable spectrum for itsmonoline CVA [Credit ValuationAdjustment] positions from 2009.

FromMarcus Agius toLordTurner, 18 April 2012

The Board and I took note of AndrewBaileys comments in ourFebruarymeeting and, while he specificallyexcludedBob Diamond and ChrisLucas from his comments, it was clearthat tone fromthe top is one of theFSAs concerns.

From LordTurner,chairman ofFSA,toMarcusAgius,Barclays chairman10April 2012:

Barclays oftenseemsto be seeking togain advantage through the useo

fcomplex structures, orthrough arguingforregulatory approaches which are atthe aggressive end ofinterpretationoftherelevant rules and regulations.

Ourteam felt that Barclays continued toargue forcapital optimisation in a waywhich inefficientlyusedup ourresourceand goodwill.

....

The cumulative effect has been toleaveus withan impression that Barclayshas a tendency continually to seekadvantage fromcomplex structures orfavourable regulatory interpretations.

The FSA released letters yesterday

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days evidence from Barclays chairmanMarcus Agius.John Mann MP told City A.M. that at

least four members of the committeewant to pose further questions to theformer Barclays boss after apparentinconsistencies appeared in hisaccount of events.

Agius directly contradictedDiamond on at least six occasions. Ihave no reason to doubt the accuracyof Agius answers, therefore I think weneed to be calling Diamond back,Mann said.

Diamond has serially misledParliament, he added, a comment

which the banker calledunfair and unfound-

ed. Mann also saidthat he expects thescandal to moveonto RBS whichmay well be moreserious whenFSA chair Lord

Turner appearsbefore the treasury

select committee onMonday.

BANKS should be given breathingspace from the onslaught of newregulation in return for drasticallyincreasing their levels of corecapital, a key Bank of Englandpolicymaker said last night.

Speaking in a personal capacity,Robert Jenkins floated the idea of afreeze on new banking regulationsand a reassessment of the existingrulebook if banks can raise theirtangible equity capital to 20 per cent.

The best solution is to set theminimum for loss absorbing capitalat a level which discouragesrecklessness and protects the publicpurse when it happens, he said.

BY ELIZABETH FOURNIER

FORMER Barclays boss Bob Diamondyesterday agreed to turn down pay-ments worth around 20m followinghis resignation from the firm.

But the banks ex-chief executive willstill receive a years salary and a cashpayment in lieu of pension contribu-tions, worth around 2m in all.

Bob Diamond has voluntarilydecided to forgo any deferred consid-eration and deferred bonuses towhich he otherwise would have beenentitled to, Barclays chairmanMarcus Agius told the Treasury selectcommittee yesterday.

Diamond later issued a statement on

the settlement: It is my hope that mydecision to step down and todaysagreement on my remunerationwill help close this chapter andallow Barclays to move forward andprosper.

But this will not be the end of theroad for Diamond, who could findhimself recalled to the Treasuryselect committee following yester-

Bob Diamondmisses out on

20m bonusesBY JAMES WATERSON

Diamond was atBarclays for 16 years

US LAWMAKERS said yesterdaythey would call Fed chairman BenBernanke and the Treasurysecretary Tim Geithner to facequestions over the Libor scandal.

Tim Johnson, chairman of the USSenate Banking Committee, said: Iam concerned by the growingallegations of potential widespreadmanipulation of Libor and similarinterbank rates by some financialfirms, he said.

The Banking Committee will

BY ELIZABETH FOURNIERhold hearings in July with TreasurySecretary Geithner and Federal

Reserve chairman Bernanke, and Iam asking them to be prepared toanswer Senators questions on thismatter, he added.

It also emerged yesterday thatthe Federal Reserve Bank of New

York may have known in August2007 that the setting of globalinterbank rates was flawed. Aspokesman said it had anecdotalreports from Barclays of problems

with Libor and worked with theUK regulators on the issue.

WEDNESDAY 11 JULY 20123NEWS

cityam.com

I was faced with the dilemma that there was fargreater reputational damage than anticipated,and certainly far greater than we had sought, thatthere was a requirement for some further action.

Marcus Agius

[Diamond] was utterly depressed. The conversationwas not long. He asked for time to talk to his familyand we left confident that if he hadnt already madethe decision, that he would make the right decision.

Andy Love

David Ruffley

Ruffley: Under your captaincy a greatBritish bank has been dragged through themud. Are you ashamed of that?Agius: I regret deeply whats happened.

US policymakers face Senatecommittee over Libor scandal

Dont you acceptthat the bank wastotally out of touch,that it took ameeting with thegovernor of theBank to do the rightthing?

BoE official: upcapital buffers

THE ROYAL Bank of Scotland said yes-terday that it will refund all charges

incurred by its customers during theIT glitches that have left many accountholders unable to access their cashover the past few weeks.

RBS also said it would reimburse cus-tomers of other banks who were hit aspart of the crisis, paying back chargesincluding overdraft fees and intereston late payments. Some Ulster Bankcustomers are still being affected byproblems, which started last month.

RBS will send letters detailingrefunds to account holders in the nexttwo weeks.

BY CITY A.M. REPORTER

RBS reveals itsrefund plans

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MARKS & SPENCER announced a raftof management changes yesterdayand confirmed that its head of gener-al merchandise Kate Bostock is toleave, as the retail giant revealed itsworst quarterly sales figures in years.

The company said Bostock will beleaving by mutual consent on 1October and will be succeed by JohnDixon, M&Ss head of food, who hasplayed a key role in driving successfulofferings like the dine-in-for-10 offer.

Belinda Earl, former chief executiveof Jaeger, Aquascutum andDebenhams, will also join as styledirector, working three days a week,in a move to revive its underperform-ing womenswear division.

Patrick Bousquet-Chavanne, a for-mer Este Lauder executive, has beendrafted in for the new role of corpo-rate director of strategy implementa-tion and business development.The dramatic overhaul of its team

came as M&S confirmed sales of cloth-ing and homeware slumped 6.8 percent on a like-for-like basis in the 13weeks to 30 June, with food sales up0.6 per cent. Overall like-for-like salesfell by 2.8 per cent.

M&S shakes up

managementas sales slump

BY KASMIRA JEFFORD Chief executive Marc Bollandblamed a tough trading season on abasket of three things, namely, ahighly promotional market, shortageof stock on some of its clothing linesand miserable weather conditions.The trading update coincided with

the groups annual general meeting,where shareholders bemoaned toomany sleeveless dresses, loud music instores, poor strategy and made refer-ence to Marc Bolland as the BobDiamond of retail. But the meetingstopped short of a shareholder spring,with over 95 per cent voting in favourof the pay report and the same num-ber supporting Bollands re-election.

M&S has hired former Jaegerchief executive Belinda Earlfor the newly created role ofstyle director to boost itsfashion credentials. Earl, whohas spent 25 years working inretail, is best known for herrole at Debenhams, whereshe was the UKs youngest

retail chief executive.

M&Ss poor figures will put pressure on Marc Bolland, who has been CEO for two years

Marks and Spencer Group PLC

5 Jul 6 Jul 9 Jul 10 Jul4 Jul

320

325

330

335

340 p 327.8010 Jul

BETHANY HOCKINGINVESTEC

The ongoingoutperformance

of food is making M&S astructurally lower grossmargin business, withfood gross marginaround 20 basis pointslower than of clothing.Clothing still accountsfor roughly half of prof-its, however, so issues there are in need of a solu-tion and the management changes are thuspositive, but most don't occur until October, so it isvery early days...For the time being we make nochange to our 690m forecast, althoughsee risk as to the downside.

JEAN ROCHEPANMURE GORDON

JOHN STEVENSONPEEL HUNT

ANALYST VIEWSWHAT HAS SPARKED MARKS & SPENCERS POORTRADING PERFORMANCE? Interviews by Kasmira Jefford

PROFILE: THE NEW MANAGEMENT TEAM

MORE: Page 11, FORUM: Page 17

WEDNESDAY 11 JULY 20124 NEWS

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First quartertrading was in

line with market fearsand recent pressreports...While nothelped by the poorweather, womenswearsales appear disap-pointing relative to Nextand Debenhams,reflecting continued internal issues in ranging andmerchandising... While first quarter sales trendswere in keeping with market fears, our full-yearlike-for-like expectation of 1.8 per cent looks toooptimistic. We expect to cut our 2013 pre-tax profit to 690m from 753.6m

M&S has report-ed a first quar-

ter on the weaker sideof consensus overall...Although the sharescontinue to trade at asignificant discount totheir historical averagevaluation, we continueto rate them hold aswe wait for staff moves to settle down and forsigns that weakness in general merchandise (forexample loss of clothing market share) has beenarrested. We prefer to recommend buying sharesin Next instead, and in the mid cap space,NBrown, Asos or Dunelm.

Steve Rowe joined M&S 23years ago after jumping shipfrom Topshop. As director ofretail, he runs the M&S UKstore portfolio and played akey part in the groups turn-around under Sir Stuart Rose,helping to improve customerexperience. He will join the

board as head of M&S Food.

Belinda Earl

John Dixon

Steve RoweJohn Dixon, who has beenrunning M&S food businesssince 2008, joined the retail-er as a trainee in 1986, andwas promoted to the board in2009. He will replace KateBostock as head of generalmerchandise, tasked withreviving sales in the under-performing fashion division.

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THE CHIEF executive of Cypruss

largest lender, Bank of Cyprus,resigned yesterday, citing a lack ofcoordination in dealing withEuropes banking crisis.

Andreas Eliades was chiefexecutive officer for eight years andinstrumental in leading the banksforay into Greece, where the lenderis now heavily exposed to its debtmountain. He said he was leavingwith immediate effect.

Bank of Cyprus rattled domesticmarkets by unexpectedly seekingstate financial support just prior to aregulatory deadline to bolster itscore Tier 1 capital last month.

Capital requirements of theislands second-largest lender,Popular Bank was a key reasonforcing Cyprus into requesting aninternational bailout on 25 June.

Both banks suffered record 2011losses as a result of a writedown in

their portfolios of Greek sovereigndebt, an impairment agreed byEuropean leaders, including Cyprus'spresident, to make Greeces debtmore sustainable. The decisionproved costly for the island, theEurozones third-smallest economy.

As a result, Popular Bank requireda 1.8bn capital injection from thestate, while Bank of Cyprus hasasked for 500m. The bank said itsboard would meet tomorrow todiscuss Eliadess succession.

Bank of Cyprusboss resignsover euro crisis

BY CITY A.M. REPORTER

SPAIN will have to implement fur-ther austerity measures to get thebailout it wants, it emerged yester-day evening, following decisionsmade at a Eurogroup meeting thatran through the previous night.

Prime Minister Mariano Rajoy willhave to produce a two-year plan ofmeaningful fiscal reform by the endof July in order to receive the 100bn(79bn) bailout of its troubled bank-ing sector.These fiscal reforms will include

reduced expenditure, increased tax-ation and labour market liberalisa-tion, as well as banking reform

including a nine per cent capitalrequirement from the end of 2012until 2014.The European Commission (EC)

will have the power to scrutinise the14 Spanish banks that will benefit,which together make up some 90per cent of the market.

Spain has also been given an extrayear to meet its deficit target, set atthree percent of GDP it now hasuntil 2014.Yesterday saw the release of indus-

Rajoys partymust cut more

to get bailoutBY BEN SOUTHWOOD trial production data for Italy andFrance, which unexpectedly showedthat Italian industrial output rose 0.8per cent in May compared to April.But French output crashed a full 1.9per cent in the same period.

Italy also said yesterday that it mayneed to access Eurozone rescuefunds, to help depress rising bondyields that make borrowing extreme-ly expensive.And the IMF warned that more

Italian reform was necessary in itsannual report yesterday, even afterall of Italys impressive budgetaryachievements.The fund also warned that though

Italian banks did look to be in a rela-

tively good position, they wouldneed to maintain adequate capitaland liquidity buffers to remainresilient.

But Germanys constitutional courtmay put a complete hold on bailoutproceedings, as president AndreasVosskuhle said yesterday a very thor-ough examination of the EuropeanStability Mechanism (ESM) was likely meaning the implementation ofthe scheme will be delayed until adecision is made.

SPAINS ruling Peoples Party hasasked 24 politicians and formerBankia executives including ex-

chairman Rodrigo Rato to appearbefore parliament this month toexplain problems leading up to thetroubled lenders state rescue.

Bankia is at the heart of a crisisthat could push Spain to ask for a

bailout. It has asked for a 19bn(15bn) state rescue and formerexecutives of the lender are beinginvestigated for fraud.

Rodrigo Rato one-time IMFchief who resigned from Bankia inMay had asked to speak before

Spains ruling politicians call 24witnesses to testify over Bankia

BY CITY A.M. REPORTER parliament to defend himselfagainst the charges earlier

yesterday, when he also quit theInternational Airlines Groups

board of directors.

Meanwhile, Spains high courtaccepted a new lawsuit againstformer executives of Bankia andcombined it with an existing

judicial investigation, courtsources said.

The new complaint was filed bya protest movement known as theindignados, which has criticisedthe governments handling ofSpains economic crisis and

billions of euros of state fundssunk into wobbling banks.


cityam.com

Former Bankia chairman Rodrigo Rato has asked to a ppear before parliament

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SERIAL ENTREPRENEUR andDragons Den star Theo Paphitis hassnapped up Robert Dyas, thehardware chain, for around 10m.

The 140-year old retailer whichstarted its life as an ironmonger, wason the brink of collapse in 2009 butwas rescued by its lenders, AlliedIrish Banks and Lloyds BankingGroup, in a debt-for-equity swap.

The banks hired CavendishCorporate Finance to advise on thesale of the 100-store chain last year.

Paphitis, whose retail empireincludes the stationer Ryman,revealed the news on Twitter, saying:I am in the ironmongery business!

He is thought to be taking onaround 5m of debtand a pension liabil-ity of over 2m.

Geoff Brady, theoutgoing chair-man, said: I amdelighted that thebusiness hasattracted an entre-preneur of Theosstature.

Theo Paphitisbuys RobertDyas for 10m

BY KASMIRA JEFFORD

BLACKBERRY maker Research inMotion (RIM) executives were grilledby angry shareholders yesterday atthe troubled firms annual meeting.

Chief executive Thorsten Heins andthe Canadian firms board werequizzed about the delayed arrival ofthe next generation of BlackBerrysmartphones, while the competencyof Heins and the board was called intoquestion.

One shareholder asked how RIMhad let things get out of hand sobadly and called for members of theboard to quit, while another toldHeins: You didnt have the experi-ence that we really needed.

Executives were told: What thiscompany needs is an upheaval, astatement met with applause.

Heins, who joined the strugglingfirm from Siemens in January, haslaid out an aggressive cost-saving

BY JAMES TITCOMBplan, including cutting 5,000 jobs andclosing factories.The company has also resorted to

selling one of its private jets as its mar-ket share is squeezed by the popularityof Apples iPhone and devices runningGoogles Android software.

RIM which has seen first-quarterlosses of $518m (334.3m) fell almostfive per cent in trading yesterday.

Its share price has dropped by 75 percent in a year.

CAN THE TROUBLED HANDSET MAKERTURN ITSELF AROUND?Interviews by JamieSutherland and Polly Young

People are getting more accustomed to iPhones Iuse one but Ive got a BlackBerry for work, whichthe office supplies. I dont find it very user-friendly.

BlackBerry is embedded in the Citys infrastructure, but its notimpossible that will change, what with the pace of technology.

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

JEFF KEATINGMERCHANT SECURITIES

I was always a BlackBerry user, and then I switchedto an iPhone. At first, it was because of the apps

available. That wasnt a professional reason, but then I foundthat the iPhone deals with everything much better than theBlackBerry. Its much more of an all-rounder.

HELIOS MOODYHM CONSULTANTS

I think its going to be acquired. RIM does have prob-lems, but then all tech firms have challenges if youlook at any of the major tech firms, they normally

have a peak and then a trough, and then get acquired. RIMssecurity technology is still of unique value; the City relies on it.

PHIL WALKERRESTORATIONSUMMERSWOOD

CITYVIEWS

Research In Motion Ltd


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10 Jul


cityam.com

THE latest YouGov BrandIndex bi-annual league table reveals thatAmazon, Google and BBC iPlayerhave managed to beat 850-plus

brands to become the most highly-rated brands in the UK.

The 2012 bi-annual league table,compiled using the Index score (acomposite of six key image attributes general impression, value, quality,satisfaction, recommendation andcorporate reputation) on YouGovsBrandIndex a tracker thatmeasures daily perception of brandsamong the public highlights whichconsumer brands have been able tocut through and make a positive andlasting impression. Back in January when 2011 rankings were published Google, Amazon and M&S took

first, second and third positionrespectively.

This time around, however,Amazon has managed to overtakeGoogle and for the first time holdsthe top spot. M&S has fallen out ofthe top three, now fourth, whilenewcomer BBC iPlayer shootstowards the top, coming in third.

Other newcomers to the 2012

ranking include: Samsung (13),Freeview (14) and Dyson (18) at theexpense of Dove, Walkers, Panasonicand Thorntons.

That there are only threenewcomers in this years ranking

highlights how challenging it can befor a brand to cultivate a positiveimage and break into the topechelons of the nations favourites.

Retail and fast-moving consumergoods (FMCG) brands remaindominant, accounting for 12 of the20 entries. Favourite FMCG brandsamong UK consumers include:Colgate, Cathedral City, Cadbury andHeinz. Five technology brands(including the top two) and twobroadcasters (BBC and Channel 4)complete the list.

BRANDINDEX

STEPHAN SHAKESPEARE

BBC iPlayer topples Marks & Spencer asdigital brands dominate UKs top three

0

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60TOP 20 BRANDS 2011: UK (Based on index)

Google

60.1

Amazon58.7

Marks&Spencer54.6

BBC53.4

Heinz50.8

Sony48.8

JohnLewis46.9

Boots45.5

Cadbu

ry43.9

Sainsburys42

Thornto

ns41.49

Colgate40

.22

Channel440.16

Maltesers39.94

CathedralCity3

9.38

Walkers39.23

Watersto

nes39.15

Bosch38.75

Panasonic38.41

Dove38

Score

Google5

4.8

BBCiPlayer53.7

Mar k

s&Spencer52.2

BBC51.7

Heinz47.9

JohnLewis46.5

Sony45.2

Boots43.1

Cadbury42.4

Sainsburys40.8

Channel439.7

Cathedral

City38.5

Samsung38.4

Maltesers37.8

Colgate37.4

Freeview37.3

Waterstones37.1

Dyson36.9

Bo

sch36.6

TOP 20 BRANDS first half 2012: UK (Based on index)Score

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RIM faces angryshareholders attense meeting

RIMs chief executive Thorsten Heins had his level of experience brought into question

Dragon Theo Paphitis

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SHOPPING is all aboutjustification. I need that extrajumper because.... And whenit comes to justifying our

purchases, we turn to one of twooptions. Because Im worth it orbecause its cheap. Buyingdecisions, beyond bare essentials, are

about treats and bargains.

Thats true even in cash-strapped times like thepresent. Earlier this year,Euromonitors study of16,000 consumers aroundthe world revealed that 59per cent of us like to findbargains, rising to 64 per

cent for women, while 30per cent of women and 26per cent of menacknowledge they

SHARES IN ASOS rallied more than10 per cent yesterday after the fast-growing online fashion retailer out-shone its bricks-and-mortar peersand posted a 31 per cent rise in first-quarter sales.The internet shopping site targeted

at fashionable 20-somethings saidtrading was buoyed by a strong per-formance in the United States andAustralia as well as signs of improve-ment in the UK.

Sales in its home market rose byeight per cent in the three monthsto 30 June, which chief executiveNick Robertson described asencouraging given the currenteconomic climate.

UK consumer spending has beendented by fears of rising unemploy-ment, lacklustre growth in wagesand government austerity measures.

However, the overall retail picturewas brighter in June, as the QueensJubilee holiday helped boost Britishretail sales.

International sales grew by 49 percent and now represent 65 per centof the groups total, up from 57 percent last year.

US sales surged 83 per cent ahead

ASOS bucks the

retail gloom asrevenue jumpsBY KASMIRA JEFFORD

of City forecasts while sales in theEU rose 27 per cent and sales in therest of the world, predominantlyAustralia, were up 61 per cent in thefirst quarter.

We remain positive in our outlook,and continue to trade in line withexpectations, said Robertson, whofounded the company 12 years agoand was made an OBE in the Queens2011 Birthday Honours List.The group has benefited from the

launch of country specific sites inAustralia, Spain and Italy and theopening of a new, larger warehousein Barnsley last year.As at the end of June, ASOS had

8.7m registered users, up 50 per centyear-on-year, with 4.7m active cus-tomers, up 34 per cent year-on-year.

Asos chief executive Nick Robertson

regularly buy themselves smalltreats in Brazil, its as high as 42per cent.

This then is one way tounderstand the relative success ofAsos. Its retail concept is brilliant,not just for its innovative digitalapproach but because it offers bothtreats (fashionable clothes) andbargains (online discounts) in one.No wonder it managed year-on-year

IN BRIEF$200m missing from PFGBestn The US futures trading industry reeledyesterday as federal regulators accusedIowa-based broker PFGBest of misusingover $200m in customer funds for morethan two years, resurrecting the shock ofMF Globals collapse. The CommodityFutures Trading Commission said that thebrokers regulated Peregrine FinancialGroup unit and its owner had failed tomaintain sufficient capital in segregatedaccounts since at least February 2010.

Nokia continues to crumblen Troubled phone maker Nokia hurtledalong its downwards tumble yesterday asit shares sank a further three per cent to a17 year low. The Finnish company, which

once dominated the mobile phone mar-

ket, has failed to keep up with newerofferings from smartphone giants Appleand Samsung and posted in April a1.34bn (1bn) first quarter loss. Itscrumbling shares are now at 1.44 justtwo per cent of its 65-odd high in 2000.Its market cap has shrivelled to 5.6bn.

Smiths News enjoys revenue leapn Newspaper and magazine wholesalerSmiths News projected better thanexpected sales yesterday following itstakeovers of Dawson Books and sta-tionery maker The Consortium. Incomefor the 44 weeks to 7 July increased 3.3per cent, although the sellers core busi-ness was harmed by declining newspa-per sales. Shares jumped by five per centto 99p yesterday.

BOTTOMLINE

MARC SIDWELL

ASOS PLC


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growth of eight per cent in its UKsales over the quarter to 30 June thisyear, when others are left turning tothe weather to explain away theirdismal numbers.

From this perspective, its alsopossible to see the problem Marksand Spencer is facing. Its non-foodsales were down 6.8 per cent over

the quarter like-for-like because toomany people think M&S clothes areneither a thrilling indulgence nor abargain. Its food business,meanwhile, grew 0.6 per cent,because its not just selling anyfood, but some of the nationsfavourite treats. Bargain pants orlacy luxuries, M&S shouldnt wear amiddle of the road strategy.

Marc Sidwell is City A.M.s managingeditor

Web treats prove to be a real bargain

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THE GLOBAL economy will expandonly very slowly in the second half ofthe year, the Centre for Economicsand Business Research (CEBR)predicted today.

The CEBR expects growth of aboutone per cent over the second sixmonths of the year, with inflation indanger of turning negative.

Douglas McWilliams at the CEBRsaid: Today the world economy isagain slowing sharply. The US andChina are grinding to a halt. Europeis already in recession and growth isfalling.

The report argues that Keynesianstimulus is not always anappropriate policy, but says it will beif deflation is likely; if the measuresconsidered are temporary andreversible; if the measures funduseful activity; and if monetarymeasures are ineffective.

The G20 now needsto act together toprevent deflation, theCEBRs report will urgeof international

policymakers.

BY BEN SOUTHWOOD

THE UK economy is likely to haveshrunk yet again in the second quar-ter, making this the longest reces-sion in modern history, according toestimates released yesterday by theNational Institute of Economic andSocial Research (NIESR).

Their prediction that GDP fell 0.2per cent in the second quarter car-ries some weight among analysts,because NIESR estimates have in thepast correlated closely with later-released official GDP figures.The estimates show that the

UK was still more than four

per cent down on peak GDPin June, despite the passageof more than 50 monthssince the beginning of thedecline. In all previousrecessions anddepressions the UKwas above peakGDP by 47 monthsafter the initialcrash.Though they

estimated a

Economy slipsyet again as UK

slump goes onBY BEN SOUTHWOOD marginal quarterly uptick of 0.1 per

cent in May, the five previous monthsall had negative predictions.

Labour and the trade unionspounced on the figures, using thedata to attack chancellor GeorgeOsbornes policies.Trades Union Congress general sec-

retary Brendan Barber put poor eco-nomic outcomes down to austerity,claiming: This grim forecast showsthat unless the government changescourse, the UK could be less thanhalfway through a lost decade ofweak growth and high joblessness.

Labours Rachel Reeves MP said theUK needed a chancellor focused

full-time on the national economicinterest...and reforming our banks.

Quarter-on-quarter growth esti-mates have now been zero or neg-

ative since the threemonths to February 2011,when it was predictedthat GDP had grown 0.1per cent on the previousthree months.

Sector-by-sector, therehave been falls acrossthe board except for inpublic services, which

has shown consistentgains since a slight fallin early 2011. UK INDUSTRIAL production

upticked in May yet remains on adownwards slope, according todata released yesterday by theOffice for National Statistics (ONS)

yesterday.Production was 1.6 per cent

lower in May than in the samemonth one year earlier, and 2.1 percent lower in the three months toMay than in the same threemonths a year ago. However,compared to April, production wasup one per cent the fastestmonthly growth since March 2010.

The report, along with manyanalysts, puts the rise down to themovement of a bank holiday to

June, which suggests that Junesfigure will be depressed.

BY BEN SOUTHWOOD

Douglas McWilliamssays prices couldstart tumbling


cityam.com

The profile of recession and recovery

0 6 12 18 24 30 36 42 48 54

8 %

6 %4 %

2 %

0 %

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eak

Months from start of recession

1930-1934 1973-1976 1979-1983 1990-1993 2008-

THE UKS trade deficit narrowed inMay, with exports soaring,according to the data releasedyesterday by the Office for NationalStatistics (ONS).

The deficit in goods was down to8.4bn, from 9.7bn in April, andthe surplus in services remainedunchanged at 5.6bn, so that thecurrent account showed a deficit of2.7bn, compared to 4.1bn shownin the previous month.

Nida Ali at the Ernst & YoungITEM club said: The recent tradedata has been particularly noisy andalthough the May deficit was muchnarrower than in April, it just tookus back to where we were in thefirst quarter.

Looking through the monthlyvolatility, it is clear that the

BY BEN SOUTHWOODEurozone woes are having a majorimpact on our exporters, she wenton to add.

Total trade was up on the month excluding erratic items such as oil,exports climbed 6.6 per cent, whileimports edged up one per cent. Butgoods exports to the EU were downover four per cent in value in thethree months to May.

Significant partner country 3 month balances

- 6 - 4 - 2 2 4

GermanyUSA

NetherlandsFranceChina

Belgium/LuxIrish Republic

ItalySpain

NorwaySweden

billion 0

CEBR forecastsslow growth

Chancellor GeorgeOsborne faces anotherquarter of bad data

THE TOP one per cent of earners inthe US saw their pre-tax incomessuffer the most from 2007 to 2009,according to data released

yesterday by the CongressionalBudget Office (CBO).

Income before tax plummetedby 36 per cent for the highest oneper cent of households by

earnings, the CBO said. For thelowest four quintiles some 80 percent of the population incomes,

which also include state transfers,

BY JULIAN HARRIS fell by five per cent or less.The top 20 per cent as a whole

saw their incomes slide by 18 percent. The data also showed that thetop quintile of households paid67.9 per cent of federal taxes in2009, with the poorest quintilepaying just 0.3 per cent.

President Barack Obama hasraised taxes for high earners,arguing that Americas wealthy

citizens must contribute more tohelping reduce the governmentsmammoth budget deficit, whichtotals well over $1 trillion a year.

Monthly upturnfor UK industry

US datareveals recessionhitthe richestthe hardest

President Barack Obama has said that wealthy Americans must pay higher taxes

Exports soar despite dropin trade with the rest of EU

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IT WAS an emotional night forthe angel who lost his wingsafter eight years of service atthe helm of the British Business

Angels Association.Anthony Clarke, who earlier

this month ended his eight-yearchairmanship of the business, wasone of almost 200 people gatheredat The UK Business AngelsAssociation Gala Awards Dinnerthat took place this week at theSwan Dining Room atShakespeares Globe.

The event sought tocommemorate the successes of

investors and early stageentrepreneurs and was supportedby the City of LondonCorporation. The evening allowedfor extensive networking, guestspeakers and compelling magictricks.

Tim Luke, David Camerons No10 senior policy adviser forbusiness and enterprise, ignitedthe evening with a speechpraising the significance of angelinvesting for the governments

strategy for technology, innovationand growth.

Serial entrepreneur, founder ofEnterprise Nation and co-founderof StartUp Britain, Emma Jones,provided an after dinner speech,bolstering the importance ofangels supporting the countrysentrepreneurial talent.

Six awards were presented thatreflected the diversity of theorganisation and the extent oftheir achievements.

The award for Angel Investor ofthe Year went to Peter Saunders,who may not look celestial but

truly is an angel to theorganisation. Saunders said he wasprivileged and overjoyed to havereceived the award.

Before the dazzling event cameto a close, however, a special awardwas given to Clarke, who passesover to Sir Nigel Rudd in thecoming weeks.

Rudd is perhaps not the angel heseems to be, having previouslybeen deputy chairman of Barclays,the scandal-ridden bank.

Anthony Clarke to hand over shortly to SirNigel Rudd after eight years at the helm

Got A Story? [email protected]

13cityam.com

cityam.com/the-capitalistTHECAPITALIST

WORKERS across the City arejust hours away from com-

peting against each other in theStandard Chartered Great CityRace.

The 2012 race on Thursdayhas attracted the greatest everamount of runners with themaximum 6,500 places fromover 350 companies selling out inrecord time. The 5K race starts at19.15 at The Honourable ArtilleryCompany (HAC).

Proceeds from the race will bebacking a worthwhile cause,Seeing is Believing, a globalinitiative that tackles avoidableblindness. 5 from every entry is

being donated to the cause andStandard Chartered is matchingeach donation pound-for-pound.

Employees from all sectors willbe cheered over the start line bySeeing is Believing ambassadorSir Ranulph Fiennes OBE.

Celebrities such as five-timesParalympic gold medal legendand visually impaired athleteNoel Thatcher MBE will bejoining in the fun.


Get set for the

5k StanChartCity challenge

Angel Clarke bows out of BBAA

Anthony Clarke gets presented with a special award at the Angels Association dinner

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IN BRIEFInterserve wins 1bn in contractsn Interserve yesterday said it had woncontracts worth more than 1bn in thefirst half of 2012, reinforcing the strongfuture workload at the supportservices and construction group. The

firm said it still expects trading to bestable in 2012, in line with marketforecasts, after revenues and marginsincreasing as expected in the first half.Shares in Interserve closed up morethan six per cent yesterday as investorswelcome the upbeat outlook.

Private sales rise at Galliford Tryn Homebuilder Galliford Try said yes-terday it has sold more homes at higherprices in its private housebuilding seg-ment for the full year, largely benefit-ing from its focus on the south ofEngland, and said the UK housing mar-ket has been stable. Completionsincluding those from joint venturesrose 40 per cent to 3,039 units duringthe year. In private housebuilding, theaverage price was 250,000 per unit,up from 227,000 a year earlier.

Farepak customers to get 50p in 1n Customers of defunct Christmassavings firm Farepak will receive half ofany money they lost when the firm col-lapsed, its liquidators said yesterday.BDO confirmed that payments to thosethat lost money will be made in August,with funds coming from a combinationof an 8m payment from bank Lloyds,and a contribution from the FarepakResponse Fund charity, which was setup by the Department for Trade andIndustry in 2006 when the businesscollapsed.

NORWAYS government ordered alast-minute settlement in a disputebetween striking oil workers andemployers yesterday, as a total shut-down of the industry loomed.The strike over pensions had

brought the industry to the brink asemployers prepared to cease theiroperations.

Oil markets had been hit with theprice of crude rising over supplyfears, but soon calmed after the gov-ernment finally acted.

Under Norwegian law, the govern-ment can force the striking workersback to duty and has done so in thepast to protect the industry on whichmuch of the countrys economydepends.

But it was slow to intervene in thelatest dispute, which was in its thirdweek, and did so on Monday onlyminutes before the start of the lock-out, citing potential consequencesfor the economy.

I had to make this decision to pro-tect Norways vital interests. It wasntan easy choice, but I had to do it,"

Norway settles

oil dispute aspoliticians actBY JOHN DUNNE Labour minister Hanne Bjurstroem

said after meeting with the tradeunions and the Norwegian oil indus-try association (OLF).A full closure of output in Norway

the worlds No 8 oil exporter wouldhave cut off more than two millionbarrels of oil, natural gas liquids(NGL) and condensate per day.

But the minister said her main con-cern was the potential cut in gas sup-plies. Norway is the worldssecond-biggest gas exporter bypipeline, with the majority of sup-plies going to Britain, theNetherlands France and Germany.

This could have had serious conse-quences for the trust in Norway as acredible supplier, she added.The oil and gas industry makes up

about one-fifth of Norways $417bneconomy. The strike was primarilyover calls for employees to retire at62. Leif Sande, leader of the largestlabour union Industri Energi, repre-senting more than half of 7,000 off-shore workers, said workers wouldreturn to work immediately.

Its very sad. The strike is over, hesaid.

London Capital shares plummetas investors bet on profit slumpLONDON Capital Group (LCG)sshares slumped to their lowest pointthis year yesterday as the onlinespread-betting firm announced itexpects a drop in profits.

Predictions for the six months toJuly saw pre-tax profits fall to 2m,compared with 3m for the sameperiod last year, with LCG blamingthe disappointing figures on lowmarket volatility and tradevolumes.

The company said it expectedrevenues from its spread-betting

and contract for difference (CFD)operations to increase by 10 per

BY JAMES TITCOMBcent, but that its foreign exchangeand broking businesses wouldsuffer, with income dropping 26 percent and 67 per cent respectively.

LCG has had to put aside 1.9m toprovide for a potential 3.3mcompensation payment for clientswho lost money on a third-partycurrency fund provided by thecompany, pending an appealagainst the financial ombudsman.

The company continued to seelosses in some overseas operations,with its Australian CFD office,which opened in 2010, expecting a0.3m deficit, and its spread-betting

operation in Gibraltar losing 0.4m.LCG said it expects both ventures to

become profitable in the future.Shares in LCG fell 10 per cent to

63p yesterday, its lowest point sincelast August, before ending the dayslightly higher at 65p.

London Capital Group Holdings PLC


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PERMIRA has pulled the plug onits plans to refinance the debt ofits Birds Eye food group Iglo

which would have seen thebuyout house take a heftydividend, the private equity firmsaid yesterday.

Permira had lined up a dividendrecapitalisation with Credit Suisseand Deutsche Bank just days afterrejecting a 2.5bn (1.97bn) joint

bid for the company fromBlackstone and BC Partners.

Permira decided not to pursuethe dividend recapitalisation plan

Permira pulls plans for dividendrecapitalisation for Iglo group

BY CITY A.M. REPORTERafter it couldnt reach the level ofdividend payout it wanted, loaninvestors said.

Permira has also decided to stopthe sale process and hold ontoEuropes largest frozen foods

group after interest fell short ofits 2.8bn price tag.

Iglo Group is performingstrongly and is a well-capitalised

business. The momentum in thebusiness is strong and its currentcapital structure gives it theflexibility to pursue both itsorganic growth strategy andexplore further acquisitionopportunities, a statement fromthe company said.


cityam.com

The Iglo Group is the owner of the Birds Eye brands

BANKRUPT aircraft maker HawkerBeechcraft confirmed yesterday it

was in exclusive talks with aChinese aerospace firm over a saleof the company for $1.79bn(1.15bn), an offer that may flushout higher bids from other parties.

Chinese companies haveannounced a flurry ofinternational takeovers this year,part of a decade-old going outpolicy that encourages companiesto acquire natural resources andtechnological know-how abroad.

If finalised, Superior AviationBeijings offer for the US business

jet maker will be subject to anauction process and face legal and

Hawker confirms $1.8bn saletalks with Chinese aero firm

BY CITY A.M. REPORTERregulatory reviews in both theUnited States and China. TheChinese maker of plane enginesand parts has offered to fundHawker Beechcrafts jetoperations over the next six

weeks.Other aircraft makers such as

Brazil's Embraer or Textron couldalso bid for Hawker Beechcraft

when the auction process starts,industry bankers said.

Hawker Beechcraft, owned byGoldman Sachs private equityarm and Onex Corp filed forChapter 11 bankruptcy in May,unable to support a $2.5bn debtload amid a weak business jetmarket. Any deal would require a

green light from the USbankruptcy court.

Bwin.party hit by predictableEuro 2012 results as tax risesBWIN.PARTY DigitalEntertainment, the worlds

largest listed online gaminggroup, said yesterday that a runof predictable results in the Euro2012 football championshipmarred a solid performance in itscasino and bingo operations inthe second quarter.

The company said that itstrading performance since the

beginning of April was broadly inline with expectations, with solidperformances in bingo and

BY CITY A.M. REPORTERcasino being offset by continuedpressures in poker.

In sports betting, althoughthe Euro 2012 championship

delivered a meaningful uplift inbetting activity and customernumbers, gross win margins

were lower than expected due tothe majority of results followingthe predicted path, it said.

But on a more upbeat note, thecompany added: While certainsouthern European marketsremain challenging, the launchof the groups sports, poker,casino and bingo products in

Spain went live on 5 June, and theearly performance has beenencouraging.

AIRBUS has bagged itself a $4.2bn(2.7bn) deal with Hong Kong-basedairline Cathay Pacific, the jet makerannounced yesterday at the

Farnborough airshow.Cathay plans to buy 10 of Airbusnew A350-1000 aircraft, worth atotal $3.2bn at list prices, and spendan additional $1bn upgrading itsexisting order for 16 A350-900planes to the latest model.

Owned by European aerospacegiant EADS, Airbus has struggled togain market share from its mainrival Boeing, the US-based jetmanufacturer.

Airbus A350 competes againstBoeings 787 Dreamliner and 777mini-jumbo, its most profitableplane.

But Boeing trumped Airbus innumber of orders at Farnborough,

announcing yesterday that GECapital Aviation Services will buy100 of its 737 jets, after securing a$7.2bn order on Monday.

The Farnborough airshow got offto a slow start for Airbus, withanalysts predicting the Eurozonecrisis could see even existing ordersdelayed or cancelled.

Cheuvreux analysts said Airbusand Boeing would likely take halfthe number of orders as last year.

Airbus bags a $4.2bn dealfrom Cathay Pacific airline

BY LAUREN DAVIDSON

Bwin.Party Digital Entertainment PLC


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15WEDNESDAY 11 JULY 2012

LONDON REPORT

US technologystocks drivedown markets

US stocks fell for a fourth dayyesterday as more pessimismfrom American companiescompounded worries the

sluggish world economy is taking atoll on US profit growth.A sales warning from engine maker

Cummins came on top of earlierweak forecasts from chipmakersApplied Materials and Advanced

Micro Devices, causing the market toextend losses in afternoon trading.The news sent the S&P 500 down

for a fourth consecutive day, theindexs longest downward streaksince May when it fell for six straightdays.

Shares of industrials fell the most at1.6 per cent. Cummins was amongthe biggest losers, declining 8.9 percent to $86.91.Alcoa, which kicked off the earn-

ings period, fell 4.1 per cent to $8.40,a day after it reported a quarterly lossand lower sales.The Dow Jones industrial average

was down 83.17 points, or 0.65 percent, at 12,653.12. The Standard &Poors 500 Index was down 10.99points, or 0.81 per cent, at 1,341.47.The Nasdaq Composite Index wasdown 29.44 points, or one per cent, at2,902.33.

Bank stocks also declined, with theeuro hitting a two-year low againstthe dollar amid uncertainty aboutprogress in tackling the euro zonecrisis. The KBW Bank index fell 0.9per cent.Advanced Micro Devices tumbled

11.2 per cent to $4.99 after the chip-maker slashed its outlook for second-quarter, whileApplied Materials lost2.7 per cent to $10.71.

US-listed shares of Research InMotion fell five per cent to $7.29.

ARECOVERY in beaten-downfinancial stocks pushed Britainsbenchmark share index higheryesterday, although volumes were

thin, indicating a lack of conviction inthe rally due to fears over the Eurozonedebt crisis and the weak globaleconomy.The blue-chip FTSE 100 index closed up

0.7 per cent, or 36.74 points, at 5,664.07points, recovering from two consecutivedays of losses that took more than 1.1 per-centage points off the index.Trading volumes, however, were thin as

many chose to stay on the sidelines dueto persistent fears over the Eurozone cri-sis and the weak economic backdrop.Volumes for the FTSE 100 came in at 66per cent of their average 90-day volume.

Prudential topped the FTSE 100 leader-board, rising 3.3 per cent. Rival insurerLegal & General rose 2.1 per cent, whilethe FTSE 350 banking sector gained 1.3per cent.

Financials have generally beenstronger across the board today, and

Prudentials benefiting from that, saidCentral Markets chief strategist RichardPerry.

British engineer GKN and aerospacegroup BAE also featured prominently onthe FTSEs leaderboard, rising 3.3 and 2.7per cent respectively on expectations ofcontract wins at this weeks Farnboroughair show.The FTSE 100 has remained above the

5,600 level since breaking above thatmark at the end of June, but has failed tostay above the 5,700 level after havingreached an intraday high of 5,727.45points on 5 July.

Firmer performances by financialstocks lift FTSE as volumes stay thin

BESTof the BROKERSSSE PLC

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SSEInvestec has upped itstarget price to 1479p from1226p and upgraded SSEto buy from holdfollowing an upbeatcapital markets day lastmonth and prospects ofimproved profit growth.

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5,660


5,664.0710 Jul

WPP PLC


p815

795

800

805

810

808.0010 Jul

WPPJP Morgan Cazenove hasupgraded thecommunications giant, tooverweight fromneutral as it believesmanagement changes at

its market research armwill help boost growth.

AG Barr PLC


p

417.50

420.00

422.50

425.00

427.50

430.00 428.6010 Jul

AG BARRDespite AG Barroutperforming the drinksmarket, Societe Generaledowngraded the Irn Bru-maker to sell fromhold, reducing its pricetarget to 370p from 390pafter rain dampened sales.

Argonaut Capital PartnersThe fund management firm has

appointed John Lester as partnerand head of distribution. He joinsfrom Neptune InvestmentManagement, where he was headof strategic partnerships. Lesterwas previously associate directorat HSBC Asset Management.

HSBCPatrick Boucher has been appointed global head of productmanagement, equity research at the banking group. Hisnew post follows six years as head of research, Americas at

HSBC. Boucher is replaced by Ben Laidler, who was head ofLatAM equity research and strategy at JP Morgan.

CouttsJo Kaye has been appointed chief operating officer,products services and marketing at RBSs wealth division.She joins from Barclays Wealth, where she was global headof operational risk. Kaye started her career at the Bank ofEngland.

Berwin Leighton PaisnerThe law firm has appointed Justin Cornelius as a partner inits corporate practice. He joins from Nabarro, where he iscurrently a partner and a funds practitioner. Cornelius

specialises in investment funds in the real estate sector.

Jones Lang LaSalleClaudia Hamm Bastow has been appointed head of Europe,Middle East and Africa workplace solutions at theprofessional services firm. She joins from DEGW, theconsultancy, where she was a managing director.

Troika DialogThe Russian investment house has appointed SergeiKhaliullin as a director in its mergers and acquisitionsexecutions team. He joins from Alfa-Bank, where he wasdirector of corporate finance. Khaliullin has also worked atMerrill Lynch, Renaissance Capital and Goldman Sachs.

WHOS SWITCHING JOBS Edited by Tom Welsh

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

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17

Top level failure[Re: Osborne and Tucker have both beendamaged by Libor row, yesterday]Im staggered that both Paul Tucker andBob Diamond didnt take notes of theirtelephone conversations, or indeed havethem recorded. Under Financial ServicesAuthority regulations, many of us have to.Wed get fined or disbarred if we didnt.Quentin Holland, managing director of PQR

Financial Planning.

Will George Osborne be chancellor nextyear? I hope not. I speak as a Conservative.

Maurice Gosfield

How likely is Osborne to be removed by aPrime Minister who cant see his failings?

John Page

Lords reform costs[Re: Should MPs vote in favour of theproposed reforms to the House of Lords,yesterday]The thought of spending 250m reformingthe Lords when millions are unemployed,immigration controls at Heathrow are anational disgrace and our armed forces arebeing cut is nothing short of insanity. Itsabout time Nick Clegg was told a few hometruths. His party came third at the 2010general election and his party lost thealternative vote referendum. If he cantconcentrate on the issues that matter to themajority of people in this country then heshould leave the government and give whatlittle hope there is of rescuing this nation achance to succeed.

Alex Sawyer

THE RETAILER famous for 10meals and the Per Una brandhas stumbled. In this age ofausterity, it may come as littlesurprise that a firm like M&S

is falling short. But in reporting itsweakest quarterly figures for sevenyears, its challenges run far deeper.

Although M&Ss food sales grew by2.9 per cent, like-for-like sales wereup just 0.6 per cent. This is modestfor two reasons. Firstly, the British

Retail Consortium reported retailsales growth across the sector of 1.4per cent in June. Secondly, M&Srelied heavily on Jubilee-related salesto reach this figure. Without theJubilee, like-for-like sales growthcould have been negative.The weather and the economy are

certainly mitigating factors. TheM&S product mix lends itself well towarmer weather and fatter wallets.However, Waitrose has shown that itis possible to grow market share asconsumers top-up discounted stapleswith premium items.

Despite the weather, the short-termoutlook for food is positive. Jubileesales should segue into the Olympics,when demand will be bolstered bytourists. But more questions will beraised when the UK runs out ofevents to bolster consumer spending.The quarterly 6.8 per cent slump in

non-food sales is M&Ss worst since2005. Mid-market retailers likeInditex, owner of Zara, and H&M con-tinue to register growth, and thelikes of Asos have carved out a sharein the young fashion market. M&Shas not.

Not only have expensive campaignsfailed to bring in younger shoppers,but the brand is becoming more syn-onymous with food than clothing.Rationalisation of its clothing rangehas been repeatedly suggested yes-terdays appointment of Belinda Earlas the firms new style director sig-

TOP TWEETSWhat should George Osborne do? He shouldget out of government. He is incompetentand unable to see past party politics.@FinancialBear

Well done Bob Diamond for refusing his20m leaving bonus. Hell still getcastigated for his wages, though.@marcuselliott

It makes no sense for Labour to support theprinciple of Lords reform but not the process.They must will the means as well as the end.@CarolineLucas

If Marks & Spencer wants to find out why noone likes its clothes, it should look at itsstores: Depressing, untidy and confusing.@JustCounsel

Should the government consider removingstate benefits from wealthier pensioners?

YESThe pinch on public spending is, very likely, going to have to get

tighter. When it does, the government will need to ask itselfsome searching questions. Questions like, does Lord Sugar reallyneed 200 for his heating bills this winter? Could Sir B ruceForsyth afford his own TV licence? Would Lord Prescott survivewithout free bus travel? The primary purpose of the welfaresystem should be to offer a helping hand to those who reallyneed it. There should always be support for pensioners whocant afford to heat their homes, or who would struggle to payprescriptions. These were the people for whom the system wasinvented. It was difficult to justify handouts to the rich in thedays of plenty. Now its impossible. Protecting the vulnerable byscrapping benefits for the better off is a price worth paying.Alex Burghart is director of policy at the Centre for SocialJustice.

Alex Burghart

NORos Altmann

The government should not listen to calls for the means-testing of

pensioner benefits. It would be equivalent to only cutting the statepension of those who have saved for their retirement and it wouldleave many poorer pensioners without the help they require. Thereason we have all these pensioner benefits is because the statepension is so low for so many people. Around half have incomesbelow 10,000 a year and millions are already eligible for means-testing, although many won't claim. Means-testing pensionerbenefits would involve assessing nearly 6m pensioners. It iscomplex, inefficient, costly to administer and penalises those whohave saved. Universal benefits ensure all those who need them doreceive what they should. It would make more sense to taxpensioner benefits, or perhaps increase the age at which eligibilitystarts.Ros Altmann is director general of Saga.

RAPIDresponses M&S sales fall flat

as it fails to carvea fashion identity

nals yet another fresh approach.Perhaps opportunities abroad will

yield better results for M&S. The

retailer singled out strong trading inChina and India as sources of futuregrowth, with plans to double thenumber of stores in China this year.Still, the companys internationaldivision saw sales rise by only 0.9 percent.With limited exposure to the

Eurozone, and a presence in marketslike Indonesia, Malaysia, Thailandand the Philippines, as well as Chinaand India, M&Ss international salesgrowth of less than 1 per cent is dis-appointing.And shareholders have other rea-

sons to be unhappy. Since MarcBolland took over as chief executivein May 2010, M&Ss shares have fall-en by around 12 per cent, underper-forming rivals as well as the broaderUK market. This has not stoppedBolland receiving some substantialand well-publicised performancerelated bonuses, however.

Nonetheless, few investors votedagainst Bollands reappointment atyesterdays AGM. Similar patiencewill not be shown if trading contin-ues to sag in future quarters.

For investors, the key yardstick forjudging M&Ss performance is the400p per-share bid made by Sir PhilipGreen in 2004. The companys sharesbriefly traded above this level early inBollands tenure, but since then theyhave mostly languished below it.Jon Copestake is chief retail analyst at the

Economist Intelligence Unit.


JON COPESTAKE

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Mercedes-Benz range. We were driv-ing the A200 petrol, A200 diesel andthe A250 petrol versions. All of thecars were in AMG Sport trim with 7-speed dual clutch automatic trans-mission. The interior is simplyexcellent. In AMG Sport trim, thecabin is awash with metal surfaces,leather, a carbon fibre effect andleather-like dash and racy red con-trast trim. The air vents are outstand-ing because, electroplated in silverchrome metal, when you operatethem they are actually cold to thetouch. Meanwhile the dials are in sil-ver and red. The only element I dis-

liked in the whole interior was theirchequered flag effect which seems astep to far from classy to cheesy.And if thats come as a surprise, the

driving isnt bad either. The new A-Class is much sportier than its prede-cessor. Of the three models we drove,the 136bhp 1.8-litre A200 CDI was ourfavourite. Though it lacked the pace ofthe A250 petrol model, it seemed tooffer the best balance between per-formance and economy. The AMGSport spec includes a dynamic han-dling package that gives a firmer ridebut makes for a car that is more agilein the corners. Though it doesnt have

the pace of the A250 petrol model, itseemed like the best all-rounderthanks to its high mpg and CO2 emis-sions figures of just 116g. The automat-ic transmission, though, could be alittle indecisive. I couldnt help think-ing that sometimes when I put myfoot down the gearbox was strugglingto decide which gear it was going togive me, as if it was scratching its cogsand wondering what to do.

But really, if there was another fail-ing, I didnt find it. The new A-Classhas managed to shake off its stuffyimage in one fell swoop and is nowpossibly the best car Mercedes makes.

The new A-Class has gone from stuffy to cool in zero seconds flat

20WEDNESDAY 11 JULY 2012 cityam.com

WORDS BY

RYAN BORROFF

THE VERDICT:DESIGN hhhhhPERFORMANCE hhhhiPRACTICALITY hhhhi

THE FACTS:MERCEDES A-CLASS

PRICE: 25,970

0-62MPH: 9.2 secsTOP SPEED: 130mphCO2 G/KM: 116g/kmMPG COMBINED: 65.7mpg

The new A-Class really is all classMercedes-Benz has started again with its new A-Class. The result is a stylish car thats actually rather brilliant

LIFE&STYLE MOTORING

Its fair to say the A-Class didntexactly set the world alight whenMercedes-Benz first launched itback in 1997. It has always

seemed like the odd one out in theMercedes-Benz line up and the poorrelation to its larger siblings. Matterswerent helped by a stuffy image andpoor performance compared to itscompetitors, not to mention a one-box, upright, mini MPV design thatseemed to age quickly and headdown a cul-de-sac design wise.

So much so, Mercedes-Benz hasdecided to throw its little baby outwith the bathwater and completelystart again with its new A-Class. It isso unlike the model that came

before it that it really ought to havean entirely new name. At the inter-national launch in Slovenia lastweek, I lost count of the amount ofjournalists climbing out of it,scratching their heads and declar-ing: Wow, I cant believe thats anA-Class.

This is all set against the backdropof small cars getting posher. Thisyear will see a battle commence forthe title of the best new premiumhatchback. Audi, Mercedes-Benz andVolvo are all launching new cars,with their A3, A-Class and V40 mod-els. Which means, if youre in themarket for such a car, your decisionis about to get a lot harder.The new A-Classs fuddy-duddy

image has been replaced by quitepossibly the most stylish car in thesmall family car segment. Longerand lower than the old model, itselegant and sporty it looks fantas-tic. Its large, bold grille and badge,muscular shoulders, arcing roof andconvex and concave surfaces positive-ly yell how dynamic the car promisesto be. It makes even the Audi A3 lookunadventurous. In fact Id go so far asto say its sexy. In design terms itslike ditching support tights and slip-ping into something by Coco de Mer.And if you think the outside looks

smart, just wait until you get in it.This is easily one of the best interiorsof the year and surely the best of the

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